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ONE GROUP MUTUAL FUNDS
1111 POLARIS PARKWAY
COLUMBUS, OHIO 43271-1235
CIRCLE INCOME SHARES, INC.
P.O BOX 77004
INDIANAPOLIS, INDIANA 46277-7004
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information contains information which may
be of interest to investors but which is not included in the Combined
Prospectus/Proxy Statement (the "Prospectus") of One Group Mutual Funds dated
November 20, 2000 relating to the transfer of the assets and liabilities of
Circle Income Shares, Inc. ("Circle Income") to One Group Income Bond Fund. This
Statement of Additional Information is not a prospectus and is authorized for
distribution only when it accompanies or follows delivery of the Prospectus.
This Statement of Additional Information should be read in conjunction with the
Prospectus. A copy of the Prospectus may be obtained, without charge, by calling
1-800-338-4345.
The Prospectus and Statement of Additional Information for One Group
Mutual Funds dated November 1, 2000, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The audited
financial statements and related independent accountant's report for One Group
Income Bond Fund contained in the Annual Report dated June 30, 2000, are hereby
incorporated by reference. Copies of these materials may be obtained by calling
1-800-338-4345.
The Prospectus for Circle Income dated November 20, 1975 has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The audited financial statements and related independent accountant's
report for Circle Income contained in the Annual Report dated June 30, 2000, are
hereby incorporated by reference. Copies of these materials may be obtained by
calling 1-800-338-4345.
The Date of This Statement Of Additional Information is November 20,
2000.
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TABLE OF CONTENTS
PAGE
Management of Circle Income B-3
- Directors and Officers B-3
- Investment Advisory Contract B-6
- Custodian Contract B-7
- Independent Accountants B-8
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MANAGEMENT OF CIRCLE INCOME
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DIRECTORS AND OFFICERS
Overall responsibility for management of Circle Income Shares, Inc.
rests with the Board of Directors who were elected by the Shareholders. The
Directors are responsible for making major decisions about Circle Income's
investment objectives and policies, but delegate the day-to-day administration
of Circle Income to the officers of Circle Income. There are currently five
Directors, two of whom are "interested persons" of Circle Income within the
meaning of that term under the 1940 Act. The Directors and Officers of Circle
Income, their addresses, and principal occupations during the past five years
are set forth below.
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH CIRCLE INCOME DURING THE PAST FIVE YEARS
---------------- ------------------ --------------------------
<S> <C> <C>
Frederick R. Ford Director since April 1984. Dr. Ford is currently Executive Vice
President and Treasurer Emeritus of Purdue
University. He retired June 30, 1998 from
Purdue University where he had served as
Executive Vice President and Treasurer since
January 1974. As the chief financial and
business officer, he managed all securities,
properties, and funds belonging to the
University and all trusts in which the
University had interests. In addition, he
was responsible for all business operations,
physical plant, housing and food services,
internal auditing and investments.
Bruce J. Glor* Director and President since Mr. Glor is a consultant. Mr. Glor joined
November 1996. Bank One in June 1994 as Senior Vice
President for Bank One, Akron, NA where he
managed the Akron/Canton office. From
January 1996 to October 2000, Mr. Glor served
as Executive Vice President and Managing
Director of the Indiana Investment
Management Group of Bank One Trust Company,
NA. As Managing Director, he is responsible
for Retirement Services, Personal Investing
and Trust business in the state. He is also
a member of the Senior Management Committee
and Indiana Leadership Council. Prior to
joining Bank One, Mr. Glor was Regional
Manager for Marine Midland Bank's Private
Clients Group.
Charles E. Greer Director since April 1999. Mr. Greer is an attorney, entrepreneur and
serves as a Chapter II bankruptcy trustee
for the Southern District of Indiana. Either
as bankruptcy trustee or temporary CEO, he
has operated a number of businesses and is
currently the owner of a construction
business in Indianapolis, Indiana. Prior to
his present positions, he was a partner in
the Indianapolis law firm of Ice Miller
Donadio and Ryan.
Steven R. Hazelbaker Director since April 1997. Mr. Hazelbaker is Executive Vice President and
Chief Operating Officer of Meridian Insurance
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Group, Inc. From April 1994 to July 2000,
Mr. Hazelbaker served as Chief Financial
Officer and Treasurer of Meridian Insurance
Group, Inc. As the Chief Financial Officer,
he is responsible for investments, cash
management, financial reporting, taxes,
billings and collections. Prior to joining
Meridian, Mr. Hazelbaker was a partner
with Coopers & Lybrand (now
PricewaterhouseCoopers LLP).
James D. Keckley* Director since April 1973. Mr. Keckley is retired. Prior to his
retirement on January 1, 1990, Mr. Keckley
served as Executive Vice President of Bank
One, Indiana, NA. As Executive Vice
President of Bank One, Indiana, NA, he was
responsible for the Private Banking Division
of the Trust & Asset Management Group.
Jeffrey W. Fountain Executive Vice President Mr. Fountain has been a Corporate Analyst,
since March 21, 1994; Vice Risk Management Policy and Research, Banc
President from January 28, One Investment Advisors Corporation, since
1988 to March 21, 1994. March 31, 2000. Prior to that time, Mr.
Fountain has been the Director of Fixed
Income Research, Banc One Investment
Advisors Corporation, since 1992
Timothy P. Holihen Vice President since March Mr. Holihen has been a Managing Director,
21, 1994 National Accounts Group, Banc One Investment
Advisors Corporation, since June 1, 1994.
Jeffrey D. Sitzman Vice President since January Mr. Sitzman has been a Senior Corporate
21, 2000 Analyst, Risk Management Policy and
Research, Banc One Investment Advisors
Corporation, since October 20, 1997. Prior
to joining Banc One Investment Advisors
Corporation in 1997, Mr. Sitzman was a
Senior Investment Analyst, Anthem Inc. from
1992 to 1997.
Thomas F. Wilson Vice President since August Mr. Wilson has been a Portfolio Manager,
9, 1990 Banc One Investment Advisors Corporation,
since May 2, 1983.
Robert L. Young Treasurer since November 13, Mr. Young has been a Director, Mutual Fund
1997 Administration, One Group Administrative
Services, Inc., since October 1999. From
December 1996 to October 1999, Mr. Young was
Managing Director, Mutual Fund
Administration, Banc One Investment Advisors
Corporation. Prior to joining Banc One
Investment Advisors Corporation in 1996, Mr.
Young was a Senior Audit Manager for
Deloitte & Touche.
Jacqueline A. Weitz Secretary since January 17, Ms. Weitz has been Vice President and Client
1997 Service Officer, Banc One Investment Management
Group since 1995.
</TABLE>
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The Compensation Table below sets forth the total compensation for the
Directors and certain Officers of Circle Income for the fiscal year ended June
30, 2000.
<TABLE>
<CAPTION>
COMPENSATION TABLE (1)
PENSION OR ESTIMATED TOTAL
AGGREGATE RETIREMENT BENEFITS ANNUAL COMPENSATION
NAME OF PERSON, COMPENSATION ACCRUED AS PART OF BENEFITS UPON FROM CIRCLE INCOME
POSITION FROM CIRCLE INCOME COMPANY EXPENSES RETIREMENT COMPLEX
-------- ------------------ ---------------- ---------- -------
<S> <C> <C> <C> <C>
Frederick R. Ford $5,000 NA NA $5,000
Bruce J. Glor* $0 NA NA $0
Charles E. Greer $5,000 NA NA $5,000
Steven R. Hazelbaker $5,000 NA NA $5,000
James D. Keckley* $4,600 NA NA $4,600
</TABLE>
*Mr. Glor and Mr. Keckley are interested persons as that term is defined in the
Investment Company Act of 1940 and the rules thereunder.
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INVESTMENT ADVISORY CONTRACT
Circle Income and Bank One Indianapolis, N.A., a wholly owned
subsidiary of Bank One Corporation, entered into an Investment Advisory Contract
(the "Investment Advisory Contract") on November 4, 1993. On November 19, 1997,
pursuant to a Transfer & Assumption of Contract, Bank One, Indiana, N.A.
transferred the Investment Advisory Contract to Banc One Investment Advisors
Corporation (the "Adviser"), an indirect, wholly-owned subsidiary of Bank One
Corporation and an affiliate of Bank One, Indiana, N.A. Under the Investment
Advisory Contract the Adviser provides investment management and advisory
services to Circle Income. The Adviser advises Circle Income on the composition
of its investment portfolio, bears the cost of research, statistical analysis
and continuous supervision of the portfolio and recommends which securities are
bought or sold and in what amounts. In addition to providing management and
investment advisory services, the Adviser is required to keep the books and
financial records of Circle Income and to furnish the services of individuals to
perform executive, administrative and clerical services. The Adviser is required
to compensate all personnel, officers and directors of Circle Income who are
officers, directors or employees of the Adviser or any of its affiliates and to
bear the administrative expenses of Circle Income's Dividend Reinvestment Plan.
Expenses in connection with the sale of Circle Income shares are borne
by Circle Income. Such expenses include the expenses of the registration and
qualification of Circle Income's shares under the Securities Act of 1933 and the
securities laws of various states; legal, auditing, custodian's, transfer
agent's and registrar's fees; the costs of printing stock certificates, the
registration statement, preliminary and final prospectuses; prospectus
distribution costs; Blue Sky memoranda and surveys; and any fees payable to the
National Association of Securities Dealers, Inc.
Other than the expenses specifically assumed by the Adviser under the
Investment Advisory Contract, all expenses incurred in the operation of Circle
Income are borne by Circle Income, including brokerage commissions on portfolio
transactions; salaries, fees and expenses of officers, directors and employees
who are not officers, directors or employees of the Adviser or any of its
affiliates; taxes; transfer agent's, registrar's, dividend disbursing agent's
and custodian's fees; auditing and legal fees; costs of information obtained
from sources other than the Adviser or any of its affiliates relating to the
valuation of portfolio securities; costs and expenses incident to any additional
public offering of shares of Circle Income; certain extraordinary expenses; and
the costs and expenses, including postage, of stockholder reports and proxy
materials.
Under the Investment Advisory Contract and subject to the limitations
set forth below, the Adviser is entitled to receive a monthly fee which on an
annual basis would amount to approximately .50% of the first $50 million of
Circle Income's average weekly net assets and .40% of Circle Income's average
weekly net assets in excess of $50 million. The fee is computed on a weekly
basis and is payable monthly. There is no additional advisory fee based on
portfolio income. During the fiscal years ended June 30, 1999, and June 30,
2000, advisory fees paid to the Adviser by Circle Income amounted to $165,900
and $159,100, respectively.
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The Investment Advisory Contract provides that if and to the extent
that the aggregate expenses of every character incurred by Circle Income during
any fiscal year as of any fee payment date (including, but not limited to, fees
of the Adviser, but excluding interest, taxes, the expenses of this and any
future offerings and, where permitted, extraordinary expenses) shall exceed 1
1/2% of the first $30,000,000 of average weekly net assets during the fiscal
year to such date and 1% of any additional average weekly net assets, the
Adviser will waiver further fees, and to the extent such expenses exceed the
lesser of (i) 25% of Circle Income's gross income for such year, including gains
from the sale of securities, or (ii) 1 1/2% of the first $30,000,000 of average
weekly net assets for the fiscal year plus 1% of any additional average weekly
net assets, the Adviser shall be indebted to Circle Income as of the last day of
such fiscal year, and shall remit payment to Circle Income not later than the
last day of the first month of the next succeeding fiscal year, in the amount
equal to the amount of such excess.
Under the Investment Advisory Contract, the Adviser is obligated to
advise with respect to Circle Income's portfolio with the same skill and care
with which it administers its other fiduciary accounts and to conform to
applicable laws and regulations, including the regulations and rulings of the
Comptroller of the Currency of the United States relating to fiduciary powers of
national banks. These regulations provide, in general, that assets managed by a
national bank as fiduciary shall not be invested in stock or obligations of, or
property acquired from, the Adviser, any of its affiliates or their directors,
officers or employees or other individuals with whom there exists such a
connection, or organizations in which there exists such an interest, as might
affect the exercise of the best judgment of the Adviser. They further provide
that fiduciary assets shall not be sold or transferred, by loan or otherwise, to
the Adviser or persons connected with the Adviser as described above. In
addition, the Investment Advisory Contract states that the Adviser will not
invest other fiduciary accounts in Circle Income's shares, make loans for the
purpose of purchasing or carrying shares of Circle Income, or make loans to
Circle Income. The Investment Advisory Contract also provides that the Adviser
will maintain and continue its policy and practice of conducting the business of
its Trust and Asset Management Group independently of its commercial banking
group. Therefore, the investment decisions of the Trust and Asset Management
Group are made without consideration of customer relationships with the
commercial banking group and information is not sought or obtained from the
commercial banking group regarding any issuer of securities. Circle Income does
not acquire securities from or sell securities to accounts managed by the Trust
and Asset Management Group.
On July 23, 1993, the Investment Advisory Contract was first approved
by the Board of Directors of Circle Income, including a majority of the
directors who were not parties to, or "interested persons" (as defined in the
Investment Company Act of 1940) of either party to, the Investment Advisory
Contract. The Investment Advisory Contract was last approved by the shareholders
of Circle Income on November 4, 1993, and has been reapproved annually by the
Board of Directors.
CUSTODIAN CONTRACT
Circle Income and Bank One Trust Company, N.A., a wholly owned
subsidiary of Bank One Corporation entered into a Custodian Agreement on
December 18, 1988. Bank One Trust Company, N.A. maintains it principal offices
at 100 E. Broad Street, Columbus, Ohio 43271.
Under the Custodian Agreement, Bank One Trust Company, N.A.:
(i) maintains a separate account or accounts in the name of Circle
Income;
(ii) makes receipts and disbursements of money on behalf of Circle
Income;
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(iii) collects and receives all income and other payments and
distributions on account of the Circle Income' portfolio
securities;
(iv) responds to correspondence from security brokers and others
relating to its duties; and
(v) makes periodic reports to Circle Income's Board of Directors
concerning Circle Income's operations.
Bank One Trust Company, N.A. is entitled to compensation for its
services and for reimbursement of reasonable out-of-pocket expenses according to
the following schedule:
MARKET VALUE
OF FEE: First $1 million $3.00 per $1,000
Next $1 million $1.50 per $1,000
Next $3 million $1.00 per $1,000
Next $5 million $ .50 per $1,000
Next $10 million $ .25 per $1,000
Minimum account fee of $3,000 per year.
TRANSACTION FEES: Transactions
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DTC/Fed. Eligible $10.00
Physical $20.00
Options and Futures $35.00
Agency $40.00
Check Cut $5.00
Outgoing Wire $10.00
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP, Huntington Center, Suite 2100, 41 South High
Street, Columbus, Ohio 43215-6160, serves as independent accountants to Circle
Income. Arthur Andersen provides general accounting and auditing services to
Circle Income.
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