<PAGE> 1
ONE GROUP(R) INVESTOR FUNDS
ANNUAL REPORT
For the year ended June 30, 2000
[One Group Logo]
ONE GROUP(R) INVESTOR CONSERVATIVE GROWTH FUND
ONE GROUP(R) INVESTOR BALANCED FUND
ONE GROUP(R) INVESTOR GROWTH & INCOME FUND
ONE GROUP(R) INVESTOR GROWTH FUND
<PAGE> 2
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
This material must be preceded or accompanied by a current prospectus.
<PAGE> 3
Table of Contents
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
Portfolio Performance Review................................................ 2
Schedules of Portfolio Investments.......................................... 9
Statements of Assets and Liabilities......................................... 13
Statements of Operations..................................................... 14
Statements of Changes in Net Assets.......................................... 15
Schedules of Capital Stock Activity.......................................... 17
Financial Highlights......................................................... 19
Notes to Financial Statements................................................ 35
Report of Independent Accountants............................................ 40
1
<PAGE> 4
One Group Investor Funds
Portfolio Performance Review
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
HOW DID THE FUNDS PERFORM?
For the year ended June 30, 2000, the One Group Investor Funds posted the
following total returns for their respective I share classes:
- One Group Investor Conservative Growth Fund, 4.52%
- One Group Investor Balanced Fund, 6.69%
- One Group Investor Growth & Income Fund, 8.10%
- One Group Investor Growth Fund, 10.17%
For information on other share classes and performance comparisons to indexes,
please see pages 5-8.
HOW WOULD YOU CHARACTERIZE THE STOCK MARKET
DURING THE LAST FISCAL YEAR?
Volatility--in its extreme form--was the operative word for the last 12 months.
As the battle between growth and value, or fundamentals and valuation, played
out, the market experienced wild swings. In late 1999 through early 2000 we saw
many technology and other growth stocks take charge because their fundamentals
were stronger. They exhibited greater revenue growth rates and
earnings-per-share growth rates that pushed their valuations to levels not seen
in years.
In addition, the last quarter of 1999 saw huge money inflows toward new economy,
or "concept," stocks, regardless of valuation. The rise and fall of the concept
stock played a huge part in market performance. The company behind a concept
stock typically has a plan, but little or no revenues or earnings. The market
was filled with these concepts, including internet ideas, business-to-business
ideas and optical networking ideas, to name a few. When investors were willing
to buy these concepts at any price, other stocks fared poorly in a relative
sense.
The tightening actions of the Federal Reserve have tempered some of this
enthusiasm so far in 2000. Many of 1999's big winners, including the concept
stocks, fell back to earth as valuation concerns ignited a correction among
technology stocks. Investors took note that valuations were getting more and
more unreasonable, particularly because many of the high-flying internet stocks
didn't even have any earnings on which to base valuations. Also, it became
apparent that the rosy projections for many of the high-growth technology issues
wouldn't pan out. All of this helped make value stocks more attractive,
especially as the Federal Reserve continued to raise interest rates.
The high volatility that's been present since mid-March has placed emphasis on
sector neutrality and stock selection, two of Banc One Investment Advisors' key
strengths.
HOW WOULD YOU CHARACTERIZE THE BOND MARKET?
During the fiscal year interest rates increased as the U.S. economy continued to
surprise investors with high levels of income growth and low inflation.
Uncomfortable with the strong economic growth and potential for future
inflation, the Federal Reserve began a series of interest rate hikes that
eventually pushed up the federal funds rate by 1.75 percentage points. But, more
important, short-term market rates rose by more than 1 percentage point, causing
prices to decline on many of the securities our fixed income funds invest in.
In addition, spread volatility remained high during the year, and non-Treasury
securities underperformed. (Spreads refer to the differences in yields between
non-Treasury bonds, such as agency, corporate and mortgage-backed securities,
and comparable-maturity Treasury bonds. When spreads widen, prices on non-
Treasury bonds decline relative to Treasury bond prices, and vice versa.)
Several factors contributed to this volatility, including Y2K worries, concerns
about a more restrictive Federal Reserve, and speculation that government
surpluses would eliminate the federal debt. The U.S. Treasury began buying back
its long-term debt and some shorter-term debt. This decreased the supply of
Treasury securities, causing prices on available Treasuries to rise.
Furthermore, high levels of growth among certain government agencies led to
congressional scrutiny, causing investors to question the future status of
securities issued by these agencies. In this volatile environment,
higher-quality bonds outperformed lower-quality securities.
2
<PAGE> 5
One Group Investor Funds
Portfolio Performance Review, continued
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
WHAT WAS YOUR ASSET ALLOCATION STRATEGY?
All of the Investor Funds finished the fiscal year with neutral asset
allocations:
- One Group Investor Conservative Growth Fund: 30% equity funds, 70% fixed
income funds.
- One Group Investor Balanced Fund: 50% equity funds, 50% fixed income funds.
- One Group Investor Growth & Income Fund: 70% equity funds, 30% fixed income
funds.
- One Group Investor Growth Fund: 90% equity funds, 10% fixed income funds.
But, for approximately four months out of the last fiscal year, One Group
Investor Growth Fund and One Group Investor Growth and Income Fund each had a 1%
overweight toward equity funds. In addition, within each asset class we did make
some temporary, tactical moves. After several quarters of strong performance,
many growth stocks had achieved extremely high valuations. As such, in February
we reduced weightings to mid- and large-cap growth funds and increased
international fund exposure. In the Investor Balanced Fund, we overweighted
international funds by 1% and underweighted mid-cap funds by 1%. In the Investor
Growth and Income Fund and the Investor Growth Fund, we overweighted
international funds by 2% and underweighted mid- and large-cap funds by 1% each.
Style weightings remained neutral in the Investor Conservative Growth Fund.
In addition, we gradually increased the allocation to the One Group High Yield
Bond Fund in all portfolios except the Investor Conservative Growth Fund. We
took this action to complete the initiation of this important asset class into
the fund mix and to take advantage of the increasingly attractive long-term
prospects for this market segment.
WHAT WERE YOUR KEY STRATEGIES IN THE EQUITY ARENA?
Other than the strategic style moves mentioned above, we continued to maintain
broad equity diversification. The Investor Funds enjoyed varying exposure,
depending on the overall investment objective, to large-, mid- and small-cap
funds as well as international funds. This diversified approach helps limit risk
while offering return opportunities from a variety of market segments.
WHAT WERE YOUR KEY STRATEGIES WITHIN THE FIXED INCOME MARKET?
In this difficult fixed income environment, we favored short maturity,
high-grade investments. We also focused on slightly reducing duration to take
advantage of rising interest rates. (Duration is a measure of a fund's price
sensitivity to interest rate changes. A longer duration indicates greater
sensitivity; a shorter duration indicates less.) Instead of making "bets" on
interest rate movements by significantly altering duration, we prefer to
concentrate on the yield component of total return.
As such, our fund management teams emphasized select investments in the
corporate, asset-backed and mortgage-backed sectors. This strategy typically
allows the funds to capture yield advantages over Treasury securities. At the
same time, they focus on maintaining portfolios with good average credit
quality. During this past fiscal year, our focus on yield helped offset some of
the price decline caused by higher interest rates.
The best-performing funds included One Group Ultra Short-Term Bond Fund and One
Group Short-Term Bond Fund, primarily due to their short average maturities and
durations. One Group High Yield Bond Fund, in contrast, performed poorly due to
rising risk premiums and escalating credit problems within this sector of the
market.
WHAT IS YOUR OUTLOOK FOR THE FUNDS?
We expect economic growth to continue but at a slower pace, as the effects of
the Federal Reserve's interest rate hikes eventually take hold. We also expect
corporate earnings growth to remain attractive. But, in an environment where
interest rates are rising and growth is slowing, investors are not likely to get
much more multiple expansion. As such, we believe earnings alone will drive
stock prices higher in the coming year.
The outlook for the fixed income market has improved but is not yet rosy.
Additional interest rate increases may be possible over the coming fiscal year
if inflation
3
<PAGE> 6
One Group Investor Funds
Portfolio Performance Review, continued
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
picks up or the economy refuses to slow down. Any difficulties, though, should
be offset somewhat by the higher yields now available. In particular, risk
premiums are well above normal, and long-term return prospects are now at the
most attractive level since late 1994. As a result, we anticipate bonds will
provide a greater contribution to total return in the year ahead.
/s/ Richard R. Jandrain
Richard R. Jandrain, III
Chief Investment Officer of Equity Securities
Chairman, Asset Allocation Committee
Banc One Investment Advisors Corporation
Please refer to the prospectus and the accompanying financial statements for
more information about the Fund.
4
<PAGE> 7
One Group Investor Conservative Growth Fund
Portfolio Performance Review, continued
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 4.52% 8.51%
</TABLE>
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE AGGREGATE
CLASS I BOND INDEX LIPPER MIX
------- ---------------------- ----------
<S> <C> <C> <C>
12/96 10000 10000 10000
6/97 10600 10262 10476
6/98 11949 11153 11745
6/99 12787 11613 12311
6/00 13365 12145 13263
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 4.27% 8.11%
Class A* (1.21)% 6.50%
</TABLE>
* Reflects 5.25% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
AGGREGATE BOND
CLASS A CLASS A* INDEX LIPPER MIX
------- -------- --------------- ----------
<S> <C> <C> <C> <C>
12/96 10000 9479 10000 10000
6/97 10546 9997 10262 10476
6/98 11852 11235 11153 11745
6/99 12655 11995 11613 12311
6/00 13195 12507 12145 13263
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 3.48% 7.42%
Class B** (1.47)% 6.71%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
AGGREGATE BOND
CLASS B CLASS B** INDEX LIPPER MIX
------- --------- --------------- ----------
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 10000
6/97 10530 10530 10262 10476
6/98 11744 11744 11153 11745
6/99 12461 12461 11613 12311
6/00 12895 12595 12145 13263
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 3.48% 6.94%
Class C** 2.49% 6.94%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
AGGREGATE BOND
CLASS C CLASS C** INDEX LIPPER MIX
------- --------- --------------- ----------
<S> <C> <C> <C> <C>
7/97 10000 10000 10000 10000
6/98 11148 11148 10868 11212
6/99 11818 11818 11317 11752
6/00 12229 12229 11835 12660
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Conservative Growth Fund is measured against the
Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised
of U.S. Government, mortgage, corporate and asset-backed securities with
maturities of one to ten years. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management fees. By contrast, the performance of the
Fund reflects the deduction of these services as well as the deduction of sales
charges on Class A shares and applicable contingent deferred sales charges on
Class B and Class C shares.
The Lipper Mix consists of the average monthly returns of the Lipper 1000 Index
(20%), the Lipper International Fund Index (5%), and the Lipper Intermediate
U.S. Government Index (75%). The Lipper Universes consist of the equally
weighted average monthly return of all the funds within the category.
5
<PAGE> 8
One Group Investor Balanced Fund
Portfolio Performance Review, continued
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 6.69% 12.20%
</TABLE>
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE AGGREGATE
CLASS I BOND INDEX LIPPER MIX
------- ---------------------- ----------
<S> <C> <C> <C>
12/96 10000 10000 10000
6/97 10848 10262 10701
6/98 12695 11153 12288
6/99 14111 11613 13144
6/00 15055 12145 14532
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 6.43% 11.87%
Class A* 0.83% 10.19%
</TABLE>
* Reflects 5.25% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
AGGREGATE BOND
CLASS A CLASS A* INDEX LIPPER MIX
------- -------- --------------- ----------
<S> <C> <C> <C> <C>
12/96 10000 9479 10000 10000
6/97 10841 10275 10262 10701
6/98 12642 11983 11153 12288
6/99 13995 13266 11613 13144
6/00 14896 14119 12145 14532
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 5.58% 11.15%
Class B** 0.58% 10.51%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
AGGREGATE BOND
CLASS B CLASS B** INDEX LIPPER MIX
------- --------- --------------- ----------
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 10000
6/97 10822 10822 10262 10701
6/98 12537 12537 11153 12288
6/99 13792 13792 11613 13144
6/00 14561 14261 12145 14532
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 5.59% 10.36%
Class C** 4.59% 10.36%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
AGGREGATE BOND
CLASS C CLASS C** INDEX LIPPER MIX
------- --------- --------------- ----------
<S> <C> <C> <C> <C>
7/97 10000 10000 10000 10000
6/98 11566 11566 10868 11483
6/99 12728 12728 11317 12283
6/00 13439 13439 11835 13580
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Balanced Fund is measured against the Lehman
Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised of U.S.
Government, mortgage, corporate and asset-backed securities with maturities of
one to ten years. Investors are unable to purchase the index directly, although
they can invest in the underlying securities. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management fees. By contrast, the performance of the Fund reflects
the deduction of these services as well as the deduction of sales charges on
Class A shares and applicable contingent deferred sales charges on Class B and
Class C shares.
The Lipper Mix consists of the average monthly returns of the Lipper 1000 Index
(40%), the Lipper International Fund Index (5%), and the Lipper Intermediate
U.S. Government Index (55%). The Lipper Universes consist of the equally
weighted average monthly return of all the funds within the category.
6
<PAGE> 9
One Group Investor Growth & Income Fund
Portfolio Performance Review, continued
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 8.10% 15.05%
</TABLE>
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS I
------------------ ---------- -------
<S> <C> <C> <C>
12/96 10000 10000 10000
6/97 11750 10926 11087
6/98 15210 12842 13342
6/99 18456 14013 15225
6/00 19953 15889 16459
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 7.85% 14.97%
Class A* 2.21% 13.26%
</TABLE>
* Reflects 5.25% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P
SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS A CLASS A*
-------------- ---------- ------- --------
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 9479
6/97 11750 10926 11150 10568
6/98 15210 12842 13400 12701
6/99 18456 14013 15224 14430
6/00 19953 15889 16419 15563
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 7.04% 14.12%
Class B** 2.04% 13.51%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P
SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS B CLASS B**
-------------- ---------- ------- ---------
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 10000
6/97 11750 10926 11102 11102
6/98 15210 12842 13276 13276
6/99 18456 14013 14937 14937
6/00 19953 15889 15989 15689
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 7.10% 12.95%
Class C** 6.10% 12.95%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P
SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS C CLASS C**
-------------- ---------- ------- ---------
<S> <C> <C> <C> <C>
7/97 10000 10000 10000 10000
6/98 12944 11754 11908 11908
6/99 15708 12825 13450 13450
6/00 16981 14543 14405 14405
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth & Income Fund is measured against the S&P
SuperComposite 1500 Index, an unmanaged index generally representative of the
performance of large and small companies in the U.S. stock market. Investors are
unable to purchase the index directly, although they can invest in the
underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management fees. By contrast, the performance of the Fund reflects the deduction
of these services as well as the deduction of sales charges on Class A shares
and applicable contingent deferred sales charges on Class B and Class C shares.
The Lipper Mix consists of the average monthly returns of the Lipper 1000 Index
(60%), the Lipper International Fund Index (5%), and the Lipper Intermediate
U.S. Government Index (35%). The Lipper Universes consist of the equally
weighted average monthly return of all the funds within the category.
7
<PAGE> 10
One Group Investor Growth Fund
Portfolio Performance Review, continued
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 10.17% 18.15%
</TABLE>
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS I
------------------ ---------- -------
<S> <C> <C> <C>
12/96 10000 10000 10000
6/97 11750 11161 11350
6/98 15210 13342 14053
6/99 18456 14783 16419
6/00 19953 17222 18089
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 10.04% 17.69%
Class A* 4.28% 15.93%
</TABLE>
* Reflects 5.25% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P
SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS A* CLASS A
-------------- ---------- -------- -------
<S> <C> <C> <C> <C>
12/96 10000 10000 9479 10000
6/97 11750 11161 10696 11284
6/98 15210 13342 13203 13929
6/99 18456 14783 15368 16213
6/00 19953 17222 16910 17841
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 9.14% 17.24%
Class B** 4.14% 16.67%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P
SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS B** CLASS B
-------------- ---------- --------- -------
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 10000
6/97 11750 11161 11388 11388
6/98 15210 13342 13952 13952
6/99 18456 14783 16124 16124
6/00 19953 17222 17298 17598
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 9.08% 15.60%
Class C** 8.08% 15.60%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P
SUPERCOMPOSITE
1500 INDEX LIPPER MIX CLASS C** CLASS C
-------------- ---------- --------- -------
<S> <C> <C> <C> <C>
7/97 10000 10000 10000 10000
6/98 12944 11955 12242 12242
6/99 15708 13245 14157 14157
6/00 16981 15431 15443 15443
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth Fund is measured against the S&P
SuperComposite 1500 Index, an unmanaged index generally representative of the
performance of large and small companies in the U.S. stock market. Investors are
unable to purchase the index directly, although they can invest in the
underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management fees. By contrast, the performance of the Fund reflects the deduction
of these services as well as the deduction of sales charges on Class A shares
and applicable contingent deferred sales charges on Class B and Class C shares.
The Lipper Mix consists of the average monthly returns of the Lipper 1000 Index
(75%), the Lipper International Fund Index (10%), and the Lipper Intermediate
U.S. Government Index (15%). The Lipper Universes consist of the equally
weighted average monthly return of all the funds within the category.
8
<PAGE> 11
One Group Mutual Funds
Investor Conservative Growth Fund
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 2000
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (99.7%):
2,010 One Group Bond Fund, Class I........... $ 20,257
677 One Group Diversified Equity Fund,
Class I.............................. 10,189
222 One Group Diversified International
Fund, Class I........................ 3,982
186 One Group Diversified Mid Cap Fund,
Class I.............................. 4,040
581 One Group Equity Income Fund, Class
I.................................... 12,343
3,084 One Group Government Bond Fund,
Class I.............................. 29,421
1,159 One Group High Yield Bond Fund,
Class I.............................. 10,318
3,865 One Group Income Bond Fund, Class I.... 29,028
2,057 One Group Intermediate Bond Fund,
Class I.............................. 20,713
99 One Group International Equity Index
Fund, Class I........................ 2,136
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
457 One Group Large Cap Growth Fund,
Class I.............................. $ 12,193
766 One Group Large Cap Value Fund,
Class I.............................. 11,879
67 One Group Mid Cap Growth Fund,
Class I.............................. 2,002
144 One Group Mid Cap Value Fund, Class
I.................................... 1,942
4,200 One Group Prime Money Market Fund,
Class I.............................. 4,200
2,018 One Group Short-Term Bond Fund,
Class I.............................. 20,769
1,288 One Group Ultra Short-Term Bond Fund,
Class I.............................. 12,531
--------
Total Investment Companies 207,943
--------
Total (Cost $207,439) (a) $207,943
========
</TABLE>
------------
Percentages indicated are based on net assets of $208,652.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $445. Cost for federal income tax purposes differs from market
value by unrealized appreciation (depreciation) of securities as follows
(amount in thousands):
<TABLE>
<S> <C>
Unrealized appreciation...................... $ 6,066
Unrealized depreciation...................... (6,007)
-------
Net unrealized appreciation (depreciation)... $ 59
=======
</TABLE>
See notes to financial statements.
9
<PAGE> 12
One Group Mutual Funds
Investor Balanced Fund
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 2000
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (100.4%):
6,500 One Group Bond Fund, Class I........... $ 65,521
4,399 One Group Diversified Equity Fund,
Class I.............................. 66,208
1,000 One Group Diversified International
Fund, Class I........................ 17,964
811 One Group Diversified Mid Cap Fund,
Class I.............................. 17,595
5,647 One Group Government Bond Fund, Class
I.................................... 53,869
4,675 One Group High Yield Bond Fund,
Class I.............................. 41,605
10,391 One Group Income Bond Fund, Class I.... 78,035
2,296 One Group Intermediate Bond Fund, Class
I.................................... 23,119
818 One Group International Equity Index
Fund, Class I........................ 17,708
2,309 One Group Large Cap Growth Fund,
Class I.............................. 61,599
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
3,589 One Group Large Cap Value Fund,
Class I.............................. $ 55,636
1,045 One Group Mid Cap Growth Fund,
Class I.............................. 31,075
2,111 One Group Mid Cap Value Fund, Class
I.................................... 28,366
5,980 One Group Prime Money Market Fund,
Class I.............................. 5,980
1,684 One Group Short-Term Bond Fund,
Class I.............................. 17,324
1,188 One Group Ultra Short-Term Bond Fund,
Class I.............................. 11,561
--------
Total Investment Companies 593,165
--------
Total (Cost $567,878) (a) $593,165
========
</TABLE>
------------
Percentages indicated are based on net assets of $590,950.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $2,626. Cost for federal income tax purposes differs from
market value by unrealized appreciation (depreciation) of securities as
follows (amount in thousands):
<TABLE>
<S> <C>
Unrealized appreciation...................... $ 38,988
Unrealized depreciation...................... (16,327)
--------
Net unrealized appreciation (depreciation)... $ 22,661
========
</TABLE>
See notes to financial statements.
10
<PAGE> 13
One Group Mutual Funds
Investor Growth & Income Fund
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 2000
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (100.0%):
5,246 One Group Bond Fund, Class I........... $ 52,883
7,563 One Group Diversified Equity Fund,
Class I.............................. 113,820
2,890 One Group Diversified International
Fund, Class I........................ 51,927
2,753 One Group Diversified Mid Cap Fund,
Class I.............................. 59,702
4,575 One Group Government Bond Fund, Class
I.................................... 43,643
5,872 One Group High Yield Bond Fund,
Class I.............................. 52,260
8,189 One Group Income Bond Fund, Class I.... 61,501
2,592 One Group Intermediate Bond Fund, Class
I.................................... 26,099
1,199 One Group International Equity Index
Fund, Class I........................ 25,954
4,406 One Group Large Cap Growth Fund,
Class I.............................. 117,556
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
7,106 One Group Large Cap Value Fund,
Class I.............................. $110,139
2,167 One Group Mid Cap Growth Fund,
Class I.............................. 64,433
4,304 One Group Mid Cap Value Fund, Class
I.................................... 57,850
13,130 One Group Prime Money Market Fund,
Class I.............................. 13,130
849 One Group Short-Term Bond Fund,
Class I.............................. 8,732
696 One Group Small Cap Growth Fund,
Class I.............................. 9,021
637 One Group Small Cap Value Fund, Class
I.................................... 8,751
837 One Group Ultra Short-Term Bond Fund,
Class I.............................. 8,139
--------
Total Investment Companies 885,540
--------
Total (Cost $835,318) (a) $885,540
========
</TABLE>
------------
Percentages indicated are based on net assets of $885,342.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $7,538. Cost for federal income tax purposes differs from
market value by unrealized appreciation (depreciation) of securities as
follows (amount in thousands):
<TABLE>
<S> <C>
Unrealized appreciation...................... $66,538
Unrealized depreciation...................... (23,854)
-------
Net unrealized appreciation (depreciation)... $42,684
=======
</TABLE>
See notes to financial statements.
11
<PAGE> 14
One Group Mutual Funds
Investor Growth Fund
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 2000
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (99.7%):
1,013 One Group Bond Fund, Class I........... $ 10,210
4,947 One Group Diversified Equity Fund,
Class I.............................. 74,453
1,763 One Group Diversified International
Fund, Class I........................ 31,683
2,350 One Group Diversified Mid Cap Fund,
Class I.............................. 50,982
540 One Group Government Bond Fund, Class
I.................................... 5,150
1,708 One Group High Yield Bond Fund,
Class I.............................. 15,205
2,045 One Group Income Bond Fund, Class I.... 15,357
1,208 One Group International Equity Index
Fund, Class I........................ 26,150
3,149 One Group Large Cap Growth Fund,
Class I.............................. 84,008
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
------ --------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
5,324 One Group Large Cap Value Fund,
Class I.............................. $ 82,520
1,818 One Group Mid Cap Growth Fund,
Class I.............................. 54,037
3,784 One Group Mid Cap Value Fund, Class
I.................................... 50,862
11,843 One Group Prime Money Market Fund,
Class I.............................. 11,843
842 One Group Small Cap Growth Fund,
Class I.............................. 10,915
759 One Group Small Cap Value Fund, Class
I.................................... 10,426
--------
Total Investment Companies 533,801
--------
Total (Cost $481,524) (a) $533,801
========
</TABLE>
------------
Percentages indicated are based on net assets of $535,498.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $3,144. Cost for federal income tax purposes differs from
market value by unrealized appreciation (depreciation) of securities as
follows (amount in thousands):
<TABLE>
<S> <C>
Unrealized appreciation...................... $58,807
Unrealized depreciation...................... (9,674)
-------
Net unrealized appreciation (depreciation)... $49,133
=======
</TABLE>
See notes to financial statements.
12
<PAGE> 15
One Group Mutual Funds
--------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 2000
(Amounts in Thousands, except per share amounts)
<TABLE>
<CAPTION>
INVESTOR INVESTOR INVESTOR INVESTOR
CONSERVATIVE BALANCED GROWTH & GROWTH
GROWTH FUND FUND INCOME FUND FUND
------------ -------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at cost....................................... $207,439 $567,878 $835,318 $481,524
Unrealized appreciation (depreciation) from investments.... 504 25,287 50,222 52,277
-------- -------- -------- --------
Investments, at value...................................... 207,943 593,165 885,540 533,801
Cash....................................................... -- -- 280 --
Distributions receivable................................... 823 1,872 1,975 720
Receivable for capital shares issued....................... 960 714 1,989 1,869
Prepaid expenses and other assets.......................... 6 7 8 7
-------- -------- -------- --------
TOTAL ASSETS............................................... 209,732 595,758 889,792 536,397
-------- -------- -------- --------
LIABILITIES:
Dividends payable.......................................... 679 4,001 3,411 251
Payable for capital shares redeemed........................ 176 318 406 246
Accrued expenses and other payables:
Investment advisory fees................................. 5 10 14 4
Administration fees...................................... 5 15 18 2
Distribution fees........................................ 110 303 369 288
Other.................................................... 105 161 232 108
-------- -------- -------- --------
TOTAL LIABILITIES.......................................... 1,080 4,808 4,450 899
-------- -------- -------- --------
NET ASSETS:
Capital.................................................... 205,991 552,497 814,397 461,158
Accumulated undistributed net realized gains (losses) from
investment transactions and distributions from investment
company affiliates....................................... 2,157 13,166 20,723 22,063
Net unrealized appreciation (depreciation) from
investments.............................................. 504 25,287 50,222 52,277
-------- -------- -------- --------
NET ASSETS................................................. $208,652 $590,950 $885,342 $535,498
======== ======== ======== ========
NET ASSETS:
Class I.................................................. $ 52,294 $56,229 $207,040 $ 73,483
Class A.................................................. 31,225 219,684 299,207 140,449
Class B.................................................. 117,926 298,942 362,151 302,162
Class C.................................................. 7,207 16,095 16,944 19,404
-------- -------- -------- --------
Total...................................................... $208,652 $590,950 $885,342 $535,498
======== ======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Class I.................................................. 4,714 4,489 14,957 4,793
Class A.................................................. 2,820 17,543 21,430 9,209
Class B.................................................. 10,647 23,889 26,026 19,685
Class C.................................................. 652 1,291 1,228 1,277
-------- -------- -------- --------
Total...................................................... 18,833 47,212 63,641 34,964
======== ======== ======== ========
Net Asset Value
Class I -- Offering and redemption price per share....... $ 11.09 $ 12.52 $ 13.84 $ 15.33
======== ======== ======== ========
Class A -- Redemption price per share.................... $ 11.07 $ 12.52 $ 13.96 $ 15.25
======== ======== ======== ========
Maximum sales charge................................... 5.25% 5.25% 5.25% 5.25%
======== ======== ======== ========
Maximum offering price per share (100%/(100% -- maximum
sales charge) of net asset value adjusted to nearest
cent)................................................ $ 11.68 $ 13.21 $ 14.73 $ 16.09
======== ======== ======== ========
Class B -- Offering price per share (a).................. $ 11.08 $ 12.51 $ 13.91 $ 15.35
======== ======== ======== ========
Class C -- Offering price per share (a).................. $ 11.06 $ 12.46 $ 13.80 $ 15.19
======== ======== ======== ========
</TABLE>
------------
(a) Redemption price per Class B and Class C share varies based on length of
time shares are held.
See notes to financial statements.
13
<PAGE> 16
One Group Mutual Funds
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS YEAR ENDED JUNE 30, 2000
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR INVESTOR INVESTOR INVESTOR
CONSERVATIVE BALANCED GROWTH & GROWTH
GROWTH FUND FUND INCOME FUND FUND
------------ -------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Distribution income from affiliates.................... $10,248 $23,704 $25,684 $11,976
------- ------- ------- -------
EXPENSES:
Investment advisory fees............................... 105 278 384 221
Administration fees.................................... 209 542 701 441
Distribution fees (Class A)............................ 113 705 926 405
Distribution fees (Class B)............................ 1,242 2,686 2,819 2,211
Distribution fees (Class C)............................ 86 166 149 170
Custodian fees......................................... 5 4 4 4
Legal and audit fees................................... 9 12 14 11
Trustees' fees and expenses............................ 6 11 13 9
Transfer agent fees.................................... 177 463 833 586
Registration and filing fees........................... 76 88 95 79
Printing costs......................................... 35 85 111 64
Other.................................................. 8 15 15 11
------- ------- ------- -------
Total expenses before waivers.......................... 2,071 5,055 6,064 4,212
Less waivers........................................... (240) (584) (895) (656)
------- ------- ------- -------
Net Expenses........................................... 1,831 4,471 5,169 3,556
------- ------- ------- -------
Net Investment Income (Loss)........................... 8,417 19,233 20,515 8,420
------- ------- ------- -------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from investment
transactions......................................... (1,120) (2,874) (5,866) 421
Distributions of realized gains by investment company
affiliates........................................... 4,604 21,128 39,227 28,576
Net change in unrealized appreciation (depreciation)
from investments in affiliates....................... (4,098) (2,947) 5,183 5,853
------- ------- ------- -------
Net realized/unrealized gains (losses) from
investments.......................................... (614) 15,307 38,544 34,850
------- ------- ------- -------
Change in net assets resulting from operations......... $ 7,803 $34,540 $59,059 $43,270
======= ======= ======= =======
</TABLE>
See notes to financial statements.
14
<PAGE> 17
One Group Mutual Funds
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE INVESTOR
GROWTH FUND BALANCED FUND
------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss)............................ $ 8,417 $ 5,010 $ 19,233 $ 9,832
Net realized gains (losses) from investment
transactions.......................................... (1,120) 304 (2,874) (1,574)
Distributions of realized gains by investment company
affiliates............................................ 4,604 1,687 21,128 6,956
Net change in unrealized appreciation (depreciation)
from investments...................................... (4,098) 1,707 (2,947) 16,871
-------- -------- -------- --------
Change in net assets resulting from operations.............. 7,803 8,708 34,540 32,085
-------- -------- -------- --------
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income.............................. (2,063) (1,467) (2,859) (3,441)
From net realized gains................................. (259) (372) (210) (2,012)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.............................. (1,441) (847) (7,627) (3,125)
From net realized gains................................. (249) (193) (575) (1,311)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.............................. (4,596) (2,687) (8,237) (4,343)
From net realized gains................................. (923) (708) (740) (2,775)
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income.............................. (317) (189) (510) (336)
From net realized gains................................. (68) (53) (49) (232)
-------- -------- -------- --------
Change in net assets from shareholder distributions......... (9,916) (6,516) (20,807) (17,575)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions.............. 13,830 108,576 70,800 288,629
-------- -------- -------- --------
Change in net assets........................................ 11,717 110,768 84,533 303,139
NET ASSETS:
Beginning of period..................................... 196,935 86,167 506,417 203,278
-------- -------- -------- --------
End of period........................................... $208,652 $196,935 $590,950 $506,417
======== ======== ======== ========
</TABLE>
See notes to financial statements.
15
<PAGE> 18
One Group Mutual Funds
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR GROWTH INVESTOR
& INCOME FUND GROWTH FUND
------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss)............................ $ 20,515 $ 9,558 $ 8,420 $ 5,456
Net realized gains (losses) from investment
transactions.......................................... (5,866) (4,049) 421 (2,208)
Distributions of realized gains by investment company
affiliates............................................ 39,227 11,964 28,576 14,695
Net change in unrealized appreciation (depreciation)
from investments...................................... 5,183 38,821 5,853 29,588
-------- -------- -------- --------
Change in net assets resulting from operations.............. 59,059 56,294 43,270 47,531
-------- -------- -------- --------
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income.............................. (6,408) (5,573) (2,294) (2,945)
From net realized gains................................. (1,361) (3,758) (1,081) (4,219)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.............................. (7,627) (1,989) (2,437) (1,935)
From net realized gains................................. (1,739) (1,911) (1,221) (3,069)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.............................. (6,143) (3,776) (3,416) (2,417)
From net realized gains................................. (1,798) (4,316) (2,185) (4,568)
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income.............................. (337) (282) (273) (297)
From net realized gains................................. (100) (335) (183) (564)
-------- -------- -------- --------
Change in net assets from shareholder distributions......... (25,513) (21,940) (13,090) (20,014)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Change in net assets from capital transactions.............. 163,440 424,171 120,069 137,033
-------- -------- -------- --------
Change in net assets........................................ 196,986 458,525 150,249 164,550
NET ASSETS:
Beginning of period..................................... 688,356 229,831 385,249 220,699
-------- -------- -------- --------
End of period........................................... $885,342 $688,356 $535,498 $385,249
======== ======== ======== ========
</TABLE>
See notes to financial statements.
16
<PAGE> 19
One Group Mutual Funds
--------------------------------------------------------------------------------
SCHEDULES OF CAPITAL STOCK ACTIVITY
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE INVESTOR
GROWTH FUND BALANCED FUND
------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS I SHARES:
Proceeds from shares issued............................... $ 33,438 $ 19,054 $ 33,551 $ 24,622
Proceeds from shares issued in Pegasus acquisition........ -- -- -- 14,183
Dividends reinvested...................................... 948 370 944 1,516
Cost of shares redeemed................................... (18,827) (13,123) (64,277) (51,130)
-------- -------- -------- --------
Change in net assets from Class I capital transactions.... $ 15,559 $ 6,301 $(29,782) $(10,809)
======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued............................... $ 14,411 $ 22,281 $101,696 $ 60,946
Proceeds from shares issued in Pegasus acquisition........ -- -- -- 97,757
Dividends reinvested...................................... 1,564 936 6,219 3,991
Cost of shares redeemed................................... (14,168) (6,347) (70,485) (23,019)
-------- -------- -------- --------
Change in net assets from Class A capital transactions.... $ 1,807 $ 16,870 $ 37,430 $139,675
======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued............................... $ 35,974 $ 88,650 $110,126 $139,496
Proceeds from shares issued in Pegasus acquisition........ -- -- -- 25,340
Dividends reinvested...................................... 5,289 3,063 7,459 6,726
Cost of shares redeemed................................... (43,388) (11,204) (55,071) (19,622)
-------- -------- -------- --------
Change in net assets from Class B capital transactions.... $ (2,125) $ 80,509 $ 62,514 $151,940
======== ======== ======== ========
CLASS C SHARES:
Proceeds from shares issued............................... $ 4,039 $ 6,499 $ 8,211 $ 9,361
Dividends reinvested...................................... 348 216 485 544
Cost of shares redeemed................................... (5,798) (1,819) (8,058) (2,082)
-------- -------- -------- --------
Change in net assets from Class C capital transactions.... $ (1,411) $ 4,896 $ 638 $ 7,823
======== ======== ======== ========
SHARE TRANSACTIONS:
CLASS I SHARES:
Issued.................................................... 3,019 1,717 2,724 2,027
Issued in Pegasus acquisition............................. -- -- -- 1,184
Reinvested................................................ 86 34 77 130
Redeemed.................................................. (1,705) (1,182) (5,211) (4,367)
-------- -------- -------- --------
Change in Class I Shares.................................. 1,400 569 (2,410) (1,026)
======== ======== ======== ========
CLASS A SHARES:
Issued.................................................... 1,307 2,010 8,298 5,133
Issued in Pegasus acquisition............................. -- -- -- 8,160
Reinvested................................................ 142 84 504 338
Redeemed.................................................. (1,286) (573) (5,743) (1,902)
-------- -------- -------- --------
Change in Class A Shares.................................. 163 1,521 3,059 11,729
======== ======== ======== ========
CLASS B SHARES:
Issued.................................................... 3,256 8,007 9,003 11,711
Issued in Pegasus acquisition............................. -- -- -- 2,117
Reinvested................................................ 479 277 605 573
Redeemed.................................................. (3,937) (1,010) (4,488) (1,595)
-------- -------- -------- --------
Change in Class B Shares.................................. (202) 7,274 5,120 12,806
======== ======== ======== ========
CLASS C SHARES:
Issued.................................................... 364 585 676 793
Reinvested................................................ 32 20 39 47
Redeemed.................................................. (527) (165) (652) (177)
-------- -------- -------- --------
Change in Class C Shares.................................. (131) 440 63 663
======== ======== ======== ========
</TABLE>
See notes to financial statements.
17
<PAGE> 20
One Group Mutual Funds
--------------------------------------------------------------------------------
SCHEDULES OF CAPITAL STOCK ACTIVITY
(Amounts in Thousands)
<TABLE>
<CAPTION>
INVESTOR GROWTH INVESTOR
& INCOME FUND GROWTH FUND
------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS I SHARES:
Proceeds from shares issued............................... $ 59,009 $ 45,077 $ 34,701 $ 26,700
Proceeds from shares issued in Pegasus acquisition........ -- 85,917 -- 794
Dividends reinvested...................................... 3,725 2,495 1,724 2,977
Cost of shares redeemed................................... (73,540) (32,247) (69,256) (23,549)
-------- -------- -------- --------
Change in net assets from Class I capital transactions.... $(10,806) $101,242 $(32,831) $ 6,922
======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued............................... $117,352 $ 70,189 $ 75,587 $ 39,280
Proceeds from shares issued in Pegasus acquisition........ -- 163,313 -- 16,083
Dividends reinvested...................................... 8,170 4,511 3,499 5,019
Cost of shares redeemed................................... (83,084) (43,971) (47,740) (21,519)
-------- -------- -------- --------
Change in net assets from Class A capital transactions.... $ 42,438 $194,042 $ 31,346 $ 38,863
======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued............................... $167,970 $118,374 $147,149 $ 84,953
Proceeds from shares issued in Pegasus acquisition........ -- 17,502 -- 12,323
Dividends reinvested...................................... 7,006 7,937 5,582 7,009
Cost of shares redeemed................................... (47,114) (20,030) (34,421) (18,200)
-------- -------- -------- --------
Change in net assets from Class B capital transactions.... $127,862 $123,783 $118,310 $ 86,085
======== ======== ======== ========
CLASS C SHARES:
Proceeds from shares issued............................... $ 8,756 $ 6,811 $ 8,698 $ 6,771
Dividends reinvested...................................... 398 573 452 853
Cost of shares redeemed................................... (5,208) (2,280) (5,906) (2,461)
-------- -------- -------- --------
Change in net assets from Class C capital transactions.... $ 3,946 $ 5,104 $ 3,244 $ 5,163
======== ======== ======== ========
SHARE TRANSACTIONS:
CLASS I SHARES:
Issued.................................................... 4,384 3,572 2,361 2,024
Issued in Pegasus acquisition............................. -- 6,749 -- 59
Reinvested................................................ 276 203 117 227
Redeemed.................................................. (5,491) (2,538) (4,675) (1,771)
-------- -------- -------- --------
Change in Class I Shares.................................. (831) 7,986 (2,197) 539
======== ======== ======== ========
CLASS A SHARES:
Issued.................................................... 8,680 4,934 5,201 2,958
Issued in Pegasus acquisition............................. -- 12,718 -- 1,203
Reinvested................................................ 601 359 238 389
Redeemed.................................................. (6,146) (2,859) (3,276) (1,634)
-------- -------- -------- --------
Change in Class A Shares.................................. 3,135 15,152 2,163 2,916
======== ======== ======== ========
CLASS B SHARES:
Issued.................................................... 12,452 9,331 9,968 6,368
Issued in Pegasus acquisition............................. -- 1,368 -- 911
Reinvested................................................ 516 639 377 538
Redeemed.................................................. (3,494) (1,547) (2,347) (1,367)
-------- -------- -------- --------
Change in Class B Shares.................................. 9,474 9,791 7,998 6,450
======== ======== ======== ========
CLASS C SHARES:
Issued.................................................... 657 553 599 514
Reinvested................................................ 30 46 31 66
Redeemed.................................................. (391) (180) (407) (184)
-------- -------- -------- --------
Change in Class C Shares.................................. 296 419 223 396
======== ======== ======== ========
</TABLE>
See notes to financial statements.
18
<PAGE> 21
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Conservative Growth Fund
---------------------------------------------------
Class I Shares
---------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
--------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
------- ------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 11.20 $ 11.06 $ 10.33 $ 10.00
------- ------- ------- -------
Investment Activities:
Net investment income (loss)........................ 0.52 0.47 0.46 0.26
Net realized and unrealized gains (losses) from
investments...................................... (0.03) 0.28 0.82 0.33
------- ------- ------- -------
Total from Investment Activities................. 0.49 0.75 1.28 0.59
------- ------- ------- -------
Distributions:
Net investment income............................... (0.52) (0.48) (0.45) (0.26)
Net realized gains.................................. (0.08) (0.13) (0.10) --
------- ------- ------- -------
Total Distributions.............................. (0.60) (0.61) (0.55) (0.26)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........................ $ 11.09 $ 11.20 $ 11.06 $ 10.33
======= ======= ======= =======
Total Return.......................................... 4.52% 7.01% 12.70% 6.00%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)................... $52,294 $37,131 $30,352 $15,038
Ratio of expenses to average net assets............. 0.20% 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net
assets........................................... 4.66% 4.31% 4.43% 4.92%(c)
Ratio of expenses to average net assets*............ 0.30% 0.32% 0.56% 1.46%(c)
Portfolio turnover (d).............................. 23.76% 9.73% 3.22% 28.46%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
19
<PAGE> 22
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE GROWTH FUND
---------------------------------------------------
CLASS A SHARES
---------------------------------------------------
DECEMBER 10,
YEAR ENDED JUNE 30, 1996 THROUGH
--------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
------- ------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 11.18 $ 11.04 $ 10.32 $10.00
------- ------- ------- ------
Investment Activities:
Net investment income (loss)......................... 0.49 0.44 0.43 0.22
Net realized and unrealized gains (losses) from
investments....................................... (0.03) 0.29 0.82 0.32
------- ------- ------- ------
Total from Investment Activities.................. 0.46 0.73 1.25 0.54
------- ------- ------- ------
Distributions:
Net investment income................................ (0.49) (0.46) (0.43) (0.22)
Net realized gains................................... (0.08) (0.13) (0.10) --
------- ------- ------- ------
Total Distributions............................... (0.57) (0.59) (0.53) (0.22)
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD......................... $ 11.07 $ 11.18 $ 11.04 $10.32
======= ======= ======= ======
Total Return (Excludes Sales Charge)................... 4.27% 6.77% 12.38% 5.46%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................... $31,225 $29,714 $12,538 $1,299
Ratio of expenses to average net assets.............. 0.45% 0.45% 0.45% 0.47%(c)
Ratio of net investment income to average net
assets............................................ 4.46% 4.07% 4.12% 4.76%(c)
Ratio of expenses to average net assets*............. 0.65% 0.67% 0.82% 3.05%(c)
Portfolio turnover (d)............................... 23.76% 9.73% 3.22% 28.46%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
20
<PAGE> 23
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Conservative Growth Fund
-----------------------------------------------------
Class B Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 11.19 $ 11.05 $ 10.33 $10.00
-------- -------- ------- ------
Investment Activities:
Net investment income (loss)....................... 0.41 0.36 0.37 0.19
Net realized and unrealized gains (losses) from
investments..................................... (0.03) 0.29 0.81 0.33
-------- -------- ------- ------
Total from Investment Activities................ 0.38 0.65 1.18 0.52
-------- -------- ------- ------
Distributions:
Net investment income.............................. (0.41) (0.38) (0.36) (0.19)
Net realized gains................................. (0.08) (0.13) (0.10) --
-------- -------- ------- ------
Total Distributions............................. (0.49) (0.51) (0.46) (0.19)
-------- -------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 11.08 $ 11.19 $ 11.05 $10.33
======== ======== ======= ======
Total Return (Excludes Sales Charge)................. 3.48% 6.10% 11.53% 5.30%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $117,926 $121,348 $39,489 $2,616
Ratio of expenses to average net assets............ 1.20% 1.20% 1.20% 1.21%(c)
Ratio of net investment income to average net
assets.......................................... 3.70% 3.33% 3.37% 4.06%(c)
Ratio of expenses to average net assets*........... 1.30% 1.32% 1.47% 3.52%(c)
Portfolio turnover (d)............................. 23.76% 9.73% 3.22% 28.46%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
21
<PAGE> 24
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Conservative Growth Fund
------------------------------------------
Class C Shares
------------------------------------------
JULY 1,
Year Ended June 30, 1997 THROUGH
--------------------- JUNE 30,
2000 1999 1998 (a)
------ ------ ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $11.17 $11.03 $10.33
------ ------ ------
Investment Activities:
Net investment income (loss).............................. 0.41 0.36 0.35
Net realized and unrealized gains (losses) from
investments............................................ (0.03) 0.29 0.81
------ ------ ------
Total from Investment Activities....................... 0.38 0.65 1.16
------ ------ ------
Distributions:
Net investment income..................................... (0.41) (0.38) (0.36)
Net realized gains........................................ (0.08) (0.13) (0.10)
------ ------ ------
Total Distributions.................................... (0.49) (0.51) (0.46)
------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $11.06 $11.17 $11.03
====== ====== ======
Total Return (Excludes Sales Charge)........................ 3.48% 6.00% 11.48%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $7,207 $8,742 $3,788
Ratio of expenses to average net assets................... 1.20% 1.20% 1.20%
Ratio of net investment income to average net assets...... 3.70% 3.32% 3.39%
Ratio of expenses to average net assets*.................. 1.30% 1.33% 1.47%
Portfolio turnover (b).................................... 23.76% 9.73% 3.22%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
22
<PAGE> 25
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Balanced Fund
---------------------------------------------------
Class I Shares
---------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
--------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
------- ------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 12.24 $ 11.81 $ 10.63 $ 10.00
------- ------- ------- -------
Investment Activities:
Net investment income (loss)........................ 0.53 0.47 0.37 0.21
Net realized and unrealized gains (losses) from
investments...................................... 0.27 0.79 1.39 0.63
------- ------- ------- -------
Total from Investment Activities................. 0.80 1.26 1.76 0.84
------- ------- ------- -------
Distributions:
Net investment income............................... (0.49) (0.51) (0.36) (0.21)
Net realized gains.................................. (0.03) (0.32) (0.22) --
------- ------- ------- -------
Total Distributions.............................. (0.52) (0.83) (0.58) (0.21)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........................ $ 12.52 $ 12.24 $ 11.81 $ 10.63
======= ======= ======= =======
Total Return.......................................... 6.69% 11.16% 17.02% 8.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)................... $56,229 $84,447 $93,557 $72,155
Ratio of expenses to average net assets............. 0.20% 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net
assets........................................... 4.10% 3.85% 3.31% 3.84%(c)
Ratio of expenses to average net assets*............ 0.27% 0.26% 0.32% 0.56%(c)
Portfolio turnover (d).............................. 20.99% 13.51% 9.71% 12.20%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
23
<PAGE> 26
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Balanced Fund
-----------------------------------------------------
Class A Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 12.24 $ 11.83 $ 10.66 $10.00
-------- -------- ------- ------
Investment Activities:
Net investment income (loss)....................... 0.47 0.42 0.34 0.17
Net realized and unrealized gains (losses) from
investments..................................... 0.30 0.79 1.39 0.66
-------- -------- ------- ------
Total from Investment Activities................ 0.77 1.21 1.73 0.83
-------- -------- ------- ------
Distributions:
Net investment income.............................. (0.46) (0.48) (0.34) (0.17)
Net realized gains................................. (0.03) (0.32) (0.22) --
-------- -------- ------- ------
Total Distributions............................. (0.49) (0.80) (0.56) (0.17)
-------- -------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 12.52 $ 12.24 $ 11.83 $10.66
======== ======== ======= ======
Total Return (Excludes Sales Charge)................. 6.43% 10.70% 16.62% 8.41%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $219,684 $177,336 $32,605 $2,176
Ratio of expenses to average net
assets.......................................... 0.45% 0.45% 0.45% 0.47%(c)
Ratio of net investment income to average net
assets.......................................... 3.82% 3.27% 3.01% 3.78%(c)
Ratio of expenses to average net assets*........... 0.62% 0.61% 0.66% 1.12%(c)
Portfolio turnover (d)............................. 20.99% 13.51% 9.71% 12.20%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
24
<PAGE> 27
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Balanced Fund
-----------------------------------------------------
Class B Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 12.24 $ 11.82 $ 10.65 $10.00
-------- -------- ------- ------
Investment Activities:
Net investment income (loss)....................... 0.37 0.33 0.26 0.16
Net realized and unrealized gains (losses) from
investments..................................... 0.30 0.81 1.39 0.65
-------- -------- ------- ------
Total from Investment Activities................ 0.67 1.14 1.65 0.81
-------- -------- ------- ------
Distributions:
Net investment income.............................. (0.37) (0.40) (0.26) (0.16)
Net realized gains................................. (0.03) (0.32) (0.22) --
-------- -------- ------- ------
Total Distributions............................. (0.40) (0.72) (0.48) (0.16)
-------- -------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 12.51 $ 12.24 $ 11.82 $10.65
======== ======== ======= ======
Total Return (Excludes Sales Charge)................. 5.58% 10.01% 15.85% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $298,942 $229,671 $70,463 $5,672
Ratio of expenses to average net
assets.......................................... 1.20% 1.20% 1.20% 1.22%(c)
Ratio of net investment income to average net
assets.......................................... 3.04% 2.78% 2.26% 2.93%(c)
Ratio of expenses to average net assets*........... 1.27% 1.26% 1.31% 1.73%(c)
Portfolio turnover (d)............................. 20.99% 13.51% 9.71% 12.20%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
25
<PAGE> 28
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR BALANCED FUND
--------------------------------------
CLASS C SHARES
--------------------------------------
JULY 1,
YEAR ENDED JUNE 30, 1997 THROUGH
-------------------- JUNE 30,
2000 1999 1998 (a)
------- ------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.19 $ 11.77 $10.63
------- ------- ------
Investment Activities:
Net investment income (loss).............................. 0.37 0.32 0.26
Net realized and unrealized gains (losses) from
investments............................................ 0.30 0.81 1.37
------- ------- ------
Total from Investment Activities....................... 0.67 1.13 1.63
------- ------- ------
Distributions:
Net investment income..................................... (0.37) (0.39) (0.27)
Net realized gains........................................ (0.03) (0.32) (0.22)
------- ------- ------
Total Distributions.................................... (0.40) (0.71) (0.49)
------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 12.46 $ 12.19 $11.77
======= ======= ======
Total Return (Excludes Sales Charge)........................ 5.59% 10.04% 15.66%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $16,095 $14,963 $6,653
Ratio of expenses to average net assets................... 1.20% 1.20% 1.20%
Ratio of net investment income to average net assets...... 3.08% 2.85% 2.24%
Ratio of expenses to average net assets*.................. 1.27% 1.26% 1.30%
Portfolio turnover (b).................................... 20.99% 13.51% 9.71%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
26
<PAGE> 29
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth & Income Fund
-----------------------------------------------------
Class I Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................ $ 13.29 $ 12.57 $ 10.93 $ 10.00
-------- -------- ------- -------
Investment Activities:
Net investment income (loss)...................... 0.43 0.35 0.25 0.15
Net realized and unrealized gains (losses) from
investments.................................... 0.63 1.32 1.92 0.93
-------- -------- ------- -------
Total from Investment Activities............... 1.06 1.67 2.17 1.08
-------- -------- ------- -------
Distributions:
Net investment income............................. (0.42) (0.48) (0.25) (0.15)
Net realized gains................................ (0.09) (0.47) (0.28) --
-------- -------- ------- -------
Total Distributions............................ (0.51) (0.95) (0.53) (0.15)
-------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD...................... $ 13.84 $ 13.29 $ 12.57 $ 10.93
======== ======== ======= =======
Total Return........................................ 8.10% 14.11% 20.34% 10.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)................. $207,040 $209,770 $98,060 $43,660
Ratio of expenses to average net assets........... 0.20% 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net
assets......................................... 3.14% 3.70% 2.17% 2.78%(c)
Ratio of expenses to average net assets*.......... 0.28% 0.27% 0.34% 0.66%(c)
Portfolio turnover (d)............................ 21.50% 17.87% 11.38% 18.07%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
27
<PAGE> 30
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth & Income Fund
-----------------------------------------------------
Class A Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 13.40 $ 12.69 $ 11.02 $10.00
-------- -------- ------- ------
Investment Activities:
Net investment income (loss)....................... 0.39 0.36 0.22 0.12
Net realized and unrealized gains (losses) from
investments..................................... 0.65 1.27 1.95 1.02
-------- -------- ------- ------
Total from Investment Activities................ 1.04 1.63 2.17 1.14
-------- -------- ------- ------
Distributions:
Net investment income.............................. (0.39) (0.45) (0.22) (0.12)
Net realized gains................................. (0.09) (0.47) (0.28) --
-------- -------- ------- ------
Total Distributions............................. (0.48) (0.92) (0.50) (0.12)
-------- -------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 13.96 $ 13.40 $ 12.69 $11.02
======== ======== ======= ======
Total Return (Excludes Sales Charge)................. 7.85% 13.62% 20.18% 11.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $299,207 $245,151 $39,874 $4,262
Ratio of expenses to average net assets............ 0.45% 0.45% 0.45% 0.46%(c)
Ratio of net investment income to average net
assets.......................................... 2.91% 1.54% 1.91% 2.67%(c)
Ratio of expenses to average net assets*........... 0.63% 0.62% 0.67% 1.26%(c)
Portfolio turnover (d)............................. 21.50% 17.87% 11.38% 18.07%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
28
<PAGE> 31
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth & Income Fund
-----------------------------------------------------
Class B Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 13.36 $ 12.64 $ 11.00 $10.00
-------- -------- ------- ------
Investment Activities:
Net investment income (loss)....................... 0.29 0.26 0.14 0.09
Net realized and unrealized gains (losses) from
investments..................................... 0.64 1.29 1.92 1.00
-------- -------- ------- ------
Total from Investment Activities................ 0.93 1.55 2.06 1.09
-------- -------- ------- ------
Distributions:
Net investment income.............................. (0.29) (0.36) (0.14) (0.09)
Net realized gains................................. (0.09) (0.47) (0.28) --
-------- -------- ------- ------
Total Distributions............................. (0.38) (0.83) (0.42) (0.09)
-------- -------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 13.91 $ 13.36 $ 12.64 $11.00
======== ======== ======= ======
Total Return (Excludes Sales Charge)................. 7.04% 12.93% 19.13% 11.02%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $362,151 $221,088 $85,468 $8,896
Ratio of expenses to average net assets............ 1.20% 1.20% 1.20% 1.21%(c)
Ratio of net investment income to average net
assets.......................................... 2.13% 2.12% 1.15% 1.94%(c)
Ratio of expenses to average net assets*........... 1.28% 1.27% 1.32% 1.89%(c)
Portfolio turnover (d)............................. 21.50% 17.87% 11.38% 18.07%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
29
<PAGE> 32
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth & Income Fund
--------------------------------------
Class C Shares
--------------------------------------
JULY 1,
Year Ended June 30, 1997 THROUGH
-------------------- JUNE 30,
2000 1999 1998 (a)
------- ------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.25 $ 12.54 $10.93
------- ------- ------
Investment Activities:
Net investment income (loss).............................. 0.29 0.26 0.14
Net realized and unrealized gains (losses) from
investments............................................ 0.64 1.28 1.90
------- ------- ------
Total from Investment Activities....................... 0.93 1.54 2.04
------- ------- ------
Distributions:
Net investment income..................................... (0.29) (0.36) (0.15)
Net realized gains........................................ (0.09) (0.47) (0.28)
------- ------- ------
Total Distributions.................................... (0.38) (0.83) (0.43)
------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 13.80 $ 13.25 $12.54
======= ======= ======
Total Return (Excludes Sales Charge)........................ 7.10% 12.94% 19.08%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $16,944 $12,347 $6,429
Ratio of expenses to average net assets................... 1.20% 1.20% 1.20%
Ratio of net investment income to average net assets...... 2.18% 2.20% 1.14%
Ratio of expenses to average net assets*.................. 1.28% 1.27% 1.31%
Portfolio turnover (b).................................... 21.50% 17.87% 11.38%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
30
<PAGE> 33
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth Fund
----------------------------------------------------
Class I Shares
----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
---------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 14.39 $ 13.39 $ 11.25 $ 10.00
------- -------- ------- -------
Investment Activities:
Net investment income (loss)....................... 0.40 0.32 0.12 0.09
Net realized and unrealized gains (losses) from
investments..................................... 1.04 1.77 2.49 1.25
------- -------- ------- -------
Total from Investment Activities................ 1.44 2.09 2.61 1.34
------- -------- ------- -------
Distributions:
Net investment income.............................. (0.34) (0.43) (0.12) (0.09)
Net realized gains................................. (0.16) (0.66) (0.35) --
------- -------- ------- -------
Total Distributions............................. (0.50) (1.09) (0.47) (0.09)
------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD....................... $ 15.33 $ 14.39 $ 13.39 $ 11.25
======= ======== ======= =======
Total Return......................................... 10.17% 16.84% 23.81% 13.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $73,483 $100,566 $86,355 $31,318
Ratio of expenses to average net assets............ 0.20% 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net
assets.......................................... 2.77% 2.57% 1.04% 1.70%(c)
Ratio of expenses to average net assets*........... 0.32% 0.31% 0.36% 0.77%(c)
Portfolio turnover (d)............................. 28.66% 14.62% 4.05% 18.49%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
31
<PAGE> 34
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth Fund
-----------------------------------------------------
Class A Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 14.30 $ 13.33 $ 11.21 $10.00
-------- -------- ------- ------
Investment Activities:
Net investment income (loss)....................... 0.33 0.29 0.10 0.07
Net realized and unrealized gains (losses) from
investments..................................... 1.09 1.74 2.47 1.21
-------- -------- ------- ------
Total from Investment Activities................ 1.42 2.03 2.57 1.28
-------- -------- ------- ------
Distributions:
Net investment income.............................. (0.31) (0.40) (0.10) (0.07)
Net realized gains................................. (0.16) (0.66) (0.35) --
-------- -------- ------- ------
Total Distributions............................. (0.47) (1.06) (0.45) (0.07)
-------- -------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 15.25 $ 14.30 $ 13.33 $11.21
======== ======== ======= ======
Total Return (Excludes Sales Charge)................. 10.04% 16.40% 23.44% 12.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $140,449 $100,789 $55,057 $4,439
Ratio of expenses to average net assets............ 0.45% 0.45% 0.45% 0.46%(c)
Ratio of net investment income to average net
assets.......................................... 2.25% 2.08% 0.78% 1.82%(c)
Ratio of expenses to average net assets*........... 0.67% 0.66% 0.70% 1.62%(c)
Portfolio turnover (d)............................. 28.66% 14.62% 4.05% 18.49%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
See notes to financial statements.
32
<PAGE> 35
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth Fund
-----------------------------------------------------
Class B Shares
-----------------------------------------------------
DECEMBER 10,
Year Ended June 30, 1996 THROUGH
----------------------------------- JUNE 30,
2000 1999 1998 1997 (a)
-------- -------- ------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 14.44 $ 13.47 $ 11.34 $10.00
-------- -------- ------- ------
Investment Activities:
Net investment income (loss)....................... 0.24 0.20 0.02 0.04
Net realized and unrealized gains (losses) from
investments..................................... 1.07 1.76 2.48 1.34
-------- -------- ------- ------
Total from Investment Activities................ 1.31 1.96 2.50 1.38
-------- -------- ------- ------
Distributions:
Net investment income.............................. (0.24) (0.33) (0.02) (0.04)
Net realized gains................................. (0.16) (0.66) (0.35) --
-------- -------- ------- ------
Total Distributions............................. (0.40) (0.99) (0.37) (0.04)
-------- -------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 15.35 $ 14.44 $ 13.47 $11.34
======== ======== ======= ======
Total Return (Excludes Sales Charge)................. 9.14% 15.57% 22.52% 13.88%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).................. $302,162 $168,823 $70,515 $7,651
Ratio of expenses to average net assets............ 1.20% 1.20% 1.20% 1.20%(c)
Ratio of net investment income to average net
assets.......................................... 1.41% 1.44% 0.04% 0.97%(c)
Ratio of expenses to average net assets*........... 1.32% 1.31% 1.35% 2.18%(c)
Portfolio turnover (d)............................. 28.66% 14.62% 4.05% 18.49%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
See notes to financial statements.
33
<PAGE> 36
One Group Mutual Funds
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Investor Growth Fund
--------------------------------------
Class C Shares
--------------------------------------
JULY 1,
Year Ended June 30, 1997 THROUGH
-------------------- JUNE 30,
2000 1999 1998 (a)
------- ------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 14.30 $ 13.34 $11.25
------- ------- ------
Investment Activities:
Net investment income (loss).............................. 0.24 0.18 0.02
Net realized and unrealized gains (losses) from
investments............................................ 1.05 1.77 2.45
------- ------- ------
Total from Investment Activities....................... 1.29 1.95 2.47
------- ------- ------
Distributions:
Net investment income..................................... (0.24) (0.33) (0.03)
Net realized gains........................................ (0.16) (0.66) (0.35)
------- ------- ------
Total Distributions.................................... (0.40) (0.99) (0.38)
------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 15.19 $ 14.30 $13.34
======= ======= ======
Total Return (Excludes Sales Charge)........................ 9.08% 15.65% 22.42%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $19,404 $15,071 $8,772
Ratio of expenses to average net assets................... 1.20% 1.20% 1.20%
Ratio of net investment income to average net assets...... 1.52% 1.50% 0.04%
Ratio of expenses to average net assets*.................. 1.32% 1.31% 1.35%
Portfolio turnover (b).................................... 28.66% 14.62% 4.05%
</TABLE>
------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
See notes to financial statements.
34
<PAGE> 37
One Group Mutual Funds
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000
1. ORGANIZATION:
The One Group Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company established as a Massachusetts business trust. The accompanying
financial statements and financial highlights are those of the Investor
Conservative Growth Fund, the Investor Balanced Fund, the Investor Growth &
Income Fund, and the Investor Growth Fund (individually a "Fund",
collectively the "Funds") only. Each Fund is a diversified mutual fund. The
Funds invest solely in other portfolios of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Investments in One Group Mutual Funds (the "Underlying Funds") are valued
at the closing net asset value per share of each of the Underlying Funds on
the day of valuation. Short-term investments maturing in 60 days or less
are valued at amortized cost, which approximates market value.
SECURITY TRANSACTIONS AND RELATED INCOME
Purchases and sales of the Underlying Funds are accounted for on a trade
date basis. Net realized gains or losses on sales of the Underlying Funds
are determined on the specific identification cost method. Other income and
expenses are recognized on the accrual basis. Distributions from the
Underlying Funds and dividends to the Funds' shareholders are recorded on
the ex-dividend date.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one Fund of the
Trust are allocated among the respective Funds. Each class of shares bears
its pro-rata portion of expenses attributable to its series, except that
each class separately bears expenses related specifically to that class,
such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly for
the Funds, except for the Investor Conservative Growth Fund, which is
declared and paid monthly. Net realized capital gains, if any, are
distributed at least annually. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are due to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily
due to differing treatments for expiring capital loss carryforwards and
deferrals of certain losses. Permanent book and tax basis differences, if
any, have been reclassified among the components of net assets.
Continued
35
<PAGE> 38
One Group Mutual Funds
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 2000
Certain funds also utilized earnings and profits distributed to
shareholders on redemption of shares as part of the dividends paid
deduction for income tax purposes.
FEDERAL INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company
by complying with the provisions available to certain investment companies
as defined in applicable sections of the Internal Revenue Code, and to make
distributions from net investment income and from net realized capital
gains sufficient to relieve it from all, or substantially all, federal
income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares, and any series may be classified
or reclassified into one or more classes. The Trust is registered to offer
fifty-four series and six classes of shares: Class I, Class A, Class B, Class
C, Class S and Service Class. Currently, the Trust consists of forty-nine
active funds. The Funds are each authorized to issue Class I, Class A, Class
B and Class C shares only. Class A shares are subject to initial sales
charges, imposed at the time of purchase, in accordance with the Funds'
prospectus. Certain redemptions of Class B and Class C shares are subject to
contingent deferred sales charges in accordance with the Funds' prospectus.
Shareholders are entitled to one vote for each full share held and vote in
the aggregate and not by class or series, except as otherwise expressly
required by law or when the Board of Trustees has determined that the matter
to be voted on affects only the interest of shareholders of a particular
class or series. See Schedules of Capital Stock Activity.
4. INVESTMENT ADVISORY, ADMINISTRATION, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor") are
parties to an investment advisory agreement under which the Advisor is
entitled to receive an annual fee, computed daily and paid monthly, equal to
0.05% of the average daily net assets of the Investor Conservative Growth
Fund, the Investor Balanced Fund, the Investor Growth & Income Fund, and the
Investor Growth Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administration agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.10% on
the first $500 million of each Fund's average daily net assets, 0.075% of
each Fund's average daily net assets between $500 million and $1 billion, and
0.05% of each Fund's average daily net assets when fund assets exceed $1
billion. One Group Administrative Services ("OGA"), an affiliate of the
Advisor, serves as sub-Administrator to each fund of the Trust, pursuant to
an agreement between the Administrator and OGA. Pursuant to this agreement,
OGA performs many of the Administrator's duties, for which the OGA receives a
fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A, Class B and Class C shares are subject to a
distribution and shareholder services plans (the "Plans") pursuant to Rule
12b-1 under the 1940 Act. As provided in the Plans, the Trust will pay the
Distributor a fee of 0.35% of the average daily net assets of Class A shares
of each of the Funds and 1.00% of the average daily net assets of the Class B
and Class C shares of each of the Funds. Currently, the Distributor has
voluntarily agreed to limit payments under the Plans to 0.25% of average
daily net assets of the Class A shares of each Fund. Up to 0.25% of the fees
payable under the Plans may be used as compensation for shareholder services
by the Distributor and/or financial institutions and intermediaries. Fees
paid under the Plans may be applied by the Distributor toward (i)
compensation for its
Continued
36
<PAGE> 39
One Group Mutual Funds
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 2000
services in connection with distribution assistance or provision of
shareholder services; or (ii) payments to financial institutions and
intermediaries such as banks (including affiliates of the Advisor), brokers,
dealers and other institutions, including the Distributor's affiliates and
subsidiaries as compensation for services or reimbursement of expenses
incurred in connection with distribution assistance or provision of
shareholder services.
Class I shares of each Fund are offered without distribution fees. For the
period ended June 30, 2000, the Distributor received $8,247,635 from
commissions earned on sales of Class A shares and redemptions of Class B and
Class C shares, of which, the Distributor re-allowed $8,036,808 to affiliated
broker-dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the year ended June 30, 2000, fees in the
following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT DISTRIBUTION FEES
ADVISORY FEES ADMINISTRATION WAIVED
FUND WAIVED FEES WAIVED CLASS A
---- ------------- -------------- -----------------
<S> <C> <C> <C>
Investor Conservative Growth Fund.................. $ 57 $151 $ 32
Investor Balanced Fund............................. 170 213 201
Investor Growth & Income Fund...................... 234 396 265
Investor Growth Fund............................... 152 388 116
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities) during the year ended June 30, 2000 were as
follows (amounts in thousands):
<TABLE>
<CAPTION>
FUND PURCHASES SALES
---- --------- --------
<S> <C> <C>
Investor Conservative Growth Fund........................... $ 67,791 $ 48,751
Investor Balanced Fund...................................... 193,019 114,444
Investor Growth & Income Fund............................... 339,086 162,501
Investor Growth Fund........................................ 233,067 124,349
</TABLE>
6. LINE OF CREDIT:
The Trust and State Street Bank and Trust Company ("State Street") and a
group of banks (collectively, the "Banks") entered into a financing agreement
dated October 19, 1999. Under this agreement, the Banks provide an unsecured
committed credit facility in the aggregate amount of $500 million. The credit
facility is allocated, under the terms of the financing agreement, among the
Banks. Advances under the agreement are taken primarily for temporary or
emergency purposes, including the meeting of redemption requests that
otherwise might require the untimely disposition of securities, and are
subject to each Fund's borrowing restrictions. Interest on borrowings is
payable at the Federal Funds Rate plus 0.50% on an annualized basis. Interest
on borrowings during the period from and including December 15, 1999 to
January 17, 2000, was payable at 0.50% plus the higher of the Fed Funds
Effective Rate plus 0.50% or the Fed Funds Target Rate plus 1.50%. A
commitment fee of 0.10% per annum will be incurred on the unused portion of
the committed facility, which is allocated to all Funds.
During the year ended June 30, 2000, there were no borrowings by the Funds
under the Agreement.
Continued
37
<PAGE> 40
One Group Mutual Funds
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 2000
7. DEFERRED COMPENSATION PLAN:
Independent Trustees of the Funds may participate in a Deferred Compensation
Plan in which they may defer any or all compensation related to performance
of their duties as a Trustee. All deferred compensation is paid by the Funds
and invested into various One Group Mutual Funds elected by each Trustee. The
Plan is fully funded and therefore, the Funds bear no additional trustee
expense over and above the normal cash compensation.
8. PEGASUS REORGANIZATION:
The Trust entered an agreement and plan of reorganization and liquidation
("the Reorganization") with the Pegasus Funds pursuant to which all of the
assets and liabilities of each Pegasus Fund transferred to a fund of the One
Group in exchange for shares of the corresponding fund of the One Group. The
Reorganization, which qualified as a tax-free exchange for federal income tax
purposes, was completed on March 22, 1999 following approval by shareholders
of the Pegasus Funds at a special shareholder meeting. The following is a
summary of shares outstanding, net assets, net asset value per share issued
and unrealized appreciation immediately before and after the Reorganization
(amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------------- --------------
PEGASUS MANAGED INVESTOR INVESTOR
ASSETS CONSERVATIVE BALANCED BALANCED
FUND FUND FUND
------------------- -------------- --------------
<S> <C> <C> <C>
Shares.......................................... 10,038 25,605 37,066
Net assets...................................... $137,280 $306,589 $443,869
Net asset value:
Class I....................................... 13.73 11.98 11.98
Class A....................................... 13.67 11.98 11.98
Class B....................................... 13.68 11.97 11.97
Class C....................................... -- 11.92 11.92
Unrealized appreciation/(depreciation).......... (3,150) 19,523 16,373
</TABLE>
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------------- --------------
PEGASUS MANAGED INVESTOR INVESTOR
ASSET BALANCED GROWTH & GROWTH &
FUND INCOME FUND INCOME FUND
------------------- -------------- --------------
<S> <C> <C> <C>
Shares.......................................... 25,159 27,223 48,058
Net assets...................................... $266,732 $347,797 $614,529
Net asset value:
Class I....................................... 10.50 12.73 12.73
Class A....................................... 10.53 12.84 12.84
Class B....................................... 11.96 12.79 12.79
Class C....................................... -- 12.69 12.69
Unrealized appreciation/(depreciation).......... (11,652) 25,486 13,834
</TABLE>
Continued
38
<PAGE> 41
One Group Mutual Funds
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 2000
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------------- --------------
PEGASUS MANAGED INVESTOR INVESTOR
ASSETS GROWTH GROWTH GROWTH
FUND FUND FUND
------------------- -------------- --------------
<S> <C> <C> <C>
Shares.......................................... 2,740 22,356 24,529
Net assets...................................... $29,200 $300,776 $329,976
Net asset value:
Class I....................................... 10.79 13.45 13.45
Class A....................................... 10.73 13.37 13.37
Class B....................................... 10.55 13.52 13.52
Class C....................................... -- 13.38 13.38
Unrealized appreciation/(depreciation).......... (1,306) 22,458 21,152
</TABLE>
9. FEDERAL TAX INFORMATION (UNAUDITED):
The accompanying table below details distributions from long-term capital
gains for the following funds for the fiscal year ended June 30, 2000
(amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
---- ------
<S> <C>
Investor Conservative Growth Fund........................... $2,258
Investor Balanced Fund...................................... 5,061
Investor Growth & Income Fund............................... 9,319
Investor Growth Fund........................................ 8,896
</TABLE>
ELIGIBLE DISTRIBUTIONS:
The Trust designates the following percentage of distributions eligible for
the dividends received deductions for corporations.
<TABLE>
<CAPTION>
FUND
----
<S> <C>
Investor Conservative Growth Fund........................... 1.25%
Investor Balanced Fund...................................... 2.51%
Investor Growth & Income Fund............................... 4.33%
Investor Growth Fund........................................ 5.87%
</TABLE>
39
<PAGE> 42
Report of Independent Accountants
--------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 2000
To the Board of Trustees and Shareholders of
One Group Mutual Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Investor Conservative Growth
Fund, the Investor Balanced Fund, the Investor Growth & Income Fund and the
Investor Growth Fund (four series of One Group Mutual Funds, hereafter referred
to as the "Funds") at June 30, 2000, the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the two
years in the period then ended and financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 2000 by
correspondence with the Underlying Funds, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Columbus, Ohio
August 18, 2000
40
<PAGE> 43
(This page has been left blank intentionally.)
<PAGE> 44
One Group is distributed by
The One Group Services Company,
which is not affiliated with BANK
ONE CORPORATION. Banc One
Investment Advisors Corporation
serves as investment advisor to
the One Group, for which it
receives advisory fees.
Call Investor Services at
The One Group Service Center
at 1 800 480 4111 for a prospectus
containing complete information
about charges and expenses. Read
carefully before investing. Past
performance is no guarantee of
future results.
BANC ONE
INVESTMENT
ADVISORS
CORPORATION
TOG-F-036-AN (8/00)
[Bank One Logo]
