<PAGE> 1
ONE GROUP(R) TECHNOLOGY FUND
PROSPECTUS
JUNE 16, 2000
[ONE GROUP - LOGO]
THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THE SHARES OF
AND OF THE FUNDS AS AN INVESTMENT OR
DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
<PAGE> 2
TABLE OF
CONTENTS
<TABLE>
<C> <S>
FUND SUMMARY: INVESTMENTS, RISK & PERFORMANCE
One Group Technology Fund 2
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</TABLE>
<TABLE>
<C> <S>
MORE ABOUT THE FUND
Principal Investment Strategies 6
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Investment Risks 7
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Investment Policies 7
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Portfolio Quality 8
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Temporary Defensive Positions 8
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Portfolio Turnover 9
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</TABLE>
<TABLE>
<C> <S>
HOW TO DO BUSINESS WITH ONE GROUP MUTUAL FUNDS
Purchasing Fund Shares 10
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Sales Charges 14
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Sales Charge Reductions and Waivers 16
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Exchanging Fund Shares 18
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Redeeming Fund Shares 20
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</TABLE>
<TABLE>
<C> <S>
SHAREHOLDER INFORMATION
Voting Rights 23
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Dividend Policies 23
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Tax Treatment of Shareholders 24
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Shareholder Inquiries 24
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</TABLE>
<TABLE>
<C> <S>
MANAGEMENT OF ONE GROUP MUTUAL FUNDS
The Advisor 25
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The Fund Managers 25
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</TABLE>
<TABLE>
<C> <S>
APPENDIX A: INVESTMENT PRACTICES 26
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</TABLE>
<PAGE> 3
FUND SUMMARY
Investments, Risk & Performance
<PAGE> 4
2
ONE GROUP(R)
- ------------------------------------
FUND SUMMARY: INVESTMENTS, RISK & PERFORMANCE
Technology Fund
WHAT IS THE GOAL OF THE
TECHNOLOGY FUND? The Fund is designed to provide long-term capital
growth.
WHAT ARE THE TECHNOLOGY
FUND'S MAIN INVESTMENT
STRATEGIES? The Fund mainly invests in equity securities of
companies that have developed, or are expected to
develop, products, processes, or services that will
provide significant technological advances and
improvements. This may include, for example, companies
that develop, produce or distribute products in the
computer, electronics, and communications sectors. In
selecting investments, the Fund will generally invest in
companies that are positioned for accelerated growth or
higher earnings. In addition, the Fund also may invest
in companies (regardless of size) whose stocks appear to
be trading below their true value. For more information
about the Technology Fund's investment strategies,
please read "More About the Fund" and "Principal
Investment Strategies."
WHAT ARE THE MAIN RISKS
OF INVESTING IN THE
TECHNOLOGY FUND? The main risks of investing in the Technology Fund and
the circumstances likely to adversely affect your
investment are described below. The share price of the
Technology Fund will change every day in response to
interest rates and other market conditions. You may lose
money if you invest in the Technology Fund. For
additional information on risk, please read "Investment
Risks."
<PAGE> 5
3
- ------------------------------------
Technology Fund
MAIN RISKS
- --------------------------
Securities Of Technology Companies. The Fund's
performance is closely tied to and affected by the
technology sector. The stock price of technology
companies tends to be more volatile than the stock price
of companies in other industries. In addition, the
valuation of many technology stocks could be high when
considered by such traditional measures of value as
price to earnings ratios. Competitive pressures also may
have a significant effect on the financial condition of
technology-sensitive companies. Further, because of the
rapid pace of technological development, products and
services produced by companies in which the Fund invests
may become obsolete or have relatively short product
cycles. As a result, the Fund's value and its returns
may be considerably more volatile and pose greater risks
than the values and returns of other mutual funds that
do not focus their investments on companies in the
technology sector.
Smaller Companies. The Fund's investments in smaller,
newer companies may be riskier than investments in
larger, more established companies. Small companies may
be more vulnerable to economic, market, and industry
changes. Because economic events have a greater impact
on smaller companies, there may be greater and more
frequent changes in their stock price. This may cause
unexpected and frequent decreases in the value of your
investment in the Fund. Finally, emerging companies in
the technology sector may not be profitable and may not
anticipate earning profits in the foreseeable future.
Market Risk. The Fund invests in equity securities (such
as stocks) which are more volatile and carry more risks
than some other forms of investment. The price of equity
securities may rise or fall because of economic or
political changes or changes in a company's financial
condition. Initial public offerings ("IPOs") and other
investment techniques may have a magnified performance
impact on a fund with a small asset base. The Fund may
not experience similar performance as its assets grow.
Equity securities also are subject to "stock market
risk" meaning that stock prices in general (or
technology stock prices in particular) may decline over
short or extended periods of time. When the value of the
Fund's securities goes down, your investment in the Fund
decreases in value.
Derivative Risk. The Fund invests in securities that may
be considered to be DERIVATIVES. The value of derivative
securities (like mortgage-backed securities) is
dependent upon the performance of underlying assets or
securities. If the underlying assets do not perform as
expected, the value of the derivative security and your
investment in the Fund declines. Derivatives are more
volatile and are riskier in terms of both liquidity and
value than traditional investments.
Non-Diversified. The Fund is considered non-diversified
and can invest more of its assets in securities of a
single issuer than a "diversified" fund. In addition,
the Fund's investments are concentrated in the
technology sector. This concentration increases the risk
of loss to the Fund by increasing its exposure to
economic, business, political or regulatory developments
that may be adverse to the technology sector of the
economy.
<PAGE> 6
4
Not FDIC insured. An investment in the Fund is not a
deposit of Bank One Corporation or any of its affiliates
and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Because the Fund recently began operations, investment
performance is not available.
<PAGE> 7
5
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Technology Fund
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay
if you buy and hold shares of
the Fund.
EXAMPLES
The examples are intended to
help you compare the cost of
investing in the Fund with the
cost of investing in other
mutual funds. The examples
assume that you invest $10,000
in the Fund for the time
periods indicated and reflect
what you would pay if you
either redeemed all of your
shares or if you continued to
hold them at the end of the
periods shown. The examples
also assume that your
investment has a 5% return each
year and that the fund's
operating expenses remain the
same. Your actual costs may be
higher or lower than those
shown below. There is no sales
charge (load) on reinvested
dividends.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
----------------------------------------------------------------------------------------------
(fees paid directly from your investment) (1) CLASS A CLASS B CLASS C CLASS I
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases 5.25% NONE NONE NONE
(as a percentage of offering price)
----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) NONE(2) 5.00% 1.00% NONE
(as a percentage of original purchase price
of redemption proceeds, as applicable)
----------------------------------------------------------------------------------------------
Redemption Fee NONE NONE NONE NONE
----------------------------------------------------------------------------------------------
Exchange Fee NONE NONE NONE NONE
----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
---------------------------------------------------------------------------------------------
(expenses that are deducted from Fund assets) CLASS A CLASS B CLASS C CLASS I
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Advisory Fees 1.00% 1.00% 1.00% 1.00%
---------------------------------------------------------------------------------------------
Distribution [and/or Service] (12b-1) Fees .35% 1.00% 1.00% NONE
---------------------------------------------------------------------------------------------
Other Expenses (3) .50% .50% .50% .50%
---------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.85% 2.50% 2.50% 1.50%
---------------------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement (4) (.30%) (.20%) (.20%) (.20%)
---------------------------------------------------------------------------------------------
Net Expenses 1.55% 2.30% 2.30% 1.30%
---------------------------------------------------------------------------------------------
</TABLE>
(1) If you buy or sell shares through a Shareholder
Servicing Agent, you may be charged separate
transaction fees by the Shareholder Servicing
Agent. In addition, an annual $10.00 sub-minimum
account fee may be applicable and a $7.00 charge
may be deducted from redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more.
Please see "Sales Charges."
(3) Expense information is based on estimated amounts
for the current fiscal year.
(4) Banc One Investment Advisors Corporation and The
One Group Services Company have contractually
agreed to waive fees and/or reimburse expenses to
limit total annual fund operating expenses to
1.55% for Class A shares, 2.30% for Class B
shares, 2.30% for Class C shares, and 1.30% for
Class I shares until October 31, 2000.
<TABLE>
<CAPTION>
CLASS B (2) CLASS C
ASSUMING ASSUMING
CLASS B (2) REDEMPTION AT CLASS C REDEMPTION AT
ASSUMING NO THE END OF ASSUMING NO THE END OF
CLASS A REDEMPTION EACH PERIOD REDEMPTION EACH PERIOD
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year (1) $ 674 $ 233 $ 733 $ 233 $ 333
------------------------------------------------------------------------------------------
3 Years $1,049 $ 760 $1,060 $ 760 $ 760
------------------------------------------------------------------------------------------
5 Years $1,447 $1,313 $1,513 $1,313 $1,313
------------------------------------------------------------------------------------------
10 Years $2,557 $2,661 $2,661 $2,821 $2,821
------------------------------------------------------------------------------------------
<CAPTION>
CLASS I
--------------------- ---------------
<S> <C>
1 Year (1) $ 132
----------------------------------------------
3 Years $ 454
-------------------------------------------------------
5 Years $ 800
----------------------------------------------------------------
10 Years $1,773
-------------------------------------------------------------------------
</TABLE>
(1) Without contractual fee waivers, 1 Year expenses
would be as follows:
<TABLE>
<S> <C>
Class A $703
Class B (no redemption) $253
Class B (with redemption) $753
Class C (no redemption) $253
Class C (with redemption) $353
Class I $153
</TABLE>
(2) Class B shares automatically convert to Class A
shares after eight (8) years. Therefore, the
number in the "10 Years" example for Class B
Shares represents a combination of Class A and
Class B operating expenses.
<PAGE> 8
6
ONE GROUP(R)
- ------------------------------------
More About the Fund
The Fund described in this Prospectus is a series of One
Group Mutual Funds and is managed by Banc One Investment
Advisors Corporation. For more information about One
Group and Banc One Investment Advisors, please read
"Management of One Group Mutual Funds" and the Statement
of Additional Information.
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT
STRATEGIES This Prospectus describes a mutual fund that is designed
to provide long-term growth of capital. The principal
investment strategies that are used to meet the Fund's
investment objective are described in Fund Summary:
Investments, Risk, & Performance in the front of this
prospectus. They are also described below.
- The Fund mainly invests in equity securities of
companies that have, or are expected to develop
products, processes or services that will provide
significant technological advances and improvements.
- The Fund normally invests at least 65% of its total
assets in common and preferred stocks, rights,
warrants, convertible securities, and other equity
securities of companies that develop significant
technological advancements or improvements.
- Up to 35% of the Fund's total assets may be invested
in U.S. government securities, other investment grade
fixed income securities, cash and cash equivalents,
and equity securities of companies outside the
technology industry.
- The Fund may also invest up to 25% of its net assets
in the securities of foreign issuers.
- The Fund also may engage in securities lending.
- Not all the securities purchased by the Fund will pay
dividends.
There can be no assurance that the Fund will achieve its
investment objectives. Please note that the Fund may
also use strategies that are not described below, but
which are described in the Statement of Additional
Information.
<PAGE> 9
7
- --------------------------------------------------------------------------------
INVESTMENT RISKS The risks associated with investing in the Technology
Fund are described below and in Fund Summary:
Investments, Risk, & Performance at the front of this
prospectus.
- -----
SECURITIES OF TECHNOLOGY COMPANIES. The Fund invests a
significant portion of its assets in the securities of
companies in the technology sector. Because of this
focus, the Fund's performance is closely tied to and
affected by this sector. The valuation of many
technology stocks could be high when considered by such
traditional measures of value as price to earnings
ratios, price to book, or dividend yield. This reflects
the fact that many technology stocks are issued by
relatively new companies that have not yet achieved
profitability. Companies in the rapidly changing
technology field also often have unusually high price
volatility. For example, products and services that at
first appear promising may not prove commercially
successful. Such earnings disappointments can result in
sharp stock price declines. Competitive pressures also
may have a significant effect on the financial condition
of technology-sensitive companies. For example, if
technology continues to advance at an accelerated rate,
and the number of companies and product offerings
continues to expand, increasingly aggressive pricing may
affect the profitability of companies in which the Fund
invests. In addition, because of the rapid pace of
technological development, products and services
produced by companies in which the Fund invests may
become obsolete or have relatively short product cycles.
As a result, the Fund's value and returns may be
considerably more volatile and pose greater risks than
the value and returns of other mutual funds with greater
diversification among economic sectors.
DERIVATIVES. The Fund may invest in securities that are
considered to be DERIVATIVES. These securities may be
more volatile than other investments. Derivatives
present, to varying degrees, market, credit, leverage,
liquidity, and management risks. A Fund's use of
derivatives may cause the Fund to recognize higher
amounts of short-term capital gains (generally taxed at
ordinary income tax rates) than if the Fund did not use
such instruments.
WHAT IS A DERIVATIVE?
Derivatives are securities or contracts
(like futures and options) that derive
their value from the performance of
underlying assets or securities.
For more information about risks associated with the
types of investments that the Technology Fund may
purchase, please read Fund Summary: Investments, Risk, &
Performance, Appendix A and the Statement of Additional
Information.
- --------------------------------------------------------------------------------
INVESTMENT POLICIES The Fund's investment objective and the investment
policies summarized below are fundamental. This means
that they cannot be changed without the consent of a
majority of the outstanding shares of the Fund. The full
text of the fundamental policies can be found in the
Statement of Additional Information.
<PAGE> 10
8
- -----
The Fund may not:
1. Concentrate its investments in the securities of one
or more issuers conducting their principal business
in a particular industry or group of industries
(except the technology sector). This does not include
obligations issued or guaranteed by the U.S.
government or its agencies and instrumentalities and
repurchase agreements involving such securities.
2. Make loans, except that the Fund may (i) purchase or
hold debt instruments in accordance with its
investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities
lending.
Additional investment policies can be found in the
Statement of Additional Information.
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY Various rating organizations (like Standard & Poor's
Corporation and Moody's Investor Service) assign ratings
to securities. Equity securities, which will make up the
bulk of the Fund's investments, are not rated by rating
organizations. Generally, ratings are divided into two
main categories: "Investment Grade Securities" and
"Non-Investment Grade Securities." Although there is
always a risk of default, rating agencies believe that
issuers of Investment Grade Securities have a high
probability of making payments on such securities.
Non-Investment Grade Securities include securities that,
in the opinion of the rating agencies, are more likely
to default than Investment Grade Securities. The Fund
only purchases securities that meet the rating criteria
described below. Banc One Investment Advisors will look
at a security's rating at the time of investment. If the
securities are unrated, Banc One Investment Advisors
must determine that they are of comparable quality to
rated securities.
- -----
RATINGS OF THE FUND'S SECURITIES
- Corporate bonds generally will be rated in one of the
three highest investment grade categories.
- Banc One Investment Advisors reserves the right to
invest in corporate bonds which present attractive
opportunities and are rated in the lowest investment
grade category. These corporate bonds may be riskier
than higher rated bonds.
For more information about ratings, please see
"Description of Ratings" in the Statement of Additional
Information.
- --------------------------------------------------------------------------------
TEMPORARY DEFENSIVE
POSITIONS To respond to unusual market conditions, the Fund may
invest all or most of its assets in cash and CASH
EQUIVALENTS for temporary defensive purposes. These
investments may result in a lower yield than
lower-quality or longer term investments and may prevent
the Fund from meeting its investment objectives.
WHAT IS A CASH EQUIVALENT?
Cash Equivalents are highly liquid, high
quality instruments with maturities of
three months or less on the date they are
purchased. They include securities issued
by the U.S. Government, its agencies and
instrumentalities, repurchase agreements
(other than equity repurchase agreements),
certificates of deposit, bankers'
acceptances, commercial paper (rated in
one of the two highest rating categories),
variable rate master demand notes, money
market funds and bank money market deposit
accounts.
<PAGE> 11
9
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER The Fund may engage in active and frequent trading of
portfolio securities to achieve their principal
investment strategies. Portfolio turnover may vary
greatly from year to year, as well as within a
particular year. The Fund anticipates a portfolio
turnover rate well above that of other mutual funds that
do not concentrate their investments in the technology
sector. It is not uncommon for technology funds to have
turnover rates of 200 -- 300%.
Higher portfolio turnover rates will likely result in
higher transaction costs to the Fund and may result in
additional tax consequences to you. To the extent
portfolio turnover results in short-term capital gains,
such gains will generally be taxed at ordinary income
tax rates.
<PAGE> 12
10
ONE GROUP(R)
- ------------------------------------
How to Do Business with
One Group Mutual Funds
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
WHERE CAN I BUY SHARES?You may purchase Fund shares from the following sources:
- The One Group Services Company, and
- Shareholder Servicing Agents. These include investment
advisors, brokers, financial planners, banks,
insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased
this way will be held for you by the Shareholder
Servicing Agent.
WHEN CAN I BUY SHARES?- Purchases may be made on any business day. This
includes any day that the Fund is open for business,
other than weekends and days on which the New York
Stock Exchange ("NYSE") is closed, including the
following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving, and
Christmas.
- Purchase requests received by The One Group Services
Company before 4 p.m. Eastern Time ("ET") will be
effective that day. On occasion, the NYSE will close
before 4 p.m. ET. When that happens, purchase requests
received after the NYSE closes will be effective the
following business day.
- Purchase orders may be cancelled by the Fund's
Custodian, State Street Bank and Trust Company, if it
does not receive "federal funds" by 4:00 p.m. ET (i)
on the business day after the order is placed if you
are buying Class I shares, or (ii) on the third
business day if you are purchasing Class A, Class B or
Class C shares.
- If a Shareholder Servicing Agent holds your shares, it
is the responsibility of the Shareholder Servicing
Agent to send your purchase or redemption order to the
Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption
requests.
- The One Group Services Company can reject a purchase
order if it does not think that it is in the best
interests of a Fund and/or its shareholders to accept
the order.
- Shares are electronically recorded. Therefore,
certificates will not be issued.
WHAT KIND OF SHARES
CAN I BUY? One Group offers the following classes of shares:
- Class A, Class B and Class C shares are available to
the general public.
- Class I shares are available to institutional
investors and any organization authorized to act in a
fiduciary, advisory, custodial or agency capacity. We
will refer to these entities as "Intermediaries."
<PAGE> 13
11
- When deciding what class of shares to buy, you should
consider the amount of your investment, the length of
time you intend to hold the shares, and the sales
charges and expenses applicable to each class of
shares. If you intend to hold your shares for six or
more years, Class B shares may be more appropriate for
you. If you intend to hold your shares for less than
six years, you may want to consider Class A or Class C
shares. Sales charges are discussed in the section of
this prospectus entitled SALES CHARGES.
One Group Fund Direct IRA and 403(b). One Group offers
retirement plans. These plans allow participants to
defer taxes while their retirement savings grow. Call
The One Group Services Company at 1-800-480-4111 for an
Adoption Agreement.
HOW MUCH DO SHARES COST?- Shares are sold at net asset value ("NAV") plus a
sales charge, if any.
- Each class of shares in the Fund has a different NAV.
This is primarily because each class has different
distribution expenses.
- NAV per share is calculated by dividing the total
market value of the Fund's investments and other
assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- The Fund's NAV changes every day. NAV is calculated
each business day following the close of the NYSE at
4:00 p.m. ET. On occasion, the NYSE will close before
4 p.m. ET. When that happens, NAV will be calculated
as of the time the NYSE closes.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000 ($100 for
employees of Bank One Corporation and its
affiliates). The minimum initial investment for an
IRA and 403(b) is $250.
- Subsequent investments must be at least $25.
- You may purchase no more than $249,999 of Class B
shares. This is because Class A shares offer a
reduced sales charge on purchases of $250,000 or
more and have lower expenses. The section of this
prospectus entitled WHAT KIND OF SHARES CAN I BUY?
provides information that can help you choose the
appropriate share class.
- The One Group Services Company may waive these
minimums.
3. Complete the Account Application Form. Be sure to
sign up for all of the Account privileges that you
plan to take advantage of. Doing so now means that
you will not have to complete additional paperwork
later.
4. Send the completed application and a personal check
(unless you choose to pay by wire) to:
STATE STREET BANK AND TRUST COMPANY
C/O ONE GROUP
P.O. BOX 8528
BOSTON, MA 02266-8528
Contributions to Fund Direct IRAs should be made
payable to "State Street Bank and Trust Company for
the Benefit of (your name)."
If you choose to pay by wire, please call The One
Group Services Company at 1-800-480-4111.
<PAGE> 14
12
5. All checks must be in U.S. dollars. One Group does
not accept "third party checks." Checks made payable
to any individual or company and endorsed to One
Group Mutual Funds are considered third party checks.
All checks must be payable to one of the following:
- One Group Mutual Funds;
- State Street Bank and Trust Company; or
- One Group Technology Fund.
Checks made payable to any party other than those
listed above will be returned to the address provided
on the account application.
6. If you redeem shares purchased by check, One Group
will delay forwarding your redemption proceeds until
payment has been collected from your bank. One Group
generally receives payment within seven (7) business
days of purchase.
7. If you purchase shares through a Shareholder
Servicing Agent, you may be required to complete
additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent
regarding purchases, exchanges and redemptions.
8. If you have any questions, contact your Shareholder
Servicing Agent or call The One Group Services
Company at 1-800-480-4111.
CAN I PURCHASE SHARES
OVER THE TELEPHONE? Yes. Simply select this option on your Account
Application Form and then:
- Contact your Shareholder Servicing Agent or The One
Group Services Company at 1-800-480-4111 to relay your
purchase instructions.
- Authorize a bank transfer or initiate a wire transfer
to the following wire address:
STATE STREET BANK AND TRUST COMPANY
ATTN: CUSTODY & SHAREHOLDER SERVICES
ABA 011 000 028
DDA 99034167
FBO ONE GROUP FUND
(EX: ONE GROUP TECHNOLOGY -- A)
YOUR ACCOUNT NUMBER
(EX: 123456789)
YOUR ACCOUNT REGISTRATION
(EX: JOHN SMITH & MARY SMITH, JTWROS)
- One Group uses reasonable procedures to confirm that
instructions given by telephone are genuine. These
procedures include recording telephone instructions
and asking for personal identification. If these
procedures are followed, One Group will not be
responsible for any loss, liability, cost or expense
of acting upon unauthorized or fraudulent
instructions; you bear the risk of loss.
- You may revoke your right to make purchases over the
telephone by sending a letter to:
STATE STREET BANK AND TRUST COMPANY
C/O ONE GROUP
P.O. BOX 8528
BOSTON, MA 02266-8528
<PAGE> 15
13
CAN I AUTOMATICALLY
INVEST ON A SYSTEMATIC
BASIS? Yes. After your Account is established, you may purchase
additional Class A, Class B and Class C shares by making
automatic monthly investments from your bank account. To
establish a Systematic Investment Plan:
- Select the "Systematic Investment Plan" option on the
Account Application Form.
- Provide the necessary information about the bank
account from which your investments will be made.
- Shares purchased under a Systematic Investment Plan
may not be redeemed for five (5) business days.
- One Group currently does not charge for this service,
but may impose a charge in the future. However, your
bank may impose a charge for debiting your bank
account.
- You may revoke your election to make systematic
investments by calling The One Group Services Company
at 1-800-480-4111 or by sending a letter to:
STATE STREET BANK AND TRUST COMPANY
C/O ONE GROUP
P.O. BOX 8528
BOSTON, MA 02266-8528
CONVERSION FEATURE Your Class B shares automatically convert to Class A
shares after eight years (measured from the end of the
month in which they were purchased).
- After conversion, your shares will be subject to the
lower distribution and shareholder servicing fees
charged on Class A shares.
- You will not be assessed any sales charges or fees for
conversion of shares, nor will you be subject to any
Federal income tax.
- Because the share price of the Class A shares may be
higher than that of the Class B shares at the time of
conversion, you may receive fewer Class A shares;
however, the dollar value will be the same.
- If you have exchanged Class B shares of a One Group
Fund for Class B shares of another, the time you held
the shares in each One Group Fund will be added
together.
<PAGE> 16
14
- --------------------------------------------------------------------------------
SALES CHARGES The One Group Services Company compensates Shareholder
Servicing Agents who sell shares of One Group Mutual
Funds. Compensation comes from sales charges, 12b-1 fees
and payments by The One Group Services Company from its
own resources.
CLASS A
SHARES
- -------------------------
This table shows the amount of sales charge you pay and
the commissions paid to Shareholder Servicing Agents.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT SALES CHARGE SALES CHARGE COMMISSION
OF AS A % OF THE AS A % AS A %
PURCHASES OFFERING PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
LESS THAN $50,000 5.25% 5.54% 4.75%
-------------------------------------------------------------------------------
$50,000-$99,999 4.50% 4.71% 4.05%
-------------------------------------------------------------------------------
$100,000-$249,999 3.50% 3.63% 3.05%
-------------------------------------------------------------------------------
$250,000-$499,999 2.50% 2.56% 2.05%
-------------------------------------------------------------------------------
$500,000-$999,999 2.00% 2.04% 1.60%
-------------------------------------------------------------------------------
$1,000,000* 0.00% 0.00% 0.00%
-------------------------------------------------------------------------------
</TABLE>
* If you purchase $1 million or more of Class A shares
and are not assessed a sales charge at the time of
purchase, you will be charged the equivalent of 1% of
the purchase price if you redeem any or all of the
Class A shares within one year of purchase and 0.50%
of the purchase price if you redeem within two years
of purchase, unless The One Group Services Company
receives notice before you invest indicating that your
Shareholder Servicing Agent is waiving its commission.
CLASS B SHARES
- -------------------------
Class B shares are offered at NAV, without any up-front
sales charges. However, if you redeem these shares
within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC")
according to the following schedule:
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEARS CDSC AS A %
SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
-----------------------------------
1-2 4.00%
-----------------------------------
2-3 3.00%
-----------------------------------
3-4 3.00%
-----------------------------------
4-5 2.00%
-----------------------------------
5-6 1.00%
-----------------------------------
MORE THAN 6 0.00%
-----------------------------------
</TABLE>
The One Group Services Company pays a commission of
4.00% of the original purchase price to Shareholder
Servicing Agents who sell Class B shares.
CLASS C SHARES
- -------------------------
Class C shares are offered at NAV, without any up-front
sales charge. However, if you redeem your shares within
one year of the purchase date, you will be assessed a
CDSC as follows:
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEARS CDSC AS A %
SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
-----------------------------------
AFTER FIRST
YEAR NONE
-----------------------------------
</TABLE>
<PAGE> 17
15
Shareholder Servicing Agents selling Class C shares
receive a commission of 1.00% of the original purchase
price from The One Group Services Company.
How the CDSC is Calculated
- The Fund assumes that all purchases made in a given
month were made on the first day of the month.
- The CDSC is based on the current market value or the
original cost of the shares, whichever is less.
- No CDSC is imposed on share appreciation, nor is a
CDSC assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- To keep your CDSC as low as possible, the Fund first
will redeem the shares you have held for the longest
time and thus have the lowest CDSC.
- If you exchange Class B or Class C shares of an
unrelated mutual fund for Class B or Class C shares of
One Group in connection with a fund reorganization,
the CDSC applicable to your original shares (including
the period of time you have held those shares) will be
applied to One Group shares you receive in the
reorganization.
12b-1 FEES
- -------------------------
Each One Group Fund has adopted a plan under Rule 12b-1
that allows it to pay distribution and shareholder
servicing fees for the sale and distribution of shares
of the Funds. These fees are called 12b-1 fees. 12b-1
fees are paid by One Group to The One Group Services
Company as compensation for its services and expenses.
The One Group Services Company in turn pays all or part
of the 12b-1 fee to Shareholder Servicing Agents that
sell shares of One Group.
The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average
daily net assets of the Fund, which is currently
being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00%
of the average daily net assets of the Fund. This
will cause expenses for Class B and Class C shares to
be higher and dividends to be lower than for Class A
shares.
3. There are no 12b-1 fees for Class I shares.
12b-1 fees, together with the CDSC, help The One Group
Services Company sell Class B and Class C shares without
an "up-front" sales charge by defraying the costs of
advancing brokerage commissions and other expenses paid
to Shareholder Servicing Agents.
- The One Group Services Company may use up to .25% of
the fees for shareholder servicing and up to .75% for
distribution.
- The One Group Services Company may pay 12b-1 fees to
its affiliates and to Banc One Investment Advisors and
its affiliates (or any sub-advisor) for brokerage and
other agency transactions.
Because 12b-1 fees are paid out of Fund assets on an
on-going basis, over time these fees will increase the
cost of your investment and may cost you more than
paying other types of sales charges.
<PAGE> 18
16
- --------------------------------------------------------------------------------
SALES CHARGE REDUCTIONS
AND WAIVERS
REDUCING YOUR CLASS A There are several ways you can reduce the sales charges
SALES CHARGES you pay on Class A shares:
- -----------------------
1. Right of Accumulation: You may add the market value
of any Class A, Class B or Class C shares of a One
Group Fund (except a money market fund) that you (and
your spouse and minor children) already own to the
amount of your next Class A purchase for purposes of
calculating the sales charge. An Intermediary also
may take advantage of this option.
2. Letter of Intent: With an initial investment of
$2,000, you may purchase Class A shares of one or
more One Group Funds over the next 13 months and pay
the same sales charge that you would have paid if all
shares were purchased at once. A percentage of your
investment will be held in escrow until the full
amount covered by the Letter of Intent has been
invested.
To take advantage of the accumulation privilege or
letter of intent, complete the appropriate section of
your fund application, or contact your investment
representative. To determine if you are eligible for the
accumulation privilege, contact The One Group Services
Company at 1-800-480-4111. These programs may be
terminated or amended at any time.
WAIVER OF THE CLASS A
SALES CHARGE No sales charge is imposed on Class A shares of the Fund
- --------------------- if the shares were:
1. Bought with the reinvestment of dividends and capital
gains distributions.
2. Acquired in exchange for other Fund shares if a
comparable sales charge has been paid for the
exchanged shares.
3. Bought by officers, directors or trustees, retirees
and employees (and their spouses and immediate family
members) of:
- One Group.
- Bank One Corporation and its subsidiaries and
affiliates.
- The One Group Services Company and its subsidiaries
and affiliates.
- State Street Bank and Trust Company and its
subsidiaries and affiliates.
- Broker/dealers who have entered into dealer
agreements with One Group and their subsidiaries and
affiliates.
- An investment sub-advisor of a fund of One Group and
such sub-advisor's subsidiaries and affiliates.
4. Bought by:
- Affiliates of Bank One Corporation and certain
accounts (other than IRA Accounts) for which an
Intermediary acts in a fiduciary, advisory, agency,
or custodial capacity or accounts which participate
in select affinity programs with Bank One
Corporation and its affiliates and subsidiaries.
- Accounts as to which a bank or broker-dealer charges
an asset allocation fee, provided the bank or
broker-dealer has an agreement with The One Group
Services Company.
<PAGE> 19
17
- Certain retirement and deferred compensation plans
and trusts used to fund those plans, including, but
not limited to, those defined in sections 401(a),
403(b) or 457 of the Internal Revenue Code and
"rabbi trusts."
- Shareholder Servicing Agents who have a dealer
arrangement with The One Group Services Company, who
place trades for their own accounts or for the
accounts of their clients and who charge a
management, consulting or other fee for their
services, as well as clients of such Shareholder
Servicing Agents who place trades for their own
accounts if the accounts are linked to the master
account of such Shareholder Servicing Agent.
5. Bought with proceeds from the sale of Class I shares
of a One Group Fund or acquired in an exchange of
Class I shares of a Fund for Class A shares of the
same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a
mutual fund, including a One Group Fund, for which a
sales charge was paid, but only if the purchase is
made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution
from an employee benefit plan, but only if the
purchase is made within 60 days of the sale or
distribution and, at the time of the distribution,
the employee benefit plan had plan assets invested in
a One Group Fund.
8. Bought with assets of One Group.
9. Bought in connection with plans of reorganization of
a Fund, such as mergers, asset acquisitions and
exchange offers to which a Fund is a party.
WAIVER OF THE CLASS B
SALES CHARGE No sales charge is imposed on redemptions of Class B
- --------------------- shares of the Fund:
1. If you withdraw no more than 10% of the value of your
account in a 12 month period. Shares received from
dividend and capital gains reinvestment are included
in calculating amounts eligible for this waiver. You
need to participate in the Systematic Withdrawal Plan
to take advantage of this waiver.
2. If you buy the shares in connection with certain
retirement plans, such as 401(k) and similar
qualified plans.
3. If you are the shareholder (or a joint shareholder),
or a participant or beneficiary of certain retirement
plans and you die or become disabled (as defined by
the Tax Code) after the account is opened, but only
if the redemption is made within one year of such
death or disability.
4. That represent a minimum required distribution from
an IRA Account or other qualifying retirement plan,
but only if you are at least age 70 1/2.
5. Exchanged in connection with plans of reorganization
of the Fund, such as mergers, asset acquisitions and
exchange offers to which a One Group Fund is a party.
6. Exchanged for Class B shares of other One Group
Funds. However, you may pay a sales charge when you
redeem the Fund shares you received in the exchange.
Please read Do I pay a Sales Charge on an Exchange?.
<PAGE> 20
18
WAIVER OF THE CLASS C
SALES CHARGE No sales charge is imposed on redemptions of Class C
- --------------------- shares of the Fund:
1. If you withdraw no more than 10% of the value of your
account. Shares received from dividend and capital
gains reinvestment are included in calculating
amounts eligible for this waiver. You need to
participate in the Systematic Withdrawal Plan to take
advantage of this waiver.
2. If you buy the shares in connection with certain
retirement plans, such as 401(k) and similar
qualified plans.
3. If you are the shareholder (or a joint shareholder),
or a participant or beneficiary of certain retirement
plans and you die or become disabled (as defined by
the Tax Code) after the account is opened, but only
if the redemption is made within one year of such
death or disability.
4. That represent a minimum required distribution from
an IRA Account or other qualifying retirement plan,
but only if you are at least age 70 1/2.
5. Exchanged in connection with plans of reorganization
of the Fund, such as mergers, asset acquisitions and
exchange offers to which a Fund is a party.
6. Exchanged for Class C shares of other One Group
Funds. However, you may pay a sales charge when you
redeem the Fund shares you received in the exchange.
Please read Do I pay a Sales Charge on an Exchange?.
7. If The One Group Services Company receives notice
before you invest indicating that your Shareholder
Servicing Agent, due to the type of account that you
have, is waiving its commission.
WAIVER QUALIFICATIONS
- ---------------------
To take advantage of any of these sales charge waivers,
you must qualify for such waiver in advance. To see if
you qualify, contact The One Group Services Company at
1-800-480-4111 or your Shareholder Servicing Agent.
These waivers will not continue indefinitely and may be
discontinued at any time without notice.
- --------------------------------------------------------------------------------
EXCHANGING FUND SHARES
WHAT ARE MY EXCHANGE
PRIVILEGES? You may make the following exchanges:
- Class I shares of the Fund may be exchanged for Class
A shares of the Fund or for Class A or Class I shares
of another One Group Fund.
- Class A shares of the Fund may be exchanged for Class
I shares of the Fund or for Class A or Class I shares
of another One Group Fund, but only if you are
eligible to purchase those shares.
- Class B shares of the Fund may be exchanged for Class
B shares of another One Group Fund.
- Class C shares of the Fund may be exchanged for Class
C shares of another One Group Fund.
<PAGE> 21
19
One Group Funds offer a Systematic Exchange Privilege
which allows you to automatically exchange shares of one
fund to another on a monthly or quarterly basis. This
privilege is useful in Dollar Cost Averaging. To
participate in the Systematic Exchange Privilege, please
select it on your Account Application. To learn more
about it, please call The One Group Services Company at
1-800-480-4111.
One Group does not charge a fee for this privilege. In
addition, One Group may change the terms and conditions
of your exchange privileges upon 60 days written notice.
WHEN ARE EXCHANGES
PROCESSED? Exchanges are processed the same business day they are
received, provided:
- State Street Bank and Trust Company receives the
request by 4:00 p.m., ET.
- You have provided One Group with all of the
information necessary to process the exchange.
- You have received a current prospectus of the Fund or
Funds in which you wish to invest.
- You have contacted your Shareholder Servicing Agent,
if necessary.
DO I PAY A SALES CHARGE
ON AN EXCHANGE? Generally, you will not pay a sales charge on an
exchange. However:
- You will pay a sales charge if you own Class I shares
of a Fund and you want to exchange those shares for
Class A shares, unless you qualify for a sales charge
waiver (see above).
- You will pay a sales charge if you bought Class A
shares of a Fund:
1. That does not charge a sales charge and you want to
exchange them for shares of a Fund that does, in
which case you would pay the sales charge
applicable to the Fund into which you are
exchanging.
2. That charged a lower sales charge than the Fund
into which you are exchanging, in which case you
would pay the difference between that Fund's sales
charge and all other sales charges you have already
paid.
- If you exchange Class B or Class C shares of a Fund,
you will not pay a sales charge at the time of the
exchange, however:
1. Your new Class B or Class C shares will be subject
to the higher CDSC of either the Fund from which
you exchanged, the Fund into which you exchanged,
or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class
B or Class C shares is carried over to your new
shares.
ARE EXCHANGES TAXABLE?
Generally:
- An exchange between classes of shares of the same Fund
is not taxable for Federal income tax purposes.
- An exchange between Funds is considered a sale and
generally results in a capital gain or loss for
Federal income tax purposes.
<PAGE> 22
20
- You should talk to your tax advisor before making an
exchange.
ARE THERE LIMITS ON
EXCHANGES? Yes. The exchange privilege is not intended as a way for
you to speculate on short-term movements in the market
and the Fund does not permit excessive trading or market
timing. Therefore:
- To prevent disruptions in the management of the Funds,
One Group limits excessive exchange activity.
- Exchange activity is excessive if it EXCEEDS TWO
SUBSTANTIVE EXCHANGE REDEMPTIONS (WITHIN 30 DAYS OF
EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- In addition, One Group reserves the right to reject
any exchange request (even those that are not
excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or
otherwise adversely affect other shareholders.
- --------------------------------------------------------------------------------
REDEEMING FUND SHARES
WHEN CAN I REDEEM SHARES?
You may redeem all or some of your shares on any day
that the Fund is open for business.
- Redemption requests received by The One Group Services
Company before 4:00 p.m. ET (or when the NYSE closes)
will be effective that day.
HOW DO I REDEEM SHARES?- Unless you have selected the telephone option on your
Account Application Form, you must send a written
redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and
Trust Company at the following address:
ONE GROUP
C/O STATE STREET BANK AND TRUST COMPANY
P.O. BOX 8528
BOSTON, MA 02266-8528
- All requests for redemptions from IRA accounts must be
in writing.
- You may request redemption forms by calling The One
Group Services Company at 1-800-480-4111.
- State Street Bank and Trust Company may require that
the signature on your redemption request be guaranteed
by a participant in the Securities Transfer
Association Medallion Program or the Stock Exchange
Medallion Program, unless:
1. the redemption is for shares worth $50,000 or less;
and
2. the redemption is payable to the shareholder of
record; and
3. the redemption check is mailed to the shareholder
at the record address or the redemption is payable
by wire or bank transfer (ACH) to a pre-existing
bank account.
<PAGE> 23
21
- On the Account Application Form you may elect to have
the redemption proceeds mailed or wired to:
1. a designated commercial bank; or
2. your Shareholder Servicing Agent.
- State Street Bank and Trust Company may charge you a
wire redemption fee. The current charge is $7.00.
- Your redemption proceeds will be paid within seven
days after receipt of the redemption request.
WHAT WILL MY SHARES BE
WORTH? - If you own Class A and Class I shares and the Fund
receives your redemption request by 4:00 p.m. ET (or
when the NYSE closes), you will receive that day's
NAV.
- If you own Class B or Class C shares and the Fund
receives your redemption request by 4:00 p.m. ET (or
when the NYSE closes), you will receive that day's
NAV, minus the amount of any applicable CDSC.
CAN I REDEEM BY
TELEPHONE? Yes, if you selected this option on your Account
Application Form.
- Call your Shareholder Servicing Agent or The One Group
Service Company at 1-800-480-4111 to relay your
redemption request.
- Your redemption proceeds will be mailed or wired to
the commercial bank account you designated on your
Account Application Form.
- State Street Bank and Trust Company may charge you a
wire redemption fee. The current charge is $7.00.
- One Group uses reasonable procedures to confirm that
instructions given by telephone are genuine. These
procedures include recording telephone instructions
and asking for personal identification. If these
procedures are followed, One Group will not be
responsible for any loss, liability, cost or expense
of acting upon unauthorized or fraudulent
instructions; you bear the risk of loss.
- REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY
TELEPHONE.
CAN I REDEEM ON A
SYSTEMATIC BASIS? If you have an account value of at least $10,000, you
may elect to receive monthly, quarterly or annual
payments of not less than $100 each.
- Select the "Systematic Withdrawal Plan" option on the
Account Application Form.
- Specify the amount you wish to receive and the
frequency of the payments.
- You may designate a person other than yourself as the
payee.
- There is no charge for this service.
- If you select this option, please keep in mind that:
1. It may not be in your best interest to buy
additional Class A shares while participating in a
Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
<PAGE> 24
22
2. If you own Class B or Class C shares, you or your
designated payee may receive systematic payments.
The applicable Class B or Class C sales charge is
waived provided your withdrawals do not exceed 10%
annually, measured from the date you begin
participating in the Plan. Shares received from
dividend and capital gains reinvestment are
included in calculating the 10%. Withdrawals in
excess of 10% will subject the entire annual
withdrawal to the applicable sales load.
3. If you are age 70 1/2, you may elect to receive
payments to the extent that the payment represents
a minimum required distribution from an IRA or
other qualifying retirement plan.
4. If the amount of the systematic payment exceeds the
income earned by your account since the previous
payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your
shares. This will reduce the amount of your
investment.
ADDITIONAL INFORMATION
REGARDING REDEMPTIONS
- -------------------------
- Generally, all redemptions will be for cash. However,
if you redeem shares worth $500,000 or more of the
Fund's assets, the Fund reserves the right to pay part
or all of your redemption proceeds in readily
marketable securities instead of cash. If payment is
made in securities, the Fund will value the securities
selected in the same manner in which it computes NAV.
This process minimizes the affect of large redemptions
on the Fund and its remaining shareholders.
- If you redeem shares for which you paid by check, and
One Group has not yet received payment on the check,
One Group will delay forwarding your redemption
proceeds until payment has been collected from your
bank.
- Because of the high cost of handling small
investments, One Group charges a sub-minimum account
fee. Accounts which fall under the minimum required
balance due to shareholder redemptions will be
assessed an annual fee of $10.00 per Fund. The
sub-minimum account fee will not apply to IRA accounts
and the accounts of employees of Bank One Corporation
and its affiliates.
- One Group may suspend your ability to redeem when:
1. Trading on the New York Stock Exchange ("NYSE") is
restricted.
2. The NYSE is closed (other than weekend and holiday
closings).
3. The SEC has permitted a suspension.
4. An emergency exists.
The Statement of Additional Information offers more
details about this process.
- You generally will recognize a gain or loss on a
redemption for Federal income tax purposes. You should
talk to your tax advisor before making a redemption.
<PAGE> 25
23
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
VOTING RIGHTS
- -----------------------
The Fund does not hold annual shareholder meetings, but
may hold special meetings. The special meetings are
held, for example, to elect or remove Trustees, change
the Fund's fundamental investment objective, or approve
an investment advisory contract.
As a Fund shareholder, you have one vote for each share
that you own. Each Fund, and each class of shares within
each Fund, vote separately on matters relating solely to
that Fund or class, or which affect that Fund or class
differently. However, all shareholders will have equal
voting rights on matters that affect all shareholders
equally.
DIVIDEND POLICIES
- -----------------------
DIVIDENDS. The Fund generally declares dividends on the
last business day of each year. Dividends for the Fund
are distributed on the first business day of the next
month after they are declared. Capital gains, if any,
for the Fund are distributed at least annually.
The Fund pays dividends and distributions on a per-share
basis. This means that the value of your shares will be
reduced by the amount of the payment. If you purchase
shares shortly before the record date for a dividend or
the distribution of capital gains, you will pay the full
price for the shares and receive some portion of the
price back as a taxable dividend or distribution.
Dividends payable on Class I shares will be more than
those payable on other classes of shares. This is
because Class A, Class B and Class C shares have higher
distribution expenses.
DIVIDEND REINVESTMENT. You automatically will receive
all income dividends and capital gain distributions in
additional shares of the same Fund and class, unless you
have elected to take such payment in cash. The price of
the shares is the NAV determined immediately following
the dividend record date. Reinvested dividends and
distributions receive the same tax treatment as
dividends and distributions paid in cash.
If you want to change the way in which you receive
dividends and distributions, you must write to State
Street Bank & Trust Company at P.O. Box 8528, Boston, MA
02266-8528, at least 15 days prior to the distribution.
The change is effective upon receipt by State Street.
You also may call The One Group Services Company at
1-800-480-4111 to make this change.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES. Class B
shares received as dividends and capital gains
distributions will be accounted for separately. Each
time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of
the Class B shares in the sub-account will also convert
to Class A shares. (See "Conversion Feature.")
<PAGE> 26
24
TAX TREATMENT
OF SHAREHOLDERS
- -------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS. A sale, exchange,
or redemption of Fund shares generally will produce
either a taxable gain or a loss. You are responsible for
any tax liabilities generated by your transactions.
Reinvested dividends and distributions receive the same
tax treatment as dividends and distributions paid in
cash.
TAXATION OF
DISTRIBUTIONS
- -------------------------
The Fund will distribute substantially all of its net
investment income (including, for this purpose, the
excess of net short-term capital gains over net
long-term capital losses) and net capital gains (i.e.,
the excess of net long-term capital gains over net
short-term capital losses) on at least an annual basis.
Dividends you receive from the Fund, whether reinvested
or received in cash, will be taxable to you. Dividends
from the Fund's net investment income will be taxable as
ordinary income and distributions from the Fund's
long-term capital gains will be taxable to you as such,
regardless of how long you have held the shares.
Distributions are taxable to you even if they are paid
from income or gains earned by the Fund prior to your
investment (and thus were included in the price you
paid).
Dividends paid in January, but declared in October,
November or December of the previous year, will be
considered to have been paid in the previous year.
TAXATION OF
RETIREMENT PLANS
- -------------------------
Distributions by the Fund to qualified retirement plans
generally will not be taxable. However, if shares are
held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received shares as
a distribution from a retirement plan, the distributions
will be taxable to the plan or individual as described
in "Taxation of Distributions." If you are considering
purchasing shares with qualified retirement plan assets,
you should consult your tax advisor for a more complete
explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an
investment.
TAX INFORMATION
- -------------------------
The Form 1099 that is mailed to you every January
details your dividends and their federal tax category.
Even though the Fund provides you with this information,
you are responsible for verifying your tax liability
with your tax professional. For additional tax
information see the Statement of Additional Information.
Please note that this tax discussion is general in
nature; no attempt has been made to present a complete
explanation of the Federal, state, local or foreign tax
treatment of the Fund or its shareholders.
SHAREHOLDER INQUIRIES
- -------------------------
If you have any questions or need additional
information, please write The One Group Services Company
at 3435 Stelzer Road, Columbus, OH 43219, call
1-800-480-4111 or visit www.onegroup.com.
REPORTING
- -------------------------
In March and September you will receive a financial
report from One Group. In addition, One Group will
periodically send you proxy statements and other
reports.
<PAGE> 27
25
ONE GROUP(R)
- ------------------------------------
Management of
One Group Mutual Funds
- --------------------------------------------------------------------------------
THE ADVISOR Banc One Investment Advisors (1111 Polaris Parkway, P.O.
Box 710211, Columbus, Ohio 43271-0211) makes the
day-to-day investment decisions for the Fund and
continuously reviews, supervises and administers the
Fund's investment program. Banc One Investment Advisors
performs its responsibilities subject to the supervision
of, and policies established by, the Trustees of One
Group Mutual Funds. Banc One Investment Advisors has
served as investment advisor to the Trust since its
inception. In addition, Banc One Investment Advisors
serves as investment advisor to other mutual funds and
individual corporate, charitable, and retirement
accounts. As of June 30, 1999, Banc One Investment
Advisors, an indirect wholly-owned subsidiary of Bank
One Corporation, managed over $126 billion in assets.
- --------------------------------------------------------------------------------
ADVISORY FEES Banc One Investment Advisors is paid a fee based on an
annual percentage of the average daily net assets of the
Fund. Under the investment advisory agreement with the
Fund, Banc One Investment Advisors is entitled to a fee,
which is calculated daily and paid monthly, equal to
1.00% of the assets of the Fund.
- --------------------------------------------------------------------------------
THE FUND MANAGERS The Fund is managed by a team of Fund managers, research
analysts, and other investment management professionals.
Each team member makes recommendations about the
securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while
the portfolio managers determine strategy, industry
weightings, Fund holdings, and cash positions.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS This section normally would include Financial Highlights
for the Fund. Because the Fund had not begun operations
as of June 30, 1999, there are no Financial Highlights
for the Fund.
<PAGE> 28
26
ONE GROUP(R)
- ------------------------------------
Appendix A
- --------------------------------------------------------------------------------
INVESTMENT PRACTICES The Fund invests in a variety of securities and employs
a number of investment techniques. Each security and
technique involves certain risks. What follows is a list
of some of the securities and techniques utilized by the
Fund, as well as the risks inherent in their use. Equity
securities are subject mainly to market risk. Fixed
income securities are primarily influenced by market,
credit and prepayment risks, although certain securities
may be subject to additional risks. For a more complete
discussion, see the Statement of Additional Information.
Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
RISK
INSTRUMENT TYPE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Obligations: Bills, notes, bonds, Market
STRIPS, and CUBES.
-------------------------------------------------------------------------------
Treasury Receipts: TRS, TIGRs, and CATS. Market
-------------------------------------------------------------------------------
U.S. Government Agency Securities: Securities Market
issued by agencies and instrumentalities of the Credit
U.S. Government. These include Ginnie Mae, Fannie
Mae, and Freddie Mac.
-------------------------------------------------------------------------------
Certificates of Deposit: Negotiable instruments Market
with a stated maturity. Credit
Liquidity
-------------------------------------------------------------------------------
Time Deposits: Non-negotiable receipts issued by a Liquidity
bank in exchange for the deposit of funds. Credit
Market
-------------------------------------------------------------------------------
Common Stock: Shares of ownership of a company. Market
-------------------------------------------------------------------------------
Repurchase Agreements: The purchase of a security Credit
and the simultaneous commitment to return the Market
security to the seller at an agreed upon price on Liquidity
an agreed upon date. This is treated as a loan.
-------------------------------------------------------------------------------
Reverse Repurchase Agreements: The sale of a Market
security and the simultaneous commitment to buy Leverage
the security back at an agreed upon price on an
agreed upon date. This is treated as a borrowing
by the Fund.
-------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
27
<TABLE>
<CAPTION>
RISK
INSTRUMENT TYPE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Securities Lending: The lending of up to 33 1/3% Credit
of the Fund's total assets. In return the Fund Market
will receive cash, other securities, and/or Leverage
letters of credit as collateral.
-------------------------------------------------------------------------------
When-Issued Securities and Forward Commitments: Market
Purchase or contract to purchase securities at a Leverage
fixed price for delivery at a future date. Liquidity
Credit
-------------------------------------------------------------------------------
Investment Company Securities: Shares of other Market
mutual funds, including One Group money market
funds and shares of other money market funds for
which Banc One Investment Advisors or its
affiliates serve as investment advisor or
administrator. Banc One Investment Advisors will
waive certain fees when investing in funds for
which it serves as investment advisor.
-------------------------------------------------------------------------------
Convertible Securities: Bonds or preferred stock Market
that can convert to common stock. Credit
-------------------------------------------------------------------------------
Call and Put Options: A call option gives the Management
buyer the right to buy, and obligates the seller Liquidity
of the option to sell, a security at a specified Credit
price at a future date. A put option gives the Market
buyer the right to sell, and obligates the seller Leverage
of the option to buy, a security at a specified
price at a future date. The Fund will sell only
covered call and secured put options.
-------------------------------------------------------------------------------
Futures and Related Options: A contract providing Management
for the future sale and purchase of a specified Market
amount of a specified security, class of Credit
securities, or an index at a specified time in the Liquidity
future and at a specified price. Leverage
-------------------------------------------------------------------------------
Real Estate Investment Trusts ("REITS"): Pooled Liquidity
investment vehicles which invest primarily in Management
income producing real estate or real estate Market
related loans or interest. Regulatory
Tax
Prepayment
-------------------------------------------------------------------------------
Bankers' Acceptances: Bills of exchange or time Credit
drafts drawn on and accepted by a commercial bank. Liquidity
Maturities are generally six months or less. Market
-------------------------------------------------------------------------------
</TABLE>
<PAGE> 30
28
<TABLE>
<CAPTION>
RISK
INSTRUMENT TYPE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper: Secured and unsecured short-term Credit
promissory notes issued by corporations and other Liquidity
entities. Maturities generally vary from a few Market
days to nine months.
-------------------------------------------------------------------------------
Foreign Securities: Stocks issued by foreign Market
companies, as well as commercial paper of foreign Political
issuers and obligations of foreign banks, overseas Liquidity
branches of U.S. banks and supranational entities. Foreign
Includes American Depositary Receipts, Global Investment
Depositary Receipts, American Depositary
Securities, and European Depositary Receipts.
-------------------------------------------------------------------------------
Restricted Securities: Securities not registered Liquidity
under the Securities Act of 1933, such as Market
privately placed commercial paper and Rule 144A
securities.
-------------------------------------------------------------------------------
Variable and Floating Rate Instruments: Credit
Obligations with interest rates which are reset Liquidity
daily, weekly, quarterly or some other period and Market
which may be payable to the Fund on demand.
-------------------------------------------------------------------------------
Rights and Warrants: Securities, typically issued Market
with preferred stock or bonds, that give the Credit
holder the right to buy a proportionate amount of
common stock at a specified price.
-------------------------------------------------------------------------------
Preferred Stock: A class of stock that generally Market
pays a dividend at a specified rate and has
preference over common stock in the payment of
dividends and in liquidation.
-------------------------------------------------------------------------------
Mortgage-Backed Securities: Debt obligations Prepayment
secured by real estate loans and pools of loans. Market
These include collateralized mortgage obligations Credit
("CMOs") and Real Estate Mortgage Investment Regulatory
Conduits ("REMICs").
-------------------------------------------------------------------------------
Corporate Debt Securities: Corporate bonds and Market
non-convertible debt securities. Credit
-------------------------------------------------------------------------------
Swaps, Caps and Floors: The Fund may enter into Management
these transactions to manage its exposure to Credit
changing interest rates and other factors. Swaps Liquidity
involve an exchange of obligations by two parties. Market
Caps and floors entitle a purchaser to a principal
amount from the seller of the cap or floor to the
extent that a specified index exceeds or falls
below a predetermined interest rate or amount.
-------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
29
<TABLE>
<CAPTION>
RISK
INSTRUMENT TYPE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
New Financial Products: New options and futures Management
contracts and other financial products continue to Credit
be developed and the Fund may invest in such Market
options, contracts and products. Liquidity
-------------------------------------------------------------------------------
Index Shares: Ownership interest in unit Market
investment trusts and other pooled investment
vehicles that hold a portfolio of securities or
stocks designed to track the price performance and
dividend yield of a particular index including
Standard & Poor's Depository Receipts ("SPDRs")
and Nasdaq-100s.
-------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
INVESTMENT RISKS Below is a more complete discussion of the types of
risks inherent in the securities and investment
techniques listed above. Because of these risks, the
value of the securities held by the Fund may fluctuate,
as will the value of your investment in the Fund.
Certain investments are more susceptible to these risks
than others
- Credit Risk. The risk that the issuer of a security,
or the counterparty to a contract, will default or
otherwise become unable to honor a financial
obligation. Credit risk is generally higher for
non-investment grade securities. The price of a
security can be adversely affected prior to actual
default as its credit status deteriorates and the
probability of default rises.
- Leverage Risk. The risk associated with securities or
practices that multiply small index or market
movements into large changes in value. Leverage is
often associated with investments in derivatives, but
also may be embedded directly in the characteristics
of other securities.
- Hedged. When a derivative (a security whose value is
based on another security or index) is used as a
hedge against an opposite position that the Fund
also holds, any loss generated by the derivative
should be substantially offset by gains on the
hedged investment, and vice versa. While hedging can
reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to
imperfect matching between the derivative and
underlying security, and there can be no assurance
that the Fund's hedging transactions will be
effective.
- Speculative. To the extent that a derivative is not
used as a hedge, the Fund is directly exposed to the
risks of that derivative. Gains or losses from
speculative positions in a derivative may be
substantially greater than the derivative's original
cost.
<PAGE> 32
30
- Liquidity Risk. The risk that certain securities may
be difficult or impossible to sell at the time and the
price that would normally prevail in the market. The
seller may have to lower the price, sell other
securities instead or forego an investment
opportunity, any of which could have a negative effect
on Fund management or performance. This includes the
risk of missing out on an investment opportunity
because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- Management Risk. The risk that a strategy used by the
Fund's management may fail to produce the intended
result. This includes the risk that changes in the
value of a hedging instrument will not match those of
the asset being hedged. Incomplete matching can result
in unanticipated risks.
- Market Risk. The risk that the market value of a
security may move up and down, sometimes rapidly and
unpredictably. These fluctuations may cause a security
to be worth less than the price originally paid for
it, or less than it was worth at an earlier time.
Market risk may affect a single issuer, industry,
sector of the economy or the market as a whole. There
is also the risk that the current interest rate may
not accurately reflect existing market rates. For
fixed income securities, market risk is largely, but
not exclusively, influenced by changes in interest
rates. A rise in interest rates typically causes a
fall in values, while a fall in rates typically causes
a rise in values. Finally, key information about a
security or market may be inaccurate or unavailable.
This is particularly relevant to investments in
foreign securities.
- Political Risk. The risk of losses attributable to
unfavorable governmental or political actions, seizure
of foreign deposits, changes in tax or trade statutes,
and governmental collapse and war.
- Foreign Investment Risk. The risk associated with
higher transaction costs, delayed settlements,
currency controls and adverse economic developments.
This also includes the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign
currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse
any gains produced by foreign currency denominated
investments and may widen any losses. Exchange rate
volatility also my affect the ability of an issuer to
repay U.S. dollar denominated debt, thereby increasing
credit risk.
- Prepayment Risk. The risk that the principal repayment
of a security will occur at an unexpected time,
especially that the repayment of a mortgage or
asset-backed security occurs either significantly
sooner or later than expected. Changes in prepayment
rates can result in greater price and yield
volatility. Prepayments generally accelerate when
interest rates decline. When mortgage and other
obligations are prepaid, the Fund may have to reinvest
in securities with a lower yield. Further, with early
prepayment, the Fund may fail to recover any premium
paid, resulting in an unexpected capital loss.
- Tax Risk. The risk that the issuer of the securities
will fail to comply with certain requirements of the
Internal Revenue Code, which could cause adverse tax
consequences. Also the risk that the tax treatment of
municipal or other securities could be changed by
Congress, thereby affecting the value of outstanding
securities.
<PAGE> 33
31
- Regulatory Risk. The risk associated with Federal and
state laws which may restrict the remedies that a
lender has when a borrower defaults on loans. These
laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy
and debtor relief laws, restrictions on "due on sale"
clauses, and state usury laws.
- Zero Coupon Risk. The market prices of securities
structured as zero coupon or pay-in-kind securities
are generally affected to a greater extent by interest
rate changes. These securities tend to be more
volatile than securities which pay interest
periodically.
<PAGE> 34
(Intentionally Left Blank)
<PAGE> 35
- --------------------------------------------------------------------------------
If you want more information about the Fund, the
following documents are free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about
the Fund's investments is available in the Fund's annual
and semi-annual reports to shareholders. In the Fund's
annual report, you will find a discussion of the market
conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal
year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI"): The SAI
provides more detailed information about the Fund and is
incorporated into this prospectus by reference.
HOW CAN I GET MORE INFORMATION? You can get a free copy
of the semi-annual/ annual reports or the SAI, request
other information or discuss your questions about the
Fund by calling 1-800-480-4111 or by writing the Fund
at:
one group(R) mutual funds
3435 stelzer road
columbus, ohio 43219
You can also review and copy the Fund's reports and the
SAI at the Public Reference Room of the Securities and
Exchange Commission ("SEC"). (For information about the
SEC's Public Reference Room call 1-202-942-8090). You
can also get reports and other information about the
Fund from the EDGAR Database on the SEC's web site at
http://www.sec.gov. Copies of this information also may
be obtained, after paying a copying charge, by
electronic request at the following e-mail address:
[email protected] or by writing the Public Reference
Section of the SEC, Washington,D.C. 20549-6009
(Investment Company Act File No. 811-4236)
TOG-F-133 [ONE GROUP LOGO]
