<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1999
REGISTRATION NOS. 2-95973 AND 811-4236
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
POST-EFFECTIVE AMENDMENT NO. 49 |X|
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT |X|
OF 1940
AMENDMENT NO. 50 |X|
ONE GROUP(R) MUTUAL FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(800) 480-4311
(REGISTRANT'S TELEPHONE NUMBER)
MARK S. REDMAN
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
ALAN G. PRIEST, ESQUIRE MICHAEL V. WIBLE, ESQUIRE
ROPES & GRAY BANK ONE CORPORATION
ONE FRANKLIN SQUARE 100 EAST BROAD STREET, 18TH FL.
1301 K STREET, N.W., SUITE 800E COLUMBUS, OHIO 43271-0158
WASHINGTON, D.C. 20005
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: IMMEDIATELY UPON EFFECTIVENESS
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
_____ on November 1, 1998 pursuant to paragraph(b)
_____ on (DATE) pursuant to paragraph(a)(1)
__X__ 75 days after filing pursuant to paragraph(a)(2)
_____ on March 18, 1999 pursuant to paragraph(a)(2) of Rule 485.
If appropriate, check the following box:
_____ post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest.
<PAGE> 2
ONE GROUP MUTUAL FUNDS
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A PART A ITEM PROSPECTUS CAPTION
- --------------------- ------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis About the Fund
3. Financial Highlights
4. General Description About the Fund, More About the
of Registrant Fund, How To Do Business with
One Group(R) Mutual Funds; Details About the
Fund's Investment Practices and Policies
5. Management of the Fund About the Fund; More About the
Fund; Organization & Management
of the Fund;
6. Capital Stock and Other Securities About the Fund; Shareholder Information
7. Purchase of Securities How To Do Business with
Being Offered One Group(R) Mutual Funds, Organization
& Management of the Fund
8. Redemption or Repurchase How To Do Business with
One Group(R) Mutual Funds
9. Pending Legal Proceedings Inapplicable
</TABLE>
<TABLE>
<CAPTION>
COMBINED STATEMENT OF
ADDITIONAL INFORMATION
FORM N-1A PART B ITEM CAPTION
- --------------------- -------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Trust; Additional Information
Description of Shares
13. Investment Objective and Policies Investment Objectives and
Policies
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Additional Information -
Holders of Securities Miscellaneous
16. Investment Advisory and Other
Services Management of the Trust
17. Brokerage Allocation Management of the Trust -
Portfolio Transactions
18. Capital Stock and Other Securities Valuation; Additional
Information Regarding the
Calculation of Per Share Net
Asset Value;
Additional Purchase
and Redemption Information;
Additional Information
19. Purchase, Redemption and Pricing of Valuation; Additional
Securities Being Offered Information Regarding the
Calculation Per Share Net Asset
Value; Additional Purchase and
Redemption Information;
Management of the Trust
20. Tax Status Investment Objectives and
Policies - Additional Tax
Information Concerning the Fund
21. Underwriters Management of the Trust -
Distributor
22. Calculation of Performance Data Additional Information -
Calculation of Performance Data
23. Financial Statements New Fund - none available
</TABLE>
<PAGE> 3
PART A
Part A of Post-effective Amendment No. 46 (filed October 28, 1998) to One Group
Registration Statement on Form N-1A for One Group Institutional Prime Money
Market Fund, One Group Tax Exempt Money Market Fund, One Group Treasury Money
Market Fund, One Group Texas Municipal Money Bond Fund, One Group Investor Fixed
Income Fund and One Group Investor Aggressive Growth Fund and Part A of
Post-Effective Amendment No. 48 (filed March 12, 1999) to One Group Mutual Funds
Registration Statement on Form N-1A for One Group(R) U.S. Treasury Securities
Money Market Fund, One Group(R) Prime Money Market Fund, One Group(R) Municipal
Money Market Fund, One Group(R) Ohio Municipal Money Market Fund, One Group(R)
Michigan Municipal Money Market Fund, One Group(R) Government Money Market Fund,
One Group(R) Treasury Only Money Market Fund, One Group(R) Cash Management Money
Market Fund, One Group(R) Treasury Cash Management Money Market Fund, One
Group(R) Treasury Prime Cash Management Money Market Fund, One Group(R) U.S.
Government Cash Management Money Market Fund, One Group(R) Municipal Cash
Management Money Market Fund, One Group(R) Diversified Mid Cap Fund, One
Group(R) Small Cap Value Fund, One Group(R) Market Expansion Index Fund, One
Group(R) Diversified International Fund, One Group(R) Equity Income Fund, One
Group(R) Mid Cap Value Fund, One Group(R) Mid Cap Growth Fund, One Group(R)
Equity Index Fund, One Group(R) Large Cap Value Fund, One Group(R) Large Cap
Growth Fund, One Group(R) Balanced Fund, One Group(R) Diversified Equity Fund,
One Group(R) Small Cap Growth Fund, One Group(R) International Equity Index
Fund, One Group(R) Income Bond Fund, One Group(R) Ultra Short-Term Bond Fund,
One Group(R) Short-Term Bond Fund, One Group(R) Intermediate Bond Fund, One
Group(R) Government Bond Fund, One Group(R) High Yield Bond Fund, One Group(R)
Treasury & Agency Fund, One Group(R) Bond Fund, One Group(R) Municipal Income
Fund, One Group(R) Intermediate Tax-Free Bond Fund, One Group(R) Tax-Free Bond
Fund, One Group(R) Short-Term Municipal Bond Fund, One Group(R) Ohio Municipal
Bond Fund, One Group(R) West Virginia Municipal Bond Fund, One Group(R) Kentucky
Municipal Bond Fund, One Group(R) Arizona Municipal Bond Fund, One Group(R)
Louisiana Municipal Bond Fund, One Group(R) Michigan Municipal Bond Fund, One
Group(R) Investor Growth Fund, One Group(R) Investor Growth and Income Fund, One
Group(R) Investor Conservative Growth Fund, and One Group(R) Investor Balanced
Fund are incorporated herein by reference.
<PAGE> 4
ONE GROUP MUTUAL FUNDS
ONE GROUP(R) U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
ONE GROUP(R) TREASURY PRIME MONEY MARKET FUND
JULY ____, 1999
1
<PAGE> 5
TABLE OF CONTENTS
A BRIEF PREVIEW OF THE FUNDS
ABOUT THE FUNDS
One Group(R) U.S. Government Securities Money Market FunD
One Group(R) Treasury Prime Money Market Fund
MORE ABOUT THE FUNDS
HOW TO DO BUSINESS WITH ONE GROUP MUTUAL FUNDS
Purchasing Fund Shares
Sales Charges
Sales Charge Reductions and Waivers
Exchanging Fund Shares
Redeeming Fund Shares
SHAREHOLDER INFORMATION
Voting Rights
Dividend Policies
Tax Treatment of the Funds
Tax Treatment of Shareholders
Shareholder Inquiries
ORGANIZATION AND MANAGEMENT OF THE FUNDS
The Funds
The Board of Trustees
The Advisor
The Distributor
The Administrator and Sub-Administrator
The Transfer Agent, Custodian and Sub-Custodian
Year 2000
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
Investment Practices
Investment Risks
Investment Policies
APPENDIX: DESCRIPTION OF RATINGS
2
<PAGE> 6
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE FUNDS?
The Funds are designed to produce high current income with liquidity and
stability of principal. Each Fund will use its best efforts to maintain a
constant net asset value of $1.00 per share, although there is no guarantee that
the Funds will be able to do so. Please read about each Fund before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds will invest only in U.S. dollar-denominated securities, will maintain
an average maturity on a dollar-weighted basis of 90 days or less, and will
acquire only "eligible securities" that present minimal credit risks and have a
maturity of 397 days or less. The Funds intend to comply with Rule 2a-7 under
the Investment Company Act of 1940. An investment in the Funds is not a deposit
of Bank One Corporation or its affiliates and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The U.S. Government Securities Money Market Fund invests in securities that are
backed by "credit enhancements" such as letters of credit. The value of
investments in the Fund could decrease if the credit quality of the credit
enhancement provider declines. In addition, the U.S. Government Securities Money
Market Fund invests in mortgage-related securities which have significantly
greater price and yield volatility than traditional fixed income securities. For
more information about risks, please read "More About the Funds" and "Investment
Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
Each Fund currently offers Class A, Class C, Class I and Service Class shares.
Class A and Class C shares are offered to the general public. Class I shares are
offered to institutional investors, including affiliates of Bank One Corporation
and any bank, depository institution, insurance company, pension plan or other
organization authorized to act in fiduciary, advisory, agency, custodial or
similar capacities. Class I shares are not available to Individual Retirement
Accounts ("IRA"). Service Class shares are offered to entities purchasing such
shares on behalf of investors requiring additional administrative or accounting
services such as sweep processing.
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the Funds are open
for business. Purchase and redemption procedures are explained in greater detail
in "How To Do Business With One Group Mutual Funds." For additional information,
call The One Group Services Company at 1-800-480-4111 or visit One Group Mutual
Fund's web site at www.onegroup.com.
3
<PAGE> 7
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are distributed
monthly. Any capital gains are distributed at least annually. Distributions are
paid in additional shares of the same class unless you elect to take the payment
in cash. For a more detailed discussion of dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment Advisors"), an
indirect subsidiary of Bank One Corporation, serves as the advisor of the Funds.
Banc One Investment Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its services and compensation
can be found in the Prospectus under the headings "The Advisor" and "Shareholder
Expenses."
4
<PAGE> 8
ONE GROUP(R) U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks high current income with liquidity and stability of principal.
PORTFOLIO SECURITIES
The Fund invests in short-term securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities; and repurchase agreements
relating to such securities. The Fund may also engage in securities lending. For
a list of all the securities in which the Fund may invest, please read
"Investment Practices."
RISK CONSIDERATIONS
Before you invest, please read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SERVICE
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS C CLASS CLASS I
------- ------- ----- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) none none none none
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waiver)(2) .32% .32% .32% .32%
12b-1 Fees (after fee waiver)(3) .25% 1.00% .55% none
Other Expenses .20% .20% .20% .20%
Total Fund Operating Expenses (after fee waivers)(4) .77% 1.52% 1.07% .52%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you
may be charged separate transaction fees by the Shareholder Servicing
Agent.
(2) Without a fee waiver, Investment Advisory Fees would be .35% for all
classes of shares.
(3) Due to 12b-1 fees, long-term Class A, Class C and Service Class
shareholders may pay more than the equivalent of the maximum front-end
sales charges permitted under the rules of the National Association of
Securities Dealers. Without the voluntary waiver, 12b-1 fees would be
.75% for Service Class shares.
(4) Without the voluntary reduction of Investment Advisory and 12b-1 fees,
Total Operating Expenses would be .80% for Class A shares, 1.55% for
Class C shares, 1.30% for Service Class shares, and .55% for Class I
shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) 5% annual return; and (2) redemption at the end of each time
period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $ 8 $25
Class A (without fee waivers) $ 8 $26
Class C $25 $48
Class C (without fee waivers) $26 $49
Class I $ 5 $17
Class I (without fee waivers) $ 6 $18
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
5
<PAGE> 9
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $ 8 $25
Class A (without fee waivers) $ 8 $26
Class C $15 $48
Class C (without fee waivers) $16 $49
Class I $ 5 $17
Class I (without fee waivers) $ 6 $18
</TABLE>
Because of the nature of the shares, shareholders are not expected to remain in
Service Class shares for more than a very limited period of time. However, a
shareholder investing in Service Class shares on a continual basis for a period
of one month would pay $1, three months would pay $3, and one year would pay
$11. Without the voluntary fee reduction, that shareholder would pay $1 after
one month, $3 after three months, and $13 after one year.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
ONE GROUP(R) U.S. GOVERNMENT SECURITIES MONEY MARKET FUND FINANCIAL HIGHLIGHTS
This section normally would include Financial Highlights for the Fund. Because
the Fund had not begun operations as of June 30, 1999, there are no Financial
Highlights for the Fund.
6
<PAGE> 10
ONE GROUP(R) TREASURY PRIME MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks high current income with liquidity and stability of principal.
PORTFOLIO SECURITIES
The Fund invests in U.S. Treasury bills, notes, bonds and other U.S. obligations
issued or guaranteed by the U.S. Treasury. The Fund does not invest in
repurchase agreements. For a list of all the securities in which the Fund may
invest, please read "Investment Practices."
RISK CONSIDERATIONS
Before you invest, please read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SERVICE
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS C CLASS CLASS I
------- ------- ----- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) none none none none
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waiver)(2) .32% .32% .32% .32%
12b-1 Fees (after fee waiver)(3) .25% 1.00% .55% none
Other Expenses .20% .20% .20% .20%
Total Fund Operating Expenses (after fee waivers)(4) .77% 1.52% 1.07% .52%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you
may be charged separate transaction fees by the Shareholder Servicing
Agent.
(2) Without a fee waiver, Investment Advisory Fees would be .35% for all
classes of shares.
(3) Due to 12b-1 fees, long-term Class A, Class C and Service Class
shareholders may pay more than the equivalent of the maximum front-end
sales charges permitted under the rules of the National Association of
Securities Dealers. Without the voluntary waiver, 12b-1 fees would be
.75% for Service Class shares.
(4) Without the voluntary reduction of Investment Advisory and 12b-1 fees,
Total Operating Expenses would be .80% for Class A shares, 1.55% for
Class C shares, 1.30% for Service Class shares, and .55% for Class I
shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) 5% annual return; and (2) redemption at the end of each time
period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Class A $ 8 $25
Class A (without fee waivers) $ 8 $26
Class C $25 $48
Class C (without fee waivers) $26 $49
Class I $ 5 $17
Class I (without fee waivers) $ 6 $18
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
7
<PAGE> 11
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Class A $ 8 $25
Class A (without fee waivers) $ 8 $26
Class C $15 $48
Class C (without fee waivers) $16 $49
Class I $ 5 $17
Class I (without fee waivers) $ 6 $18
</TABLE>
Because of the nature of the shares, shareholders are not expected to remain in
Service Class shares for more than a very limited period of time. However, a
shareholder investing in Service Class shares on a continual basis for a period
of one month would pay $1, three months would pay $3, and one year would pay
$11. Without the voluntary fee reduction, that shareholder would pay $1 after
one month, $3 after three months, and $13 after one year.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
ONE GROUP(R) TREASURY PRIME MONEY MARKET FUND FINANCIAL HIGHLIGHTS
This section normally would include Financial Highlights for the Fund. Because
the Fund had not begun operations as of June 30, 1999, there are no Financial
Highlights for the Fund.
8
<PAGE> 12
MORE ABOUT THE FUNDS
PORTFOLIO QUALITY
Securities will be purchased by the Funds only if Banc One Investment Advisors
determine that they present minimal credit risk under guidelines adopted by the
One Group Board of Trustees. In addition, unless a more specific rating is
specified, all investments of the Funds must be rated in one of the three
highest rating categories described in "Description of Ratings" in the Appendix.
If an investment is unrated, Banc One Investment Advisors must determine that it
is of comparable quality to a rated security. Banc One Investment Advisors will
look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
Each Fund may invest up to 10% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by the Board of Trustees in determining whether an investment
is illiquid.
SPECIAL RISK CONSIDERATIONS
NET ASSET VALUE: There is no assurance that the Funds will meet their investment
objectives or be able to maintain a net asset value of $1.00 per share on a
continuous basis.
PORTFOLIO TURNOVER: The Funds attempt to increase yield by taking advantage of
short-term market variations. This policy is expected to result in high
portfolio turnover. However, this should not adversely affect the Funds because
they usually do not pay brokerage commissions when purchasing U.S. government
securities.
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
DERIVATIVES: The U.S. Government Securities Money Market Fund invests in
securities that are considered to be derivatives. Derivatives are securities or
contracts that derive their value from the performance of underlying assets or
securities. These securities may be more volatile than other securities. These
include mortgage-backed securities, including collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and REMICs).
Derivatives present, to varying degrees, market, credit, leverage, liquidity,
and management risks. The Fund's use of derivatives may cause the Fund to
recognize higher amounts of short-term capital gains (generally taxed at
ordinary income tax rates) than it would if the Fund did not use such
instruments. For a more detailed discussion of these risks, please read
"Investment Risks."
9
<PAGE> 13
HOW TO DO BUSINESS WITH ONE GROUP MUTUAL FUNDS
PURCHASING FUND SHARES
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
o The One Group Services Company, and
o Shareholder Servicing Agents. These include investment advisors,
brokers, financial planners, banks, insurance companies, retirement or
401(k) plan sponsors, or other intermediaries. Shares purchased this
way will be held for you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
o Purchases may be made on any business day. This includes any day that
the Funds are open for business, other than weekends, days on which the
New York Stock Exchange ("NYSE") is closed, and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving, and Christmas.
o Purchase requests will be effective on the day received by The One
Group Services Company and you will be eligible to receive dividends
declared the same day, if such purchase orders are received by The One
Group Services Company:
(i) before 2:00 p.m., Eastern Time ("ET"), for the Treasury Prime
Money Market Fund;
(ii) before 4:00 p.m., ET, the U.S. Government Securities Money
Market Fund.
In addition, the Fund's custodian, State Street Bank and Trust Company,
must receive "federal funds" before 4:00 p.m., ET on such day. If State
Street Bank and Trust Company does not receive federal funds by the
cut-off time, the purchase order will not be effective until the next
business day on which federal funds are timely received by State Street
Bank and Trust Company.
o On occasion, the NYSE will close before 4:00 p.m. ET. When that
happens, purchase requests received after the NYSE closes will be
effective the following business day.
o If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase
or redemption order to the Fund. Your Shareholder Servicing Agent may
have an earlier cut-off time for purchase and redemption requests.
o The One Group Services Company can reject a purchase order if it does
not think that it is in the best interests of a Fund and/or its
shareholders to accept the order.
o Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
One Group offers the following classes of shares:
o Class A and Class C shares are available to the general public.
o Class I shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or
agency capacity. We will refer to these entities as "Intermediaries."
o Service Class shares are available to Intermediaries purchasing shares
on behalf of investors requiring additional administrative or
accounting services such as sweep processing.
10
<PAGE> 14
One Group Fund Direct IRA. One Group offers a retirement plan. These plans allow
participants to defer taxes while their retirement savings grow. Call The One
Group Services Company at 1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
o Shares are sold at net asset value ("NAV").
o NAV per share is calculated by dividing the total market value of a
Fund's investment and other assets allocable to a class (minus class
expenses) by the number of outstanding shares in that class. The Funds
use their best efforts to maintain their NAV at $1.00, although there
is no guarantee that they will be able to do so.
o NAV is calculated each business day as of 2:00 p.m., ET, for the
Treasury Prime Money Market Fund; and 4:00 p.m., ET, for the U.S.
Government Securities Money Market Fund. On occasion, the NYSE will
close before 4:00 p.m. ET. When that happens, NAV will be calculated as
of the time the NYSE closes.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most
appropriate for you.
2. Decide how much you want to invest.
o The minimum initial investment is $1,000 ($100 for employees
of BANK ONE CORPORATION and its affiliates). The minimum
initial investment for an IRA is $250.
o Subsequent investments must be at least $100 ($25 for
employees of BANK ONE CORPORATION and its affiliates).
o The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of
the Account privileges that you plan to take advantage of. Doing so now
means that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose
to pay by wire or bank transfer) payable to "One Group" to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
Contributions to Fund Direct IRAs should be made payable to "State
Street Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10)
calendar days if purchases are made by check or under the Systematic
Investment Plan (see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may
be required to complete additional forms or follow additional
procedures. You should contact your Shareholder Servicing Agent
regarding purchases, exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or
call The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
o Contact your Shareholder Servicing Agent or The One Group Services
Company at 1-800-480-4111 to relay your purchase instructions.
11
<PAGE> 15
o Send a personal check payable to "One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or
initiate a wire transfer to the following wire address:
State Street Bank & Trust Company
Attn: Custody & Shareholder Services
ABA 011 000 028
DDA 99034167
FBO One Group Fund (ex: One Group Treasury Prime Money Market Fund--A)
Your Account Number (ex: 123456789)
Your Account Registration (ex: John Smith & Mary Smith, JTWROS)
o One Group uses reasonable procedures to confirm that instructions given
by telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these
procedures are followed, One Group will not be responsible for any
loss, liability, cost or expense of acting upon unauthorized or
fraudulent instructions; you bear the risk of loss.
o You may revoke your right to make purchases over the telephone by
sending a letter to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
CAN I AUTOMATICALLY INVEST ON A SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A and
Class C shares by making automatic monthly investments from your bank account.
The minimum initial investment is still $1,000, but minimum automatic additions
are only $25. The One Group Services Company may waive these minimums. To
establish a Systematic Investment Plan:
o Select the "Systematic Investment Plan" option on the Account
Application Form.
o Provide the necessary information about the bank account from which
your investments will be made.
o Shares purchased under a Systematic Investment Plan may not be redeemed
for ten (10) calendar days.
o One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for
debiting your bank account.
o You may revoke your right to make systematic investments by calling The
One Group Services Company at 1-800-480-4111 or by sending a letter to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
MAY I WRITE CHECKS ON MY ACCOUNT?
Class A shareholders may write checks for $250 or more.
o Checks may be payable to any person and your account will continue to
earn dividends until the check clears.
o Checks are free, but your bank or the payee may charge you for stop
payment orders, insufficient funds, or other valid reasons.
o You can not use this option to close your account because of the
difficulty of determining the exact value of your account.
12
<PAGE> 16
o You must wait ten (10) calendar days before you can write a check
against shares purchased by a check.
TO SELECT THIS OPTION:
o Select the "Check Writing" option on the Account Application Form.
o Complete, sign and return a signature card and other forms sent to you
by State Street Bank and Trust Company. You will receive a supply of
checks that will be drawn on State Street Bank and Trust Company.
SALES CHARGES
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of One Group. Compensation comes from sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. Occasionally,
The One Group Services Company, at its own expense, also will provide cash
incentives to select Shareholder Servicing Agents. Those Shareholder Servicing
Agents who may receive special incentives include Banc One Securities
Corporation, The Advisors Group, United Planners Financial Services of America,
Inc., The Legend Group, and Rosewood Retirement Advisory Services, LLC.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 1.00%
After first year none
</TABLE>
The One Group Services Company pays a commission of 1.00% of the original
purchase price to Shareholder Servicing Agents who sell Class C shares.
How the CDSC is Calculated
o The Fund assumes that all purchases made in a given month were made on
the first day of the month.
o The CDSC is based on the net amount redeemed.
o A sales charge is not assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
o To keep your CDSC as low as possible, the Fund first will redeem any
shares in your account that carry no CDSC, starting with Class A
Shares. After that, the Fund will redeem the shares you have held for
the longest time and thus have the lowest CDSC.
o If you exchange Class C shares of an unrelated mutual fund for Class C
shares of One Group in connection with a fund reorganization, the CDSC
applicable to your original shares (including the period of time you
have held those shares) will be applied to One Group shares you receive
in the reorganization.
12b-1 FEES
12b-1 fees are paid by One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to brokers and other Shareholder
Servicing Agents that sell shares of One Group.
o The 12b-1 fees vary by share class as follows:
13
<PAGE> 17
1. Class A shares pay a 12b-1 fee of .25% of the average daily
net assets of the Fund.
2. Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund. This will cause expenses for Class C
shares to be higher and dividends to be lower than for Class A
shares.
3. Service Class shares pay a 12b-1 fee of .75% of the average
daily net assets of the Fund, which is currently being waived
to .55% for each Fund.
4. There are no 12b-1 fees for Class I shares.
o 12b-1 fees, together with the CDSC, help The One Group Services Company
sell Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
o The One Group Services Company may use up to .25% of the fees for
shareholder servicing and up to .75% for distribution. During the last
fiscal year, The One Group Services Company received 12b-1 fees.
o The One Group Services Company may pay 12b-1 fees to its affiliates and
to Banc One Investment Advisors and its affiliates (or any sub-advisor)
for brokerage and other agency transactions.
SALES CHARGE REDUCTIONS AND WAIVERS
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value
annually. You do not have to participate in the Systematic Withdrawal
Plan to take advantage of this waiver.
2. If you buy the shares in connection with certain retirement plans, such
as 401(k) and similar qualified plans.
3. If you are the shareholder (or a joint shareholder), or a participant
or beneficiary of certain retirement plans and you die or become
disabled (as defined by the Tax Code), but only if the redemption is
made within one year of such death or disability.
4. That represent a minimum required distributions from an IRA Account or
other qualifying retirement plan, but only if you are at least age 70
1/2.
5. Exchanged in connection with plans of reorganizations of a Fund, such
as mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class C shares of other One Group Funds.
7. If The One Group Services Company receives notice before you invest
indicating that your Shareholder Servicing Agent, due to the type of
account that you have, is waiving its commission.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
EXCHANGING FUND SHARES
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
o Class I shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Class I shares of another One Group Fund.
14
<PAGE> 18
o Class A shares of a Fund may be exchanged for Class I shares of that
Fund or for Class A or Class I shares of another One Group Fund, but
only if you are eligible to purchase those shares.
o Class C shares of a Fund may be exchanged for Class C shares of another
One Group Fund.
o Service Class shares do not have exchange privileges.
One Group offers a Systematic Exchange Privilege which allows you to
automatically exchange shares of one fund to another on a monthly or quarterly
basis. This privilege is useful in dollar cost averaging. To participate in this
privilege, please select it on your account application. To learn more about it,
please call The One Group Services Company at 1-800-480-4111.
One Group may change the terms and conditions of your exchange privileges upon
60 days written notice. One Group does not charge a fee for this privilege.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
o State Street Bank and Trust Company receives the request by 4:00 p.m.
ET.
o You have provided One Group with all of the information necessary to
process the exchange.
o You have received a current prospectus of the Fund or Funds into which
you wish to invest.
o You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
o You will pay a sales charge if you own Class I shares of a Fund and you
want to exchange those shares for Class A shares, unless you qualify
for a sales charge waiver.
o You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange
them for shares of a Fund that does, in which case you would
pay the sales charge applicable to the Fund into which you are
exchanging.
2. That charged a lower sales charge than the Fund into which you
are exchanging, in which case you would pay the difference
between that Fund's sales charge and all other sales charges
you have already paid.
o If you exchange Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which
you exchanged, or any Fund from which you previously
exchanged.
2. The current holding period for your exchanged Class C shares
is carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
o An exchange between classes of shares of the same Fund is not taxable
for Federal income tax purposes.
o An exchange between Funds is considered a sale and generally results in
a capital gain or loss for Federal income tax purposes.
15
<PAGE> 19
o You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
o To prevent disruptions in the management of the Funds, One Group limits
excessive exchange activity.
o Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH
PERIOD.
o In addition, One Group reserves the right to reject any exchange
request (even those that are not excessive) if the Fund reasonably
believes that the exchange will result in excessive transaction costs
or otherwise adversely affect other shareholders.
REDEEMING FUND SHARES
WHEN CAN I REDEEM SHARES?
o You may redeem all or some of your shares on any day that the Funds are
open for business.
o Redemption requests received by The One Group Services Company before
4:00 p.m. ET (or when the NYSE closes), will be effective that day.
HOW DO I REDEEM SHARES?
o Unless you have selected the telephone option on your Account
Application Form, you must send a written redemption request to your
Shareholder Servicing Agent, if applicable, or to State Street Bank and
Trust Company at the following address:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
o All requests for redemptions from IRA accounts must be in writing.
o You may request redemption forms by calling The One Group Services
Company at 1-800-480-4111.
o State Street Bank and Trust Company may require that the signature on
your redemption request be guaranteed by a commercial bank, a member of
a domestic stock exchange, or a member of the Securities Transfer
Association Medallion Program or the Stock Exchange Medallion Program,
unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record;
3. the redemption check is mailed to the shareholder at the
record address; or
4. the redemption is payable by wire or bank transfer (ACH) to a
pre-existing bank account.
o On the Account Application Form you may elect to have the redemption
proceeds mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder
Servicing Agent.
o State Street Bank and Trust Company may charge you a wire redemption
fee. The current charge is $7.00.
16
<PAGE> 20
o Your redemption proceeds will ordinarily be paid within seven days
after receipt of the redemption request. If you have wire instructions
on file, the Funds will attempt to honor requests for same day payment,
if the request is received before 2:00 p.m. ET for the Treasury Prime
Money Market Fund and 4:00 p.m. ET for the U.S. Government Securities
Money Market Fund. If redemption requests are received after these
times, the Funds will attempt to wire payment the next business day.
o The Funds also will attempt to honor requests for payments in two
business days, if the redemption request is received after the times
listed above.
WHAT WILL MY SHARES BE WORTH?
o The NAV of shares of the Funds is expected to remain constant at $1.00
per share, although there is no assurance that this will always be the
case.
o If you own Class A, Service Class or Class I shares, you will receive
the NAV calculated after your redemption request is received. Please
read "How Much Do Shares Cost?"
o If you own Class C shares, you will receive the NAV calculated after
your redemption request is received, minus the amount of any applicable
CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
o Call your Shareholder Servicing Agent or The One Group Services Company
at 1-800-480-4111 to relay your redemption request.
o Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
o State Street Bank and Trust Company may charge you a wire redemption
fee. The current charge is $7.00.
o One Group uses reasonable procedures to confirm that instructions given
by telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these
procedures are followed, One Group will not be responsible for any
loss, liability, cost or expense of acting upon unauthorized or
fraudulent instructions; you bear the risk of loss.
o REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000 you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
o Select the "Systematic Withdrawal Plan" option on the Account
Application Form.
o Specify the amount you wish to receive and the frequency of the
payments.
o You may designate a person other than yourself as the payee.
o There is no charge for this service.
o If you select this option, please keep in mind that:
1. If you own Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited
to no more than 10% of your account value annually, measured
from the date the redemption request is received.
2. If you are age 70-1/2, you may elect to receive payments to
the extent that the payment represents a minimum required
distribution from an IRA or other qualifying retirement plan.
You also may elect to receive payments of less than $100 each.
17
<PAGE> 21
3. If the amount of the systematic payment exceeds the income
earned by your account since the previous payment under the
Systematic Withdrawal Plan, payments will be made by redeeming
some of your shares. This will reduce the amount of your
investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
o All redemptions will be for cash. The redemption price of shares is
expected to remain constant at $1.00 per share, although there is no
assurance that this will always be the case.
o If you redeem shares for which you paid by check, and One Group has not
yet received payment on the check, One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been
collected from your bank.
o Because of the high cost of handling small investments, One Group
charges a sub-minimum account fee. Accounts under $1,000 that are not
participating in a Systematic Investment Plan will be assessed an
annual fee of $10.00. The sub-minimum account fee will not apply to IRA
accounts and the accounts of employees of Bank One Corporation and its
affiliates.
o One Group may suspend your ability to redeem when:
1. Trading on the NYSE is restricted;
2. the NYSE is closed (other than weekend and holiday closings);
3. the SEC has permitted a suspension; or
4. an emergency exists.
The Statement of Additional Information offers more details about this process.
o You generally will recognize a gain or loss on a redemption for Federal
income tax purposes. You should talk to your tax advisor before making
a redemption.
18
<PAGE> 22
SHAREHOLDER INFORMATION
VOTING RIGHTS
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
DIVIDEND POLICIES
DIVIDENDS
The Funds generally declare dividends on each business day. Dividends are
distributed on the first business day of each month. Capital gains, if any, for
all Funds are distributed at least annually.
Dividends payable on Class I shares will be more than those payable on other
classes of shares. This is because Class A, Class C and Service Class shares
have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8528, Boston, MA
02266-8528, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street. You also may change the way you receive dividends
and distributions by calling The One Group Services Company at 1-800-480-4111.
19
<PAGE> 23
TAX TREATMENT OF THE FUNDS
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT OF SHAREHOLDERS
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares may produce either a taxable gain
or a loss. You are responsible for any tax liabilities generated by your
transactions.
TAXATION OF DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
(including, for this purpose, the excess, if any, of net short-term capital
gains over net long-term capital losses) and, if any, net capital gains (i.e.,
the excess, if any, of net long-term capital gains over net short-term capital
losses) to investors on at least an annual basis. Dividends you receive from a
Fund, whether reinvested or received in cash, will be taxable to you. Dividends
from a Fund's net investment income will be taxable as ordinary income and
distributions from a Fund's long-term capital gains will be taxable to you as
such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid in the previous year.
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans generally will not be
taxable. However, if shares are held by a plan that ceases to qualify for
tax-exempt treatment or by an individual who has received shares as a
distribution from a retirement plan, the distributions will be taxable to the
plan or individual as described in "Taxation of Distributions." If you are
considering purchasing shares with qualified retirement plan assets, you should
consult your tax advisor for a more complete explanation of the Federal, state,
local and (if applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In September and March you will receive a financial report from One Group. In
addition, One Group will periodically send you proxy statements and other
reports.
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<PAGE> 24
ORGANIZATION AND MANAGEMENT OF THE FUNDS
THE FUNDS
Each Fund is a series of One Group Mutual Funds, an open-end management
investment company. One Group currently offers 53 separate Funds. Two of the
Funds are described in this prospectus; the other Funds are described in
separate prospectuses. Each Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to One
Group since 1993. Prior to that time, One Group was advised by affiliates of
Banc One Investment Advisors. In addition to One Group, Banc One Investment
Advisors serves as investment advisor to other mutual funds and individual,
corporate, charitable and retirement accounts. As of March 29, 1999, Banc One
Investment Advisors, an indirect, wholly-owned subsidiary of Bank One
Corporation managed over $120 billion in assets.
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives a fee
based on the total assets of One Group. For the first $1.5 billion in One Group
assets, The One Group Services Company receives an annual fee of .20% of each
Fund's average daily net assets. The annual rate declines to .18% on assets up
to $2 billion, and to .16% when assets exceed $2 billion. The fee is calculated
daily and paid monthly. Some Funds are not included in the calculations. Banc
One Investment Advisors, the Sub-Administrator, provides office space,
equipment, and facilities, as well as legal and regulatory support.
THE TRANSFER AGENT, CUSTODIAN AND THE SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8528, Boston, MA 02266-8528 or
your Shareholder Servicing Agent, if appropriate, handles shareholder record
keeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust Company. Bank One Trust Company, N.A. is paid a fee for this service.
YEAR 2000
Preparing for the Year 2000 is a high priority for One Group. Both The One Group
Services Company and Banc One Investment Advisors have formed dedicated teams to
help them successfully achieve Year 2000 compliance. In addition, these teams
are responsible for assessing the readiness of all other service providers to
One Group. Year 2000 remediation efforts are directed toward both information
technology and non-information technology systems. Non-information technology
systems include elevators, photocopy machines, and facsimile machines, and
should have no significant impact on the delivery of services to One Group.
Banc One Investment Advisors has identified 49 information technology systems
and interfaces that provide service and support to One Group. Each system is
assigned a priority rating: high, medium or low. Systems rated "high" are those
which are essential to the operation of One Group. Each system rated
21
<PAGE> 25
"high" was scheduled to be Year 2000 compliant by December 31, 1998. All systems
will be tested for compliance throughout 1999.
Many, if not all, of the systems are owned or operated by third party servicers
(for example, One Group's Custodian). Consequently, remediation efforts must be
made by those servicers. Banc One Investment Advisors and The One Group Services
Company have, and will continue to, monitor the remediation progress of the
service providers. This process involves documentation, on-site visits, and
review of remediation plans and test results. Both Banc One Investment Advisors
and The One Group Services Company have budgeted in excess of $700,000 in fiscal
year 1998 and over $1 million in fiscal year 1999 toward the remediation effort
for all systems and interfaces. Neither One Group nor its shareholders will bear
any of the direct remediation expenses.
Neither The One Group Services Company nor Banc One Investment Advisors
currently anticipate that the move to Year 2000 will have a material impact on
their ability to continue to provide the Funds with service at current levels.
Likewise, One Group currently anticipates that the move to Year 2000 will not
have a material impact on its operations.
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
FUND NAME
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
- --------- ---------
<S> <C>
One Group(R) U.S. Government Securities Money Market Fund 1
One Group(R) Treasury Prime Money Market Fund 2
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
- ---------- --------- ---------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes and bonds 1-2 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued 1 Market
by agencies and instrumentalities of the U.S. Credit
Government. These include Ginnie Mae, Fannie Mae, and
Freddie Mac.
REPURCHASE AGREEMENTS: The purchase of a security and 1 Credit
the simultaneous commitment to return the security to Market
the seller at an agreed upon price on an agreed upon Liquidity
date. This is treated as a loan.
SECURITIES LENDING: The lending of up to 33 1/3% of 1 Credit
the Fund's total assets. In return the Fund will Market
receive cash, other securities, and/or letters of credit. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: 1 Market
Purchase or contract to purchase securities at a fixed Leverage
price for delivery at a future date. Liquidity
</TABLE>
22
<PAGE> 26
<TABLE>
<S> <C> <C>
INVESTMENT COMPANY SECURITIES: Shares of other money 1 Market
market mutual funds, including money market funds of One
Group and shares of other investment companies for which
Banc One Investment Advisors serves as investment advisor
or administrator. Banc One Investment Advisors will waive
certain fees when investing in funds for which it serves as
investment advisor.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1 Market
interest rates which are reset daily, weekly, quarterly Credit
or some other period and which may be payable to the Fund Liquidity
on demand.
MORTGAGE-BACKED SECURITIES: Debt obligations secured 1 Pre-Payment
by real estate loans and pools of loans. These Market
include collateralized mortgage obligations ("CMOs") Credit
and Real Estate Mortgage Investment Conduits ("REMICs"). Regulatory
</TABLE>
INVESTMENT RISKS
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risks than others.
o CREDIT RISK. The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to
honor a financial obligation. Credit risk is generally higher for
non-investment grade securities. The price and liquidity of a security
can be adversely affected prior to actual default as its credit status
deteriorates and the probability of default rises.
o LEVERAGE RISK. The risk associated with securities or practices (such
as borrowing) that multiply small index or market movements into large
changes in value.
o LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in
the market. The seller may have to lower the price, sell other
securities instead or forego an investment opportunity, any of which
could have a negative effect on fund management or performance. This
includes the risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in less
advantageous investments.
o MARKET RISK. The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably. These fluctuations may
cause a security to be worth less than the price originally paid for
it, or less than it was worth at an earlier time. Market risk may
affect a single issuer, industry, sector of the economy or the market
as a whole. For fixed income securities, market risk is largely, but
not exclusively, influenced by changes in interest rates. A rise in
interest rates typically causes a fall in values, while a fall in rates
typically causes a rise in values. Finally, key information about a
security or market may be inaccurate or unavailable. This is
particularly relevant to investments in foreign securities.
o PRE-PAYMENT RISK. The risk that the principal repayment of a security
will occur at an unexpected time, especially that the repayment of a
mortgage or asset-backed security occurs either significantly sooner or
later than expected. Changes in pre-payment rates can result in greater
price and yield volatility. Pre-payments generally accelerate when
interest rates decline. When mortgage and other obligations are
pre-paid, a Fund may have to reinvest in securities with a lower yield.
Further, with early repayment, a Fund may fail to recoup any premium
paid, resulting in an unexpected capital loss.
o REGULATORY RISK. The risk associated with Federal and state laws which
may restrict the remedies that a lender has when a borrower defaults on
loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor
relief laws, restrictions on "due on sale" clauses, and state usury
laws.
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<PAGE> 27
INVESTMENT POLICIES
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. In addition to
the fundamental policies mentioned earlier, the following fundamental policies
apply to each Fund as specified. The full text of the fundamental policies can
be found in the Statement of Additional Information.
FUNDAMENTAL POLICIES OF EACH FUND
Each Fund:
1. Will use its best efforts to maintain a constant net asset value of
$1.00 per share, although there is no guarantee that the Funds will be
able to do so.
2. Will not, with respect to 75% of a Fund's total assets, purchase the
securities of an issuer if as a result more than 5% of its total assets
would be invested in the securities of that issuer or the Fund would
own more than 10% of the outstanding voting securities of that issuer,
except as otherwise permitted by applicable law or regulation. This
does not include securities issued or guaranteed by the United States,
its agencies or instrumentalities, and repurchase agreements involving
these securities.
3. Will not purchase securities while borrowings (including reverse
repurchase agreements) exceed 5% of the respective Fund's net assets.
4. Will not borrow money or issue senior securities, except that the Funds
may borrow from banks for temporary purposes in amounts not exceeding
10% of their total assets at the time of the borrowing.
5. Will not mortgage, pledge or hypothecate any assets, except in
connection with borrowing specified in 4 above and in amounts not in
excess of the lesser of the dollar amount borrowed or 10% of the value
of the respective Fund's total assets at the time of its borrowing.
24
<PAGE> 28
APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial
strength. Typically they will be major financial
institutions with highly valuable and defensible
business franchises, strong financial fundamentals,
and a very attractive and stable operating
environment.
B These banks possess strong intrinsic financial
strength. Typically, they will be important
institutions with valuable and defensible business
franchises, good financial fundamentals, and an
attractive and stable operating environment.
C These banks possess good intrinsic financial
strength. Typically, they will be institutions with
valuable and defensible business franchises. These
banks will demonstrate either acceptable financial
fundamentals within a stable operating environment,
or better than average financial fundamentals within
an unstable operating environment.
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
Aaa The highest rating assigned by S&P. The obligor's
capacity to meet its financial commitment on the
obligation is extremely strong.
Aa The obligor's capacity to meet its financial
commitments on the obligation is very strong.
A The obligation is somewhat more susceptible to the
adverse effects of changes in circumstances and
economic conditions than obligations in higher rated
categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still
strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
25
<PAGE> 29
Aaa Insurance companies rated in this category offer
exceptional financial security. While the financial
strength of these companies is likely to change, such
changes as can be visualized are most unlikely to
impair their fundamentally strong position.
Aa These insurance companies offer excellent financial
security. Together with the Aaa group, they
constitute what are generally known as high grade
companies. They are rated lower than Aaa companies
because long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good
financial security. However, elements may be present
which suggest a susceptibility to impairment sometime
in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment
on the obligation is extremely strong.
AA The obligor's capacity to meet its financial
commitments on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to
the adverse effects of changes in circumstances and
economic conditions than obligations in higher rated
categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still
strong.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and
interest will be paid on a timely basis.
TBW-2 While degree of safety regarding timely repayment of
principal and interest is strong, the relative degree
is not as high as for issues rated TBW-1.
TBW-3 Lowest investment grade category. While more
susceptible to adverse developments than obligations
with higher ratings, capacity to service principal
and interest in a timely fashion is considered
adequate.
TBW-4 Non-investment grade and, therefore, speculative.
26
<PAGE> 30
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor and Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8528
Boston, MA 02266-8528
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING ONE GROUP(R).
27
<PAGE> 31
ONE GROUP MUTUAL FUNDS
REAL ESTATE FUND
JULY __, 1999
1
<PAGE> 32
TABLE OF CONTENTS
A BRIEF PREVIEW OF THE FUND
About the Fund
MORE ABOUT THE FUND
HOW TO DO BUSINESS WITH ONE GROUP MUTUAL FUNDS
Purchasing Fund Shares
Sales Charges
Sales Charge Reductions and Waivers
Exchanging Fund Shares
Redeeming Fund Shares
SHAREHOLDER INFORMATION
Voting Rights
Dividend Policies
Tax Treatment of the Fund
Tax Treatment of Shareholders
Shareholder Inquiries
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund
The Board of Trustees
The Advisor
The Distributor
The Administrator and Sub-Administrator
The Transfer Agent, Custodian and Sub-Custodian
Year 2000
DETAILS ABOUT THE FUND'S INVESTMENT PRACTICES AND POLICIES
Investment Practices
Investment Risks
Investment Policies
APPENDIX: DESCRIPTION OF RATINGS
2
<PAGE> 33
A BRIEF PREVIEW OF THE FUND
WHAT ARE THE GOALS OF ONE GROUP REAL ESTATE FUND?
The Fund is designed to provide current income and long-term growth of capital.
WHAT IS THE FUND'S INVESTMENT STRATEGY?
The Fund normally will invest in equity securities of companies operating in the
real estate industry. The Fund also may invest in debt securities and preferred
stocks which are convertible into common stock, and lend its portfolio
securities.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Equity securities such as those in which the Fund may invest are more volatile
and carry more risk than some other forms of investment. Accordingly, as with
all equity investments, you may lose money by investing in the Fund. The Fund
may invest in derivative securities. These securities may expose the Fund to
special risks. Economic developments affecting the real estate industry will
have a disproportionate impact on the Fund. An investment in the Fund is not a
deposit of Bank One Corporation or its affiliates and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. For more information about risks, please read "More About the Fund" and
"Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Fund currently offers four classes of Shares: Class A, Class B, Class C and
Class I. Class A, Class B and Class C shares are offered to the general public.
Class I shares are offered to institutional investors, including affiliates of
Bank One Corporation and any bank, depository institution, insurance company,
pension plan or other organization authorized to act in fiduciary, advisory,
agency, custodial or similar capacities. The section called "How To Do Business
With One Group Mutual Funds" will provide more information. Class I shares are
not available to Individual Retirement Accounts ("IRA").
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Fund on any day that the Fund is open for
business. Purchase and redemption procedures are explained in greater detail in
"How To Do Business With One Group Mutual Funds." For additional information,
call The One Group Services Company at 1-800-480-4111 or visit One Group Mutual
Fund's web site at www.onegroup.com.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on the last business day of each quarter and
are distributed periodically on the first business day of each quarter. Any
capital gains are distributed at least annually. Distributions are paid in
additional shares of the same class unless you elect to take the payment in
cash. For a more detailed discussion of dividends, see "Dividend Policies."
3
<PAGE> 34
WHO MANAGES THE FUND?
Banc One Investment Advisors Corporation ("Banc One Investment Advisors"), an
indirect subsidiary of Bank One Corporation, serves as the advisor of the Fund.
A more detailed discussion regarding Banc One Investment Advisors, its services
and compensation can be found in the Prospectus under the headings "The Advisor"
and "Shareholder Expenses."
4
<PAGE> 35
ONE GROUP(R) REAL ESTATE FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide current income and long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY
The Fund invests primarily in equity securities of companies operating in the
real estate industry. "Real estate companies" are companies that earn at least
50% of their revenues from the ownership, construction, financing, management,
or sale of commercial, industrial, or residential real estate, or that have at
least 50% of their assets in real estate. These companies include real estate
investment trusts that either own properties or make construction or mortgage
loans, real estate developers, homebuilders, and companies with substantial real
estate holdings. The Fund also may invest in companies whose products and
services are related to the real estate industry, such as building supply
manufacturers, mortgage lenders, or mortgage servicing companies.
PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in equity securities
of companies operating in the real estate industry. These securities include
common stocks, debt securities, and preferred stocks that are convertible to
common stocks. Up to 35% of the Fund's total assets may be invested in U.S.
government securities, other investment grade fixed income securities, cash and
cash equivalents. The Fund also may invest in the securities of foreign issuers.
For a list of all the securities in which the Fund may invest, please read
"Investment Practices."
RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. The Fund also will invest in fixed income securities. The value of
these securities will change in response to interest rate changes and other
factors. This is especially true to the extent that the Fund invests in debt
securities in the lowest investment grade category. Such securities have
speculative characteristics. Because of its exposure to the real estate
industry, economic developments affecting that industry will have a
disproportionate impact on the Fund. Before you invest, please read "More About
the Fund" and "Investment Practices."
FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
5
<PAGE> 36
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS I
- ----------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price) 5.25% none none none
Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds,
as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver)(3) .25% 1.00% 1.00% none
Other Expenses .36% .36% .36% .36%
Total Fund Operating Expenses 1.35% 2.10% 2.10% 1.10%
(after fee waivers)(4)
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you
may be charged separate transaction fees by the Shareholder Servicing
Agent. In addition, a $10.00 sub-minimum account fee may be applicable
and a $7.00 charge will be deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders
may pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. Without the voluntary waiver, 12b-1 fees would be .35% for
Class A shares.
(4) Total Operating Expenses have been revised to reflect fee waivers.
Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.45% for Class A shares.
6
<PAGE> 37
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $66 $93
Class A (without fee waivers) $66 $96
Class B $71 $96
Class C $31 $66
Class I $11 $35
</TABLE>
Assuming no redemption the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $66 $93
Class A (without fee waivers) $66 $96
Class B $21 $66
Class C $21 $66
Class I $11 $35
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
7
<PAGE> 38
ONE GROUP(R) REAL ESTATE FUND Financial Highlights
This section normally would include Financial Highlights for the Fund. Because
the Fund had not begun operations as of June 30, 1999, there are no Financial
Highlights for the Fund.
8
<PAGE> 39
MORE ABOUT THE FUND
PORTFOLIO QUALITY
The Fund only purchases securities that meet certain rating criteria.
o Corporate bonds generally will be rated in one of the three highest
investment grade categories.
o Banc One Investment Advisors reserves the right to invest in corporate
bonds which present attractive opportunities and are rated in the
lowest investment grade category. These corporate bonds may be riskier
than higher rated bonds.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by the One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK CONSIDERATIONS
REAL ESTATE SECURITIES: The Fund generally is subject to the same risks that
affect direct investments in real estate and its performance is closely tied to
conditions affecting the real estate industry. Real estate values rise and fall
in response to a variety of factors, including local, regional and national
economic conditions, the strength of specific industries renting properties, and
other factors affecting supply and demand for properties. When economic growth
is slowing, demand for property decreases and prices may decline. Rising
interest rates, which drive up mortgage and financing costs, can restrain
construction and buying and selling activity and make other investments more
attractive. Property values could decrease because of overbuilding, extended
vacancies, increase in property taxes and operating expenses, changes in zoning
laws, environmental regulations, clean-up of and liability for environmental
hazards, uninsured casualty or condemnation losses, or a general decline in
neighborhood values. The value of securities of companies that service the real
estate industry will also be affected by changes affecting the real estate
market.
DERIVATIVES: The Fund may invest in securities that are considered to be
"derivatives." Derivatives are securities or contracts that derive their value
from the performance of underlying assets or securities. These include:
o options, futures contracts, and options on futures contracts
o warrants
o mortgage-backed securities, including collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and
REMICs) and stripped mortgage-backed (Interest Only (IOs) and Principal
Only (POs))
o asset-backed securities
o swap, cap and floor transactions
o new financial products
These securities may be more volatile than other investments. Derivatives
present, to varying degrees, market, credit, leverage, liquidity, and management
risks. For a more detailed discussion of these risks, please read "Investment
Risks." A Fund's use of derivatives may cause the Fund to recognize higher
amounts of short-term capital gains (generally taxed at ordinary income tax
rates) than it would if the Fund did not use such instruments.
9
<PAGE> 40
INTERNATIONAL INVESTMENTS: Investments in foreign securities involve risks
different from investments in U.S. securities. For more details, see "Investment
Practices" and "Investment Risks." Because of these risk factors, the share
price of a fund investing in foreign securities may be volatile, and you should
be able to sustain sudden, and sometimes substantial, fluctuations in the value
of your investment. On January 1, 1999, the European Economic and Monetary Union
introduced the "Euro." The Euro will serve as a common currency for
participating European nations. All stocks issued by corporations located in
those nations are denominated in Euros. In addition, outstanding shares have
been redenominated in Euros. All government bonds issued by participating
nations will be in Euros, and outstanding government bonds have been
redenominated in Euros. The introduction of the Euro presents some
uncertainties, such as the adequacy of newly created accounting, clearing,
settlement and payment systems for the new currency. These uncertainties
surrounding the introduction of the Euro could adversely affect the value of the
foreign securities held by the Fund.
SMALL CAPITALIZATION COMPANIES: Investments in smaller, younger companies may be
riskier than investments in larger, more established companies. These companies
may be more vulnerable to changes in economic conditions, specific industry
conditions, market fluctuations, and other factors affecting the profitability
of other companies. Because economic events may have a greater impact on smaller
companies, there may be a greater and more frequent fluctuation in their stock
price. This may cause frequent and unexpected increases or decreases in the
value of your investment.
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment. Fixed income securities also are subject to the
risk that the issuer of the security will be unable to meet its repayment
obligation.
NON-DIVERSIFIED FUND: The Fund is "non-diversified." This means that the Fund
may invest a more significant portion of its assets in the securities of a
single issuer than can a "diversified" fund. In addition, the Fund's investments
are concentrated in the real estate industry. This concentration increases the
risk of loss to the Fund by increasing its exposure to economic, business,
political or regulatory developments that may be adverse to the real estate
industry.
10
<PAGE> 41
HOW TO DO BUSINESS WITH ONE GROUP MUTUAL FUNDS
PURCHASING FUND SHARES
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
o The One Group Services Company, and
o Shareholder Servicing Agents. These include investment advisors,
brokers, financial planners, banks, insurance companies, retirement or
401(k) plan sponsors, or other intermediaries. Shares purchased this
way will be held for you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
o Purchases may be made on any business day. This includes any day that
the Fund is open for business, other than weekends, days on which the
New York Stock Exchange ("NYSE") is closed, and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas.
o Purchase requests received by The One Group Services Company before 4
p.m. Eastern Time ("ET") will be effective that day. On occasion, the
NYSE will close before 4 p.m. ET. When that happens, purchase requests
received after the NYSE closes will be effective the following business
day.
o Purchase orders may be cancelled by the Fund's Custodian, State Street
Bank and Trust Company, if it does not receive "federal funds" by 4:00
p.m. ET (i) on the business day after the order is placed if you are
buying Class I shares, and (ii) on the third business day if you are
purchasing Class A, Class B or Class C shares.
o If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase
or redemption order to the Fund. Your Shareholder Servicing Agent may
have an earlier cut-off time for purchase and redemption requests.
o The One Group Services Company can reject a purchase order if it does
not think that it is in the best interests of a Fund and/or its
shareholders to accept the order.
o Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
One Group offers the following classes of shares:
o Class A, Class B and Class C shares are available to the general
public.
o Class I shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or
agency capacity. We will refer to these entities as "Intermediaries."
o If you intend to hold your shares for six or more years, Class B shares
may be more appropriate for you. If you intend to hold your shares for
less than six years, you may want to consider Class A or Class C
shares.
One Group Fund Direct IRA. One Group offers a retirement plan. This plan allows
participants to defer taxes while their retirement savings grow. Call The One
Group Services Company at 1-800-480-4111 for an Adoption Agreement.
11
<PAGE> 42
HOW MUCH DO SHARES COST?
o Shares are sold at net asset value ("NAV") plus a sales charge, if any.
o Each class of shares in each Fund has a different NAV. This is
primarily because each class has different distribution expenses.
o NAV per share is calculated by dividing the total market value of a
Fund's investments and other assets allocable to a class (minus class
expenses) by the number of outstanding shares in that class.
o A Fund's NAV changes every day. NAV is calculated each business day
following the close of the NYSE at 4:00 p.m. ET. On occasion, the NYSE
will close before 4 p.m. ET. When that happens, NAV will be calculated
as of the time the NYSE closes.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully.
2. Decide how much you want to invest.
o The minimum initial investment is $1,000 ($100 for employees
of Bank One Corporation and its affiliates). The minimum
initial investment for an IRA is $250.
o Subsequent investments must be at least $100 ($25 for
employees of Bank One Corporation and its affiliates).
o You may purchase no more than $250,000 of Class B shares at
one time.
o The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of
the Account privileges that you plan to take advantage of. Doing so now
means that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose
to pay by wire or bank transfer) payable to "One Group" to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
Contributions to Fund Direct IRAs should be made payable to "State
Street Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10)
calendar days if purchases are made by check or under the Systematic
Investment Plan (see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may
be required to complete additional forms or follow additional
procedures. You should contact your Shareholder Servicing Agent
regarding purchases, exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or
call The One Group Services Company at 1-800-480-4111.
12
<PAGE> 43
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
o Contact your Shareholder Servicing Agent or The One Group Services
Company at 1-800-480-4111 to relay your purchase instructions.
o Send a personal check made payable to "One Group" to State Street Bank
and Trust Company (see address above), authorize a bank transfer, or
initiate a wire transfer to the following wire address:
State Street Bank and Trust Company
Attn: Custody & Shareholder Services
ABA 011 000 028
DDA 99034167
FBO One Group Fund (ex: One Group Real Estate--A)
Your Account Number (ex: 123456789)
Your Account Registration (ex: John Smith & Mary Smith, JTWROS)
o One Group uses reasonable procedures to confirm that instructions given
by telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these
procedures are followed, One Group will not be responsible for any
loss, liability, cost or expense of acting upon unauthorized or
fraudulent instructions; you bear the risk of loss.
o You may revoke your right to make purchases over the telephone by
sending a letter to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
CAN I AUTOMATICALLY INVEST ON A SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
o Select the "Systematic Investment Plan" option on the Account
Application Form.
o Provide the necessary information about the bank account from which
your investments will be made.
o Shares purchased under a Systematic Investment Plan may not be redeemed
for ten (10) calendar days.
o One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for
debiting your bank account.
o You may revoke your right to make systematic investments by calling The
One Group Services Company at 1-800-480-4111 or by sending a letter to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
CONVERSION FEATURE
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
13
<PAGE> 44
o After conversion, your shares will be subject to the lower distribution
and shareholder servicing fees charged on Class A shares.
o You will not be assessed any sales charges or fees for conversion of
shares, nor will you be subject to any Federal income tax.
o Because the share price of the Class A shares may be higher than that
of the Class B shares at the time of conversion, you may receive fewer
Class A shares; however, the dollar value will be the same.
o If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added
together.
SALES CHARGES
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of One Group. Compensation comes from sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. Occasionally,
The One Group Services Company, at its own expense, also will provide cash
incentives which will be paid to select Shareholder Servicing Agents. Those
Shareholder Servicing Agents who may receive special incentives include Banc One
Securities Corporation, The Advisors Group, United Planners Financial Services
of America, Inc., The Legend Group, and Rosewood Retirement Advisory Services,
LLC. The One Group Services Company pays additional compensation to Shareholder
Servicing Agents for sales of over $1 million dollars of Class A shares.
Shareholder Servicing Agents receive 1.00% of the purchase price of Class A
shares for sales of $1 million to $5 million, and 0.50% on amounts over $5
million.
CLASS A SHARES
This table shows the amount of sales charge you pay and the commissions paid to
Shareholder Servicing Agents.
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE COMMISSION
AS A % OF THE AS A % AS A %
AMOUNT OF PURCHASES OFFERING PRICE OF YOUR INVESTMENT OF OFFERING PRICE
- ------------------- -------------- ------------------ -----------------
<S> <C> <C> <C>
Less than $50,000 5.25% 5.54% 4.75%
$50,000-$99,999 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not
assessed a sales charge at the time of purchase, you will be charged
the equivalent of 1% of the purchase price if you redeem any or all of
the Class A shares within one year of purchase and 0.50% of the
purchase price if you redeem within two years of purchase, unless The
One Group Services Company receives notice before you invest indicating
that your Shareholder Servicing Agent is waiving its commission.
14
<PAGE> 45
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 1.00%
After first year none
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
o The Fund assumes that all purchases made in a given month were made on
the first day of the month.
o The CDSC is based on the current market value or the original cost of
the shares, whichever is less.
o A sales charge is not imposed on increases in NAV above the initial
purchase price, nor is a sales charge assessed on shares acquired
through reinvestment of dividends or capital gains distributions.
o To keep your CDSC as low as possible, the Fund first will redeem any
shares in your account that carry no CDSC, starting with Class A
Shares. After that, the Fund will redeem the shares you have held for
the longest time and thus have the lowest CDSC.
o If you exchange Class B or Class C shares of an unrelated mutual fund
for Class B or Class C shares of One Group in connection with a fund
reorganization, the CDSC applicable to your original shares (including
the period of time you have held those shares) will be applied to One
Group shares you receive in the reorganization.
15
<PAGE> 46
12b-1 FEES
12b-1 fees are paid by One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of One Group.
o The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily
net assets of the Fund, which is currently being waived to
.25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the
average daily net assets of the Fund. This will cause expenses
for Class B and Class C shares to be higher and dividends to
be lower than for Class A shares.
3. There are no 12b-1 fees for Class I shares.
o 12b-1 fees, together with the CDSC, help The One Group Services Company
sell Class B and Class C shares without an "up-front" sales charge by
financing the costs of advancing brokerage commissions and other
expenses paid to Shareholder Servicing Agents.
o The One Group Services Company may use up to .25% of the fees
for shareholder servicing and up to .75% for distribution.
During the last fiscal year, The One Group Services Company
received 12b-1 fees totaling .25% and 1.00% of the average
daily net assets of Class A and Class B shares, respectively.
o The One Group Services Company may pay 12b-1 fees to its
affiliates and to Banc One Investment Advisors and its
affiliates (or any sub-advisor) for brokerage and other agency
transactions.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A,
Class B or Class C shares of a Fund (except a money market fund) that
you (and your spouse and minor children) already own to the amount of
your next Class A purchase for purposes of calculating the sales
charge. An Intermediary also may take advantage of this option.
2. Letter of Intent: With an initial investment of $2,000, you may
purchase Class A shares of one or more funds over the next 13 months
and pay the same sales charge that you would have paid if all shares
were purchased at once. A percentage of your investment will be held in
escrow until the full amount covered by the Letter of Intent has been
invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your investment
representative. To determine if you are eligible for the accumulation privilege,
contact The One Group Services Company at 1-800-480-4111. These programs may be
terminated or amended at any time.
16
<PAGE> 47
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Fund if the shares were:
1. Bought with the reinvestment of dividends and capital gains
distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge
has been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and
their spouses and immediate family members) of:
o One Group.
o BANK ONE CORPORATION and its subsidiaries and affiliates.
o The One Group Services Company and its subsidiaries and
affiliates.
o State Street Bank and Trust Company and its subsidiaries and
affiliates.
o Broker/dealers who have entered into dealer agreements with
One Group and their subsidiaries and affiliates.
o An investment sub-advisor of a fund of One Group and such
sub-advisor's subsidiaries and affiliates.
4. Bought by:
o Affiliates of Bank One Corporation and certain accounts (other
than IRA Accounts) for which an Intermediary acts in a
fiduciary, advisory, agency, custodial or Accounts which
participate in select affinity programs with Bank One
Corporation and its affiliates and subsidiaries.
o Accounts as to which a bank or broker-dealer charges an asset
allocation fee, provided the bank or broker-dealer has an
agreement with The One Group Services Company.
o Certain retirement and deferred compensation plans and trusts
used to fund those plans, including, but not limited to, those
defined in sections 401(a), 403(b) or 457 of the Internal
Revenue Code and "rabbi trusts."
o Shareholder Servicing Agents who have a dealer arrangement
with The One Group Services Company, who place trades for
their own accounts or for the accounts of their clients and
who charge a management, consulting or other fee for their
services, as well as clients of such Shareholder Servicing
Agents who place trades for their own accounts if the accounts
are linked to the master account of such Shareholder Servicing
Agent.
5. Bought with proceeds from the sale of Class I shares of a One Group
Fund or acquired in an exchange of Class I shares of a Fund for Class A
shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund,
including a One Group Fund, for which a sales charge was paid, but only
if the purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee
benefit plan, but only if the purchase is made within 60 days of the
sale or distribution and, at the time of the distribution, the employee
benefit plan had plan assets invested in a One Group Fund.
8. Bought with assets of One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a
party.
17
<PAGE> 48
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Fund:
1. Provided that you withdraw no more than 10% of your account value
annually. You do not have to participate in the Systematic Withdrawal
Plan to take advantage of this waiver.
2. If you buy the shares in connection with certain retirement plans, such
as 401(k) and similar qualified plans.
3. If you are the shareholder (or a joint shareholder), or a participant
or beneficiary of certain retirement plans and you die or become
disabled (as defined by the Tax Code), but only if the redemption is
made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or
other qualifying retirement plan, but only if you are at least age
70-1/2.
5. Exchanged in connection with plans of reorganizations of a Fund, such
as mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class B shares of other One Group Funds.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Fund:
1. Provided that you withdraw no more than 10% of the account value
annually. You do not have to participate in the Systematic Withdrawal
Plan to take advantage of this waiver.
2. If you buy the shares in connection with certain retirement plans, such
as 401(k) and similar qualified plans.
3. If you are the shareholder (or a joint shareholder), or a participant
or beneficiary of certain retirement plans and you die or become
disabled (as defined by the Tax Code), but only if the redemption is
made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or
other qualifying retirement plan, but only if you are at least age
70-1/2.
5. Exchanged in connection with plans of reorganizations of a Fund, such
as mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class C shares of other One Group Funds.
7. If The One Group Services Company receives notice before you invest
indicating that your Shareholder Servicing Agent, due to the type of
account that you have, is waiving its commission.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
18
<PAGE> 49
EXCHANGING FUND SHARES
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
o Class I shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Class I shares of another One Group Fund.
o Class A shares of a Fund may be exchanged for Class I shares of that
Fund or for Class A or Class I shares of another One Group Fund, but
only if you are eligible to purchase those shares.
o Class B shares of a Fund may be exchanged for Class B shares of another
One Group Fund.
o Class C shares of a Fund may be exchanged for Class C shares of another
One Group Fund.
One Group Funds offer a Systematic Exchange Privilege which allows you to
automatically exchange shares of one fund to another on a monthly or quarterly
basis. This privilege is useful in Dollar Cost Averaging. To participate in this
privilege, please select it on your account application. To learn more about it,
please call The One Group Services Company at 1-800-480-4111.
One Group does not charge a fee for this privilege. In addition, One Group may
change the terms and conditions of your exchange privileges upon 60 days written
notice.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
o State Street Bank and Trust Company receives the request by 4:00 p.m.,
ET.
o You have provided One Group with all of the information necessary to
process the exchange.
o You have received a current prospectus of the Fund or Funds in which
you wish to invest.
o You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
o You will pay a sales charge if you own Class I shares of a Fund and you
want to exchange those shares for Class A shares, unless you qualify
for a sales charge waiver (see above).
o You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales
charge applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that
Fund's sales charge and all other sales charges you have already paid.
o If you exchange Class B or Class C shares of a Fund, you will not pay a
sales charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC
of either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares
is carried over to your new shares.
19
<PAGE> 50
ARE EXCHANGES TAXABLE?
Generally:
o An exchange between classes of shares of the same Fund is not taxable
for Federal income tax purposes.
o An exchange between Funds is considered a sale and generally results in
a capital gain or loss for Federal income tax purposes.
o You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short term movements in the market. Therefore:
o To prevent disruptions in the management of the Funds, One Group limits
excessive exchange activity.
o Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH
PERIOD.
o In addition, One Group reserves the right to reject any exchange
request (even those that are not excessive) if the Fund reasonably
believes that the exchange will result in excessive transaction costs
or otherwise adversely affect other shareholders.
REDEEMING FUND SHARES
WHEN CAN I REDEEM SHARES?
You may redeem all or some of your shares on any day that the Fund is open for
business.
o Redemption requests received by The One Group Services Company before
4:00 p.m. ET (or when the NYSE closes) will be effective that day.
HOW DO I REDEEM SHARES?
o Unless you have selected the telephone option on your Account
Application Form, you must send a written redemption request to your
Shareholder Servicing Agent, if applicable, or to State Street Bank and
Trust Company at the following address:
One Group
c/o State Street Bank and Trust Company
P.O. Box 8528
Boston, MA 02266-8528
o All requests for redemptions from IRA accounts must be in writing.
o You may request redemption forms by calling The One Group Services
Company at 1-800-480-4111.
o State Street Bank and Trust Company may require that the signature on
your redemption request be guaranteed by a commercial bank, a member of
a domestic stock exchange, or a member of the Securities Transfer
Association Medallion Program or the Stock Exchange Medallion Program,
unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record;
3. the redemption check is mailed to the shareholder at the
record address; or
20
<PAGE> 51
4. the redemption is payable by wire or bank transfer (ACH) to a
pre-existing bank account.
o On the Account Application Form you may elect to have the redemption
proceeds mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder
Servicing Agent.
o State Street Bank and Trust Company may charge you a wire redemption
fee. The current charge is $7.00.
o Your redemption proceeds will be paid within seven days after receipt
of the redemption request.
WHAT WILL MY SHARES BE WORTH?
o If you own Class A and Class I shares and the Fund receives your
redemption request by 4:00 p.m. ET (or when the NYSE closes), you will
receive that day's NAV.
o If you own Class B or Class C shares and the Fund receives your
redemption request by 4:00 p.m. ET (or when the NYSE closes), you will
receive that day's NAV, minus the amount of any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
o Call your Shareholder Servicing Agent or The One Group Service Company
at 1-800-480-4111 to relay your redemption request.
o Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
o State Street Bank and Trust Company may charge you a wire redemption
fee. The current charge is $7.00.
o One Group uses reasonable procedures to confirm that instructions given
by telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these
procedures are followed, One Group will not be responsible for any
loss, liability, cost or expense of acting upon unauthorized or
fraudulent instructions; you bear the risk of loss.
o REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000, you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
o Select the "Systematic Withdrawal Plan" option on the Account
Application Form.
o Specify the amount you wish to receive and the frequency of the
payments.
o You may designate a person other than yourself as the payee.
o There is no charge for this service.
o If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A
shares while participating in a Systematic Withdrawal Plan.
This is because Class A shares have an up-front sales charge.
21
<PAGE> 52
2. If you own Class B or Class C shares, you or your designated
payee may receive systematic payments provided the payments
are limited to no more than 10% of your account value
annually, measured from the date the redemption request is
received.
3. If you are age 70-1/2, you may elect to receive payments to
the extent that the payment represents a minimum required
distribution from an IRA or other qualifying retirement plan.
4. If the amount of the systematic payment exceeds the income
earned by your account since the previous payment under the
Systematic Withdrawal Plan, payments will be made by redeeming
some of your shares. This will reduce the amount of your
investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
o All redemptions will be for cash.
o If you redeem shares for which you paid by check, and One Group has not
yet received payment on the check, One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been
collected from your bank.
o Because of the high cost of handling small investments, One Group
charges a sub-minimum account fee. Accounts under $1,000 that are not
participating in a Systematic Investment Plan will be assessed an
annual fee of $10.00. The sub-minimum account fee will not apply to IRA
accounts and the accounts of employees of Bank One Corporation and its
affiliates.
o One Group may suspend your ability to redeem when:
1. Trading on the New York Stock Exchange ("NYSE") is restricted.
2. The NYSE is closed (other than weekend and holiday closings).
3. The SEC has permitted a suspension.
4. An emergency exists.
The Statement of Additional Information offers more details about this
process.
o You generally will recognize a gain or loss on a redemption for Federal
income tax purposes. You should talk to your tax advisor before making
a redemption.
22
<PAGE> 53
SHAREHOLDER INFORMATION
VOTING RIGHTS
The Fund does not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change the Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
DIVIDEND POLICIES
DIVIDENDS
The Fund generally declares dividends on the last business day of each quarter.
Dividends are distributed on the first business day of the next quarter. Capital
gains, if any, for the Fund are distributed at least annually.
The Fund pays dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
Dividends payable on Class I shares will be more than those payable on other
classes of shares. This is because Class A, Class B and Class C shares have
higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8528, Boston, MA
02266-8528, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street. You also may change the way you receive dividends
and distributions by calling The One Group Services Company at 1-800-480-4111.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
TAX TREATMENT OF THE FUND
TAX STATUS OF THE FUND
The Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Fund qualifies, as it has in the past, it will pay
no federal income tax on the earnings it distributes to shareholders.
23
<PAGE> 54
TAX TREATMENT OF SHAREHOLDERS
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
(including, for this purpose, the excess of net short-term capital gains over
net long-term capital losses and net capital gains (i.e., the excess of net
long-term capital gains over net short-term capital losses) on at least an
annual basis. Dividends you receive from the Fund, whether reinvested or
received in cash, will be taxable to you. Dividends from a Fund's net investment
income will be taxable as ordinary income and distributions from the Fund's
long-term capital gains will be taxable to you as such, regardless of how long
you have held the shares. Distributions are taxable to you even if they are paid
from income or gains earned by the Fund prior to your investment (and thus were
included in the price you paid).
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid in the previous year.
TAXATION OF RETIREMENT PLANS
Distributions by the Fund to qualified retirement plans generally will not be
taxable. However, if shares are held by a plan that ceases to qualify for
tax-exempt treatment or by an individual who has received shares as a
distribution from a retirement plan, the distributions will be taxable to the
plan or individual as described in "Taxation of Distributions." If you are
considering purchasing shares with qualified retirement plan assets, you should
consult your tax advisor for a more complete explanation of the Federal, state,
local and (if applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Fund provides you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Fund or their shareholders.
24
<PAGE> 55
SHAREHOLDER INQUIRIES
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from One Group. In
addition, One Group will periodically send you proxy statements and other
reports.
25
<PAGE> 56
ORGANIZATION AND MANAGEMENT OF THE FUND
THE FUND
The Fund is a series of One Group Mutual Funds, an open-end management
investment company. One Group currently offers 53 separate Funds. The other
Funds are described in separate prospectuses. The Fund described in this
prospectus is non-diversified. Each Fund of One Group Mutual Funds is supervised
by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Fund. The Trustees
are responsible for making major decisions about the Fund's investment
objectives and policies, but delegate the day-to-day administration of the Fund
to the officers of One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Fund and continuously reviews, supervises and administers the Fund's investment
programs. Banc One Investment Advisors has served as investment advisor to One
Group since 1993. Prior to that time, One Group was advised by affiliates of
Banc One Investment Advisors. In addition to One Group, Banc One Investment
Advisors serves as investment advisor to other mutual funds and individual,
corporate, charitable and retirement accounts. As of March 29, 1999, Banc One
Investment Advisors, an indirect, wholly-owned subsidiary of Bank One
Corporation, managed over $120 billion in assets.
26
<PAGE> 57
As the assets in the Fund increase, the investment advisory fees for the Fund is
reduced as follows:
<TABLE>
<S> <C>
First $1.5 billion .74%
Next $500 million .70%
Thereafter .65%
</TABLE>
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Fund and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Fund's administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives a fee
based on the total assets of One Group. For the first $1.5 billion in One Group
assets, The One Group Services Company receives an annual fee of .20% of each
Fund's average daily net assets. The annual rate declines to .18% on assets up
to $2 billion, and to .16% when assets exceed $2 billion. The fee is calculated
daily and paid monthly. Some One Group funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8528, Boston, MA 02266-8528, or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping, produces and distributes account statements, distributes
dividends, and processes buy and sell requests. As the Fund's custodian, State
Street holds the Fund's assets, settles all portfolio trades and assists in
calculating the Fund's net asset values. Bank One Trust Company, N.A. serves as
sub-custodian in connection with the Funds' securities lending activities under
an agreement with State Street Bank and Trust Company. Bank One Trust Company,
N.A. is paid a fee by the Fund for this service.
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<PAGE> 58
YEAR 2000
Preparing for the Year 2000 is a high priority for One Group. Both The One Group
Services Company and Banc One Investment Advisors have formed dedicated teams to
help them successfully achieve Year 2000 compliance. In addition, these teams
are responsible for assessing the readiness of all other service providers to
One Group. Year 2000 remediation efforts are directed toward both information
technology and non-information technology systems. Non-information technology
systems include elevators, photocopy machines, and facsimile machines, and
should have no significant impact on the delivery of services to One Group.
Banc One Investment Advisors has identified 49 information technology systems
and interfaces that provide service and support to One Group. Each system is
assigned a priority rating: high, medium or low. Systems rated "high" are those
which are essential to the operation of One Group. Each system rated "high" was
scheduled to be Year 2000 compliant by December 31, 1998. All systems will be
tested for compliance throughout 1999.
Many, if not all, of the systems are owned or operated by third party servicers
(for example, One Group's Custodian). Consequently, remediation efforts must be
made by those servicers. Banc One Investment Advisors and The One Group Services
Company have, and will continue to, monitor the remediation progress of the
service providers. This process involves documentation, on-site visits, and
review of remediation plans and test results. Both Banc One Investment Advisors
and The One Group Services Company have budgeted in excess of $700,000 in fiscal
year 1998 and over $1 million in fiscal year 1999 toward the remediation effort
for all systems and interfaces. Neither One Group nor its shareholders will bear
any of the direct remediation expenses.
Neither The One Group Services Company nor Banc One Investment Advisors
currently anticipates that the move to Year 2000 will have a material impact on
their ability to continue to provide the Fund with service at current levels.
Likewise, One Group currently anticipates that the move to Year 2000 will not
have a material impact on its operations.
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<PAGE> 59
DETAILS ABOUT THE FUND'S INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES
The Fund invests in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Fund, as well as the
risks inherent in their use. Equity securities are subject mainly to market
risk. Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. For a more complete discussion, see the Statement of Additional
Information. Following the table is a more complete discussion of risk.
<TABLE>
<CAPTION>
INSTRUMENT RISK TYPE
- ---------- ---------
<S> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, Market
bonds, STRIPS, and CUBES.
TREASURY RECEIPTS: TRS, TIGRs, and CATS. Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities Market
issued by agencies and instrumentalities of Credit
the U.S. Government. These include Ginnie Mae,
Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments Market
with a stated maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by Liquidity
a bank in exchange for the deposit of funds. Credit
Market
COMMON STOCK: Shares of ownership of a company. Market
REPURCHASE AGREEMENTS: The purchase of a security Credit
and the simultaneous commitment to return the Market
security to the seller at an agreed upon price Liquidity
on an agreed upon date. This is treated as a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security Market
and the simultaneous commitment to buy the security Leverage
back at an agreed upon price on an agreed upon
date. This is treated as a borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33 1/3% Credit
of the Fund's total assets. In return the Fund Market
will receive cash, other securities, and/or Leverage
letters of credit as collateral.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Market
Purchase or contract to purchase securities Leverage
at a fixed price for delivery at a future date. Liquidity
Credit
INVESTMENT COMPANY SECURITIES: Shares of other Market
mutual funds, including One Group money market
funds and shares of other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One Investment
Advisors will waive certain fees when investing in funds for which it serves as
investment advisor.
</TABLE>
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<PAGE> 60
<TABLE>
<S> <C>
CONVERTIBLE SECURITIES: Bonds or preferred stock Market
that convert to common stock. Credit
CALL AND PUT OPTIONS: A call option gives the buyer Management
the right to buy, and obligates the seller of the Liquidity
option to sell, a security at a specified price. A Credit
put option gives the buyer the right to sell, and Market
obligates the seller of the option to buy, a security Leverage
at a specified price. The Fund will sell only
covered call and secured put options.
FUTURES AND RELATED OPTIONS: A contract providing Management
for the future sale and purchase of a specified Market
amount of a specified security, class of securities, Credit
or an index at a specified time in the future and Liquidity
at a specified price. Leverage
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled Liquidity
investment vehicles which invest primarily in Management
income producing real estate or real estate Market
related loans or interest. Regulatory
Tax
Pre-payment
BANKERS' ACCEPTANCES: Bills of exchange or time Credit
drafts drawn on and accepted by a commercial bank. Liquidity
Maturities are generally six months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term Credit
promissory notes issued by corporations and other Liquidity
entities. Maturities generally vary from a few Market
days to nine months.
FOREIGN SECURITIES: Stocks issued by foreign companies, Market
as well as commercial paper of foreign issuers Political
and obligations of foreign banks, overseas branches Liquidity
of U.S. banks and supranational entities. Includes Foreign Investment
American Depository Receipts.
RESTRICTED SECURITIES: Securities not registered Liquidity
under the Securities Act of 1933, such as privately Market
placed commercial paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations Credit
with interest rates which are reset daily, weekly, Liquidity
quarterly or some other period and which may be Market
payable to the Fund on demand.
WARRANTS: Securities, typically issued with Market
preferred stock or bonds, that give the holder Credit
the right to buy a proportionate amount of
common stock at a specified price.
PREFERRED STOCK: A class of stock that Market
generally pays a dividend at a specified rate
and has preference over common stock in
the payment of dividends and in liquidation.
</TABLE>
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<PAGE> 61
<TABLE>
<CAPTION>
INSTRUMENT RISK TYPE
- ---------- ---------
<S> <C>
MORTGAGE-BACKED SECURITIES: Debt obligations Pre-payment
secured by real estate loans and pools of loans. Market
These include collateralized mortgage obligations Credit
("CMOs"), Real Estate Mortgage Investment Conduits Regulatory
("REMICs") and Stripped Mortgage-Backed Securities
("SMBS").
CORPORATE DEBT SECURITIES: Corporate bonds and Market
non-convertible debt securities.
ASSET-BACKED SECURITIES: Securities secured by Pre-payment
company receivables, home equity loans, truck and Market
auto loans, leases, credit card receivables and Credit
other securities backed by other types of Regulatory
receivables or other assets.
MORTGAGE DOLLAR ROLLS: A transaction in which Pre-payment
a Fund sells securities for delivery in a current Market
month and simultaneously contracts with the same Regulatory
party to repurchase similar but not identical
securities on a specified future date.
ADJUSTABLE RATE MORTGAGE LOANS ("ARMS"): Loans Pre-payment
in a mortgage pool which provide for a fixed Market
initial mortgage interest rate for a specified Credit
period of time, after which the rate may be Regulatory
subject to periodic adjustments.
SWAPS, CAPS AND FLOORS: A Fund may enter into Management
these transactions to manage its exposure to Credit
changing interest rates and other factors. Swaps Liquidity
involve an exchange of obligations by two Market
parties. Caps and floors entitle a purchaser
to a principal amount from the seller of the
cap or floor to the extent that a specified
index exceeds or falls below a predetermined
interest rate or amount.
NEW FINANCIAL PRODUCTS: New options and futures Management
contracts and other financial products continue Credit
to be developed and the Fund may invest in such Market
options, contracts and products. Liquidity
</TABLE>
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<PAGE> 62
INVESTMENT RISKS
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Fund may fluctuate, as will the value of
your investment in the Fund. Certain investments are more susceptible to these
risk than others.
o CREDIT RISK. The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to
honor a financial obligation. Credit risk is generally higher for
non-investment grade securities. The price and liquidity of a security
can be adversely affected prior to actual default as its credit status
deteriorates and the probability of default rises.
o LEVERAGE RISK. The risk associated with securities or practices that
multiply small index or market movements into large changes in value.
Leverage is often associated with investments in derivatives, but also
may be embedded directly.
o HEDGED. When a derivative (a security whose value is based on
another security or index) is used as a hedge against an opposite
position that the fund also holds, any loss generated by the derivative
should be substantially offset by gains on the hedged investment, and
vice versa. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. Hedges are sometimes subject to imperfect
matching between the derivative and underlying security, and there can
be no assurance that a Fund's hedging transactions will be effective.
o SPECULATIVE. To the extent that a derivative is not used as a
hedge, the fund is directly exposed to the risks of that derivative.
Gains or losses from speculative positions in a derivative may be
substantially greater than the derivative's original cost.
o LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that would normally
prevail in the market. The seller may have to lower the price, sell
other securities instead or forego an investment opportunity, any of
which could have a negative effect on fund management or performance.
This includes the risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in
less advantageous investments.
o MANAGEMENT RISK. The risk that a strategy used by a fund's management
may fail to produce the intended result. This includes the risk that
changes in the value of a hedging instrument will not match those of
the asset being hedged. Incomplete matching can result in unanticipated
risks.
o MARKET RISK. The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably. These fluctuations may
cause a security to be worth less than the price originally paid for
it, or less than it was worth at an earlier time. Market risk may
affect a single issuer, industry, sector of the economy or the market
as a whole. There is also the risk that the current interest rate may
not accurately reflect existing market rates. For fixed income
securities, market risk is largely, but not exclusively, influenced by
changes in interest rates. A rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in
values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments
in foreign securities.
o POLITICAL RISK. The risk of losses attributable to unfavorable
governmental or political actions, seizure of foreign deposits, changes
in tax or trade statutes, and governmental collapse and war.
o FOREIGN INVESTMENT RISK. The risk associated with higher transaction
costs, delayed settlements, currency controls and adverse economic
developments. This also includes the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign currencies may
negatively affect an investment. Adverse changes in exchange rates may
erode or reverse any gains produced by foreign currency denominated
investments and may widen any losses. Exchange rate volatility also my
affect the ability of an issuer to repay U.S. dollar denominated debt,
thereby increasing credit risk.
o PRE-PAYMENT RISK. The risk that the principal repayment of a security
will occur at an unexpected time, especially that the repayment of a
mortgage or asset-backed security occurs either significantly sooner or
later than expected. Changes in pre-payment rates can result in greater
price and yield volatility. Pre-payments generally accelerate when
interest rates decline. When mortgage
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<PAGE> 63
and other obligations are pre-paid, a Fund may have to reinvest in
securities with a lower yield. Further, with early prepayment, a Fund
may fail to recover any premium paid, resulting in an unexpected
capital loss.
o TAX RISK. The risk that the issuer of the securities will fail to
comply with certain requirements of the Internal Revenue Code, which
would cause adverse tax consequences.
o REGULATORY RISK. The risk associated with Federal and state laws which
may restrict the remedies that a lender has when a borrower defaults on
loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor
relief laws, restrictions on "due on sale" clauses, and state usury
laws.
INVESTMENT POLICIES
The Fund's investment objective and the investment policies summarized below are
fundamental. This means that they cannot be changed without the consent of a
majority of the outstanding shares of the Fund. The full text of the fundamental
policies can be found in the Statement of Additional Information.
The Fund may not:
1. Purchase an issuer's securities if as a result more than 25% of its
total assets would be invested in the securities of that issuer. This
restriction applies with respect to 50% of a Fund's total assets. With
respect to the remaining 50% of the Fund's total assets, it may not
purchase an issuer's securities if as a result more than 5% of its
total assets would be invested in the securities of that issuer. This
does not include securities issued or guaranteed by the United States,
its agencies or instrumentalities, and repurchase agreements involving
these securities.
2. Concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group
of industries (except the real estate industry). This does not include
obligations issued or guaranteed by the U.S. government or its agencies
and instrumentalities and repurchase agreements involving such
securities.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) engage in securities
lending.
Additional investment policies can be found in the Statement of Additional
Information.
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<PAGE> 64
TEMPORARY DEFENSIVE POSITION
Sometimes Banc One Investment Advisors decides that the Fund should temporarily
be invested up to 100% in cash and cash equivalents. Cash equivalents include:
o Securities issued by the U.S. Government, its agencies and
instrumentalities
o Repurchase Agreements
o Certificates of Deposit
o Bankers' Acceptances
o Commercial Paper (rated in one of the two highest rating categories)
o Variable Rate Master Demand Notes
o Bank Money Market Deposit Accounts
While the Fund is engaged in a temporary defensive position, it will not be
pursuing its investment objectives. Therefore, the Fund will pursue a temporary
defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Fund and may result in additional tax consequences to you. The portfolio
turnover rate for the Fund is not expected to exceed 50%. To the extent
portfolio turn over results in short-term capital gains, such gains will
generally be taxed at ordinary income tax rates.
34
<PAGE> 65
APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to
alternative sources of funds, is outstanding and safety is
just below risk-free U.S. Treasury obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection
factors. Risk factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet
financial commitment is strong. Obligations designated with a
plus sign (+) indicate that capacity to meet financial
commitment is extremely strong.
A-2 Issues somewhat more susceptible to adverse effects of changes
in circumstances and economic conditions than obligations in
higher rating categories. However, the capacity to meet
financial commitments is satisfactory.
FITCH'S IBCA INC. ("FITCH")
F1 Highest capacity for timely repayment. Those issues rated F1+
possess a particularly strong credit feature.
F2 Satisfactory capacity for timely repayment although such
capacity may be susceptible to adverse changes in business,
economic or financial conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
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<PAGE> 66
A These banks possess exceptional intrinsic financial strength.
Typically they will be major financial institutions with
highly valuable and defensible business franchises, strong
financial fundamentals, and a very attractive and stable
operating environment.
B These banks possess strong intrinsic financial strength.
Typically, they will be important institutions with valuable
and defensible business franchises, good financial
fundamentals, and an attractive and stable operating
environment.
C These banks possess good intrinsic financial strength.
Typically, they will be institutions with valuable and
defensible business franchises. These banks will demonstrate
either acceptable financial fundamentals within a stable
operating environment, or better than average financial
fundamentals within an unstable operating environment.
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
Aaa The highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely
strong.
Aa The obligor's capacity to meet its financial commitments on
the obligation is very strong.
A The obligation is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions
than obligations in higher rated categories. However, the
obligor's capacity to meet its financial commitment on the
obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional
financial security. While the financial strength of these
companies is likely to change, such changes as can be
visualized are most unlikely to impair their fundamentally
strong position.
Aa These insurance companies offer excellent financial security.
Together with the Aaa group, they constitute what are
generally known as high grade companies. They are rated lower
than Aaa companies because long-term risks appear somewhat
larger.
A Insurance companies rated in this category offer good
financial security. However, elements may be present which
suggest a susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's
capacity to meet its financial commitment on the obligation is
extremely strong.
AA The obligor's capacity to meet its financial commitments on
the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
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<PAGE> 67
DESCRIPTION OF CORPORATE BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong
capacity to meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's
capacity to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions
than debt in higher rated categories. However, capacity to
meet its financial commitment on the obligation is still
strong.
BBB Exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to meet its financial
commitment on the obligation.
Non-Investment Grade
BB Less vulnerable to non-payment than other speculative issues.
However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet financial
commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but
currently has the capacity to meet its financial commitment on
the obligation. Adverse business, financial or economic
conditions will likely impair capacity or willingness to meet
its financial commitment on the obligation.
CCC Currently vulnerable to non-payment, and is dependent upon
favorable business, financial, and economic conditions to meet
its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, they are
not likely to have the capacity to meet its financial
commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a
bankruptcy petition has been filed, or similar action has been
taken, but payments on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
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<PAGE> 68
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest
payments are protected by a large, or an exceptionally stable,
margin and principal is secure.
Aa High quality by all standards. Margins of protection may not
be as large as in Aaa securities, fluctuation of protective
elements may be greater, or there may be other elements
present that make the long-term risks appear somewhat larger
than in Aaa securities.
A These bonds possess many favorable investment attributes and
are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa These bonds are considered medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and
principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future.
B These bonds lack the characteristics of a desirable investment
(i.e., potentially low assurance of timely interest and
principal payments or maintenance of other contract terms over
any long period of time may be small).
Caa Bonds in this category have poor standing and may be in
default. These bonds carry an element of danger with respect
to principal and interest payments.
Ca Speculative to a high degree and could be in default or have
other marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within
the universe of preferred stocks.
aa High-grade preferred stock. This rating indicates that there
is a reasonable assurance the earnings and asset protection
will remain relatively well maintained in the foreseeable
future.
a Upper-medium grade preferred stock. While risks are judged to
be somewhat greater than in the "aaa" and "aa" classification,
earnings and asset protection are, nevertheless, expected to
be maintained at adequate levels.
baa Medium-grade preferred stock, neither highly protected nor
poorly secured. Earnings and asset protection appear adequate
at present but may be questionable over any great length of
time.
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<PAGE> 69
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong
capacity to pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay
preferred stock obligations is very strong, although not as
overwhelming as for issues rated "AAA."
A Backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions.
BBB Backed by an adequate capacity to pay the preferred stock
obligations. Whereas the issuer normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
to make payments for a preferred stock in this category than
for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest
will be paid on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal
and interest is strong, the relative degree is not as high as
for issues rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to
adverse developments than obligations with higher ratings,
capacity to service principal and interest in a timely fashion
is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
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<PAGE> 70
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor and Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8528
Boston, MA 02266-8528
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING ONE GROUP(R).
40
<PAGE> 71
ONE GROUP MUTUAL FUNDS
TECHNOLOGY FUND
JULY __, 1999
1
<PAGE> 72
TABLE OF CONTENTS
A BRIEF PREVIEW OF THE FUND
About the Fund
MORE ABOUT THE FUND
HOW TO DO BUSINESS WITH ONE GROUP MUTUAL FUNDS
Purchasing Fund Shares
Sales Charges
Sales Charge Reductions and Waivers
Exchanging Fund Shares
Redeeming Fund Shares
SHAREHOLDER INFORMATION
Voting Rights
Dividend Policies
Tax Treatment of the Fund
Tax Treatment of Shareholders
Shareholder Inquiries
ORGANIZATION AND MANAGEMENT OF THE FUND
The Fund
The Board of Trustees
The Advisor
The Distributor
The Administrator and Sub-Administrator
The Transfer Agent, Custodian and Sub-Custodian
Year 2000
DETAILS ABOUT THE FUND'S INVESTMENT PRACTICES AND POLICIES
Investment Practices
Investment Risks
Investment Policies
APPENDIX: DESCRIPTION OF RATINGS
2
<PAGE> 73
A BRIEF PREVIEW OF THE FUND
WHAT ARE THE GOALS OF ONE GROUP TECHNOLOGY FUND?
The Fund is designed to provide long-term capital growth.
WHAT IS THE FUND'S INVESTMENT STRATEGY?
The Fund normally will invest in equity securities of companies that have
developed, or are expected to develop, products, processes or services that will
provide significant technological advances and improvements, as well as
companies that will benefit significantly from such advances and improvements.
The Fund also may invest in debt securities and preferred stocks which are
convertible into common stock, and lend its portfolio securities.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Equity securities such as those in which the Fund may invest are more volatile
and carry more risk than some other forms of investment. Accordingly, as with
all equity investments, you may lose money by investing in the Fund. The Fund
may invest in derivative securities. These securities may expose the Fund to
special risks. Additionally, because of the Fund's exposure to the technology
sector, economic developments affecting that sector will have a disproportionate
impact on the Fund. An investment in the Fund is not a deposit of Bank One
Corporation or its affiliates and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. For more
information about risks, please read "More About the Fund" and "Investment
Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Fund currently offers four classes of Shares: Class A, Class B, Class C and
Class I. Class A, Class B and Class C shares are offered to the general public.
Class I shares are offered to institutional investors, including affiliates of
Bank One Corporation and any bank, depository institution, insurance company,
pension plan or other organization authorized to act in fiduciary, advisory,
agency, custodial or similar capacities. The section called "How To Do Business
With One Group Mutual Funds" will provide more information. Class I shares are
not available to Individual Retirement Accounts ("IRA").
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Fund on any day that the Fund is open for
business. Purchase and redemption procedures are explained in greater detail in
"How To Do Business With One Group Mutual Funds." For additional information,
call The One Group Services Company at 1-800-480-4111 or visit One Group Mutual
Fund's web site www.onegroup.com.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on the last business day of each quarter and
are distributed periodically on the first business day of each quarter. Any
capital gains are distributed at least annually. Distributions are paid in
additional shares of the same class unless you elect to take the payment in
cash. For a more detailed discussion of dividends, see "Dividend Policies."
3
<PAGE> 74
WHO MANAGES THE FUND?
Banc One Investment Advisors Corporation ("Banc One Investment Advisors"), an
indirect subsidiary of Bank One Corporation, serves as the advisor of the Fund.
A more detailed discussion regarding Banc One Investment Advisors, its services
and compensation can be found in the Prospectus under the headings "The Advisor"
and "Shareholder Expenses."
4
<PAGE> 75
ONE GROUP(R)
TECHNOLOGY FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY
The Fund invests primarily in equity securities of companies that Banc One
Investment Advisors believes have developed, or are expected to develop,
products, processes or services that will provide significant technological
advances and improvements, as well as companies whose processes or services will
benefit from such advances and improvements. These companies may include, for
example, companies that develop, produce or distribute products in the computer,
semi-conductor, electronics, communications, health care, and biotechnology
sectors. In selecting investments, Banc One Investment Advisors searches for
companies, regardless of size, whose stocks appear to be trading below their
true value. The Fund also will invest in companies that are positioned for
accelerated growth or higher earnings. Not all securities purchased by the Fund
will pay dividends.
PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in common and
preferred stocks, rights, warrants, convertible securities, and other equity
securities of companies that develop or benefit from significant technological
advances or improvements. Up to 35% of the Fund's total assets may be invested
in U.S. government securities, other investment grade fixed income securities,
cash and cash equivalents. The Fund also may invest in the securities of foreign
issuers. The Fund also may engage in securities lending. For a list of all the
securities in which the Fund may invest, please read "Investment Practices."
RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. The Fund also will invest in fixed income securities. The value of
these securities will change in response to interest rate changes and other
factors. This is especially true to the extent that the Fund invests in debt
securities in the lowest investment grade category. Such securities have
speculative characteristics. Because of its exposure to the technology industry,
economic developments affecting that industry will have a disproportionate
impact on the Fund. Before you invest, please read "More About the Fund" and
"Investment Practices."
FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
5
<PAGE> 76
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS I
- ----------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price) 5.25% none none none
Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds,
as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Investment Advisory Fees (after fee waiver)(3) .80% .80% .80% .80%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% none
Other Expenses .50% .50% .50% .50%
Total Fund Operating Expenses 1.55% 2.30% 2.30% 1.30%
(after fee waivers)(5)
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you
may be charged separate transaction fees by the Shareholder Servicing
Agent. In addition, a $10.00 sub-minimum account fee may be applicable
and a $7.00 charge will be deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Without the fee waiver, Investment Advisory Fees would be. 1.00% for
all classes of shares.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders
may pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. Without the voluntary waiver, 12b-1 fees would be .35% for
Class A shares.
(5) Total Operating Expenses have been revised to reflect fee waivers.
Without the voluntary reduction of Investment Advisory and 12b-1 fees,
Total Operating Expenses would be 1.85% for Class A shares, 2.50% for
Class B shares, 2.50% for Class C shares, and 1.50% for Class I shares.
6
<PAGE> 77
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $67 $99
Class A (without fee waivers) $70 $108
Class B $73 $102
Class B (without fee waivers) $75 $108
Class C $33 $72
Class C (without fee waivers) $35 $78
Class I $13 $41
Class I (without fee waivers) $15 $47
</TABLE>
Assuming no redemption the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Class A $67 $99
Class A (without fee waivers) $70 $108
Class B $23 $72
Class B (without fee waivers) $25 $78
Class C $23 $72
Class C (without fee waivers) $25 $78
Class I $13 $41
Class I (without fee waivers) $15 $47
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
7
<PAGE> 78
ONE GROUP(R) TECHNOLOGY FUND Financial Highlights
This section normally would include Financial Highlights for the Fund. Because
the Fund had not begun operations as of June 30, 1999, there are no Financial
Highlights for the Fund.
8
<PAGE> 79
MORE ABOUT THE FUND
PORTFOLIO QUALITY
The Fund only purchases securities that meet certain rating criteria.
o Corporate bonds generally will be rated in one of the three highest
investment grade categories.
o Banc One Investment Advisors reserves the right to invest in corporate
bonds which present attractive opportunities and are rated in the
lowest investment grade category. These corporate bonds may be riskier
than higher rated bonds.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by the One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK CONSIDERATIONS
SECURITIES OF TECHNOLOGY COMPANIES: The Fund invests a significant portion of
its assets in the securities of companies in the technology sector. Because of
this focus, the Fund's performance is closely tied to and affected by this
sector. The stock price of technology companies tends to be more volatile than
the stock price of companies in other industries. Competitive pressures also may
have a significant effect on the financial condition of technology-sensitive
companies. For example, if technology continues to advance at an accelerated
rate, and the number of companies and product offerings continues to expand,
increasingly aggressive pricing may affect the profitability of companies in
which the Fund invests. In addition, because of the rapid pace of technological
development, products and services produced by companies in which the Fund
invests may become obsolete or have relatively short product cycles. As a result
the Fund's returns may be considerably more volatile than the returns of other
mutual funds that do not invest in similarly related companies.
DERIVATIVES: The Fund may invest in securities that are considered to be
"derivatives." Derivatives are securities or contracts that derive their value
from the performance of underlying assets or securities. These include:
o options, futures contracts, and options on futures contracts
o warrants
o mortgage-backed securities, including collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and
REMICs) and stripped mortgage-backed (Interest Only (IOs) and Principal
Only (POs))
o asset-backed securities
o swap, cap and floor transactions
o new financial products
These securities may be more volatile than other investments. Derivatives
present, to varying degrees, market, credit, leverage, liquidity, and management
risks. For a more detailed discussion of these risks, please read "Investment
Risks." A Fund's use of derivatives may cause the Fund to recognize higher
amounts of short-term capital gains (generally taxed at ordinary income tax
rates) than it would if the Fund did not use such instruments.
INTERNATIONAL INVESTMENTS: Investments in foreign securities involve risks
different from investments in U.S. securities. For more details, see "Investment
Practices" and "Investment Risks." Because of these risk factors, the share
price of a fund investing in foreign securities may be volatile, and you should
9
<PAGE> 80
be able to sustain sudden, and sometimes substantial, fluctuations in the value
of your investment. On January 1, 1999, the European Economic and Monetary Union
introduced the "Euro." The Euro will serve as a common currency for
participating European nations. All stocks issued by corporations located in
those nations will be denominated in Euros. In addition, outstanding shares have
been redenominated in Euros. All government bonds issued by participating
nations are in Euros, and outstanding government bonds have been redenominated
in Euros. The introduction of the Euro presents some uncertainties, such as the
adequacy of newly created accounting, clearing, settlement and payment systems
for the new currency. These uncertainties surrounding the introduction of the
Euro could adversely affect the value of the foreign securities held by the
Fund.
SMALL CAPITALIZATION COMPANIES: Investments in smaller, younger companies may be
riskier than investments in larger, more established companies. These companies
may be more vulnerable to changes in economic conditions, specific industry
conditions, market fluctuations, and other factors effecting the profitability
of other companies. Because economic events may have a greater impact on smaller
companies, there may be a greater and more frequent fluctuation in their stock
price. This may cause frequent and unexpected increases or decreases in the
value of your investment.
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment. Fixed income securities also are subject to the
risk that the issuer of the security will be unable to meet its repayment
obligation.
NON-DIVERSIFIED FUND: The Fund is "non-diversified." This means that the Fund
may invest a more significant portion of its assets in the securities of a
single issuer than can a "diversified" fund. In addition, the Fund's investments
are concentrated in the technology sector. This concentration increases the risk
of loss to the Fund by increasing its exposure to economic, business, political
or regulatory developments that may be adverse to the technology sector of the
economy.
10
<PAGE> 81
HOW TO DO BUSINESS WITH ONE GROUP MUTUAL FUNDS
PURCHASING FUND SHARES
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
o The One Group Services Company, and
o Shareholder Servicing Agents. These include investment advisors,
brokers, financial planners, banks, insurance companies, retirement or
401(k) plan sponsors, or other intermediaries. Shares purchased this
way will be held for you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
o Purchases may be made on any business day. This includes any day that
the Fund is open for business, other than weekends, days on which the
New York Stock Exchange ("NYSE") is closed, and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas.
o Purchase requests received by The One Group Services Company before 4
p.m. Eastern Time ("ET") will be effective that day. On occasion, the
NYSE will close before 4 p.m. ET. When that happens, purchase requests
received after the NYSE closes will be effective the following business
day.
o Purchase orders may be cancelled by the Fund's Custodian, State Street
Bank and Trust Company, if it does not receive "federal funds" by 4:00
p.m. ET (i) on the business day after the order is placed if you are
buying Class I shares, and (ii) on the third business day if you are
purchasing Class A, Class B or Class C shares.
o If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase
or redemption order to the Fund. Your Shareholder Servicing Agent may
have an earlier cut-off time for purchase and redemption requests.
o The One Group Services Company can reject a purchase order if it does
not think that it is in the best interests of a Fund and/or its
shareholders to accept the order.
o Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
One Group offers the following classes of shares:
o Class A, Class B and Class C shares are available to the general
public.
o Class I shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or
agency capacity. We will refer to these entities as "Intermediaries."
o If you intend to hold your shares for six or more years, Class B shares
may be more appropriate for you. If you intend to hold your shares for
less than six years, you may want to consider Class A or Class C
shares.
One Group Fund Direct IRA. One Group offers a retirement plan. This plan allows
participants to defer taxes while their retirement savings grow. Call The One
Group Services Company at 1-800-480-4111 for an Adoption Agreement.
11
<PAGE> 82
HOW MUCH DO SHARES COST?
o Shares are sold at net asset value ("NAV") plus a sales charge, if any.
o Each class of shares in each Fund has a different NAV. This is
primarily because each class has different distribution expenses.
o NAV per share is calculated by dividing the total market value of a
Fund's investments and other assets allocable to a class (minus class
expenses) by the number of outstanding shares in that class.
o A Fund's NAV changes every day. NAV is calculated each business day
following the close of the NYSE at 4:00 p.m. ET. On occasion, the NYSE
will close before 4 p.m. ET. When that happens, NAV will be calculated
as of the time the NYSE closes.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully.
2. Decide how much you want to invest.
o The minimum initial investment is $1,000 ($100 for employees
of Bank One Corporation and its affiliates). The minimum
initial investment for an IRA is $250.
o Subsequent investments must be at least $100 ($25 for
employees of Bank One Corporation and its affiliates).
o You may purchase no more than $250,000 of Class B shares at
one time.
o The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of
the Account privileges that you plan to take advantage of. Doing so now
means that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose
to pay by wire or bank transfer) payable to "One Group" to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
Contributions to Fund Direct IRAs should be made payable to "State
Street Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10)
calendar days if purchases are made by check or under the Systematic
Investment Plan (see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may
be required to complete additional forms or follow additional
procedures. You should contact your Shareholder Servicing Agent
regarding purchases, exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or
call The One Group Services Company at 1-800-480-4111.
12
<PAGE> 83
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
o Contact your Shareholder Servicing Agent or The One Group Services
Company at 1-800-480-4111 to relay your purchase instructions.
o Send a personal check made payable to "One Group" to State Street Bank
and Trust Company (see address above), authorize a bank transfer, or
initiate a wire transfer to the following wire address:
State Street Bank and Trust Company
Attn: Custody & Shareholder Services
ABA 011 000 028
DDA 99034167
FBO One Group Fund (ex: One Group Technology--A)
Your Account Number (ex: 123456789)
Your Account Registration (ex: John Smith & Mary Smith, JTWROS)
o One Group uses reasonable procedures to confirm that instructions given
by telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these
procedures are followed, One Group will not be responsible for any
loss, liability, cost or expense of acting upon unauthorized or
fraudulent instructions; you bear the risk of loss.
o You may revoke your right to make purchases over the telephone by
sending a letter to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
CAN I AUTOMATICALLY INVEST ON A SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
o Select the "Systematic Investment Plan" option on the Account
Application Form.
o Provide the necessary information about the bank account from which
your investments will be made.
o Shares purchased under a Systematic Investment Plan may not be redeemed
for ten (10) calendar days.
o One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for
debiting your bank account.
o You may revoke your right to make systematic investments by calling The
One Group Services Company at 1-800-480-4111 or by sending a letter to:
State Street Bank and Trust Company
c/o One Group
P.O. Box 8528
Boston, MA 02266-8528
CONVERSION FEATURE
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
13
<PAGE> 84
o After conversion, your shares will be subject to the lower distribution
and shareholder servicing fees charged on Class A shares.
o You will not be assessed any sales charges or fees for conversion of
shares, nor will you be subject to any Federal income tax.
o Because the share price of the Class A shares may be higher than that
of the Class B shares at the time of conversion, you may receive fewer
Class A shares; however, the dollar value will be the same.
o If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added
together.
SALES CHARGES
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of One Group. Compensation comes from sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. Occasionally,
The One Group Services Company, at its own expense, also will provide cash
incentives which will be paid to select Shareholder Servicing Agents. Those
Shareholder Servicing Agents who may receive special incentives include Banc One
Securities Corporation, The Advisors Group, United Planners Financial Services
of America, Inc., The Legend Group, and Rosewood Retirement Advisory Services,
LLC. The One Group Services Company pays additional compensation to Shareholder
Servicing Agents for sales of over $1 million dollars of Class A shares.
Shareholder Servicing Agents receive 1.00% of the purchase price of Class A
shares for sales of $1 million to $5 million, and 0.50% on amounts over $5
million.
CLASS A SHARES
This table shows the amount of sales charge you pay and the commissions paid to
Shareholder Servicing Agents.
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE COMMISSION
AS A % OF THE AS A % AS A %
AMOUNT OF PURCHASES OFFERING PRICE OF YOUR INVESTMENT OF OFFERING PRICE
- ------------------- -------------- ------------------ -----------------
<S> <C> <C> <C>
Less than $50,000 5.25% 5.54% 4.75%
$50,000-$99,999 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not
assessed a sales charge at the time of purchase, you will be charged
the equivalent of 1% of the purchase price if you redeem any or all of
the Class A shares within one year of purchase and 0.50% of the
purchase price if you redeem within two years of purchase, unless The
One Group Services Company receives notice before you invest indicating
that your Shareholder Servicing Agent is waiving its commission.
14
<PAGE> 85
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 1.00%
After first year none
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
o The Fund assumes that all purchases made in a given month were made on
the first day of the month.
o The CDSC is based on the current market value or the original cost of
the shares, whichever is less.
o A sales charge is not imposed on increases in NAV above the initial
purchase price, nor is a sales charge assessed on shares acquired
through reinvestment of dividends or capital gains distributions.
o To keep your CDSC as low as possible, the Fund first will redeem any
shares in your account that carry no CDSC, starting with Class A
Shares. After that, the Fund will redeem the shares you have held for
the longest time and thus have the lowest CDSC.
o If you exchange Class B or Class C shares of an unrelated mutual fund
for Class B or Class C shares of One Group in connection with a fund
reorganization, the CDSC applicable to your original shares (including
the period of time you have held those shares) will be applied to One
Group shares you receive in the reorganization.
15
<PAGE> 86
12b-1 FEES
12b-1 fees are paid by One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of One Group.
o The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily
net assets of the Fund, which is currently being waived to
.25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the
average daily net assets of the Fund. This will cause expenses
for Class B and Class C shares to be higher and dividends to
be lower than for Class A shares.
3. There are no 12b-1 fees for Class I shares.
o 12b-1 fees, together with the CDSC, help The One Group Services Company
sell Class B and Class C shares without an "up-front" sales charge by
defraying the costs of advancing brokerage commissions and other
expenses paid to Shareholder Servicing Agents.
o The One Group Services Company may use up to .25% of the fees
for shareholder servicing and up to .75% for distribution.
During the last fiscal year, The One Group Services Company
received 12b-1 fees totaling .25% and 1.00% of the average
daily net assets of Class A and Class B shares, respectively.
o The One Group Services Company may pay 12b-1 fees to its
affiliates and to Banc One Investment Advisors and its
affiliates (or any sub-advisor) for brokerage and other agency
transactions.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A,
Class B or Class C shares of a Fund (except a money market fund) that
you (and your spouse and minor children) already own to the amount of
your next Class A purchase for purposes of calculating the sales
charge. An Intermediary also may take advantage of this option.
2. Letter of Intent: With an initial investment of $2,000, you may
purchase Class A shares of one or more funds over the next 13 months
and pay the same sales charge that you would have paid if all shares
were purchased at once. A percentage of your investment will be held in
escrow until the full amount covered by the Letter of Intent has been
invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your investment
representative. To determine if you are eligible for the accumulation privilege,
contact The One Group Services Company at 1-800-480-4111. These programs may be
terminated or amended at any time.
16
<PAGE> 87
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Fund if the shares were:
1. Bought with the reinvestment of dividends and capital gains
distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge
has been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and
their spouses and immediate family members) of:
o One Group.
o Bank One Corporation and its subsidiaries and affiliates.
o The One Group Services Company and its subsidiaries and
affiliates.
o State Street Bank and Trust Company and its subsidiaries and
affiliates.
o Broker/dealers who have entered into dealer agreements with
One Group and their subsidiaries and affiliates.
o An investment sub-advisor of a fund of One Group and such
sub-advisor's subsidiaries and affiliates.
4. Bought by:
o Affiliates of Bank One Corporation and certain accounts (other
than IRA Accounts) for which an Intermediary acts in a
fiduciary, advisory, agency, custodial or Accounts which
participate in select affinity programs with Bank One
Corporation and its affiliates and subsidiaries.
o Accounts as to which a bank or broker-dealer charges an asset
allocation fee, provided the bank or broker-dealer has an
agreement with The One Group Services Company.
o Certain retirement and deferred compensation plans and trusts
used to fund those plans, including, but not limited to, those
defined in sections 401(a), 403(b) or 457 of the Internal
Revenue Code and "rabbi trusts."
o Shareholder Servicing Agents who have a dealer arrangement
with The One Group Services Company, who place trades for
their own accounts or for the accounts of their clients and
who charge a management, consulting or other fee for their
services, as well as clients of such Shareholder Servicing
Agents who place trades for their own accounts if the accounts
are linked to the master account of such Shareholder Servicing
Agent.
5. Bought with proceeds from the sale of Class I shares of a One Group
Fund or acquired in an exchange of Class I shares of a Fund for Class A
shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund,
including a One Group Fund, for which a sales charge was paid, but only
if the purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee
benefit plan, but only if the purchase is made within 60 days of the
sale or distribution and, at the time of the distribution, the employee
benefit plan had plan assets invested in a One Group Fund.
8. Bought with assets of One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a
party.
17
<PAGE> 88
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Fund:
1. Provided that you withdraw no more than 10% of your account value
annually. You do not have to participate in the Systematic Withdrawal
Plan to take advantage of this waiver.
2. If you buy the shares in connection with certain retirement plans, such
as 401(k) and similar qualified plans.
3. If you are the shareholder (or a joint shareholder), or a participant
or beneficiary of certain retirement plans and you die or become
disabled (as defined by the Tax Code), but only if the redemption is
made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or
other qualifying retirement plan, but only if you are at least age
70-1/2.
5. Exchanged in connection with plans of reorganizations of a Fund, such
as mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class B shares of other One Group Funds.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Fund:
1. Provided that you withdraw no more than 10% of the account value
annually. You do not have to participate in the Systematic Withdrawal
Plan to take advantage of this waiver.
2. If you buy the shares in connection with certain retirement plans, such
as 401(k) and similar qualified plans.
3. If you are the shareholder (or a joint shareholder), or a participant
or beneficiary of certain retirement plans and you die or become
disabled (as defined by the Tax Code), but only if the redemption is
made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or
other qualifying retirement plan, but only if you are at least age
70-1/2.
5. Exchanged in connection with plans of reorganizations of a Fund, such
as mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class C shares of other One Group Funds.
7. If The One Group Services Company receives notice before you invest
indicating that your Shareholder Servicing Agent, due to the type of
account that you have, is waiving its commission.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
18
<PAGE> 89
EXCHANGING FUND SHARES
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
o Class I shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Class I shares of another One Group Fund.
o Class A shares of a Fund may be exchanged for Class I shares of that
Fund or for Class A or Class I shares of another One Group Fund, but
only if you are eligible to purchase those shares.
o Class B shares of a Fund may be exchanged for Class B shares of another
One Group Fund.
o Class C shares of a Fund may be exchanged for Class C shares of another
One Group Fund.
One Group Funds offer a Systematic Exchange Privilege which allows you to
automatically exchange shares of one fund to another on a monthly or quarterly
basis. This privilege is useful in Dollar Cost Averaging. To participate in this
privilege, please select it on your account application. To learn more about it,
please call The One Group Services Company at 1-800-480-4111.
One Group does not charge a fee for this privilege. In addition, One Group may
change the terms and conditions of your exchange privileges upon 60 days written
notice.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
o State Street Bank and Trust Company receives the request by 4:00 p.m.,
ET.
o You have provided One Group with all of the information necessary to
process the exchange.
o You have received a current prospectus of the Fund or Funds in which
you wish to invest.
o You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
o You will pay a sales charge if you own Class I shares of a Fund and you
want to exchange those shares for Class A shares, unless you qualify
for a sales charge waiver (see above).
o You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales
charge applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that
Fund's sales charge and all other sales charges you have already paid.
o If you exchange Class B or Class C shares of a Fund, you will not pay a
sales charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC
of either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares
is carried over to your new shares.
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<PAGE> 90
ARE EXCHANGES TAXABLE?
Generally:
o An exchange between classes of shares of the same Fund is not taxable
for Federal income tax purposes.
o An exchange between Funds is considered a sale and generally results in
a capital gain or loss for Federal income tax purposes.
o You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short term movements in the market. Therefore:
o To prevent disruptions in the management of the Funds, One Group limits
excessive exchange activity.
o Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH
PERIOD.
o In addition, One Group reserves the right to reject any exchange
request (even those that are not excessive) if the Fund reasonably
believes that the exchange will result in excessive transaction costs
or otherwise adversely affect other shareholders.
REDEEMING FUND SHARES
WHEN CAN I REDEEM SHARES?
You may redeem all or some of your shares on any day that the Fund is open for
business.
o Redemption requests received by The One Group Services Company before
4:00 p.m. ET (or when the NYSE closes) will be effective that day.
HOW DO I REDEEM SHARES?
o Unless you have selected the telephone option on your Account
Application Form, you must send a written redemption request to your
Shareholder Servicing Agent, if applicable, or to State Street Bank and
Trust Company at the following address:
One Group
c/o State Street Bank and Trust Company
P.O. Box 8528
Boston, MA 02266-8528
o All requests for redemptions from IRA accounts must be in writing.
o You may request redemption forms by calling The One Group Services
Company at 1-800-480-4111.
o State Street Bank and Trust Company may require that the signature on
your redemption request be guaranteed by a commercial bank, a member of
a domestic stock exchange, or a member of the Securities Transfer
Association Medallion Program or the Stock Exchange Medallion Program,
unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record;
3. the redemption check is mailed to the shareholder at the
record address; or
4. the redemption is payable by wire or bank transfer (ACH) to a
pre-existing bank account.
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<PAGE> 91
o On the Account Application Form you may elect to have the redemption
proceeds mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder
Servicing Agent.
o State Street Bank and Trust Company may charge you a wire redemption
fee. The current charge is $7.00.
o Your redemption proceeds will be paid within seven days after receipt
of the redemption request.
WHAT WILL MY SHARES BE WORTH?
o If you own Class A and Class I shares and the Fund receives your
redemption request by 4:00 p.m. ET (or when the NYSE closes), you will
receive that day's NAV.
o If you own Class B or Class C shares and the Fund receives your
redemption request by 4:00 p.m. ET (or when the NYSE closes), you will
receive that day's NAV, minus the amount of any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
o Call your Shareholder Servicing Agent or The One Group Service Company
at 1-800-480-4111 to relay your redemption request.
o Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
o State Street Bank and Trust Company may charge you a wire redemption
fee. The current charge is $7.00.
o One Group uses reasonable procedures to confirm that instructions given
by telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these
procedures are followed, One Group will not be responsible for any
loss, liability, cost or expense of acting upon unauthorized or
fraudulent instructions; you bear the risk of loss.
o REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000, you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
o Select the "Systematic Withdrawal Plan" option on the Account
Application Form.
o Specify the amount you wish to receive and the frequency of the
payments.
o You may designate a person other than yourself as the payee.
o There is no charge for this service.
o If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A
shares while participating in a Systematic Withdrawal Plan.
This is because Class A shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated
payee may receive systematic payments provided the payments
are limited to no more than 10% of your account value
annually, measured from the date the redemption request is
received.
21
<PAGE> 92
3. If you are age 70-1/2, you may elect to receive payments to
the extent that the payment represents a minimum required
distribution from an IRA or other qualifying retirement plan.
4. If the amount of the systematic payment exceeds the income
earned by your account since the previous payment under the
Systematic Withdrawal Plan, payments will be made by redeeming
some of your shares. This will reduce the amount of your
investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
o All redemptions will be for cash.
o If you redeem shares for which you paid by check, and One Group has not
yet received payment on the check, One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been
collected from your bank.
o Because of the high cost of handling small investments, One Group
charges a sub-minimum account fee. Accounts under $1,000 that are not
participating in a Systematic Investment Plan will be assessed an
annual fee of $10.00. The sub-minimum account fee will not apply to IRA
accounts and the accounts of employees of BANK ONE CORPORATION and its
affiliates.
o One Group may suspend your ability to redeem when:
1. Trading on the New York Stock Exchange ("NYSE") is restricted.
2. The NYSE is closed (other than weekend and holiday closings).
3. The SEC has permitted a suspension.
4. An emergency exists.
The Statement of Additional Information offers more details about this
process.
o You generally will recognize a gain or loss on a redemption for Federal
income tax purposes. You should talk to your tax advisor before making
a redemption.
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<PAGE> 93
SHAREHOLDER INFORMATION
VOTING RIGHTS
The Fund does not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change the Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
DIVIDEND POLICIES
DIVIDENDS
The Fund generally declares dividends on the last business day of each quarter.
Dividends are distributed on the first business day of the next quarter. Capital
gains, if any, for the Fund is distributed at least annually.
The Fund pays dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
Dividends payable on Class I shares will be more than those payable on other
classes of shares. This is because Class A, Class B and Class C shares have
higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8528, Boston, MA
02266-8528, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street. You also may change the way you receive dividends
and distributions by calling The One Group Services Company at 1-800-480-4111.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
TAX TREATMENT OF THE FUND
TAX STATUS OF THE FUND
The Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Fund qualifies, as it has in the past, it will pay
no federal income tax on the earnings it distributes to shareholders.
TAX TREATMENT OF SHAREHOLDERS
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
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<PAGE> 94
TAXATION OF DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
(including, for this purpose, the excess of net short-term capital gains over
net long-term capital losses and net capital gains (i.e., the excess of net
long-term capital gains over net short-term capital losses) on at least an
annual basis. Dividends you receive from the Fund, whether reinvested or
received in cash, will be taxable to you. Dividends from a Fund's net investment
income will be taxable as ordinary income and distributions from the Fund's
long-term capital gains will be taxable to you as such, regardless of how long
you have held the shares. Distributions are taxable to you even if they are paid
from income or gains earned by the Fund prior to your investment (and thus were
included in the price you paid).
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid in the previous year.
TAXATION OF RETIREMENT PLANS
Distributions by the Fund to qualified retirement plans generally will not be
taxable. However, if shares are held by a plan that ceases to qualify for
tax-exempt treatment or by an individual who has received shares as a
distribution from a retirement plan, the distributions will be taxable to the
plan or individual as described in "Taxation of Distributions." If you are
considering purchasing shares with qualified retirement plan assets, you should
consult your tax advisor for a more complete explanation of the Federal, state,
local and (if applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Fund provides you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Fund or their shareholders.
SHAREHOLDER INQUIRIES
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from One Group. In
addition, One Group will periodically send you proxy statements and other
reports.
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<PAGE> 95
ORGANIZATION AND MANAGEMENT OF THE FUND
THE FUND
The Fund is a series of One Group Mutual Funds, an open-end management
investment company. One Group currently offers of 53 separate Funds. The other
Funds are described in separate prospectuses. The Fund described in this
prospectus is non-diversified. Each Fund of One Group Mutual Funds is supervised
by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Fund. The Trustees
are responsible for making major decisions about the Fund's investment
objectives and policies, but delegate the day-to-day administration of the Fund
to the officers of One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Fund and continuously reviews, supervises and administers the Fund's investment
programs. Banc One Investment Advisors has served as investment advisor to One
Group since 1993. Prior to that time, One Group was advised by affiliates of
Banc One Investment Advisors. In addition to One Group, Banc One Investment
Advisors serves as investment advisor to other mutual funds and individual,
corporate, charitable and retirement accounts. As of March 29, 1999, Banc One
Investment Advisors, an indirect, wholly-owned subsidiary of Bank One
Corporation, managed over $120 billion in assets.
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Fund and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Fund's administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives a fee
based on the total assets of One Group. For the first $1.5 billion in One Group
assets, The One Group Services Company receives an annual fee of .20% of each
Fund's average daily net assets. The annual rate declines to .18% on assets up
to $2 billion, and to .16% when assets exceed $2 billion. The fee is calculated
daily and paid monthly. Some One Group funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8528, Boston, MA 02266-8528, or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statementing, distributes dividends, and processes buy and
sell requests. As the Fund's custodian, State Street holds the Fund's assets,
settles all portfolio trades and assists in calculating the Fund's net asset
values. Bank One Trust Company, N.A. serves as sub-custodian in connection with
the Funds' securities lending activities under an agreement with State Street
Bank and Trust Company. Bank One Trust Company, N.A. is paid a fee by the Fund
for this service.
YEAR 2000
Preparing for the Year 2000 is a high priority for One Group. Both The One Group
Services Company and Banc One Investment Advisors have formed dedicated teams to
help them successfully achieve Year 2000 compliance. In addition, these teams
are responsible for assessing the readiness of all other service providers to
One Group. Year 2000 remediation efforts are directed toward both information
technology and non-information technology systems. Non-information technology
systems include elevators, photocopy machines, and facsimile machines, and
should have no significant impact on the delivery of services to One Group.
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<PAGE> 96
Banc One Investment Advisors has identified 49 information technology systems
and interfaces that provide service and support to One Group. Each system is
assigned a priority rating: high, medium or low. Systems rated "high" are those
which are essential to the operation of One Group. Each system rated "high" was
scheduled to be Year 2000 compliant by December 31, 1998. All systems will be
tested for compliance throughout 1999.
Many, if not all, of the systems are owned or operated by third party servicers
(for example, One Group's Custodian). Consequently, remediation efforts must be
made by those servicers. Banc One Investment Advisors and The One Group Services
Company have, and will continue to, monitor the remediation progress of the
service providers. This process involves documentation, on-site visits, and
review of remediation plans and test results. Both Banc One Investment Advisors
and The One Group Services Company have budgeted in excess of $700,000 in fiscal
year 1998 and over $1 million in fiscal year 1999 toward the remediation effort
for all systems and interfaces. Neither One Group nor its shareholders will bear
any of the direct remediation expenses.
Neither The One Group Services Company nor Banc One Investment Advisors
currently anticipates that the move to Year 2000 will have a material impact on
their ability to continue to provide the Fund with service at current levels.
Likewise, One Group currently anticipates that the move to Year 2000 will not
have a material impact on its operations.
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<PAGE> 97
DETAILS ABOUT THE FUND'S INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES
The Fund invests in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Fund, as well as the
risks inherent in their use. Equity securities are subject mainly to market
risk. Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. For a more complete discussion, see the Statement of Additional
Information. Following the table is a more complete discussion of risk.
<TABLE>
<CAPTION>
INSTRUMENT RISK TYPE
- ---------- ---------
<S> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, Market
bonds, STRIPS, and CUBES.
TREASURY RECEIPTS: TRS, TIGRs, and CATS. Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities Market
issued by agencies and instrumentalities of Credit
the U.S. Government. These include Ginnie Mae,
Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments Market
with a stated maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by Liquidity
a bank in exchange for the deposit of funds. Credit
Market
COMMON STOCK: Shares of ownership of a company. Market
REPURCHASE AGREEMENTS: The purchase of a security Credit
and the simultaneous commitment to return the Market
security to the seller at an agreed upon price Liquidity
on an agreed upon date. This is treated as a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security Market
and the simultaneous commitment to buy the security Leverage
back at an agreed upon price on an agreed upon
date. This is treated as a borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33 1/3% Credit
of the Fund's total assets. In return the Fund Market
will receive cash, other securities, and/or Leverage
letters of credit as collateral.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Market
Purchase or contract to purchase securities Leverage
at a fixed price for delivery at a future date. Liquidity
Credit
INVESTMENT COMPANY SECURITIES: Shares of other Market
mutual funds, including One Group money market
funds and shares of other investment companies
for which Banc One Investment Advisors serves as
investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when
investing in funds for which it serves as
investment advisor.
</TABLE>
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<PAGE> 98
<TABLE>
<S> <C>
CONVERTIBLE SECURITIES: Bonds or preferred stock Market
that convert to common stock. Credit
CALL AND PUT OPTIONS: A call option gives the buyer Management
the right to buy, and obligates the seller of the Liquidity
option to sell, a security at a specified price. A Credit
put option gives the buyer the right to sell, and Market
obligates the seller of the option to buy, a security Leverage
at a specified price. The Fund will sell only
covered call and secured put options.
FUTURES AND RELATED OPTIONS: A contract providing Management
for the future sale and purchase of a specified Market
amount of a specified security, class of securities, Credit
or an index at a specified time in the future and Liquidity
at a specified price. Leverage
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled Liquidity
investment vehicles which invest primarily in Management
income producing real estate or real estate Market
related loans or interest. Regulatory
Tax
Pre-payment
BANKERS' ACCEPTANCES: Bills of exchange or time Credit
drafts drawn on and accepted by a commercial bank. Liquidity
Maturities are generally six months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term Credit
promissory notes issued by corporations and other Liquidity
entities. Maturities generally vary from a few Market
days to nine months.
FOREIGN SECURITIES: Stocks issued by foreign companies, Market
as well as commercial paper of foreign issuers Political
and obligations of foreign banks, overseas branches Liquidity
of U.S. banks and supranational entities. Includes Foreign Investment
American Depository Receipts.
RESTRICTED SECURITIES: Securities not registered Liquidity
under the Securities Act of 1933, such as privately Market
placed commercial paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations Credit
with interest rates which are reset daily, weekly, Liquidity
quarterly or some other period and which may be Market
payable to the Fund on demand.
WARRANTS: Securities, typically issued with Market
preferred stock or bonds, that give the holder Credit
the right to buy a proportionate amount of
common stock at a specified price.
PREFERRED STOCK: A class of stock that Market
generally pays a dividend at a specified rate
and has preference over common stock in
the payment of dividends and in liquidation.
</TABLE>
28
<PAGE> 99
<TABLE>
<CAPTION>
INSTRUMENT RISK TYPE
- ---------- ---------
<S> <C>
MORTGAGE-BACKED SECURITIES: Debt obligations Pre-payment
secured by real estate loans and pools of loans. Market
These include collateralized mortgage obligations Credit
("CMOs"), Real Estate Mortgage Investment Conduits Regulatory
("REMICs") and Stripped Mortgage-Backed Securities
("SMBS").
CORPORATE DEBT SECURITIES: Corporate bonds and Market
non-convertible debt securities.
SWAPS, CAPS AND FLOORS: A Fund may enter into Management
these transactions to manage its exposure to Credit
changing interest rates and other factors. Swaps Liquidity
involve an exchange of obligations by two Market
parties. Caps and floors entitle a purchaser
to a principal amount from the seller of the
cap or floor to the extent that a specified
index exceeds or falls below a predetermined
interest rate or amount.
NEW FINANCIAL PRODUCTS: New options and futures Management
contracts and other financial products continue Credit
to be developed and the Fund may invest in such Market
options, contracts and products. Liquidity
</TABLE>
INVESTMENT RISKS
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Fund may fluctuate, as will the value of
your investment in the Fund. Certain investments are more susceptible to these
risk than others.
o CREDIT RISK. The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to
honor a financial obligation. Credit risk is generally higher for
non-investment grade securities. The price and liquidity of a security
can be adversely affected prior to actual default as its credit status
deteriorates and the probability of default rises.
o LEVERAGE RISK. The risk associated with securities or
practices that multiply small index or market movements into large
changes in value. Leverage is often associated with investments in
derivatives, but also may be embedded directly.
o HEDGED. When a derivative (a security whose value is based on
another security or index) is used as a hedge against an
opposite position that the fund also holds, any loss generated
by the derivative should be substantially offset by gains on
the hedged investment, and vice versa. While hedging can
reduce or eliminate losses, it can also reduce or eliminate
gains. Hedges are sometimes subject to imperfect matching
between the derivative and underlying security, and there can
be no assurance that a Fund's hedging transactions will be
effective.
o SPECULATIVE. To the extent that a derivative is not used as a
hedge, the fund is directly exposed to the risks of that
derivative. Gains or losses from speculative positions in a
derivative may be substantially greater than the derivative's
original cost.
o LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that would normally
prevail in the market. The seller may have to lower the price, sell
other securities instead or forego an investment opportunity, any of
which could have a negative effect on fund management or performance.
This includes the risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in
less advantageous investments.
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o MANAGEMENT RISK. The risk that a strategy used by a fund's management
may fail to produce the intended result. This includes the risk that
changes in the value of a hedging instrument will not match those of
the asset being hedged. Incomplete matching can result in unanticipated
risks.
o MARKET RISK. The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably. These fluctuations may
cause a security to be worth less than the price originally paid for
it, or less than it was worth at an earlier time. Market risk may
affect a single issuer, industry, sector of the economy or the market
as a whole. There is also the risk that the current interest rate may
not accurately reflect existing market rates. For fixed income
securities, market risk is largely, but not exclusively, influenced by
changes in interest rates. A rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in
values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments
in foreign securities.
o POLITICAL RISK. The risk of losses attributable to unfavorable
governmental or political actions, seizure of foreign deposits, changes
in tax or trade statutes, and governmental collapse and war.
o FOREIGN INVESTMENT RISK. The risk associated with higher transaction
costs, delayed settlements, currency controls and adverse economic
developments. This also includes the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign currencies may
negatively affect an investment. Adverse changes in exchange rates may
erode or reverse any gains produced by foreign currency denominated
investments and may widen any losses. Exchange rate volatility also my
affect the ability of an issuer to repay U.S. dollar denominated debt,
thereby increasing credit risk.
o PRE-PAYMENT RISK. The risk that the principal repayment of a security
will occur at an unexpected time, especially that the repayment of a
mortgage or asset-backed security occurs either significantly sooner or
later than expected. Changes in pre-payment rates can result in greater
price and yield volatility. Pre-payments generally accelerate when
interest rates decline. When mortgage and other obligations are
pre-paid, a Fund may have to reinvest in securities with a lower yield.
Further, with early prepayment, a Fund may fail to recover any premium
paid, resulting in an unexpected capital loss.
o TAX RISK. The risk that the issuer of the securities will fail to
comply with certain requirements of the Internal Revenue Code, which
would cause adverse tax consequences.
o REGULATORY RISK. The risk associated with Federal and state laws which
may restrict the remedies that a lender has when a borrower defaults on
loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor
relief laws, restrictions on "due on sale" clauses, and state usury
laws.
INVESTMENT POLICIES
The Fund's investment objective and the investment policies summarized below are
fundamental. This means that they cannot be changed without the consent of a
majority of the outstanding shares of the Fund. The full text of the fundamental
policies can be found in the Statement of Additional Information.
The Fund may not:
1. Purchase an issuer's securities if as a result more than 25% of its
total assets would be invested in the securities of that issuer. This
restriction applies with respect to 50% of a Fund's total assets. With
respect to the remaining 50% of the Fund's total assets, it may not
purchase an issuer's securities if as a result more than 5% of its
total assets would be invested in the securities of that issuer. This
does not include securities issued or guaranteed by the United States,
its agencies or instrumentalities, and repurchase agreements involving
these securities.
2. Concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group
of industries (except the technology sector). This does not include
obligations issued or guaranteed by the U.S. government or its agencies
and instrumentalities and repurchase agreements involving such
securities.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) engage in securities
lending.
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Additional investment policies can be found in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
Sometimes Banc One Investment Advisors decides that the Fund should temporarily
be invested up to 100% in cash and cash equivalents. Cash equivalents include:
o Securities issued by the U.S. Government, its agencies and
instrumentalities
o Repurchase Agreements
o Certificates of Deposit
o Bankers' Acceptances
o Commercial Paper (rated in one of the two highest rating categories)
o Variable Rate Master Demand Notes
o Bank Money Market Deposit Accounts
While the Fund is engaged in a temporary defensive position, it will not be
pursuing its investment objectives. Therefore, the Fund will pursue a temporary
defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Fund and may result in additional tax consequences to you. The portfolio
turnover rate for the Fund is not estimated to exceed 100%. To the extent
portfolio turn over results in short-term capital gains, such gains will
generally be taxed at ordinary income tax rates.
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APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities
unless Banc One Investment Advisors determines that such securities are the
equivalent of investment grade securities. Securities that have received
different ratings from more than one agency are considered investment grade if
at least one agency has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to
alternative sources of funds, is outstanding and safety is
just below risk-free U.S. Treasury obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection
factors. Risk factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet
financial commitment is strong. Obligations designated with a
plus sign (+) indicate that capacity to meet financial
commitment is extremely strong.
A-2 Issues somewhat more susceptible to adverse effects of changes
in circumstances and economic conditions than obligations in
higher rating categories. However, the capacity to meet
financial commitments is satisfactory.
FITCH'S IBCA INC. ("FITCH")
F1 Highest capacity for timely repayment. Those issues rated F1+
possess a particularly strong credit feature.
F2 Satisfactory capacity for timely repayment although such
capacity may be susceptible to adverse changes in business,
economic or financial conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength.
Typically they will be major financial institutions with
highly valuable and defensible business franchises, strong
financial fundamentals, and a very attractive and stable
operating environment.
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B These banks possess strong intrinsic financial strength.
Typically, they will be important institutions with valuable
and defensible business franchises, good financial
fundamentals, and an attractive and stable operating
environment.
C These banks possess good intrinsic financial strength.
Typically, they will be institutions with valuable and
defensible business franchises. These banks will demonstrate
either acceptable financial fundamentals within a stable
operating environment, or better than average financial
fundamentals within an unstable operating environment.
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
Aaa The highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely
strong.
Aa The obligor's capacity to meet its financial commitments on
the obligation is very strong.
A The obligation is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions
than obligations in higher rated categories. However, the
obligor's capacity to meet its financial commitment on the
obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional
financial security. While the financial strength of these
companies is likely to change, such changes as can be
visualized are most unlikely to impair their fundamentally
strong position.
Aa These insurance companies offer excellent financial security.
Together with the Aaa group, they constitute what are
generally known as high grade companies. They are rated lower
than Aaa companies because long-term risks appear somewhat
larger.
A Insurance companies rated in this category offer good
financial security. However, elements may be present which
suggest a susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's
capacity to meet its financial commitment on the obligation is
extremely strong.
AA The obligor's capacity to meet its financial commitments on
the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
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DESCRIPTION OF CORPORATE BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong
capacity to meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's
capacity to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions
than debt in higher rated categories. However, capacity to
meet its financial commitment on the obligation is still
strong.
BBB Exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to meet its financial
commitment on the obligation.
Non-Investment Grade
BB Less vulnerable to non-payment than other speculative issues.
However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet financial
commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but
currently has the capacity to meet its financial commitment on
the obligation. Adverse business, financial or economic
conditions will likely impair capacity or willingness to meet
its financial commitment on the obligation.
CCC Currently vulnerable to non-payment, and is dependent upon
favorable business, financial, and economic conditions to meet
its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, they are
not likely to have the capacity to meet its financial
commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a
bankruptcy petition has been filed, or similar action has been
taken, but payments on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
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MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest
payments are protected by a large, or an exceptionally stable,
margin and principal is secure.
Aa High quality by all standards. Margins of protection may not
be as large as in Aaa securities, fluctuation of protective
elements may be greater, or there may be other elements
present that make the long-term risks appear somewhat larger
than in Aaa securities.
A These bonds possess many favorable investment attributes and
are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa These bonds are considered medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and
principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future.
B These bonds lack the characteristics of a desirable investment
(i.e., potentially low assurance of timely interest and
principal payments or maintenance of other contract terms over
any long period of time may be small).
Caa Bonds in this category have poor standing and may be in
default. These bonds carry an element of danger with respect
to principal and interest payments.
Ca Speculative to a high degree and could be in default or have
other marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within
the universe of preferred stocks.
aa High-grade preferred stock. This rating indicates that there
is a reasonable assurance the earnings and asset protection
will remain relatively well maintained in the foreseeable
future.
a Upper-medium grade preferred stock. While risks are judged to
be somewhat greater than in the "aaa" and "aa" classification,
earnings and asset protection are, nevertheless, expected to
be maintained at adequate levels.
baa Medium-grade preferred stock, neither highly protected nor
poorly secured. Earnings and asset protection appear adequate
at present but may be questionable over any great length of
time.
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S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong
capacity to pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay
preferred stock obligations is very strong, although not as
overwhelming as for issues rated "AAA."
A Backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions.
BBB Backed by an adequate capacity to pay the preferred stock
obligations. Whereas the issuer normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity
to make payments for a preferred stock in this category than
for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest
will be paid on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal
and interest is strong, the relative degree is not as high as
for issues rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to
adverse developments than obligations with higher ratings,
capacity to service principal and interest in a timely fashion
is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
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<PAGE> 107
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor and Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8528
Boston, MA 02266-8528
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING ONE GROUP(R).
37
<PAGE> 108
PART B
Part B of Post Effective Amendment 48 (filed March 12, 1999) to the Trust's
Registration Statement on Form N1-A is incorporated herein by reference.
<PAGE> 109
STATEMENT OF ADDITIONAL INFORMATION
ONE GROUP(R) MUTUAL FUNDS
ONE GROUP U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
(THE "U.S. GOVERNMENT SECURITIES MONEY MARKET FUND")
ONE GROUP TREASURY PRIME MONEY MARKET FUND
(THE "TREASURY PRIME MONEY MARKET FUND")
ONE GROUP REAL ESTATE FUND (THE "REAL ESTATE FUND")
ONE GROUP TECHNOLOGY FUND (THE "TECHNOLOGY FUND")
(EACH A "FUND," AND COLLECTIVELY THE "FUNDS")
JULY ___, 1999
This Statement of Additional Information is not a Prospectus, but supplements
and should be read in conjunction with the Prospectuses dated July ___, 1999.
This Statement of Additional Information is incorporated in its entirety into
each Fund's Prospectus. A copy of each Prospectus is available without charge by
writing to The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio
43219, or by telephoning toll free (800)-480-4111.
<PAGE> 110
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE TRUST.........................................................................................................1
INVESTMENT OBJECTIVES AND POLICIES................................................................................2
ADDITIONAL INFORMATION ON FUND INSTRUMENTS........................................................................2
ASSET-BACKED SECURITIES......................................................................................2
BANK OBLIGATIONS.............................................................................................2
COMMERCIAL PAPER.............................................................................................3
COMMON STOCK.................................................................................................3
CONVERTIBLE SECURITIES.......................................................................................3
FOREIGN INVESTMENTS..........................................................................................3
RISK FACTORS OF FOREIGN INVESTMENTS..........................................................................3
LIMITATIONS ON THE USE OF FOREIGN INVESTMENTS................................................................4
FUTURES AND OPTIONS TRADING..................................................................................4
FUTURES CONTRACTS............................................................................................4
LIMITATIONS ON THE USE OF FUTURES CONTRACTS..................................................................5
RISK FACTORS IN FUTURES TRANSACTIONS.........................................................................6
OPTIONS CONTRACTS............................................................................................7
WRITING (SELLING) COVERED CALLS..............................................................................8
PURCHASING CALL OPTIONS......................................................................................9
PURCHASING PUT OPTIONS.......................................................................................9
SECURED PUTS................................................................................................10
STRADDLES AND SPREADS.......................................................................................10
RISK FACTORS IN OPTIONS TRANSACTIONS........................................................................10
LIMITATIONS ON THE USE OF OPTIONS...........................................................................11
GOVERNMENT SECURITIES.......................................................................................11
HIGH QUALITY INVESTMENTS WITH REGARD TO THE MONEY MARKET FUNDS..............................................11
INVESTMENT COMPANY SECURITIES...............................................................................12
MORTGAGE-RELATED SECURITIES.................................................................................12
LIMITATIONS ON THE USE OF MORTGAGE-BACKED SECURITIES........................................................14
RISKS FACTORS OF MORTGAGE-RELATED SECURITIES................................................................17
NEW FINANCIAL PRODUCTS......................................................................................18
PERCS.......................................................................................................18
PREFERRED STOCK.............................................................................................18
REAL ESTATE INVESTMENT TRUSTS ("REITS").....................................................................19
REPURCHASE AGREEMENTS.......................................................................................19
REVERSE REPURCHASE AGREEMENTS...............................................................................20
RESTRICTED SECURITIES.......................................................................................20
SECURITIES LENDING..........................................................................................21
SWAPS, CAPS AND FLOORS......................................................................................21
TREASURY RECEIPTS...........................................................................................23
U.S. TREASURY OBLIGATIONS...................................................................................23
VARIABLE AND FLOATING RATE INSTRUMENTS......................................................................23
WARRANTS....................................................................................................25
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS..............................................................25
INVESTMENT RESTRICTIONS.....................................................................................26
PORTFOLIO TURNOVER..........................................................................................28
ADDITIONAL TAX INFORMATION CONCERNING ALL FUNDS.............................................................28
ADDITIONAL TAX INFORMATION CONCERNING INTERNATIONAL INVESTMENTS.............................................30
</TABLE>
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<TABLE>
<S> <C>
VALUATION........................................................................................................31
VALUATION OF THE MONEY MARKET FUNDS.........................................................................31
VALUATION OF THE EQUITY FUNDS...............................................................................31
ADDITIONAL INFORMATION REGARDING THE CALCULATION OF PER SHARE NET ASSET VALUE....................................32
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...................................................................32
EXCHANGES...................................................................................................32
REDEMPTIONS.................................................................................................33
MANAGEMENT OF THE TRUST..........................................................................................33
TRUSTEES & OFFICERS.........................................................................................33
INVESTMENT ADVISOR..........................................................................................36
BANC ONE INVESTMENT ADVISORS CORPORATION....................................................................36
GLASS-STEAGALL ACT..........................................................................................37
PORTFOLIO TRANSACTIONS......................................................................................38
ADMINISTRATOR...............................................................................................39
DISTRIBUTOR.................................................................................................40
DISTRIBUTION PLAN...........................................................................................40
CUSTODIAN AND TRANSFER AGENT................................................................................41
EXPERTS.....................................................................................................41
ADDITIONAL INFORMATION...........................................................................................41
DESCRIPTION OF SHARES.......................................................................................41
SHAREHOLDER AND TRUSTEE LIABILITY...........................................................................43
PERFORMANCE.................................................................................................44
CALCULATION OF PERFORMANCE DATA.............................................................................44
MISCELLANEOUS...............................................................................................46
</TABLE>
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THE TRUST
One Group Mutual Funds (the "TRUST") is an open-end management
investment company. The Trust consists of fifty-eight series of units of
beneficial interest ("SHARES") each representing interests in one of fifty-eight
separate investment portfolios ("PORTFOLIOS"). This Statement of Additional
Information provides information about the following four portfolios ("FUNDS"):
Money Market Funds. The U.S. Government Securities Money Market Fund
and the Treasury Prime Money Market Fund (these two Funds being
collectively referred to as the "MONEY MARKET FUNDS"),
Equity Funds. The Real Estate Fund and the Technology Fund (these two
Funds being collectively referred to as the "EQUITY FUNDS"),
DIVERSIFICATION. The Money Market Funds are diversified, as defined under the
Investment Company Act of 1940, as amended (the "1940 ACT"). The Real Estate
Fund and Technology Fund are non-diversified.
SHARE CLASSES. Shares in the Funds (other than the Money Market Funds) are
generally offered in four separate classes: Class I Shares, Class A Shares,
Class B Shares and Class C Shares. The U.S. Government Securities Money Market
Fund and the Treasury Prime Money Market Fund offer Class A Shares, Class C
Shares, Class I Shares and Service Class Shares. Much of the information
contained herein expands upon subjects discussed in the Prospectuses for the
respective Funds. No investment in a particular class of Shares of a Fund should
be made without first reading that Fund's Prospectus.
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<PAGE> 113
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement each Fund's investment objective and
policies as set forth in the respective Prospectus for that Fund.
ADDITIONAL INFORMATION ON FUND INSTRUMENTS
ASSET-BACKED SECURITIES
Asset-backed securities consist of securities secured by company
receivables, home equity loans, truck and auto loans, leases, credit card
receivables and other securities backed by other types of receivables or other
assets. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying debt may be
refinanced or paid off prior to their maturities during periods of declining
interest rates. In that case, a Fund manager may have to reinvest the proceeds
from the securities at a lower rate. Potential market gains on a security
subject to prepayment risk may be more limited than potential market gains on a
comparable security that is not subject to prepayment risk. Under certain
prepayment rate scenarios, a Fund may fail to recoup any premium paid on
asset-backed securities.
BANK OBLIGATIONS
Bank obligations consist of bankers' acceptances, certificates of
deposit, and demand and time deposits.
Bankers' Acceptances are negotiable drafts or bills of exchange
typically drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks and savings and loan associations having, at the time
of investment, total assets in excess of $1 billion (as of the date of their
most recently published financial statements).
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of deposit
will be those of domestic and foreign branches of U.S. commercial banks which
are members of the Federal Reserve System or the deposits of which are insured
by the Federal Deposit Insurance Corporation, and in certificates of deposit of
domestic savings and loan associations the deposits of which are insured by the
Federal Deposit Insurance Corporation if, at the time of purchase, such
institutions have total assets in excess of $1 billion (as of the date of their
most recently published financial statements). Certificates of deposit may also
include those issued by foreign banks outside the United States with total
assets at the time of purchase in excess of the equivalent of $1 billion. The
Funds may also invest in Eurodollar certificates of deposit, which are U.S.
dollar-denominated certificates of deposit issued by branches of foreign and
domestic banks located outside the United States, and Yankee certificates of
deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States. Certain Funds
may also invest in obligations (including banker's acceptances and certificates
of deposit) denominated in foreign currencies (see "Foreign Investments"
herein).
Demand Deposits are funds deposited in a commercial bank or a savings
and loan association which, without prior notice to the bank, may be withdrawn
generally by negotiable draft. Time and demand deposits will be maintained only
at banks or savings and loan associations from which a Fund could purchase
certificates of deposit. Time Deposits are interest-bearing non-negotiable
deposits at a bank or a savings and loan association that have a specific
maturity date. A time deposit earns a specific rate of interest over a definite
period of time. Time deposits cannot be traded on the secondary market and those
exceeding seven days and with a withdrawal penalty are considered to be
illiquid.
COMMERCIAL PAPER
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<PAGE> 114
Commercial paper consists of promissory notes issued by corporations.
Although such notes are generally unsecured, the Funds may also purchase secured
commercial paper. Except as noted below with respect to variable amount master
demand notes, issues of commercial paper normally have maturities of less than
nine months and fixed rates of return. The Funds only purchase commercial paper
that meets the following criteria.
Equity Funds. The Equity Funds may purchase commercial paper consisting
of issues rated at the time of purchase in the highest or second
highest rating category by at least one NRSRO (such as A-2 or better by
S&P, P-2 or better by Moody's or F-2 or better by Fitch) or if unrated,
determined by Banc One Investment Advisors to be of comparable quality.
COMMON STOCK
Common stock represents a share of ownership in a company and usually
carries voting rights and earns dividends. Unlike preferred stock, dividends on
common stock are not fixed but are declared at the discretion of the issuer's
board of directors.
CONVERTIBLE SECURITIES
Convertible securities have characteristics similar to both fixed
income and equity securities. Convertible securities may be issued as bonds or
preferred stock. Because of the conversion feature, the market value of
convertible securities tends to move together with the market value of the
underlying stock. As a result, the Funds' selection of convertible securities is
based, to a great extent, on the potential for capital appreciation that may
exist in the underlying stock. The value of convertible securities is also
affected by prevailing interest rates, the credit quality of the issuer, and any
call provisions.
FOREIGN INVESTMENTS
Some of the Funds may invest in certain obligations or securities of
foreign issuers. Possible investments include equity securities of foreign
entities, obligations of foreign branches of U.S. banks and of foreign banks,
including, without limitation, Eurodollar Certificates of Deposit, Eurodollar
Time Deposits, Eurodollar Banker's Acceptances, Canadian Time Deposits and
Yankee Certificates of Deposits, and investments in Canadian Commercial Paper,
and Europaper. Securities of foreign issuers may include sponsored and
unsponsored American Depository Receipts ("ADRs"). Sponsored ADRs are listed on
the New York Stock Exchange; unsponsored ADRs are not. Therefore, there may be
less information available about the issuers of unsponsored ADRs than the
issuers of sponsored ADRs. Unsponsored ADRs are restricted securities.
RISK FACTORS OF FOREIGN INVESTMENTS
Political and Exchange Risks. Foreign investments may subject a Fund to
investment risks that differ in some respects from those related to
investments in obligations of U.S. domestic issuers. Such risks include
future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible
seizure, nationalization or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source,
greater fluctuations in value due to changes in exchange rates, or the
adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on such
obligations.
Higher Transaction Costs. Foreign investments may entail higher
custodial fees and sales commissions than domestic investments.
Accounting and Regulatory Differences. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in
business practices different from those respecting domestic issuers of
similar securities or obligations. Foreign branches of U.S. banks and
foreign banks are not regulated by U.S. banking authorities and may be
subject to less stringent reserve requirements than those applicable to
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domestic branches of U.S. banks. In addition, foreign banks generally
are not bound by the accounting, auditing, and financial reporting
standards comparable to those applicable to U.S. banks.
Currency Risk. On January 1, 1999, the European Economic and Monetary
Union introduced the "euro." The euro will serve as a common currency
for participating European nations. All stocks issued by corporations
located in those nations will be denominated in euros. In addition,
outstanding shares have been redenominated in euros. All government
bonds issued by participating nations will be in euros, and outstanding
government bonds have been redenominated in euros. The introduction of
the euro presents some uncertainties, such as the adequacy of newly
created accounting, clearing, settlement, and payment systems for the
new currency. These uncertainties could adversely affect the value of
the foreign securities held by the Funds.
LIMITATIONS ON THE USE OF FOREIGN INVESTMENTS . Investments in all
types of foreign obligations or securities will not exceed 25% of the net assets
of the Funds that may invest in such securities.
FUTURES AND OPTIONS TRADING
Some of the Funds may enter into futures contracts, options, options on
futures contracts and stock index futures contracts and options thereon for the
purposes of remaining fully invested, reducing transaction costs, or managing
interest rate risk.
FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase
by another party of a specified amount of a specific security, class of
securities, or an index at a specified future time and at a specified price. A
stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contracts and the price at which the futures contract is
originally struck. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. government agency.
Although most futures contracts by their terms call for actual delivery
and acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery.
Closing out an open futures position is done by taking an opposite position
("buying" a contract which has previously been "sold," or "selling" a contract
previously "purchased") in an identical contract to terminate the position. The
acquisition of put and call options on futures contracts will, respectively,
give a Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period. Brokerage commissions are incurred when a
futures contract is bought or sold.
When making futures trades, the Funds are required to make a good faith
margin deposit in cash or government securities with a broker or custodian to
initiate and maintain open positions in futures contracts. A margin deposit is
intended to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified delivery
date. Minimal initial margin requirements are established by the futures
exchange and may be changed. Brokers may establish deposit requirements which
are higher than the exchange minimums. Initial margin deposits on futures
contracts are customarily set at levels much lower than the prices at which the
underlying securities are purchased and sold, typically ranging upward from less
than 5% of the value of the contract being traded.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to
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and from the futures broker for as long as the contract remains open. The Funds
expect to earn interest income on their margin deposits.
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Funds intend to enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the CFTC if, to the extent that such
futures and options are not for "bona fide hedging purposes" (as defined by the
CFTC), the aggregate initial margin and premiums on such positions (excluding
the amount by which options are in the money) do not exceed 5% of the Fund's
total assets at current value. A Fund, however, may invest more than such amount
for bona fide hedging purposes, and also may invest more than such amount if it
obtains authority to do so from the CFTC without rendering the fund a commodity
pool operator or adversely affecting its status as an investment company for
federal securities laws.
A Fund may buy and sell futures contracts and related options to manage
its exposure to changing interest rates and security prices. When interest rates
are expected to rise or market values of portfolio securities are expected to
fall, a Fund can seek through the sale of futures contracts to offset a decline
in the value of its portfolio securities. When interest rates are expected to
fall or market values are expected to rise, a Fund, through the purchase of such
contracts, can attempt to secure better rates or prices for the Fund than might
later be available in the market when it effects anticipated purchases.
Although techniques other than the sale and purchase of futures
contracts could be used to control the Funds' exposure to market fluctuations,
the use of futures contracts may be a more effective means of managing this
exposure. While the Funds will incur commission expenses in both opening and
closing out futures positions, these costs may be lower than transaction costs
that would be incurred in the purchase and sale of the underlying securities.
A Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying reference
security or index. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market, resulting in an inability to
close a futures position prior to its maturity date. Third, the purchase of a
futures contract involves the risk that a Fund could lose more than the original
margin deposit required to initiate a futures transaction.
LIMITATIONS ON THE USE OF FUTURES CONTRACTS
None of the Funds will enter into futures contract transactions for
purposes other than bona fide hedging purposes to the extent that, immediately
thereafter, the sum of its initial margin deposits and premiums on open
contracts exceeds 5% of the market value of the respective Fund's total assets.
In addition, none of the Equity Funds will enter into futures contracts to the
extent that the value of the futures contracts held would exceed 25% of the
respective Fund's total assets.
The Funds have undertaken to restrict their futures contract trading as
follows: first, the Funds will not engage in transactions in futures contracts
for speculative purposes; second, the Funds will not market themselves to the
public as commodity pools or otherwise as vehicles for trading in the
commodities futures or commodity options markets; third, the Funds will disclose
to all prospective Shareholders the purpose of and limitations on their
commodity futures trading; fourth, the Funds will submit to the CFTC special
calls for information. Accordingly, registration as a commodities pool operator
with the CFTC is not required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the SEC. Under those requirements, where a Fund has a
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long position in a futures contract, it may be required to establish a
segregated account (not with a futures commission merchant or broker) containing
cash or certain liquid assets equal to the purchase price of the contract (less
any margin on deposit). For a short position in futures or forward contracts
held by a Fund, those requirements may mandate the establishment of a segregated
account (not with a futures commission merchant or broker) with cash or certain
liquid assets that, when added to the amounts deposited as margin, equal the
market value of the instruments underlying the futures contracts (but are not
less than the price at which the short positions were established). However,
segregation of assets is not required if a Fund "covers" a long position. For
example, instead of segregating assets, a Fund, when holding a long position in
a futures contract, could purchase a put option on the same futures contract
with a strike price as high or higher than the price of the contract held by the
Fund. In addition, where a Fund takes short positions, or engages in sales of
call options, it need not segregate assets if it "covers" these positions. For
example, where a Fund holds a short position in a futures contract, it may cover
by owning the instruments underlying the contract. The Funds may also cover such
a position by holding a call option permitting it to purchase the same futures
contract at a price no higher than the price at which the short position was
established. Where a Fund sells a call option on a futures contract, it may
cover either by entering into a long position in the same contract at a price no
higher than the strike price of the call option or by owning the instruments
underlying the futures contract. A Fund could also cover this position by
holding a separate call option permitting it to purchase the same futures
contract at a price no higher than the strike price of the call option sold by
the Fund. In certain circumstances, entry into a futures contract that
substantially eliminates risk of loss and the opportunity for gain in an
"appreciated financial position" will also accelerate gain to the Funds.
RISK FACTORS IN FUTURES TRANSACTIONS
Liquidity. Positions in futures contracts may be closed out only on an
exchange which provides a secondary market for such futures. However,
there can be no assurance that a liquid secondary market will exist for
any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, a Fund would continue to be required to make daily cash
payments to maintain the required margin. In such situations, if a Fund
has insufficient cash, it may have to sell portfolio securities to meet
daily margin requirements at a time when it may be disadvantageous to
do so. In addition, a Fund may be required to make delivery of the
instruments underlying futures contracts it holds. The inability to
close options and futures positions also could have an adverse impact
on the ability to effectively hedge such positions. The Funds will
minimize the risk that they will be unable to close out a futures
contract by only entering into futures contracts which are traded on
national futures exchanges and for which there appears to be a liquid
secondary market.
Risk of Loss. The risk of loss in trading futures contracts in some
strategies can be substantial, due both to the low margin deposits
required, and the extremely high degree of leverage involved in futures
pricing. Because the deposit requirements in the futures markets are
less onerous than margin requirements in the securities market, there
may be increased participation by speculators in the futures market
which may also cause temporary price distortions. A relatively small
price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at
the time of purchase, 10% of the value of the futures contract is
deposited as margin, a subsequent 10% decrease in the value of the
futures contract would result in a total loss of the margin deposit,
before any deduction for the transaction costs, if the account were
then closed out. A 15% decrease would result in a loss equal to 150% of
the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess
of the amount invested in the contract. However, because the futures
strategies engaged in by the Funds are only for risk management
purposes, Banc One Investment Advisors does not believe that the Funds
are subject to the risks of loss frequently associated with futures
transactions. Each Fund would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the
underlying financial instrument and sold it after the decline.
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Correlation Risk. Utilization of futures transactions by a Fund
involves the risk of imperfect or no correlation where the securities
underlying futures contracts have different maturities than the
portfolio securities being hedged. It is also possible that a Fund
could lose money on futures contracts and also experience a decline in
value of its portfolio securities. There is also the risk of loss by a
Fund of margin deposits in the event of bankruptcy of a broker with
whom the Fund has an open position in a futures contract or related
option.
Price Fluctuations. Most futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single
trading day. The daily limit establishes the maximum amount that the
price of a futures contract may vary either up or down from the
previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily
limit governs only price movement during a particular trading day and
therefore does not limit potential losses, because the limit may
prevent the liquidation of unfavorable positions. Futures contract
prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.
Some futures strategies, including selling futures, buying puts and
writing covered calls, may reduce a Fund's exposure to price fluctuations. Other
strategies, including buying futures, and buying calls, tend to increase market
exposure. Futures and options may be combined with each other in order to adjust
the risk and return characteristics of the overall portfolio. A Fund expects to
enter into these transactions to manage a return or spread on a particular
investment or portion of its assets, to protect against any increase in the
price of securities a Fund anticipates purchasing at a later date, or for other
risk management strategies.
OPTIONS CONTRACTS
Some of the Funds may use options on securities or futures contracts as
a hedging device. An option gives the buyer of the option the right (but not the
obligation) to purchase a futures contract or security at a specified price
(also called the STRIKE price). A CALL OPTION gives the buyer the "right to
purchase" a security at a specified price (the exercise price) at any time until
a certain date (the expiration date). So long as the obligation of the writer of
a call option continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring the writer to deliver
the underlying security against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by repurchasing an option
identical to that previously sold. To secure the writer's obligation to deliver
the underlying security in the case of a call option, subject to the rules of
the Options Clearing Corporation, a writer is required to deposit in escrow the
underlying security or other assets in accordance with such rules.
A PUT OPTION gives the buyer the right to sell the underlying futures
contract or security. The purchase price of an option is referred to as its
"premium." The seller (or "writer") of a put option must purchase futures
contracts or securities at a strike price if the option is exercised. In the
case of a call option, the seller must sell the futures contract or security in
the underlying futures contract or security at the strike price if the option is
exercised.
A NAKED OPTION is an option written by a party who does not own the
underlying futures contract or security. A COVERED OPTION is an option written
by a party who does own the underlying position. The initial purchase (sale) of
an option is an "opening transaction." In order to close out an option position,
the Fund may enter into a "closing transaction". This involves the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened. A call
option on a futures contract or security is said to be "in-the-money" if the
strike price is below current market levels and "out-of-the-money" if the strike
price is above current market levels. A put option is "in-the-money" if the
strike price is above current market levels, and "out-of-the-money" if the
strike price is below current market levels.
Options have limited life spans, usually tied to the delivery or
settlement date of the underlying futures contract or security. Some options,
however, expire significantly in advance of such dates. An option that is
"out-of-the-money" and not offset by the time it expires becomes worthless. On
certain exchanges "in-the-money"
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options are automatically exercised on their expiration date, but on others
unexercised options simply become worthless after their expiration date. Options
usually trade at a premium (referred to as the "time value" of the option) above
their intrinsic value (the difference between the market price for the
underlying futures contract or equity security and the strike price). As an
option nears its expiration date, the market value and the intrinsic value move
into parity as the time value diminishes.
Increased market volatility generally increases the value of options by
increasing the probability of favorable market swings, putting outstanding
options "in-the-money." Although purchasing options is a limited risk trading
approach, significant losses can be incurred by doing so.
WRITING (SELLING) COVERED CALLS
Some of the Funds may write (sell) covered call options and purchase
options to close out options previously written by the Fund. The Funds' purpose
in writing covered call options is to generate additional premium income. This
premium income will serve to enhance a Fund's total return and will reduce the
effect of any price decline of the security involved in the option. Generally,
the Funds will write covered call options on securities which, in the opinion of
Banc One Investment Advisors, are not expected to make any major price moves in
the near future but which, over the long term, are deemed to be attractive
investments for the Fund. The Funds will write only covered call options. This
means that a Fund will only write a call option on a security which a Fund
already owns.
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each Fund's
investment objectives. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked options, which a Fund will not do), but capable of
enhancing the Fund's total return. When writing a covered call option, a Fund,
in return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, but conversely
retains the risk of loss should the price of the security decline. Unlike one
who owns securities not subject to an option, a Fund has no control over when it
may be required to sell the underlying securities, since it may be assigned an
exercise notice at any time prior to the expiration of its obligation as a
writer. Thus, the security could be "called away" at a price substantially below
the fair market value of the security. If a call option which a Fund has written
expires, a Fund will realize a gain in the amount of the premium; however, such
gain may be offset by a decline in the market value of the underlying security
during the option period. If the call option is exercised, a Fund will realize a
gain or loss from the sale of the underlying security. The security covering the
call will be maintained in a segregated account of the Fund's custodian. The
Funds do not consider a security covered by a call to be "pledged" as that term
is used in each Fund's policy which limits the pledging or mortgaging of its
assets.
The premium received is the market value of an option. The premium each
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, the Fund's Advisor, in determining whether a
particular call option should be written on a particular security, will consider
the reasonableness of the anticipated premium and the likelihood that a liquid
secondary market will exist for those options. The premium received by a Fund
for writing covered call options will be recorded as a liability in the Fund's
statement of assets and liabilities. This liability will be adjusted daily to
the option's current market value, which will be the latest sale price at the
time at which the net asset value per Share of the Fund is computed (close of
the New York Stock Exchange), or, in the absence of such sale, the latest asked
price. The liability will be extinguished upon expiration of the option, the
purchase of an identical option in the closing transaction, or delivery of the
underlying security upon the exercise of the option.
Generally, a Fund, in order to avoid the exercise of an option sold by
it, will be able to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in a Fund's best interest. A closing purchase
transaction consists of a Fund purchasing an option having the same terms as the
option
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sold by a Fund, and has the effect of cancelling a Fund's position as a seller.
The premium which a Fund will pay in executing a closing purchase transaction
may be higher (or lower) than the premium received when the option was sold,
depending in large part upon the relative price of the underlying security at
the time of each transaction. To the extent options sold by a Fund are exercised
and a Fund delivers securities to the holder of a call option, a Fund's turnover
rate will increase, which would cause a Fund to incur additional brokerage
expenses.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security.
Furthermore, effecting a closing transaction will permit a Fund to
write another call option on the underlying security with either a different
exercise price or expiration date or both. If a Fund desires to sell a
particular security from its portfolio on which it has written a call options it
will seek to effect a closing transaction prior to, or concurrently with, the
sale of the security. There is, of course, no assurance that a Fund will be able
to effect such closing transactions at a favorable price. If a Fund cannot enter
into such a transaction, it may be required to hold a security that it might
otherwise have sold, in which case it would continue to be at market risk on the
security. This could result in higher transaction costs. A Fund will pay
transaction costs in connection with the writing of options to close out
previously written options. Such transaction costs are normally higher than
those applicable to purchases and sales of portfolio securities.
Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities at the time the options are written. From time to time, a Fund may
purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such security
from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
PURCHASING CALL OPTIONS
Certain Funds may purchase call options to hedge against an increase in
the price of securities that the Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Fund, as
holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs. These costs will reduce any profit the Fund might
have realized had it bought the underlying security at the time it purchased the
call option. In the event that paying a premium for a call option, together with
a price movement in the underlying security, is such that exercise of the option
would not be profitable to the Fund, loss of the premium may be offset by a
decrease in the acquisition cost of securities by the Fund.
PURCHASING PUT OPTIONS
Certain Funds may also purchase put options to protect their portfolio
holdings in an underlying security against a decline in market value. Such hedge
protection is provided during the life of the put option since the Fund, as
holder of the put option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying security's market
price. For a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, the Fund will reduce
any profit it might otherwise have realized from appreciation of the underlying
security by the premium paid for the put option and by transaction cost.
However, any loss of premium may be offset by an increase in the value of the
Fund's securities.
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WRITING (SELLING) SECURED PUTS
Certain Funds may write secured puts. For the secured put writer,
substantial depreciation in the value of the underlying security would result in
the security being "put to" the writer at the strike price of the option which
may be substantially in excess of the fair market value of the security. If a
secured put option expires unexercised, the writer realizes a gain in the amount
of the premium.
STRADDLES AND SPREADS
Certain Funds also may engage in straddles and spreads. In a straddle
transaction, a Fund either buys a call and a put or sells a call and a put on
the same security. In a spread, the Fund purchases and sells a call or a put.
The Fund will sell a straddle when Banc One Investment Advisors believes the
price of a security will be stable. The Fund will receive a premium on the sale
of the put and the call. A spread permits the Fund to make a hedged investment
that the price of a security will increase or decline.
RISK FACTORS IN OPTIONS TRANSACTIONS
Risk of Loss. When it purchases an option, a Fund runs the risk that it
will lose its entire investment in the option in a relatively short period of
time, unless the Fund exercises the option or enters into a closing sale
transaction with respect to the option during the life of the option. If the
price of the underlying security does not rise (in the case of a call) or fall
(in the case of a put) to an extent sufficient to cover the option premium and
transaction costs, a Fund will lose part or all of its investment in the option.
This contrasts with an investment by a Fund in the underlying securities, since
the Fund may continue to hold its investment in those securities notwithstanding
the lack of a change in price of those securities. In addition, there may be
imperfect or no correlation between the changes in market value of the
securities held by the Funds and the prices of the options.
Judgement of Advisor. The successful use of the options strategies
depends on the ability of Banc One Investment Advisors to assess interest rate
and market movements correctly and to accurately calculate the fair price of the
option. The effective use of options also depends on a Fund's ability to
terminate option positions at times when Banc One Investment Advisors, deems it
desirable to do so. A Fund will take an option position only if Banc One
Investment Advisors believes there is a liquid secondary market for the option,
however, there is no assurance that a Fund will be able to effect closing
transactions at any particular time or at an acceptable price.
Liquidity. If a secondary trading market in options were to become
unavailable, a Fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the market for
particular options or series of options. A marketplace may discontinue trading
of a particular option or options generally. In addition, a market could become
temporarily unavailable if unusual events, such as volume in excess of trading
or clearing capability, were to interrupt normal market operations. A
marketplace may at times find it necessary to impose restrictions on particular
types of options transactions, which may limit a Fund's ability to realize its
profits or limit its losses.
Market Restrictions. Disruptions in the markets for the securities
underlying options purchased or sold by a Fund could result in losses on the
options. If trading is interrupted in an underlying security, the trading of
options on that security is normally halted as well. As a result, a Fund as
purchaser or writer of an option will be unable to close out its positions until
option trading resumes, and it may be faced with losses if trading in the
security reopens at a substantially different price. In addition, the Options
Clearing Corporation ("OCC") or other options markets may impose exercise
restrictions. If a prohibition on exercise is imposed at the time when trading
in the option has also been halted, a Fund as purchaser or writer of an option
will be locked into its position until one of the two restrictions has been
lifted. If a prohibition on exercise remains in effect until an option owned by
a Fund has expired, the Fund could lose the entire value of its option.
Foreign Investment Risks. Special risks are presented by
internationally-traded options. Because of time differences between the United
States and the various foreign countries, and because different holidays are
observed in different countries, foreign option markets may be open for trading
during hours or on days when U.S. markets
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are closed. As a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
LIMITATIONS ON THE USE OF OPTIONS
Each Fund will limit the writing of put and call options to 25% of its
net assets. Some Funds may enter into over-the-counter option transactions.
There will be an active over-the-counter market for such options which will
establish their pricing and liquidity. Broker/Dealers with whom the Trust will
enter into such option transactions shall have a minimum net worth of
$20,000,000.
GOVERNMENT SECURITIES
Obligations of certain agencies and instrumentalities of the U.S.
government, such as the Government National Mortgage Association ("GINNIE MAE")
and the Export-Import Bank, are supported by the full faith and credit of the
U.S. Treasury; others, such as the Federal National Mortgage Association
("FANNIE MAE"), are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations; and still others, such as the
Federal Farm Credit Banks and the Federal Home Loan Mortgage Corporation
("FREDDIE MAC") are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial support
to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. A Fund will invest in the obligations of such
agencies or instrumentalities only when Banc One Investment Advisors believes
that the credit risk with respect thereto is minimal. For information on
mortgage-related securities issued by certain agencies or instrumentalities of
the U.S. government, see "Investment Objectives and Policies--Mortgage-Related
Securities" in this Statement of Additional Information.
HIGH QUALITY INVESTMENTS WITH REGARD TO THE MONEY MARKET FUNDS
The Money Market Funds may invest only in obligations determined by the
Fund's investment Advisor, Banc One Investment Advisors to present minimal
credit risks under guidelines adopted by the Trust's Board of Trustees.
The Treasury Prime Money Market Fund may only invest in U.S. Treasury
bills, notes and other U.S. Treasury obligations issued or guaranteed by the
U.S. government.
The U.S. Government Securities Money Market Fund invest exclusively in
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities, some of which may be subject to repurchase agreements.
With regard to the Money Market Funds, investments will be limited to
those obligations which, at the time of purchase, (i) possess one of the three
highest short-term ratings from an NRSRO in the case of single-rated securities;
or (ii) possess, in the case of multiple-rated securities, one of the three
highest short-term ratings by at least two NRSROs or (iii) do not possess a
rating (i.e., are unrated) but are determined by Banc One Investment Advisors to
be of comparable quality to the rated instruments eligible for purchase by the
Trust under guidelines adopted by the Board of Trustees (collectively, "ELIGIBLE
SECURITIES"). A security that has not received a rating will be deemed to
possess the rating assigned to an outstanding class of the issuer's short-term
debt obligations if determined by Banc One Investment Advisors to be comparable
in priority and security to the obligation selected for purchase by the Trust.
A security subject to a tender or demand feature will be considered an
Eligible Security only if both the demand feature and the underlying security
possess a high quality rating or, if such do not possess a rating, are
determined by Banc One Investment Advisors to be of comparable quality;
provided, however, that where the demand feature would be readily exercisable in
the event of a default in payment of principal or interest on the underlying
security, the obligation may be acquired based on the rating possessed by the
demand feature or, if the demand feature does not possess a rating, a
determination of comparable quality by Banc One Investment Advisors. A security
which at the time of issuance had a maturity exceeding 397 days but, at the time
of purchase, has a
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remaining maturity of 397 days or less, is not considered an Eligible Security
if it does not possess a high quality rating and the long-term rating, if any,
is not within the top three highest rating categories.
Eligible Securities include First-Tier Securities and Second-Tier
Securities. First-Tier Securities include those that possess a rating in the
highest category, in the case of a single-rated security, or at least two
ratings in the highest rating category, in the case of multiple-rated
securities, or, if the securities do not possess a rating, are determined to be
of comparable quality by Banc One Investment Advisors pursuant to the guidelines
adopted by the Board of Trustees. Second-Tier Securities are all other Eligible
Securities.
Each Money Market Fund will not invest more than 5% of its total assets
in the First Tier Securities of any one issuer (as defined by or permitted under
Rule 2a-7). In addition, each Fund may not invest more than 5% of its total
assets in Second Tier Securities, with investment in the Second Tier Securities
of any one issuer further limited to the greater of 1% of the Fund's total
assets or $1 million. If a percentage limitation is satisfied at the time of
purchase, a later increase in such percentage resulting from a change in the
Fund's net asset value or a subsequent change in a security's qualification as a
First Tier or Second Tier Security will not constitute a violation of the
limitation. In addition, there is no limit on the percentage of a Fund's assets
that may be invested in obligations issued or guaranteed by the U.S. government,
its agencies, or instrumentalities and, with respect to each Money Market Fund
(other than the Treasury Prime Money Market Fund), repurchase agreements fully
collateralized by such obligations.
Under the guidelines adopted by the Trust's Board of Trustees and in
accordance with Rule 2a-7 under the 1940 Act, Banc One Investment Advisors may
be required to promptly dispose of an obligation held in a Fund's portfolio in
the event of certain developments that indicate a diminishment of the
instrument's credit quality, such as where an NRSRO downgrades an obligation
below the second highest rating category, or in the event of a default relating
to the financial condition of the issuer.
A rating by an NRSRO may be utilized only where the NRSRO is neither
controlling, controlled by, or under common control with the issuer of, or any
issuer, guarantor, or provider of credit support for, the instrument.
INVESTMENT COMPANY SECURITIES
Some of the Funds may invest up to 5% of their total assets in the
securities of any one investment company (another mutual fund), but may not own
more than 3% of the outstanding securities of any one investment company or
invest more than 10% of their total assets in the securities of other investment
companies. Other investment company securities may include securities of a money
market fund of the Trust, and securities of other investment companies for which
Banc One Investment Advisors serves as investment advisor or administrator.
Because other investment companies employ an investment advisor, such
investments by the Funds may cause Shareholders to bear duplicate fees. Banc One
Investment Advisors will waive its fee attributable to the assets of the
investing fund invested in a money market fund of the Trust and in other funds
advised by Banc One Investment Advisors; and, to the extent required by the laws
of any state in which shares of the Trust are sold, Banc One Investment Advisors
will waive its fees attributable to the assets of any Fund invested in any
investment company.
MORTGAGE-RELATED SECURITIES
MORTGAGE-BACKED SECURITIES (CMOS AND REMICS). Certain of the Funds may
invest in mortgage-backed securities including collateralized mortgage
obligations ("CMOS") and Real Estate Mortgage Investment Conduits ("REMICS").
Mortgage-backed securities represent pools of mortgage loans assembled for sale
to investors by various governmental agencies such as Ginnie Mae and
government-related organizations such as Fannie Mae and Freddie Mac, as well as
by nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies. Such
non-governmental mortgage securities cannot be treated as U.S. government
securities for purposes of investment policies. A REMIC is a CMO that qualifies
for special tax treatment under the Code and invests in certain mortgages
principally secured by interests in real property and other permitted
investments.
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There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue.
Ginnie Mae Securities. Mortgage-related securities issued by Ginnie Mae
include Ginnie Mae Mortgage Pass-Through Certificates which are guaranteed as to
the timely payment of principal and interest by Ginnie Mae and such guarantee is
backed by the full faith and credit of the United States. Ginnie Mae is a
wholly-owned U.S. government corporation within the Department of Housing and
Urban Development. Ginnie Mae certificates also are supported by the authority
of Ginnie Mae to borrow funds from the U.S. Treasury to make payments under its
guarantee.
Fannie Mae Securities. Mortgage-related securities issued by Fannie Mae
include Fannie Mae Guaranteed Mortgage Pass-Through Certificates which are
solely the obligations of Fannie Mae and are not backed by or entitled to the
full faith and credit of the United States. Fannie Mae is a government-sponsored
organization owned entirely by private stock-holders. Fannie Mae Certificates
are guaranteed as to timely payment of the principal and interest by Fannie Mae.
Freddie Mac Securities. Mortgage-related securities issued by Freddie
Mac include Freddie Mac Mortgage Participation Certificates. Freddie Mac is a
corporate instrumentality of the United States, created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks.
Freddie Mac Certificates are not guaranteed by the United States or by
any Federal Home Loan Banks and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. Freddie Mac Certificates entitle
the holder to timely payment of interest, which is guaranteed by Freddie Mac.
Freddie Mac guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. When Freddie Mac does not
guarantee timely payment of principal, Freddie Mac may remit the amount due on
account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after it
becomes payable.
CMOs and guaranteed REMIC pass-through certificates ("REMIC
CERTIFICATES") issued by Fannie Mae, Freddie Mac, Ginnie Mae and private issuers
are types of multiple class pass-through securities. Investors may purchase
beneficial interests in REMICs, which are known as "regular" interests or
"residual" interests. The Funds do not currently intend to purchase residual
interests in REMICs. The REMIC Certificates represent beneficial ownership
interests in a REMIC Trust, generally consisting of mortgage loans or Fannie
Mae, Freddie Mac or Ginnie Mae guaranteed mortgage pass-through certificates
(the "MORTGAGE ASSETS"). The obligations of Fannie Mae, Freddie Mac or Ginnie
Mae under their respective guaranty of the REMIC Certificates are obligations
solely of Fannie Mae, Freddie Mac or Ginnie Mae, respectively.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient funds are otherwise available.
For Freddie Mac REMIC Certificates, Freddie Mac guarantees the timely
payment of interest, and also guarantees the payment of principal as payments
are required to be made on the underlying mortgage participation certificates
("PCs"). PCs represent undivided interests in specified residential mortgages or
participation therein purchased by Freddie Mac and placed in a PC pool. With
respect to principal payments on PCs, Freddie Mac generally guarantees ultimate
collection of all principal of the related mortgage loans without offset or
deduction. Freddie Mac also guarantees timely payment of principal on certain
PCs referred to as "Gold PCs."
Ginnie Mae REMIC Certificates guarantee the full and timely payment of
interest and principal on each class of securities (in accordance with the terms
of those classes as specified in the related offering circular supplement). The
Ginnie Mae guarantee is backed by the full faith and credit of the United States
of America.
REMIC Certificates issued by Fannie Mae, Freddie Mac and Ginnie Mae are
treated as U.S. government
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securities for purposes of investment policies. CMOs and REMIC Certificates
provide for the redistribution of cash flow to multiple classes. Each class of
CMOs or REMIC Certificates, often referred to as a "tranches," is issued at a
specific adjustable or fixed interest rate and must be fully retired no later
than its final distribution date. This reallocation of interest and principal
results in the redistribution of prepayment risk across to different classes.
This allows for the creation of bonds with more or less risk than the underlying
collateral exhibits. Principal prepayments on the mortgage loans or the Mortgage
Assets underlying the CMOs or REMIC Certificates may cause some or all of the
classes of CMOs or REMIC Certificates to be retired substantially earlier than
their final distribution dates. Generally, interest is paid or accrues on all
classes of CMOs or REMIC Certificates on a monthly basis.
The principal of and interest on the Mortgage Assets may be allocated
among the several classes of CMOs or REMIC Certificates in various ways. In
certain structures (known as "sequential pay" CMOs or REMIC Certificates),
payments of principal, including any principal prepayments, on the Mortgage
Assets generally are applied to the classes of CMOs or REMIC Certificates in the
order of their respective final distribution dates. Thus, no payment of
principal will be made on any class of sequential pay CMOs or REMIC Certificates
until all other classes having an earlier final distribution date have been paid
in full.
Additional structures of CMOs and REMIC Certificates include, among
others, "parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC
Certificates are those which are structured to apply principal payments and
prepayments of the Mortgage Assets to two or more classes concurrently on a
proportionate or disproportionate basis. These simultaneous payments are taken
into account in calculating the final distribution date of each class.
A wide variety of REMIC Certificates may be issued in the parallel pay
or sequential pay structures. These securities include accrual certificates
(also known as "Z-BONDS"), which only accrue interest at a specified rate until
all other certificates having an earlier final distribution date have been
retired and are converted thereafter to an interest-paying security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
Certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC Certificates (the
"PAC CERTIFICATES"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount of principal payable on the next payment date. The
PAC Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying Mortgage Assets. These tranches tend to have market prices and
yields that are much more volatile than the PAC classes. The Z-Bonds in which
the Funds may invest may bear the same non-credit- related risks as do other
types of Z-Bonds. Z-Bonds in which the Fund may invest will not include residual
interest.
LIMITATIONS ON THE USE OF MORTGAGE-BACKED SECURITIES
Equity Funds. The Equity Funds may invest in mortgage-backed securities
issued by private issuers including Guaranteed CMOs and REMIC
pass-through Securities that are rated in one of the four highest
rating categories by at least one NRSRO at the time of investment or,
if unrated, determined by Banc One Investment Advisors to be of
comparable quality.
Money Market Funds. The Money Market Funds may only invest in
mortgage-backed securities issued or guaranteed by the U.S. government,
or its agencies or instrumentalities. With respect to the Money Market
Funds, mortgage-backed securities must be rated in one of the three
highest rating categories by at least one NRSRO at the time of
investment or, if unrated, determined by Banc One Investment Advisors
to be of comparable quality.
MORTGAGE DOLLAR ROLLS. Some of the Funds may enter into Mortgage Dollar
Rolls in which the Funds sell securities for delivery in the current month and
simultaneously contract with the same counterparty to repurchase
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similar (same type, coupon and maturity) but not identical securities on a
specified future date. When a Fund enters into mortgage dollar rolls, the Fund
will hold and maintain a segregated account until the settlement date, cash or
liquid, high grade debt securities in an amount equal to the forward purchase
price. The Funds benefit to the extent of any difference between the price
received for the securities sold and the lower forward price for the future
purchase (often referred to as the "drop") or fee income plus the interest
earned on the cash proceeds of the securities sold until the settlement date of
the forward purchase. Unless such benefits exceed the income, capital
appreciation and gain or loss due to mortgage prepayments that would have been
realized on the securities sold as part of the mortgage dollar roll, the use of
this technique will diminish the investment performance of the Funds compared
with what such performance would have been without the use of mortgage dollar
rolls. The benefits derived from the use of mortgage dollar rolls may depend
upon Banc One Investment Advisors' ability to predict correctly mortgage
prepayments and interest rates. There is no assurance that mortgage dollar rolls
can be successfully employed. The Funds currently intend to enter into mortgage
dollar rolls that are accounted for as a financing transaction. For purposes of
diversification and investment limitations, mortgage dollar rolls are considered
to be mortgage-backed securities.
STRIPPED MORTGAGE BACKED SECURITIES. Stripped Mortgage Backed
Securities ("SMBS") are derivative multi-class mortgage securities. SMBS are
usually structured with two classes that receive different proportions of the
interest and principal distributions from a pool of mortgage assets. A common
type of SMBS will have one class receiving all of the interest from the mortgage
assets ("IOS"), while the other class will receive all of the principal ("POS").
Mortgage IOs receive monthly interest payments based upon a notional amount that
declines over time as a result of the normal monthly amortization and
unscheduled prepayments of principal on the associated mortgage POs.
In addition to the risks applicable to Mortgage-Related Securities in
general, SMBS are extremely sensitive to changes in prepayments and interest
rates. Even though such securities have been guaranteed by an agency or
instrumentality of the U.S. government, under certain interest rate or
prepayment rate scenarios, the Funds may fail to fully recover their investment
in such securities. Changes in prepayment rates can cause the return on
investment in IOs to be highly volatile, and under extremely high prepayment
conditions IOs can incur significant losses. POs are bought at a discount to the
ultimate principal repayment value. The rate of return on a PO will vary with
prepayments, rising as prepayment increase and falling as prepayments decrease.
The market value of the class consisting entirely of principal payments
generally is unusually volatile in response to changes in interest rates. The
yields on a class of SMBS that receives all or most of the interest from
mortgage assets are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more volatile
and there is a greater risk that any premium paid will not be fully recouped.
Banc One Investment Advisors will seek to manage these risks (and potential
benefits) by investing in a variety of such securities and by using certain
analytical and hedging.
The Equity Funds may invest in SMBS to enhance revenues or hedge
against interest rate risk. The Funds may only invest in SMBS issued or
guaranteed by the U.S. government, its agencies or instrumentalities. Although
the market for SMBS is increasingly liquid, certain SMBS may not be readily
marketable and will be considered illiquid for purposes of the Funds'
limitations on investments in illiquid securities.
ADJUSTABLE RATE MORTGAGE LOANS. The Real Estate Fund may invest in
adjustable rate mortgage loans ("ARMS"). ARMs eligible for inclusion in a
mortgage pool will generally provide for a fixed initial mortgage interest rate
for a specified period of time. Thereafter, the interest rates (the "MORTGAGE
INTEREST RATES") may be subject to periodic adjustment based on changes in the
applicable index rate (the "INDEX RATE"). The adjusted rate would be equal to
the Index Rate plus a gross margin, which is a fixed percentage spread over the
Index Rate established for each ARM at the time of its origination.
Adjustable interest rates can cause payment increases that some
borrowers may find difficult to make. However, certain ARMs may provide that the
Mortgage Interest Rate may not be adjusted to a rate above an applicable
lifetime maximum rate or below an applicable lifetime minimum rate for such ARM.
Certain ARMs may also be subject to limitations on the maximum amount by which
the Mortgage Interest Rate may adjust for any single adjustment period (the
"MAXIMUM ADJUSTMENT"). Other ARMs ("NEGATIVELY AMORTIZING
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ARMS") may provide instead or as well for limitations on changes in the monthly
payment on such ARMs. Limitations on monthly payments can result in monthly
payments which are greater or less than the amount necessary to amortize a
Negatively Amortizing ARM by its maturity at the Mortgage Interest Rate in
effect in any particular month. In the event that a monthly payment is not
sufficient to pay the interest accruing on a Negatively Amortizing ARM, any such
excess interest is added to the principal balance of the loan, causing negative
amortization and will be repaid through future monthly payments. It may take
borrowers under Negatively Amortizing ARMs longer periods of time to achieve
equity and may increase the likelihood of default by such borrowers. In the
event that a monthly payment exceeds the sum of the interest accrued at the
applicable Mortgage Interest Rate and the principal payment which would have
been necessary to amortize the outstanding principal balance over the remaining
term of the loan, the excess (or "accelerated amortization") further reduces the
principal balance of the ARM. Negatively Amortizing ARMs do not provide for the
extension of their original maturity to accommodate changes in their Mortgage
Interest Rate. As a result, unless there is a periodic recalculation of the
payment amount (which there generally is), the final payment may be
substantially larger than the other payments. These limitations on periodic
increases in interest rates and on changes in monthly payment protect borrowers
from unlimited interest rate and payment increases.
Certain adjustable rate mortgage loans may provide for periodic
adjustments of scheduled payments in order to amortize fully the mortgage loan
by its stated maturity. Other adjustable rate mortgage loans may permit their
stated maturity to be extended or shortened in accordance with the portion of
each payment that is applied to interest as affected by the periodic interest
rate adjustments.
There are two main categories of indices which provide the basis for
rate adjustments on ARMs: those based on U.S. Treasury securities and those
derived from a calculated measure such as a cost of funds index or a moving
average of mortgage rates. Commonly utilized indices include the one-year,
three-year and five-year constant maturity Treasury bill rates, the three-month
Treasury bill rate, the 180-day Treasury bill rate, rates on longer-term
Treasury securities, the 11th District Federal Home Loan Bank Cost of Funds, the
National Median Cost of Funds, the one-month, three-month, six-month or one-year
London Interbank Offered Rate ("LIBOR"), the prime rate of a specific bank, or
commercial paper rates. Some indices, such as the one-year constant maturity
Treasury rate, closely mirror changes in market interest rate levels. Others,
such as the 11th District Federal Home Loan Bank Cost of Funds index, tend to
lag behind changes in market rate levels and tend to be somewhat less volatile.
The degree of volatility in the market value of the Fund's portfolio and
therefore in the net asset value of the Fund's shares will be a function of the
length of the interest rate reset periods and the degree of volatility in the
applicable indices.
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In general, changes in both prepayment rates and interest rates will
change the yield on Mortgage-Backed Securities. The rate of principal
prepayments with respect to ARMs has fluctuated in recent years. As is the case
with fixed mortgage loans, ARMs may be subject to a greater rate of principal
prepayments in a declining interest rate environment. For example, if prevailing
interest rates fall significantly, ARMs could be subject to higher prepayment
rates than if prevailing interest rates remain constant because the availability
of fixed rate mortgage loans at competitive interest rates may encourage
mortgagors to refinance their ARMs to "lock-in" a lower fixed interest rate.
Conversely, if prevailing interest rates rise significantly, ARMs may prepay at
lower rates than if prevailing rates remain at or below those in effect at the
time such ARMs were originated. As with fixed rate mortgages, there can be no
certainty as to the rate of prepayments on the ARMs in either stable or changing
interest rate environments. In addition, there can be no certainty as to whether
increases in the principal balances of the ARMs due to the addition of deferred
interest may result in a default rate higher than that on ARMs that do not
provide for negative amortization. Other factors affecting prepayment of ARMs
include changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgage properties and servicing decisions.
RISKS FACTORS OF MORTGAGE-RELATED SECURITIES
Guarantor Risk. There can be no assurance that the U.S. government
would provide financial support to Fannie Mae, Freddie Mac or Ginnie Mae if
necessary in the future. Although certain mortgage-related securities are
guaranteed by a third party or otherwise similarly secured, the market value of
the security, which may fluctuate, is not so secured.
Interest Rate Sensitivity. If a Fund purchases a mortgage- related
security at a premium, that portion may be lost if there is a decline in the
market value of the security whether resulting from changes in interest rates or
prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages and, therefore, it is not possible to
predict accurately the security's return to the Funds. In addition, regular
payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return the Funds
will receive when these amounts are reinvested.
Market Value. The market value of the Fund's adjustable rate
Mortgage-Backed Securities may be adversely affected if interest rates increase
faster than the rates of interest payable on such securities or by the
adjustable rate mortgage loans underlying such securities. Furthermore,
adjustable rate Mortgage-Backed Securities or the mortgage loans underlying such
securities may contain provisions limiting the amount by which rates may be
adjusted upward and downward and may limit the amount by which monthly payments
may be increased or decreased to accommodate upward and downward adjustments in
interest rates.
Prepayments. Although having less risk of decline during periods of
rising interest rates, adjustable rate Mortgage-Backed Securities have less
potential for capital appreciation than fixed rate Mortgage-Backed Securities
because their coupon rates will decline in response to market interest rate
declines. The market value of fixed rate Mortgage-Backed Securities may be
adversely affected as a result of increases in interest rates and, because of
the risk of unscheduled principal prepayments, may benefit less than other fixed
rate securities of similar maturity from declining interest rates. Finally, to
the extent Mortgage-Backed Securities are purchased at a premium, mortgage
foreclosures and unscheduled principal prepayments may result in some loss of
the Fund's principal investment to the extent of the premium paid. On the other
hand, if such securities are purchased at a discount, both a scheduled payment
of principal and an unscheduled prepayment of principal will increase current
and total returns and will accelerate the recognition of income.
Yield Characteristics. The yield characteristics of Mortgage-Backed
Securities differ from those of traditional fixed income securities. The major
differences typically include more frequent interest and principal payments,
usually monthly, and the possibility that prepayments of principal may be made
at any time. Prepayment
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rates are influenced by changes in current interest rates and a variety of
economic, geographic, social and other factors and cannot be predicted with
certainty. As with fixed rate mortgage loans, adjustable rate mortgage loans may
be subject to a greater prepayment rate in a declining interest rate
environment. The yields to maturity of the Mortgage-Backed Securities in which
the Funds invest will be affected by the actual rate of payment (including
prepayments) of principal of the underlying mortgage loans. The mortgage loans
underlying such securities generally may be prepaid at any time without penalty.
In a fluctuating interest rate environment, a predominant factor affecting the
prepayment rate on a pool of mortgage loans is the difference between the
interest rates on the mortgage loans and prevailing mortgage loan interest rates
(giving consideration to the cost of any refinancing). In general, if mortgage
loan interest rates fall sufficiently below the interest rates on fixed rate
mortgage loans underlying mortgage pass-through securities, the rate of
prepayment would be expected to increase. Conversely, if mortgage loan interest
rates rise above the interest rates on the fixed rate mortgage loans underlying
the mortgage pass-through securities, the rate of prepayment may be expected to
decrease.
NEW FINANCIAL PRODUCTS
New options and futures contracts and other financial products, and
various combinations thereof, continue to be developed and certain of the Funds
may invest in any such options, contracts and products as may be developed to
the extent consistent with each Fund's investment objective, policies and
restrictions and the regulatory requirements applicable to investment companies.
These various products may be used to adjust the risk and return
characteristics of each Fund's investments. These various products may increase
or decrease exposure to security prices, interest rates, commodity prices, or
other factors that affect security values, regardless of the issuer's credit
risk. If market conditions do not perform consistent with expectations, the
performance of each Fund would be less favorable than it would have been if
these products were not used. In addition, losses may occur if counterparties
involved in transactions do not perform as promised. These products may expose
the Fund to potentially greater return as well as potentially greater risk of
loss than more traditional fixed income investments.
PERCS*
The Equity Funds may invest in Preferred Equity Redemption Cumulative
Stock ("PERCS") which is a form of convertible preferred stock that actually has
more of an equity component than it does fixed income characteristics. These
instruments permit companies to raise capital via a surrogate for common equity.
PERCS are preferred stock which convert to common stock after a specified period
of time, usually three years, and are considered the equivalent of equity by the
ratings agencies. Issuers pay holders a substantially higher dividend yield than
that on the underlying common stock, and in exchange, the holder's appreciation
is capped, usually at about 30 percent. The PERC is mandatorily convertible into
common stock, but is callable at any time at an initial call price that reflects
a substantial premium to the stock's issue price. The call price declines daily
in an amount that reflects the incremental dividend that holders enjoy. PERCS
are listed on an exchange where the common stock is listed.
*PERCS is a registered trademark of Morgan Stanley, which does not
sponsor and is in no way affiliated with One Group.
PREFERRED STOCK
Preferred stock is a class of stock that generally pays dividends at a
specified rate and has preference over common stock in the payment of dividends
and liquidation. Preferred stock generally does not carry voting rights. As with
all equity securities, the price of preferred stock fluctuates based on changes
in a company's financial condition and on overall market and economic
conditions.
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REAL ESTATE INVESTMENT TRUSTS ("REITS")
Certain of the Funds may invest in equity interests or debt obligations
issued by REITs. REITs are pooled investment vehicles which invest primarily in
income producing real estate or real estate related loans or interest. REITs are
generally classified as equity REITs, mortgage REITs or a combination of equity
and mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling property that has appreciated in
value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. Similar to
investment companies, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Code. A Fund will
indirectly bear its proportionate share of expenses incurred by REITs in which a
Fund invests in addition to the expenses incurred directly by a Fund.
Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax free pass-through of income under the Code and failing to
maintain their exemption from registration under the Act.
REITs (especially mortgage REITs) are also subject to interest rate
risks. When interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investment in such loans will gradually
align themselves to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investment in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks included in the S&P
Index of 500 Common Stocks.
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, a Fund would acquire
securities from a seller, subject to the seller's agreement to repurchase such
securities at a mutually agreed-upon date and price. The repurchase price would
generally equal the price paid by the Fund plus interest negotiated on the basis
of current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller under a repurchase agreement will be
required to maintain the value of collateral held pursuant to the agreement at
not less than the repurchase price (including accrued interest).
If the seller were to default on its repurchase obligation or become
insolvent, the Fund holding such obligation would suffer a loss to the extent
that the proceeds from a sale of the underlying portfolio securities were less
than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Fund were delayed pending court action.
Additionally, there is no controlling legal precedent under U.S. law and there
may be no controlling legal precedents under the laws of certain foreign
jurisdictions confirming that a Fund would be entitled, as against a claim by
such seller or its receiver or trustee in bankruptcy, to retain the underlying
securities, although (with respect to repurchase agreements subject to U.S. law)
the Board of Trustees of the Trust believes that, under the regular procedures
normally in effect for custody of a Fund's securities subject to repurchase
agreements and under federal laws, a court of competent jurisdiction would rule
in favor of the Trust if presented with the question. Securities subject to
repurchase agreements will be held by the Trust's custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system. Repurchase
agreements are considered by the SEC to be loans by a Fund under the 1940 Act.
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Repurchase Agreement Counterparties. Repurchase counterparties include
Federal Reserve member banks with assets in excess of $1 billion and registered
broker dealers which Banc One Investment Advisors.
REVERSE REPURCHASE AGREEMENTS
Funds may borrow money for temporary purposes by entering into reverse
repurchase agreements. Pursuant to such agreements, a Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed-upon date and price. A Fund would enter
into reverse repurchase agreements only to avoid otherwise selling securities
during unfavorable market conditions to meet redemptions. At the time a Fund
entered into a reverse repurchase agreement, it would place in a segregated
custodial account assets, such as cash or liquid securities consistent with the
Fund's investment restrictions and having a value equal to the repurchase price
(including accrued interest), and would subsequently monitor the account to
ensure that such equivalent value was maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which the Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered by the SEC to be
borrowings by a Fund under the 1940 Act.
RESTRICTED SECURITIES
Some of the Funds may invest in commercial paper issued in reliance on
the exemption from registration afforded by Section 4(2) of the Securities Act
of 1933 and other restricted securities. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally sold
to institutional investors, such as the Funds, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, thus
providing liquidity. The Funds believe that Section 4(2) commercial paper and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Funds intend,
therefore, to treat restricted securities that meet the liquidity criteria
established by the Board of Trustees, including Section 4(2) commercial paper
and Rule 144A Securities, as determined by Banc One Investment Advisors, as
liquid and not subject to the investment limitation applicable to illiquid
securities.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a SEC Staff position set forth in the
adopting release for Rule 144A under the Securities Act of 1933 ("RULE 144A").
Rule 144A is a nonexclusive safe-harbor for certain secondary market
transactions involving securities subject to restrictions on resale under
federal securities laws. Rule 144A provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional buyers.
Rule 144A was expected to further enhance the liquidity of the secondary market
for securities eligible for resale. The Funds believe that the Staff of the SEC
has left the question of determining the liquidity of all restricted securities
to the Trustees. The Trustees have directed Banc One Investment Advisors to
consider the following criteria in determining the liquidity of certain
restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security
and the number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace
trades.
Certain Section 4(2) commercial paper programs cannot rely on Rule 144A
because, among other things, they were established before the adoption of the
rule. However, the Trustees may determine for purposes of the
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Trust's liquidity requirements that an issue of 4(2) commercial paper is liquid
if the following conditions, which are set forth in a 1994 SEC no-action letter,
are met:
o The 4(2) paper must not be traded flat or in default as to
principal or interest;
o The 4(2) paper must be rated in one of the two highest rating
categories by a least two NRSROS, or if only one NRSRO rates
the security, by that NRSRO, or if unrated, is determined by
Banc One Investment Advisors to be of equivalent quality; and
o Banc One Investment Advisors must consider the trading market
for the specific security, taking into account all relevant
factors, including but not limited, to whether the paper is
the subject of a commercial paper program that is administered
by an issuing and paying agent bank and for which there exists
a dealer willing to make a market in that paper, or is
administered by a direct issuer pursuant to a direct placement
program; and
o Banc One Investment Advisors shall monitor the liquidity of
the 4(2) commercial paper purchased and shall report to the
Board of Trustees promptly if any such securities are no
longer determined to be liquid if such determination causes a
Fund to hold more than 15% (10% for Money Market Funds) of its
net assets in illiquid securities in order for the Board of
Trustees to consider what action, if any, should be taken on
behalf of The One Group, unless Banc One Investment Advisors
is able to dispose of illiquid assets in an orderly manner in
an amount that reduces the Fund's holdings of illiquid assets
to less than 15% (10% for Money Market Funds) of its net
assets; and
o Banc One Investment Advisors shall report to the Board of
Trustees on the appropriateness of the purchase and retention
of liquid restricted securities under these Guidelines no less
frequently that quarterly.
SECURITIES LENDING
In order to generate additional income, each of the Funds, except the
Treasury Prime Money Market Fund may lend up to 33 1/3% of the securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, securities of the U.S. government or its agencies,
shares of an investment trust or mutual fund, letters of credit or any
combination of cash, such securities, shares, or letters of credit as collateral
equal at all times to at least 100% of the market value plus accrued interest on
the securities lent. The Funds will continue to receive interest on the
securities lent while simultaneously seeking to earn interest on the investment
of cash collateral in U.S. government securities, shares of an investment trust
or mutual fund, or commercial paper, repurchase agreements, variable and
floating rate instruments, restricted securities, asset-backed securities, and
the other types of investments permitted by the applicable Fund's prospectus.
Collateral is marked to market daily to provide a level of collateral at least
equal to the market value of the securities lent. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will only be made to
borrowers deemed by Banc One Investment Advisors to be of good standing under
guidelines established by the Trust's Board of Trustees and when, in the
judgment of Banc One Investment Advisors, the consideration which can be earned
currently from such securities loans justifies the attendant risk. Loans are
subject to termination by the Funds or the borrower at any time, and are
therefore, not considered to be illiquid investments.
SWAPS, CAPS AND FLOORS
Certain of the Funds may enter into swaps, caps, and floors on various
securities (such as U.S. government securities), securities indexes, interest
rates, prepayment rates, foreign currencies or other financial instruments or
indexes, in order to protect the value of the Fund from interest rate
fluctuations and to hedge against fluctuations in the floating rate market in
which the Fund's investments are traded, for both hedging and non-hedging
purposes. While swaps, caps, and floors (sometimes hereinafter collectively
referred to as "SWAP CONTRACTS") are different from futures contracts (and
options on futures contracts) in that swap contracts are individually negotiated
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with specific counterparties, the Funds will use swap contracts for purposes
similar to the purposes for which they use options, futures, and options on
futures. Those uses of swap contracts (i.e. , risk management and hedging)
present the Funds with risks and opportunities similar to those associated with
options contracts, futures contracts, and options on futures. See "Futures
Contracts" and "Risk Factors in Futures Contracts."
The Funds may enter into these transactions to manage their exposure to
changing interest rates and other market factors. Some transactions may reduce
each Fund's exposure to market fluctuations while others may tend to increase
market exposure.
Swap contracts typically involve an exchange of obligations by two
sophisticated parties. For example, in an interest rate swap, the Fund may
exchange with another party their respective rights to receive interest, such as
an exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of respective rights to make or receive payments in
specified currencies. Mortgage swaps are similar to interest rate swaps in that
they represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages.
Caps and floors are variations on swaps. The purchase of a cap entitles
the purchaser to receive a principal amount from the party selling the cap to
the extent that a specified index exceeds a predetermined interest rate or
amount. The purchase of an interest rate floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specified index falls below a predetermined interest rate or
amount. Caps and floors are similar in many respects to over-the-counter options
transactions, and may involve investment risks that are similar to those
associated with options transactions and options on futures contracts.
Because swap contracts are individually negotiated, they remain the
obligation of the respective counterparties, and there is a risk that a
counterparty will be unable to meet its obligations under a particular swap
contract. If a counterparty defaults on a swap contract with a Fund, the Fund
may suffer a loss. To address this risk, each Fund will usually enter into
interest rate swaps on a net basis, which means that the two payment streams
(one from the Fund to the counterparty, one to the Fund from the counterparty)
are netted out, with the Fund receiving or paying, as the case may be, only the
net amount of the two payments. Interest rate swaps do not involve the delivery
of securities, other underlying assets, or principal, except for the purposes of
collateralization as discussed below. Accordingly, the risk of loss with respect
to interest rate swaps entered into on a net basis would be limited to the net
amount of the interest payments that the Fund is contractually obligated to
make. If the other party to an interest rate swap defaults, the Fund's risk of
loss consists of the net amount of interest payments that a Fund is
contractually entitled to receive. In addition, the Fund may incur a market
value adjustment on securities held upon the early termination of the swap. To
protect against losses related to counterparty default, the Funds may enter into
swaps that require transfers of collateral for changes in market value. In
contrast, currency swaps and other types of swaps may involve the delivery of
the entire principal value of one designated currency or financial instrument in
exchange for the other designated currency or financial instrument. Therefore,
the entire principal value of such swaps may be subject to the risk that the
other party will default on its contractual delivery obligations.
In addition, because swap contracts are individually negotiated and
ordinarily non-transferable, there also may be circumstances in which it would
be impossible for a Fund to close out its obligations under the swap contract
prior to its maturity. Under such circumstances, the Fund might be able to
negotiate another swap contract with a different counterparty to offset the risk
associated with the first swap contract. Unless the Fund is able to negotiate
such an offsetting swap contract, however, the Fund could be subject to
continued adverse developments, even after Banc One Investment Advisors has
determined that it would be prudent to close out or offset the first swap
contract.
The Funds will not enter into any mortgage swap, interest rate swap,
cap or floor transaction unless the unsecured commercial paper, senior debt, or
the claims paying ability of the other party thereto is rated in one of the top
two rating categories by at least one NRSRO, or if unrated, determined by Banc
One Investment Advisors to be of comparable quality.
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The use of swaps involves investment techniques and risks different
from and potentially greater than those associated with ordinary Fund securities
transactions. If Banc One Investment Advisors is incorrect in its expectations
of market values, interest rates, or currency exchange rates, the investment
performance of the Funds would be less favorable than it would have been if this
investment technique were not used. In addition, in certain circumstances entry
into a swap contract that substantially eliminates risk of loss and the
opportunity for gain in an "appreciated financial position" will accelerate gain
to the Funds.
The Staff of the SEC is presently considering its position with respect
to swaps, caps and floors as senior securities. Pending a determination by the
Staff, the Funds will either treat swaps, caps and floors as being subject to
their senior securities restrictions or will refrain from engaging in swaps,
caps and floors. Once the Staff has expressed a position with respect to swaps,
caps and floors, the Funds intend to engage in swaps, caps and floors, if at
all, in a manner consistent with such position. To the extent the net amount of
an interest rate or mortgage swap is held in a segregated account, consisting of
cash or liquid, high grade debt securities, the Funds and Banc One Investment
Advisors believe that swaps do not constitute senior securities under the
Investment Company Act of 1940 and, accordingly, will not treat them as being
subject to each Fund's borrowing restrictions. The net amount of the excess, if
any, of each Fund's obligations over its entitlements with respect to each
interest rate swap will be accrued on a daily basis and an amount of cash or
liquid securities having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated account by the Funds'
Custodian.
TREASURY RECEIPTS
Certain of the Funds may purchase interests in separately traded
interest and principal component parts of U.S. Treasury obligations that are
issued by banks or brokerage firms and are created by depositing U.S. Treasury
notes and U.S. Treasury bonds into a special account at a custodian bank.
Receipts include Treasury Receipts ("TRS"), Treasury Investment Growth Receipts
("TIGRS"), and Certificates of Accrual on Treasury Securities ("CATS").
U.S. TREASURY OBLIGATIONS
The Funds may invest in bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal Securities ("STRIPS") and
Coupon Under Book Entry Safekeeping ("CUBES"). The Funds may also invest in
Inflation Indexed Treasury Obligations.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain obligations purchased by some of the Funds may carry variable
or floating rates of interest, may involve a conditional or unconditional demand
feature and may include variable amount master demand notes.
VARIABLE AMOUNT MASTER DEMAND NOTES are demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, a Fund
may demand payment of principal and accrued interest. While the notes are not
typically rated by credit rating agencies, issuers of variable amount master
demand notes (which are normally manufacturing, retail, financial, brokerage,
investment banking and other business concerns) must satisfy the same criteria
as set forth above for commercial paper. Banc One Advisers will consider the
earning power, cash flow, and other liquidity ratios of the issuers of such
notes and will continuously monitor their financial status and ability to meet
payment on demand. In determining average weighted portfolio maturity, a
variable amount master demand note will be deemed to have a maturity equal to
the period of time remaining until the principal amount can be recovered from
the issuer through demand.
Some of the Funds subject to their investment objective policies and
restrictions, may acquire VARIABLE AND FLOATING RATE INSTRUMENTS. A variable
rate instrument is one whose terms provide for the adjustment of its interest
rate on set dates and which, upon such adjustment, can reasonably be expected to
have a
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market value that approximates its par value. Some of the Funds may purchase
EXTENDABLE COMMERCIAL NOTES. Extendable commercial notes are variable rate notes
which normally mature within a short period of time (e.g., 1 month) but which
may be extended by the issuer for a maximum maturity of thirteen months.
A floating rate instrument is one whose terms provide for the
adjustment of its interest rate whenever a specified interest rate changes and
which, at any time, can reasonably be expected to have a market value that
approximates its par value. Floating rate instruments are frequently not rated
by credit rating agencies; however, unrated variable and floating rate
instruments purchased by a Fund will be determined by Banc One Investment
Advisors under guidelines established by the Trust's Board of Trustees to be of
comparable quality at the time of purchase to rated instruments eligible for
purchase under the Fund's investment policies. In making such determinations,
Banc One Investment Advisors will consider the earning power, cash flow and
other liquidity ratios of the issuers of such instruments (such issuers include
financial, merchandising, bank holding and other companies) and will
continuously monitor their financial condition. There may be no active secondary
market with respect to a particular variable or floating rate instrument
purchased by a Fund. The absence of such an active secondary market, could make
it difficult for the Fund to dispose of the variable or floating rate instrument
involved in the event the issuer of the instrument defaulted on its payment
obligations, and the Fund could, for this or other reasons, suffer a loss to the
extent of the default. Variable or floating rate instruments may be secured by
bank letters of credit or other assets. A Fund will purchase a variable or
floating rate instrument to facilitate portfolio liquidity or to permit
investment of the Fund's assets at a favorable rate of return.
With respect to the Money Market Funds, variable or floating rate
instruments with stated maturities of more than 397 days may, under the
Securities and Exchange Commission's amortized cost rule, Rule 2a-7 under the
1940 Act, be deemed to have shorter maturities as follows:
(1) Adjustable Rate Government Securities. A Government Security which
is a Variable Rate Security where the variable rate of interest is readjusted no
less frequently than every 762 days shall be deemed to have a maturity equal to
the period remaining until the next readjustment of the interest rate. A
Government Security which is a Floating Rate Security shall be deemed to have a
remaining maturity of one day.
(2) Short-Term Variable Rate Securities. A Variable Rate Security, the
principal amount of which, in accordance with the terms of the security, must
unconditionally be paid in 397 calendar days or less shall be deemed to have
maturity equal to the earlier of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand.
(3) Long-Term Variable Rate Securities. A Variable Rate Security, the
principal amount of which is scheduled to be paid in more than 397 days, that is
subject to a Demand Feature shall be deemed to have a maturity equal to the
longer of the period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be recovered through
demand.
(4) Short-Term Floating Rate Securities. A Floating Rate Security, the
principal amount of which, in accordance with the terms of the security, must
unconditionally be paid in 397 calendar days or less shall be deemed to have a
maturity of one day.
(5) Long-Term Floating Rate Securities. A Floating Rate Security, the
principal amount of which is scheduled to be paid in more than 397 days, that is
subject to a demand feature, shall be deemed to have a maturity equal to the
period remaining until the principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than thirty days' notice or at specified intervals not exceeding 397
calendar days and upon no more than 30 days notice.
LIMITATIONS ON THE USE OF VARIABLE AND FLOATING RATE NOTES. Variable
and floating rate instruments for which no readily available market exists will
be purchased in an amount which, together with securities with legal or
contractual restrictions on resale or for which no readily available market
exists (including repurchase agreements
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providing for settlement more than seven days after notice), exceeds 10% (with
respect to the Money Market Funds) or 15% (with respect to all Funds, other than
the Money Market Funds, which can purchase such notes) of the Fund's net assets
only if such instruments are subject to a demand feature that will permit the
Fund to demand payment of the principal within seven days after demand by the
Fund. There is no limit on the extent to which a Fund may purchase demand
instruments that are not illiquid. If not rated, such instruments must be found
by Banc One Investment Advisors, under guidelines established by the Trust's
Board of Trustees, to be of comparable quality to instruments that are rated
high quality. A rating may be relied upon only if it is provided by a nationally
recognized statistical rating organization that is not affiliated with the
issuer or guarantor of the instruments. For a description of the rating symbols
of S&P, Moody's, and Fitch used in this paragraph, see the Appendix. The above
Funds may also invest in Canadian Commercial Paper which is commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S. corporation
and in Europaper which is U.S. dollar denominated commercial paper of a foreign
issuer.
WARRANTS
Warrants are securities, typically issued with preferred stock or
bonds, that give the holder the right to buy a proportionate amount of common
stock at a specified price, usually at a price that is higher than the market
price at the time of issuance of the warrant. The right may last for a period of
years or indefinitely.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
Some Funds may purchase securities on a "when-issued" and forward
commitment basis. When a Fund agrees to purchase securities, the Fund's
custodian will set aside cash or liquid portfolio securities equal to the amount
of the commitment in a separate account. The Funds may purchase securities on a
when-issued basis when deemed by Banc One Investment Advisors to present
attractive investment opportunities. When-issued securities are purchased for
delivery beyond the normal settlement date at a stated price and yield, thereby
involving the risk that the yield obtained will be less than that available in
the market at delivery. The Funds generally will not pay for such securities or
earn interest on them until received. Although the purchase of securities on a
when-issued basis is not considered to be leveraging, it has the effect of
leveraging. When Banc One Investment Advisors purchases a when-issued security,
the Custodian will set aside cash or liquid securities to satisfy the purchase
commitment. In such a case, a Fund may be required subsequently to place
additional assets in the separate account in order to assure that the value of
the account remains equal to the amount of the Fund's commitment. The Fund's net
assets may fluctuate to a greater degree when it sets aside portfolio securities
to cover such purchase commitments than when it sets aside cash. In addition,
when a Fund engages in "when-issued" transactions, it relies on the seller to
consummate the trade. Failure of the seller to do so may result in the Fund's
incurring a loss or missing the opportunity to obtain a price considered to be
advantageous.
In a forward commitment transaction, the Funds contract to purchase
securities for a fixed price at a future date beyond customary settlement time.
The Funds are required to hold and maintain in a segregated account until the
settlement date, cash, U.S. government securities or liquid high-grade debt
obligations in an amount sufficient to meet the purchase price. Alternatively,
the Funds may enter into offsetting contracts for the forward sale of other
securities that they own. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date.
Limitations on the Use of When Issued Securities and Forward
Commitments. No Fund intends to purchase "when-issued" securities for
speculative purposes but only for the purpose of acquiring portfolio securities.
Because a Fund will set aside cash or liquid portfolio securities to satisfy its
purchase commitments in the manner described, the Fund's liquidity and the
ability of Banc One Investment Advisors to manage the Fund might, as described
in the Prospectuses, be affected in the event its commitments to purchase
when-issued securities ever exceeded 40% of the value of its assets. Commitments
to purchase when-issued securities will not, under normal market conditions,
exceed 25% of a Fund's total assets, and a commitment will not exceed 90 days. A
Fund may dispose of a when-issued security or forward commitment prior to
settlement if Banc One Investment Advisors deems it appropriate to do so.
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INVESTMENT RESTRICTIONS
The following investment restrictions are FUNDAMENTAL and may be
changed with respect to a particular Fund only by a vote of a majority of the
outstanding Shares of that Fund. See "ADDITIONAL INFORMATION--Miscellaneous" in
this Statement of Additional Information.
Each of the Equity Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 25% of the total
assets of a Fund would be invested in the securities of such issuer. This
restriction applies to 50% of a Fund's assets. With respect to the remaining 50%
of its total assets, a Fund may not purchase the securities of any issuer if as
a result more than 5% of the total assets of the Fund would be invested in the
securities of such issuer. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
(i) that this limitation does not apply to investments in the obligations issued
or guaranteed by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities; (ii) with respect to the Real
Estate Fund, this limitation does not apply to investments in the real estate
industry; and (iii) with respect to investments in the Technology Fund, this
limitation does not apply to the technology sector. For purposes of this
limitation (i) utilities will be divided according to their services (for
example, gas, gas transmission, electric and telephone will each be considered a
separate industry); and (ii) wholly-owned finance companies will be considered
to be in the industries of their parents if their activities are primarily
related to financing the activities of their parents.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in the Prospectus and in this Statement of Additional Information.
Each of the Money Market Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with the Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer,
provided, however, that a Fund may invest up to 25% of its total assets without
regard to this restriction as permitted by applicable law. For purposes of these
limitations, a security is considered to be issued by the government entity
whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a nongovernmental user, such user would be considered the
issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry provided
that (i) this limitation does not apply to investments in the obligations issued
or guaranteed by the U.S. government or its agencies and instrumentalities,
domestic bank certificates of deposit or bankers' acceptance and repurchase
agreements involving such securities; (ii) wholly-owned finance companies will
be considered to be in the industries of their parents if their activities are
primarily related to financing the activities of their parents; and (iii)
utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry.)
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<PAGE> 138
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in the Prospectus and in this Statement of Additional Information.
None of the Funds may:
1. Purchase securities on margin or sell securities short.
2. Underwrite the securities of other issuers except to the extent that
a Fund may be deemed to be an underwriter under certain securities laws in the
disposition of "restricted securities."
3. Purchase or sell commodities or commodity contracts (including
futures contracts), except that for bona fide hedging and other permissible
purposes: (i) the Equity Funds may purchase or sell financial futures contracts
and may purchase call or put options on financial futures contracts.
4. Purchase participation or other direct interests in oil, gas or
mineral exploration or development programs (although investments by all Funds
in marketable securities of companies engaged in such activities are not hereby
precluded).
5. Invest in any issuer for purposes of exercising control or
management.
6. Purchase securities of other investment companies except as
permitted by the 1940 Act and rules, regulations and applicable exemptive relief
thereunder.
7. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (however, each Fund except the
Money Market Funds may, to the extent appropriate to its investment objective,
purchase securities secured by real estate or interests therein or securities
issued by companies investing in real estate or interests therein).
8. Borrow money or issue senior securities, except that each Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets at
the time of its borrowing. A Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
The following investment restrictions are NON-FUNDAMENTAL except as
noted otherwise and therefore can be changed by the Board of Trustees without
prior shareholder approval.
No Fund may:
1. Invest in illiquid securities in an amount exceeding, in the
aggregate 15% of the Fund's net assets (10% of net assets for a Fund that is a
Money Market Fund). An illiquid security is a security which cannot be disposed
of promptly (within seven days) and in the usual course of business without a
loss, and includes repurchase agreements maturing in excess of seven days, time
deposits with a withdrawal penalty, non-negotiable instruments and instruments
for which no market exists.
2. Acquire the securities of registered open-end investment companies
or registered unit investment trusts in reliance on Section 12(d)(1)(F) or
12(d)(1)(G) of the 1940 Act.
The foregoing percentages apply at the time of purchase of a security.
Banc One Investment Advisors shall report to the Board of Trustees promptly if
any of a Fund's investments are no longer determined to be liquid or if the
market value of Fund assets has changed if such determination or change causes a
Fund to hold more than 15% (10% in the case of a Fund that is a Money Market
Fund) of its net assets in illiquid securities in order for the Board
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<PAGE> 139
of Trustees to consider what action, if any, should be taken on behalf of the
Trust, unless Banc One Investment Advisors is able to dispose of illiquid assets
in an orderly manner in an amount that reduces the Fund's holdings of illiquid
assets to less than 15% (or 10% in the case of a Fund that is a Money Market
Fund) of its net assets.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average value of the portfolio securities. The calculation excludes all
securities whose maturities at the time of acquisition were one year or less.
Thus, for regulatory purposes, the portfolio turnover rates with respect to the
Money Market Funds are expected to be zero.
The portfolio turnover rate for Real Estate Fund and Technology Fund is
not expected to exceed 50% and 100%, respectively, however, the rate may vary
from year to year. Higher portfolio turnover rates will likely result in higher
transaction costs to the Funds and may result in additional tax consequences to
Shareholders. To the extent portfolio turnover results in short-term capital
gains, such gains will generally be taxed at ordinary income tax rates.
Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may also be affected by cash requirements for redemptions
of Shares. Portfolio turnover will not be a limiting factor in making portfolio
decisions.
ADDITIONAL TAX INFORMATION CONCERNING ALL FUNDS
Each Fund is treated as a separate entity for federal income tax
purposes and is not combined with The One Group's other funds. It is the policy
of each Fund of the Trust to meet the requirements necessary to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). By following such policy, each Fund expects to
eliminate or reduce to a nominal amount the federal income taxes to which it may
be subject.
In order to qualify as a regulated investment company, each Fund must,
among other things, (1) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, foreign currencies or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies, and (2)
diversify its holdings so that at the end of each quarter of its taxable year
(i) at least 50% of the market value of the Fund's assets is represented by cash
or cash items, U.S. government securities, securities of other regulated
investment companies, and other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the value of the Fund's assets and
10% of the outstanding voting securities of such issuer, and (ii) not more than
25% of the value of its assets is invested in the securities of any one issuer
(other than U.S. government securities or the securities of other regulated
investment companies) or of two or more issuers that the Fund controls and that
are engaged in the same, similar, or related trades or businesses. These
requirements may limit the range of the Fund's investments. If a Fund qualifies
as a regulated investment company, it will not be subject to federal income tax
on the part of its income distributed to Shareholders, provided the Fund
distributes during its taxable year at least (a) 90% of its taxable net
investment income (very generally, dividends, interest, certain other income,
and the excess, if any, of net short-term capital gain over net long-term loss),
and (b) 90% of the excess of (i) its tax-exempt interest income (if any) less
(ii) certain deductions attributable to that income. Each Fund of the Trust
intends to make sufficient distributions to Shareholders to qualify for this
special tax treatment.
If a Fund failed to qualify as a regulated investment company receiving
special tax treatment in any taxable year, the Fund would be subject to tax on
its taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term
capital gains, would be taxable to Shareholders as ordinary income. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company and being accorded special tax treatment.
Generally, regulated investment companies that do not distribute in
each calendar year an amount equal to 98% of their "ordinary income" (as
defined) for the calendar year, plus 98% of their capital gain net income (as
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<PAGE> 140
defined) for the one-year period ending on October 31 of such calendar year,
plus any undistributed amounts from the previous year are subject to a
non-deductible excise tax equal to 4% of the undistributed amounts. For purposes
of the excise tax, a Fund is treated as having distributed any amount on which
it is subject to income tax for any taxable year ending in such calendar year.
Each Fund of the Trust intends to make sufficient distributions to avoid
liability for the excise tax.
Shareholders of the Funds will generally be subject to federal income
tax on distributions received from the Funds. Dividends that are attributable to
a Fund's net investment income will be taxed to shareholders as ordinary income.
Distributions of net capital gain that are designated by a Fund as capital gain
dividends will generally be taxable to a Shareholder receiving such
distributions as long-term capital gain (generally taxed at a 20% tax rate for
non-corporate Shareholders) regardless of how long the Shareholder has held its
shares. Distributions in excess of a Fund's current and accumulated "earnings
and profits" will be treated by a Shareholder receiving such distributions as a
return of capital to the extent of such Shareholder's basis in its Shares in the
Fund, and thereafter as capital gain. A return of capital is not taxable, but
reduces a Shareholder's basis in its shares. Shareholders not subject to tax on
their income generally will not be required to pay tax on amounts distributed to
them. The sale, exchange or redemption of Fund shares by a Shareholder may give
rise to a taxable gain or loss to that Shareholder. In general, any gain or loss
realized upon a taxable disposition of shares will be treated as long-term
capital gain or loss if the Shareholder has held the shares for more than 12
months (generally taxed at a 20% tax rate for non-corporate shareholders), and
otherwise as short-term capital gain or loss. However, if a Shareholder sells
shares at a loss within six months of purchase, any loss will be disallowed for
Federal income tax purposes to the extent of any exempt-interest dividends
received on such shares. Dividends and distributions on a Fund's shares are
generally subject to federal income tax as described herein to the extent they
do not exceed the Fund's realized income and gains, even though such dividends
and distributions may economically represent a return of a particular
shareholder's investment. Such distributions are likely to occur in respect of
shares purchased at a time when the Fund's net asset value reflects gains that
are either unrealized, or realized but not distributed.
In addition, any loss (not already disallowed as provided in the
preceding sentence) realized upon a taxable disposition of shares held for six
months or less will be treated as long-term to the extent of any long-term
capital gain distributions received by the Shareholder with respect to the
shares. All or a portion of any loss realized upon a taxable disposition of Fund
shares will be disallowed if other Fund shares are purchased within 30 days
before or after the disposition. In such a case, the basis of the newly
purchased shares will be adjusted to reflect the disallowed loss.
Certain investment and hedging activities of the Funds, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, swaps, short sales, foreign currencies, and foreign
securities will be subject to special tax rules (including mark-to-market,
constructive sale, straddle, wash sale and short sale rules). In a given case,
these rules may accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's securities, convert long-term
capital gains into short-term capital gains, convert short-term capital losses
into long-term capital losses, or otherwise affect the character of the Fund's
income. These rules could therefore affect the amount, timing and character of
distributions to Shareholders and cause differences between a Fund's book income
and taxable income. Income earned as a result of these transactions would, in
general, not be eligible for the dividends-received deduction or for treatment
as exempt-interest dividends when distributed to Shareholders. The Fund will
endeavor to make any available elections pertaining to such transactions in a
manner believed to be in the best interest of the Fund.
Certain securities purchased by the Funds (such as STRIPS, CUBES, TRS,
TIGRS, and CATS), as defined in "Details About the Funds' Investment Practices
and Policies" in the Funds' Prospectuses, are sold at original issue discount
and thus do not make periodic cash interest payments. Similarly, zero-coupon
bonds do not make periodic interest payments. A Fund will be required to include
as part of its current income for tax purposes the imputed interest on such
obligations even though the Fund has not received any interest payments on such
obligations during that period. Because each Fund distributes substantially all
of its net investment income to its Shareholders (including such imputed
interest), the Fund may have to sell portfolio securities in order to generate
the cash necessary for the required distributions. Such sales may occur at a
time when Banc One Investment Advisors would not otherwise have chosen to sell
such securities and may result in a taxable gain or loss.
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A Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or of gross proceeds from
redemptions paid to any individual Shareholder who has provided to the Fund
either an incorrect tax identification number or no number at all, or who is
subject to withholding by the Internal Revenue Service for failure properly to
report payments of interest or dividends. This withholding, known as backup
withholding, is not an additional tax, and any amounts withheld may be credited
against the Shareholder's ultimate U.S. tax liability.
The Internal Revenue Service recently revised its regulations affecting
the application to foreign investors of the back-up withholding and withholding
tax rules described above. The new regulations will generally be effective for
payments made after December 31, 1999 (although transition rules will apply). In
some circumstances, the new rules will increase the certification and filing
requirements imposed on foreign investors in order to qualify for exemption from
the 31% back-up withholding tax and for reduced withholding tax rates under
income tax treaties. Foreign investors in a Fund should consult their tax
advisors with respect to the potential application of these new regulations. The
foregoing is only a summary of some of the important federal tax considerations
generally affecting purchasers of Shares of a Fund of the Trust. No attempt is
made to present herein a complete explanation of the federal income tax
treatment of each Fund or its Shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, prospective purchasers of
Shares of a Fund are urged to consult their tax advisors with specific reference
to their own tax situation, including the potential application of state, local
and (if applicable) foreign taxes.
The foregoing discussion and the discussion below regarding foreign
investments are based on tax laws and regulations which are in effect on the
date of this Statement of Additional Information; such laws and regulations may
be changed by legislative, judicial or administrative action, and such changes
may be retroactive.
ADDITIONAL TAX INFORMATION CONCERNING INTERNATIONAL INVESTMENTS
Transactions of a Fund in foreign currency denominated debt securities
(and similar instruments) may result in ordinary income or loss to the Fund for
federal income tax purposes which will be taxable to the Shareholders as such
when it is distributed to them.
Gains from foreign currencies (including foreign currency options,
foreign currency futures and foreign currency forward contracts) will (under
regulations to be issued) constitute qualifying income for purposes of the 90%
test only to the extent that they are directly related to the trust's business
of investing in stock or securities.
Investment by a Fund in certain "passive foreign investment companies"
could subject the Fund to a U.S. federal income tax or other charge on proceeds
from the sale of its investment in such a company or other distributions from
such a company, which tax cannot be eliminated by making distributions to
Shareholders of the Fund. If a Fund elects to treat a passive foreign investment
company as a "qualified electing fund," different rules would apply, although
the Funds do not expect to make such an election. Rather, the Funds intend to
avoid such tax or other charge by making an election to mark gains (and to a
limited extent, losses) from such investments to market annually.
The qualified electing fund and mark-to-market elections may have the
effect of accelerating the recognition of income (without the receipt of cash)
and increase the amount required to be distributed for a Fund to avoid taxation.
Making either of these elections therefore may require a Fund to liquidate other
investments (including when it is not advantageous to do so) to meet its
distribution requirement, which also may accelerate the recognition of gain and
affect a Fund's total return.
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VALUATION
VALUATION OF THE MONEY MARKET FUNDS
The Money Market Funds have elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the 1940 Act. This involves valuing an
instrument at its cost initially and thereafter assuming a constant amortization
to maturity of any discounts or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. This method may result in
periods during which value, as determined by amortized cost, is higher or lower
than the price each Fund would receive if it sold the instrument. The value of
securities in the Funds can be expected to vary inversely with changes in
prevailing interest rates.
Pursuant to Rule 2a-7, the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to their objective of
maintaining a stable net asset value per Share, provided that no Fund will
purchase any security with a remaining maturity of more than 397 days
(securities subject to repurchase agreements and certain variable or floating
rate instruments may bear longer maturities) nor maintain a dollar-weighted,
average portfolio maturity which exceeds 90 days. The Trust's Board of Trustees
has also undertaken to establish procedures reasonably designed, taking into
account current market conditions and a Fund's investment objective, to
stabilize the net asset value per Share of the Money Market Funds for purposes
of sales and redemptions at $1.00. These procedures include review by the
Trustees, at such intervals as they deem appropriate, to determine the extent,
if any, to which the net asset value per Share of each Fund calculated by using
available market quotations deviates from $1.00 per Share. In the event such
deviation exceeds one half of one percent, the Rule requires that the Board
promptly consider what action, if any, should be initiated. If the Trustees
believe that the extent of any deviation from a Fund's $1.00 amortized cost
price per Share may result in material dilution or other unfair results to new
or existing investors, they will take such steps as they consider appropriate to
eliminate or reduce to the extent reasonably practicable any such dilution or
unfair results. These steps may include selling portfolio instruments prior to
maturity, shortening the average portfolio maturity, withholding or reducing
dividends, reducing the number of a Fund's outstanding Shares without monetary
consideration, or utilizing a net asset value per Share determined by using
available market quotations.
VALUATION OF THE EQUITY FUNDS
Except as noted below, investments of the Equity Funds of the Trust in
securities the principal market for which is a securities exchange are valued at
their market values based upon the latest available sales price or, absent such
a price, by reference to the latest available bid and asked prices in the
principal market in which such securities are normally traded. Except as noted
below, investments of the Funds in securities the principal market for which is
a securities exchange are valued at the closing mid-market price on that
exchange on the day of computation.
With regard to each of the above-mentioned Funds, securities the
principal market for which is not a securities exchange are valued at the mean
of their latest bid and ask quotations in such principal market. Securities and
other assets for which quotations are not readily available are determined by
Banc One Investment Advisors to not accurately reflect their value are valued at
their fair value as determined in good faith under consistently applied
procedures established by and under the general supervision of the Trustees of
the Trust. Short-term securities are valued at either amortized cost or original
cost plus accrued interest, which approximates current value.
The value of a foreign security is determined in its national currency
as of the close of trading on the foreign exchange or other principal market on
which it is traded, which value is then converted into its U.S. dollar
equivalent at the foreign exchange closing mid-market rate reported in the
Financial Times as the closing rate for that date. When an occurrence subsequent
to the time a value of a foreign security was so established is likely to have
changed the value, then the fair value of those securities will be determined by
consideration of other factors by or under the direction of the Trustees of the
Trust or their delegates.
Securities for which market quotations are readily available will be
valued on the basis of quotations provided by dealers in such securities or
furnished by a pricing service. Securities for which market quotations are not
readily available and other assets will be valued at fair value using methods
determined in good faith by Banc
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One Investment Advisors under the supervision of the Trustees and may include
yield equivalents or a pricing matrix.
ADDITIONAL INFORMATION REGARDING THE
CALCULATION OF PER SHARE NET ASSET VALUE
The net asset value of each Fund is determined and its Class I, Class
A, Class B, Class C and Service Class Shares are priced as of the times
specified in each Fund's Prospectus. The net asset value per Share of each
Fund's Class I, Class A, Class B, Class C and Service Class Shares is calculated
by determining the value of the respective Class's proportional interest in the
securities and other assets of the Fund, less (i) such Class's proportional
share of general liabilities and (ii) the liabilities allocable only to such
Class, and dividing such amount by the number of Shares of the Class
outstanding. The net asset value of a Fund's Class I, Class A, Class B, Class C
and Service Class Shares may differ from each other due to the expense of the
Distribution and Shareholders Services Plan fee applicable to a Fund's Class A,
Class B, Class C and Service Class Shares.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
All of the classes of Shares in each Fund (other than Service Class
shares) are sold on a continuous basis by The One Group Services Company (the
"DISTRIBUTOR"), and the Distributor has agreed to use appropriate efforts to
solicit all purchase orders.
Class I Shares in a Fund may be purchased, through procedures
established by the Distributor, by institutional investors, including affiliates
of BANK ONE CORPORATION and any bank, depository institution, insurance company,
pension plan or other organization authorized to act in fiduciary, advisory,
agency, custodial or similar capacities. Class I Shares are not available to
Individual Retirement Accounts.
Class A, Class B and Class C Shares may be purchased by any investor
that does not meet the purchase eligibility criteria, described above, with
respect to Class I Shares. In addition to purchasing Class A, Class B and Class
C Shares directly from the Distributor, an investor may purchase Class A, Class
B and Class C Shares through a financial institution, such as a bank, savings
and loan association, insurance company (each a "SHAREHOLDER SERVICING AGENT")
that has established a Shareholder servicing agreement with the Distributor, or
through a broker-dealer that has established a dealer agreement with the
Distributor. Questions concerning the eligibility requirements for each class of
the Trust's Shares may be directed to the Distributor at 1-800-480-4111.
Service Class Shares are available only in Money Market Funds. This
class of shares is available to broker-dealers, other financial intermediaries,
banks and other depository institutions requiring special administrative and
accounting services (e.g., sweep processing).
EXCHANGES
The exchange privileges described herein may be exercised only in those
states where the Shares of the Fund or such other Fund may be legally sold. All
exchanges discussed herein are made at the net asset value of the exchanged
Shares, except as provided below. The Trust does not impose a charge for
processing exchanges of Shares. For Federal income tax purposes, an exchange is
treated as a sale of shares and generally results in a capital gain or loss.
Class I. Class I Shareholders of a Fund may exchange their Shares for
Class A Shares of the same Fund or for Class A Shares or Class I Shares of
another Portfolio of the Trust. Class A Shareholders may exchange their Shares
for Class I Shares of a Fund or for Class I or Class A Shares of another
Portfolio of the Trust, if the Shareholder is eligible to purchase such Shares.
Class A Shares. If a Shareholder seeks to exchange Class A Shares of a
Fund that does not impose a sales charge for Class A Shares of a Portfolio that
does, or the Portfolio being exchanged into has a higher sales charge,
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<PAGE> 144
the Shareholder will be required to pay a sales charge in the amount equal to
the difference between the sales charge applicable to the Fund into which the
Shares are being exchanged and any sales charge previously paid for the
exchanged Shares, including any sales charges incurred on any earlier exchanges
of the Shares (unless such sales charge is otherwise waived as provided above).
The exchange of Class I Shares for Class A Shares also will require payment of
the sales charge unless the sales charge is waived, as provided above. If a
Shareholder (no longer eligible to purchase Class I Shares) purchases Class A
Shares of a Fund, the Shareholder will be subject to Distribution and
Shareholder Services Plan Fees.
Class B Shares. Class B Shareholders of a Fund may exchange their
Shares for Class B Shares of any other Portfolio of the Trust on the basis of
the net asset value of the exchanged Class B Shares, without the payment of any
Contingent Deferred Sales Charge that might otherwise be due upon redemption of
the outstanding Class B Shares. The newly acquired Class B Shares will be
subject to the higher Contingent Deferred Sales Charge of either the Fund from
which the Shares were exchanged or the Portfolio into which the Shares were
exchanged. With respect to outstanding Class B Shares as to which previous
exchanges have taken place, "higher Contingent Deferred Sales Charge" shall mean
the higher of the Contingent Deferred Sales Charge applicable to either the Fund
the Shares are exchanging into or any other Fund from which the Shares
previously have been exchanged. For purposes of computing the Contingent
Deferred Sales Charge that may be payable upon a disposition of the newly
acquired Class B Shares, the holding period for outstanding Class B Shares of
the Fund from which the exchange was made is "tacked" to the holding period of
the newly acquired Class B Shares. For purposes of calculating the holding
period applicable to the newly acquired Class B Shares, the newly acquired Class
B Shares shall be deemed to have been issued on the date of receipt of the
Shareholder's order to purchase the outstanding Class B Shares of the Fund from
which the initial exchange was made.
Class C Shares. Class C Shareholders may not exchange their Class C
Shares for shares of any other class nor may shares of any other class be
exchanged for Class C Shares.
Service Class Shares. Service Class Shareholders may not exchange their
Service Class Shares for Shares of any other class, nor may Shares of any other
class be exchanged for Service Class Shares.
REDEMPTIONS
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when:
(a) trading on the New York Stock Exchange (the "EXCHANGE") is
restricted by applicable rules and regulations of the Securities and Exchange
Commission,
(b) the Exchange is closed for other than customary weekend and holiday
closings,
(c) the SEC has by order permitted such suspension, or
(d) an emergency exists as determined by the SEC.
MANAGEMENT OF THE TRUST
TRUSTEES & OFFICERS
Overall responsibility for management of the Trust rests with the Board
of Trustees of the Trust. There are currently five Trustees, all of whom, except
John F. Finn, are not "interested persons" of the Trust within the meaning of
that term under the 1940 Act. The Trustees, in turn, elect the officers of the
Trust to supervise actively its day-to-day operations.
The Trustees of the Trust, their addresses, their ages, and principal
occupations during the past five years are set forth below.
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<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE WITH THE TRUST DURING THE PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Peter C. Marshall 56 Trustee From November, 1993 to present,
DCI Marketing, Inc. President, DCI Marketing, Inc.
2727 W. Good Hope Road
Milwaukee, WI 53209
Charles I. Post 70 Trustee From July, 1986 to present, self
7615 4th Avenue West employed as a consultant.
Bradenton, FL 34209
Frederick W. Ruebeck 59 Trustee From June, 1988 to present,
Eli Lilly & Company Director of Investments, Eli
Lilly Corporate Center Lilly and Company.
307 East McCarty
Indianapolis, IN 46258
Robert A. Oden, Jr. 52 Trustee From 1995 to present, President,
Office of the President Kenyon College; from 1989 to 1995,
Ransom Hall Headmaster, The Hotchkiss School.
Kenyon College
Gambier, OH 43022
*John F. Finn 51 Trustee Since 1975, President of Gardner, Inc.
President
Gardner, Inc.
1150 Chesapeake Avenue
Columbus, Ohio 43212
Marilyn McCoy 51 Trustee Vice President of Administration and Planning
Northwestern University Northwestern University (1985 to present)
Office of the Vice President
Administration & Planning
633 Clark St.-Crown 2-112
Evanston, IL 60208
Julius L. Pallone 68 Trustee President, J. L. Pallone Associates
J.L. Pallone Associates (1994 to present)
3000 Town Center
Suite 732
Southfield, MI 48075
Donald L. Tuttle 64 Trustee Vice President (1995 to present) and Senior
Association for Vice President (1992 to 1995), Association
Management and Research Investment Management and Research
5 Boar's Head Lane
Charlottesville, VA 22901
</TABLE>
* John F. Finn is an "interested person" as that term is defined in the
Investment Company Act of 1940.
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The Trustees of the Trust receive fees and expenses for each meeting of
the Board of Trustees attended. No officer or employee of the Distributor
currently acts as a Trustee of the Trust.
The Compensation Table below sets forth the estimated total
compensation to the Trustees from the Trust and the operational funds of The One
Group for the Trust's fiscal year ended June 30, 1998.
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION
NAME OF PERSON, COMPENSATION ACCRUED AS PART OF BENEFITS UPON FROM THE FUND
POSITION(2) FROM THE TRUST TRUST EXPENSES(3) RETIREMENT COMPLEX(4)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter C. Marshall, $47,500 N/A N/A $50,500
Chairman
Charles I. Post, $45,500 N/A N/A $48,500
Trustee
Frederick W. Ruebeck, $45,500 N/A N/A $48,500
Trustee
Robert A. Oden, Jr., $46,260 N/A N/A $49,250
Trustee
John F. Finn, $ 0 N/A N/A $ 0
Trustee
</TABLE>
1 Figures are for the Trust's fiscal year ended June 30, 1998.
2 Marilyn McCoy, Julius L. Palone and Donald L. Tuttle did not serve as
Trustees as of June 30, 1998.
3 The Trustees may defer all or a part of their compensation payable by
the Trust pursuant to the Deferred Compensation Plan for Trustees of
The One Group (the "PLAN"). Under the Plan, the Trustees may specify
Class I shares of one or more Funds of the Trust that will be used to
measure the performance of a Trustee's deferred compensation account. A
Trustee's deferred compensation account will be paid at such times as
elected by the Trustee subject to certain mandatory payment provisions
in the Plan (e.g., death of a Trustee.)
4 "Fund Complex" comprises the funds of The One Group and the funds of
The One Group(R) Investment Trust that were operational as of June 30,
1998.
The officers of the Trust receive no compensation directly from the
Trust for performing the duties of their offices. The officers of the Trust,
their addresses, and principal occupations during the past five years are shown
below.
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<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark S. Redman President and From November, 1997 to present,
The One Group Services Assistant Secretary President, The One Group Services
Company Company; From June, 1995 to
3435 Stelzer Road November, 1997, Officer, The One
Columbus, Ohio 43219 Group Services Company; From
February, 1989 to present,
employee of BISYS Fund Services,
Inc. (FKA Winsbury Company)
William J. Tomko Treasurer From April, 1997 to present, Chief
BISYS Fund Services, Operating Officer, BISYS Fund
Inc. Services, Inc.; From April, 1987,
3435 Stelzer Road to 1997, April, 1997, employee,
Columbus, Ohio 43219 BISYS Fund Services, Inc.
Charles L. Booth Secretary From February, 1998, to present,
BISYS Fund Services, Chief Compliance Officer and
Inc. Vice President Fund Compliance
3435 Stelzer Road BISYS Fund Services, Inc.; From
Columbus, Ohio 43219 April, 1988, to February, 1998,
employee, BISYS Fund Services, Inc.
Alaina J. Metz Assistant Secretary From June 1995 to present,
BISYS Fund Services, Chief Administrator,
Inc. Administration and Regulatory
3435 Stelzer Road Services, BISYS Fund Services,
Columbus, Ohio 43219 Inc.; from May 1989 to June 1995,
Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
</TABLE>
INVESTMENT ADVISOR
BANC ONE INVESTMENT ADVISORS CORPORATION
Investment advisory services to each of the Trust's Portfolios are
provided by Banc One Investment Advisors. Banc One Investment Advisors makes the
investment decisions for the assets of the Funds. In addition, Banc One
Investment Advisors continuously reviews, supervises and administers the Funds'
investment program, subject to the supervision of, and policies established by,
the Trustees of the Trust. The Trust's Shares are not sponsored, endorsed or
guaranteed by, and do not constitute obligations or deposits of any bank
affiliate of Banc One Investment Advisors and are not insured by the FDIC or
issued or guaranteed by the U.S. government or any of its agencies.
Banc One Investment Advisors is an indirect, wholly-owned subsidiary of
BANK ONE CORPORATION, a bank holding company incorporated in the state of
Delaware. BANK ONE CORPORATION has affiliate banking organizations in Arizona,
Colorado, Illinois, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma,
Texas, Utah, West Virginia and Wisconsin. In addition, BANK ONE CORPORATION has
several affiliates that engage in data processing, venture capital, investment
and merchant banking, and other diversified services including trust
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management, investment management, brokerage, equipment leasing, mortgage
banking, consumer finance, and insurance.
Banc One Investment Advisors represents a consolidation of the
investment advisory staffs of a number of bank affiliates of BANK ONE
CORPORATION, which have considerable experience in the management of open-end
management investment company portfolios, including One Group (formerly, The One
Group and the Helmsman Fund) since 1985.
The Funds had not commenced operations prior to the date of this
Statement of Additional Information.
All investment advisory services are provided to the Funds by Banc One
Investment Advisors pursuant to an investment advisory agreement dated January
11, 1993 (the "INVESTMENT ADVISORY AGREEMENT"). The Investment Advisory
Agreement will continue in effect as to a particular Fund from year to year, if
such continuance is approved at least annually by the Trust's Board of Trustees
or by vote of a majority of the outstanding Shares of such Fund (as defined
under "ADDITIONAL INFORMATION--Miscellaneous" in this Statement of Additional
Information), and a majority of the Trustees who are not parties to the
respective investment advisory agreements or interested persons (as defined in
the Investment Company Act of 1940) of any party to the respective investment
advisory agreements by votes cast in person at a meeting called for such
purpose. The Investment Advisory Agreement was renewed by the Trust's Board of
Trustees at their quarterly meeting on August 20, 1998. The Investment Advisory
Agreement is terminable as to a particular Fund at any time on 60 days' written
notice without penalty by the Trustees, by vote of a majority of the outstanding
Shares of that Fund, or by the Fund's Advisor as the case may be. The Investment
Advisory Agreement also terminates automatically in the event of any assignment,
as defined in the 1940 Act.
The Investment Advisory Agreement provides that the Investment Advisor
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the performance of the respective
investment advisory agreements, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith, or gross negligence on the
part of Banc One Investment Advisors in the performance of its duties, or from
reckless disregard by it of its duties and obligations thereunder.
GLASS-STEAGALL ACT
In 1971, the United States Supreme Court held in Investment Company Institute v.
Camp that the federal statute commonly referred to as the Glass-Steagall Act
prohibits a national bank from operating a Fund for the collective investment of
managing agency accounts. Subsequently, the Board of Governors of the Federal
Reserve System (the "BOARD") issued a regulation and interpretation to the
effect that the Glass-Steagall Act and such decision: (a) forbid a bank holding
company registered under the Federal Bank Holding Company Act of 1956 (the
"HOLDING COMPANY ACT") or any non-bank affiliate thereof from sponsoring,
organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its Shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment Advisor, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisors to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisors to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act. In addition, state securities laws on this issue
may differ from the interpretations of federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
In the Investment Advisory Agreement with the Trust, Banc One Investment
Advisors has represented to the Trust that it possesses the legal authority to
perform the investment advisory services contemplated by the agreement and
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<PAGE> 149
described in the Prospectuses and this Statement of Additional Information
without violation of applicable statutes and regulations. Future changes in
either federal or state statutes and regulations relating to the permissible
activities of banks or bank holding companies and the subsidiaries or affiliates
of those entities, as well as further judicial or administrative decisions or
interpretations of present and future statutes and regulations, could prevent or
restrict Banc One Investment Advisors from continuing to perform such services
for the Trust. Depending upon the nature of any changes in the services which
could be provided by Banc One Investment Advisors, the Board of Trustees of the
Trust would review the Trust's relationship with Banc One Investment Advisors
and consider taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit or
restrict the proposed activities of BANK ONE CORPORATION subsidiary banks or
their correspondent banks in connection with customer purchases of Shares of the
Trust, these banks might be required to alter materially or discontinue the
services offered by them to customers. It is not anticipated, however, that any
change in the Trust's method of operations would affect its net asset value per
Share or result in financial losses to any customer.
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement, Banc One Investment Advisors
determines, subject to the general supervision of the Board of Trustees of the
Trust and in accordance with each Fund's investment objective and restrictions,
which securities are to be purchased and sold by each such Fund and which
brokers are to be eligible to execute its portfolio transactions. Purchases and
sales of portfolio securities with respect to the Money Market Funds usually are
principal transactions in which portfolio securities are purchased directly from
the issuer or from an underwriter or market maker for the securities. Purchases
from underwriters of portfolio securities generally include a commission or
concession paid by the issuer to the underwriter and purchases from dealers
serving as market makers may include the spread between the bid and asked price.
Transactions on stock exchanges (other than certain foreign stock exchanges)
involve the payment of negotiated brokerage commissions. Transactions in the
over-the-counter market are generally principal transactions with dealers. With
respect to the over-the-counter market, the Trust, where possible, will deal
directly with the dealers who make a market in the securities involved except in
those circumstances where better price and execution are available elsewhere.
While Banc One Investment Advisors generally seeks competitive spreads or
commissions, the Trust may not necessarily pay the lowest spread or commission
available on each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various dealers is
determined by Banc One Investment Advisors with respect to the Funds it serves
based on its best judgment and in a manner deemed fair and reasonable to
Shareholders. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price. Subject to this consideration,
dealers who provide supplemental investment research to Banc One Investment
Advisors may receive orders for transactions by the Trust, even if such dealers
charge commissions in excess of the lowest rates available, provided such
commissions are reasonable in light of the value of brokerage and research
services received. Such research services may include, but are not be limited
to, analysis and reports concerning economic factors and trends, industries,
specific securities, and portfolio strategies. Information so received is in
addition to and not in lieu of services required to be performed by Banc One
Investment Advisors and does not reduce the advisory fees payable to Banc One
Investment Advisors. Such information may be useful to Banc One Investment
Advisors in serving both the Trust and other clients and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to Banc One Investment Advisors in carrying out their obligations
to the Trust. In the last fiscal year, Banc One Investment Advisors directed
brokerage commissions to brokers who provided research services to Banc One
Investment Advisors. Total compensation paid to such brokers amounted to
$14,566,893.79.
The Trust will not execute portfolio transactions through, acquire portfolio
securities issued by, make savings deposits in, or enter into repurchase or
reverse repurchase agreements with its investment advisors or their affiliates
except as may be permitted under the 1940 Act, and will not give preference to
correspondents of BANK ONE CORPORATION subsidiary banks with respect to such
transactions, securities, savings deposits, repurchase agreements, and reverse
repurchase agreements.
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<PAGE> 150
Investment decisions for each Portfolio of the Trust are made independently from
those for the other Portfolios or any other investment company or account
managed by Banc One Investment Advisors. Any such other investment company or
account may also invest in the same securities as the Trust. When a purchase or
sale of the same security is made at substantially the same time on behalf of a
given Fund and another Fund, investment company or account the transaction will
be averaged as to price, and available investments allocated as to amount, in a
manner which Banc One Investment Advisors believes to be equitable to the
Fund(s) and such other investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by a Fund
or the size of the position obtained by a Fund. To the extent permitted by law,
Banc One Investment Advisors may aggregate the securities to be sold or
purchased by it for a Fund with those to be sold or purchased by it for other
Funds or for other investment companies or accounts in order to obtain best
execution. As provided by the Investment Advisory Agreement, in making
investment recommendations for the Trust, Banc One Investment Advisors will not
inquire or take into consideration whether an issuer of securities proposed for
purchase or sale by the Trust is a customer of Banc One Investment Advisors or
its parent or subsidiaries or affiliates and, in dealing with its commercial
customers, Banc One Investment Advisors and its parent, subsidiaries, and
affiliates will not inquire or take into consideration whether securities of
such customers are held by the Trust.
ADMINISTRATOR
The One Group Services Company serves as Administrator (the "ADMINISTRATOR") to
each Portfolio of the Trust pursuant to a Management and Administration
Agreement with the Trust (the "ADMINISTRATION AGREEMENT"). The Board of Trustees
of the Trust approved The One Group Services Company as the sole Administrator
for each Portfolio beginning December 1, 1995. The Administrator assists in
supervising all operations of each Portfolio to which it serves as Administrator
(other than those performed under the respective investment advisory agreements
and Custodian and Transfer Agency Agreements for that Portfolio).
Under the Administration Agreement, the Administrator has agreed to price the
portfolio securities of each Fund it serves and to compute the net asset value
and net income of such Funds on a daily basis, to maintain office facilities for
the Trust, to maintain each such Fund's financial accounts and records, and to
furnish the Trust statistical and research data, data processing, clerical,
accounting, and bookkeeping services, and certain other services required by the
Trust with respect to each such Fund. The Administrator prepares annual and
semi-annual reports to the SEC, prepares federal and State tax returns, prepares
filings with State securities commissions, and generally assists in all aspects
of the Trust's operations other than those performed under the investment
advisory agreements, and Custodian and Transfer Agency Agreements. Under the
Administration Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
Banc One Investment Advisors also serves as Sub-Administrator to each Portfolio
of the Trust, pursuant to an agreement between the Administrator and Banc One
Investment Advisors. Pursuant to this agreement, Banc One Investment Advisors
performs many of the Administrator's duties, for which Banc One Investment
Advisors receives a fee paid by the Administrator.
The Funds had not commenced operations prior to the date of this Statement of
Additional Information.
Unless sooner terminated, the Administration Agreement between the
Trust and The One Group Services Company will continue in effect through
November 30, 1999. The Administration Agreement thereafter shall be renewed
automatically for successive one year terms, unless written notice not to renew
is given by the non-renewing party to the other party at least sixty days prior
to the expiration of the then-current term. The Administration Agreement will be
reviewed and ratified at least annually by the Trust's Board of Trustees,
provided that the Administration Agreement is also reviewed and ratified by the
majority of the Trust's Trustees who are not parties to the Administration
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Administration Agreement, by vote cast in person at a meeting called for the
purpose of reviewing and ratifying the Administration Agreement. The
Administration Agreement may be terminated with respect to a particular
Portfolio only upon mutual agreement of the parties to the Administration
Agreement and for cause (as defined in the Administration Agreement) by the
party alleging cause, on not less than sixty days' notice by the Trust's Board
of Trustees or by The One Group Services Company.
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The Administration Agreement provides that the Administrator shall not be liable
for any error of judgment or mistake of law or any loss suffered by the Trust in
connection with the matters to which the Administration Agreement relates,
except a loss resulting from willful misfeasance, bad faith, or negligence in
the performance of its duties, or from the reckless disregard by it of its
obligations and duties thereunder.
DISTRIBUTOR
The One Group Services Company serves as Distributor to each Portfolio of the
Trust pursuant to its Distribution Agreement with the Trust (the "DISTRIBUTION
AGREEMENT"). The Board of Trustees of the Trust approved The One Group Services
Company as the sole Distributor beginning November 1, 1995. Unless otherwise
terminated, the Distribution Agreement will continue in effect until October 31,
1999 and will continue from year to year if approved at least annually (i) by
the Trust's Board of Trustees or by the vote of a majority of the outstanding
Shares of the Funds (see "ADDITIONAL INFORMATION-- Miscellaneous," in this
Statement of Additional Information) that are parties to the Distribution
Agreement, and (ii) by the vote of a majority of the Trustees of the Trust who
are not parties to the Distribution Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. The agreement may be terminated in the event of its assignment, as
defined in the 1940 Act. The One Group Services Company is a broker-dealer
registered with the Securities and Exchange Commission, and is a member of the
National Association of Securities Dealers, Inc.
DISTRIBUTION PLAN
The operation and fees with respect to Class A Shares, Class B Shares, Class C
Shares, and Service Class Shares of the Trust payable under the Trust's
Distribution and Shareholder Services Plans, to which Class A Shares, Class B
Shares, Class C Shares, and Service Class Shares of each Fund are subject, are
described in each such Fund's Prospectuses and in the Multiple Class Plan.
The Distribution and Shareholder Services Plan with respect to Class A Shares
(the "Distribution Plan") was initially approved on July 28, 1989 by the Trust's
Board of Trustees, including a majority of the Trustees who are not interested
persons of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the Distribution Plan (the "INDEPENDENT
TRUSTEES"). The Distribution Plan originally applied to the single class of
Shares of each Portfolio of the Trust that existed prior to the offering of the
Portfolios' Shares as five separate classes. An amendment to the Distribution
Plan was approved by the Independent Trustees on October 21, 1991, and became
effective on February 7, 1992. Such amendment limited fees under the
Distribution Plan only to the Class A Shares of each Portfolio. The Distribution
Plan was amended again on February 11, 1993 in order to make Retirement Class
Shares (now the Service Class Shares) subject to distribution fees. The
Distribution Plan was further amended on February 29, 1996, to eliminate certain
"defensive" provisions of the Distribution Plan. A Distribution and Shareholder
Services Plan (the "CDSC PLAN") for Class B and Class C Shares was initially
approved on August 12, 1993 by the Independent Trustees. The CDSC Plan was
re-executed on December 13, 1995 and amended on February 20, 1997.
The Funds had not commenced operations prior to the date of this Statement
Additional Information.
In accordance with Rule 12b-1 under the 1940 Act, the Distribution Plan and CDSC
Plan may be terminated with respect to the Class A Shares, Class B Shares, Class
C Shares or Service Class Shares of any Fund by a vote of a majority of the
Independent Trustees, or by a vote of a majority of the outstanding Class A
Shares, Class B Shares, Class C Shares or Service Class Shares, respectively, of
that Fund. The Distribution Plan and CDSC Plan may be amended by vote of the
Trust's Board of Trustees, including a majority of the Independent Trustees,
cast in person at a meeting called for such purpose, except that any change in
the Distribution Plan or Class B Distribution Plan that would materially
increase the distribution fee with respect to the Class A Shares, Class B
Shares, Class C Shares or Service Class Shares of a Fund requires the approval
of that Fund's Class A, Class B, Class C or Service Class Shareholders,
respectively. The Trust's Board of Trustees will review on a quarterly and
annual basis written reports of the amounts received and expended under the
Distribution Plan (including amounts expended by the Distributor to
Participating Organizations pursuant to the Servicing Agreements entered into
under the Distribution Plan)
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indicating the purposes for which such expenditures were made.
CUSTODIAN AND TRANSFER AGENT
Cash and securities owned by the Funds are held by State Street Bank and Trust
Company ("STATE STREET") as Custodian. State Street serves the respective Funds
as Custodian pursuant to a Custodian Agreement with the Trust (the "CUSTODIAN
AGREEMENT"). Under the Custodian Agreement, State Street (i) maintains a
separate account or accounts in the name of each Fund; (ii) makes receipts and
disbursements of money on behalf of each Fund; (iii) collects and receives all
income and other payments and distributions on account of the Funds' portfolio
securities; (iv) responds to correspondence from security brokers and others
relating to its duties; and (v) makes periodic reports to the Trust's Board of
Trustees concerning the Trust's operations. State Street may, at its own
expense, open and maintain a sub-custody account or accounts on behalf of the
Trust, provided that State Street shall remain liable for the performance of all
of its duties under the Custodian Agreement. NBD Bank serves as Sub-Custodian
with respect to certain securities pursuant to an agreement between the Trust,
State Street and NBD Bank.
Bank One Trust Company, N.A. serves as Sub-Custodian in connection with the
Trust's securities lending activities, pursuant to agreements between the Trust,
State Street and Bank One Trust Company. Bank One Trust Company receives a fee
paid by the Trust.
Rules adopted under the 1940 Act permit the Trust to maintain its securities and
cash in the custody of certain eligible banks and securities depositories. The
Trust intends to select foreign custodians or sub-custodians to maintain foreign
securities of the Funds pursuant to such rules, following a consideration of a
number of factors, including, but not limited to, the reliability and financial
stability of the institution; the ability of the institution to perform
custodial services for the Trust; the reputation of the institution in its
national market; the political and economic stability of the country in which
the institution is located; and the risks of potential nationalization or
expropriation of Trust assets. In addition, the 1940 Act requires that foreign
bank sub-custodians, among other things have Shareholder equity in excess of
$200 million, have no lien on the Trust's assets and maintain adequate and
accessible records.
State Street serves as Transfer Agent and Dividend Disbursing Agent for each
Fund pursuant to Transfer Agency Agreements with the Trust (the "TRANSFER AGENCY
AGREEMENT"). Under the Transfer Agency Agreements, State Street has agreed (i)
to issue and redeem Shares of the Trust; (ii) to address and mail all
communications by the Trust to its Shareholders, including reports to
Shareholders, dividend and distribution notices, and proxy material for its
meetings of Shareholders; (iii) to respond to correspondence or inquiries by
Shareholders and others relating to its duties; (iv) to maintain Shareholder
accounts and certain sub-accounts; and (v) to make periodic reports to the
Trust's Board of Trustees concerning the Trust's operations.
EXPERTS
PricewaterhouseCoopers LLP, serves as the Trust's independent public
accountants. PricewaterhouseCoopers examines financial statements for the Trust
and provides other audit, tax, and related services.
The law firm of Ropes & Gray, One Franklin Square, 1301 K Street, N.W., Suite
800 East, Washington, D.C. 20005 is counsel to the Trust. From time to time,
Ropes & Gray has rendered legal services to BANK ONE CORPORATION and its
subsidiary banks.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Trust is a Massachusetts Business Trust. The Trust's Declaration of
Trust was filed with the Secretary of State of the Commonwealth of Massachusetts
on May 23, 1985 and authorizes the Board of Trustees to issue an unlimited
number of Shares, which are units of beneficial interest, without par value. The
Trust's Declaration of Trust authorizes the Board of Trustees to establish one
or more series of Shares of the Trust, and to classify or
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reclassify any series into one or more classes by setting or changing in any one
or more respects the preferences, designations, conversion, or other rights,
restrictions, or limitations as to dividends, conditions of redemption,
qualifications, or other terms applicable to the Shares of such class, subject
to those matters expressly provided for in the Declaration of Trust, as amended,
with respect to the Shares of each series of the Trust. The Trust presently
includes 58 series of Shares, which represent interests in the following:
1. The Prime Money Market Fund;
2. The U.S. Treasury Securities Money Market Fund;
3. The Municipal Money Market Fund;
4. The Ohio Municipal Money Market Fund;
5. The Equity Income Fund;
6. The Mid Cap Value Fund;
7. The Mid Cap Growth Fund;
8. The Diversified Equity Fund;
9. The Small Cap Growth Fund;
10. The Large Cap Value Fund;
11. The Large Cap Growth Fund;
12. The International Equity Index Fund;
13. The Equity Index Fund;
14. The Balanced Fund;
15. The Income Bond Fund;
16. The Short-Term Bond Fund;
17. The Intermediate Bond Fund;
18. The Government Bond Fund;
19. The Ultra Short-Term Bond Fund;
20. The High Yield Bond Fund;
21. The Investor Growth Fund;
22. The Investor Growth & Income Fund;
23. The Investor Aggressive Growth Fund;
24. The Investor Fixed Income Fund;
25. The Investor Conservative Growth Fund;
26. The Investor Balanced Fund;
27. The Municipal Income Fund;
28. The Intermediate Tax-Free Bond Fund;
29. The Ohio Municipal Bond Fund;
30. The Texas Municipal Bond Fund;
31. The West Virginia Municipal Bond Fund;
32. The Kentucky Municipal Bond Fund;
33. The Louisiana Municipal Bond Fund;
34. The Arizona Municipal Bond Fund;
35. The Treasury Money Market Fund;
36. The Treasury Only Money Market Fund;
37. The Government Money Market Fund;
38. The Tax-Exempt Money Market Fund;
39. The Institutional Prime Money Market Fund;
40. The Treasury & Agency Fund;
41. The Small Cap Value Fund;
42. The Diversified Mid Cap Fund;
43. The Diversified International Fund;
44. The Market Expansion Index Fund;
45. The Bond Fund;
46. The Short-Term Municipal Bond Fund;
47. The Tax-Free Bond Fund;
48. The Michigan Municipal Bond Fund;
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49. The Michigan Municipal Money Market Fund;
50. The Cash Management Money Market Fund;
51. The Treasury Cash Management Money Market Fund;
52. The Treasury Prime Cash Management Money Market Fund;
53. The U.S. Government Securities Cash Management Money Market Fund; and
54. The Municipal Cash Management Money Market Fund
55. The U.S. Government Securities Money Market Fund
56. The Treasury Prime Money Market Fund
57. The Real Estate Fund
58. The Technology Fund
The Portfolios of the Trust (other than the Money Market Funds listed above)
offer shares in four separate classes: Class I Shares, Class A Shares, Class B
and Class C Shares. The U.S. Treasury Securities Money Market Fund and the Prime
Money Market Fund offer Class I Shares, Class A Shares, Class B Shares, Class C
Shares, and Service Class Shares. The Government Money Market Fund and the
Treasury Only Money Market Fund offer only a single class of shares. The
Municipal Money Market Fund, the Ohio Municipal Money Market Fund, the Michigan
Municipal Money Market Fund, the U.S. Government Securities Money Market Fund
and the Treasury Prime Money Market Fund offer Class I, Class A, Class C, and
Service Class Shares. The Cash Management Funds offer Class A and Class I Shares
only. See the relevant Prospectus for those Funds for more details.
Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus and this Statement of Additional
Information, the Trust's Shares will be fully paid and non-assessable. In the
event of a liquidation or dissolution of the Trust, Shares of a Fund are
entitled to receive the assets available for distribution belonging to the Fund,
and a proportionate distribution, based upon the relative asset values of the
respective Funds, of any general assets not belonging to any particular Fund
which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of the outstanding voting securities of an investment company
such as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding Shares of each Fund
affected by the matter. For purposes of determining whether the approval of a
majority of the outstanding Shares of a Fund will be required in connection with
a matter, a Fund will be deemed to be affected by a matter unless it is clear
that the interests of each Fund in the matter are identical, or that the matter
does not affect any interest of the Fund. Under Rule 18f-2, the approval of an
investment advisory agreement or any change in investment policy would be
effectively acted upon with respect to a Fund only if approved by a majority of
the outstanding Shares of such Fund. However, Rule 18f-2 also provides that the
ratification of independent public accountants, the approval of principal
underwriting contracts, and the election of Trustees may be effectively acted
upon by Shareholders of the Trust voting without regard to series.
Class A Shares, Class B Shares, Class C Shares and Service Class Shares of a
Fund have exclusive voting rights with respect to matters pertaining to the
Fund's Distribution Plan.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, holders of units of beneficial interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Trust's Declaration of Trust
provides that Shareholders shall not be subject to any personal liability for
the obligations of the Trust, and that every written agreement, obligation,
instrument, or undertaking made by the Trust shall contain a provision to the
effect that the Shareholders are not personally liable thereunder. The
Declaration of Trust provides for indemnification out of the trust property of
any Shareholder held personally liable solely by reason of his being or having
been a Shareholder. The Declaration of Trust also provides that the Trust shall,
upon request, assume the defense of any claim made against any Shareholder for
any act or obligation of the Trust, and shall satisfy any judgment thereon.
Thus, the risk of a Shareholder incurring financial loss on account of
Shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
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The Declaration of Trust states further that no Trustee, officer, or agent of
the Trust shall be personally liable in connection with the administration or
preservation of the assets of the trust or the conduct of the Trust's business;
nor shall any Trustee, officer, or agent be personally liable to any person for
any action or failure to act except for his own bad faith, willful misfeasance,
gross negligence, or reckless disregard of his duties. The Declaration of Trust
also provides that all persons having any claim against the Trustees or the
Trust shall look solely to the assets of the trust for payment.
PERFORMANCE
From time to time, the Funds may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of a Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in a Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects an actual rate of return over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total returns smooth
out variations in performance; they are not the same as actual year-by-year
results.
The distribution rate is computed by dividing the total amount of the dividends
per share paid out during the past period by the maximum offering price or
month-end net asset value depending on the class of a Fund. This figure is then
"annualized" (multiplied by 365 days and divided by the applicable number of
days in the period).
Funds with a front-end sales charge would incorporate the offering price into
the distribution yield in place of month-end net asset value.
Distribution rate is a measure of the level of income paid out in cash to
Shareholders over a specified period. It differs from yield and total return and
is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period.
Further information about the performance of each class of the Funds is
contained in the Trust's Annual Report to Shareholders for The One Group.
Further information about the performance of the Predecessor Funds is contained
in the Pegasus Funds', Pegasus Money Market Funds and Pegasus Cash Management
Funds' Annual Report(s) to Shareholders. Copies of such reports may be obtained
without charge by calling 1-800-480-4111.
CALCULATION OF PERFORMANCE DATA
The yield for each Money Market Fund is computed with respect to each class of
Shares by determining the percentage net change, excluding capital changes, in
the value of an investment in one Share of the particular class of the Fund over
the base period, and multiplying the net change by 365/7 (or approximately 52
weeks). The effective yield of each class of each Fund represents a compounding
of the yield by adding 1 to the number representing the percentage change in
value of the investment during the base period, raising that sum to a power
equal to 365/7, and subtracting 1 from the result. No performance data is
available with respect to the Money Market Funds because they had not commenced
operations prior to the date of this Statement of Additional Information.
The performance of the Funds may be compared in publications to the performance
of various indices and investments (such as other mutual funds) for which
reliable performance data is available, as well as averages,
44
<PAGE> 156
performance rankings or other information prepared by recognized mutual fund
statistical services, as set forth below.
Performance information showing a Fund's total return and/or 30-day yield with
respect to a particular class may be presented from time to time in advertising
and sales literature regarding the Equity Funds. A 30-day yield is calculated by
dividing the net investment income per-share earned during the 30-day base
period by the maximum offering price per share on the last day of the period,
according to the following formula:
a-b
---
30-Day Yield = 2[(cd +1)6-1]
In the above formula, "a" represents dividends and interest earned by a
particular class during the 30-day base period; "b" represents expenses accrued
to a particular class for the 30-day base period (net of reimbursements); "c"
represents the average daily number of Shares of a particular class outstanding
during the 30-day base period that were entitled to receive dividends; and "d"
represents the maximum offering price per share of a particular class on the
last day of the 30-day base period.
A Fund's respective cumulative total return and average annual total return was
determined by calculating the change in the value of a hypothetical $1,000
investment in a particular class of the Fund for each of the periods shown.
Cumulative total return for a particular class of a Fund is computed by
determining the rate of return over the applicable period that would equate the
initial amount invested to the ending redeemable value of the investment. The
cumulative return is calculated as the total dollar increase or decrease in the
value of an account assuming reinvestment of all distributions divided by the
original initial investment. The average annual return for a particular class of
a Fund is computed by determining the average annual compounded rate of return
over the applicable period that would equate the initial amount invested to the
ending redeemable value of the investment. The ending redeemable value includes
dividends and capital gain distributions reinvested at net asset value. The
resulting percentages indicated the positive or negative investment results that
an investor would have experienced from changes in share price and reinvestment
of dividends and capital gains distributions.
Performance information showing a Fund's and/or particular Class's distribution
rate may be presented from time to time in advertising and sales literature
regarding the Equity Funds. The distribution rate is calculated as follows:
distribution yield = a/(b) x 365
-----------
_______________________________________________________c
In the formula, "a" represents dividends distributed by a particular class
during that period; "b" represents month end offer price or net asset value for
a particular class; "c" represents the number of days in the period being
calculated. "365" is the number of days in a year, used to annualize the
distribution yield.
Performance will fluctuate from time to time and is not necessarily
representative of future results. Accordingly, a Fund's performance may not
provide for comparison with bank deposits or other investments that pay a fixed
return for a stated period of time. Performance is a function of a Fund's
quality, composition, and maturity, as well as expenses allocated to the Fund.
Fees imposed upon customer accounts at a bank, with regard to Class I Shares and
Service Class Shares, or a Participating Organization, with regard to Class A
and Class B Shares, will reduce a Fund's effective yield to customers.
In addition, the performance of each class of a Fund may from time to
time be compared to that of other mutual funds tracked by mutual fund rating
services, to that of broad groups of comparable mutual funds or to that of
unmanaged indices that may assume investment of dividends but do not reflect
deductions for administrative and management costs. Further, the performance of
each class of a Fund may be compared to other funds or to relevant indices that
may calculate total return without reflecting sales charges; in which case, a
Fund may advertise its total return in the same manner. If reflected, sales
charges would reduce these total return calculations.
45
<PAGE> 157
The Money Market Funds may quote actual total return performance in
advertising and other types of literature compared to indices or averages of
alternative financial products available to prospective investors. The
performance comparisons may include the average return of various bank
instruments, some of which may carry certain return guarantees offered by
leading banks and thrifts, as monitored by the BANK RATE MONITOR, and those of
corporate and government security price indices of various durations prepared by
Shearson Lehman Brothers, Solomon Brothers, Inc. and the IBC/Donoghue
organization. These indices are not managed for any investment goals.
The Money Market Funds may also use comparative performance information
computed by and available from certain industry and general market research and
publications, such as Lipper Analytical Services, Inc.
Statistical and performance information compiled and maintained by CDA
Technologies, Inc. and Interactive Data Corporation may also be used. CDA is a
performance evaluation service that maintains a statistical data base of
performance, as reported by a diverse universe of independently-managed mutual
funds. Interactive Data Corporation is a statistical access service that
maintains a data base of various industry indicators, such as historical and
current price/earning information and individual stock and fixed income price
and return information.
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H. 15), may also be used.
Comparative information on the Consumer Price Index may also be
included. This Index, as prepared by the U.S. Bureau of Labor Statistics, is the
most commonly used measure of inflation. It indicates the cost fluctuations of a
representative group of consumer goods. It does not represent a return on
investment.
The Equity Funds may quote actual total return performance from time to
time in advertising and other types of literature compared to results reported
by the Dow Jones Industrial Average.
The Dow Jones Industrial Average is an industry-accepted unmanaged
index of generally conservative securities used for measuring general market
performance. The performance reported will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The index does
not take into account any brokerage commissions or other fees. Comparative
information on the Consumer Price Index may also be included.
The Equity Funds may also promote the yield and/or total return
performance and use comparative performance information computed by and
available from certain industry and general market research and publications,
such as Lipper Analytical Services, Inc.; they may also use indices such as the
Standard & Poor's 400 Composite Stock Index, the Standard & Poor's 500 Composite
Stock Index, the Standard & Poor's 600 Composite Stock Index, the Russell 2000,
or the Morgan Stanley International European, Asian and Far East Gross Domestic
Product Index for performance comparison. Statistical and performance
information compiled and maintained by CDA Technologies, Inc. and Interactive
Data Corporation may also be used.
MISCELLANEOUS
The Trust is not required to hold a meeting of Shareholders for the
purpose of electing Trustees except that (i) the Trust is required to hold a
Shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by Shareholders and
(ii) if, as a result of a vacancy on the Board of Trustees, less than two-thirds
of the Trustees holding office have been elected by the Shareholders, that
vacancy may only be filled by a vote of the Shareholders. In addition, Trustees
may be removed from office by a written consent signed by the holders of Shares
representing two-thirds of the outstanding Shares of the Trust at a meeting duly
called for the purpose, which meeting shall be held upon the written request of
the holders of Shares representing not less than 20% of the outstanding Shares
of the Trust. Except as set forth above, the Trustees may continue to hold
office and may appoint successor Trustees.
As used in the Trust's Prospectuses and in this Statement of Additional
Information, "assets belonging to a Fund" means the consideration received by
the Trust upon the issuance or sale of Shares in that Fund, together with
46
<PAGE> 158
all income, earnings, profits, and proceeds derived from the investment thereof,
including any proceeds from the sale, exchange, or liquidation of such
investments, and any funds or payments derived from any reinvestment of such
proceeds, and any general assets of the Trust not readily identified as
belonging to a particular Fund that are allocated to that Fund by the Trust's
Board of Trustees. The Board of Trustees may allocate such general assets in any
manner it deems fair and equitable. It is anticipated that the factor that will
be used by the Board of Trustees in making allocations of general assets to
particular Funds will be the relative net asset values of the respective Funds
at the time of allocation. Assets belonging to a particular Fund are charged
with the direct liabilities and expenses in respect of that Fund, and with a
share of the general liabilities and expenses of the Trust not readily
identified as belonging to a particular Fund that are allocated to that Fund in
proportion to the relative net asset values of the respective Funds at the time
of allocation. The timing of allocations of general assets and general
liabilities and expenses of the Trust to particular Funds will be determined by
the Board of Trustees of the Trust and will be in accordance with generally
accepted accounting principles. Determinations by the Board of Trustees of the
Trust as to the timing of the allocation of general liabilities and expenses and
as to the timing and allocable portion of any general assets with respect to a
particular Fund are conclusive. For information regarding the allocations of
Class Expenses to particular classes of a Fund, see the respective Prospectus of
the Fund under "MANAGEMENT-Expenses."
As used in the Trust's Prospectuses and in this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Trust, a
particular Fund, or a particular class of Shares of a Fund, means the
affirmative vote of the lesser of (a) more than 50% of the outstanding Shares of
the Trust, such Fund, or such class of Shares of such Fund, or (b) 67% or more
of the Shares of the Trust, such Fund, or such class of Shares of such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Trust, such Fund, or such class of Shares of such Fund are
represented in person or by proxy.
The Trust is registered with the Securities and Exchange Commission as
a management investment company. Such registration does not involve supervision
by the Commission of the management or policies of the Trust.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Securities and Exchange Commission. Copies of such information may be
obtained from the Commission upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any State in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and Statement of Additional Information.
As of April 9, 1999, BANK ONE CORPORATION, One First National Plaza,
Chicago, Illinois 60670(a Delaware Corporation) through Bank Subsidiaries,
acting on behalf of their underlying accounts, held of record substantially all
of the Class I Shares of the Trust, and possessed voting or investment power as
follows:
<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL
FUND
FUND OWNERSHIP
- --------------------------------------------------------------------------------
<S> <C>
Large Cap Growth Fund 67.66%
Mid Cap Value Fund 74.99%
Mid Cap Growth Fund 71.60%
Income Bond Fund 83.81%
Intermediate Tax-Free Bond Fund 57.42%
Prime Money Market Fund 49.61%
U.S. Treasury Securities Money Market Fund 18.06%
Municipal Money Market Fund 78.69%
</TABLE>
47
<PAGE> 159
<TABLE>
<S> <C>
Equity Income Fund 74.43%
Equity Index Fund 67.59%
Large Cap Value Fund 81.89%
Ohio Municipal Bond Fund 93.35%
Short-Term Bond Fund 92.67%
International Equity Index Fund 73.96%
Balanced Fund 73.46%
Ohio Municipal Money Market Fund 52.27%
Municipal Income 97.32%
Kentucky Municipal Bond Fund 93.25%
Government Bond Fund 84.59%
Ultra Short-Term Bond Fund 75.23%
Louisiana Municipal Bond Fund 89.63%
Diversified Equity Fund 73.70%
Small Cap Growth Fund 75.66%
Intermediate Bond Fund 75.83%
Arizona Municipal Bond Fund 94.50%
West Virginia Municipal Bond Fund 98.73%
Investor Growth Fund 49.75%
Investor Growth & Income Fund 46.86%
Investor Balanced Fund 53.92%
Investor Conservative Growth Fund 63.74%
Treasury Only Money Market Fund 22.83%
Government Money Market Fund 10.04%
Treasury & Agency Fund 95.96%
High Yield Bond Fund 41.23%
Market Expansion Index Fund 3.48%
Michigan Municipal Money Market Fund 76.69%
Cash Management Money Market Fund 16.71%
U.S. Government Cash Management Money Market Fund 0.34%
Diversified International Equity Fund 61.31%
Short-Term Bond Fund 91.02%
Bond Fund 62.15%
Michigan Municipal Bond Fund 97.23%
Small Cap Value Fund 46.17%
Diversified Mid Cap Fund 7.94%
Treasury Prime Cash Management Money Market Fund 0.65%
Treasury Cash Management Money Market Fund 0.82%
Municipal Cash Management Money Market Fund 7.946%
</TABLE>
As a result, BANK ONE CORPORATION may be deemed to be a "controlling
person" of Class I Shares of each of the aforementioned Portfolios (other than
the Government Money Market Fund, the U.S. Treasury Securities Money Market
Fund, the Diversified Mid Cap Fund, the Treasury Only Money Market Fund, the
Market Expansion Index Fund, the Cash Management Money Market Fund, the U.S.
Government Cash Management Money Market Fund, the Treasury Cash Management Money
Market Fund, the Treasury Prime Cash Management Money Market Fund, and the
Municipal Cash Management Money Market Fund, under the Investment Company Act of
1940.
As of April 9, 1999, the following persons were the beneficial owners
of more than 25% of the outstanding Shares of the following class of Shares of
the following Portfolios:
48
<PAGE> 160
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
The One Group Services Co Mid Cap Value Fund 97.08% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
The One Group Services Co Small Cap Value Fund 97.12% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
NBD Bank NA Treasury Cash Management 59.52% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
Banc One Corporation Balanced Fund 34.40% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
The One Group Services Co Government Bond Fund 97.08% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
The One Group Services Co High Yield Bond Fund 97.10% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
The One Group Services Co Diversified International 97.11% Record &
3435 Stelzer Road Fund Beneficial
Columbus, OH 43219-6004 Class C
The One Group Services Co Diversified Mid Cap Fund 97.14% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
NBD Bank NA Cash Management Money Market 26.08% Record &
9000 Haggerty Road Fund Beneficial
Belleville, MI 48111-1632 Class A
The One Group Services Co Market Expansion Index Fund 79.46% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
NBD Michigan Michigan Municipal Money 52.63% Record &
9000 Haggerty Road Market Fund Beneficial
Belleville, MI 48111-1632 Class A
NBD Bank Municipal Cash Management 46.79% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
</TABLE>
49
<PAGE> 161
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
NBD Bank Municipal Cash Management 29.94% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
</TABLE>
As a result the aforementioned persons may be deemed to be "Controlling Persons"
of the class of shares of the Portfolio in which they own such shares under the
1940 Act.
The table below indicates record and beneficial owners of over 5% of any class
of shares of the Portfolios.
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Northern Trust Bank of AZ Ttee Arizona Municipal Bond Fund 27.35% Record
For Thomas A Brand & Rev Trust Class A
PO Box 92956
Chicago, IL 60675-2956
Dean Witter for the Benefit of Arizona Municipal Bond Fund 11.77% Record
Elizabeth Ryan Miller Class A
4140 N 49th Way
Church St Station - P.O. Box 250
New York, NY 10013-0250
Dean Witter Reynolds Arizona Municipal Bond Fund 11.54% Record
FBO Theodore Cesarano Class A
4617 E. Bernell Road
Phoenix, AZ 85028-5520
Gust Trust Under Agreement 1/17 Arizona Municipal Bond Fund 10.13% Record
Devens Gust & Mary Elizabeth Gust Class A
Co-Trustees
P.O. Box 25
Mule Creek, NM 88051-0025
Dean Witter For The Benefit Of Arizona Municipal Bond Fund 8.26% Record
The David B & Frances L Hartline Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of Arizona Municipal Bond Fund 6.51% Record
William J Lofy Trust Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of Arizona Municipal Bond Fund 5.34% Record
Florence E Sutton Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
</TABLE>
50
<PAGE> 162
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter For The Benefit Of Arizona Municipal Bond Fund 41.89% Record
Charles Stoddard & Class B
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of Arizona Municipal Bond Fund 21.64% Record
Eugene B Debuck Class B
4550 North Flowing Wells #90
Church St Station - P.O. Box 250
New York, NY 10008-0250
Carolyn S Ward Arizona Municipal Bond Fund 14.70% Record &
James D Ward JT TEN Class B Beneficial
825 W Annandale
Tucson, AZ 85737-6923
Dean Witter For The Benefit Of Arizona Municipal Bond Fund 9.47% Record
Marshall L Silverstein Trust Class B
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Scottsdale, AZ 85258-1618
Dean Witter For The Benefit Of Arizona Municipal Bond Fund 5.93% Record
Pete R Samorano & Class B
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Strafe & Co Arizona Municipal Bond Fund 99.38% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co Large Cap Growth Fund 71.20% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Eagle & Co Large Cap Growth Fund 11.96% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Banc One Sec Svgs Plan Large Cap Growth Fund 11.36% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Banc One Corporation Large Cap Growth Fund 9.98% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
</TABLE>
51
<PAGE> 163
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co Mid Cap Value Fund 6.48% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
BISYS Brokerage Services Inc Mid Cap Value Fund 5.88% Record
FBO Rapistan Demag Class A
PO Box 4054
Concord, CA 94524-4054
The One Group Services Co Mid Cap Value Fund 97.08% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
Strafe & Co Mid Cap Value Fund 78.25% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Corporation Mid Cap Value Fund 11.51% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Emp Ret Plan of NBD Bancorp Mid Cap Value Fund 8.81% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Banc One Securities Corp FBO Mid Cap Growth Fund 18.63% Record
The One Investment Solution Class A
733 Greencrest Dr
Westerville, OH 43081-4903
Invesco Trust Co TTEE Mid Cap Growth Fund 5.72% Record
T D Williamson, Inc Thrift Plan Class A
PO Box 77405
Atlanta, GA 30357-1405
</TABLE>
52
<PAGE> 164
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Banc One Securities Corp FBO Mid Cap Growth Fund 86.70% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co Mid Cap Growth Fund 81.90% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Corporation Mid Cap Growth Fund 13.11% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Dean Witter For The Benefit Of Income Bond Fund 5.86% Record
Alpert Corp Money Purchase Plan Class A
Steven Kurtz TTEE
5 World Trade Center 6th Floor
New York, NY 10048-0205
Strafe & Co Income Bond Fund 86.09% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Inv Option Plan Income Bond Fund 9.74% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
NCR Benefit Account Income Bond Fund 6.45% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Strafe & Co Intermediate Tax-Free Fund 58.19% Record
BOIA _ One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
53
<PAGE> 165
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Eagle & Co. Intermediate Tax-Free Fund 28.76% Record
P.O. Box 804357 Class I
Chicago, IL 60680-4105
Eagle & Co. Intermediate Tax-Free Fund 7.30% Record
P.O. Box 804357 Class I
Chicago, IL 60680-4105
Pershing As Agent - Omnibus Account Prime Money Market Fund 31.97% Record
For Exclusive Benefit of Class A
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
Dean Witter FBO Prime Money Market Fund 17.90% Record
Banc One Securities Class A
PO Box 250 Church Street Station
New York, NY 10013-0250
BISYS Fund Services Inc Prime Money Market Fund 9.12% Record
Fbo Bank One Corporate Sweep Class A
3435 Stelzer Road Suite 1000
Columbus, OH 43219-6004
Strafe & Co Prime Money Market Fund 71.35% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Trust Company NA Prime Money Market Fund 5.34% Record
Omnibus-Corporate Cash Sweep AC Class I
Attn Cash Management DB3
235 W Schrock Rd
Westerville, OH 43081-2874
Pershing As Agent - Omnibus Account US Treasury Securities Money 19.74% Record
For Exclusive Benefit of Market Fund
One Group Customer Accounts Class A
1 Pershing Plz
Jersey City, NJ 07399-0001
</TABLE>
54
<PAGE> 166
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
BISYS Fund Services Inc US Treasury Securities Money 18.88% Record
Fbo Bank One Corporate Sweep Market Fund
3435 Stelzer Road Suite 1000 Class A
Columbus, OH 43219-6004
BISYS Fund Services Inc US Treasury Securities Money 16.11% Record
Fbo Bank One Securities Market Fund
3435 Stelzer Road Suite 1000 Class A
Columbus, OH 43219-6004
Dean Witter FBO US Treasury Securities Money 15.06% Record
Banc One Securities Market Fund
PO Box 250 - Church Street Station Class A
New York, NY 10013-0250
BISYS Fund Services Inc US Treasury Securities Money 14.79% Record
Fbo Bank One Texas Sweep Market Fund
3435 Stelzer Road Suite 1000 Class A
Columbus, OH 43219-6004
State Street Bank & Trust Co US Treasury Securities Money 10.40% Record
Cust for the IRA Rollover of Market Fund
Michael R Nides Class B
2046A Dickory Ave.
New Orleans, LA 70123-5817
Dean Witter For the Benefit Of US Treasury Securities Money 8.94% Record
Mary Sue Gilpin Market Fund
413 Dunmoreland Circle Class B
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Donaldson Lufkin Jenrette US Treasury Securities Money 8.02% Record
PO Box 2052 Market Fund
Jersey City, NJ 07303-2052 Class B
State Street Bank & Trust Co US Treasury Securities Money 5.97% Record
Cust for the IRA of Market Fund
Jan Schlabowske Class B
W127 S9189 North Cape Rd
Muskego, WI 53150-4621
</TABLE>
55
<PAGE> 167
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter - For the Benefit Of US Treasury Securities Money 5.69% Record
Carmen T Teller and Market Fund
PO Box 250 Church Street Station Class B
New York, NY 10008-0250
Dean Witter For the Benefit Of US Treasury Securities Money 41.18% Record
Martin Homes Inc Prof Shar Pln Market Fund
PO Box 250 - Church Street Station Class C
New York, NY 10008-0250
Dean Witter For The Benefit Of US Treasury Securities Money 20.57% Record
Merrill A. Kirk Market Fund
Church Street Station - PO Box 250 Class C
New York, NY 10013-0250
Dean Witter For The Benefit Of US Treasury Securities Money 17.62% Record
Merrill A. Kirk Market Fund
Church Street Station - PO Box 250 Class C
New York, NY 10013-0250
Dean Witter For The Benefit Of US Treasury Securities Money 7.92% Record
Timothy J. McMullen Market Fund
Church Street Station - PO Box 250 Class C
New York, NY 10013-0250
Dean Witter For The Benefit Of US Treasury Securities Money 6.23% Record
Osareni Christopher Ogiesoba & Margaret Iyobosa Market Fund
Ogiesoba JTTE Class C
Church Street Station - PO Box 250
New York, NY 10013-0250
Strafe & Co (N) US Treasury Securities Money 75.06% Record
BOIA - One Group Operations Market Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
Bank one Trust Company NA US Treasury Securities Money 13.79% Record
Omnibus-Corporate Cash Sweep AC Market Fund
235 W Schrock Rd Class I
Westerville, OH 43081-2874
First National Bank of Chicago US Treasury Securities Money 6.19% Record
Corporate Trust Administration Market Fund
1 F&B Plaza, Ste. 0126 Class I
Chicago, IL 60670
</TABLE>
56
<PAGE> 168
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Pershing As Agent - Omnibus Account Municipal Money Market Fund 42.02% Record
For Exclusive Benefit of Class A
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
Dean Witter FBO Municipal Money Market Fund 16.98% Record
Banc One Securities Class A
PO Box 250 - Church Street Station
New York, NY 10013-0250
BISYS Fund Services Inc Municipal Money Market Fund 8.06% Record
FBO Bank One Corporate Sweep Class A
3435 Stelzer Road Suite 1000
Columbus, OH 43219-6004
Strafe & Co Municipal Money Market Fund 94.79% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Dean Witter For The Benefit Of Equity Income Fund 67.09% Record
McKee Char TR/Lynn A Hammond & Class C
Clare W White Co-TTEES
Church St Station - PO Box 250
New York, NY 10013-0250
UMB Bank Cust Fbo Equity Income Fund 7.03% Record
Bruce W Young IRA Class C
718 Sycamore Ave SPC 200
Vista, CA 92083-7952
Dean Witter For The Benefit Of Equity Income Fund 5.54% Record
Williams Brother Construction Class C
Inc 401(K) PSP Thomas J Williams
Church St Station - PO Box 250
New York, NY 10013-0250
Strafe & Co Equity Income Fund 76.76% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
57
<PAGE> 169
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Eagle & Co. Equity Income Fund 16.57% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Banc One Securities Corp Fbo Equity Index Fund 19.09% Record
The One Investment Solution Class A
733 Greencrest Dr
Westerville, OH 43081-4903
Banc One Securities Corp Fbo Equity Index Fund 60.17% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. Equity Index Fund 75.61% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Sec Svgs Plan -Equity Fund Equity Index Fund 18.35% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Cons Power Union Welfare Benefit Equity Index Fund 13.07% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Hojo & Co. Equity Index Fund 8.44% Record
P.O. Box 804357 Class I
Chicago, IL 60680-4105
Oakland City Retirement System Equity Index Fund 6.75% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Hojo & Co. Equity Index Fund 5.66% Record
P.O. Box 804357 Class I
Chicago, IL 60680-4105
</TABLE>
58
<PAGE> 170
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette Large Cap Value Fund 74.65% Record
PO Box 2052 Class C
Jersey City, NJ 07303-2052
The One Group Services Co Large Cap Value Fund 24.60% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
Strafe & Co Large Cap Value Fund 84.25% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Investor Growth Fund Large Cap Value Fund 5.24% Record &
3435 Stelzer Road Class I Beneficial
Columbus, OH 43219-6004
Banc One Corporation Large Cap Value Fund 24.18% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Dean Witter For The Benefit Of Ohio Municipal Bond Fund 6.21% Record
M. Myrtle Nafzger Trust Class A
Church St Station - PO Box 250
New York, NY 10008-0250
Dean Witter For The Benefit Of Ohio Municipal Bond Fund 5.32% Record
Vivian R Sauls Class A
519 Chapel Rd
Church St Station - PO Box 250
New York, NY 10013-0250
Strafe & Co. Ohio Municipal Bond Fund 97.82% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
NES Group Inc Corp Investmt Act Ohio Municipal Bond Fund 6.75% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Bear Stearns Securities Corp International Equity Index 10.59% Record
FBO 102-06578-29 Fund
1 Metrotech Center North Class A
Brooklyn, NY 11201-3870
</TABLE>
59
<PAGE> 171
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Firstar Trust Co TTEE International Equity Index 9.26% Record
FBO Milwaukee Foundation - Equity Fund
P.O. Box 1787 Class A
Milwaukee, WI 53201-1787
X-MEN LLC International Equity Index 7.60% Record
TTEE Gregg Schneider Fund
520 Lake Cook Rd, Ste. 105 Class A
Deerfield, IL 60015-4995
Donaldson Lufkin Jenrette International Equity Index 5.13% Record
PO Box 2052 Fund
Jersey City, NJ 07303-2052 Class A
Banc One Securities Corp Fbo International Equity Index 79.01% Record
The One Investment Solution Fund
733 Greencrest Dr Class C
Westerville, OH 43081-4903
NFSC FEBO #AAP-824968 International Equity Index 7.95% Record
NFSC/ FMTC IRA Rollover Fund
201 Mara Place Class C
San Ramon, CA 94583-2824
Dean Witter For The Benefit Of International Equity Index 5.02% Record
Robert M Lynch & Fund
PO Box 250 Church Street Station Class C
New York, NY 1008-0250
Strafe & Co. International Equity Index 86.68% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
Banc One Corporation International Equity Index 16.87% Beneficial
100 E Broad Street Fund
Columbus, OH 43215-3607 Class I
Strafe & Co. Short-Term Bond Fund 10.57% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
60
<PAGE> 172
<TABLE>
<S> <C> <C> <C>
Strafe & Co. Short-Term Fund 92.15% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. Louisiana Municipal Bond Fund 96.85% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Lawrence Mazerac Jr Louisiana Municipal Bond Fund 5.53% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Banc One Securities Corp Fbo Diversified Equity Fund 8.91% Record
The One Investment Solution Class A
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. Diversified Equity Fund 8.02% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp Fbo Diversified Equity Fund 86.86% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. Diversified Equity Fund
BOIA - One Group Operations Class I 75.09% Record
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
First Chicago NBD TTEE Diversified Equity Fund
First Chicago NBD Svgs & Invsmt Plan Class I 6.15% Record
C/O Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Melvin Skol Small Cap Growth Fund 17.93% Record &
2811 Scley St Class C Beneficial
Erie, PA 16508-1719
Judith M Torrico Small Cap Growth Fund 16.07% Record &
101 Nicholson St Class C Beneficial
Buffalo, NY 14214-1128
</TABLE>
61
<PAGE> 173
<TABLE>
<S> <C> <C> <C>
Dean Witter For The Benefit Of Small Cap Growth Fund 9.15% Record
Robert Kennedy and Class C
Annemarie Kennedy Reisinger JTT
Church St Station - PO Box 250
New York, NY 10013-0250
State Street Bank & Trust Co Small Cap Growth Fund 6.99% Record
Cust for the IRA of Class C
Linda L Cole
14 Penguin Ct
Woodlands, TX 77380-1827
Dean Witter For The Benefit Of Small Cap Growth Fund 5.33% Record
Erik Olsson & Class C
PO Box 250 Church Street Station
New York, NY 10008-0250
Strafe & Co. Small Cap Growth Fund 75.39% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Investor Growth Fund Small Cap Growth Fund 10.78% Record &
3435 Stelzer Road Class I Beneficial
Columbus, OH 43219-6004
The One Group Investor Growth & Income Fund Small Cap Growth Fund 6.26% Record &
3435 Stelzer Road Class I Beneficial
Columbus, OH 43219-6004
Firstar Trust Company Small Cap Growth Fund 5.28% Record &
FBO Milwaukee Foundation Class I Beneficial
PO Box 1787
Milwaukee, WI 53201-1787
Strafe & Co. Small Cap Value Fund 14.06% Record &
BOIA - One Group Operations Class A Beneficial
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
NBD As Trustee Small Cap Value Fund 11.41% Record
Bankers Systems Inc Class A
Employees Profit Sharing Plan
107 N Cross Street, Ste. 2092
Wheaton, IL 60187-5317
The One Group Services Co Small Cap Value Fund 97.12% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
</TABLE>
62
<PAGE> 174
<TABLE>
<S> <C> <C> <C>
Strafe & Co. Small Cap Value Fund 46.26% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Eagle & Co Small Cap Value Fund 32.82% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
BF Goodrich Pension Small Cap Value Fund 20.48% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Eagle & Co Small Cap Value Fund 13.04% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Donaldson Lufkin Jenrette Tax-Free Bond Fund 9.85% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Tax-Free Bond Fund 6.04% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Tax-Free Bond Fund 5.17% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Tax-Free Bond Fund 5.00% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Strafe & Co. Tax-Free Bond Fund 67.19% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Eagle & Co Tax-Free Bond Fund 27.52% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Dean Witter For The Benefit Of Treasury & Agency Fund 6.97% Record
Billy J Eisenhour Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of Treasury & Agency Fund 6.37% Record
Maricopa County Municipal Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
</TABLE>
63
<PAGE> 175
<TABLE>
<S> <C> <C> <C>
Dean Witter For The Benefit Of Treasury & Agency Fund 6.00% Record
Tonto Apache Tribe Class A
30 E. Apache Reservation
PO Box 250 Church Street Station
New York, NY 10008-0250
Strafe & Co. Treasury & Agency Fund 98.64% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
NBD Bank NA Treasury Cash Management 59.52% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
NBD Bank NA Treasury Cash Management 16.36% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
First National Bank of Chicago Treasury Cash Management 10.48% Record
525 W Monroe St Money Market Fund
Chicago, IL 60661-3629 Class A
American National Bank Treasury Cash Management 8.86% Record
33 N Lasalle Street Money Market Fund
Chicago, IL 60602-2602 Class A
First National Bank of Chicago Treasury Cash Management 76.18% Record
Corporate Trust Administration Money Market Fund
1 F&B Plaza, Ste. 0126 Class I
Chicago, IL 60670
First National Bank of Chicago Treasury Cash Management 14.58% Record
Corporate Trust Administration Money Market Fund
One N State St Class I
Chicago, IL 60602-3300
Strafe & Co. Treasury Only Money Market 75.38% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
BISYS Fund Services Inc Treasury Only Money Market 12.31% Record
FBO Bank One Corporate Sweep Fund
3435 Stelzer Road Suite 1000
Columbus, OH 43219-6004
BISYS Fund Services Inc Treasury Only Money Market 5.24% Record
FBO Bank One Corporate Sweep Fund
3435 Stelzer Road Suite 1000
Columbus, OH 43219-6004
</TABLE>
64
<PAGE> 176
<TABLE>
<S> <C> <C> <C>
First National Bank of Chicago Treasury Prime Cash 33.41% Record
525 W Monroe St Management Money Market Fund
Chicago, IL 60661-3629 Class A
First National Bank of Chicago Treasury Prime Cash 23.81% Record
Corporate Trust Administration Management Money Market Fund
One N State St, 9th Fl Class A
Chicago, IL 60602-3300
First National Bank of Chicago Treasury Prime Cash 16.55% Record
120 S Lasalle St, Ste. 1626 Management Money Market Fund
Chicago, IL 60603-3406 Class A
American National Bank Treasury Prime Cash 14.06% Record
33 N Lasalle Street Management Money Market Fund
Chicago, IL 60602-2602 Class A
First National Bank of Chicago Treasury Prime Cash 37.78% Record
Corporate Trust Administration Management Money Market Fund
One N State St, 9th Fl Class I
Chicago, IL 60602-3300
</TABLE>
65
<PAGE> 177
<TABLE>
<S> <C> <C> <C>
Hella North America Holding Inc Treasury Prime Cash 27.63% Record
1101 Vincennes Ave Management Money Market Fund
PO Box 398 Class I
Flora, IL 62839-0398
First National Bank of Chicago Treasury Prime Cash 13.19% Record
525 W Monroe St Management Money Market Fund
Chicago, IL 60661-3629 Class I
Strafe & Co. Treasury Prime Cash 13.18% Record
BOIA - One Group Operations Management Money Market Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
Eagle & Co. Treasury Prime Cash 5.42% Record
PO Box 804357 Management Money Market Fund
Chicago, IL 60680-4105 Class I
First National Bank of Chicago US Government Securities 58.23% Record
525 W Monroe St Cash Management Money Market
Chicago, IL 60661-3629 Fund
Class A
First National Bank of Chicago US Government Securities 17.32% Record
120 S Lasalle St, Ste. 1626 Cash Management Money Market
Chicago, IL 60603-3406 Fund
Class A
American National Bank US Government Securities 11.26% Record
1 Freedom Dr Cash Management Money Market
Oaks, PA 19456 Fund
Class A
American National Bank US Government Securities 5.17% Record
33 N Lasalle Street Cash Management Money Market
Chicago, IL 60602-2602 Fund
Class A
First National Bank of Chicago US Government Securities 84.33% Record
Corporate Trust Administration Cash Management Money Market
One N State St, 9th Fl Fund
Chicago, IL 60602-3300 Class I
</TABLE>
66
<PAGE> 178
<TABLE>
<S> <C> <C> <C>
Eagle & Co. US Government Securities 5.96% Record
PO Box 804357 Cash Management Money Market
Chicago, IL 60680-4105 Fund
Class I
First National Bank of Chicago US Government Securities 5.17% Record
Corporate Trust Administration Cash Management Money Market
1 F&B Plaza, Ste. 0126 Fund
Chicago, IL 60670 Class I
Strafe & Co. Balanced Fund 90.09% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Corporation Balanced Fund 34.40% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Dean Witter FBO Ohio Municipal Money Market 98.81% Record
Banc One Securities Fund
PO Box 250 Class A
Church Street Station
New York, NY 10013-0250
Strafe & Co. Ohio Municipal Money Market 99.88% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
Douglas & Lois Peacock Ohio Municipal Money Market 10.92% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
Henny Penny Corp Ohio Municipal Money Market 8.65% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
Akron Stadium Reserve Account Ohio Municipal Money Market 5.82% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
</TABLE>
67
<PAGE> 179
<TABLE>
<S> <C> <C> <C>
Harriet J. Goldberg Custody Ohio Municipal Money Market 5.77% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
Elizabeth W. Bertschy Ohio Municipal Money Market 5.26% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
Banc One Securities Corp FBO Municipal Income Fund 37.49% Record
The One Investment Solution Class A
733 Greencrest Dr
Westerville, OH 43081-4903
Banc One Securities Corp FBO Municipal Income Fund 44.34% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Donaldson Lufkin Jenrette Municipal Income Fund 7.40% Record
Securities Corporation Inc. Class C
P.O. Box 2052
Jersey City, NJ 07303-2052
Dean Witter For The Benefit of Municipal Income Fund 5.34% Record
G H Kelsoe Jr Class C
PO Box 250 Church Street Station
New York, NY 10008-0250
Strafe & Co. Municipal Income Fund 98.92% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Dean Witter For The Benefit Of Kentucky Municipal Bond Fund 16.98% Record
Gary Osswald Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of Kentucky Municipal Bond Fund 5.79% Record
Karrick Scott Collins Trust Class A
Karrick Scott Collins TTEE
Church St Station - PO Box 250
New York, NY 10013-0250
Strafe & Co.
BOIA - One Group Operations Kentucky Municipal Bond Fund 94.02% Record
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
68
<PAGE> 180
<TABLE>
<S> <C> <C> <C>
Dean Witter For The Benefit Of West Virginia Municipal Bond 37.80% Record
Balzout Inc DBA S&E Printing Fund Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of West Virginia Municipal Bond 10.28% Record
Stephen A Lewis Fund Class A
3720 Noyles Avenue
5 World Trade Center 6th Floor
New York, NY 10048-0205
Dean Witter For The Benefit Of West Virginia Municipal Bond 7.65% Record
James F Duncan Fund Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of West Virginia Municipal Bond 7.47% Record
Sally L Wilson Trust Fund Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit Of West Virginia Municipal Bond 9.06% Record
Katherine Poe Fund Class B
606 River Lane
5 World Trade Center 6th Floor
New York, NY 10048-0205
Strafe & Co. West Virginia Municipal Bond 99.16% Record
BOIA - One Group Operations Fund Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Services Co Government Bond Fund 97.08% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
Strafe & Co. Government Bond Fund 86.28% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Investor Balanced Fund Government Bond Fund 5.18% Record &
3435 Stelzer Road Class I Beneficial
Columbus, OH 43219-6004
</TABLE>
69
<PAGE> 181
<TABLE>
<S> <C> <C> <C>
Dean Witter For The Benefit Of Ultra Short Term Bond Fund 22.01% Record
Samaritan Health Plan Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Investment Company Institute Ultra Short Term Bond Fund 9.29% Record &
1401 H St NW Class A Beneficial
Washington, DC 20005-2110
Dean Witter For The Benefit Of Ultra Short Term Bond Fund 5.93% Record
Obleness Memorial Hospital Class A
C/O Donald E Reuter
Church St Station - PO Box 250
New York, NY 10013-0250
Dean Witter For The Benefit Of Ultra Short Term Bond Fund 5.24% Record
Thomas Electric Class A
7601 N 74th Avenue
5 World Trade Center 6th Fl
New York, NY 10048-0205
Strafe & Co. Ultra Short Term Bond Fund 85.85% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Investor Balnced Fund Ultra Short Term Bond Fund 5.03% Record &
3435 Stelzer Road Class I Beneficial
Columbus, OH 43219-6004
Banc One Securities Corp FBO Intermediate Bond Fund 35.77% Record
The One Investment Solution Class A
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. Intermediate Bond Fund 8.74% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp FBO Intermediate Bond Fund 57.50% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
</TABLE>
70
<PAGE> 182
<TABLE>
<S> <C> <C> <C>
Strafe & Co. Intermediate Bond Fund 78.19% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Eagle & Co. Intermediate Bond Fund 8.51 % Record
P.O. Box 804357 Class I
Chicago, IL 60680-4105
Strafe & Co. Investor Growth Fund 7.19% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Dean Witter For The Benefit Of Investor Growth Fund 5.09% Record
William D Robertson DDS PSP Class C
PO Box 250 Church Street Station
New York, NY 10008-0250
Strafe & Co. Investor Growth Fund 69.46% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Sec Svgs Pl - Inv Grwth Investor Growth Fund 23.03% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Bank One TTEE Investor Growth Fund 11.65% Record
Brillion Iron Works P/S Class I
190 Heatherdown Drive
Westerville, OH 43081-2868
Virginia R Corrin Investor Growth Fund 8.20% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
</TABLE>
71
<PAGE> 183
<TABLE>
<S> <C> <C> <C>
First Chicago NBD TTEE Investor Growth & Income Fund 9.90% Record
Clarian Health Partners Inc Class A
Defined Contribution Plan
C/O Putnam Investments
PO Box 9740
Providence, RI 02940-9740
BISYS Brokerage Services Inc Investor Growth & Income Fund 7.51% Record
FBO Kelly Retirement Plus Class A
PO Box 4054
Concord, CA 94524-4054
BISYS Brokerage Services Inc Investor Growth & Income Fund 6.91% Record
FBO Kelly Retirement Plus Class A
PO Box 4054
Concord, CA 94524-4054
Dean Witter Reynolds Cust For Investor Growth & Income Fund 7.33% Record
Milo Meacham Jr Class C
Church St Station PO Box 250
New York, NY 10008-0250
Dean Witter Reynolds Cust For Investor Growth & Income Fund 5.14% Record
Jack Homra Class C
Church St Station PO Box 250
New York NY 10008-0250
Strafe & Co. Investor Growth & Income Fund 61.44% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
First Chicago NBD TTEE Investor Growth & Income Fund 28.14% Record
First Chicago NBD Svgs & Invsmt Plan Class I
C/O Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Banc One Sec Svgs Plan Investor Growth & Income Fund 10.42% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
</TABLE>
72
<PAGE> 184
<TABLE>
<S> <C> <C> <C>
Revco D.S., Inc. Serp - Trust A Investor Growth & Income Fund 7.64% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
DWPLLC/Target BNF-Bal Fd Investor Growth & Income Fund 5.35% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Strafe & Co. Investor Balanced Fund 7.69% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Dean Witter For The Benefit Of Investor Balanced Fund 5.20% Record
Joseph A Hess Class C
IRA Standard Dated 11/18/97
Church St Station - PO Box 250
New York, NY 10013-0250
Strafe & Co. Investor Balanced Fund 69.54% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
First Chicago NBD TTEE Investor Balanced Fund 15.41% Record
First Chicago NBD Svgs & Invsmt Plan Class I
C/O Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Kenosha Carpenters #161 Pens-Mgd Investor Balanced Fund 7.33% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Centennial Liquor Retirement Plan Investor Balanced Fund 6.65% Beneficial
100 E Broad Street Class I
Columbus, OH 43215-3607
Dean Witter For The Benefit Of Investor Conservative Growth 8.48% Record
Paavo Ensio & Fund
PO Box 250 Church Street Station Class A
New York, NY 10008-0250
</TABLE>
73
<PAGE> 185
<TABLE>
<S> <C> <C> <C>
State Street Bank & Trust Co. Investor Conservative Growth 5.83% Record
Cust. for IRA Rollover of Fund
George L. Allison Class C
768 E. Indiana Ave.
Spencer, IN 47460-1538
Strafe & Co. Investor Conservative Growth 85.19% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
Banc One Sec Svgs Pl - Inv Con Grwth Investor Conservative Growth 20.49% Beneficial
100 E Broad Street Fund
Columbus, OH 43215-3607 Class I
Kenosha Carpenters #161 Pens-Mgd Investor Conservative Growth 12.44% Beneficial
100 E Broad Street Fund
Columbus, OH 43215-3607 Class I
Bank One Inv Option Plan Investor Conservative Growth 9.01% Beneficial
100 E Broad Street Fund
Columbus, OH 43215-3607 Class I
Strafe & Co. Government Money Market Fund 76.92% Record
BOIA - One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
BWC - JP Morgan Government Money Market Fund 12.10% Beneficial
100 E. Broad Street
Columbus, OH 43215-3607
BISYS Fund Services Inc Government Money Market Fund 7.81% Record
FBO Bank One Corporate Sweep
3435 Stelzer Road Suite 1000
Columbus, OH 43219-6004
Bank One Texas NA Government Money Market Fund 7.13% Record &
1717 Main St Beneficial
Dallas, TX 75201-4605
BWC - Miller Anderson Government Money Market Fund 6.64% Beneficial
100 E. Broad Street
Columbus, OH 43215-3607
BWC - Hyperion Capital Government Money Market Fund 5.27% Beneficial
100 E. Broad Street
Columbus, OH 43215-3607
</TABLE>
74
<PAGE> 186
<TABLE>
<S> <C> <C> <C>
Strafe & Co. High Yield Bond Fund Class A 21.10% Record
BOIA - One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Donaldson Lufkin Jenrette High Yield Bond Fund Class A 16.44% Record
PO Box 2052
Jersey City, NJ 07303-2052
Josephine M. Gibson High Yield Bond Fund Class A 9.29% Record &
James L. Gibson Jr. JT TEN Beneficial
3636 Janlin Ct.
Cincinnati, OH 45211-6306
Donaldson Lufkin Jenrette High Yield Bond Fund Class A 8.95% Record
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette High Yield Bond Fund Class B 11.00% Record
PO Box 2052
Jersey City, NJ 07303-2052
Dean Witter FBO High Yield Bond Fund Class B 7.01% Record
Edwin E Morgan
PO Box 250 Church Street Station
New York, NY 10008-0250
Donaldson Lufkin Jenrette High Yield Bond Fund Class B 6.96% Record
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette High Yield Bond Fund Class B 6.44% Record
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette High Yield Bond Fund Class B 5.57% Record
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette High Yield Bond Fund Class B 5.17% Record
PO Box 2052
Jersey City, NJ 07303-2052
The One Group Services Co High Yield Bond Fund Class C 97.10% Record &
3435 Stelzer Road Beneficial
Columbus, OH 43219-6004
</TABLE>
75
<PAGE> 187
<TABLE>
<S> <C> <C> <C>
Strafe & Co. High Yield Bond Fund 39.73% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Eagle & Co. High Yield Bond Fund 16.82% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Empl Ret Plan of NBD Bancorp High Yield Bond Fund 14.81% Beneficial
100 E. Broad Street Class I
Columbus, OH 43215-3607
Inner Wharf & Co High Yield Bond Fund 12.93% Record
C/O State Street Bank Class I
1 Heritage Drive JP2N
N. Quincy, MA 02171-2105
Banc One Corporation High Yield Bond Fund 9.87% Beneficial
100 E. Broad Street Class I
Columbus, OH 43215-3607
Inner Wharf & Co High Yield Bond Fund 9.81% Record
C/O State Street Bank Class I
1 Heritage Drive JP2N
N. Quincy, MA 02171-2105
The One Group Investor Growth & Income Fund High Yield Bond Fund 8.23% Record &
3435 Stelzer Road Class I Beneficial
Columbus, OH 43219-6004
The One Group Investor Growth Fund High Yield Bond Fund 7.09% Record &
3435 Stelzer Road Class I Beneficial
Columbus, OH 43219-6004
Strafe & Co. Diversified International 10.67% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway Class A
PO Box 710211
Columbus, OH 43271-0211
The One Group Services Co Diversified International 97.11% Record &
3435 Stelzer Road Fund Beneficial
Columbus, OH 43219-6004 Class C
Strafe & Co. Diversified International 53.99% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
76
<PAGE> 188
<TABLE>
<S> <C> <C> <C>
Eagle & Co Diversified International 27.99% Record
PO Box 804357 Fund
Chicago, IL 60680-4105 Class I
Empl Ret Plan of NBD Bancorp Diversified International 19.85% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
Eagle & Co Diversified International 7.91% Record
PO Box 804357 Fund
Chicago, IL 60680-4105 Class I
Inner Wharf & Co Diversified International 5.67% Record
C/O State Street Bank Fund
1 Heritage Drive JP2N Class I
N. Quincy, MA 02171-2105
NBD Bank TTEE Diversified Mid Cap Fund 8.10% Record
American Axle & Manufacturing Inc Class A
Personal S/P Hourly Rate Association
900 Tower Dr
Troy, MI 48098-2810
MAC and Co A/C 078-025 Diversified Mid Cap 7.38% Record
PO Box 3198 Class A
Pittsburgh, PA 15230-3198
Strafe & Co. Diversified Mid Cap Fund 5.47% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Services Co Diversified Mid Cap Fund 97.14% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
Strafe & Co. Diversified Mid Cap Fund 76.87 Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
First Chicago NBD TTEE Diversified Mid Cap Fund 10.89% Record
First Chicago NBD Svgs & Invsmt Plan Class I
C/O Putnam Investments
PO Box 9740
Providence, RI 02940-9740
</TABLE>
77
<PAGE> 189
<TABLE>
<S> <C> <C> <C>
Eagle & Co. Diversified Mid Cap Fund 8.37% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Empl Ret Plan of NBD Bancorp Diversified Mid Cap Fund 7.94% Beneficial
100 E. Broad Street Class I
Columbus, OH 43215-3607
First National Bank of Chicago Cash Management Money Market 29.06% Record
Cash Management Dept Fund
525 W Monroe St Class A
Chicago, IL 60661-3629
NBD Bank NA Cash Management Money Market 26.08% Record &
9000 Haggerty Road Fund Beneficial
Belleville, MI 48111-1632 Class A
NBD Bank NA Cash Management Money Market 20.55% Record &
9000 Haggerty Road Fund Beneficial
Belleville, MI 48111-1632 Class A
First National Bank of Chicago Cash Management Money Market 11.56% Record &
Commercial Products Fund Beneficial
120 S Lasalle St Ste. 1626 Class A
Chicago, IL 60603-3406
American National Bank Cash Management Money Market 6.12% Record &
33 N Lasalle St Fund Beneficial
Chicago, IL 60602-2602 Class A
NBD Bank NA Cash Management Money Market 5.98% Record &
9000 Haggerty Road Fund Beneficial
Belleville, MI 48111-1632 Class A
Eagle & Co Cash Management Money Market 38.46% Record
PO Box 804357 Fund
Chicago, IL 60680-4105 Class I
First National Bank of Chicago Cash Management Money Market 24.57% Record
Corporate Trust Administration Fund
Cash Sweep Dept Class I
One N State St, 9th Fl
Chicago, IL 60602-3300
Strafe & Co. Cash Management Money Market 19.83% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
78
<PAGE> 190
<TABLE>
<S> <C> <C> <C>
Hojo & Co Cash Management Money Market 5.30% Record
PO Box 804357 Fund
Chicago, IL 60680-4105 Class I
Covenant Trust Company TTEE Market Expansion Index Fund 71.34% Record
Jolene M Peterson Rev Trust Class A
U/A DTD 06/24/98
5101 N Francisco Ave
Chicago, IL 60625-3611
State Street Bank & Trust Co Cust Market Expansion Index Fund 15.69% Record
George F Abel Class A
41611 Onaway Ct
Northville, MI 48167-2464
Donoaldson Lufkin Jenrette Market Expansion Index Fund 24.87% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Dean Witter For The Benefit of Market Expansion Index Fund 15.76% Record
Anthony A Ripeli Jr Class B
PO Box 250 Church Street Station
New York, NY 10008-0250
Donoaldson Lufkin Jenrette Market Expansion Index Fund 12.73% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Dean Witter For The Benefit of Market Expansion Index Fund 9.00% Record
Jacinta L Alvarado Class B
PO Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter For The Benefit of Market Expansion Index Fund 6.49% Record
Thomas R Searcy & Class B
PO Box 250 Church Street Station
New York, NY 10008-0250
Donoaldson Lufkin Jenrette Market Expansion Index Fund 6.22% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Donoaldson Lufkin Jenrette Market Expansion Index Fund 5.49% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
The One Group Services Co Market Expansion Index Fund 79.46% Record &
3435 Stelzer Road Class C Beneficial
Columbus, OH 43219-6004
</TABLE>
79
<PAGE> 191
<TABLE>
<S> <C> <C> <C>
Dean Witter For The Benefit of Market Expansion Index Fund 18.18% Record
J Richard Thomas and Class C
PO Box 250 Church Street Station
New York, NY 10008-0250
Hojo & Co Market Expansion Index Fund 82.22% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Hojo & Co Market Expansion Index Fund 12.23% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Donaldson Lufkin Jenrette Michigan Municipal Bond Fund 6.96% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Michigan Municipal Bond Fund 6.75% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette Michigan Municipal Bond Fund 6.69% Record
PO Box 2052 Class B
Jersey City, NJ 07303-2052
Strafe & Co. Michigan Municipal Bond Fund 97.19% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
NBD Michigan Michigan Municipal Money 52.63% Record &
9000 Haggerty Road Market Fund Beneficial
Belleville, MI 48111-1632 Class A
Pershing As Agent - Omnibus Account Michigan Municipal Money 8.52% Record
For Exclusive Benefit of Market Fund
One Group Customer Accounts Class A
1 Pershing Plz
Jersey City, NJ 07399-0001
James R Donahey Michigan Municipal Money 5.03% Record &
Pat J Donahay JT TEN Market Fund Beneficial
421 Highland Class A
Ann Arbor, MI 48104-1729
Strafe & Co. Michigan Municipal Money 90.95% Record
BOIA - One Group Operations Market Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
80
<PAGE> 192
<TABLE>
<S> <C> <C> <C>
Richard D Manus Michigan Municipal Money 12.46% Beneficial
100 E. Broad Street Market Fund
Columbus, OH 43215-3607 Class I
George E Manus Michigan Municipal Money 12.23% Beneficial
100 E. Broad Street Market Fund
Columbus, OH 43215-3607 Class I
OK Thompson Michigan Municipal Money 8.19% Beneficial
100 E. Broad Street Market Fund
Columbus, OH 43215-3607 Class I
NBD Bank Municipal Cash Management 46.79% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
NBD Bank Municipal Cash Management 29.94% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
NBD Bank Municipal Cash Management 16.00% Record &
9000 Haggerty Road Money Market Fund Beneficial
Belleville, MI 48111-1632 Class A
First National Bank of Chicago Municipal Cash Management 6.50% Record &
120 S Lasalle St., Ste 1626 Money Market Fund Beneficial
Chicago, IL 60603-3406 Class A
Eagle & Co Municipal Cash Management 76.99% Record
PO Box 804357 Money Market Fund
Chicago, IL 60680-4105 Class I
Hojo & Co Municipal Cash Management 13.71% Record
PO Box 804357 Money Market Fund
Chicago, IL 60680-4105 Class I
Strafe & Co. Municipal Cash Management 9.27% Record
BOIA - One Group Operations Money Market Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
81
<PAGE> 193
<TABLE>
<S> <C> <C> <C>
Donaldson Lufkin Jenrette Short-Term Municipal Bond 42.13% Record
PO Box 2052 Fund
Jersey City, NJ 07303-2052 Class A
Donaldson Lufkin Jenrette Short-Term Municipal Bond 22.88% Record
PO Box 2052 Fund
Jersey City, NJ 07303-2052 Class A
Dean Witter For The Benefit of Short-Term Municipal Bond 5.40% Record
F Jay Anderson Family Ltd Fund
PO Box 250 Church Street Station Class A
New York, NY 10008-0250
Donaldson Lufkin Jenrette Short-Term Municipal Bond 55.79% Record
PO Box 2052 Fund
Jersey City, NJ 07303-2052 Class B
Donaldson Lufkin Jenrette Short-Term Municipal Bond 19.30% Record
PO Box 2052 Fund
Jersey City, NJ 07303-2052 Class B
Donaldson Lufkin Jenrette Short-Term Municipal Bond 10.79% Record
PO Box 2052 Fund
Jersey City, NJ 07303-2052 Class B
Strafe & Co. Short-Term Municipal Bond 93.87% Record
BOIA - One Group Operations Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
Haworth Inc Short-Term Municipal Bond 8.29% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
Eagle & Co. Short-Term Municipal Bond 6.05% Record
PO Box 804357 Fund
Chicago, IL 60680-4105 Class I
Bruce Becker Rev Trust Short-Term Municipal Bond 5.56% Beneficial
100 E. Broad Street Fund
Columbus, OH 43215-3607 Class I
</TABLE>
82
<PAGE> 194
<TABLE>
<S> <C> <C> <C>
Strafe & Co. Bond Fund 10.40% Record
BOIA - One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Putnam Fiduciary Trust Co TTEE Bond Fund 7.33% Record
Market Square P/S Plan Class A
859 Willard Street MS B-3-B
Quincy, MA 02169-7428
Putnam Fiduciary Trust Co TTEE Bond Fund 7.12% Record
Elco Textron Inc Class A
859 Willard St MSE2C
Quincy, MA 02169-7428
Donaldson, Lufkin Jenrette Bond Fund 69.96% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
The One Group Services Co Bond Fund 29.17% Record
3435 Stelzer Road Class C
Columbus, OH 43219-6004
Strafe & Co. Bond Fund 63.31% Record
BOIA - One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Eagle & Co. Bond Fund 10.68% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
Henry Ford Investment Mgmt Bond Fund 7.44% Beneficial
100 E. Broad Street Class I
Columbus, OH 43215-3607
Inner Wharf & Co Bond Fund 6.83% Record
C/O State Street Bank Class I
1 Heritage Drive JP2N
N. Quincy, MA 02171-2105
Eagle & Co. Bond Fund 6.80% Record
PO Box 804357 Class I
Chicago, IL 60680-4105
</TABLE>
83
<PAGE> 195
<TABLE>
<S> <C> <C> <C>
Inner Wharf & Co Bond Fund 5.19% Record
C/O State Street Bank Class I
1 Heritage Drive JP2N
N. Quincy, MA 02171-2105
First Chicago NBD TTEE Bond Fund 5.08% Record
First Chicago NBD Svgs & Invsmt Plan Class I
C/O Putnam Investments
PO Box 9740
Providence, RI 02940-9740
</TABLE>
As a group, the Trustee and Officers of the Trust owned less than 1% of the
Shares of each class of the Trust. A copy of the annual reports to shareholders
must accompany the delivery of this Statement of Additional Information.
84
<PAGE> 196
Registration Statement
of One Group(R) Mutual Funds
on Form N-1A
PART C
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
New Funds -- no financial statements
-1-
<PAGE> 197
(b) Exhibits:
(1) Amended and Restated Declaration of Trust dated as of February
18, 1999 is incorporated by reference to Exhibit (1) to the
Registrant's Registration Statement on Form N-1A (filed March
12, 1999).
(2) Code of Regulations as amended and restated as of October 25,
1990 is incorporated by reference to Exhibit (2) to
Post-Effective Amendment No. 39 (filed August 16, 1996) to
Registrant's Registration Statement on Form N-1A.
(3) None.
(4) Rights of Shareholders.
-----------------------
The following portions of Registrant's Declaration of Trust
incorporated as Exhibit (1) hereto, define the rights of
shareholders:
5.1 Shares in the Series or Classes of the Trust.
---------------------------------------------
A. The Trustees shall have full power and authority, in their
sole discretion, without obtaining the prior approval of the
Shareholders (either with respect to the Trust as a whole or
with respect to any series or classes of the Trust) by vote or
otherwise, to establish one or more series of Shares of the
Trust. The establishment of any such series shall be effective
upon the adoption by a majority of the Trustees then in office
of a resolution establishing such series and setting the
voting rights, preferences, designations, conversion or other
rights, restrictions, limitations as to distributions,
conditions of redemption, qualifications, or other terms of
the Shares of such series. The beneficial interest in each
series of the Trust shall at all times be divided into an
unlimited number of full and fractional transferable Shares
without par value. The investment objective, policies, and
restrictions governing the management and operations of each
series of the Trust, including the management of assets
belonging to any particular series, may from time to time be
changed or supplemented by the Trustees, subject to the
requirements of the Act. The Trustees may from time to time
divide or combine the outstanding Shares of any one or more
series of the Trust into a greater or lesser number without
thereby changing their proportionate beneficial interests in
the Trust assets allocated or belonging to such series.
Subject to the respective voting rights, preferences,
designations, conversion or other rights, restrictions,
limitations as to distributions, conditions of redemption,
qualifications, or other terms of the Shares of each series of
the Trust, the Trustees may, without Shareholder approval,
divide the Shares of any series into two or more classes,
Shares of each such class having such
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<PAGE> 198
voting rights, preferences, designations, conversion or other
rights, restrictions, limitations as to distributions,
conditions of redemption, qualifications, or other terms
applicable to Shares of such class as the Trustees may
determine.
B. The holder of each Share shall be entitled to one vote for
each full Share, and a proportionate fractional vote for each
fractional Share, irrespective of the series or class, then
recorded in his name on the books of the Trust. On any matter
submitted to a vote of Shareholders, all Shares then issued
and outstanding and entitled to vote, irrespective of the
series or class, shall be voted in the aggregate and not by
series or class except: (1) as otherwise required by the Act;
or (2) when the matter, as conclusively determined by the
Trustees, affects only the interests of the Shareholders of a
particular series or class of the Trust (in which case only
Shareholders of the affected series or class shall be entitled
to vote thereon).
C. Shares of each series or class of the Trust shall have the
following preferences, participating or other special rights,
qualifications, restrictions and limitations:
(1) ASSETS BELONGING TO A SERIES OR CLASS. All
consideration received by the Trust for the issue or
sale of Shares of any series or class, together with
all assets in which such consideration is invested or
reinvested, including any proceeds derived from the
sale, exchange, or liquidation of such assets, and
any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be,
shall be referred to as "assets belonging to" that
series or class. In addition, any assets, income,
earnings, profits or proceeds thereof, or funds or
payments which are not readily identifiable as
belonging to a particular series or class shall be
allocated by the Trustees to one or more series or
class (such allocation to be conclusive and binding
upon the Shareholders of all series or class for all
purposes) in such manner as they, in their sole
discretion, deem fair and equitable, and shall also
be referred to as "assets belonging to" such series
or class. Such assets belonging to a particular
series or class shall irrevocably belong for all
purposes to the Shares of the series or class, and
shall be so handled upon the books of account of the
Trust. Such assets and the income, earnings, profits,
and proceeds thereof, including any proceeds derived
from the sale, exchange, or liquidation thereof, and
any funds or payments derived from any reinvestment
of such proceeds in whatever form, are herein
referred to as "assets belonging to" such a series or
class. Shareholders of any series or class shall have
no right, title or interest in or to the assets
belonging to any other series or class.
(2) LIABILITIES BELONGING TO A SERIES OR CLASS. The
assets belonging to any series or class of the Trust
shall be charged with the direct liabilities in
respect of such series or class and with all
expenses, costs, charges, and reserves attributable
to such series or class, and shall also
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<PAGE> 199
be charged with the share of such series or class of
the general liabilities, expenses, costs, charges,
and reserves of the Trust which are not readily
identifiable as belonging to a particular series or
class in proportion to the relative net assets of the
respective series or class, as determined at such
time or times as may be authorized by the Trustees.
Any such determination by the Trustees shall be
conclusive and binding upon the Shareholders of all
series or class for all purposes; PROVIDED, HOWEVER,
that under no circumstances shall the assets
allocated or belonging to any series or class of the
Trust be charged with liabilities directly
attributable to any other series or class. The
liabilities so charged to a series or class are
herein referred to as "liabilities belonging to" such
series or class. All persons who may have extended
credit to a particular series or class or who have
contracts or claims with respect to a particular
series or class shall look only to the assets of that
particular series or class for payment of such
contracts or claims.
(3) LIQUIDATING DISTRIBUTIONS. In the event of the
termination of the Trust or a particular series or
class thereof and the winding up of its affairs, the
Shareholders of the Trust or such particular series
or class shall be entitled to receive out of the
assets of the Trust or belonging to the particular
series or class, as the case may be, available for
distribution to Shareholders, but other than general
assets not belonging to any particular series or
class of the Trust, the assets belonging to such
series or class; and the assets so distributable to
the Shareholders of any series or class shall be
distributed among such Shareholders in proportion to
the number of Shares of such series or class held by
them and recorded in their names on the books of the
Trust. In the event that there are any general assets
not belonging to any particular series or class of
the Trust available for distribution, such
distribution shall be made to the Shareholders of all
series or class subject to such termination and
winding up in proportion to the relative net assets
of the respective series or class determined as
hereinafter provided and the number of Shares of such
series or class held by them and recorded in their
names on the books of the Trust.
(4) DIVIDENDS AND DISTRIBUTIONS. Shares of each
series or class shall be entitled to such dividends
and distributions in Shares or in cash or both, as
may be declared from time to time by the Trustees,
acting in their sole discretion, with respect to such
series or class, PROVIDED, HOWEVER, that dividends
and distributions on Shares of a particular series or
class shall be paid only out of the lawfully
available "assets belonging to" such series or class
as such term is defined in this Declaration of Trust.
5.2 PURCHASE OF SHARES. The Trustees may accept investments in
each series or class of the Trust from such Persons for such
consideration and on such
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<PAGE> 200
other terms as they may from time to time authorize. The Trust
may reject any order for, or refuse to give effect on the
books of the Trust to the transfer of, any Shares as permitted
under the Act. Each such investment shall be credited to the
Shareholder's account in the form of full and fractional
Shares of the appropriate series or class of the Trust, at the
net asset value per Share next computed after receipt of the
investment.
5.3 NET ASSET VALUE PER SHARE. The net asset value per Share
of each series or class of the Trust shall be computed at such
time or times as the Trustees may specify pursuant to the Act.
Assets shall be valued and net asset value per Share shall be
determined by such Person or Persons as the Trustees may
appoint under the supervision of the Trustees in such manner
not inconsistent with the Act and any orders of the Securities
and Exchange Commission received by the Trust, as the Trustees
may determine.
5.4 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded separately with respect to each series or class on
the record books of the Trust. Certificates for Shares shall
be issued to holders of such Shares only upon the
authorization of the Trustees, in their discretion, to issue
such Shares, and shall be issued, if at all, subject to such
rules and regulations as the Trustees may determine. The
Trustees may make such rules as they consider appropriate for
the transfer of Shares and similar matters. The record books
of the Trust shall be conclusive as to the identity of holders
of Shares and as to the number of Shares of each series or
class held by each Shareholder.
5.5 PREEMPTIVE RIGHTS. Shareholders shall have no preemptive
or other rights to subscribe to any additional Shares or other
securities issued by the Trust or by the Trustees.
5.6 REDEMPTION OF SHARES. To the extent of the assets of the
Trust legally available for such redemptions, a Shareholder of
any series or class of the Trust shall have the right, subject
to the provisions of Section 5.7 hereof, to require the Trust
to redeem his full and fractional Shares of any series or
class out of assets belonging to such series or class at a
redemption price equal to the net asset value per Share next
determined after receipt of a request to redeem in proper form
as determined by the Trustees. The Trustees shall establish
such rules and procedures as they deem appropriate for
redemption of Shares; PROVIDED, HOWEVER, that all redemptions
shall be in accordance with the Act. Without limiting the
generality of the foregoing, the Trust shall, to the extent
permitted by applicable law, have the right at any time to
redeem the Shares owned by any holder thereof (i) if the value
of such Shares in an account maintained by the Trust or its
transfer agent for any Shareholder with respect to any series
or class of the Trust is $1,000 or less; PROVIDED, HOWEVER,
that any such Shareholder shall be notified that the value of
his account is $1,000 or less, and shall be allowed sixty days
to make additional purchases of Shares of the appropriate
series or class so that the value of his account will exceed
$1,000 before any such involuntary redemption is processed by
the Trust; or (ii) if the net income with respect to any
particular series or class of
-5-
<PAGE> 201
the Trust should be negative or it should otherwise be
appropriate to carry out the Trust's responsibilities under
the Act, in each case subject to such further terms and
conditions as the Board of Trustees of the Trust may from time
to time adopt. The redemption price of Shares of any series or
class of the Trust shall, except as otherwise provided in this
section, be the net asset value thereof as determined by the
Board of Trustees of the Trust from time to time in accordance
with the provisions of applicable law, less such redemption
fee or other charge, if any, as may be fixed by resolution of
the Board of Trustees of the Trust. When the net income with
respect to any particular series or class of the Trust is
negative or whenever deemed appropriate by the Board of
Trustees of the Trust in order to carry out the Trust's
responsibilities under the Act, any series or class of the
Trust may, without payment of compensation but in
consideration of the interests of the Trust or a particular
series or class thereof and of the Shareholders of the Trust
or of such series or class in maintaining a constant net asset
value per Share with respect to such series or class, redeem
pro rata from each holder of record on such day such number of
full and fractional Shares of such series or class as may be
necessary to reduce the aggregate number of outstanding Shares
of such series or class in order to permit the net asset value
thereof to remain constant. Payment of the redemption price,
if any, shall be made in cash by the appropriate series or
class of the Trust at such time and in such manner as may be
determined from time to time by the Board of Trustees of the
Trust unless, in the opinion of the Board of Trustees, which
shall be conclusive and binding upon the Shareholders for all
purposes, conditions exist which make payment wholly in cash
unwise or undesirable; in such event the appropriate series or
class of the Trust may make payment in the assets belonging or
allocable to such series or class, the value of which shall be
determined as provided herein.
5.7 SUSPENSION OF RIGHT OF REDEMPTION. The Trustees may
suspend the right of redemption by Shareholders or postpone
the date of payment or the recordation of transfer of Shares
of any series or class, as permitted under the Act or
applicable law. Such suspension or postponement shall take
effect at such time as the Trustees shall specify but not
later than the close of business on the business day following
the declaration of suspension or postponement, and thereafter
there shall be no right of redemption or payment or transfer
until the Trustees shall declare the suspension at an end. In
case of suspension of the right of redemption, a Shareholder
may either withdraw his request for redemption or receive
payment based on the net asset value existing after the
termination of the suspension.
5.8 CONVERSION RIGHTS. The Trustees shall have the authority
to provide from time to time that the holders of Shares of any
series or class shall have the right to convert or exchange
said Shares for or into Shares of one or more other series or
class in accordance with such requirements and procedures as
may be established from time to time by the Trustees.
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8.1 VOTING POWERS. The Shareholders shall have power to vote
(a) for the election or removal of Trustees; (b) with respect
to the amendment of this Declaration of Trust as provided in
Section 10.8 hereof; (c) with respect to the approval of
investment advisory and distribution agreements entered into
on behalf of the Trust or one or more series or class thereof,
and with respect to such other matters relating to the Trust
as may be required by law, by this Declaration of Trust, the
Regulations of the Trust, by any requirements applicable to or
agreement of the Trust, and as the Trustees may consider
desirable; and (d) to the same extent as the shareholders of a
Massachusetts business corporation, when considering whether a
court action, proceeding, or claim should or should not be
brought or maintained derivatively or as a class action on
behalf of the Trust or the Shareholders; PROVIDED, HOWEVER,
that no Shareholder of a particular series or class shall be
entitled to bring, or to vote in respect of, any class or
derivative action not on behalf of the series or class of the
Trust in respect of which the Shareholder owns Shares. Every
Shareholder of record shall have the right to one vote for
every whole Share (other than Shares held in the treasury of
the Trust) standing in his name on the books of the Trust, and
to have a proportional fractional vote for any fractional
Share, as to any matter on which the Shareholder is entitled
to vote. There shall be no cumulative voting. Shares may be
voted in person or by proxy. On any matter submitted to a vote
of the Shareholders, all Shares shall be voted in the
aggregate and not by individual series or class, except (i)
where required by the Act, Shares shall be voted by individual
series or class, and (ii) if the Trustees shall have
determined that a matter affects the interests only of one or
more series or class, then only the Shareholders of such
affected series or class shall be entitled to vote thereon.
Until Shares are issued, the Trustees may exercise all rights
of Shareholders and may take any action required or permitted
to be taken by Shareholders by law, this Declaration of Trust,
or the Regulations.
8.2 MEETINGS. Meetings of Shareholders may be called by the
Trustees as provided in the Regulations, and shall be called
by the Trustees upon the written request of Shareholders
owning at least twenty percent of the outstanding Shares
entitled to vote.
8.3 QUORUM AND REQUIRED VOTE. At any meeting of the
Shareholders, a quorum for the transaction of business shall
consist of a majority of the Shares of each series or class
outstanding and entitled to vote with respect to a matter
appearing in person or by proxy; PROVIDED, HOWEVER, that at
any meeting at which the only actions to be taken are actions
required by the Act to be taken by vote of all outstanding
Shares of all series or class entitled to vote thereon,
irrespective of series or class, a quorum shall consist of a
majority of Shares (without regard to series or class)
entitled to vote thereon, and that at any meeting at which the
only actions to be taken shall have been determined by the
Board of Trustees to affect the rights and interests of one or
more but not all series or classes of the Trust, a quorum
shall consist of a majority of the outstanding Shares of the
series or class so affected; and PROVIDED, FURTHER, that
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reasonable adjournments of such meeting until a quorum is
obtained may be made by vote of the Shares present in person
or by proxy. A majority of the Shares voted shall decide any
question and a plurality shall elect a Trustee, subject to any
applicable requirements of law or of this Declaration of Trust
or the Regulations; PROVIDED, HOWEVER, that when any provision
of law or of this Declaration of Trust requires the holders of
Shares of any particular series or class to vote by series or
class and not in the aggregate with respect to a matter, then
the vote of the majority of the outstanding Shares of that
series or class shall decide such matter insofar as that
particular series or class shall be concerned.
8.4 SHAREHOLDER ACTION BY WRITTEN CONSENT. Any action which
may be taken by Shareholders may be taken without a meeting if
the holders of not less than two-thirds of the Shares entitled
to be voted with respect to the matter consent to the action
in writing and the written consent is filed with the records
of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
8.5 CODE OF REGULATIONS. The Regulations may include further
provisions not inconsistent with this Declaration of Trust for
Shareholders' meetings, votes, record dates, notices of
meetings, and related matters.
9.4 LIMITATION OF SHAREHOLDER LIABILITY. Shareholders shall
not be subject to any personal liability in connection with
the assets of the Trust for the acts or obligations of the
Trust. The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree
to pay by way of subscription to any Share or otherwise. Every
obligation, contract, instrument, certificate, Share, other
security or undertaking of the Trust, and every other act
whatsoever executed in connection with the Trust shall be
conclusively presumed to have been executed or done by the
executors thereof only in their capacities as Trustees under
this Declaration of Trust or in their capacity as officers,
employees, or agents of the Trust, and not individually. Every
note, bond, contract, order, or other undertaking issued by or
on behalf of the Trust or the Trustees relating to the Trust
or to any series or class of the Trust, and the stationery
used by the Trust, shall include a recitation limiting the
obligation represented thereby to the Trust and its assets
(but the omission of such a recitation shall not operate to
bind any Shareholder), as follows:
"The names 'One Group(R) Mutual Funds' and 'Trustees
of One Group(R) Mutual Funds' refer respectively to
the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to
time under a Declaration of Trust dated May 23, 1985
to which reference is hereby made and a copy of which
is on file at the office of the Secretary of the
Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations
of 'One Group(R) Mutual Funds' entered
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into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not
individually, but in such capacities, and are not
binding upon any of the Trustees, Shareholders or
representatives of the Trust personally, but bind
only the assets of the Trust, and all persons dealing
with any series of Shares of the Trust must look
solely to the assets of the Trust belonging to such
series for the enforcement of any claims against the
Trust."
The rights accruing to a Shareholder under this Section 9.4
shall not exclude any other right to which such Shareholder
may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not
specifically provided for herein, PROVIDED, HOWEVER, that a
Shareholder of any series or class of the Trust shall be
indemnified only from assets belonging to that series or
class.
9.5 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
or former Shareholder shall be held to be personally liable
solely by reason of his being or having been a Shareholder and
not because of his acts or omissions or for some other reason,
the Shareholder or former Shareholder (or his heirs,
executors, administrators, or other legal representatives, or,
in the case of a corporation or other entity, its corporate or
other general successor) shall be entitled out of the Trust
estate to be held harmless from and indemnified against all
loss and expense arising from such liability. The Trust shall,
upon request by the Shareholder, assume the defense of any
claim made against any Shareholder for any act or obligations
of the Trust, and shall satisfy any judgment thereon.
9.6 LIABILITIES OF A SERIES OR CLASS. Liabilities belonging to
any series or class of the Trust, including, without
limitation, expenses, fees, charges, taxes, and liabilities
incurred or arising in connection with a particular series or
class, or in connection with the management thereof, shall be
paid only from the assets belonging to that series or class.
10.3 TERMINATION OF TRUST. This Trust shall continue without
limitation of time; PROVIDED, HOWEVER, that:
A. The Trustees, with the vote of a majority of the
outstanding Shares of any series or class of the Trust, may
sell and convey the assets belonging to such series or class
to another trust or corporation organized under the laws of
any state of the United States, which is a management
investment company as defined in the Act, for an adequate
consideration which may include the assumption of all
outstanding obligations, taxes, and other liabilities, accrued
or contingent, of the series or class and which may include
beneficial interests of such trust or stock of such
corporation. Upon making provision for the payment of all such
liabilities, by such assumption or otherwise, the Trustees
shall distribute the remaining proceeds ratably among the
holders of the Shares of the series or class then outstanding.
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B. The Trustees, with the vote of a majority of the
outstanding Shares of any series or class of the Trust, may
sell and convert into money all the assets belonging to such
series or class. Upon making provision for the payment of all
outstanding obligations, taxes, and other liabilities, accrued
or contingent, of the series or class, the Trustees shall
distribute the remaining assets belonging to such series or
class ratably among the holders of the outstanding Shares of
the series or class.
C. Without the vote of a majority of outstanding Shares of any
series or class of the Trust (unless Shareholder approval is
otherwise required by applicable law), the Trustees may
combine the assets belonging to any two or more series or
classes into a single series or class if the Trustees
reasonably determine that such combination will not have a
material adverse effect on the Shareholders of each series or
class affected thereby.
D. After the effective date of the determination of the
Trustees under paragraph A or B above,
(1) The Trust shall carry on no business relating to
the assets of such series or class except for the
purpose of winding up the affairs of such series or
class.
(2) The Trustees shall proceed to wind up the affairs
of such series or class and all of the powers of the
Trustees under this Declaration of Trust shall
continue until the affairs of such series or class
shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust
relating to such series or class, to collect assets
of such series or class, to sell, convey, assign,
exchange, transfer, or otherwise dispose of all or
any part of the remaining assets of such series or
class to one or more Persons at public or private
sale for consideration that may consist in whole or
in part of cash, securities, or other property of any
kind, to discharge or pay its liabilities, and to do
all other acts appropriate to liquidate the business
of such series or class.
Upon completion of the distribution of the remaining proceeds
or the remaining assets as provided in paragraphs A and B of
this section, the Trustees may authorize the termination of
that series or class of the Trust. Such termination shall be
effective upon filing with the State Secretary of the
Commonwealth of Massachusetts of an instrument setting forth
such termination, at which time the Trustees shall be
discharged of any and all further liabilities and duties
hereunder relating to such series or class and the right,
title and interest of all parties shall be cancelled and
discharged with respect to such series or class. Such
instrument shall constitute an amendment to this Declaration
of Trust when filed with the State Secretary of the
Commonwealth of Massachusetts as provided in this Title X.
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10.8 AMENDMENT PROCEDURE.
A. This Declaration of Trust may be amended by the affirmative
vote of the holders of not less than a majority of the
outstanding Shares of each series affected thereby (as the
Trustees shall determine) or by any larger vote as may be
required by any provisions of applicable law.
B. Notwithstanding any other provisions hereof, until such
time as a Registration Statement under the Securities Act of
1933, as amended, covering the first public offering of
securities of the Trust shall have become effective, this
Declaration of Trust may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees.
C. The Trustees may also amend this Declaration without the
vote of Shareholders to cure any error or ambiguity or to
change the name of the Trust or, if they deem it necessary, to
conform this Declaration of Trust to the requirements of
applicable state or federal laws or regulations or the
requirements of the regulated investment company provisions of
the Internal Revenue Code, but the Trustees shall not be
liable for failing to do so.
The following portions of Registrant's Code of Regulations incorporated
as Exhibit (2) hereto, define the rights of shareholders:
1.1 PLACE. An Annual Meeting of Shareholders may be held for a
calendar year if called by the Trustees acting in their sole
discretion, and any such annual or Special Meetings of
Shareholders shall be held at such place, date, and time as
the Trustees may designate.
1.2 SPECIAL MEETING. Special Meetings of Shareholders may be
called by the Trustees, and shall be called by the Trustees
upon the written request of holders of at least twenty percent
of the outstanding units of beneficial interest in the Trust
("Shares") entitled to vote.
1.3 NOTICE. Written notice, stating the place, day and hour of
each meeting of Shareholders and, in the case of Special
Meetings, the general nature of the business to be transacted,
shall be given by, or at the direction of, the person calling
the meeting to each Shareholder of record entitled to vote at
the meeting at least ten days prior to the day named for the
meeting, unless in a particular case a longer period of notice
is required by law.
1.4 SHAREHOLDER'S LIST. The officer or agent having charge of
the transfer books for shares of the Trust shall make, at
least five days before each meeting of Shareholders, a
complete list of the Shareholders entitled to vote at the
meeting, arranged in alphabetical order with the address of
and the number of Shares held by each such Shareholder. The
list shall be kept on file at the office of the Trust and
shall be subject to inspection by any Shareholders at any time
during usual business hours, and shall also be produced and
kept open at the time and place of each meeting of
Shareholders and shall be
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subject to the inspection of any Shareholder during each
meeting of Shareholders.
1.5 RECORD DATE. The Trustees may fix a time (during which
they may close the Share transfer books of the Trust) not more
than ninety (90) days prior to the date of any meeting of
Shareholders, or the date fixed for the payment of any
dividend, or the date of the allotment of rights or the date
when any change or conversion or exchange of Shares shall go
into effect, as a record date for the determination of the
Shareholders entitled to notice of, or to vote at, any such
meeting, or entitled to receive payment of any such dividend,
or to receive any such allotment of rights, or to exercise
such rights, as the case may be. In such case, only such
Shareholders as shall be shareholders of record at the close
of business on the date so fixed shall be entitled to notice
of, or to vote at, such meeting or to receive payment of such
dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any
record date, as aforesaid.
3.1 FORM. Notices to Shareholders shall be in writing and
delivered personally or mailed to the Shareholders at their
addresses appearing on the books of the Trust.
3.2 WAIVER. Whenever any notice of the time, place, or purpose
of any meeting of Shareholders, Trustees, or committee is
required to be given under the provisions of Massachusetts law
or under the provisions of the Declaration of Trust or these
Regulations, a waiver thereof in writing, signed by the person
or persons entitled to such notice and filed with the record
of the meeting, whether before or after the holding thereof,
or actual attendance at the meeting of Shareholders in person
or by proxy, or at the meeting of Trustees or committee in
person, shall be deemed equivalent to the giving of such
notice to such persons.
(5)(a) Investment Advisory Agreement dated January 11, 1993 between
Registrant and Banc One Investment Advisors Corporation is
incorporated by reference to Exhibit 5(a) to Post-Effective
Amendment No. 27 (filed March 17, 1993) to Registrant's
Registration Statement on Form N-1A.
(5)(b) Amended and Restated Schedule A to the Investment Advisory
Agreement between Registrant and Banc One Investment Advisors
Corporation dated November 19, 1998 is incorporated by
reference to Exhibit (5)(b) to Post-Effective Amendment No. 47
(filed December 23, 1998) to Registrant's Registration
Statement on Form N-1A.
(5)(c) Sub-Investment Advisory Agreement dated October 1, 1996
between Banc One Investment Advisors Corporation and
Independence International Associates, Inc. is incorporated by
reference to Exhibit (5)(c) to Post-Effective Amendment No. 42
(filed June 18, 1997) to the Registrant's Registration
Statement on Form N-1A.
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(5)(d) Sub-Investment Advisory Agreement, dated as of August 20, 1998
between Banc One Investment Advisors Corporation and Banc One
High Yield Partners, LLC is incorporated by reference to
Exhibit (5)(d) to Post-Effective Amendment No. 45 (filed
August 26, 1998) to Registrant's Registration Statement on
Form N-1A.
(6)(a) Re-executed Distribution Agreement dated December 13, 1995
between Registrant and The One Group Services Company is
incorporated by reference to Exhibit (7)(c) to Registrant's
Registration Statement on Form N-14 (filed January 19, 1996).
(6)(b) Revised Schedules A-E to the Distribution Agreement between
the Registrant and The One Group Services Company is
incorporated by reference to Exhibit (6)(b) to Registrant's
Registration Statement on Form N-1A (filed March 12, 1999).
(6)(c) Dealer's Agreement for Registrant dated November 11, 1995
between The One Group Services Company and Banc One Securities
Corporation is incorporated by reference to Exhibit (7)(d) to
Registrant's Registration Statement on Form N-14 (filed
January 19, 1996).
(6)(d) Form of Shareholder Servicing Agreement between the Registrant
and Participating Service Organizations is incorporated by
reference to Exhibit (7)(f) to Registrant's Registration
Statement on Form N-14 (filed on May 29, 1998).
(6)(e) Agency Services and Delegation Agreement between INVESCO Trust
Company and Registrant dated January 1, 1998 is incorporated
by reference to Exhibit (10)(j) to Registrant's Registration
Statement on Form N-14 (filed on May 29, 1998).
(6)(f) Processing Agreement by and between Pershing Division of
Donaldson, Lufkin & Jenrette Securities Corporation and The
One Group dated as of February, 1999 is incorporated by
reference to Exhibit (6)(f) to Registrant's Registration
Statement on Form N-1A (filed March 12, 1999).
(7) Deferred Compensation Plan for Trustees of The One Group is
incorporated by reference to Exhibit (7) to Post-Effective
Amendment No. 47 (filed December 23, 1998) to Registrant's
Registration Statement on Form N-1A.
(8)(a) Custodian Contract dated as of July 29, 1988 between
Registrant and State Street Bank and Trust Company is
incorporated by reference to Exhibit (8)(a) to Post Effective
Amendment No. 45 (filed August 26, 1998) to Registrant's
Registration Statement on Form N-1A.
(8)(b) Amendment to Custodian Contract dated as of July 29, 1988
between Registrant and State Street Bank and Trust Company is
incorporated by reference to Exhibit (8)(b) to Post Effective
Amendment No. 45 (filed August 26, 1998) to Registrant's
Registration Statement on Form N-1A.
(8)(c) Sub-Custodian Agreement between State Street Bank and Trust
Company, Bank One Trust Company, N.A. and the Registrant is
incorporated by reference to Exhibit (8)(b) to Post-Effective
Amendment No. 37 (filed June 13, 1996) to the Registrant's
Registration Statement on Form N-1A.
(8)(d) First Amendment to the Subcustodian Agreement dated as of
December, 1996 between State Street Bank and Trust Company,
Bank One Trust Company,
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N.A. and the Registrant is incorporated by reference to
Exhibit (8)(d) to Post Effective Amendment No. 45 (filed
August 26, 1998) to Registrant's Registration Statement on
Form N-1A.
(8)(e) International Securities Lending Subcustodian and Services
Agreement, dated December 29, 1997 between State Street Bank
and Trust Company, Bank One Trust Company, N.A. and the
Registrant is incorporated by reference to Exhibit (8)(c) to
Post-Effective Amendment No. 44 (filed June 5, 1998) to the
Registrant's Registration Statement on Form N-1A.
(8)(f) Sub-Custodian Agreement dated as of March 19, 1999, between
State Street Bank and Trust Company, NBD Bank and One Group
Mutual Funds is filed herewith.
(9)(a) Re-executed Management and Administration Agreement dated
November 20, 1997 is incorporated by reference to Exhibit
(13)(b) to Registrant's Registration Statement on Form N-14
(filed on May 29, 1998).
(9)(b) Revised Schedule A to the Management and Administration
Agreement between the Registrant and The One Group Services
Company is incorporated by reference to Exhibit (9)(b) to
Post-Effective Amendment No. 47 (filed December 23, 1997) to
the Registrant's Registration Statement on Form N-1A.
(9)(c) Transfer Agency and Service Agreement dated as of February 9,
1988 between the Registrant and State Street Bank and Trust
Company is incorporated by reference to Exhibit (9)(c) to Post
Effective Amendment No. 45 (filed August 26, 1998) to
Registrant's Registration Statement on Form N-1A.
(9)(d) Amendment to the Transfer Agency and Service Agreement dated
as of February 6, 1996 is incorporated by reference to Exhibit
(9)(d) to Post-Effective Amendment No. 45 (filed August 26,
1998) to the Registrant's Registration Statement on Form N-1A.
(9)(e) Fund Accounting Agreement dated December 1, 1995 between the
Registrant and The One Group Services Company is incorporated
by reference to Exhibit (13)(c) to Registrant's Registration
Statement on Form N-14 (filed January 19, 1996).
(9)(f) Revised Schedule A to the Fund Accounting Agreement between
the Registrant and The One Group Services Company is
incorporated by reference to Exhibit (9)(f) to Post-Effective
Amendment No. 47 (filed December 23, 1997) to the Registrant's
Registration Statement on Form N-1A.
(9)(g) Sub-Administration Agreement dated December 1, 1995 between
The One Group Services Company and Banc One Investment
Advisors Corporation is incorporated by reference to Exhibit
(13)(d) to the Registrant's Registration Statement on Form
N-14 (filed January 19, 1996).
(9)(h) Revised Schedule A to the Sub-Administration Agreement between
The One Group Services Company and Banc One Investment
Advisors Corporation incorporated by reference to Exhibit
(9)(h) to Post-Effective Amendment No. 47 (filed December 23,
1997) to the Registrant's Registration Statement on Form N-1A.
(9)(i) Agency Services and Delegation Agreement dated January 1, 1996
between the Registrant and BISYS Qualified Plan Services is
incorporated by reference
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to Exhibit (9)(g) to Post-Effective Amendment No. 37 (filed
June 13, 1996) to the Registrant's Registration Statement on
Form N-1A.
(9)(j) Form of Agency Services and Delegation Agreement between the
Registrant and Bank One Trust Company, NA is incorporated by
reference to Exhibit (9)(i) to Post-Effective Amendment No. 43
(filed August 29, 1997) to Registrant's Registration Statement
on Form N-1A.
(9)(k) Form of Order Processing Agreement between the Registrant and
Bank One Trust Company, NA is incorporated by reference to
Exhibit (9)(j) to Post-Effective Amendment No. 43 (filed
August 29, 1997) to Registrant's Registration Statement on
Form N-1A.
(9)(l) Shareholder Servicing Agreement is incorporated by reference
to Exhibit 9(h) to Post-Effective Amendment No. 37 (filed June
13, 1996) to the Registrant's Registration Statement on Form
N-1A.
(9)(m) Services Agreement dated as of June 6, 1997 between the
Registrant and Charles Schwab & Company, is incorporated by
reference to Exhibit (9)(l) to Post-Effective Amendment No. 44
(filed June 5, 1998) to Registrant's Registration Statement on
Form N-1A.
(9)(n) Operating Agreement dated as of June 6, 1997 between the
Registrant and Charles Schwab & Company, is incorporated by
reference to Exhibit (9)(m) to Post-Effective Amendment No. 44
(filed June 5, 1998) to Registrant's Registration Statement on
Form N-1A.
(9)(o) Retirement Services Order Processing Agreement dated as of
June 6, 1997 between the Registrant and Charles Schwab &
Company, is incorporated by reference to Exhibit (9)(n) to
Post-Effective Amendment No. 44 (filed June 5, 1998) to
Registrant's Registration Statement on Form N-1A.
(9)(p) Securities Lending Agreement for Non-ERISA Accounts dated as
of August 1995 between the Registrant, Banc One Investment
Advisors Corporation, and Bank One Trust Company, N.A. is
incorporated by reference to Exhibit (9)(p) to Post Effective
Amendment No. 45 (filed August 26, 1998) to Registrant's
Registration Statement on Form N-1A.
(9)(q) Amendment to Securities Lending Agreement for Non-ERISA
Accounts dated as of January 21, 1997 between the Registrant,
Banc One Investment Advisors Corporation, and Bank One Trust
Company, N.A. is incorporated by reference to Exhibit (9)(q)
to Post Effective Amendment No. 45 (filed August 26, 1998) to
Registrant's Registration Statement on Form N-1A.
(9)(r) Second Amendment to the Securities Lending Agreement (Domestic
Securities), effective May 21, 1998, between the Registrant,
Banc One Investment Advisors, and Bank One Trust Company, N.A.
is incorporated by
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reference to Exhibit (9)(r) to Post Effective Amendment No. 45
(filed August 26, 1998) to Registrant's Registration Statement
on Form N-1A.
(9)(s) Securities Lending Agreement for Non-ERISA Accounts dated as
of January 8, 1998 between the Registrant, Banc One Investment
Advisors, and Bank One Trust Company, N.A. is incorporated by
reference to Exhibit (9)(s) to Post Effective Amendment No. 45
(filed August 26, 1998) to Registrant's Registration Statement
on Form N-1A.
(9)(t) Amendment to the Securities Lending Agreement (Foreign
Securities) effective May 21, 1998 is incorporated by
reference to Exhibit (9)(t) to Post Effective Amendment No. 45
(filed August 26, 1998) to Registrant's Registration Statement
on Form N-1A.
(9)(u) Fund Alliance Agreement by and between The One Group,
The One Group Services Company, and Putnam Fiduciary Trust
Company is filed herewith.
(9)(v) Agency Agreement dated as of March 18, 1997 between Pegasus
Funds and BISYS Fund Services, Inc. is filed herewith.
(9)(w) Amendment dated April 1, 1999, to the Agency Agreement dated
as of March 18, 1997 between Pegasus Funds and BISYS Fund
Services, Inc. is filed herewith.
(9)(x) Agency Agreement dated as of March 11, 1997 between Pegasus
Funds and NBD Bank is filed herewith.
(9)(y) Amendment to the Agency Agreement dated as of March 11, 1997
between Pegasus Funds and NBD Bank is filed herewith.
(9)(z) Agency Agreement dated as of November 1, 1996 between Pegasus
Funds and Putnam Fiduciary Trust Company is filed herewith.
(9)(aa) Fifth Amendment dated March 19, 1999, to the Agency Agreement
dated as of November 1, 1996 between Pegasus Funds and Putnam
Fiduciary Trust Company is filed herewith.
(9)(bb) Form of Agency Agreement between The One Group Services
Company and various shareholder servicing agents is filed
herewith.
(9)(cc) Sub-Transfer Agency Agreement between One Group Mutual Funds
and the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corporation, is filed herewith.
(9)(dd) Form of Sub-Transfer Agency Agreement is filed herewith.
(9)(ee) Form of Order Processing Agreement is filed herewith.
(10) Opinion and consent of counsel is filed herewith.
(11)(a) Consent of PricewaterhouseCoopers LLP is filed herewith.
(11)(b) Consent of Arthur Andersen LLP is filed herewith.
(11)(c) Consent of Ropes & Gray is filed herewith.
(12) None
(13) Purchase Agreement dated July 18, 1985, between Registrant and
Physicians Insurance Company of Ohio is incorporated by
reference to Exhibit (13) to Post Effective Amendment No. 45
(filed August 26, 1998) to Registrant's Registration Statement
on Form N-1A.
(14) None.
(15)(a) Re-Executed Distribution and Shareholder Services Plan - Class
A and Service Class shares dated November 1, 1995, as amended
August 20, 1997, between the Registrant and The One Group
Services Company is incorporated by reference to Exhibit
(15)(a) to Post-Effective Amendment No. 43 (filed August 29,
1997) to Registrant's Registration Statement on Form N-1A.
(15)(b) Distribution and Shareholder Services Plan - Class B and Class
C Shares dated January 1, 1994, as amended August 20, 1997,
between the Registrant and The One Group Services Company is
incorporated by reference to Exhibit (15)(b) to Post-Effective
Amendment No. 43 (filed August 29, 1997) to Registrant's
Registration Statement on Form N-1A.
(16) Schedules for Computation of Performance Calculations are
incorporated by reference to Exhibit (16) to Post-Effective
Amendment No. 43 (filed August 29, 1997) to Registrant's
Registration Statement on Form N-1A.
-16-
<PAGE> 212
(18)(a) Multiple Class Plan for the Registrant adopted by the Board of
Trustees on May 22, 1995, as amended May 21, 1998 is
incorporated by reference to Exhibit (10)(k) to Registrant's
Registration Statement on Form N-14 (filed on May 29, 1998).
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
As of the effective date of this Registration Statement there are no persons
controlled or under common control with the Registrant.
Item 26. Number of Holders of Securities
-------------------------------
No longer required by new Form N-1A.
Item 27 Indemnification.
----------------
Article IX, Section 9.2 of the Registrant's Declaration of
Trust, incorporated as Exhibit (1) hereto, provides for the
indemnification of Registrant's trustees and officers.
Indemnification of the Registrant's principal underwriter,
custodians, investment advisers, administrator, and transfer
agents is provided for in the Registrant's respective
Agreements with those service providers as filed or
incorporated by reference as Exhibits hereto. As of the
effective date of this Registration Statement, the Registrant
has obtained from a major insurance carrier a trustees and
officers' liability policy covering certain types of errors
and omissions. In no event will Registrant indemnify any of
its trustees, officers, employees, or agents against any
liability to which such person would otherwise be subject by
reason of his willful misfeasance, bad faith, or gross
negligence in the performance of his duties, or by reason of
his reckless disregard of the duties involved in the conduct
of his office or under his agreement with Registrant.
Registrant will comply with Rule 484 under the Securities Act
of 1933 and Release 11330 under the Investment Company Act of
1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer or controlling person
of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
-17-
<PAGE> 213
Item 28. Business and Other Connections of Investment Advisers
-----------------------------------------------------
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors") performs investment advisory services for all of
the Funds of The One Group. Independence International
Associates, Inc. performs investment sub-advisory services for
the International Equity Index Fund. Banc One High Yield
Partners, LLC provides investment advisory services for the
High Yield Bond Fund.
Banc One Investment Advisors is an indirect wholly-owned
subsidiary of BANK ONE CORPORATION, a bank holding company
incorporated in the state of Delaware. BANK ONE CORPORATION
now operates affiliate banking organizations in Arizona,
Colorado, Illinois, Indiana, Kentucky, Louisiana, Michigan,
Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. In
addition, BANK ONE CORPORATION has several affiliates that
engage in data processing, venture capital, investment and
merchant banking, and other diversified services including
trust management, investment management, brokerage, equipment
leasing, mortgage banking, consumer finance, and insurance.
To the knowledge of Registrant, none of the directors or
officers of Banc One Investment Advisors, Independence
International Associates, Inc. or Banc One High Yield
Partners, LLC, except as set forth or incorporated herein, is
or has been, at any time during the past two calendar years,
engaged in any other business, profession, vocation or
employment of a substantial nature. Set forth below are the
names and principal businesses of the directors of Banc One
Investment Advisors who are engaged in any other business,
profession, vocation or employment of a substantial nature.
Banc One Investment Advisors
----------------------------
<TABLE>
<CAPTION>
Position with Banc Other
One Investment Advisors Substantial Occupation Type of Business
----------------------- ---------------------- ----------------
<S> <C> <C>
David J. Kundert, Chairman, Chairman, Bank One Investment
President, and CEO Trust Company, NA,
100 East Broad
Street, Columbus,
Ohio 43215
</TABLE>
-18-
<PAGE> 214
<TABLE>
<S> <C> <C>
Frederick L. Cullen, Director Chairman/CEO Bank One, NA, 100 East Banking
Broad Street, Columbus, Ohio 43215;
Chairman and Chief Operating Officer,
Banc One Ohio Corporation, 100 East
Broad Street, Columbus, Ohio 43215
Kenneth T. Stevens, Director CEO, Bank One Retail Group Banking
1111 Polaris Parkway
Columbus, Ohio 43240
Peter W. Atwater, Director Former Treasurer, Investment
and Chief Operating Officer Bank One Corporation,
100 East Broad Street,
Columbus, Ohio 43215
David R. Meuse, Director Chairman/CEO Banc One Investment
Capital Holding
Corporation, 150 East
Gay Street, Columbus,
Ohio 43215
William G. Jurgenson, Director Executive Vice President Banking
First National Bank of Chicago,
1 First National Plaza,
Chicago, Illinois 60670
William P. Boardman, Director Senior Executive Vice President Banking
and Head of Acquisitions,
BANK ONE CORPORATION
One First National Plaza,
Chicago, Illinois 60670
Richard W. Vague, Director Chairman & CEO, Credit Card
First USA
201 North Market Street
Wilmington, Delaware 19801
</TABLE>
The principal business address of the principal executive officer and directors
of Banc One Investment Advisors is 1111 Polaris Parkway, P.O. Box 710211,
Columbus, Ohio 43271-0211.
Independence International Associates, Inc.
- -------------------------------------------
Independence International Associates, Inc. ("IIA") is the
Sub-Investment Advisor to the International Equity Index Fund. IIA, a
corporation organized under the laws of Massachusetts, provides investment
advice to institutional and investment company clients. Information regarding
the firm's ownership and other business connections of the officers and
directors is listed on the Form ADV filed by IIA with the SEC pursuant to the
-19-
<PAGE> 215
Investment Advisers Act of 1940 (SEC File No.801-28785), the text of which is
hereby incorporated by reference.
Banc One High Yield Partners, LLC
- ---------------------------------
Banc One High Yield Partners, LLC is the Sub-Investment Advisor to the
High Yield Bond Fund ("Banc One Partners"). Banc One Partners, a limited
liability company organized under the laws of Ohio, provides investment advice
to the High Yield Bond Fund. Set forth below are the names and principal
businesses of the managers and investment officers of Banc One Partners who are
engaged in any other business, profession, vocation or employment of a
substantial nature.
<TABLE>
<CAPTION>
Position with Other Substantial Type of
Banc One Partners Occupation Business
----------------- ---------- --------
<S> <C> <C>
James P. Shanahan, Manager Pacholder Associates, Investment
Inc., Managing Director
& General Counsel, 8044
Montgomery Road, Suite
#382, Cincinnati, Ohio
45236
William J. Morgan, Manager Pacholder Associates, Investment
Inc., President, 8044
Montgomery Road, Suite
#382, Cincinnati, Ohio
45236
Mark A. Beeson, Manager Banc One Investment Investment
Advisors, Senior
Managing Director, 1111
Polaris Parkway,
Columbus, Ohio 43271
Gary Madich, Manager Banc One Investment Investment
Advisors, Senior
Managing Director, 1111
Polaris Parkway,
Columbus, Ohio 43271
</TABLE>
-20-
<PAGE> 216
<TABLE>
<S> <C> <C>
Ryan L. Langdon, Vice Pacholder Investment
President -- Senior Analyst Associates, Inc., Vice
President, 8044
Montgomery Road, Suite
#382, Cincinnati, Ohio
45236
Anthony L. Longi, Jr., Vice
President -- Portfolio Manager Pacholder Investment
Associates, Inc.,
Executive Vice
President, 8044
Montgomery Road, Suite
#382, Cincinnati, Ohio
45236
</TABLE>
Item 29. Principal Underwriters
----------------------
(a) The One Group Services Company acts as administrator and
distributor for each of the Fund's Portfolios.
(b) The directors and officers of The One Group Services Company are
set forth below. The business address of each director or officer is
3435 Stelzer Road, Columbus, Ohio 43219.
<TABLE>
<CAPTION>
Positions and Offices
With The One Group
Name Services Company Positions With Registrant
---- ---------------- -------------------------
<S> <C> <C>
Lynn J. Mangum Chairman and Chief None
Executive Officer
Dennis Sheehan Director None
Kevin J. Dell Vice President/Secretary/ None
Michael D. Burns Vice President None
Steven Ludwig Compliance Officer None
Robert Tuch Assistant Secretary None
David P. Blackmore Vice President/ None
Chief Financial Officer
</TABLE>
-21-
<PAGE> 217
<TABLE>
<S> <C> <C>
Mark S. Redman President President
Mark J. Ryberczyk Senior Vice President None
William J. Tomko Senior Vice President Treasurer
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
(1) Banc One Investment Advisors Corporation, 1111 Polaris
Parkway, P.O. Box 710211, Columbus, Ohio 43271-0211
(records relating to its functions as Investment Adviser
and Sub-Administrator).
(2) Independence International Associates, Inc., 75 State
Street, Boston, MA 02109 (records relating to its
functions as Sub-Investment Adviser to the International
Equity Index Fund).
(3) Banc One High Yield Partners, LLC, 1111 Polaris Parkway,
P.O. Box 710211, Columbus, Ohio 43271-0211 and 8044
Montgomery Road, Suite #382, Cincinnati, Ohio 45236
(records relating to its functions as Sub-Investment
Advisor to the High Yield Bond Fund).
(4) The One Group Services Company, 3435 Stelzer Road,
Columbus, OH 43219 (records relating to its functions as
Distributor for all Funds).
(5) The One Group Services Company, 3435 Stelzer Road,
Columbus, OH 43219 (records relating to its functions as
Administrator for all Funds).
(6) State Street Bank and Trust Company, 470 Atlantic
Avenue, Fifth Floor, Boston, MA 02205-9087 (records
relating to its functions as custodian and transfer
agent to all Funds).
(7) Ropes & Gray, One Franklin Square, 1301 K Street, N.W.,
Suite 800 East, Washington, D.C. 20005 (Declaration of
Trust, Code of Regulations, and Minute Books).
Item 31. Management Services
-------------------
N/A
Item 32. Undertakings
------------
The Registrant undertakes to call a meeting of
Shareholders, at the request of at least 10% of the
Registrant's outstanding shares, for the purpose of
voting upon the question of removal of a trustee or
trustees and to assist in communications with other
shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
-22-
<PAGE> 218
The Registrant undertakes to furnish to each person to
whom a prospectus for a particular fund is delivered a
copy of the Registrant's latest annual report to
shareholders relating to that fund upon request and
without charge.
-23-
<PAGE> 219
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 49 to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Washington, D.C. on the
27th day of April, 1999.
One Group(R) Mutual Funds
(Registrant)
By: /s/ Mark S. Redman
------------------------
*Mark S. Redman
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Mark S. Redman President April 27, 1999
- ------------------
* Mark S. Redman
/s/ William J. Tomko Treasurer April 27, 1999
- --------------------
*William J. Tomko
/s/ Peter C. Marshall Trustee April 27, 1999
- ---------------------
*Peter C. Marshall
/s/ Charles I. Post Trustee April 27, 1999
- --------------------
*Charles I. Post
/s/ Frederick W. Ruebeck Trustee April 27, 1999
- -------------------------
*Frederick W. Ruebeck
/s/ Robert A. Oden Trustee April 27, 1999
- ------------------
*Robert A. Oden
/s/ John F. Finn Trustee April 27, 1999
- ----------------
*John F. Finn
*By: /s/ Alan G. Priest
------------------
Alan G. Priest
Attorney-in-Fact, pursuant to powers of attorney filed herewith.
</TABLE>
-24-
<PAGE> 220
POWER OF ATTORNEY
-----------------
Mark S. Redman, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The One Group(R)
(the "Group"), to comply with the Investment Company Act of 1940, as amended,
and the Securities Act of 1933, as amended ("Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of any and all instruments and/or
documents pertaining to the federal registration of the shares of the Group,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign in the name and on behalf of the undersigned as
a director and/or officer of the Group any and all amendments to the Group's
Registration Statement as filed with the Securities and Exchange Commission
under said Acts, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue thereof.
Dated: May 21, 1998
/s/ Mark S. Redman
------------------
Mark S. Redman
-25-
<PAGE> 221
POWER OF ATTORNEY
-----------------
William J. Tomko, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The One Group(R)
(the "Group"), to comply with the Investment Company Act of 1940, as amended,
and the Securities Act of 1933, as amended ("Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of any and all instruments and/or
documents pertaining to the federal registration of the shares of the Group,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign in the name and on behalf of the undersigned as
a director and/or officer of the Group any and all amendments to the Group's
Registration Statement as filed with the Securities and Exchange Commission
under said Acts, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue thereof.
Dated: May 21, 1998
/s/ William J. Tomko
--------------------
William J. Tomko
-26-
<PAGE> 222
POWER OF ATTORNEY
-----------------
Peter C. Marshall, whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa
Albertelli, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group(R) (the "Group"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
/s/ Peter C. Marshall
---------------------
Peter C. Marshall
-27-
<PAGE> 223
POWER OF ATTORNEY
-----------------
Charles I. Post, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The One Group(R)
(the "Group"), to comply with the Investment Company Act of 1940, as amended,
and the Securities Act of 1933, as amended ("Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of any and all instruments and/or
documents pertaining to the federal registration of the shares of the Group,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign in the name and on behalf of the undersigned as
a director and/or officer of the Group any and all amendments to the Group's
Registration Statement as filed with the Securities and Exchange Commission
under said Acts, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue thereof.
Dated: May 21, 1998
/s/ Charles I. Post
-------------------
Charles I. Post
-28-
<PAGE> 224
POWER OF ATTORNEY
-----------------
Frederick W. Ruebeck, whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa
Albertelli, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group(R) (the "Group"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
/s/ Frederick W. Ruebeck
------------------------
Frederick W. Ruebeck
-29-
<PAGE> 225
POWER OF ATTORNEY
-----------------
Robert A. Oden, Jr., whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa
Albertelli, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group(R) (the "Group"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
/s/ Robert A. Oden, Jr.
-----------------------
Robert A. Oden, Jr.
-30-
<PAGE> 226
POWER OF ATTORNEY
-----------------
John F. Finn, whose signature appears below, does hereby constitute and
appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The One Group(R)
(the "Group"), to comply with the Investment Company Act of 1940, as amended,
and the Securities Act of 1933, as amended ("Acts"), and any rules, regulations
or requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of any and all instruments and/or
documents pertaining to the federal registration of the shares of the Group,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign in the name and on behalf of the undersigned as
a director and/or officer of the Group any and all amendments to the Group's
Registration Statement as filed with the Securities and Exchange Commission
under said Acts, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue thereof.
Dated: May 21, 1998
/s/ John F. Finn
----------------
John F. Finn
-31-
<PAGE> 227
Exhibit No. Description
----------- -----------
(9)(u) Fund Alliance Agreement by and between The One Group,
The One Group Services Company, and Putnam Fiduciary
Trust Company.
(9)(v) Agency Agreement dated as of March 18, 1997 between
Pegasus Funds and BISYS Fund Services, Inc.
(9)(w) Amendment dated April 1, 1999 to the Agency Agreement
dated as of March 18, 1997 between Pegasus Funds and
BISYS Fund Services, Inc.
(9)(x) Agency Agreement dated as of March 11, 1997 between
Pegasus Funds and NBD Bank.
(9)(y) Amendment to the Agency Agreement dated as of March
11, 1997 between Pegasus Funds and NBD Bank.
(9)(z) Agency Agreement dated as of November 1, 1996 between
Pegasus Funds and Putnam Fiduciary Trust Company.
(9)(aa) Fifth Amendment dated March 19, 1999, to the Agency
Agreement dated as of November 1, 1996 between
Pegasus Funds and Putnam Fiduciary Trust Company.
(9)(bb) Form of Agency Agreement between The One Group
Services Company and various shareholder servicing
agents.
(9)(cc) Sub-Transfer Agency Agreement between One Group
Mutual Funds and the Pershing Division of Donaldson,
Lufkin & Jenrette Securities Corporation.
(9)(dd) Form of Sub-Transfer Agency Agreement.
(9)(ee) Form of Order Processing Agreement.
10 Opinion of Counsel
11(a) Consent of PricewaterhouseCoopers LLP
11(b) Consent of Arthur Andersen LLP
11(c) Consent of Ropes & Gray
-32-
<PAGE> 1
Exhibit (8)(f)
Sub-Custodian Agreement dated as of March 19, 1999
between
State Street Bank and Trust Company, NBD Bank
and
One Group Mutual Funds
<PAGE> 2
SUBCUSTODIAN AGREEMENT
----------------------
This Subcustodian Agreement (the "Agreement") is entered into as of
March , 1999 by and between State Street Bank and Trust Company, a Massachusetts
trust company (the "Custodian"), NBD Bank (the "Subcustodian") and One Group(R)
Mutual Funds, an open-end management investment company registered under the
Investment Company Act of 1940 ("One Group").
Background Information
----------------------
A. The Custodian has been appointed as custodian for One Group pursuant to
a Custodian Agreement between the Custodian and One Group (the
"Custodian Agreement").
B. Banc One Investment Advisors Corporation, an investment advisor
registered under the Investment Advisers Act of 1940 ( "BOIA") serves
as investment adviser to The One Group.
C. Prior to the merger between the Pegasus Funds and One Group, the
Subcustodian held certain mortgage-backed securities and other assets
(collectively, the "Securities") on behalf of the Pegasus Funds. Until
such time as such Securities are sold on behalf of One Group or
transferred to the Custodian, the Subcustodian is willing to continue
to hold such Securities in an account (each, an "Account") established
on behalf of the funds of the One Group listed on EXHIBIT A hereto.
STATEMENT OF AGREEMENT
----------------------
The parties hereby acknowledge the accuracy of the foregoing Background
Information and hereby agree as follows:
Section 1. Appointment of the Subcustodian. One Group hereby instructs
the Custodian to appoint and the Custodian hereby appoints Subcustodian to hold
certain cash and the Securities. Subcustodian represents that it is qualified to
act as a custodian for a registered investment company under the Investment
Company Act of 1940, as amended. Subcustodian shall only be responsible for
custody hereunder of Securities actually delivered to it and then only while it
is held in and as a part of an Account. All securities accepted by Subcustodian
on behalf of One Group under the terms of this Agreement shall be in "street
name" or other good delivery form.
Section 2. Registration of Securities. Securities held by the
Subcustodian (other than bearer securities) shall be registered in the name of
the Custodian or in the name of any nominee of the Custodian or in the name of
the Subcustodian or of any nominee of the Subcustodian or in the name of any
depository designated by the Subcustodian or its nominee.
Section 3. Accounts. The Subcustodian may hold securities in: (i) the
bank vault of Subcustodian; (ii) such other banks or trust companies as have
been approved by One Group and pursuant to a written agreement between such
other banks or trust companies and the Subcustodian; (iii) its accounts with a
clearing agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as
2
<PAGE> 3
a securities depository (the "Securities Depository"); or (iv) a book-entry
account which is maintained for the Subcustodian by a Federal Reserve Bank (the
"Book Entry Account").
So long as Subcustodian maintains any account pursuant to (iii) or (iv)
above for One Group, Subcustodian shall: (i) identify as belonging to One Group
a quantity of such securities in the fungible bulk of securities (A) registered
in the name of Subcustodian or its nominee, or (B) shown on Subcustodian's
account on the books of the Securities Depository, the Book-Entry Account, or
Subcustodian's agent; (ii) promptly send to the Custodian reports it receives
from the appropriate Federal Reserve Bank or Securities Depository on its system
of internal accounting control; and (iii) send to the Custodian such reports of
the systems of internal accounting control of Subcustodian and its agents
through which such securities are deposited as are available and as the
Custodian may reasonably request from time to time.
Section 4. Collection of Income. Subcustodian shall collect all income
and other payments with respect to registered securities held in an Account to
which One Group shall be entitled by law or pursuant to custom in the securities
business, and shall collect all income and principal and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by Subcustodian in an Account. Subcustodian shall detach and
present for payment all coupons and other income and principal items requiring
presentation as and when they become due, shall collect dividends and interest
when due on securities held in an Account, and shall endorse and deposit for
collection, in the name of One Group, checks, drafts, and other negotiable
instruments on the same day as received.
Subcustodian shall not be under any obligation or duty to take action
to effect collection of any amount, if the Securities on which such amount is
payable are in default and payment is refused after due demand or presentation.
Subcustodian will, however, notify BOIA in writing within a reasonable period of
time of such default and refusal to pay.
Section 5. Instructions. Instructions furnished to the Custodian by
BOIA or to the Subcustodian by BOIA or the Custodian with respect to this
Agreement shall be signed by such officer or officers of the party giving such
instructions as are authorized from time to time by such party (each an
"Authorized Person"); provided, however, that each of the Custodian and the
Subcustodian is authorized to accept and act upon orders, whether given orally,
by telephone or otherwise, which the Custodian or the Subcustodian reasonably
believes to be given by an Authorized Person. All oral instructions shall be
promptly confirmed in writing. The records of the Subcustodian and the Custodian
shall be presumed to reflect accurately any oral instructions given by an
Authorized Person or a person believed by such party to be an Authorized Person.
Section 6. Voting and Other Actions. Subcustodian shall promptly
deliver or mail to BOIA all forms of proxies and all notices of meetings
affecting or relating to Securities held in an Account. Upon receipt of
instructions of BOIA, Subcustodian shall execute and deliver such proxies or
other authorizations as may be required. Neither Subcustodian nor its nominee
shall vote any securities or execute any proxy to vote the same or give any
consent to take any other action with respect thereto.
Section 7. Responsibility of Subcustodian. The Subcustodian shall use
the same care with respect to the receiving, safekeeping, handling, and
delivering of Securities, as applicable, held
3
<PAGE> 4
under this Agreement as it uses in respect of its own similar securities, but it
need not maintain any special insurance for the benefit of the Custodian, BOIA,
or One Group. The Subcustodian shall not be liable for any action taken or thing
done by it in carrying out the terms and provisions of this Agreement if done in
good faith and without negligence or willful misconduct on the Subcustodian's
part. The Custodian shall not be liable for any action taken or thing done by
(i) the Subcustodian or (ii) the Custodian in carrying out the terms and
provisions of this Agreement if done in good faith and without negligence or
willful misconduct on the Custodian's part. In providing the services hereunder,
it is understood that the Subcustodian shall neither render advice to the
Custodian, BOIA , or The One Group as to the value of securities or other
property, or make recommendations as to the advisability of investing in,
purchasing, loaning, or selling Securities or other property, nor shall the
Subcustodian, either directly or indirectly, have any discretionary authority or
control with respect to purchasing, loaning, or selling Securities or other
property for One Group.
Subcustodian shall release and deliver securities held in a Account and
take any other action as directed by BOIA, with respect to dividends, splits,
distributions, spin-offs, puts, calls, conversions, redemptions, tenders,
exchanges, mergers, reorganizations, rights, warrants, or any other similar
activity relating to the securities. Subcustodian shall request direction of
BOIA upon receipt of actual notice where One Group has an option as to any such
activity. For purposes of this paragraph, Subcustodian shall be deemed to have
actual notice if any such activity is published in one or more of the following
publications: J.J. Kenny's Munibase System, Financial Card Service, Xcitek,
Inc., Standard & Poors' Called Bond Listing, Depository Trust Reorganization
Notices, and The Wall Street Journal. If Subcustodian does not have actual
notice of such activity, any such activity will be handled by Subcustodian on a
"best efforts" basis. The Subcustodian will follow all instructions from BOIA
with respect to voting as to any particular issue(s).
As long as and to the extent that it exercises reasonable care,
Subcustodian shall not be responsible for the title, validity, or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and Subcustodian shall be held harmless in acting
upon instructions from an Authorized Person under this Agreement.
Subcustodian shall be entitled to rely upon and may act upon advice of
counsel (who may or may not be counsel for the Custodian or One Group) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
If the Custodian, One Group or BOIA require Subcustodian to take any
action with respect to securities, which action involves the payment of monies
or which action may, in the opinion of Subcustodian, result in Subcustodian's or
its nominee's being liable for the payment of money or incurring liability of
some other form, BOIA or One Group, as a prerequisite to requiring Subcustodian
to take such action, shall provide indemnity to Subcustodian in an amount and
form satisfactory to Subcustodian.
Neither Custodian nor Subcustodian shall be responsible or liable for
any failure or delay in the performance of its obligations under this Agreement
arising out of or caused directly or indirectly, by circumstances beyond its
reasonable control, including without limitation: acts of God; earthquakes;
fires; floods; wars; civil or military disturbance; sabotage; epidemics; riots;
4
<PAGE> 5
terrorism; interruptions, loss or malfunctions of utilities or communications
service; accidents; labor disputes; acts of civil or military authority;
governmental action; or inability to obtain labor, material, equipment, or
transportation.
Subcustodian shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in this
Agreement.
Section 8. Fees. One Group shall in connection with each security
hereunder pay to the Subcustodian the Subcustodian's fee, which shall accrue
daily, and which shall be set forth on EXHIBIT B hereto.
Section 9. Records and Reports. One Group hereby acknowledges that it
may have the right to receive broker confirmations within the time period
prescribed by 12 C.F.R. Section 12.5 at no additional cost. In lieu of receiving
such confirmations within such time period, One Group and Subcustodian agree to
the alternative procedures set forth in this Section. The Subcustodian shall
furnish statements of account monthly to Custodian and One Group or in such
other manner and frequency as the Subcustodian, Custodian and One Group shall
agree.
The Sub-custodian shall provide Custodian and One Group, upon request,
with any quarterly or annual reports prepared in the normal course of business
of the Subcustodian by the Subcustodian's independent public accountants on the
accounting system, internal accounting controls and procedures for safeguarding
securities relating to the services provided by the Subcustodian under this
Agreement.
The Subcustodian will not refuse any reasonable request for inspection
and audit of its books and records by an agent of a Fund or the Custodian, as
such records may relate to this Agreement.
The Subcustodian shall cooperate with each Fund and the Custodian and
their respective independent public accountants in connection with annual and
other audits of the books and records of the Custodian or the Funds.
Section 10. Effective Period, Termination and Amendment. This Agreement
shall become effective as of the date hereof and shall continue in full force
and effect until terminated as hereinafter provided, may be amended at any time
by mutual agreement of the parties hereto, and may be terminated by any party
hereto by an instrument in writing delivered or mailed, postage prepaid to the
other parties, such termination to take effect not sooner than thirty (30) days
after the date of delivery or mailing; provided, however, that the Custodian may
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Subcustodian by the Federal Deposit Insurance
Corporation or upon the happening of a like event at the direction of an
appropriate regulatory body or court of competent jurisdiction. Upon termination
of this Agreement, the Subcustodian shall promptly deliver all property then
held by the Subcustodian under this Agreement or cash proceeds thereof in
accordance with instructions of BOIA.
Section 11. Communications. All communications required or permitted to
be given under this Agreement shall be in writing (including telex, telegraph or
telefax, facsimile, or similar electronic transmittal device) unless expressly
provided otherwise, and addressed as follows:
5
<PAGE> 6
<TABLE>
<S> <C> <C>
(a) If to the Subcustodian: NBD Bank
235 West Schrock Road
Westerville, Ohio 43271-1075
Telephone: (614)
Telefax: (614)
(b) If to the Custodian: State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02119
Attention: Janine Donovan
Telephone: 617-985-8757
Telefax: 617-985-1198
(c) If to BOIA: Banc One Investment Advisors Corporation
1111 Polaris Parkway
Columbus, Ohio 43240
Attention: Bob Young
Telephone: (614) 213-0916
Telefax: (614) 213-7173
(d) If to One Group: One Group Mutual Funds
c/o Banc One Investment Advisors
Corporation
1111 Polaris Parkway
Columbus, Ohio 43240
Attention: Mark A. Beeson
Telephone: (614) 213-6678
Telefax: (614) 213-6331
</TABLE>
Section 12. Governing Law. This Agreement shall be construed and
enforced according to the laws of the Commonwealth of Massachusetts and all
provisions shall be administered according to the laws of said State, except as
said laws are superseded or preempted by any Federal law.
Section 13. Severability. The intention of the parties to this
agreement is to comply fully with all laws, rules, regulations, and public
policies, and this Agreement shall be construed consistently with all laws,
rules, regulations, and public policies to the extent possible. If and to the
extent that any court of competent jurisdiction determines it is impossible to
construe any provision of this agreement consistently with any law, rule,
regulation, or public policy and consequently holds that provision to be
invalid, such holding shall in no way affect the validity of the other
provisions of this Agreement, which shall remain in full force and effect.
Section 14. Non-Waiver. No failure by any party to insist upon
compliance with any term of this Agreement, to exercise any option, enforce any
right, or seek any remedy upon any default of any other party shall affect, or
constitute a waiver of, the first party's right to insist upon such strict
compliance, exercise that option, enforce that right, or seek that remedy with
respect to that default or any prior, contemporaneous, or subsequent default. No
custom or practice of the
6
<PAGE> 7
parties at variance with any provision of this Agreement shall affect or
constitute a waiver of, any party's right to demand strict compliance with all
provisions of this agreement.
Section 15. Captions. The captions of the various sections of this
Agreement are not part of the context of this Agreement, but are only labels to
assist in locating those sections and shall be ignored in construing this
Agreement.
Section 16. Additional Terms applicable to One Group. The names `One(R)
Group Mutual Funds' and `Trustees of One(R) Group Mutual Funds' refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated May 23, 1985 to which reference is hereby made and a copy of which
is on file at the office of the Secretary of the Commonwealth of Massachusetts
and elsewhere as required by law, and to any and all amendments thereto so filed
or hereafter filed. The obligations of `One(R) Group Mutual Funds' entered into
in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, Shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series of Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
Section 17. Waiver of Jury Trial. One Group, Custodian and the
Subcustodian hereby voluntarily, irrevocably and unconditionally waive any right
to have a jury participate in resolving any dispute, whether sounding in
contract, tort, or otherwise, between the One Group, Custodian and/or
Subcustodian arising out of, in connection with, related to, or incidental to
the relationship established between the One Group, Custodian and/or
Subcustodian in connection with this Agreement, or any other Agreement or
document executed or delivered in connection herewith or the transactions
related hereto.
Section 18. Entire Agreement. This Agreement represents the entire
agreement between the parties and may not be modified or amended except by a
writing signed by the parties hereto.
7
<PAGE> 8
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed this __ day of March 199
ONE GROUP MUTUAL FUNDS
By: /s/ Mark S. Redman
-----------------------------------
Title: President
--------------------------------
NBD BANK
(as Subcustodian)
By: /s/ Gary Young
-----------------------------------
Title: Vice-President
--------------------------------
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By: /s/ Kenneth Lynn
-----------------------------------
Title: Executive Vice-President
--------------------------------
8
<PAGE> 9
<TABLE>
<CAPTION>
THE ONE GROUP 614 213 3486 03/19 '99 13:20 NO.985 04/04
<S> <C> <C> <C>
PTLA - LIST OF ASSETS Online Trust Inquiry System Page 00001
Trust No 839461700 Name PEGASUS MULTI SECTOR BOND FUND DATE 02-11-99
ASSET/CUSIP ASSET DESCRIPTION PAR/SHARES COST
100920030 FEDERAL HOUSING ADMINISTRATION 2037,350.8200 2096,606.71
31499pdp9 MERRILL LYNCH PROJ PASS THRU CTFS
POOL #M170 DATED 3-1-86
7.430000% MATURING 08-01-20
EST ANNUAL INC: 151,375.17 ORIG FACE VALUE 2,500,000.0000
BANKERS TRUST COMPANY
REG:01 LPQ-6: 01-29-99 @ 97.000 = 1976,230.29
100920040 FEDERAL HOUSING ADMINISTRATION 2807,433.8100 2919,989.79
31499PZ4 GREYSTONE 1996-2 PUTABLE POOL
DATED 2-1-96
7.430000% MATURING 11-01-22
EST ANNUAL INC: 208,592.33 ORIG FACE VALUE 3,000,000.00
BANKERS TRUST COMPANY
REG:01 LPQ-6: 01-29-99 @ 95.656 = 2685,478.88
TOTAL U.S. GOVERNMENT BONDS 5,016.596.50
TOTAL COST-BONDS 5,016,596.50
TOTAL MKT -BONDS 4,661,709.17
GRAND TOTAL -COST 5,016,596.50
</TABLE>
COMMAND LINE
* * * CONTINUED * * *
ENTER: EXECUTE PF12/PF24: HELP PRINTER ID N/A*
9
<PAGE> 10
<TABLE>
<CAPTION>
Exhibit A-3
THE ONE GROUP 614 213 3486 03/19 '99 13:20 NO. 985 03/04
<S> <C> <C> <C>
PTLA - LIST OF ASSETS Online Trust Inquiry System Page 00001
Trust No 838035200 Name PEGASUS BOND FUND DATE 02-11-99
ASSET/CUSIP ASSET DESCRIPTION PAR/SHARES COST
100920030 FEDERAL HOUSING ADMINISTRATION 1222,490.5200 1258,046.45
31499PDP9 MERRILL LYNCH PROJ PASS THRU CTFS
POOL #M170 DATED 3-1-86
7.430000% MATURING 08-01-20
EST ANNUAL INC: 90,831.05 ORIG FACE VALUE 1,500,000.0000
BANKERS TRUST COMPANY
REG:01 LPQ-6: 01-29-99 @ 97.000 = 1185,815.80
100920040 FEDERAL HOUSING ADMINISTRATION 2479,044.3700 2578,434.52
31499PZ4 GREYSTONE 1996-2 PUTABLE POOL
DATED 2-1-96
7.430000% MATURING 11-01-22
EST ANNUAL INC: 184,193.00 ORIG FACE VALUE 2,652,269.1000
BANKERS TRUST COMPANY
REG:01 LPQ-6: 01-29-99 @ 95.656 = 2371,354.68
100969931 MORGAN STANLEY MORTGAGE TRUST 2,319.5300 457,119.80
61790tbt8 COLLATERALIZED MORTGAGE OBLIGATION
SERIES 37 CLASS 2 IO INV DTD 7-20-91
88600.000000% MATURING 07-20-21
</TABLE>
COMMAND LINE
* * * CONTINUED * * *
ENTER: EXECUTE PF12/PF24: HELP PRINTER ID N/A*
10
<PAGE> 11
<TABLE>
<CAPTION>
Exhibit A-2
THE ONE GROUP 614 213 3486 03/19 '99 13:20 NO. 985 04/04
<S> <C> <C> <C>
PTLA - LIST OF ASSETS Online Trust Inquiry System Page 00001
Trust No 838035300 Name PEGASUS INTERMEDIATE BOND FUND DATE 02-11-99
ASSET/CUSIP ASSET DESCRIPTION PAR/SHARES COST
100920040 FEDERAL HOUSING ADMINISTRATION 1871,622.5400 1946,829.71
31499P7Z4 GREYSTONE 1996-2 PUTABLE POOL
DATED 2-1-96
7.430000% MATURING 11-01-22
EST ANNUAL INC: 139,061.55 ORIG FACE VALUE 2,000,000.0000
BANKERS TRUST COMPANY
REG:01 LPQ-6: 01-29-99 @ 95.656 = 1790,319.25
TOTAL U.S. GOVERNMENT BONDS 1,946,829.71
TOTAL COST-BONDS 1,946,829.71
TOTAL MKT -BONDS 1,790,319.25
GRAND TOTAL -COST 1,946,829.71
GRAND TOTAL -MKT 1,790,319.25
TOTAL EST ANNUAL INCOME 139,061.55
PRINCIPAL CASH .00
INCOME CASH .00
GRAND TOTAL-PAR 1,871,622.5400
</TABLE>
COMMAND LINE
* * * CONTINUED * * *
ENTER: EXECUTE PF12/PF24: HELP PRINTER ID N/A*
11
<PAGE> 1
EXHIBIT (9)(u)
FUND ALLIANCE AGREEMENT BY AND BETWEEN THE ONE GROUP, THE
ONE GROUP SERVICES COMPANY, AND PUTNAM FIDUCIARY TRUST COMPANY
<PAGE> 2
THE ONE GROUP FUND ALLIANCE AGREEMENT
FUND ALLIANCE AGREEMENT made as of the ___ day of ____________, 19__ by
and between The One Group, a Massachusetts business trust, (the "Fund Company")
and The One Group Services Company (the "TOGSC") with principal offices at 3435
Stelzer Road, Columbus, OH 43219, and Putnam Fiduciary Trust Company, a
Massachusetts trust company with its principal office at One Post Office Square,
Boston, Massachusetts 02109 ("Plan Agent").
WHEREAS TOGSC serves as administrator and distributor in connection
with certain other matters for each investment company listed on Schedule A
hereto, as such Schedule A may be amended from time to time with the mutual
consent of the parties hereto (each such investment company a "Fund" and,
collectively, the "Funds"), each of which is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the "
1940 Act"). With respect to any Fund, this Agreement shall become effective upon
the date such Fund is identified on Schedule A and this Agreement is approved by
the Fund or its Board of Trustees if such approval is required;
WHEREAS Plan Agent provides certain administrative and recordkeeping
services as agent for certain employee benefit plans, (each such plan a "Plan"
and, collectively, the "Plans"), and is a transfer agent registered under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and
WHEREAS TOGSC desires to appoint Plan Agent as agent for the Funds
solely with respect to the Plans, Plan Agent desires to accept such appointment;
and
WHEREAS, the Plans have authorized and requested the parties hereto to
carry out the obligations described herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE PARTIES.
1.01. TOGSC and Plan Agent agree to facilitate the purchase and
redemption OF SHARES of shares of the Funds on behalf of the
Plans and their Participants through one or more accounts per
Fund for each Plan (the "Accounts"). Accounts for a Plan will
be opened upon completion of the application form for the
appropriate Fund. Plan Agent represents and warrants that it
is authorized to act on behalf of each Plan effecting
transactions in the Accounts.
1.02. TOGSC agrees to waive any and all loads or fees associated
with purchase, exchange and redemption transactions. Any
trading restrictions, including those related to the size and
frequency of transactions, are also waived. TOGSC agrees to
cause the Accounts to be kept open on each Fund's books
regardless of a lack of activity or small position size except
to the extent Plan Agent takes specific action to close an
Account.
1.03. Subject to the terms and conditions set forth in this
Agreement, TOGSC hereby appoints Plan Agent to act as, and
Plan Agent agrees to act as, agent for the sole purpose of
accepting orders for the purchase, and requests for the
redemption, of the authorized and
<PAGE> 3
issued shares of beneficial interest or common stock of any
Fund (the "Shares") purchased, held or redeemed by a Plan
(collectively referred to as "Instructions"). If a Fund offers
two or more series of Shares, at any time, each such series
shall be deemed at such time to be a Fund, unless otherwise
indicated herein.
1.04. Plan Agent shall perform the following services in accordance
with procedures established from time to time by agreement of
the parties hereto:
a) Receive from the Plans orders for the purchase of
Shares by the close of regular trading on the New
York Stock Exchange (the "Close of Trading") each
business day that the New York Stock Exchange is open
for business ("Business Day"), transmit such orders
to the Fund Company or its designee for acceptance on
such Business Day and promptly deliver or instruct
the Plans (or the Plans' Trustee(s) as the case may
be) to deliver payment and appropriate documentation
therefor to the Fund Company or its designee for
acceptance. On occasions when the New York Stock
Exchange closes earlier than its regular trading time
(4:00 p.m. Eastern Time), the earlier close time will
apply;
b) Receive from the Plans by the Close of Trading each
Business Day redemption requests and redemption
directions, transmit such requests and directions to
the Fund Company or its designee and deliver
appropriate documentation therefor to the Fund
Company or its designee, in each case for acceptance
on such Business Day; and
c) As instructed, maintain adequate records related to,
and advise the Fund Company or its designee as to,
the foregoing. To the extent required under the 1940
Act and rules thereunder, Plan Agent and the Fund
Company or its designee agree that such records
maintained by it will be preserved, maintained and
made available in accordance with the provisions of
the 1940 Act and rules thereunder, and copies or, if
required, originals, will be surrendered promptly to
the Fund Company or its designee on and in accordance
with its request. Records surrendered hereunder shall
be in machine readable or optical disk form. This
provision shall survive the termination of this
Agreement.
1.05. Plan Agent shall maintain adequate offices, personnel and
computer and other equipment to perform the services
contemplated by this Agreement. Plan Agent shall notify TOGSC
and the Fund Company or its designee promptly in the event
that it becomes unable for any reason to perform the services
contemplated by, or any other of its obligations under, this
Agreement.
1.06. Plan Agent shall maintain insurance coverage at all times that
is reasonable and customary in light of its duties hereunder.
1.07. In accordance with procedures established from time to time by
agreement of the parties hereto, TOGSC and the Fund Company or
its designee shall furnish to Plan Agent, for each Fund, no
later than 6:30 p.m. Eastern Time on each Business Day as
appropriate:
2
<PAGE> 4
a) Net asset value information as of the Close of Trading each
Business Day when such information is used for crediting
accounts;
b) Dividend and capital gains distribution information, as it
arises, when such information is used for crediting accounts;
c) Daily accrual for interest rate factor (mil rate) information
with respect to Funds which declare dividends daily, when such
information is used for crediting accounts; and
d) In addition, the TOGSC, the Fund Company or its designee will
transmit daily net asset value information and daily accrual
for interest rate factor (mil rate) information as of the
Close of Trading each Business Day to Plan Agent via the
NSCC's Mutual Fund Profile system ("MFPS") no later than 7:00
p.m. Eastern Time on each Business Day.
1.08. a) Orders derived from, and in amounts equal to, Instructions
received by Plan Agent prior to the Close of Trading on any
Business Day ("Day 1") shall be transmitted by Plan Agent via
the Fund/SERV system to the Fund Company or its designee no
later than 5:00 a.m. Eastern Time on the next Business Day
("Day 2"). Such trades will be effected at the net asset value
of each Fund's shares calculated as of the Close of Trading on
Day 1 subject to the terms of such Fund's prospectus. In the
event or an error or delay with respect to the transmittal of
such orders by Plan Agent, Plan Agent may resubmit such order
to the Fund Company or its designee via the Fund/SERV system
on the Business Day following Day 2 and the Fund Company or
its designee shall effect such trade as of the original trade
date.
b) To the extent that such orders are not transmitted to the Fund
Company or its designee via the Fund/SERV system, such orders
shall be transmitted via facsimile to the Fund Company or its
designee by 9:00 a.m. Eastern Time on the next Business Day.
Such trades will be effected at the net asset value of each
Fund's shares calculated as of the Close of Trading on Day 1
subject to the terms of such Fund's prospectus.
1.09. Plan Agent, TOGSC and the Fund Company or its designee agree that all
books, records, information and data pertaining to the business of the
other party which are exchanged or received pursuant to the negotiation
or the carrying out of this Agreement shall remain confidential and
shall not be voluntarily disclosed to any other person, except as may
be required by law.
1.10. Plan Agent and the Fund Company or its designee shall maintain or
provide for redundant facilities and shall maintain or provide for
backup files of its records maintained hereunder and shall store such
back-up files in a secure off-premises location, so that in the event
of a power failure or other interruption of whatever cause at the
location of its records such records are maintained intact and
transactions can be processed at another location.
3
<PAGE> 5
1.11. Plan Agent, TOGSC and the Fund Company or its designee shall comply
with federal and state securities laws and regulations thereunder in
connection with its responsibilities under this Agreement.
1.12. In accordance with the procedures established from time to time by
agreement of the parties hereto, the Fund Company or its designee shall
promptly furnish to the Plan Agent in the frequency requested, for each
Fund:
a) copies of prospectuses, financial statements, reports or other
materials relating to each Fund, and updates of such
materials, in the quantity requested by Plan Agent, as such
updates become available and as required by law; and
b) performance data for each Fund, including without limitation,
standardized performance information, total return and current
yield information computed in accordance with SEC rules and
other performance information as the Plan Agent may reasonably
request;
c) Such copies and performance data as described in subsections
1.12. (a) and (b) above (collectively "Fund Information") may
be received by the Plan Agent through electronic means or in
disk format. Plan Agent is authorized to distribute such
Information to the Plan and plan participants via Internet,
other electronic means or hard copy;
d) With respect to the Fund Information received electronically
or in disk format, Plan Agent represents, warrants and
covenants that it shall not alter in any way such Fund
Information provided by the Fund Company or its designee and
shall promptly make available updated Fund Information after
Plan Agent receives such Fund Information from the Fund
Company or its designee in the format specified in subsection
(c) above. The Fund Company or its designee represents,
warrants and covenants that Fund Information shall be promptly
delivered electronically or in disk format to the Plan Agent.
1.13. Purchases and sales of the Funds are subject to the terms of the Funds'
prospectuses.
1.14. TOGSC and the Fund Company hereby authorizes Plan Agent, for purposes
of Section 1.12 (b) and (c), concerning the transmission of performance
data, to utilize Lipper Analytical Services ("Lipper") in reporting the
performance of the Fund(s). TOGSC and the Fund Company shall not be
responsible for such information obtained from Lipper except to the
extent TOGSC and/or the Fund Company provides erroneous information to
Lipper.
1.15. On each Business Day for which Plan Agent has transmitted orders for
purchases, exchanges or redemptions for a Plan, the Fund Company or its
designee shall send to Plan Agent via the Fund/SERV system,
verification of such purchases, exchanges or redemptions or
notification of the rejection of such orders("Confirmations"). Such
Confirmations shall include the total number of Shares of each Fund
held by a Plan following such purchases, exchanges or redemptions.
4
<PAGE> 6
The Fund Company or its designee shall submit, in a timely
manner, such Confirmations to the Fund/SERV system in order
for Plan Agent to receive no later than 11:00 a.m. Eastern
Time the next Business Day.
1.16. a) In the event there are purchase and redemption orders
received by the transfer agent of a Fund within the
time limits set forth above on any Business Day for
any Fund, settlement shall occur consistent with the
requirements of the Fund/SERV system.
b) For those purchase orders not transmitted via the
Fund/SERV system, Plan Agent shall initiate payment
to the Fund Company or its designated agent in
federal funds no later than 1:00 p.m. on the Business
Day following the day on which the Instructions are
treated as having been received by the Fund Company
or its designee pursuant to this Agreement.
c) For those redemption orders not transmitted via the
Fund/SERV system, the Fund Company or its designee
shall initiate payment in federal funds no later than
1:00 p.m. on the Business Day following the day on
which the Instructions are treated as having been
received by the Fund Company or its designee pursuant
to this Agreement.
1.17. The Fund Company or its designee will transmit to Plan Agent
by dedicated facsimile and via the NETWORKING system those
Networking activity files reflecting all account activity
including but not limited to closing account balance,
purchases, redemptions, capital gains, dividends, price and
share adjustments. Such files must be received by Plan Agent
on the Business Day following Day 2. Information transmitted
by dedicated facsimile shall be sent to Plan Agent no later
than 11:00 a.m. on the next Business Day.
2. COMPENSATION. For the services which Plan Agent will render to TOGSC
and the Fund Company under this Agreement, TOGSC and the Fund Company
will pay to Plan Agent an annual fee calculated on a quarterly basis,
at the rate or rates as set forth in Schedule B.
3. REPRESENTATIONS AND WARRANTIES.
3.01. Each party represents and warrants to the other party that:
a) It is duly organized, validly existing and in good
standing under the laws of its state of organization
or incorporation:
b) It has legal power and authority to carry on its
business, and is registered or licensed as required,
in each jurisdiction where it conducts its business.
c) It is empowered by its charter and bylaws and under
applicable law to enter into and to perform this
Agreement.
d) All requisite actions have been taken to authorize it
to enter into and to perform this Agreement.
5
<PAGE> 7
e) TOGSC is duly registered as a registered broker
dealer, the Fund Company is duly registered as a
registered investment company under the 1940 Act and
Plan Agent is duly registered as registered transfer
agent under section 17A of the 1934 Act;
f) It maintains and knows of no reason why it cannot or
will not during the term hereof maintain adequate
offices, personnel and computer and other equipment
to perform the services contemplated by this
Agreement; and
g) Each party hereby represents that all of its core
systems directly affecting client operations will be
fully tested and operational prior to December 31,
1999 to ensure that they will function without
material disruption of each party's ability to
provide services as provided herein in the Year 2000
and beyond.
4. INDEMNIFICATION.
4.01. Each party (an "Indemnitor") shall indemnify and hold harmless
the other party, each of such other party's affiliated
companies, and all of the divisions, subsidiaries, directors,
officers, agents, employees and assigns of each of the
foregoing (collectively, "Indemnified Parties"), against and
from any and all demands, damages, liabilities, and losses, or
any pending or completed actions, claims, suits, complaints,
proceedings, or investigations (including all expenses of
litigation or arbitration, judgments, fines or amounts paid in
any settlement consented to by the Indenmitor) to which any of
them may be or become subject as a result or arising out of
(a) any negligent act or omission by the Indemnitor or its
agents relating to the performance of its obligations under
this Agreement; (b) any breach of the Indemnitor's
representations or warranties contained in this Agreement; (c)
the Indemnitor's failure to comply with any of the terms of
this Agreement; or (d) the acceptance by any Indemnified Party
of any transaction or account maintenance information from the
Indemnitor with respect to the Plans or their assets. Each
party represents and warrants that at all times it has
sufficient financial resources, whether through a fidelity
bond or otherwise, to meet all of its indemnification
obligations arising under this Agreement.
4.02. In order that the indemnification provisions contained herein
shall apply, upon the assertion of a claim or loss for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party
of such assertion or loss, and shall keep the other advised
with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option
to participate at its expense with the party seeking
indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may
be required to indemnify it except with the other party's
prior written consent. The obligations of the parties hereto
under this Section 4 shall survive the termination of the
Agreement.
6
<PAGE> 8
5. ACKNOWLEDGMENTS. Plan Agent acknowledges that each Fund, as a
registered investment company under the 1940 Act, is subject
to the provisions of the 1940 Act and regulations thereunder,
and that the offer and sale of its shares are subject to the
provisions of federal and state laws and regulations
applicable to the offer and sale of securities. The Fund
Company and TOGSC acknowledges that Plan Agent is not
responsible for such Fund's compliance with such laws and
regulations.
6. STATEMENTS REGARDING THE FUNDS. It is understood by the
parties that the Plan Agent's representatives will discuss
with Participants the investment objectives and policies of
the Funds: provided, however, that Plan Agent is not
authorized to make any representations concerning the
Distributor, any Fund, or a Fund's Shares except those
representations contained in the Fund's then-current
Prospectus and the Company's Statement of Additional
Information and in such printed information as the Distributor
or the Company may subsequently prepare.
[;solely as set forth in the Fund's current Prospectus and
other written materials prepared by the Fund Company or its
affiliates, and the recent investment performance of the Funds
as provided by the Fund Company, TOGSC or a third party
distributor of performance data.]
7. REVIEW OF PARTICIPANT COMMUNICATIONS MATERIALS. It is
understood by the parties that, based on the Fund's current
Prospectus and the information supplied by the Fund Company or
its designee under Section 1.12. above, the Plan Agent may
prepare communications or disclosure materials for the Plans
and their Participants which describe the Funds. Except for
those materials described above, the Plan Agent shall supply
the Fund, or its designated representative, with copies of all
other materials concerning the Funds within a reasonable time
period in advance of their intended distribution to the Plans
or their Participants. The Plan Agent and the Fund Company
shall establish a mutually agreeable time frame in which such
materials shall be reviewed and approved for use by the Fund
Company , or its designated representative. The Plan Agent
agrees not to use any such materials without the prior
approval of the Fund Company or its designated representative.
The Fund Company shall provide to Plan Agent updated
prospectuses and sales literature. The Fund Company represents
and warrants that such sales literature has been filed with
the NASD and reflects resolution of any NASD comments thereon.
Plan Agent agrees its use of such materials in literature
prepared by Plan Agent will conform to applicable law and NASD
Conduct Rules, including any filing requirements with respect
to such literature.
8. OTHER FUND INFORMATION. The Fund Company agrees to supply the
Plan Agent with any information which it may have that could
have an adverse impact on the performance of the Funds in the
same manner and time frame in which such information is made
available to the Fund's shareholders.
9. REASONABLE ACCESS. The Fund Company will provide Plan Agent or
its designated affiliate with reasonable access to its
offices, representatives, sales support personnel and Fund
investment management professionals for meetings and
day-to-day investment questions. The Fund Company or its
designee will provide to the Plan Agent written quarterly
performance reports with respect to the Funds, including but
not limited to (i) a comparison of performance against one or
more appropriate benchmarks or indices; (ii) quarterly,
year-to-date and annualized one, three and five year
performance date (or data for such lesser period of the Fund's
existence), and (iii) the Fund earnings on a net-of-fees
basis.
7
Language indicated as being shown by strike out in the typeset document is
enclosed in brackets '[' and ']' in the electronic format.
<PAGE> 9
In addition, the Fund Company or its designee shall provide
such materials as reasonably requested by the Plan Agent,
including but not limited to, fund fact sheets, descriptions
of current Fund structure and attribution rates related to
fund strategy.
10. NOTIFICATION OF MATERIAL CHANGES. TOGSC shall promptly notify
the Plan Agent in the event of any material change in the
management, ownership or control of the Fund. In addition,
TOGSC shall notify the Plan Agent of any change in the
"fundamental policies" or other policy limitations described
in the Prospectus or Statement of Additional Information.
11. TERMINATION OF AGREEMENT.
11.01. This Agreement may be terminated by either party (i)
upon sixty (60) days written notice to the other
party or (ii) immediately upon written notice to the
other party in the event that:
a) Plan Agent becomes unable for any reason to
perform the services contemplated by this
Agreement,
b) TOGSC ceases to be the distributor for the
Funds, or
c) the Funds cease to be investment
alternatives under the Plans.
11.02. Upon termination of this Agreement, each party shall
return to the other party all copies of confidential
or proprietary materials or information received from
such other party hereunder other than materials or
information required to be retained by such party
under applicable laws or regulations. The obligations
of the parties under this subsection 11.02. and the
provisions of Sections 1, 2, 4, and 6 through 10;
provided, however, that, in the event TOGSC is
terminated as distributor for the Fund or otherwise
ceases to act as distributor for the Fund, such
payment obligation shall immediately cease. In such
event, Plan Agent may seek to receive such payments
from the Fund or any successor distributor that is
appointed by the Fund.
12. ASSIGNMENT.
12.01. Neither this Agreement nor any rights or obligations hereunder
may be assigned or delegated by either party without the
written consent of the other party.
12.02. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns.
13. NOTICES. Notices hereunder shall be in writing, shall be delivered
personally, sent by certified mail, return receipt requested, or sent by
facsimile machine in accordance with procedures established by agreement of the
parties hereto, and shall be addressed to a party either at his address below or
at a changed address specified by it in a notice to the other party hereto:
8
<PAGE> 10
The Fund Company:
The One Group
3435 Stelzer Road
Columbus, OH 43229
ATTN: Mark S. Redman
TOGSC:
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43229
ATTN: Mark S. Redman
Plan Agent:
DCPA
Level 1
Location 33
P.O. Box 9740
Providence, RI 02940-9740
ATTN: Maureen Phillips, Managing Director
14. AMENDMENT. This Agreement may be amended or modified only by a written
agreement executed by both parties.
15. NON-SOLICITATION. The Fund Company and TOGSC hereby agree that, so long
as this Agreement is in effect and for a period of two years from the
date of its termination, it will not solicit defined contribution plan
business from any sponsor of any plan for which Plan Agent provides
defined contribution plan services (including without limitation
trustee or recordkeeping services) or any affiliate of such a sponsor.
16. RELATIONSHIP OF THE PARTIES; NO JOINT VENTURE. Except for the limited
purpose provided for in Section 1, it is understood and agreed that all
services performed under this Agreement by Plan Agent shall not be as an
employee or agent of the Fund Company, TOGSC or Funds and none of the
parties shall hold itself out as an agent of any other party with the
authority to bind such party. Neither the execution nor performance of
this Agreement shall be deemed to create a partnership or joint venture
by and among any of the parties.
17. USE OF NAMES. Except as expressly agreed to in writing by the parties,
neither the Fund Company nor TOGSC shall use, nor shall it allow its
employees or agents to use, the name or logo of Plan Agent or any of
its affiliates, or any of the products or services sponsored, by the
Plan Agent or any of its affiliates for advertising, trade or other
commercial or non-commercial purposes.
18. GOVERNING LAW. This Agreement shall be constructed and the provisions
thereof interpreted under and in accordance with the laws of The
Commonwealth of Massachusetts.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written. This
Agreement is intended to set forth the rights, duties and
responsibilities between the Fund Company, TOGSC and Plan Agent with
respect to the matters covered herein.
9
<PAGE> 11
Nothing contained in the Agreement is intended to convey rights to any
third parties such as Plans, Plan participants, the Fund Company or
TOGSC.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
PUTNAM FIDUCIARY TRUST COMPANY THE ONE GROUP SERVICES COMPANY
By: /s/ Maureen Phillips By: /s/ Mark S. Redman
-------------------------------- --------------------------------
Name: Maureen Phillips Name: Mark S. Redman
----------------------------- -----------------------------
Title: Managing Director Title: President
---------------------------- ----------------------------
THE ONE GROUP
By: /s/ William Tomko
--------------------------------
Name: William Tomko
-----------------------------
Title: Treasurer
----------------------------
01/25/99
10
<PAGE> 12
SCHEDULE A
The following funds shall be offered as part of the Fund Alliance Program:
FUNDS
-----
The One Group Growth Opportunities Fund - Class A Shares
The One Group Bond Fund - Class A Shares
11
<PAGE> 13
SCHEDULE B - FUNDS AND FEES
The Fund Company and TOGSC shall automatically pay to Plan Agent a fee with
respect to each Fund, calculated and paid quarterly in arrears, equal to the
product of: (i) (a) the number of calendar days in the applicable quarter
divided by the number of calendar days in that year and (b) the percentage
specified below and (ii) the average daily net asset value of the investments
held in such Fund pursuant to this Agreement computed by totaling the aggregate
investment (share net asset value multiplied by the total number of shares held)
on each day during the calendar quarter and dividing by the total number of days
during such quarter. Fee will be paid by wire transfer or by check, at the Plan
Agent's election.
The Fund Company and TOGSC shall keep adequate and accurate records with respect
to the calculation and payment of these fees. Such records shall be provided to
Plan Agent upon request for purposes of auditing and reconciliation of payment
amounts.
The fees for the funds as listed in Part I of Revised Schedule A - List of Funds
shall be as follows:
Fund Annual Fee
The One Group Growth Opportunities Fund 0.35% (35 basis points)
(Class A Shares)
The One Group Bond Fund (Class A Shares) 0.25% (25 basis points)
The above stated fees shall continue throughout the duration of this Agreement.
The foregoing, notwithstanding, if either the Fund Company or TOGSC extends a
higher rate of fees to any other plan service provider, the Fund Company and
TOGSC shall offer such higher rate of fees to the Plan Agent.
12
<PAGE> 1
Exhibit (9)(v)
Agency Agreement dated March 18, 1997 between Pegasus Funds
and BISYS Fund Services, Inc.
12
<PAGE> 2
AGENCY AGREEMENT
----------------
THIS AGREEMENT made as of the 18th day of March, 1997, by and among
PEGASUS FUNDS (the "Fund"), a Massachusetts business trust registered as an
open-end management investment company under the Investment Company Act of 1940
(the "1940 Act"); BISYS FUND SERVICES, INC. ("BFS"), a Delaware corporation; and
BISYS QUALIFIED PLAN SERVICES, INC., a Delaware corporation ("BQPS").
W I T N E S S E T H:
--------------------
WHEREAS, the Fund has caused First Data Investor Services Group, Inc.,
the transfer agent, dividend disbursement agent and shareholder servicing agent
for the Fund (the "Transfer Agent") to establish a master account for each
investment portfolio of the Fund identified on Schedule A (individually, a
"Portfolio"; collectively, the "Portfolios") on its mutual fund shareholder
accounting system reflecting the aggregate ownership of such Portfolios by each
of the tax-qualified defined contribution plans made available by First Chicago
NBD Bank (individually, a "Plan"; collectively, the "Plans") for which BQPS has
agreed to provide Plan recordkeeping services;
WHEREAS, it is intended that BQPS will establish individual accounts on
its defined contribution plan record-keeping system reflecting all transactions
by or on behalf of participants and beneficiaries under the Plans which result
in purchases or redemptions by the Plans of shares of the Portfolios;
WHEREAS, it is intended that BFS will act as a servicing agent for the
Fund to receive orders by the Plans for purchases and redemptions of shares of
the Portfolios resulting from transactions by or on behalf of the Plan
participants and beneficiaries which are recorded on BQPS' defined contribution
plan record-keeping system;
WHEREAS, the parties hereto have agreed to utilize the Fund/SERV system
established by National Securities Clearing Corporation ("NSCC") for the
placement and settlement of Fund trades ("Fund/SERV"); and
WHEREAS, it is intended that the settlement of trades through Fund/SERV
will provide for the settlement of trades within three days of each trade date.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree and
declare as follows:
Section 1. Appointment as Servicing Agent. BFS is hereby appointed as a
Servicing Agent for the Fund to receive orders, in accordance with the
procedures outlined in Section 5 hereof, for the purchases and redemptions by
the Plans of shares of the Portfolios. Such purchases and redemptions shall be
based on participant-level transactions made by or on behalf of participants and
beneficiaries under the Plans which are recorded on BQPS' defined contribution
plan record-keeping system. For purposes of this Agreement "participant-level
transactions" shall include:
13
<PAGE> 3
(a) any authorized direction to invest contributions by or on
behalf of any Plan participant in any Portfolio in accordance with the
terms and conditions of the applicable Plan and the Fund's
prospectuses;
(b) any authorized direction to transfer or exchange existing,
amounts held on behalf of any participant or beneficiary by the
applicable Plan to any Portfolio in accordance with the terms and
conditions of the Plan and the Fund's prospectuses;
(c) any authorized direction to transfer or exchange existing,
amounts invested in any Portfolio on behalf of any participant or
beneficiary by the applicable Plan to any other investment option
offered under the Plan in accordance with the terms and conditions of
the Plan and the Fund's prospectuses; and
(d) any authorized direction to pay loan, withdrawal or
distribution proceeds to a participant or beneficiary by the applicable
Plan from the Fund in accordance with the terms and conditions of the
Plan and the Fund's prospectuses.
BQPS will notify the Fund in writing of any changes in a Plan which
would have an effect on the aforementioned procedures. BQPS shall maintain
records for each Plan and for the participants thereof reflecting all shares of
each Portfolio purchased and redeemed by each Plan based on participant-level
transactions (including the date and price for all transactions and share
balances) and all reinvestment by each Plan of dividends and capital gains
distributions paid by the Portfolios. BQPS shall reconcile on each business day
all transactions by each Plan involving shares of the Portfolios (including
purchases, redemptions and reinvestments of dividends and capital gains
distributions),with the corresponding participant-level transactions on BQPS'
defined contribution plan record-keeping system.
Section 2. Appointment of Subcontractor. BFS may, in its discretion
appoint in writing other parties that are qualified to perform the services that
BFS is responsible for providing under this Agreement and are reasonably
acceptable to the Fund (individually, a "Subcontractor") to carry out some or
all of its responsibilities under this Agreement. It is understood that any such
Subcontractor shall be the agent of BFS and not the anent of the Fund or the
Transfer Agent; it is further understood that BFS shall be fully responsible for
the acts of such Subcontractor and shall not be relieved of any of its
responsibilities hereunder by the appointment of such Subcontractor.
Section 3. Fees. The Fund shall pay BFS for the services to be provided
by BFS under this Agreement in accordance with, and in the manner set forth in,
Schedule B hereto.
Section 4. Reimbursement of Expenses. In addition to paying BFS the
fees described in Section 3 hereof, the Fund agrees to reimburse BFS for its
out-of-pocket expenses in providing services hereunder, including without
limitation, the following:
(a) All freight and other delivery and bonding charges
incurred by BFS in delivering materials to shareholders or any of the
parties to this Agreement;
14
<PAGE> 4
(b) All direct telephone, telephone transmission and telecopy
or other electronic transmission expenses incurred by BFS as required
to perform the services to be provided by BFS hereunder;
(c) Costs of postage, couriers, stock computer paper,
statements, labels, envelopes, checks, reports, letters, tax forms,
proxies, notices or other form of printed material which shall be
required by BFS for the performance of the services to be provided
hereunder;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses BFS shall incur at the written direction of a
duly authorized officer of the Fund.
Section 5. Accepting Purchase and Redemption Orders. In accordance with
the procedures set forth below. BFS will receive orders by the Plans for
purchases and redemptions of shares of the Portfolios resulting from
participant-level transactions which are recorded on BQPS' defined contribution
plan record-keeping system. In the case of any such purchase or redemption order
received by BQPS on any business day prior to the time the net asset value of
shares of the Portfolio is determined, the order shall be accorded a trade date
on the accounting system maintained on behalf of the Fund that is the date of
receipt of the order by BQPS. In the case of any such purchase or redemption
order received by BQPS on any business day after the time the net asset value of
shares of the Portfolio is determined, the order shall be accorded a trade date
on such accounting system that is the next business day that the Portfolio is
open for trading.
(a) Receipt by BOPS of Participant-Level Transactions. It is
understood by the parties that BQPS may receive participant-level
transactions in various formats, including directions in writing, by
computer magnetic tape, diskette or electronic data transmission, or by
any other accepted method for transmitting defined contribution plan
data that is adopted for the Plans. All participant-level transactions
shall be received and processed by BQPS in accordance with its standard
transaction processing procedures that apply to all investment options
offered under the Plans which procedures shall be in accordance with
the procedures outlined in the Fund's current prospectuses and
applicable provisions of law. BQPS shall maintain records sufficient to
identify the date of receipt of all participant-level transactions
involving the Portfolios and shall make such records available upon
request for examination by the Fund or its designated representative
or, at the request of the Fund, by appropriate governmental
authorities. Under no circumstances shall BQPS change, alter or
manipulate any participant-level transactions received by it in good
order.
(b) Transmission by the Transfer Agent of Share Price,
Dividend and Capital Gains Information. The Fund will cause the
Transfer Agent to transmit to BFS, by 6:00 p.m. Eastern tune on each
business day that the Fund is open for trading, a telefax identifying
the net asset, value per share (or "share price") of each Portfolio as
of the
15
<PAGE> 5
close of trading on that business day. The Fund will also cause the
Transfer Agent to transmit to BFS, by 6:00 p.m. Eastern time on or
before each record date established for the payment of dividends or
capital gains distributions by any Portfolio, a telefax containing the
dividend or capital gains distribution rate for such payment.
(c) Placement and Settlement of Trades on Behalf of the Plans.
Based on the aggregate participant-level transactions received by BFS
on each business day that the Fund is open for trading, net purchase
and redemption orders shall be transmitted to the Transfer Agent via
Fund/SERV on the same date that such orders are received by BFS;
provided, however, that money market fund purchase and redemption
orders, will be placed up to three days following receipt of such
orders. The Fund. will cause the Transfer Agent to make available a
trading desk until 7:00 p.m. Eastern time each day for purposes of
processing redemption orders.
(d) Monthly Statements by the Transfer Agent. The Fund will
cause the Transfer Agent to provide to BFS, by the 15th business day of
each calendar month, a statement for the preceding calendar month
reflecting the shares of each Portfolio held by the Plans as of the end
of such preceding month and all transactions by the Plans in each
Portfolio during such preceding month.
(e) Establishment of Networking Accounts; Transmission of
Files. The Fund will cause the Transfer Agent to establish an
appropriate NSCC Network Level 4 account for Plan-related omnibus
accounts. The Fund will also cause the Transfer Agent to transmit files
to BFS reflecting current Portfolio positions in such networking
accounts. Such files shall be transmitted on a semi-monthly basis at
such times that are agreed upon by the parties.
(f) Processing Adjustments. In the event of any error or delay
with respect to the procedures outlined in this Section 5, which is
caused by the Fund or the Transfer Agent, the Fund will cause the
Transfer Agent to make any adjustments on the Transfer Agent's
accounting system necessary to correct such error or delay and the Fund
shall reimburse BFS for any losses or reasonable costs incurred
directly as a result of the error or delay. In the event of any error
or delay with respect to the procedures outlined in this Section 5(f)
which is caused by BFS or BQPS, the Fund will cause the Transfer Agent
to make any adjustments on the Transfer Agent's accounting system
necessary to correct such error or delay provided that the Fund shall
be reimbursed by BFS or BQPS for any losses or reasonable costs
incurred by the Fund or by the Transfer Agent directly as a result of
the error or delay. In the event of any such adjustments on the
Transfer Agent's accounting system, BFS shall make the corresponding
adjustments on its accounting system and BQPS shall make the
corresponding adjustments on its defined contribution plan
record-keeping system. BFS, BQPS and the Fund, respectively), each
agree to provide the others prompt notice of any errors or delays of
the type referred to in this Section 5(f) and to use reasonable efforts
to take such action as may be appropriate to avoid or mitigate any such
costs or losses.
16
<PAGE> 6
(g) Contingency Procedures. BFS and BQPS shall develop
appropriate, mutually agreeable contingency procedures to protect the
Plan participants and beneficiaries from any significant investment
loss or market exposure attributable to transmission failures.
Section 6. Fund Communications. The following materials and information
with respect to the Fund shall be furnished where appropriate or required by
applicable laws, to fiduciaries, participants and beneficiaries under the Plans:
(a) Fund's Prospectuses, Annual Reports and Proxy Materials.
The Fund or its designee shall make available to Plan sponsors current
prospectuses, shareholder reports, and proxy statements and related
materials for the Fund. The Fund or its designee shall also furnish
additional supplies of such materials for individual participants.
(b) Review by the Fund of Participant Communications
Materials. It is understood by the parties that, based on the current
prospectuses for the Fund and the information supplied under Section
6(a) above, BQPS may prepare communications or disclosure materials for
participants and beneficiaries under the Plans which describe the Fund
in the same format as that used for the other investment options
offered under the Plans. BQPS shall supply the Fund or the designated
representative of the Fund with copies of such materials on the Fund
within a reasonable period of time in advance of their intended
distribution to the Plan participants and beneficiaries. BQPS and the
Fund shall establish a mutually agreeable time frame in which such
materials shall be reviewed by the Fund or the designated
representative of the Fund for any errors, omissions or objections.
BQPS agrees not to use any such materials without the approval of the
Fund or the designated representative of the Fund.
Section 7. Standard of Care: Reliance on Records and Instructions:
Indemnification.
(a) BFS and BQPS shall use their best efforts to ensure the
accuracy of all services performed under this Agreement, but shall not
be liable to the Fund for any action taken or omitted by them in the
absence of bad faith, willful misfeasance, negligence or reckless
disregard by them of their obligations and duties. BFS and BQPS each
agrees to indemnify and hold harmless the Fund and its employees,
agents, trustees, officers and nominees from and against any and all
claims, demands, actions and suits, whether groundless or otherwise,
and from and against any and all judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character (i) arising out of the indemnifying party's
bad faith, willful misfeasance, negligence or reckless disregard of its
obligations and duties hereunder, (ii) arising out of any breach by the
indemnifying party of a material provision of this Agreement; (iii)
arising out of any breach by the indemnifying party of any
representation, warranty or covenant made in this Agreement; or (iv)
based, if applicable, upon reasonable reliance on information, records,
instructions or requests given or made to the Fund by, the indemnifying
party; provided that this indemnification shall not apply to actions or
omissions of the Fund and its employees. agents, trustees, officers and
nominees in cases of their own bad faith, willful misfeasance,
negligence or reckless
17
<PAGE> 7
disregard by them of their obligations and duties; and further provided
that, prior to confessing any claim against it which may be the subject
of this indemnification, the Fund shall give each of BFS and BQPS
written notice of and reasonable opportunity to defend against said
claim in its own name or in the name of the Fund.
(b) The Fund agrees to indemnify and hold harmless BFS, BQPS
and their employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether
groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character (i) arising out of the
Fund's bad faith, willful misfeasance, negligence or reckless disregard
of its obligations and duties hereunder; (ii) arising out of any breach
by the Fund of a material provision of this Agreement; (iii) arising
out of any breach by the Fund of any representation, warranty or
covenant made in this Agreement; or (iv) based, if applicable, upon
reasonable reliance on information, records, instructions or requests
given or made to BFS and/or BQPS by or on behalf of the Fund; provided
that this indemnification shall not apply to actions or omissions of
BFS or BQPS and their employees, agents, directors, officers and
nominees in cases of their own bad faith, willful misfeasance,
negligence or reckless disregard by them of their obligations and
duties; and further provided that prior to confessing any claim against
them which may be the subject of this indemnification, BFS and/or BQPS
shall give the Fund written notice of and reasonable opportunity to
defend against said claim in its own name or in the name of BFS and/or
BQPS.
Section 8. Maintenance of Computer Systems and Other Equipment;
Uncontrollable Events. BFS and BQPS shall maintain adequate and reliable
computer and other equipment necessary or appropriate to carry out their
obligations under this Agreement. In the event of computer or other equipment
failures at their own facilities beyond their reasonable control. BFS and BQPS
shall use their best efforts to minimize service interruptions. BFS and BQPS
represent and warrant that the various procedures and systems which they have
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the records, data, equipment, facilities and other
property used in the performance of their obligations hereunder are adequate and
that they will make such changes therein from time to time as are required for
the secure performance of their obligations hereunder. Notwithstanding the
foregoing, BFS and BQPS assume no responsibility hereunder, and shall not be
liable for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond their reasonable control.
Section 9. Confidentiality. All information, books, records, and data
supplied by one party to any other party or parties in connection with the
negotiation or carrying out of this Agreement are and shall remain the property
of the party supplying such information, books, records, or data and shall be
kept confidential by the other parties except as may be required by law.
Section 10. Effective Date; Duration and Termination of Agreement. This
Agreement shall be effective as of the date first written above. Any party to
this Agreement may terminate such Agreement upon ninety (90) days' written
notice to the other parties (which notice may be
18
<PAGE> 8
waived by any of the parties). This Agreement shall automatically terminate upon
the discontinuance of the Fund as an investment option offered under the Plans
or if, at any time, the authorizations, licenses, qualifications or
registrations required to be maintained by BFS or BQPS in connection with the
performance of their duties hereunder shall lapse or cease to remain in full
force and effect.
Section 11. Representations and Warranties. BFS and BQPS each represent
that it has obtained,. and shall maintain,. all authorizations, licenses,
qualifications or registrations of any governmental body required of it in
connection with this Agreement and the registrations are and will remain in full
force and effect during the term of this Agreement. BFS, BQPS and the Fund each
represents and warrants that at all times it has sufficient financial resources,
whether through a fidelity bond or otherwise, to meet all of its indemnification
obligations arising under this Agreement. In addition, each of the parties
hereto represents that it has been duly authorized to enter into this Agreement.
Section 12. Amendments. The parties hereto may agree in writing to
amend this Agreement at any time in whole or in part.
Section 13. Assignment. This Agreement and the rights and duties
hereunder shall not be assignable by any of the parties hereto except by the
specific written consent of the other parties; provided, however, that this
Section 13 shall not limit or in any way affect BFS' right to appoint a
Subcontractor pursuant to Section 2 hereof. This Agreement shall be binding upon
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns.
Section 14. Notices. Any notice provided hereunder shall be
sufficiently given when sent by registered or certified mail,. postage prepaid,
to the party required to be served with such notice at the following addresses:
for BFS, 3435 Stelzer Road, Columbus, Ohio 43219, facsimile number (614)
470-8725, Attn: George 0. Martinez; for BQPS, 323 Norristown Road, Ambler,
Pennsylvania, 19002, facsimile number (215) 542-1888, Attn: Eric Hill; for the
Fund, 3435 Stelzer Road, Columbus, Ohio, 43219, facsimile number (614) 470-8715,
Attn: D'Ray Moore. Any notice, except a notice of termination pursuant to
Section 10, may also be sent by confirmed facsimile transmission, which shall be
deemed to have been given when sent. Any of the parties hereto may, from time to
time, specify in writing to the other parties a different address or facsimile
number for purposes of receiving notice pursuant to this Section 14.
Section 15. Headings. Paragraph headings in this Agreement are included
for convenience only and are not to be used to construe or interpret this
Agreement.
Section 16. Governing Law. This Agreement shall be governed by, and its
provisions shall be construed in accordance with, the laws of the State of Ohio.
Section 17. Matters Relating to the Fund as a Massachusetts Business
Trust. The names "Pegasus Funds" and "Trustees of Pegasus Funds" refer,
respectively, to the business trust created and the trustees, as trustees but
not individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated as of May 1, 1992,. to which reference is
hereby made and a copy of which is on file at the office of the Secretary of the
19
<PAGE> 9
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed. The obligations of the Fund
entered into in the name or on behalf thereof by any of the trustees,
shareholders or representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of the Fund personally, but bind only the assets of the Fund,
and all persons dealing with any portfolio of the Fund must look solely to the
assets of the Fund belonging to such portfolio for the enforcement of any claims
against the Fund.
Section 18. Sole Agreement. This Agreement is the sole agreement
whereby BFS acts as servicing agent for the Fund, and it supersedes any and all
preexisting agreements whereby BFS or its affiliates acted as servicing agents
for the Fund is predecessor investment companies.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers as of the day and
year first above written.
BISYS FUND SERVICES, INC.
By: /s/ J. David Huber
--------------------------------
Title:
-----------------------------
Date:
------------------------------
BISYS QUALIFIED PLAN SERVICES, INC.
By: /s/ Susan West
--------------------------------
Title: Senior Vice-President
-----------------------------
Date:
------------------------------
PEGASUS FUNDS
By: /s/ D. Sutherland
--------------------------------
Title: President
-----------------------------
Date:
------------------------------
20
<PAGE> 10
SCHEDULE A
FUND PORTFOLIOS:
Money Market Fund
Treasury Money Market Fund
Municipal Money Market Fund
Michigan Municipal Money Market Fund
Cash Management Fund
U.S. Government Securities Cash Management Fund
Treasury Prime Cash Management Fund
Growth Fund International Equity Fund
Equity Index Fund
Growth and Value Fund
Intrinsic Value Fund Mid-Cap Opportunity Fund
Small-Cap Opportunity Fund
Equity Income Fund Bond Fund
Intermediate Bond Fund
Municipal Bond Fund
Short Bond Fund
Michigan Municipal Bond Fund
Intermediate Municipal Bond Fund
Income Fund International Bond Fund
Managed Assets Balanced Fund
Managed Assets Conservative Fund
Managed Assets Growth Fund
A-1
21
<PAGE> 11
SCHEDULE B
FEES:
As compensation for its services hereunder, the Fund shall pay BFS a
fee, computed daily and payable monthly, at the annual rate of .25% of
the average net assets attributable to shares owned by the Plans of
each Fund portfolio listed on Schedule A hereto.
B-1
22
<PAGE> 1
Exhibit 9(w)
Amendment dated April 1, 1999 to the Agency Agreement
dated March 18, 1997 between Pegasus Funds
and BISYS Fund Services
23
<PAGE> 2
AMENDMENT TO THE AGENCY AGREEMENT
This Amendment to the Agency Agreement is made effective February __,
1999, by and between One Group Mutual Funds, successor to Pegasus Funds (both
the "Trust"), Bank One Trust Company, NA ("Bank One") and Bisys Qualified Plan
Services ("BQPS").
WHEREAS, pursuant to an Agency Agreement ("Agreement") dated March 18, 1997,
BQPS has agreed to provide certain administrative and recordkeeping services as
agent for certain employee benefit plans, profit sharing plans and retirement
plans for certain portfolios of the Trust; and
WHEREAS, Pegasus Funds merged with and into One Group Mutual Funds on March 22,
1999; and
WHEREAS, One Group Mutual Funds is the successor to the Trust pursuant to
Section 13 of the Agreement;
NOW THEREFORE, pursuant to Section 12 of the Agreement, One Group Mutual Funds
and BQPS amend the Agreement in the following form:
1. The preamble is amended to add as a party Bank One Trust Company, NA
("Bank One") and to replace Pegasus Funds with One Group Mutual Funds.
2. Section 3 is amended to read as follows:
Compensation. For the services which BQPS shall render to the Trust
under this Agreement, the Trust and Bank One will pay to BQPS a fee on
a monthly basis, at the rate or rates as set forth in Schedule B.
3. Schedule B is amended by adding the following:
III. The fee shall be paid by both the Trust and Bank One. The Trust
shall pay no more than that portion of the fee equivalent of $18 per
account per mutual fund, and Bank One shall pay the remainder of the
fee.
4. Section 17 is amended to read as follows:
Trust Liability. The names "One Group Mutual Funds" and "Trustees of
One Group Mutual Funds" refer, respectively, to the trust created and
the trustees, as trustees, but not individually or personally, acting
from time to time under a Declaration of Trust dated as of May 23, 1985
to which reference is hereby made and a copy of which is on file at the
office of the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "One Group
24
<PAGE> 3
Mutual Funds" entered into in the name or on behalf thereof by any of
the Trustees, representatives or agent are made not individually, but
in such capacities, and are not binding upon any of the Trustees,
Shareholders, or representatives of the Trust personally, but bind only
the assets of the Trust, and all persons dealing with any series of
Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claim against the
Trust.
The Agreement, as amended, shall remain in full force and effect.
IN WITNESS THEREOF, the Trust, BQPS and Bank One have caused this
Amendment to be executed by their duly authorized officers effective as of the
date first written above.
BISYS QUALIFIED ONE GROUP MUTUAL
PLAN SERVICES FUNDS
By: /s/ Eric Hill By: /s/ Mark S. Redman
Name: Eric Hill Name: Mark S. Redman
Title: Senior Vice-President Title: President
Date: 4/6/99 Date: 2/26/99
BANK ONE TRUST COMPANY
By: /s/ John Alexander
Name: John Alexander
Title: Senior Managing Director
Date: 4/16/99
25
<PAGE> 1
Exhibit (9)(x)
Agency Agreement dated as of March 11, 1997 between
Pegasus Funds and NBD Bank
26
<PAGE> 2
PEGASUS FUNDS
AGENCY AGREEMENT
----------------
THIS AGENCY AGREEMENT made as of the l1th day of March, 1997, by and
between Pegasus Funds (the "Trust"), a registered investment company under the
Investment Company Act of 1940 (the "1940 Act"), and NBD Bank, a state-chartered
bank incorporated under the laws of Michigan, with its principal office and
place of business at 611 Woodward Avenue, Detroit, Michigan ("NBD").
WHEREAS, NBD currently provides administrative and recordkeeping
services for certain employee benefit plans, profit sharing plans and retirement
plans, and May in the future provide such services for additional plans
(collectively, the "Plans") which hold shares of certain portfolios of the Trust
(the "Funds").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto agree as follows:
Section 1. Appointment of NBD. The Trust hereby appoints NBD as an
agent for the Trust to render the services herein set forth for the compensation
herein provided, and NBD accepts such appointment.
Section 2. Duties of the Parties.
2.01 NBD shall perform the following services:
(a) Receive from the Plans orders for the purchase of
authorized shares of beneficial interest of the Funds (the "Shares") by
the close of regular trading on the New York Stock Exchange (the "Close
of Trading") each business day that the New York Stock Exchange is open
for business ("Business Day"), transmit such orders to the transfer
agent of the Trust (the "Transfer Agent") for acceptance on such
Business Day and promptly deliver or instruct the Plans (or the Plans'
Trustee(s) as the case may be) to deliver payment and appropriate
documentation therefor to Transfer Agent for acceptance;
(b) Receive from the Plans by the close of Trading each
Business Day redemption requests and redemption directions, transmit
such requests and directions to the Transfer Agent and deliver
appropriate documentation therefor to Transfer Agent, in each case for
acceptance on such Business Day; and
(c) As instructed, maintain adequate records related to, and
advise Transfer Agent as to, the foregoing. To the extent required
under the 1940 Act and rules thereunder, NBD agrees that such records
maintained by it will be preserved, maintained and made available in
accordance with the provisions of the 1940 Act and rules thereunder,
and copies or, if required,. originals, will be surrendered promptly.
Subject to
27
<PAGE> 3
the foregoing, records surrendered hereunder shall be in machine
readable or optical disk form. This provision shall survive the
termination of this Agreement.
2.02 NBD shall maintain adequate offices, personnel and
computer and other equipment to perform the services contemplated by this
Agreement. NBD shall notify the Trust promptly in the event that it becomes
unable for any reason to perform the services contemplated by, or any other of
its obligations under, this Agreement.
2.03 The parties hereto shall take all steps necessary to
ensure that the arrangements provided for in this Agreement are properly
disclosed to the Plans.
2.04 In accordance with procedures established from time to
time by agreement of the parties hereto, the Trust shall instruct the Transfer
Agent to furnish to NBD, for each Fund, no later than 6:30 P.M. Eastern Time on
each Business Day as appropriate:
(a) Net asset value information as of the Close of Trading
each Business Day when such information is used for crediting accounts;
and
(b) Dividend and capital gains distribution information, as it
arises, when such information is used for crediting accounts; and
(c) Daily accrual for interest rate factor (mil rate)
information with respect to Funds which declare dividends daily, when
such information is used for crediting accounts.
2.05 Orders derived from, and in amounts equal to, purchase
and redemption requests received by NBD prior to the Close of Trading on any
Business Day ("Day 1") shall be transmitted by 9:30 a.m. (Eastern Time) on the
next Business Day. Such trades will be effected at the net asset value of each
Fund's shares calculated as of the Close of Trading on Day 1 subject to the
terms of such Fund's prospectus.
2.06 NBD agrees that all books, records, information and data
pertaining to the business of the Transfer Agent which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential and shall not be voluntarily disclosed to any other person, except
as may be required by law.
2.07 NBD shall maintain or provide for redundant facilities
and shall maintain or provide for backup files of its records maintained
hereunder and shall store such back-up files in a secure off-premises location,
so that in the event of a power failure or other interruption of whatever cause
at the location of its records such records are maintained intact and
transactions can be processed at another location.
2.08 The parties hereto shall furnish to each other such
information as may reasonably be requested (including, without limitation,
periodic certifications confirming the provision of the services described
herein), and will otherwise cooperate with each other (including without
limitation any auditors designated by the Trust) in connection with reports to
28
<PAGE> 4
the Trust's Board of Trustees concerning this Agreement and the monies paid or
payable pursuant hereto, as well as any other reports or filings that may be
required by law.
2.09 The parties hereto shall comply with federal and state
securities laws and regulations thereunder in connection with their
responsibilities under this Agreement.
2.10 In accordance with the procedures established from time
to time by agreement of the parties hereto, the Trust shall cause the Transfer
Agent to promptly furnish to NBD in the frequency requested, for each Fund:
(a) copies of prospectuses, financial statements, reports or
other materials relating to each Fund, and updates of such materials,
in the quantity requested by NBD as such updates become available; and
(b) performance data for each Fund, including without
limitation total return and current yield information computed in
accordance with applicable regulations and other performance
information as NBD may reasonably request.
2.11 Purchases and sales of the Funds are subject to the terms
of the Funds' prospectuses.
2.12 The Trust hereby authorizes NBD, for purposes of
subsection 2.10 concerning the transmission of performance data, to utilize
Lipper Analytical Services in reporting the performance of the Fund(s).
Section 3. Compensation. For the services which NBD will render to the
Trust under this Agreement, the Trust will pay to NBD a fee on a monthly basis,
at the rate or rates as set forth in Schedule A.
Section 4. Representations and Warranties.
4.01 Each party represents and warrants to the other party
that:
(a) It is duly organized, validly existing and in good
standing under the laws of its state of organization;
(b) It has legal power and authority to carry on its business,
and is registered or licensed as required, in each jurisdiction where
it conducts its business and the registrations are and will remain in
full force and effect during the term of this Agreement;
(c) It is empowered by its charter and bylaws and under
applicable law to enter into and perform this Agreement; and
(d) All requisite actions have been taken to authorize it to
enter into and to perform this Agreement.
29
<PAGE> 5
4.02 In addition, NBD represents and warrants to the Trust
that it maintains and knows of no reason why it cannot or will not during the
term hereof maintain adequate offices, personnel and computer and other
equipment to perform the services contemplated by this Agreement.
4.03 In addition, the Trust represents and warrants that it is
registered as an investment company under the 1940 Act.
Section 5. Indemnification.
5.01 Each party (an "Indemnitor") agrees to indemnify and hold
harmless the other party,.their respective trustees or directors, officers,
agents, employees and each person, if any, who controls them within the meaning
of the Securities Act of 1933 ("1933 Act") (collectively, "Indemnified
Parties"), against any losses, claims, damages, liabilities or expenses
(including any legal or other expenses reasonably incurred by them in connection
with investigating or defending such loss, claim or action) to which an
Indemnified Party may become subject insofar as those losses, claims, damages,
liabilities or expenses (or actions in respect thereof), arise out of or are
based upon (a) any negligent act or omission by an Indemnitor or its agents
relating to the performance of its obligations under this Agreement; (b) any
breach by the indemnitor of its representations or warranties contained in this
Agreement; (c) the Indemnitor's failure to comply with any of the terms of this
Agreement; or (d) the acceptance by any Indemnified Party of any transaction or
account maintenance information from the Indemnitor with respect to the Plans or
their assets. Each party represents and warrants that at all times it has
sufficient financial resources, whether through a fidelity bond or otherwise, to
meet all of its indemnification obligations arising under this Agreement.
Notwithstanding the foregoing, there shall be no
indemnification obligation between the parties arising out of the failure of any
Plan to provide good funds for the settlement of any transaction authorized by a
Plan.
5.02 In order that the indemnification provisions contained
herein shall apply, upon the assertion of a claim or loss for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion or loss, and shall keep the
other advised with respect to all developments concerning such claim. An
Indemnitor shall have the option to assume the defense of a claim at its
expense, or to participate at its expense with the party seeking indemnification
in the defense of such claim. The party seeking indemnification shall in no case
confess any claim or make any compromise in any case in which the other party
may be required to indemnify it except with the other party's prior written
consent.
5.03 The obligations of the parties hereto under this Section
5 shall survive the termination of this Agreement.
Section 6. Acknowledgements. NBD acknowledges that the Trust, as a
registered investment company under the 1940 Act, is subject to the provisions
of the 1940 Act and
30
<PAGE> 6
regulations thereunder, and that the offer and sale of its shares are subject to
the provisions of federal and state laws and regulations applicable to the offer
and sale of securities. The Trust acknowledges that NBD is not responsible for
the Trust's compliance with such laws and regulations.'
Section 7. Duration and Termination of Agreement. This Agreement will
become effective as of the date hereof and may be terminated by either party
upon ninety (90) days written notice to the other party. This Agreement shall
terminate immediately upon written notice to the other party in the event that:
(a) NBD becomes unable for any reason to perform the services
contemplated by this Agreement;
(b) The Trust ceases to offer investment alternatives under
the Plans; or
(c) At any time, the authorizations, licenses, qualifications
or registrations required to be maintained by NBD in connection with
the performance of its duties hereunder shall lapse or cease to remain
in full force and effect.
Upon termination of this Agreement, each party shall return to the other party
all copes of confidential or proprietary materials or information received from
such other party hereunder other than materials or information required to be
retained by such party under applicable law or regulations. The obligations of
the parties under this section shall survive the termination of this Agreement.
Section 8. Assignment. Neither this Agreement nor any rights or
obligations hereunder may be assigned or delegated by either party without the
written consent of the other party. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective permitted successors and
assigns.
Section 9. Notices. Notices hereunder shall be in writing, shall be
delivered personally, sent by certified mail, return receipt requested, or sent
by facsimile machine in accordance with procedures established by agreement of
the parties hereto, and shall be addressed to a party either at his address
below or at a changed address specified by it in a notice to the other party
hereto:
Pegasus Funds
c/o First Chicago Investment Management Company
3 First National Plaza
70 West Madison
Chicago, IL 60670
Attn: Marco Hanig
NBD Bank
900 Tower Drive
Troy, Michigan 48098
Attn: Sylvia F. Morin
31
<PAGE> 7
Section 10. Amendment. This Agreement may be amended or modified only
by a written agreement executed by both parties.
Section 11. Trust Liability. The names "Pegasus Funds" and "Trustees of
Pegasus Funds" refer, respectively, to the trust created and the trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated April 21, 1987, as amended, which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of the Trust entered into in the name or on behalf thereof by any of
the trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of the Trust personally, but bind only the trust property, and
all persons dealing with any portfolio of the Trust must look solely to the
trust property belonging to such portfolio for the enforcement of any claims
against the Trust.
Section 12. Governing Law. This Agreement shall be constructed and the
provisions thereof interpreted under and in accordance with the laws of The
Commonwealth of Massachusetts.
Section 13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written. This Agreement is
intended to set forth the rights, duties and responsibilities between the Trust
and NBD with respect to the matters covered herein. Nothing contained in the
Agreement is intended to convey rights to any third parties such as Plans, Plan
participants or the Transfer Agent.
Section 14. Headings. Paragraphs headings in this Agreement are
included for convenience or reference only and are not to be used to construe or
interpret this Agreement.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
NBD BANK
By: /s/ Sylvia F. Morin
----------------------------
Name: Sylvia F. Morin
Title: First Vice President
PEGASUS FUNDS
By: /s/ Donald G. Sutherland
----------------------------
Name: Donald G. Sutherland
Title: President
32
<PAGE> 8
SCHEDULE A
FEES
The fees referred to in Section 3 of this Agreement shall be an amount
equal to 0.25% of the average daily net asset value of the shares of each Fund
that are held on behalf of the Plans.
33
<PAGE> 1
Exhibit (9)(y)
Amendment to the Agency Agreement dated as of March 11, 1997
between Pegasus Funds and NBD Bank
34
<PAGE> 2
AMENDMENT TO THE AGENCY AGREEMENT
This Amendment to the Agency Agreement is made effective February __,
1999, by and between One Group Mutual Funds, successor to Pegasus Funds (both
the "Trust"), Bank One Trust Company, NA ("Bank One") and NBD Bank.
WHEREAS, pursuant to an Agency Agreement ("Agreement") dated March 11, 1997, NBD
BANK has agreed to provide certain administrative and recordkeeping services as
agent for certain employee benefit plans, profit sharing plans and retirement
plans for certain portfolios of the Trust; and
WHEREAS, Pegasus Funds merged with and into One Group Mutual Funds on March 22,
1999; and
WHEREAS, One Group Mutual Funds is the successor to the Trust pursuant to
Section 8 of the Agreement;
NOW THEREFORE, pursuant to Section 10 of the Agreement, One Group Mutual Funds
and NBD BANK amend the Agreement in the following form:
1. The preamble is amended to add as a party Bank One Trust Company, NA
("Bank One") and to replace Pegasus Funds with One Group Mutual Funds.
2. Section 3 is amended to read as follows:
Compensation. For the services which NBD BANK shall render to the Trust
under this Agreement, the Trust and Bank One will pay to NBD BANK a fee
on a monthly basis, at the rate or rates as set forth in Schedule A.
3. Schedule A is amended by adding the following:
III. The fee shall be paid by both the Trust and Bank One. The
Trust shall pay no more than that portion of the fee equivalent of $18
per account per mutual fund, and Bank One shall pay the remainder of
the fee.
4. Section 11 is amended to read as follows:
Trust Liability. The names "One Group Mutual Funds" and "Trustees of
One Group Mutual Funds" refer, respectively, to the trust created and
the trustees, as trustees, but not individually or personally, acting
from time to time under a Declaration of Trust dated as of May 23, 1985
to which reference is hereby made and a copy of which is on file at the
office of the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "One Group Mutual Funds"
entered into in the name or on behalf thereof by any of the
35
<PAGE> 3
Trustees, representatives or agent are made not individually, but in
such capacities, and are not binding upon any of the Trustees,
Shareholders, or representatives of the Trust personally, but bind only
the assets of the Trust, and all persons dealing with any series of
Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claim against the
Trust.
The Agreement, as amended, shall remain in full force and effect.
IN WITNESS THEREOF, the Trust, NBD BANK and Bank One have caused this
Amendment to be executed by their duly authorized officers effective as of the
date first written above.
NBD BANK ONE GROUP MUTUAL
FUNDS
By: /s/ Gary Young By: /s/ Mark S.Redman
------------------------------ ------------------------
Name: Gary Young Name: Mark S. Redman
---------------------------- ----------------------
Title: Vice-President Title: President
--------------------------- ---------------------
Date: 3/25/99 Date: 2/26/99
---------------------------- ----------------------
BANK ONE TRUST COMPANY
By: /s/ John Alexander
------------------------------
Name: John Alexander
----------------------------
Title: Senior Managing Director
---------------------------
Date: 4/16/99
----------------------------
36
<PAGE> 1
Exhibit (9)(z)
Agency Agreement dated as of November 1, 1996
between Pegasus Funds and Putnam Fiduciary Trust Company
37
<PAGE> 2
PEGASUS FUNDS
Agency Agreement
THIS AGENCY AGREEMENT made as of the lst day of November, 1996, by and
between Pegasus Funds (the "Trust"), a registered investment company under the
Investment Company Act of 1940 (the "l940 Act"), and Putnam Fiduciary Trust
Company, a Massachusetts trust company with its principal office at One Post
Office Square, Boston, Massachusetts ("PFTC").
WHEREAS, PFTC has agreed to provide certain administrative and
recordkeeping services as agent for certain employee benefit plans, profit
sharing plans and retirement plans identified in Schedule A, as amended from
time to time (the "Plans") for certain portfolios of the Trust (the "Funds"),
and is a transfer agent registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); and
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto agree as follows:
Section 1. Appointment of PFTC. The Trust hereby appoints PFTC as an
agent for the Trust for the sole purpose of accepting orders for the purchase,
and requests for redemption ("Instructions"), of the authorized and issued
shares of beneficial interest or common stock of the Funds (the "Shares")
purchased, held or redeemed by a Plan. PFTC accepts such appointment and agrees
to render the services herein set forth for the compensation herein provided.
Section 2. Duties of the Parties.
2.01 PFTC shall perform the following services:
(a) Receive from the Plans orders for the purchase of
Shares by the close of regular trading on the New York Stock Exchange
(the "Close of Trading") each business day that the New York Stock
Exchange is open for business ("Business Day"), transmit such orders to
the Transfer Agent for acceptance on such Business Day and promptly
deliver or instruct the Plans (or the Plans' Trustee(s) as the case may
be) to deliver payment and appropriate documentation therefor to
Transfer Agent for acceptance;
(b) Receive from the Plans by the close of Trading
each Business Day redemption requests and redemption directions,
transmit such requests and directions to the Transfer Agent and deliver
appropriate documentation therefor to Transfer Agent, in each case for
acceptance on such Business Day; and
(c) As instructed, maintain adequate records related
to, and advise Transfer Agent as to, the foregoing. To the extent
required under the 1940 Act and rules thereunder, PFTC agrees that such
records maintained by it will be preserved, maintained and made
available in accordance with the provisions of the 1940 Act and rules
38
<PAGE> 3
thereunder, and copies or, if required, originals, will be surrendered
promptly. Subject to the foregoing, records surrendered hereunder shall
be in machine readable or optical disk form. This provision shall
survive the termination of this Agreement.
2.02 PFTC shall maintain adequate offices, personnel and
computer and other equipment to perform the services contemplated by this
Agreement. PFTC shall notify the Trust promptly in the event that it becomes
unable for any reason to perform the services contemplated by, or any other of
its obligations under, this Agreement.
2.03 The parties hereto shall take all steps necessary to
ensure that the arrangements provided for in this Agreement are properly
disclosed to the Plans.
2.04 In accordance with procedures established from time to
time by agreement of the parties hereto, the Trust shall instruct the Transfer
Agent to furnish to PFTC, for each Fund, no later than 6:30 P.M. Eastern Time on
each Business Day as appropriate:
(a) Net asset value information as of the close of
Trading each Business Day when such information-is used for crediting
accounts; and
(b) Dividend and capital gains distribution
information, as it arises, when such information is used for crediting
accounts; and
(c) Daily accrual for interest rate factor (mil rate)
information with respect to Funds which declare dividends daily, when
such information is used for crediting accounts.
2.05 Orders derived from, and in amounts equal to,
Instructions received by PFTC prior to the Close of Trading on any Business Day
("Day 1") shall be transmitted by 9:30 a.m. (Eastern Time) on the next Business
Day. Such trades will be effected at the net asset value of each Fund's shares
calculated as of the Close of Trading on Day 1 subject to the terms of such
Fund's prospectus.
2.06 PFTC agrees that all books, records, information and data
pertaining to the business of the Transfer Agent which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential and shall not be voluntarily disclosed to any other person, except
as may be required by law.
2.07 PFTC shall maintain or provide for redundant facilities
and shall maintain or provide for backup files of its records maintained
hereunder and shall store such back-up files in a secure-off-premises location,
so that in the event of a power failure or other interruption of whatever cause
at the location of its records such records are maintained intact and
transactions can be processed at another location.
2.08 The parties hereto shall furnish to each other such
information as may reasonably be requested (including, without limitation,
periodic certifications confirming the provision of the services described
herein), and will otherwise cooperate with each other
39
<PAGE> 4
(including without limitation any auditors designated by the Trust) in
connection with reports to the Trust's Board of Trustees concerning this
Agreement and the monies paid or payable pursuant hereto, as well as any other
reports or filings that may be required by law.
2.09 The parties hereto shall comply with federal and state
securities laws and regulations thereunder in connection with their
responsibilities under this Agreement.
2.10 In accordance with the procedures established from time
to time by agreement of the parties hereto, the Trust shall cause the Transfer
Agent to promptly furnish to PFTC in the frequency requested, for each Fund:
(a) copies of prospectuses, financial statements,
reports or other materials relating to each Fund, and updates of such
materials, in the quantity requested by PFTC as such updates become
available; and
(b) performance data for each Fund, including without
limitation total return and current yield information computed in
accordance with applicable regulations and other performance
information as PFTC may reasonably request.
2.11 Purchases and sales of the Funds are subject to the terms
of the Funds' prospectuses.
2.12 The Trust hereby authorizes PFTC, for purposes of
subsection 2.10 concerning the transmission of performance data, to utilize
Lipper Analytical Services in reporting the performance of the Fund(s).
Section 3. Compensation. For the services which PFTC will render to the
Trust under this Agreement, the Trust will pay to PFTC a fee on a monthly basis,
at the rate or rates as set forth in Schedules Bl and B2.
Section 4. Representations and Warranties.
4.01 Each party represents and warrants to the other party
that:
(a) It is duly organized, validly existing and in
good standing under the laws of its state of organization;
(b) It has legal power and authority to carry on its
business, and is registered or licensed as required, in each
jurisdiction where it conducts its business and the registrations are
and will remain in full force and effect during the term of this
Agreement;
(c) It is empowered by its charter and bylaws and
under applicable law to enter into and perform this Agreement; and
40
<PAGE> 5
(d) All requisite actions have been taken to
authorize it to enter into and to perform this Agreement.
4.02 In addition, PFTC represents and warrants to the Trust
that:
(a) It is duly registered as a transfer agent under
section 17A of the Exchange Act; and
(b) It maintains and knows of no reason why it cannot
or will not during the term hereof maintain adequate offices, personnel
and computer and other equipment to perform the services contemplated
by this Agreement.
4.03 In addition, the Trust represents and warrants that it is
registered as an investment company under the 1940 Act.
Section 5. Indemnification.
5.01 Each party (an "Indemnitor") agrees to indemnify and hold
harmless the other party, their respective trustees or directors, officers,
agents, employees and each person, if any, who controls them within the meaning
of the Securities Act of 1933 ("1933 Act") (collectively, "Indemnified
Parties"), against any losses, claims, damages, liabilities or expenses
(including any legal or other expenses reasonably incurred by them in connection
with investigating or defending such loss, claim or action) to which an
Indemnified Party may become subject insofar as those losses, claims, damages,
liabilities or expenses (or actions in respect thereof), arise out of or are
based upon (a) any negligent act or omission by an Indemnitor or its agents
relating to the performance of its obligations under this Agreement; (b) any
breach by the Indenmitor of its representations or warranties contained in this
Agreement; (c) the Indemnitor's failure to comply with any of the terms of this
Agreement; or (d) the acceptance by any Indemnified Party of any transaction or
account maintenance information from the Indemnitor with respect to the Plans or
their assets. Each party represents and warrants that at all times it has
sufficient financial resources, whether through a fidelity bond or otherwise, to
meet all of its indemnification obligations arising under this Agreement.
Notwithstanding the foregoing, there shall be no
indemnification obligation between the parties arising out of the failure of any
Plan to provide good funds for the settlement of any transaction authorized by a
Plan.
5.02 In order that the indemnification provisions contained
herein shall apply, upon the assertion of a claim or loss for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion or loss, and shall keep the
other advised with respect to all developments concerning such claim. An
Indemnitor shall have the option to assume the defense of a claim at its
expense, or to participate at its expense with the party seeking indemnification
in the defense of such claim. The party seeking indemnification shall in no case
confess any claim or make ani, compromise in any case in which the other party
may be required io indemnify it except with the other party's prior written
consent.
41
<PAGE> 6
5.03 The obligations of the parties hereto under this Section
5 shall survive the termination of this Agreement.
Section 6. Acknowledgements. PFTC acknowledges that the Trust, as a
registered investment company under the 1940 Act, is subject to the provisions
of the 1940 Act and regulations thereunder, and that the offer and sale of its
shares are subject to the provisions of federal and state laws and regulations
applicable to the offer and sale of securities. The Trust acknowledges that PFTC
is not responsible for the Trust's compliance with such laws and regulations.
Section 7. Duration and Termination of Agreement. This Agreement will
become effective as of the date hereof and may be terminated by either party
upon ninety (90) days written notice to the other party. This Agreement shall
terminate immediately upon written notice to the other party in the event that:
(a) PFTC becomes unable for any reason to perform the
services contemplated by this Agreement;
(b) The Trust ceases to offer investment alternatives
under the Plans; or
(c) At any time, the authorizations, licenses,
qualifications or registrations required to be maintained by PFTC in
connection with the performance of its duties hereunder shall lapse or
cease to remain in full force and effect.
Upon termination of this Agreement, each party shall return to the other party
all copies of confidential or proprietary materials or information received from
such other party hereunder other than materials or information required to be
retained by such party under applicable law or regulations. The obligations of
the parties under this section shall survive the termination of this Agreement.
Section 8. Assignment. Neither this Agreement nor any rights or
obligations hereunder may be assigned or delegated by either party without the
written consent of the other party. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective permitted successors and
assigns.
Section 9. Notices. Notices hereunder shall be in writing, shall be
delivered personally, sent by certified mail, return receipt requested, or sent
by facsimile machine in accordance with procedures established by agreement of
the parties hereto, and shall be addressed to a party either at his address
below or at a changed address specified by it in a notice to the other party
hereto:
42
<PAGE> 7
Pegasus Funds
c/o NBD Bank
900 Tower Drive
Troy, Michigan 48007-7058
Attn: Dane Criger
Putnam Fiduciary Trust Company
One Post Office Square
Boston, Massachusetts 02109
Attn: Karnig Durgarian
Section 10. Amendment. This Agreement may be amended or modified only
by a written agreement executed by both parties. The parties may add additional
employee benefit plans, profit sharing plans or retirement plans to the
provisions of this Agreement by executing one or more Schedules to this
Agreement identifying such plans and specifying the compensation payable by the
Trust with respect thereto. Each such Schedule shall be signed by both parties.
Section 11. Trust Liability. The names "Pegasus Funds" and "Trustees of
Pegasus Funds" refer, respectively, to the trust created and the trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated April 21, 1987, as amended, which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of the Trust entered into in the name or on behalf thereof by any of
the trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of the Trust personally, but bind only the trust property, and
all persons dealing with any portfolio of the Trust must look solely to the
trust property belonging to such portfolio for the enforcement of any claims
against the Trust.
Section 12. Governing Law. This Agreement shall be constructed and the
provisions thereof interpreted under and in accordance with the laws of The
Commonwealth of Massachusetts.
Section 13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written. This Agreement is
intended to set forth the rights, duties and responsibilities between the Trust
and PFTC with respect to the matters covered herein. Nothing contained in the
Agreement is intended to convey rights to any third parties such as Plans, Plan
participants or the Transfer Agent.
Section 14. Headings. Paragraphs headings in this Agreement are
included for convenience or reference only and are not to be used to construe or
interpret this Agreement.
43
<PAGE> 8
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
PUTNAM FIDUCIARY TRUST COMPANY
By: /s/ Marc Cahn
-------------------------------
Name: Marc Cahn
-----------------------------
Title: Senior Vice-President
----------------------------
Date: June 5, 1998
-----------------------------
PEGASUS FUNDS
By: /s/ D. Ray Moore
-------------------------------
Name: D. Ray Moore
-----------------------------
Title: Treasurer
----------------------------
Date: May 26, 1998
-----------------------------
44
<PAGE> 9
SCHEDULE A
LIST OF PLANS
I. Institutional Plans (Plans with assets over $20 million)
First Chicago Corporation Savings Incentive Plan
NBD Bancorp, Inc. Savings and Investment Plan
Honigman Miller Schwartz and Cohn Income Deferral Plan
Honigman Miller Schwartz and Cohn Profit Sharing Plan.
II. Retail Plans (Plans with assets under $20 million)
McKay Hochman Prototype Plan
Bayer Bess Vanderwarker Employees Profit Sharing Plan
Don R. Fruchey Profit Sharing and 401(k) Plan
45
<PAGE> 10
SCHEDULE B 1
FEES AND-EXPENSES
The fees referred to in Section 3 of this Agreement shall be as
follows:
I. For those Plans listed in Part I of Schedule A, Putnam shall receive a
base fee as follows:
a. $1 per transaction, which includes a payroll contribution to a
mutual fund in a participant account, enrollments and telephone calls
to live operators. Exchanges or transfers are not transactions for
purposes of this calculation; and
b. $3 per participant mutual fund account per annum; and
c. An annual charge of 0.18% (18 basis points) on the Trust's
equity, balanced and asset allocation funds, 0.19% (19 basis points) on
the Trust's fixed income funds and 0.20% (20 basis points) on the
Trust's money market funds based on the average daily net assets
invested by the Plans.
II. Such fees shall be fixed for a period of three years. However, in the
event that Putnam changes its standard sub-transfer agent pricing and such a
change would reduce the sub-transfer agent fees paid by the Trust's mutual
funds, then the Trust will receive the benefits of such a change.
46
<PAGE> 11
SCHEDULE B 2
FEES AND EXPENSES
The fees referred to in Section 3 of this Agreement shall be as
follows:
I. For those Plans listed in Part II of Schedule A, Putnam shall receive:
a. $1 per transaction, which includes a payroll contribution to a
mutual fund in a participant account, enrollments and telephone calls
to live operators. Exchanges or transfers are not transactions for
purposes of this calculation; and
b. $3 per participant mutual fund account per annum; and
c. An annual charge of 0.18% (18 basis points) on the Trust's
equity, balanced and asset allocation funds, 0.19% (19 basis points) on
the Trust's fixed income funds and 0.20% (20 basis points) on the
Trust's money market funds; provided, however, that the total fees paid
in any year shall not exceed the following:
<TABLE>
<S> <C>
Equity, Balanced and Asset Allocation Funds 25 basis points
Fixed Income Funds 26 basis points
Money Market Funds 27 basis points
</TABLE>
d. All basis point charges are based on the average daily net
assets invested by the Plans in the Funds.
II. Such fees shall be fixed for a period of three years. However, in the
event that Putnam changes its standard sub-transfer agent pricing and such a
change would reduce the sub- transfer agent fees paid by the Trust's mutual
funds, then the Trust will receive the benefits of such a change.
47
<PAGE> 12
THIRD AMENDMENT TO PEGASUS FUNDS AGENCY AGREEMENT
THIS AMENDMENT, dated as of the 1st day of January, 1998 by and between
Pegasus Funds (the "Trust") and Putnam Fiduciary Trust Company ("PFTC") as
parties to the Pegasus Funds Agency Agreement (the "Agreement") effective
January 1, 1998.
WHEREAS, the Trust and PFTC entered into an agreement dated November 1,
1996 with regard to certain employee benefit, profit-sharing and retirement
plans for which PFTC now performs or intends to perform administrative services
(the "Plan D")and
WHEREAS, the Trust and PFTC desire to amend said Agreement to allow
PFTC to receive electronic versions of Fund prospectus(es).
NOW THEREFORE, pursuant to Section 10 of the Agreement, the Trust and
PFTC hereby amend the Agreement as follows:
1. Section 2. 10 of the Agreement shall be deleted in its
entirety and the following language inserted in lieu thereof:
"In accordance with the procedures established from time to time by
agreement of the parties hereto, the Trust shall promptly furnish to PFTC in the
frequency requested, for each Fund:
a. copies of prospectuses, financial statements, reports or other
materials relating to each Fund, and updates of such materials, in the
quantity requested by PFTC, as such updates become available and as
required by law; and
b. performance data for each Fund, including without limitation,
standardized performance information, total return and current yield
information computed in accordance with SEC rules and other performance
information as the PFTC may reasonably request.
c. Such copies and performance data as described in subsections
(a) and (b) above (collectively "Fund Information") may be received by
PFTC through electronic means or in disk format. PFTC is authorized to
distribute such Fund Information to the Plan and plan participants via
the Internet, other electronic means or hard copy as long as it
complies with SEC rules and regulations regarding electronic delivery
applicable to such distribution.
d. With respect to the Fund Information received electronically
or in disk format, PFTC represents, warrants and covenants that it
shall not alter in any way such Fund Information provided by the Trust
and shall promptly make available updated Fund Information after PFTC
receives such Fund Information from the Trust in the format
48
<PAGE> 13
specified in subsection (c) above. The Trust represents, warrants and
covenants that Fund Information shall be promptly delivered
electronically or in disk format to PFTC."
The Agreement, as amended, shall remain in full force and effect.
IN WITNESS WHEREOF, the Trust and PFTC have caused this Amendment to be
executed by their duly authorized officers effective as of the day and year
first above written.
PUTNAM FIDUCIARY TRUST PEGASUS FUNDS
COMPANY
By: /s/ Maureen M. Phillips By: /s/ D. Ray Moore
------------------------ -------------------------
Maureen M. Phillips D. Ray Moore
------------------------ -------------------------
Title: Managing Director Title: Treasurer
--------------------- -----------------------
Date: January 5, 1998 Date: December 23, 1997
---------------------- ------------------------
49
<PAGE> 14
REVISED FOURTH AMENDMENT TO PEGASUS FUNDS
AGENCY AGREEMENT
This amendment is dated as of the 1st day of April, 1998 by and between Pegasus
Funds (the "Trust") and Putnam Fiduciary Trust Company ("PFTC") as parties to
the Pegasus Funds Agency Agreement (the "Agreement").
WHEREAS, the Trust and PFTC entered into the Agreement on November 1, 1996 with
regard to certain employee benefit, profit-sharing, and retirement plans for
which PFTC now performs or intends to perform administrative services; and
WHEREAS, PFTC and the Trust, or the Trust's designated agent, are members of the
National Securities Clearing Corporation CNSCC") or otherwise have access to the
NSCC's Fund/SERV system ("Fund/SERV") and to the NSCC's NETWORKING system
"NETWORKING"); and
WHEREAS, Fund/SERV permits the transmission of orders for the purchase and
redemption of Fund shares between PFTC and the Trust; and;
WHEREAS, NETWORKING permits the transmission of Plan account activity and data
between PFTC and the Trust; and
WHEREAS, the Trust and the PFTC desire to amend said Agreement in the manner
hereinafter set forth;
NOW THEREFORE, pursuant to Section 10 of the Agreement, the Trust and PFTC
hereby amend the Agreement in the following form:
1. Section 2.04 is amending by adding a new subsection (d) to read as
follows:
"In addition, the Transfer Agent will transmit daily net asset value
information and daily accrual for interest rate factor (mil rate)
information as of the Close of Trading each Business Day to PFTC via
the NSCC's Mutual Fund Profile system ("MFPS") no later than 7:30 p.m.
Eastern Time on each Business Day.
2. Section 2.05 is amended to read as follows:
"(a) Orders derived from, and in amounts equal to, Instructions
received by PFTC prior to the Close of Trading on any Business Day
("Day 1") shall be transmitted by PFTC via the Fund/SERV system to the
Transfer Agent no later than 5:00 a.m. Eastern Time on the next
Business Day ("Day 2"). Such trades will be effected at the net asset
value of each Fund's shares calculated as of the Close of Trading on
Day 1 subject to the terms of such Fund's prospectus. In the event of
an error or delay with respect to the transmittal of such orders by
PFTC, PFTC may resubmit such order to the Transfer Agent via the
Fund/SERV system on the Business Day following Day 2 and Transfer Agent
shall effect such trade as of the original placement date.
50
<PAGE> 15
(b) To the extent that such orders are not transmitted to the Transfer
Agent via the Fund/SERV system, such orders shall be transmitted via
facsimile to the Transfer Agent by 9:30 a.m. Eastern Time on the next
Business Day. Such trades will be effected at the net asset value of
each Fund's shares calculated as of the Close of Trading on Day 1
subject to the terms of such Fund's prospectus."
3. By adding a new Section 2.13 to read as follows:
"On each Business Day for which PFTC has transmitted orders for
purchases, exchanges or redemptions for a Plan, Transfer Agent shall
send to PFTC via the Fund/SERV system, verification of such purchases,
exchanges or redemptions or notification of the rejection of such
orders("Confirmations"). Such Confirmations shall include the total
number of Shares of each Fund held by a Plan following such purchases,
exchanges or redemptions. Transfer Agent shall submit, in a timely
manner, such Confirmations to the Fund/SERV system in order for PFTC to
receive no later than 11:00 a.m. Eastern Time the next Business Day."
4. By adding a new Section 2.14 to read as follows:
"(a) In the event there are purchase and redemption orders received by
the Transfer Agent within the time limits set forth above on any
Business Day for any Fund, settlement shall occur consistent with the
requirements of the Fund/SERV system.
(b) For those purchase orders not transmitted via the Fund/SERV system,
PFTC shall make payment to the Trust or its designated agent in federal
funds no later than the close of the Fedwire system on the Business Day
following the day on which the Instructions are treated as having been
received by the Trust pursuant to this Agreement.
(c) For those redemption orders not transmitted via the Fund/SERV
system, the Trust shall make payment in federal funds no later than the
close of the Fedwire system on the Business Day following the day on
which the Instruction are treated as having been received by the Trust
pursuant to this Agreement."
5. By adding a new Section 2.15 to read as follows:
"The Transfer Agent will transmit to PFTC via the NETWORKING system
those Networking activity files reflecting all account activity
including but not limited to closing account balance, purchases,
redemptions, capital gains, dividends, price and share adjustments.
Such files must be received by PFTC on the Business Day following Day
2."
6. By deleting in its entirety Schedule B 3 FEES AND EXPENSES and
inserting a new Schedule B 3 FEES AND EXPENSES to read as follows:
"The fees referred to in Section 3 of this Agreement shall be as
follows:
51
<PAGE> 16
For those Plans listed in Part III of Schedule A, Putnam shall receive:
a. (1) $1 per manual transaction. Exchanges or transfers are not
transactions for purposes of this calculation; and
(2) $0.75 per automated transaction. Exchanges or transfers
are not transactions for purposes of this calculation
b. $3 per participant mutual ftmd account per annum; and
c. An annual charge of 0.09 % (9 basis points) on all asset types
held by the Plans.
d. All basis point charges are based on the average daily net
assets invested by the Plans in the Funds."
The Agreement, as amended, shall remain in full force and effect.
IN WITNESS THEREOF, the Trust and PFTC have caused this Amendment to be executed
by their duly authorized officers effective as of the date first written above.
PUTNAM FIDUCIARY TRUST PEGASUS FUNDS
COMPANY
By: /s/ Marc Cahn By: /s/ D. Ray Moore
------------------------- -------------------------
Name: Marc Cahn D. Ray Moore
----------------------- -------------------------
Title: Senior Vice President Title: Treasurer
---------------------- -----------------------
Date: June 5, 1998 Date: May 26, 1998
----------------------- ------------------------
52
<PAGE> 17
AMENDED AND RESTATED SCHEDULE A OF
THE PEGASUS FUNDS AGENCY AGREEMENT
LIST OF PLANS
I. FIRST CHICAGO / NBD PLANS
First Chicago Corporation Savings Incentive Plan
NBD Bancorp, Inc. Savings and Investment Plan
II. INSTITUTIONAL PLANS
Honigman Miller Schwartz and Cohn Income Deferral Plan
Honigman Miller Schwartz and Cohn Profit Sharing Plan
Consolidated Health Group, Inc. Deferred Contribution Plan
PLATINUM Technology, Inc. 401(k) Savings Plan
American Axle & Manufacturing, Inc. Personal Savings Plan for Hourly Rate
Employees
American Axle & Manufacturing, Inc. Salaried Savings Plan
American Axle & Manufacturing, Inc. Income Security Plan for Hourly Rate
Employees
Bankers Systems, Inc. Pension Plan (effective October 1, 1997)
Bankers Systems, Inc. Cash/Profit Sharing Retirement Plan (effective October 1,
1997)
Elco Anchor Wire Inc. Retirement Plan (effective January 2, 1998)
Canadaigua Brands 401(k) and Profit Sharing Plan
Chaparral Steel Retirement Savings Plan
The Retirement Plan (TXI)
The TXI Supplemental Plan
The Market Square Profit Sharing Plan
Barton Brands, LTD. Bardstown Hourly Employees' Savings Plan
Barton Owensboro/Albany Union 401(k) Profit Sharing Plan
III. RETAIL PLANS
McKay Hochman Prototype Plan
Bayer Bess Vanderwarker Employees Profit Sharing Plan
Don R. Fruchey Profit Sharing and 401(k) Plan
Date: SEPTEMBER 4. 1998
53
<PAGE> 18
AMENDED AND RESTATED SCHEDULE A OF
THE PEGASUS FUNDS AGENCY AGREEMENT
LIST OF PLANS
I. FIRST CHICAGO/NBD PLANS
First Chicago Corporation Savings Incentive Plan
NBD Bancorp, Inc. Savings and Investment Plan
II. INSTITUTIONAL PLANS
Honigman Miller Schwartz and Cohn Income Deferral Plan
Honigman Miller Schwartz and Cohn Profit Sharing Plan
Consolidated Health Group, Inc. Deferred Contribution Plan
PLATINUM Technology, Inc. 401(k) Savings Plan
American Axle & Manufacturing, Inc. Personal Savings Plan for Hourly Rate
Employees
American Axle & Manufacturing, Inc. Salaried Savings Plan
American Axle & Manufacturing, Inc. Income Security Plan for Hourly Rate
Employees
Bankers Systems, Inc. Pension Plan (effective October 1, 1997)
Bankers Systems, Inc. Cash/Profit Sharing Retirement Plan (effective October 1,
1997)
Elco Anchor Wire Inc. Retirement Plan (effective January 2, 1998)
Canadaigua Brands 401(k) and Profit Sharing Plan
Chaparral Steel Retirement Savings Plan
The Retirement Plan (TXI)
The TXI Supplemental Plan
The Market Square Profit Sharing Plan
III. RETAIL PLANS
McKay Hochman Prototype Plan
Bayer Bess Vanderwarker Employees Profit Sharing Plan
Don R. Fruchey Profit Sharing and 401(k) Plan
DATE: APRIL 21,1998
54
<PAGE> 1
Exhibit (9)(aa)
Fifth Amendment dated March 19, 1999 to the Agency Agreement
between Pegasus Funds and Putnam Fiduciary Trust Company
55
<PAGE> 2
FIFTH AMENDMENT TO THE AGENCY AGREEMENT
This Amendment to the Agency Agreement is made effective March 19,
1999, by and between One Group Mutual Funds, successor to Pegasus Funds (the
"Trust"), Bank One Trust Company, NA ("Bank One") and Putnam Fiduciary Trust
Company ("PFTC").
WHEREAS, pursuant to an Agency Agreement ("Agreement") dated November 1, 1996,
PFTC has agreed to provide certain administrative and recordkeeping services as
agent for certain employee benefit plans, profit sharing plans and retirement
plans for certain portfolios of the Trust; and
WHEREAS, Pegasus Funds will merge with and into One Group Mutual Funds on March
22, 1999; and
WHEREAS, One Group Mutual Funds is the successor to the Trust pursuant to
Section 8 of the Agreement;
NOW THEREFORE, pursuant to Section 10 of the Agreement, One Group Mutual Funds
and PFTC amend the Agreement in the following form:
1. The preamble is amended to add as a party Bank One Trust Company, NA
("Bank One") and to replace "Pegasus Funds" with "One Group Mutual
Funds".
2. Section 3 is amended to read as follows:
Compensation. For the services which PFTC shall render to the Trust
under this Agreement, the Trust and Bank One will pay to PFTC a fee on
a monthly basis, at the rate or rates as set forth in Schedules B1 and
B2.
3. Schedules B1 and B2 are amended by adding the following:
III. The fee shall be paid by both the Trust and Bank One. The Trust
shall pay no more than that portion of the fee equivalent of $18 per
account per mutual fund, and Bank One shall pay the remainder of the
fee.
4. Section 11 is amended to read as follows:
Trust Liability. The names "One Group Mutual Funds" and "Trustees of
One Group Mutual Funds" refer, respectively, to the trust created and
the trustees, as trustees, but not individually or personally, acting
from time to time under a Declaration of Trust dated as of May 23, 1985
to which reference is hereby made and a copy of which is on file at the
office of the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "One Group Mutual Funds"
entered into in the name or on behalf thereof by any of the
56
<PAGE> 3
Trustees, representatives or agent are made not individually, but in
such capacities, and are not binding upon any of the Trustees,
Shareholders, or representatives of the Trust personally, but bind only
the assets of the Trust, and all persons dealing with any series of
Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claim against the
Trust.
The Agreement, as amended, shall remain in full force and effect.
IN WITNESS THEREOF, the Trust, PFTC and Bank One have caused this Amendment to
be executed by their duly authorized officers effective as of the date first
written above.
PUTNAM FIDUCIARY ONE GROUP MUTUAL FUNDS
TRUST COMPANY
By: /s/ Thomas M. Haggerty By: /s/ Mark S. Redman
----------------------------- ----------------------------
Name: Thomas M. Haggerty Name: Mark S. Redman
--------------------------- --------------------------
Title: Senior Vice-President Title: President
-------------------------- -------------------------
Date: March 18, 1999 Date: March 18, 1999
--------------------------- --------------------------
BANK ONE TRUST COMPANY, NA
By: /s/ John Alexander
-----------------------------
Name: John Alexander
---------------------------
Title: Senior Managing Director
--------------------------
Date: March 19, 1999
---------------------------
57
<PAGE> 1
Exhibit (9)(bb)
Form of Agency Agreement between The One Group Services Company
and Various Shareholder Servicing Agents
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AGENCY AGREEMENT
This Agreement is made as of the ________ day of ______________, 199-
between: (1) _________________________ ("Company") and (2) The One Group (the
"Trust"), The One Group Services Company (collectively, "TOGSC").
RECITALS
A. The Trust is (i) an open-end investment company with one or more series or
classes of shares (each such series or class of share a "Fund") TOGSC is either
(ii) and investment adviser to or administrator for the Funds, (iii) the
principal underwriter or distributor for the Funds, or (iv) the transfer agent
for the Funds.
B. The Trust wishes to have Company provide to the Trust or on its behalf
certain administrative services with respect to beneficial owner's of shares
("Shareholder(s)") of such Funds which Company makes available to Shareholders
through securities brokerage accounts carried by Company or correspondents of
Company ("Correspondents").
C. Company agrees to provide such services on the terms and conditions set forth
herein.
AGREEMENT
THEREFORE, in consideration of the mutual promises set forth herein,
the parties agree as follows:
1. Shareholder Services
A. Shareholder Account Set-Up and Maintenance - Company shall maintain and
provide adequate facilities and procedures to: (1) establish and maintain Fund
investments on behalf of Shareholders within a consolidated brokerage account(s)
on the Company transaction processing and recordkeeping system, and (2) access
Shareholders current Fund information including, but not limited to, share
balances, dividend information and transaction history.
B. Shareholder Assistance - Company shall make available to Correspondents any
information maintained by Company as may be necessary for Correspondents to
support and resolve Shareholder servicing inquiries. Company personnel will
assist Correspondents in the investigation of Shareholder inquiries when
necessary. Company will support Shareholder service inquiries from Shareholders
who maintain brokerage accounts with Company. Company shall not make any
statement or representation concerning a Fund that is not contained in the
Trust's registration statement, annual report or proxy statement or any
advertising or promotional material generated by or on behalf of any Fund.
C. Transaction Processing and Settlement - The Company transaction processing
system shall enable Shareholders to purchase, redeem and exchange shares of
Funds available through Company. Company shall facilitate settlement with each
Fund of Shareholder transactions in such Fund insofar as such transactions are
transmitted by Company or Correspondents on behalf of Shareholders.
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The Trust agrees that it shall either: (1) make arrangements for all
transactions processed pursuant to this Agreement to be processed thought the
National Securities Clearing Corporation Fund/SERV system, or (2) obtain proper
authority for Company to transmit to the Fund or its agent daily manual trades
until 5:00 p.m. Eastern Time, or such other times as set forth on Exhibit B,
which trades shall remain eligible for that day's public offering price provided
Company received the order by close of trading that day.
D. Shareholder Account Statement and Distribution - With respect to each
Shareholder holding Fund investments through Company, Company shall deliver or
cause to be delivered to such shareholder monthly statements when there has been
activity in such Shareholder's brokerage account during such month, or quarterly
statements during periods when there has been no monthly account activity.
Statements will include transaction detail for the statement period for each
Fund in which shares were purchased, redeemed or exchanged. and a summary of the
number of Fund shares owned and share value thereof as of the statement date to
the extend such value is provided by the Fund.
E. Confirmation Preparation and Distribution - Company shall generate a written
confirmation for each purchase, redemption and exchange transaction affecting
each Shareholders Fund investments held through Company to the extent such
confirmation is required, and such confirmation shall be distributed to
Shareholders through or on behalf of Company or Correspondents.
F. Payment of Fund Distributions - Company shall distribute to Shareholders all
dividend, capital gain or other payments authorized by the Trust and distributed
and received by Company, and such distributions shall be credited to
Shareholders in accordance with the instructions provided by each Shareholder,
including but not limited to dividend reinvestment into a Fund, or cash payments
of distributions.
G. Prospectus Fulfillment - Company will provide a prospectus to prospective
shareholders or their agent, upon request, provided the Trust or its agent has
provided adequate copies thereof to Company or its designee. Subsequent to any
Shareholder's acquisition of shares of a Fund by purchase or exchange, Company
shall provide to such shareholder a confirming prospectus for such Fund to the
extend such prospectus is required with respect to such acquisition and is
provided by the Trust or its designee. Company shall immediately inform the
Trust or its designee if adequate prospectuses have not been provided.
The Trust acknowledges and agrees that Company is not responsible for
(i) the compliance of any prospectus or supplement thereto, annual report, proxy
statement or item of advertising or marketing material of or relating to any
Fund, which is prepared by the Trust or its agent, with any applicable laws,
rules or regulations, (ii) the registration or qualification of any shares of
any Fund under any federal or applicable state laws or (iii) the compliance by
any Fund or the Trust or any "affiliated person" (as that term is defined in the
rules under the Investment Company Act of 194O, as amended), with any applicable
federal or state law, rule or regulation or the rules and regulations of any
self regulatory organization with jurisdiction over such Fund, the Trust or
affiliated person.
Company will not make any offer of Fund shares (a) in any state or
jurisdiction in which such shares are not qualified for sale or exempt from
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the requirements of the relevant securities laws at any time after it has been
provided with written notice from the Trust that such Fund is not so qualified
or exempt in such state or jurisdiction, (b) in any state or jurisdiction in
which it is not property licensed or authorized to make offers or sales, or (c)
at any time after it has been provided with written notice from the Trust that
such Fund is not then currently offering shares to the public.
H. Account Level Tax Reporting - Company shall provide to Shareholders through
Company or Correspondent such reports and information as may be required by the
then-prevailing laws and regulations under the Internal Revenue Code from
non-retirement accounts and qualified and non-qualified retirement plan
accounts.
II. Representations and Warranties
A. The Trust and TOGSC each represent and warrant that:
(1) it has the requisite authority to enter into this agreement on its
own behalf and, in the case of the Trust, on behalf of the Fund(s), and
(2) the payment to Company of any fees pursuant hereto:
(a) has been duly authorized by the Board of Trustees of the
Trust, or any other persons to the extent such
authorization is required to properly make such payment;
(b) is properly disclosed in the relevant prospectus to the
extent such disclosure may be required, and
(c) is in conformity with all federal, state and industry laws
or regulations to which the Trust or its agents are
subject.
B. Company represents and Warrants that:
(1) it is a corporation duly organized under the state laws of
__________________________ and is duly registered and/or qualified as a
broker/dealer with the SEC, NASD and in every state or territory of the United
States of America (including the District Of Columbia) where such registration
or qualification is required and has the requisite authority to enter into this
Agreement and to carry out the services contemplated herein;
(2) the execution and delivery of this Agreement and the performance of
the services contemplated herein have been duly authorized by all necessary
corporation action in its part, and this Agreement constitutes the valid and
binding obligations of Company; and
(3) it is in material conformity with all federal, state and industry
laws or regulations to which it is subject.
C. Each party hereto represents and warrants that it shall provide to the others
such information or documentation necessary for such party to fulfill its
obligations hereunder, such other information or documentation as any party may
reasonably request and that it shall comply with such operating policies and
procedures as the parties may adopt from time to time.
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D. Each party is responsible for its compliance with all applicable laws, rules
and regulations governing its performance under this Agreement except to the
extent its failure to comply with any law, rule or regulation is caused by
another party's breach of this Agreement.
III. Fees
A. Asset Based Fee
For the services provided by Company hereunder the Trust or TOGSC shall
pay to Company a fee with respect to each Fund, which fee shall be based upon a
percentage per annum of the average daily value of the aggregate number of
shares of the Fund held by Company for the accounts of customers of Company and
Correspondents. Such fee shall be calculated and paid in accordance with Exhibit
A hereto.
IV. Indemnification
The Trust and TOGSC shall indemnify and hold harmless Company and each officer,
employee and agent of Company from and against any and all claims, demands,
actions, losses, damages, liabilities, costs, charges. reasonable counsel fees.
and expenses of any nature ("Losses") arising out of ((i) any inaccuracy or
omission in any prospectus or supplement thereto, registration statement, annual
report or proxy statement of any Fund or the Trust or any advertising or
promotional materials generated by any Fund or the Trust, (ii) any breach by the
Trust or TOGSC of any representation, warranty, covenant, or agreement contained
in this Agreement and (iii) any action taken or omitted to be taken by Company
pursuant to this Agreement, except to the extent such Losses result from
Company's breach of this Agreement, willful misconduct or negligence.
Company shall indemnify, defend and hold the Trust and TOGSC (including their
officers, directors, employees and agents and any person who controls either of
them) free and harmless from and against any and all losses which such persons
may incur under the Securities Act of l933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any representation,
warrant, or covenant made by Company herein, (ii) any failure by Company to
perform its obligations as set forth herein or, (iii) any action taken or
omitted by Company to the extent that any losses associated therewith are a
result of Company's breach of this contract, willful misconduct or negligence.
V. Confidentiality
Each party acknowledges and understands that any and all technical,
trade secret, or business information, including, without limitation, financial
information, business or marketing strategies or plans, product development or
customer information, which is disclosed to the other or is otherwise obtained
by the other, its affiliates, agent or representatives during the term of this
Agreement (the "Proprietary Information") is confidential and proprietary,
constitutes trades secrets of the owner, and is of great value and importance to
the success of the owner's business. Each party agrees to use its best efforts
(the same being not less than that employed to protect his own proprietary
information) to safeguard the Proprietary Information and to prevent the
unauthorized, negligent or inadvertent use or disclosure thereof. Neither party
shall without the prior written approval of any officer of the other, directly
or indirectly,
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disclose the Proprietary Information to any person or business entity except for
a limited number of employees, attorneys, accountants and other advisors of the
other on a need-to-know basis or as may be required by law or regulation. Each
party shall promptly notify the other in writing of any unauthorized, negligent
or inadvertent use or disclosure of Proprietary Information. Each party shall be
liable under this Agreement to the other for any use or disclosure in violation
of this Agreement by its employees, attorneys, accountants or other advisors or
agents. This Section V shall continue in full force and effect notwithstanding
the termination of this Agreement.
VI. Duration and Termination of Agreement
With respect to any Fund, this Agreement shall become effective upon
the date such Fund is identified on Exhibit B, and this Agreement is approved by
the Trust's Board of Trustees if such approval is required, and shall continue
in force for one year, and shall thereafter continue automatically for
successive annual periods unless earlier terminated and subject to any periodic
approval required by the Trust's Board of Trustees. This Agreement is terminable
as to any Fund by any party upon 90 days written notice thereof to the other
parties or upon default hereof provided that such default shall not terminate
this Agreement to the extent that the defaulting party has been notified of such
default by the non-defaulting party and the defaulting party cures such default
within 10 business days of notice of such default.
After the date of termination as to a Fund, no fee will be due with
respect to any shares of such Fund that are first placed or purchased in Company
or Correspondent customer accounts after the date of such termination. However,
notwithstanding any such termination, the Trust and TOGSC Will remain obligated
to pay Company the Asset Based Fee as to each share of such Fund that was
considered in the calculation of such fee as of the date of such termination,
for so long as such share is held in the Company or Correspondent account This
Agreement, or any provision hereof, shall survive termination to the extent
necessary for each party to perform its obligations with respect to shares for
which the Asset Based Fee continues to be due subsequent to such termination.
Notwithstanding anything to the contrary contained in this section VI,
this Agreement will terminate automatically with respect to TOGSC in the event
that TOGSC ceases to serve as principal underwriter or distributor for the Funds
pursuant to a termination of its Distribution Agreement with the Fund, or, with
respect to the Trust in the event that the Fund's plan of distribution, adopted
pursuant to Rule 12b-1 under the 1940 Act, or any other plan for the financing
of shareholder servicing activities (the "Plan") which finances such payment
obligation is terminated for whatever reason by the Trusts Board of Directors.
In that connection, the Trust's and TOGSC's payment obligations with respect to
fees will cease as of the effective date of (i) the termination of TOGSC's
Distribution Agreement with the Fund or (ii) the termination of the plan, as the
case may be. This paragraph does not relieve the Trust or TOGSC of the
obligation for payment of past fees due under this Agreement. In the event such
payment obligation shall cease in accordance with clause (i) above, Company may
seek to receive such payments from any successor distributor that is appointed
by the Funds. In the event such payment obligation shall cease in accordance
with clause (ii) above, the Trust and Company agree to negotiate in good faith
with respect to whether and to what extent the Trust will continue to make such
payments either from
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a related party's resources or in reliance upon financing that is provided by a
successor plan.
VII. Miscellaneous
A. Custody - The Trust acknowledges that Fund shares maintained by Company for
Shareholders hereunder are held in custody for the exclusive benefit of
customers of Company or its Correspondents and shall be held free of any right,
charge, security interest, lien or claim against Company in favor of the Trust
or its agents acting on behalf of the Trust.
B. Transaction Charges - During the term of this Agreement, Company shall not
assess against or collect from its brokerage customers any transaction fee upon
the purchase or redemption of any Fund's shares that are considered in
Calculating the fee due pursuant to Section III hereof.
C. Nonexclusivity - The Trust acknowledges that Company may perform services
similar to those to be provided under this Agreement to other investment
companies, investment company sponsors. or service providers to investment
companies.
D. Force Majeure - No party or its affiliates shall be liable to any other party
for any damage, claim or other loss whatsoever caused by circumstances or events
beyond its reasonable control.
E. Notices - All notices and communications required to permitted by this
Agreement shall be in writing and delivered personally or sent by first class
mail unless otherwise agreed. All such notices and other communications shall be
made:
If to the Trust and TOGSC, to:
The One Group Services Company
Attn: Mark S. Redman
3435 Stelzer Road
Columbus, OH 43219-8001
If to Company, to:
------------------------------------
------------------------------------
------------------------------------
------------------------------------
G. This Agreement and any Exhibits hereto may be amended only upon the written
agreement of the parties.
H. This Agreement may not be transferred or assigned by either the Trust, TOGSC
or Company and shall be construed in accordance with the laws of the State of
Ohio.
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I. The names "The One Group" and "Trustees of The One Group refer respectively
to the business trust created and the Trustees, as trustees and not individually
or personally, acting from time to time under a Declaration of Trust amended,
restated and dated as of February 11, 1993 to which reference is hereby made and
copy of which is on file at the office of the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of The One Group entered
into in the name of on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any Fund must look solely to the assets of the Trust belonging to such Fund for
the enforcement of any Claims against the Trust.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
The One Group
By: _____________________________
Name: ___________________________
Title: __________________________
The One Group Services Company
By: _____________________________
Name: ___________________________
Title: __________________________
_________________________________
Company Name
By: _____________________________
Name: ___________________________
Title: __________________________
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EXHIBIT A
FEE SCHEDULE
1. Asset Based Fee
(a). For the services provided by Company hereunder, the Trust or TOGSC shall
pay to Company a fee with respect to each Fund, calculated daily and paid
monthly in arrears, equal to ___ percent per annum of the daily market value of
the total number of shares of such Fund held in accounts at Company (determined
by multiplying the number of such shares times the publicly-reported net asset
value of each share), excluding the value of (i) shares held in a brokerage
account prior to the effective date of the Agreement as to the Fund issuing such
shares ("Pre-Participating Assets"), and (ii)shares first placed or purchased in
a brokerage account after the termination of the Agreement as to the trust
issuing such shares. The total number of shares of all Funds with respect to
which a fee will be due to Fidelity hereunder shall be referred to in this
Exhibit A as "Participating Assets."
(b). Subsequent to each month-end, Company shall send to TOGSC a statement of
the market value of shares of the Fund for which the fee is calculated for the
preceding month, together with a statement of the amount of such fee.
(c) The Trust or TOGSC shall pay to Company such fee within 30 days after their
receipt of such statement. Such payment shall be by wire transfer or other form
acceptable to Company and shall be separate from payments related to redemption
proceeds and distributions.
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Exhibit (9)(cc)
Sub-Transfer Agency Agreement
between
One Group Mutual Funds and the Pershing Division
of
Donaldson, Lufkin & Jenrette Securities Corporation
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Processing Agreement
This Agreement made and entered into by and between Pershing Division
of Donaldson, Lufkin & Jenrette Securities Corporation, (hereinafter referred to
as Pershing) with offices in Jersey City, New Jersey and The One Group with
offices in Columbus, Ohio.
WHEREAS, Pershing currently enables customers of various broker/dealer
affiliates, subsidiaries or divisions of Bank One Corporation (hereinafter
referred to as Bank One) whose accounts are carried by Pershing as clearing
agent (hereinafter "Customers") on a fully disclosed basis, to purchase shares
of certain money market funds of The One Group ("the Funds").
WHEREAS, The One Group desires that Pershing perform certain functions
related to these purchases.
NOW THEREFORE, Pershing and The One Group agree as follows:
PART I
RESPONSIBILITIES OF PERSHING
Pershing will perform the following functions:
o Daily calculation and accrual of dividends, by beneficial owner, of the
Fund's shares, held for Customers in Pershing's Master Omnibus Account at
each One Group Fund.
Daily reconciliation of the Master Omnibus Account to The One Group
Fund shares owned by each Customer.
o Send prospectus updates, semi-annual reports, annual reports and other
required notifications as provided by the Funds to Customers as required at
The One Group's expense.
o Prepare and mail periodic statements to all Customers which detail
purchases and redemptions of the Fund's shares. Such statement shall
include opening balances, closing balances and yields for the period as
provided by the Funds.
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o Tax reporting of the purchases, sales and dividends relating to fund shares
held on IRS Form 1099 DIV. for each Customer annually.
o Provide "Resource Checking" checks and check processing to Customers
holding the funds.
PART II
RESPONSIBILITIES OF THE ONE GROUP
The One Group assumes the following obligations, responsibilities, and
functions, which it will perform:
o Transmit to Pershing by no later than 6:30 p.m. eastern time on each
business day yield factors for each Fund as required so that Pershing may
accurately allocate accrued dividends to each Customer recorded on
Pershing's records.
o Provide Pershing by no later than December 15th of each year the specific
dates when dividends will be posted for each fund each month for the
following year.
o Transmit to Pershing each day by no later than 1:00 am Eastern Time a full
position file (principal and accrued dividends) and prior day history for
each fund account registered where Pershing is the dealer of record.
o Indemnify and hold harmless Pershing from and against any losses, costs,
penalties, fines or other damages, including attorney's fees and attorneys'
fees incurred in enforcing this indemnification, arising from Pershing's
performance of these services, provided such losses, costs, penalties,
fines or other damages do not arise out of Pershing's gross negligence,
willful misconduct, or reckless disregard of its obligations under this
Agreement.
o Represent and warrant to Pershing that, at all times during the term of
this Agreement, it will remain in compliance with all duties and
obligations pursuant to all applicable law or
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industry regulation to which it is subject, including any and all record
keeping obligations and obligations concerning disclosure to public
customers and shareholders.
PART III
PAYMENT
The One Group agrees to pay Pershing 41.67 cents per account per month
for all accounts maintained on Pershing's records that had a position in one or
more of the funds. The One Group agrees to pay all reasonable costs associated
with the distribution of shareholder materials including prospectuses,
semi-annual reports, annual reports and any other required notifications of the
funds. Pershing will provide The One Group with invoices each month for amounts
due and the One Group agrees to remit payment within 10 business days of receipt
of such invoices. At any time after October 5, 2001, Pershing may change these
payment terms upon giving one-hundred eighty (180) days prior written notice to
The One Group.
PART IV
TERM AND TERMINATION OF THE AGREEMENT
This Agreement will begin at the time Pershing establishes Master
Omnibus Account (s) at the Funds and purchases fund shares for Customers as
instructed to do so by Bank One. Unless terminated, this Agreement shall
continue in effect thereafter as long as fund shares remain in one or more of
Pershing's Master Omnibus Account(s). Either party may terminate this Agreement
for convenience and without cause by giving the other party at least one hundred
eighty (180) days prior written notice.
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PART V
NOTICE PROCEDURE
Notice when required hereunder, shall be sent by Certified Mail,
postage paid, to the respective parties as set out below:
<TABLE>
<S> <C>
As to Pershing John Koehler
Senior Vice President and Treasurer
Pershing Division of Donaldson, Lufkin &
Jenrette Securities Corporation
One Pershing Plaza
Jersey City, NJ 07399
and a copy to the Office of the General Counsel, same address
As to The One Group Mark Redman
President
The One Group
3435 Stelzer Road
Columbus, OH 43219
</TABLE>
PART VI
CONFIDENTIALITY
Neither Pershing nor The One Group shall disclose the terms of this
Agreement or information obtained as a result thereof to any outside party
except to regulatory or self- regulatory organizations with appropriate
jurisdiction, pursuant to judicial process or to authorized employees of the
other on a need-to-know basis. Any other publication or disclosure
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<PAGE> 6
of the terms of this Agreement may be made only with the prior written consent
of the other party. The One Group and Pershing shall each maintain the
confidentiality of documents and information received from the other party
pursuant to this Agreement. Pershing and The One Group each agree that any
information regarding the identity of the other's customers shall be kept
confidential and not used by the other except as required in connection with
obligations under this Agreement.
The One Group acknowledges that the services Pershing provides
hereunder involve access to proprietary technology, trading and other systems,
and that techniques, algorithms and processes contained in such systems
constitute trade secrets and shall be safeguarded by The One Group, and The One
Group shall exercise reasonable care to protect Pershing's interest in such
trade secrets. The One Group agrees to make the proprietary nature of such
systems known to those of its consultants, staff, agents or clients who may
reasonably be expected to come into contact with such systems. The One Group
agrees that any breach of this confidentiality provision may result in its being
liable for damages, as provided by law.
This Part VI shall be inoperative as to information which (i) is or
becomes generally available to the public other than as a result of disclosure
by The One Group or its officers agents; or (ii) becomes available to The One
Group or its agents on a non-confidential basis from a third party which is
entitled to disclose such information; or (iii) was known to The One Group or
its agents on a non-confidential basis prior to its disclosure to The One Group
by Pershing.
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PART VII
YEAR 2000 REPRESENTATION
Pershing represents that its proprietary technology, system and
processes ("Software") will record, store, process, calculate, and present
calendar dates falling on or after (and if applicable, spans of time including)
January 1, 2000, in the same manner, and with the same functionally, data
integrity and performance, as the Software records, stores, processes,
calculates and presents calendar dates on or before December 31, 1999 ("2000
Compliant"). Pershing represents that the Software (i) will lose no
functionality with respect to the introduction of records containing dates
failing on or after January 1, 2000 and (ii) will be interoperable with other
software that has been tested and used by Pershing ("Other Software") which may
deliver records to the Software or receive records from Software, or interact
with the Software, including but not limited to back-up and archived data,
except to the extent that Other Software is not 2000 Compliant.
PART VIII
OTHER MATTERS
The parties shall, at all times during the term of this Agreement,
remain independent contractors. Nothing herein shall be construed to create a
relationship between the parties, including but not limited to an affiliation,
partnership or joint venture. Nothing herein shall be construed to supersede or
otherwise effect the terms of the Fully Disclosed Clearing Agreement between any
of the Bank One affiliates, subsidiaries or divisions and Pershing as those
agreements may be amended or assigned from time to time. In the event of any
conflict between the terms of this Agreement and the Fully Disclosed Clearing
Agreement, the terms of the Fully
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Disclosed Clearing Agreement shall govern with respond to the parties thereto.
This Agreement is between the parties hereto and is not intended to confer any
benefits on third parties, including, but not limited to, customers of either
party or Banc One.
PART IX
Governing Law and Matters Relating to the Trust as
a Massachusetts Business Trust.
This Agreement shall be governed by the law of the Commonwealth of
Massachusetts. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in the Trust's Agreement and Declaration of Trust.
Agreed and accepted this ____ day of ______________________, 1998
Pershing Division of Donaldson,
Lufkin &, Jenrette Securities Corporation The One Group
By: /s/ John P. Koehler By: /s/ Mark Redman
----------------------------------- ---------------------
Name: John P. Koehler Name: Mark Redman
-------------------------------- --------------------
Title: Senior Vice President/Treasurer Title: President
------------------------------- -------------------
Date: February 4, 1999 Date: January 1, 1999
-------------------------------- --------------------
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Exhibit (9)(dd)
Form of Sub-Transfer Agency Agreement
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SUB TRANSFER AGENCY AGREEMENT
AGREEMENT made as of ___________________________________________ by and
between ________________________________________________ ("Recordkeeper") and
The One Group (the "Trust").
WHEREAS, the Trust desires to enter into a Sub Transfer Agency
Agreement pursuant to which the Trust will retain the Recordkeeping to perform
certain Recordkeeping and accounting services and functions with respect to
transactions in Trust shares ("Shares") made by or on behalf of participants in
certain defined contribution employee benefit or retirement plans, and with
respect to holdings of Shares maintained by or on behalf of such participants,
when with respect to each Trust such plans maintain with the Funds transfer
agent ("Transfer Agent") a single master shareholder account; and
NOW, THEREFORE, in consideration of the following Kemises and mutual
covenants, the parties agree as follows:
1. Services Provided by The Recordkeeper
When and to the extent requested by the Trust, the Recordkeeper agrees
to perform recordkeeping and account services and functions with respect to
transactions in Shares made by or on behalf of participants in the Plan
("Participants"), and with respect to holding of Shares maintained by or on
behalf of participants, when with respect to the Trust the Plan maintains with
the Transfer Agent plan level shareholder accounts. To the extent requested, the
Recordkeeper will provide the following services:
A. Maintain separate records for each Participant reflecting Shares
purchased, redeemed and exchanged on behalf of such Participant and
outstanding balances of Shares owned by or for the benefit of such
Participant.
B. Prepare and transmit to Plan and/or its Participants periodic
account statements indicating the number of shares of the Trust owned
by or for the benefit of Participants and purchases, redemptions and
exchanges made on behalf of Participants.
C. With respect to the Plan, aggregate all purchase, redemption and
exchange orders made by or on behalf of the Plan's Participants and
transmit instructions based on such aggregate orders ("Instructions")
to the Transfer Agent for acceptance.
D. Provide to the Trust, the Transfer Agent and/or other parties
designated by them such other information relating to transactions in
and holdings of Shares by or on behalf of Participants as is reasonably
requested.
E. As agreed upon with the Trust, deliver or arrange for the delivery
of appropriate documentation in connection with orders.
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2. Appointment as Agent For Limited Purpose
The Recordkeeper shall be deemed the agent of the Trust for the sole
and limited purpose of receiving purchase redemption and exchange orders from
Participants and transmitting corresponding instructions to the Transfer Agent.
Except as provided specifically herein, neither the Trust nor any person to
which the Trust may delegate any of its duties hereunder shall be or hold itself
out as an agent of the Transfer Agent or the Trust.
3. Representations of Recordkeeper
The Recordkeeper agrees, represents and warrants that:
A. It will forward Instructions within such time periods and to such
parties as are specified by the Trust, the Transfer Agent, the Trust's
prospectuses and applicable law and regulation.
B. If and to the extent required under applicable federal and state
securities laws and regulations, it is duly registered pursuant to such
laws and regulations, it is not a "fiduciary" of any Plan as such term
defined in Section 3(21) of the Employment Retirement Income Security
Act of 1974, as amended ("ERISA"), and Section 4975 the Internal
Revenue Code of 1986, amended (the ""ode"): and the receipt of any fees
by it from the Trust, and the corresponding reduction of fees payable
to the Recordkeeper by the Plan (or by the Plan sponsor, according to
Recordkeeper's agreement with the Plan) will not constitute a
"prohibited transaction" for purposes of Title I of ERISA and Section
4975 of the Code.
C. At all times during the term of this contract, the Recordkeeper will
maintain errors and omissions coverage in an amount not less than
$1,000,000 per occurrence, and in the aggregate. A certificate of
insurance evidencing such coverage will be provided by the Recordkeeper
to _________________________________________________ as soon as is
practicable after commencement of this Agreement.
4 Records and Reporting
The Recordkeeper will maintain and preserve all records as required by
law in connection with its provision of services under this Agreement. Upon the
reasonable request of the Funds or the Transfer Agent, the Recordkeeper will
provide copies of. historical records relating to transactions involving the
Trust and Participants; written communications regarding the Trust to or from
participants; and other materials relating to the provision of services by the
Recordkeeper under this Agreement. The Recordkeeper will comply with any
reasonable request for such information and documents made by the Trust, or its
board of Trustees or any governmental body or self-regulatory organization. The
Recordkeeper agrees that, with respect to the Plans regarding which it is
providing services under this Agreement, the Recordkeeper will permit the Trust,
the Transfer Agent, or their representatives to have; reasonable access to it
personnel and records in order to facilitate the monitoring of the quality of
the services provided by the Recordkeeper. Notwithstanding anything herein to
the contrary, the Recordkeeper shall
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not be required to provide the names and addresses of Participants to the
Transfer Agent or the Trust, unless applicable law or regulation otherwise
requires.
5. Ability to Provide Services
The Recordkeeper agrees to notify the Trust promptly if for any reason it is
unable to perform its obligations under this Agreement.
6. Compensation
A. In consideration of performance of the services by the Recordkeeper
hereunder, the Trust will compensate the Recordkeeper ________________
as to which the Trust and the Recordkeeper agree from time-to-time in
writing.
B. The Recordkeeper will permit the Trust and their representatives
(including counsel and independent accounts) with reasonable access to
its records to enable the Trust to verify that the Recordkeeper's
charges hereunder comply with the provisions of this Agreement. Such
access shall include, but not be limited to, up to four on-site
inspections of the Recordkeeper's records each calendar year.
7. Indemnification
The Recordkeeper shall indemnify and hold harmless the Trust from and
against any and all losses and liabilities that it may incur, including without
limitation reasonable attorneys' fees, expenses and costs arising out of or
related to the performance or non-performance of the Recordkeeper of its
responsibilities under this Agreement, excluding, however, any such claims,
suits, loss, damage or costs caused by, contributed to or arising from any
non-compliance by the Trust with its obligations under this Agreement, as to
which the Trust as pertinent, shall indemnify, hold harmless and defend the
Recordkeeper on the same basis as set forth above.
8 Termination
This Agreement may be terminated at any time by either parry hereto
upon ninety (90) days written notice to the other. The provisions of paragraphs
4 and 7 shall continue in full force and effect after termination of this
Agreement.
9. Limitation of Liability of the Trustees and Shareholders
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust. The execution and delivery of this Agreement has been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind
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<PAGE> 5
only the trust property of the Trust as provided in the Trust's Agreement and
Declaration of Trust.
10. Miscellaneous
This Agreement represents the entire Agreement between the parties with
regard to the matters described herein and may not be modified or amended except
by written instrument executed by all parties. This Agreement may not be
assigned by either party hereto without the prior written consent of the other
parties. This Agreement is made and shall be construed under the laws of the
State of Ohio. This Agreement supersedes all previous agreements and
understandings between the parties with respect to its subject matter. If any
provision of the Agreement shall be held or made invalid by a statute, rule,
regulation, decision of a tribunal or otherwise, the remainder of the Agreement
shall not be affected thereby.
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
THE ONE GROUP
By: _______________________________
Title: ____________________________
___________________________________ (Recordkeeper)
By: _______________________________
Title: ____________________________
79
<PAGE> 1
Exhibit (9)(ee)
Form of Order Processing Agreement
80
<PAGE> 2
ORDER PROCESSING AGREEMENT
AGREEMENT made as of _____________, by and between ____________________
("Recordkeeper") and The One Group(R) (the "Fund Company").
WHEREAS, the Recordkeeper and the Fund Company have entered into an Agency
Agreement, which is incorporated herein by reference, under which the Fund
Company will retain the Recordkeeper to perform certain recordkeeping and
accounting services and functions with respect to transactions in shares of
series ("Funds") of the Fund Company made by or on behalf of participants in
certain employee pension benefit plans as that term is defined in Section 3(2)A)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
("Plans");
WHEREAS, pursuant to the Agency Agreement, the Recordkeeper has been deemed the
agent of the Fund Company for the limited purpose of receiving instructions
("Instructions") in proper form from participants, beneficiaries or plan
sponsors (collectively, "Participants") from which are derived orders ("Orders")
for the purchase, redemption and exchange of Fund shares; and
WHEREAS, the Recordkeeper is responsible for transmitting such Orders to the
Fund Company's transfer agent.
NOW THEREFORE, in consideration of the foregoing and the mutual promises set
forth below, the parties hereto agree as follows:
1. Provision of Net Asset Value. The Fund Company or its designee shall
furnish the Recordkeeper with the confirmed net asset value ("NAV")
information as of the close of trading on the New York Stock Exchange
(generally, 4:00 p.m., Eastern Time ("ET")) ("Market Close") on any day
that the Fund Company is open for business ("Business Day"), and
dividend and capital gains information as it arises. The Fund Company
or its designee shall use its best efforts to provide such information
by 6:30 p.m., ET on each Business Day.
2. The Recordkeepers Receipt and Transmission of Orders.
a) As provided in the Agency Agreement, the Recordkeeper will
aggregate all purchase, redemption and exchange Instructions
made by or on behalf of Plan Participants and communicate to
the Fund Company an aggregate purchase, redemption or exchange
Order.
b) The Recordkeeper agrees that (i) Orders derived from
Participant Instructions received by the Recordkeeper prior to
the Market Close on any Business Day of the Fund Company, as
defined in the Fund Company's registration statement, ("Day
1") will be electronically transmitted to the Fund Company by
5:00 a.m., ET on the next Business Day (such Orders are
referred to as "Day 1 Trades"); and (ii) orders derived from
Instructions received by the Recordkeeper after the Market
Close ("Day 2 Trades") on Day 1 will be electronically
transmitted to the Fund Company on the next Business Day
following Day 1 ("Day 2").
81
<PAGE> 3
c) If the Recordkeeper cannot electronically transmit Day 1
Trades by 5:00 a.m. on Day 2, the Recordkeeper will transmit
such Orders by facsimile prior to the Market Open (generally
7:00 a.m.) on Day 2.
3. Pricing of Orders. The Fund Company agrees that Day 1 Trades will be
effected at the NAV calculated as of the Market Close on Day 1,
provided that such trades are received by the Fund Company by 5:00
a.m., ET on Day 2 or prior to 7:00 a.m. on Day 2; and Day 2 Trades will
be effected at the NAV calculated as of the Market Close on Day 2,
provided they are received by the Fund Company by 5:00 a.m., ET on Day
3 or prior to 7:00 a.m. on Day 3. The Fund Company agrees that,
consistent with the foregoing, Day 1 Trades will have been received by
the Fund Company prior to the Market Close on Day 1, and Day 2 trades
will have been received by the Fund Company prior to the Market Close
on Day 2 for all purposes, including, without limitation, effecting
distributions.
4. Confirmations. The Fund Company will send a confirmation of each
Business Day's Order via electronic transmission or facsimile by the
Market Close on Day 2 for Day 1 Trades received by 5:00 a.m. on Day 2.
5. Role of the Recordkeeper. The parties acknowledge and agree that,
except as specifically provided in this Agreement and for the sole and
limited purposes set forth herein, the Recordkeeper acts as agent for
the Plans in connection with the effectuation of Orders subject to this
Agreement. The parties agree that the Recordkeeper is not an agent of
the Fund Company other than as provided herein and in the Agency
Agreement.
6. Books and Records. To the extent required by the Investment Company Act
of 1940 (the "1940 Act"), as amended, and the rules thereunder, all
records maintained by the Recordkeeper hereunder are the property of
the Fund Company and will be preserved, maintained and made available
in accordance with the 1940 Act and the rules thereunder. Copies, or if
required, originals, of such records shall be surrendered promptly to
the Fund Company and its agents (or independent accountants) upon
request. This Section 6 shall survive termination of this Agreement.
7. Representations of the Parties.
Each party represents and warrants to the other party that:
(a) It is duly organized, validly existing and in good standing
under the laws of its state of organization or incorporation;
(b) It has legal power and authority to carry on its business, and
is registered or licensed as required, in each jurisdiction
where it conducts its business;
(c) The Fund Company is duly registered as a registered investment
company under the Investment Company Act of 1940 and the
Recordkeeper is duly registered as a transfer agent under
Section 17A of the Securities Exchange Act of 1934.
8. Verification. Each party shall, as soon as practicable after
notification that a report, notification or other information has been
transmitted by the other party via facsimile or other electronic
transmission, confirm the receipt of such report, notification or other
82
<PAGE> 4
information. Such confirmation shall be in oral, written or electronic
format. In the absence of such confirmation, a party to whom the
transmission was sent shall not be held liable for any failure to act
in accordance with the transmission, and absent evidence to the
contrary, the sending party may not claim that the transmission was
received by the other party. Each party shall promptly notify the other
of any errors, omission or interruptions in, or delay or unavailability
of, any such transmission as promptly as possible.
9. Limitation of Liability. The Recordkeeper shall not be liable to the
Fund Company for any loss or damage, including counsel fees and court
costs, whether or not resulting from its acts or omissions to act
hereunder or otherwise hereunder, unless the loss or damage arises out
of the Recordkeeper's own bad faith, willful misfeasance, negligence or
from its reckless disregard of its obligations and duties.
The Fund Company shall not be liable to the Recordkeeper for any loss
or damage, including counsel fees and court costs, whether or not
resulting from its acts or omissions to act hereunder or otherwise
hereunder, unless the loss or damage arises out of the Fund Company's
own bad faith, willful misfeasance, negligence or from its reckless
disregard of its obligations and duties.
10. Termination. The Fund Company will provide the Recordkeeper with ninety
(90) days prior written notice if purchase Orders may no longer be
effected in accordance with this Agreement. Such termination shall not
affect the remaining provisions of this Agreement and redemption Orders
shall continue to be effected. Either party may terminate this
Agreement upon ninety (90) day's prior written agreement to the Fund
Company.
11. Entire Agreement. This Agreement represents the entire agreement
between the parties, supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, and shall not be
modified or amended except by a writing signed by both parties.
12. Notices. Unless otherwise specified, all notices and other
communications shall be in writing and shall be duly given if hand
delivered, delivered by facsimile with written confirmation, or mailed
by first class mail to the following addresses:
If to the Fund Company:
The One Group
Attn: Mark Redman
3435 Stelzer Road
Columbus, Ohio 43219
If to the Recordkeeper:
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<PAGE> 5
13. Severability. If any provision of this Agreement are held or made
invalid by a statute, rule, regulation , decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected and,
to this extent, the provisions of this Agreement shall be deemed to be
severable.
14. Governing Law. This Agreement shall be governed by the laws of the
state of Ohio, except as such laws are superseded by or preempted by
any Federal law.
15. Assignment. This Agreement may not be assigned by either party without
the prior written consent of the other party.
16. Dispute Resolution and Arbitration. Any controversy or claim arising
out of or relating to this Agreement, or the breach of the same which
gives rise to a remedy at law, shall be settled through consultation
and negotiation in good faith and a spirit of mutual cooperation.
However, if those attempts fail, the parties agree that any
misunderstandings or disputes arising from this Agreement shall be
decided by arbitration which shall be conducted, upon request by either
party, before three (3) arbitrators (unless both parties agree on one
(1) arbitrator) designated by the American Arbitration Association (the
"AAA"), in accordance with the terms of the Commercial Arbitration
Rules of the AAA, and, to the maximum extent applicable, the United
States Arbitration Act (Title 9 of the United States Code), or if such
Act is not applicable, any substantially equivalent Ohio state law. The
parties further agree that the arbitrator(s) will decide which party
must bear the expenses of the arbitration proceedings. The arbitration
will take place in Columbus, Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date set forth above.
THE ONE GROUP
By:________________________ By:__________________________
Name:_____________________ Name:________________________
Title:______________________ Title:_______________________
84
<PAGE> 1
Exhibit (10)
Opinion and Consent of Counsel
<PAGE> 2
ROPES & GRAY
ONE FRANKLIN SQUARE
1301 K STREET, N.W.
SUITE 800 EAST
WASHINGTON, DC 20005-3333
(202) 626-3300
FAX: (202) 626-3861
ONE INTERNATIONAL PLACE 30 KENNEDY PLAZA
BOSTON, MA 02110-2664 PROVIDENCE, RI 089021-2588
(617) 951-7000 (401) 458-4400
FAX: (817) 881-7050 FAX: (401) 498-4401
WRITER'S DIRECT DIAL NUMBER: (202) 626-3925
April 26, 1999
One Group(R) Mutual Funds
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
You have registered under the Securities Act of 1933, as amended (the
"1933 Act") an indefinite number of shares of beneficial interest ("Shares") of
The One Group(R) ("Trust"), as permitted by Rule 24f-2 under the Investment
Company Act of 1940, as amended (the "1940 Act"). You propose to file a
post-effective amendment on Form N-1A (the "Post-Effective Amendment") to your
Registration Statement in order to register under the 1933 Act and the 1940 Act
shares of the Funds of the Trust.
We have examined your Agreement and Declaration of Trust on file in the
office of the Secretary of The Commonwealth of Massachusetts and the Clerk of
the City of Boston. We have also examined a copy of your Code of Regulations and
such other documents, receipts and records as we have deemed necessary for the
purpose of this opinion.
Based on the foregoing, we are of the opinion that the issue and sale
of authorized but unissued Shares of the Funds have been duly authorized under
Massachusetts law. Upon the original issue and sale of your authorized but
unissued Shares and upon receipt of the authorized consideration therefor in an
amount not less than the net asset value of the Shares established and in force
at the time of their sale, the Shares issued will be validly issued, fully paid
and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust provides for indemnification out
of the property of a particular series of Shares for all loss and expenses of
any shareholder of that series held personally liable solely by reason of his
being or having been a shareholder. Thus, the risk of shareholder liability is
limited to circumstances in which that series of Shares itself would be unable
to meet its obligations.
We understand that this opinion is to be used in connection with the
filing of the Post-Effective Amendment. We consent to the filing of this opinion
with and as part of your Post-Effective Amendment.
Sincerely,
/s/ Ropes & Gray
Ropes & Gray
7072038.01
2
<PAGE> 1
Exhibit (11)(a)
Consent of PricewaterhouseCoopers LLP
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 49 to the Registration Statement on Form N-1A (File No. 2-95973) of One
Group Mutual Funds, of our reports dated August 18, 1998 on our audits of the
financial statements and financial highlights of the U.S. Treasury Securities
Money Market Fund, the Prime Money Market Fund, the Municipal Money Market Fund,
the Ohio Municipal Money Market Fund, the Ultra Short-Term Income Fund, the
Limited Volatility Bond Fund, the Government Bond Fund, the Treasury & Agency
Fund, the Intermediate Tax-Free Bond Fund, the Municipal Income Fund, the
Kentucky Municipal Bond Fund, the Ohio Municipal Bond Fund, the Louisiana
Municipal Bond Fund, the West Virginia Municipal Bond Fund, the Arizona
Municipal Bond Fund, the Treasury Only Money Market Fund, the Government Money
Market Fund, the Asset Allocation Fund, the Income Equity Fund, the Equity Index
Fund, the Value Growth Fund, the Large Company Value Fund, the Disciplined Value
Fund, the Large Company Growth Fund, the Growth Opportunities Fund, the Small
Capitalization Fund, the International Equity Index Fund, the Investor Growth
Fund, the Investor Growth & Income Fund, the Investor Balanced Fund, and the
Invesor Conservative Growth Fund constituting One Group Mutual Funds which
reports are included in the Annual Reports to Shareholders for the year ended
June 30, 1998. We also consent to the references to our Firm under the caption
"Independent Accountants" in the Prospectuses and "Experts" in the Statement of
Additional Information relating to One Group Mutual in this Post-Effective
Amendment No. 49 to the Registration Statement on Form N-1A (File No. 2-95973).
PricewaterhouseCoopers LLP
Columbus, Ohio
April 26, 1999
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form N-1A of our reports dated
February 12, 1999 included herein (or incorporated by reference) in the Pegasus
Funds, Pegasus Money Market Funds and Pegasus Cash Management Funds Annual
Reports to Shareholders for the year ended December 31, 1998 and to all
references to our firm included in this Post Effective Amendment No. 50 to the
One Group's registration statement under the Securities Act of 1933.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
April 26, 1999.
<PAGE> 1
Exhibit (11)(c)
Consent of Ropes & Gray
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our name and the references to our firm
under the caption "Legal Counsel" and "Experts" included in or made a part of
Post-Effective Amendment No. 49 to the Registration Statement of the One
Group(R) Mutual Funds (Nos. 2-95973 and 811-4236) on Form N-1A under the
Securities Act of 1933, as amended.
ROPES & GRAY
Washington, D.C.
April 26, 1999
