<PAGE> 1
CIRCLE INCOME SHARES, INC.
POST OFFICE BOX 77004
INDIANAPOLIS, INDIANA 46277-7004
November 20, 2000
To Shareholders of Circle Income Shares, Inc.:
Enclosed please find several documents furnished to you in connection with
a Special Meeting of Shareholders of Circle Income Shares, Inc. ("Circle
Income"). The Special Meeting will be held in Suite 500, The Columbia Club, 121
Monument Circle, Indianapolis, Indiana on Tuesday, January 9, 2001, at 1:00 p.m.
Central Time. At the Special Meeting, you will be asked to consider and approve
the reorganization of Circle Income into One Group Mutual Funds, specifically
One Group Income Bond Fund ("One Group Income"). We hope this material will
receive your immediate attention and that, if you cannot attend the meeting in
person, you will vote your proxy promptly.
If you approve the proposed reorganization, Circle Income will transfer all
of its assets to One Group Income, in return for Class A shares of One Group
Income. At the same time, One Group Income will assume all of the liabilities of
Circle Income. After these transfers, Class A shares of One Group Income will be
distributed to Circle Income's shareholders of record and Circle Income will be
liquidated and dissolved.
The investment objectives and policies of One Group Income and Circle
Income are similar, and the investment adviser for both funds is the same firm.
However, there are substantial differences in the major shareholder policies and
procedures. These differences will provide new features to shareholders of
Circle Income, if the proposed reorganization with One Group Income is approved.
We believe this proposal offers you many benefits, including the elimination of
Circle Income's market discount, all of which are discussed in greater detail in
the attached Combined Prospectus/Proxy Statement.
Also, the proposed reorganization is intended to be a tax-free transaction
for you and Circle Income, and you will not be assessed any sales charges or
other fees in connection with the proposal.
THE BOARD OF DIRECTORS HAS GIVEN CAREFUL CONSIDERATION TO THE PROPOSAL AND
WE BELIEVE THAT THE PROPOSED REORGANIZATION OF CIRCLE INCOME WITH ONE GROUP
INCOME IS IN THE BEST INTERESTS OF CIRCLE INCOME AND ITS SHAREHOLDERS. WE
UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE PROPOSED REORGANIZATION.
The Notice of Special Meeting of Shareholders, the accompanying Combined
Prospectus/Proxy Statement, the Prospectus for One Group Income, and the form of
proxy are enclosed. Please read these documents carefully.
We welcome your attendance at the Special Meeting of Shareholders. Your
vote is important to us. If you are unable to attend the meeting in person, we
urge you to vote your proxy by using either one of the convenient methods
available, so your shares may be voted according to your instructions.
Sincerely,
JACQUELINE A. WEITZ
Secretary
<PAGE> 2
CIRCLE INCOME SHARES, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, JANUARY 9, 2001
To Shareholders of Circle Income Shares, Inc.:
NOTICE IS HEREBY GIVEN of a Special Meeting of Shareholders (Special
Meeting and any adjournment thereof, the "Meeting") of Circle Income Shares,
Inc. ("Circle Income"). The Meeting will be held in Suite 500, The Columbia
Club, 121 Monument Circle, Indianapolis, Indiana on Tuesday, January 9, 2001, at
1:00 p.m. Central Time, to consider and vote on the following:
1. Approval of an Agreement and Plan of Reorganization pursuant to which
Circle Income will transfer all of its assets to One Group Mutual Funds,
specifically One Group Income Bond Fund ("One Group Income"), in return
for Class A shares of One Group Income. At the same time, One Group
Income will assume all of the liabilities of Circle Income. After these
transfers, it is intended that shares of One Group Income will be
distributed, on a tax-free basis, to Circle Income shareholders of
record tax-free according to their respective interests, and Circle
Income will be liquidated and dissolved. A vote in favor of the
reorganization will also constitute a vote in favor of the liquidation
and dissolution of Circle Income and termination of its registration
under the Investment Company Act of 1940.
2. Any other business that may properly come before the Meeting.
The proposed reorganization is described in the attached Combined
Prospectus/Proxy Statement and a copy of the Agreement and Plan of
Reorganization dated as of October 18, 2000, is attached as Exhibit A to the
Combined Prospectus/Proxy Statement.
One Group Mutual Funds ("One Group") is a diversified, open-end management
investment company made up of multiple series. Each series is operated as a
separate fund. One Group Mutual Funds contains fifty-five funds, of which
fifty-one are currently offered to investors. Circle Income is a diversified
closed-end management investment company incorporated in 1973 under the laws of
the State of Indiana.
Circle Income's Board of Directors fixed the close of business on November
20, 2000, as the record date. Shareholders of record are entitled to notice of,
and to vote at, the Meeting. The enclosed proxy is being solicited on behalf of
the Board of Directors. The Board of Directors of Circle Income unanimously
recommends approval of the reorganization.
By Order of the Board of Directors,
JACQUELINE A. WEITZ
Secretary
Circle Income Shares, Inc.
Post Office Box 77004
Indianapolis, Indiana 46277-7004
Phone: (800) 338-4345
November 20, 2000
Your vote is important. Each shareholder who does not expect to attend the
Meeting in person is requested to complete, sign, date, and promptly return the
enclosed proxy card. You may also submit your proxy by telephone, as further
described in the Combined Prospectus/Proxy Statement. Please vote as soon as
possible to help avoid additional proxy solicitation costs and to hold the
Meeting as scheduled.
<PAGE> 3
November 20, 2000
<TABLE>
<S> <C>
One Group(R) Mutual Funds Circle Income Shares, Inc.
1111 Polaris Parkway Post Office Box 77004
Columbus, Ohio 43271-1235 Indianapolis, Indiana 46277-7004
Tel No: 1-800-338-4345 Tel No: 1-800-338-4345
</TABLE>
COMBINED PROSPECTUS/PROXY STATEMENT
This Combined Prospectus/Proxy Statement is furnished in connection with
the solicitation of proxies from the shareholders of Circle Income Shares, Inc.
("Circle Income").
The proxies will be used at a Special Meeting of Shareholders ("Meeting")
to consider and approve an Agreement and Plan of Reorganization ("Agreement")
between Circle Income and One Group Mutual Funds dated as of October 18, 2000, a
copy of which is attached as Exhibit A, and the completion of the transactions
(collectively, the "Transaction") contemplated in the Agreement. The Agreement
provides for the transfer of all the assets and liabilities of Circle Income to
One Group Income Bond Fund ("One Group Income") in exchange for Class A shares
of One Group Income.
Following the transfer, shares of One Group Income will be distributed to
Circle Income's shareholders of record on the exchange date. Circle Income will
then be liquidated and dissolved. It is intended that as a result of the
Transaction, you will receive on a tax-free basis, a number of full and
fractional Class A shares of One Group Income equal at the date of the exchange
to the value of your share of the net assets of Circle Income. Because Circle
Income is a closed-end fund, your share of the net assets of Circle Income may
be higher or lower than the market price of the common stock of Circle Income
that you owned prior to the Transaction.
One Group Mutual Funds ("One Group") is a diversified, open-end management
investment company made up of multiple series. Each series is operated as a
separate fund. One Group contains fifty-five funds, of which fifty-one are
currently offered to investors. Circle Income is a diversified closed-end
management investment company incorporated in 1973 under the laws of the State
of Indiana.
This Combined Prospectus/Proxy Statement explains concisely what you should
know before investing in One Group Income. Please read it carefully and keep it
for future reference.
This Combined Prospectus/Proxy Statement is accompanied by the current
prospectus for One Group Income, dated November 1, 2000, which is incorporated
into this Combined Prospectus/Proxy Statement by reference.
Additional information about One Group Income can be found in the current
Statement of Additional Information of One Group Mutual Funds, dated November 1,
2000, and the Statement of Additional Information dated November 20, 2000
relating to this Combined Prospectus/Proxy Statement. Annual reports for One
Group Income and Circle Income and a Prospectus for Circle Income are
incorporated by reference in the Statement of Additional Information and will
accompany the Statement of Additional Information. Each of the documents
mentioned above is on file with the Securities and Exchange Commission and may
be obtained, without charge, by writing or calling One Group Mutual Funds or
Circle Income Shares, Inc. (the "SEC") at the addresses or telephone numbers
provided above.
PLEASE REMEMBER, SHARES OF ONE GROUP AND CIRCLE INCOME:
- ARE NOT DEPOSITS OR OBLIGATIONS, OR GUARANTEED BY BANK ONE CORPORATION
OR ITS AFFILIATES AND SUBSIDIARIES;
- ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY;
- INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE AMOUNT
INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS COMBINED PROSPECTUS/PROXY STATEMENT IN
CONNECTION WITH THE OFFER MADE BY THIS COMBINED PROSPECTUS/PROXY STATEMENT AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY ONE GROUP MUTUAL FUNDS. THIS COMBINED PROSPECTUS/PROXY
STATEMENT DOES NOT CONSTITUTE AN OFFERING BY ONE GROUP MUTUAL FUNDS IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Proposal 1: To approve the reorganization of Circle Income
Shares, Inc. ............................................. 4
Synopsis.................................................... 5
Comparison of Fund Structures.......................... 5
Comparison of Current Fees............................. 6
Performance Information................................ 8
Financial Highlights................................... 10
Comparison of Investment Objectives and Practices...... 11
Comparison of Investment Policies...................... 13
Comparison of Shareholder Policies and Procedures...... 15
Federal Income Tax Consequences........................ 19
Principal Risk Factors...................................... 19
Management of the Funds and Discussion of Fund
Performance............................................... 21
One Group Mutual Funds and One Group Income Bond
Fund.................................................. 21
Circle Income Shares, Inc.............................. 22
Information About the Proposed Transaction.................. 23
Introduction........................................... 23
Terms of the Proposed Transaction...................... 23
Federal Tax Opinions................................... 26
Fees and Expenses of the Transaction................... 26
Comparison of Shareholder Rights....................... 27
Existing and Pro Forma Capitalization.................. 27
Voting Information.......................................... 27
Ownership by Certain Beneficial Owners and Management....... 29
Rights of Dissenting Shareholders........................... 63
Interests of Certain Persons in the Transaction............. 64
Litigation.................................................. 64
Financial Statements........................................ 64
Information filed with the Securities and Exchange
Commission................................................ 65
Agreement and Plan of Reorganization dated as of October 18,
2000...................................................... Exhibit A
Circle Income Shares, Inc. Dividend Reinvestment Plan....... Exhibit B
Authorized Shares - Circle Income Shares, Inc............... Exhibit C
Management Discussion Regarding Each Fund's Performance..... Exhibit D
</TABLE>
3
<PAGE> 5
PROPOSAL 1: TO APPROVE THE REORGANIZATION OF CIRCLE INCOME SHARES, INC.
On October 18, 2000, the Board of Directors ("Directors") of Circle Income
Shares, Inc. ("Circle Income") unanimously approved an Agreement and Plan of
Reorganization pursuant to which Circle Income will transfer all of its assets
to One Group Mutual Funds, specifically One Group Income Bond Fund ("One Group
Income"), in exchange for Class A shares of One Group Income. At the same time,
One Group Income will assume all the liabilities of Circle Income. Following the
transfer, Class A shares of One Group Income will be distributed to Circle
Income shareholders of record on the exchange date. Circle Income will then be
liquidated and dissolved. These events, collectively, will be referred to in
this Combined Prospectus/Proxy Statement as the "Transaction".
It is intended that as a result of the proposed Transaction, you will
receive, without paying any sales charges and on a tax-free basis, a number of
full and fractional Class A shares of One Group Income, equal at the date of the
exchange, to the value of the net assets of Circle Income attributable to you.
Because Circle Income is a closed-end fund, your share of the net assets of
Circle Income may be higher or lower than the market price of the common stock
of Circle Income that you owned prior to the Transaction.
The Board of Directors has concluded that participation in the proposed
Transaction is in the best interests of Circle Income and its shareholders. The
Directors have further concluded that the economic interests of shareholders of
Circle Income will not be diluted as a result of the proposed transaction. In
reaching these conclusions, the Directors considered, among other things:
1. The elimination of Circle Income's market discount to its net asset
value.
2. The greater diversification in the portfolio holdings of One Group
Income.
3. The similarity of the investment objectives and policies of One Group
Income with those of Circle Income.
4. The performance of One Group Income as compared to the performance of
Circle Income.
5. The expense ratios of Circle Income and One Group Income.
6. The enhanced range of investment options available to investors in
One Group Mutual Funds. One Group Mutual Funds currently offers 51
different funds.
7. The tax-free nature of the transaction.
8. The investment and market leverage that One Group Mutual Funds will
provide.
For a more complete discussion of the factors affecting the Board's
decision, please see pages 24, 25 and 26.
4
<PAGE> 6
SYNOPSIS
This Synopsis is designed to allow you to compare the legal structure,
current fees, investment objectives, policies and restrictions, and shareholder
policies of Circle Income with those of One Group Income. This section is only a
synopsis. For more complete information, please read the prospectus for each
fund. The One Group Income prospectus is enclosed with these materials. To
obtain a copy of the Circle Income prospectus, please call 1-800-338-4345.
COMPARISON OF FUND STRUCTURES
One Group Income is an open-end investment company and Circle Income is a
closed-end investment company. This distinction is important. While both
investment companies are regulated by the U.S. Securities and Exchange
Commission ("SEC"), open- and closed-end funds differ in the way in which they
sell shares, value their shares, and provide services to their shareholders.
These differences are explained below.
One Group Income is an open-end investment company. Open-end investment
companies raise cash for investment by continuously selling shares. Cash from
the sale of shares is used by the investment adviser to purchase securities that
match the fund's investment objectives. The amount available for investment
depends, in part, on purchases and sales (redemptions) by shareholders.
Open-end funds calculate the price of their shares every business day. The
share price is called the net asset value (NAV). The NAV is the current market
value of all the assets held by the fund, minus liabilities, divided by the
total number of shares outstanding. For example, a fund with $30,000,000 in net
assets and 3,000,000 shares outstanding will have an NAV of $10.00. The NAV
changes as the value of the underlying securities rises or falls. Investors may
purchase shares of an open-end fund on any business day at the fund's current
NAV. Open-end funds also continuously buy back (redeem) shares from shareholders
who no longer wish to invest in the fund. Investors can redeem some or all of
their shares anytime and receive the current NAV.
Circle Income is a closed-end investment company whose shares are traded
over-the-counter. The shares are listed and traded on NASDAQ under the ticker
symbol "CINS." Like other publicly traded securities, the market prices of
closed-end fund shares fluctuate and are determined by supply and demand in the
marketplace. A closed-end fund raises cash for investment by selling a fixed
number of shares, and the investment adviser invests the cash in accordance with
the fund's investment objective and policies. The amount available for
investment by a closed-end fund does not depend on purchases or redemptions by
investors, because unlike an open-end fund, a closed-end fund does not issue
redeemable securities and typically does not offer its securities for sale on a
continuous basis.
Both open- and closed-end funds calculate their NAVs in the same manner.
However, because a closed-end fund's shares trade in the stock market at prices
based on investor demand, the fund may trade at a price higher or lower than its
NAV. For example, a closed-end fund in great demand may trade at a share price
higher than its NAV. In this case, the fund's shares are said to be selling at a
"premium" to the NAV. The opposite also may be true. Based on a less favorable
perception of its underlying portfolio, of the market in which it trades, or a
lack of investor knowledge or market recognition, a fund may trade at a share
price lower than its NAV. Such a fund's shares are said to be selling at a
"discount" to the NAV. For example, if a fund has an NAV per share of $10.00,
based on the current value of its portfolio, but is priced at $9.00, it is
selling at a 10% discount.
5
<PAGE> 7
In the past, shares of Circle Income have generally traded at a discount in
relation to NAV. The following table shows for each fiscal quarter for the two
most recent complete fiscal years and the fiscal quarters during the current
fiscal year: (1) the high and low NAV per share during the quarter; (2) the high
and low sale price of the shares on the NASDAQ during the quarter; and (3) the
high and low premium or discount to NAV at which the shares were trading during
the quarter.
<TABLE>
<CAPTION>
DISCOUNT TO
NET ASSET VALUES NASDAQ PRICE NET ASSET VALUE
---------------- ---------------- -----------------
FOR THE QUARTER ENDED: HIGH LOW HIGH LOW HIGH LOW
---------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
September 30, 1998................ $12.03 $11.76 $11.50 $10.88 (8.54)% (3.93)%
December 30, 1998................. $12.07 $11.73 $11.63 $10.88 (9.53)% (2.80)%
March 31, 1999.................... $12.05 $11.74 $11.25 $10.50 (11.09)% (5.32)%
June 30, 1999..................... $11.92 $11.31 $10.75 $10.38 (10.87)% (4.95)%
September 30, 1999................ $11.52 $11.21 $11.00 $ 9.75 (13.64)% (3.00)%
December 31, 1999................. $11.33 $11.13 $ 9.75 $ 8.88 (20.47)% (13.18)%
March 31, 2000.................... $11.12 $10.94 $ 9.38 $ 8.75 (20.89)% (15.31)%
June 30, 2000..................... $11.14 $10.72 $ 9.59 $ 9.00 (18.65)% (12.39)%
September 30, 2000................ $11.11 $10.97 $ 9.78 $ 9.31 (15.57)% (11.88)%
</TABLE>
The NAV per share at the close of business on October 19, 2000, (the last
trading date on which the Fund publicly reported its NAV prior to the
announcement of the proposed Transaction) was $11.06 and the last reported sales
price of a share on the NASDAQ on that date was $9.50. Due to trading in
anticipation of the proposed Transaction, Circle Income's share price and NAV
per share may be the same if and when the Transaction is consummated. Additional
information regarding Circle Income's authorized securities may be found in
Exhibit C.
Open-end funds typically provide a wide variety of services. These include
24-hour and toll-free telephone access, websites, systematic purchase and
withdrawal programs, dividend reinvestment plans, exchange rights among funds in
a fund complex, and investor education materials, such as newsletters, brochures
and planning tools. Closed-end funds typically offer dividend reinvestment
plans, but generally do not provide other shareholder services.
COMPARISON OF CURRENT FEES
The following tables show the current fees for Circle Income followed by
those currently charged by One Group Income. If the reorganization is approved,
you would pay the fees shown for One Group Income. The examples following the
tables will help you compare the cost of investing in Circle Income with the
cost of investing in One Group Income.
CIRCLE INCOME
<TABLE>
<S> <C>
ANNUAL OPERATING EXPENSES
(As a percentage of net assets attributable to Common
Shares)
Management Fees............................................. .50%
Other Expenses.............................................. .49%
Total Annual Operating Expenses............................. .99%
</TABLE>
6
<PAGE> 8
ONE GROUP INCOME
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A
-------
Maximum Sales Charge Imposed on Purchases(2)
(as a percentage of offering price)....................... 4.50%
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption
proceeds, as applicable).................................. None(3)
Redemption Fees............................................. None
Exchange Fees............................................... None
ANNUAL OPERATING EXPENSES(4)
(as a percentage of average daily net assets)
Investment Advisory Fees.................................... .60%
Distribution [and/or Service](12b-1)........................ .35%
Other Expenses.............................................. .22%
Total Fund Operating Expenses............................... 1.17%
Fee Waiver and/or Expense Reimbursement(5).................. (.25)%
Net Expenses................................................ .92%
</TABLE>
---------------
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent.
(2) Shares received in the proposed Transaction will not be subject to a sales
charge. Please see "Will I Pay a Sales Charge in the Reorganization?"
(3) Except for purchases of $1 million or more. Please see "Sales Charges" in
the One Group Income prospectus.
(4) Expense information has been restated to reflect current fees.
(5) Banc One Investment Advisors Corporation and the Administrator have
contractually agreed to waive fees and/or reimburse expenses to limit total
annual fund expenses to .92% for Class A Shares for the period beginning
November 1, 2000 and ending on October 31, 2001. Please note current fee
waivers result in net expenses of .89%.
EXAMPLES
These examples will help you compare the cost of investing in Circle Income
with the cost of investing in One Group Income. The example assumes that you
invest $1,000 for the time periods indicated. The example also assumes 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>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Circle Income (without brokerage
commissions)(1)................................ $10 $32 $ 55 $121
One Group Income (without sales charge).......... $ 9 $35 $ 62 $140
One Group Income (with sales charge)............. $54(2) $78 $104 $179
</TABLE>
This example assumes that you invest $10,000 for the time periods
indicated, based on the same assumptions as above.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Circle Income (without brokerage
commissions)(1)............................... $101 $315 $ 547 $1,213
One Group Income (without sales charge)......... $ 94 $347 $ 620 $1,398
One Group Income (with sales charge)............ $540(2) $781 $1,042 $1,785
</TABLE>
---------------
(1) The Circle Income examples do not include brokerage commissions Circle
Income shareholders pay when purchasing shares. If commissions were
included, the costs of investing in Circle Income shares would be higher.
(2) Without contractual fee waivers, 1 year expenses would be $56 based on a
$1,000 investment and $564 based on a $10,000 investment.
7
<PAGE> 9
One Group Income shares that you receive in the Transaction will not be
subject to a sales charge. However, you will be assessed a sales charge if you
purchase additional Class A shares after the Transaction, unless you qualify for
a sales charge waiver. For further information on sales charges, please read
"How Do Sales Charges Compare?" in this Combined Prospectus/Proxy Statement and
"Sales Charges" in the One Group Income prospectus accompanying this Combined
Prospectus/Proxy Statement.
PERFORMANCE INFORMATION
By showing the variability of One Group Income's performance from year to
year, the chart and table below help show the risk of investing in the Fund.
PLEASE REMEMBER THAT THE PAST PERFORMANCE OF ONE GROUP INCOME IS NOT NECESSARILY
AN INDICATION OF HOW THE FUND WILL PERFORM IN THE FUTURE.
The Bar Chart shows changes in the Fund's performance from year to year.
Total returns assume reinvestment of dividends and distributions. The returns
shown do not reflect applicable sales charges. If these charges were included,
the returns would be lower than those shown.
BAR CHART (PER CALENDAR YEAR)(1) -- CLASS A SHARES
BAR CHART
<TABLE>
<S> <C>
1994 -0.95
1995 17.2
1996 2.72
1997 8.63
1998 7.4
1999 -1.28
</TABLE>
(1)For the period from January 1, 2000, through September 30, 2000, the Class
A's total return was 6.33%. One Group Income consolidated with the Pegasus
Multi-Sector Bond Fund on March 22, 1999. For financial reporting purposes,
the Pegasus Multi-Sector Bond Fund was the accounting survivor. Therefore,
all performance information for One Group Income for periods prior to March
22, 1999, reflects the performance of the Pegasus Multi-Sector Bond Fund.
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: 5.55% 2Q1995 WORST QUARTER: -1.98% 1Q1996
</TABLE>
--------------------------------------------------------------------------------
8
<PAGE> 10
The Average Annual Total Return Table shows how the Fund's average annual
returns for the periods indicated compare to those of a broad measure of market
performance. Average annual total returns for more than one year tend to smooth
out variations in the Fund's total returns and are not the same as actual
year-by-year results. The average annual returns shown on the Average Annual
Total Return Table do include applicable sales charges. However, shares that you
receive in the Transaction will not be subject to a sales charge.
Average Annual Total Returns through December 31, 1999(1)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCEPTION PERFORMANCE
DATE OF CLASS 1 YEAR 5 YEARS SINCE 3/5/93
------------- ------ ------- ------------
<S> <C> <C> <C> <C>
Class A 3/5/93 -5.71% 5.77% 4.62%
--------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(2) -0.82% 7.73% 6.03%
--------------------------------------------------------------------------------------------
Lipper Intermediate Investment Grade
Index(3) -0.98% 7.08% 5.50%
</TABLE>
The following table shows updated average annual total returns for each
Fund, so you can compare the performance of Circle Income and One Group Income
Class A. Of course, past performance does not predict future results.
<TABLE>
<CAPTION>
CIRCLE INCOME ONE GROUP INCOME
(AT MARKET VALUE) CLASS A
----------------- ----------------
<S> <C> <C>
Fiscal YTD Ending 8/31/00 (2 months)......... 2.02% 2.26%
1 Year Annualized -- 6/30/00................. (2.59)% 3.80%
3 Year Annualized -- 6/30/00................. 2.75% 5.18%
5 Year Annualized -- 6/30/00................. 5.61% 5.38%
1 Year Annualized -- 9/30/00................. 3.69% 6.23%
3 Year Annualized -- 9/30/00................. 2.20% 5.06%
5 Year Annualized -- 9/30/00................. 6.49% 5.57%
Since Inception of One Group Income
(3/5/93).................................. 4.65% 5.44%
</TABLE>
---------------
(1)One Group Income consolidated with the Pegasus Multi-Sector Bond Fund on
March 22, 1999. For financial reporting purposes, the Pegasus Multi-Sector
Bond Fund was the accounting survivor. The performance information for One
Group Income for periods prior to March 22, 1999, reflects the performance of
the Pegasus Multi-Sector Bond Fund. On December 2, 1994 the Fund terminated
its offering of Class B shares and such shares converted to Class A shares.
The Fund re-offered Class B shares on May 31, 1995. For periods prior to the
re-offering of Class B shares on May 31, 1995, Class B performance is based
on Class A performance from March 5, 1993 to May 30, 1995. For periods prior
to the commencement of operations of Class C shares on May 30, 2000, Class C
performance is based on Class B from March 5, 1993 to May 29, 2000. All prior
class performance has been adjusted to reflect the differences in expenses
and sales charges between classes.
(2)The Lehman Brothers Aggregate Bond Index is an unmanaged index comprised of
U.S. government, mortgage, corporate and asset-backed 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
expenses 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.
(3)The Lipper Intermediate Investment Grade Index consists of the equally
weighted average monthly return of the largest funds within the universe of
all funds in the category.
9
<PAGE> 11
FINANCIAL HIGHLIGHTS
The following Financial Highlights for One Group Income and Circle Income
are intended to help you understand each Fund's performance for the last five
years. The total returns in the tables represent the rate that an investor would
have earned or lost on investments in the Funds (assuming reinvestment of all
dividends and distributions). The information for Class A shares of One Group
Income has been audited by PricewaterhouseCoopers LLP and other independent
accountants. PricewaterhouseCoopers' report, along with the One Group Income's
financial statements, is incorporated by reference in the Statement of
Additional Information. The information for Circle Income has been audited by
Arthur Andersen LLP, whose report, along with the Fund's financial statements,
also is incorporated by reference in the Statement of Additional Information.
The Statement of Additional Information is available upon request.
<TABLE>
<CAPTION>
ONE GROUP INCOME
CLASS A SHARES
--------------------------------------------------------------------
YEAR SIX MONTHS FEBRUARY 1,
ENDED ENDED YEAR ENDED DECEMBER 31, 1995 TO
JUNE 30, JUNE 30, --------------------------- DECEMBER 31,
2000 1999(A) 1998 1997 1996 1995(B)
-------- ---------- ------- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 7.68 $ 8.09 $ 8.00 $ 7.84 $ 8.18 $ 7.68
Investment Activities:
Net investment income....... 0.46 0.21 0.44 0.48 0.41 0.44
Net realized and unrealized
gains (losses) from
investments.............. (0.18) (0.34) 0.14 0.17 (0.25) 0.72
------- ------- ------- ------ ------ ------
Total from Investment
Activities............. 0.28 (0.13) 0.58 0.65 0.16 1.16
------- ------- ------- ------ ------ ------
Distributions:
Net investment income....... (0.46) (0.22) (0.44) (0.47) (0.40) (0.44)
------- ------- ------- ------ ------ ------
Net realized gains
(losses)................. -- (0.06) (0.05) (0.02) (0.10) (0.22)
------- ------- ------- ------ ------ ------
Total distributions...... (0.46) (0.28) (0.49) (0.49) (0.50) (0.66)
NET ASSET VALUE, END OF
PERIOD...................... $ 7.50 $ 7.68 $ 8.09 $ 8.00 $ 7.84 $ 8.18
Total Return (Excludes Sales
Charge)..................... 3.80% (1.62)%(C) 7.44% 8.58% 2.75% 15.55%(C)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period
(000).................... $28,677 $31,603 $15,785 $7,832 $8,798 $6,095
Ratio of expenses to average
net assets............... 0.88% 0.87%(D) 0.90% 0.87% 0.84% 0.94%(D)
Ratio of net investment
income to average net
assets................... 6.11% 5.37%(D) 5.57% 5.83% 5.75% 5.72%(D)
Ratio of expenses to average
net assets*.............. 1.16% 1.16%(D) 0.90% 0.87% 0.90% 1.15%(D)
Portfolio turnover(E)....... 25.10% 20.55% 41.69% 38.70% 103.93% 173.26%
</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) Upon reorganizing as a fund of One Group Mutual Funds, the One Group Income
Bond Fund merged into the Pegasus Multi Sector Bond Fund to become the One
Group Income Bond Fund. The Financial Highlights for the periods prior to
March 22, 1999 represent the Pegasus Multi Sector Bond Fund.
(B) Effective February 1, 1995 the Fund changed its fiscal year end from January
31, to December 31.
(C) Not annualized.
(D) Annualized.
(E) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
10
<PAGE> 12
CIRCLE INCOME
SELECTED PER SHARE DATA OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
year.......................... $ 11.44 $ 11.96 $ 11.82 $ 11.60 $ 11.84
--------- --------- --------- --------- ---------
Net investment income........... 0.79 0.79 0.83 0.88 0.90
Net realized and unrealized gain
(loss) on investments......... (0.50) (0.53) 0.15 0.21 (0.24)
--------- --------- --------- --------- ---------
Net increase in net asset value
resulting from operations..... 0.29 0.26 0.98 1.09 0.66
--------- --------- --------- --------- ---------
Dividends to shareholders from
net investment income......... (0.78) (0.78) (0.84) (0.87) (0.90)
--------- --------- --------- --------- ---------
Net asset value, end of year.... $ 10.95 $ 11.44 $ 11.96 $ 11.82 $ 11.60
========= ========= ========= ========= =========
Market value per share, end of
year.......................... $ 9.313 $ 10.375 $ 11.375 $ 10.688 $ 10.500
========= ========= ========= ========= =========
TOTAL INVESTMENT RETURN:(1)
Based on market value per
share......................... (2.59)% (2.12)% 14.60% 9.56% 11.15%
Based on net asset value per
share......................... 2.68% 2.15% 8.38% 9.69% 5.62%
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................. 0.99% 0.90% 0.90% 0.89% 0.89%
Net investment income........... 7.06% 6.65% 6.97% 7.53% 8.05%
SUPPLEMENTAL DATA:
Net assets at end of period
($000)........................ $30,703.9 $32,068.1 $33,534.6 $33,061.0 $32,451.7
Portfolio turnover rate......... 4.53% 13.52% 27.63% 8.52% 17.75%
Number of shares outstanding at
end of period (000)........... 2,803.5 2,803.5 2,803.5 2,797.4 2,797.4
</TABLE>
---------------
(1) Total investment return is a hypothetical rate of return to the shareholder
which assumes that an initial investment is made at the appropriate rate
(market value or net asset value) calculated on the last business day before
the first day of each fiscal year. All related dividends during the year are
reinvested at the appropriate rate (market value or net asset value), and
the entire investment is liquidated at the appropriate price last calculated
on the last business day of each fiscal year. The total investment return is
calculated by dividing the ending value of the investment by the beginning
value of the investment. Total investment return excludes the effects of any
commissions.
COMPARISON OF INVESTMENT OBJECTIVES AND PRACTICES
The following sections will help you compare the investment objectives and
policies of Circle Income with those of One Group Income. Please be aware that
this is only a brief discussion. More complete information regarding One Group
Income can be found in the One Group Income prospectus that you received along
with this Combined Prospectus/Proxy Statement.
One Group Income and Circle Income pursue similar investment objectives.
The primary investment objective of each fund is to seek a high level of current
income with capital appreciation as a secondary objective. The portfolio
securities held by Circle Income are compatible with the investment objectives
of One Group
11
<PAGE> 13
Income and meet the liquidity requirements for an open-end fund such as One
Group Income. Therefore, the proposed reorganization of Circle Income will not
result in significant portfolio turnover or transaction expenses due to One
Group Income's disposal of incompatible securities. Banc One Investment Advisors
Corporation ("Banc One Investment Advisors") serves as investment advisor to
both Circle Income and One Group Income. The percentages referenced below apply
at the time the security is purchased.
ONE GROUP INCOME AND CIRCLE INCOME
One Group Income seeks a high level of current income by investing
primarily in a diversified portfolio of high, medium and low-grade debt
securities. One Group Income invests at least 70% of its total assets in debt
securities of all types rated as investment grade at the time of investment or,
if unrated, determined by Banc One Investment Advisors to be of comparable
quality. In addition, up to 30% of One Group Income's total assets may be
invested in convertible securities, preferred stock, loan participations and
debt securities rated below investment grade or, if unrated, determined by Banc
One Investment Advisors to be of comparable quality. Even though it may invest
in debt securities in all rating categories, One Group Income will not invest
more than 20% of its total assets in securities rated below the fifth rating
category. Securities rated below investment grade are called "high yield bonds,"
"non-investment grade bonds" and "junk bonds". These securities are considered
to be speculative and high risk. One Group Income's average weighted maturity
will normally range between five and twenty years, although One Group Income may
shorten its weighted average maturity to as little as two years if deemed
appropriate for temporary defensive purposes. As a matter of fundamental policy,
at least 65% of One Group Income's total assets will consist of bonds.
Circle Income seeks as high a level of current income as is consistent with
prudent investment risk through investment principally in debt securities, with
capital appreciation as a secondary investment objective. Circle Income
primarily invests in corporate and mortgage-backed fixed income securities
including some high yield, high-risk fixed income securities of domestic and
foreign companies. Circle Income invests at least 75% of its total assets in
investment grade debt securities and obligations of banks, savings and loan
institutions and their holding companies, certain U.S. and Canadian government
securities, commercial paper, cash, and cash equivalents. Circle Income may
invest up to 25% of its total assets in: (i) debt securities rated below
investment grade (i.e., "high yield" or "junk" bonds), (ii) securities which may
be converted into or carry warrants to purchase equity interests, (iii)
obligations of foreign governments or corporations (provided that such
obligations are traded in the United States either on a national securities
exchange or in the over-the-counter market), and (iv) marketable common stocks
(not to exceed 10% of total assets). Normally, the Fund will maintain a dollar-
weighted average portfolio maturity of between five and 15 years; however, under
certain circumstances, this average maturity may fall below five years.
PORTFOLIO TRADING
Both One Group Income and Circle Income may buy and hold to maturity a
portion of the securities in each of their portfolios. However, both funds also
engage in portfolio trading. Such trading may involve the selling of securities
held for a short time, ranging from several months to less than a day. Trading
is used by the funds primarily in anticipation of, or response to, market
developments or to take advantage of yield disparities. The portfolio turnover
rate for both funds is relatively low. For the year ended June 30, 2000, One
Group Income's portfolio turnover rate was 25.10%. For the same period, Circle
Income's rate was 4.53%.
BORROWINGS
Both One Group Income and Circle Income may borrow funds under certain
circumstances. One Group Income may borrow money in amounts up to 10% of its
total assets, but only for temporary purposes. Circle Income may borrow money up
to 5% of its total assets, but only as a temporary measure for extraordinary or
emergency purposes.
---------------
(1) Investment grade securities are those securities rated in the top four
rating categories by a nationally recognized statistical rating organization
such as Standard & Poors Corporation or Moody's Investors Services, Inc.
12
<PAGE> 14
In addition, Circle Income also may borrow funds up to 25% of its net
assets to purchase securities. However, Circle Income does not currently engage
in this practice.
SECURITIES LENDING
Both One Group Income and Circle Income may lend portfolio securities. In
order to generate additional income, investment companies may lend up to 33 1/3%
of their total assets. In return, a fund receives cash, other securities and/or
letters of credit as collateral equal at all times to at least 100% of the
market value plus accrued interest on the securities lent.
One Group Income currently engages in securities lending, but Circle Income
does not.
COMPARISON OF INVESTMENT POLICIES
Both One Group Income and Circle Income (for purposes of this discussion
only, collectively, the "Funds") have adopted certain FUNDAMENTAL investment
policies. This means that the investment policies cannot be changed without the
consent of a majority of the outstanding shares of the Funds. Substantially all
of the fundamental investment policies of One Group Income and Circle Income are
identical. There are, however, certain differences as noted below. The
percentages referenced below apply at the time the security is purchased.
As a matter of fundamental policy, One Group Income and Circle Income may
not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities,
and, if consistent with the Fund's investment objective and
policies, repurchase agreements involving such securities) if as a
result more than 5% of the total assets of each Fund would be
invested in the securities of such issuer or each Fund would own
more than 10% of the outstanding voting securities of such issuer.
This restriction applies to 75% of each Fund's assets. For purposes
of these limitations, a security is considered to be issued by the
government entity whose assets and revenues guarantee or back the
security. With respect to private activity bonds or industrial
development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of each Fund to be invested in the securities of one or more
issuers conducting their principal business activities in the same
industry, provided that this limitation does not apply to
investments in the obligations issued or guaranteed by the U.S.
government or its agencies and instrumentalities and repurchase
agreements involving such securities. For purposes of this
limitation (i) utilities will be divided according to their services
(for example, gas, gas transmission, electric and telephone will
each be considered a separate industry); and (ii) wholly-owned
finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing
the activities of their parents.
3. Make loans, except that each Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and
policies; and (ii) engage in securities lending. In addition, One
Group Income may enter into repurchase agreements.
4. Purchase securities on margin or sell securities short. However,
Circle Income may obtain short-term credits as needed for clearance
of purchases and sales of securities. Also, Circle Income may make
short sales "against the box", but only if not more than 10% of
Circle Income's net assets is held as collateral for such sales at
any one time. While a short sale is made by selling a security a
fund does not own, a short sale is "against the box" to the extent
that a fund contemporaneously owns or has the right to obtain
securities identical to those sold short at no added cost.
5. Underwrite the securities of other issuers except to the extent that
a Fund may be deemed to be an underwriter under certain securities
laws in the disposition of "restricted securities".
6. Purchase or sell commodities or commodity contracts. However, One
Group Income, for bona fide hedging and other permissible purposes,
may purchase or sell financial futures contracts and may
13
<PAGE> 15
purchase call or put options on financial futures contracts. Circle
Income may acquire warrants or other rights to subscribe to
securities of companies issuing such warrants or rights, if acquired
as part of a unit with or attached to other securities. One Group
Income may also acquire warrants.
7. Purchase participation or other direct interests in oil, gas or
mineral exploration or development programs (although investments in
marketable securities of companies engaged in such activities are
not precluded).
8. Invest in any issuer for purposes of exercising control or
management.
9. Purchase securities of other investment companies except as
permitted by the 1940 Act and rules, regulations and applicable
exemptive relief thereunder.
10. Purchase or sell real estate. However, One Group Income may, to the
extent appropriate to its investment objective, purchase securities
secured by real estate or interests therein or securities issued by
companies investing in real estate or interests therein. Circle
Income may sell real estate otherwise acquired (for example, by a
liquidation distribution).
11. Borrow money or issue senior securities, except that One Group
Income may borrow from banks or enter into reverse repurchase
agreements for temporary purposes in amounts up to 10% of the value
of its total assets at the time of such borrowing (Circle Income may
do so up to 5% of its total assets, and then only as a temporary
measure for extraordinary or emergency purposes); or mortgage,
pledge, or hypothecate any assets, except in connection with any
such borrowing and in amounts not in excess of the lesser of the
dollar amounts borrowed or 10% of the value of One Group Income's
total assets at the time of its borrowing (Circle Income may do so
up to 15% of its total assets). One Group Income will not purchase
securities while its borrowings (including reverse repurchase
agreements) in excess of 5% of its total assets are outstanding.
In addition to the restrictions on both Funds listed above, the following
fundamental investment restrictions apply only to Circle Income. Circle Income
may not:
1. Invest more than 5% of the value of it total assets in securities of
companies that (together with predecessors) have a record of less
than three years continuous operation.
2. Participate on a joint, or a joint and several, basis in any
securities trading account. The "bunching" of orders for the sale or
portfolio securities with other accounts under the management of its
investment adviser or any of its affiliates to reduce brokerage
commissions or to average prices among them is not considered
participating in a securities trading account.
3. Purchase or retain the securities of any issuer if to Circle Income's
knowledge those officers and directors of Circle Income or its
investment adviser owning individually more then one-half of 1% of
the outstanding securities of that issuer together own beneficially
more than 5% of such securities.
4. Purchase or retain securities of American Fletcher Corporation, any
corporation 50% or more of the voting securities of which are owned
directly or indirectly by American Fletcher Corporation, or any
investment company (excluding Circle Income) or any real estate
investment trust managed or advised by American Fletcher Corporation
or any such corporation. Please note, in 1973, when Circle Income was
initially offered to the public and this restriction was established,
American Fletcher National Bank and Trust Company, a subsidiary of
American Fletcher Corporation, was Circle Income's investment
adviser. American Fletcher Corporation was acquired by Bank One
Corporation in March 1987. Under the Investment Company Act of 1940,
investment companies in general may not purchase or retain securities
of their investment advisers (or the affiliates of the investment
adviser).
The following investment restrictions for One Group Income are
NON-FUNDAMENTAL. This means that they can be changed by the One Group Board of
Trustees without the consent of a majority of the outstanding shares of One
Group Income.
14
<PAGE> 16
One Group Income may not:
1. Invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of the Fund's net assets. An illiquid security is a
security which cannot be disposed of promptly (within seven days) and
in the usual course of business without a loss, and includes
repurchase agreements maturing in excess of seven days, time deposits
with a withdrawal penalty, non-negotiable instruments and instruments
for which no market exists. Circle Income is fundamentally prohibited
from purchasing illiquid securities in excess of 20% of its total
assets.
2. Acquire the securities of registered open-end investment companies or
registered unit investment trusts in reliance on Section 12(d)(1)(F)
or 12(d)(1)(G) of the 1940 Act.
Further information on the investment policies of One Group Income is
included in its Prospectus, included with these materials and its Statement of
Additional Information, which is available upon request by calling
1-800-338-4345. Further information on the investment policies of Circle Income
is available in its Prospectus, which you may request also by calling the same
toll-free number.
COMPARISON OF SHAREHOLDER POLICIES AND PROCEDURES
The following is a summary comparison of the major shareholder policies and
procedures of One Group Income and Circle Income. As you will see, there are
substantial differences, many of which will provide attractive new features to
shareholders of Circle Income if the proposed combination with One Group Income
is approved.
HOW DO THE FUNDS' PURCHASE PROCEDURES DIFFER?
Shares of One Group Income are sold on a continuous basis. One Group Income
shares may be purchased directly from One Group Mutual Funds by mail, telephone
or wire. In addition, One Group Income's shares also may be purchased through
shareholder servicing agents, including investment advisors, brokers, financial
planners, banks, insurance companies, retirement or 401(k) plan sponsors, or
other intermediaries.
As a closed-end investment company, Circle Income differs from an open-end
investment company in that Circle Income does not continuously offer new shares
to the public. However, Circle Income's common shares are traded in the
over-the-counter market and quoted on the National Association of Securities
Dealers Automated Quotation System (NASDAQ). Circle Income shares may be
purchased through shareholder servicing agents. Brokerage commissions/fees are
typically charged on the purchases and sales of Circle Income shares.
ARE THE FUNDS OPEN ON THE SAME DAYS?
Purchases and redemptions of shares of One Group Income may be made on any
day that the New York Stock Exchange (NYSE) is open for business. The NYSE is
closed on weekends and the following holidays: New Years Day, Martin Luther King
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
Circle Income shares may be traded any day the over-the-counter market is
open for business. The over-the-counter market follows the bond markets'
schedule. The bond markets are closed on weekends and the following holidays:
New Years Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and
Christmas Day.
HOW DO THE FUNDS' MINIMUM INVESTMENT AMOUNTS COMPARE?
The minimum initial and subsequent investments in Class A shares of One
Group Income are $1,000 and $25, respectively ($100 and $25, respectively, for
employees of Bank One Corporation and its affiliates). Initial and subsequent
investment minimums may be waived. Shares are sold at current NAV, plus
applicable sales load.
Circle Income shares have no minimum investment amount. The common shares
are sold at market price, plus applicable brokerage commission. As of the date
of this Combined Prospectus/Proxy Statement, the market
15
<PAGE> 17
price of Circle Income shares reflects a discount from Circle Income's NAV.
However, under other market conditions, the market price could be in excess of
NAV.
DO THE FUNDS OFFER THE SAME TYPE OF SHARES?
One Group Income shares have no subscription or preemptive rights and only
such conversion or exchange rights as the One Group Mutual Funds Board of
Trustees may grant in its discretion. Currently, One Group Income shares enjoy
significant exchange privileges (See "How Do Exchange Privileges Compare?"
below). One Group Income shares are fully paid and non-assessable. In the event
of a liquidation or dissolution of One Group Mutual Funds, shares of One Group
Income are entitled to receive the assets available for distribution belonging
to One Group Income, and a proportionate distribution, based upon the relative
asset values of the respective One Group Mutual Funds, of any general assets not
belonging to any particular One Group Mutual Fund which are available for
distribution.
Circle Income issues one class of common stock. Each shareholder is
entitled to share ratably in any dividends and in the assets available for
distribution upon liquidation. Shares of Circle Income are fully paid and
nonassessable. The common stock has no preemptive, conversion or redemption
rights.
DOES EACH FUND OFFER MORE THAN ONE CLASS OF SHARES?
One Group Income currently offers four classes of shares: Class A, Class B,
Class C and Class I.
- Class A, Class B and Class C shares are available to the general public.
- Class I shares are available to institutional investors, such as
corporations, pension and profit sharing plans, and foundations; and any
organization authorized to act in a fiduciary, advisory, custodial or
agency capacity.
- The section entitled "How To Do Business With One Group Mutual Funds" in
the One Group Bond Prospectus accompanying this Combined Prospectus/Proxy
Statement will provide more information.
Circle Income offers a single class of common stock.
HOW DO SALES CHARGES COMPARE?
One Group Income Class A shares assess a 4.50% up-front sales charge.
In addition, open-end funds, like One Group Income, may adopt plans under
Rule 12b-1 that allow a fund to pay distribution and shareholder servicing fees
for the sale and distribution of shares of the fund. These fees are called 12b-1
fees. 12b-1 fees are paid by a fund to its distributor as compensation for
services and expenses. The distributor in turn pays all or part of the 12b-1 fee
to shareholder servicing agents that sell shares of the fund.
One Group Income 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%. The One
Group Services Company, One Group Income's distributor, 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. 12b-1 fees are
included in the Annual Operating Expenses of the Fund shown in the fee table on
page 7.
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. For more information on 12b-1 fees,
please see "Sales Charges" in the One Group Income Prospectus.
Shareholder servicing agents that sell Circle Income shares typically
charge a brokerage commission.
WILL I PAY A SALES CHARGE IN THE TRANSACTION?
No. A sales charge will NOT be imposed on any Class A shares of One Group
Income distributed in the Reorganization.
16
<PAGE> 18
For additional information regarding charges and expenses of Circle Income
and Class A shares of One Group Income, see the section entitled "Comparison of
Current Expenses" in this Combined Prospectus/Proxy Statement.
HOW DO EXCHANGE PRIVILEGES COMPARE?
One Group Income Class A shareholders may exchange their Class A shares for
Class A shares of another fund within One Group. Shareholders who are
corporations, pension and profit sharing plans, foundations, or other
institutional investors; or organizations authorized to act in a fiduciary,
advisory, custodial or agency capacity may exchange their Class A shares for
Class I shares of One Group Income or another Fund within One Group Mutual
Funds. Exchanges are processed the same business day they are received, provided
the request is received by 4:00 p.m., Eastern Time ("ET") and all of the
information necessary to process the exchange is included in the request. You
will not pay a sales charge on an exchange of Class A shares you receive in the
Transaction. In addition, One Group Mutual Funds does not charge a fee for the
exchange privilege.
You should know that an exchange between classes of shares of the same fund
is not taxable for federal income tax purposes. However, an exchange between
funds is considered a sale and generally results in a capital gain or loss for
federal income tax purposes. You should talk to your tax advisor before electing
to make an exchange.
Circle Income has no exchange privilege.
HOW DO REDEMPTION PROCEDURES COMPARE?
One Group Income permits Class A shareholders to redeem shares without
charge on any day the Fund is open for business.
- If a redemption order for One Group Income Class A shares is received by
4:00 p.m. ET (or when the New York Stock Exchange closes), the
shareholder will receive that day's NAV.
- Redemption requests may be submitted by mail, telephone or Internet.
Redemption proceeds may be mailed or wired or paid to your bank through
the Automated Clearing House ("ACH"). One Group shareholders currently
pay a $7.00 fee if they elect to receive proceeds by wire.
- One Group Mutual Funds pays shareholders for shares redeemed within seven
days after receipt of the request for redemption.
- For additional information on redemption procedures, see the section
entitled "Redeeming Fund Shares" in the One Group Income Prospectus,
accompanying this Combined Prospectus/Proxy Statement.
Circle Income shareholders have no redemption rights, but may sell their
shares in the over-the-counter market. The market for closed-end fund shares is
relatively limited. In addition, shareholders receive the market price, less any
sales commission, for their shares, which may differ from the NAV.
17
<PAGE> 19
DO BOTH FUNDS PROVIDE FOR SYSTEMATIC WITHDRAWALS?
No.
One Group Income allows a shareholder to redeem shares on a systematic
basis if the shareholder's account value is at least $10,000. A shareholder may
elect to receive monthly, quarterly, or annual payments of not less than $100.
Circle Income does not permit systematic withdrawals.
DO THE FUNDS DECLARE AND DISTRIBUTE DIVIDENDS THE SAME WAY?
Yes.
One Group Income generally declares dividends on the last business day of
each month. Dividends are distributed on the first business day of each month.
Capital gains, if any, for One Group Income are distributed at least annually.
Circle Income generally intends to distribute substantially all of its net
investment income each month, and, at least annually, substantially all of its
net realized short-term and long-term capital gains.
Both Circle Income and the One Group Funds pay dividends and distributions
on a per-share basis. This means that the value of the shares will be reduced by
the amount of the payment.
DO BOTH FUNDS OFFER A DIVIDEND REINVESTMENT PLAN?
Yes.
One Group Income shareholders AUTOMATICALLY receive all income dividends
and capital gain distributions in additional shares of the same class of One
Group Income, unless they 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.
All Circle Income shareholders may ELECT to participate in the Fund's
Dividend Reinvestment Plan. Additional information regarding the Dividend
Reinvestment Plan can be found in Exhibit B of this Combined Prospectus/Proxy
Statement.
HOW DOES THE TAX TREATMENT OF THE FUNDS AND THEIR DISTRIBUTIONS COMPARE?
Both Circle Income and One Group Income meet, and intend to continue to
meet, the requirements necessary to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). If the Funds so qualify, they will pay no federal income tax on the
earnings they distribute to shareholders and they will eliminate or reduce to a
nominal amount the federal income taxes to which they may be subject. Therefore,
both Circle Income and One Group Income distribute substantially all of their
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 a Fund, whether reinvested
or received in cash, will be taxable to you. Dividends from a Fund's net
investment income will be taxable as ordinary income and distributions from a
Fund's long-term capital gains will be taxable to you as such, regardless of how
long you have held the shares. Distributions are taxable to you even if they are
paid from income or gains earned by a Fund prior to your investment (and thus
were included in the price you paid).
ARE FUND SHARES PRICED THE SAME WAY?
No.
One Group Income determines net asset value per share by dividing the total
market value of the Fund's investments and other assets allocable to a class
(minus class expenses) and other liabilities by the number of
18
<PAGE> 20
outstanding shares in that class. The net asset value changes every day. Net
asset value is calculated EACH BUSINESS DAY at 4:00 p.m. ET.
The net asset value of Circle Income's shares is determined at the close of
business on the business day immediately preceding the LAST DAY IN EACH WEEK on
which the New York Stock Exchange is open and is computed by dividing the value
of all securities plus other assets (including dividends, if any, accrued but
not collected), less liabilities (including accrued expenses and any
distributions payable but excluding capital and surplus), by the number of
shares outstanding. Historically, shares of closed-end investment companies have
sold at market prices varying from their net asset values, frequently at a
discount from, but in some cases at a premium over, their net asset values.
DO SHAREHOLDERS IN THE FUNDS HAVE THE SAME VOTING RIGHTS?
Yes.
Circle Income shareholders are entitled to vote at the rate of one vote per
share on the election of directors and on all other matters submitted to a vote
of the common shareholders. The voting rights of Circle Income's common stock
are noncumulative, which means that the holders of more than 50% of the shares
voting for the election of directors can elect 100% of the directors if they
choose to do so, and, in such event, the holders of the remaining less than 50%
of the shares voting for the election of directors will not be able to elect any
director.
Similarly, One Group Income shareholders have one vote for each share
owned. 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. Voting rights are noncumulative.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of this transaction is subject to the condition that One Group
Mutual Funds and Circle Income receive an opinion of Ropes & Gray, counsel to
One Group Mutual Funds, to the effect that the transaction will not result in
the recognition of gain or loss for Federal income tax purposes by One Group
Income, Circle Income or Circle Income shareholders.
PRINCIPAL RISK FACTORS
This section will help you understand the main risks of investing in One
Group Income. Because of the similarities in investment objectives and policies,
Circle Income and One Group Income (for purposes of this discussion only,
collectively, the "Funds") are subject to substantially similar investment
risks. The following discussion identifies the broad risks inherent in investing
in these Funds. For more specific risks relating to specific securities
purchased by One Group Income, please read the sections entitled "Investment
Practices" and "Investment Risks" in One Group Income's prospectus, and in the
Circle Income prospectus.
FIXED INCOME SECURITIES: Both Funds invest in fixed income securities.
Investments in fixed income securities (for example, bonds) will increase or
decrease in value based on changes in interest rates, among other factors. If
rates increase, the value of Funds' investments generally decreases. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
HIGH YIELD/JUNK BONDS: One Group Income may invest up to 30% of its total
assets in debt securities rated below investment grade, while Circle Income may
invest up to 25% of its total assets in such securities. These securities are
regarded as predominately speculative. Lower rated securities generally provide
a higher yield than higher rated debt securities of similar maturity, but are
subject to a greater degree of risk that the issuer may not be able to make
principal and interest payments. Issuers of these securities may not be as
strong financially as
19
<PAGE> 21
those issuing higher rated securities. Such high yield issuers may include
smaller, less creditworthy companies or highly indebted firms.
The market value of high yield securities may fluctuate more than the
market value of higher rated securities, since high yield securities tend to
reflect short-term corporate and market developments to a greater extent than
higher rated securities. Thus, periods of economic uncertainty and change can
result in increased volatility of market prices of high yield bonds and of the
investment company's net asset value. Additional risks of high yield securities
include limited liquidity and secondary market support. As a result, the prices
of high yield securities may decline rapidly in the event that a significant
number of holders decide to sell. Issuers of high yield securities also are more
vulnerable to real or perceived economic changes, political changes or adverse
developments specific to the issuer. A projection of an economic downturn, for
example, could cause the price of these securities to decline because a
recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. In the event of a
default, the Funds would experience a decrease in income and a decline in the
market value of its investments. In addition, a long-term track record on bond
default rates, such as that for investment grade corporate bonds, does not exist
for the high yield market. It may be that future default rates on high-yield
bonds will be more widespread and higher than in the past, especially during
periods of deteriorating economic conditions.
Finally, the market prices of debt securities generally fluctuate with
changes in interest rates so that the Funds' net asset value can be expected to
decrease as interest rates rise and to increase as rates fall. The market prices
of high yield securities structured as zero coupon or pay-in-kind securities are
generally affected to a greater extent by interest rate changes and tend to be
more volatile than securities that pay interest periodically.
Credit quality in the high yield bond market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, One
Group Income and Circle Income do not rely solely on ratings issued by
established credit rating agencies, but will use such ratings in conjunction
with Banc One Investment Advisors' independent and ongoing review of credit
quality.
Because investments in lower rated securities involve greater investment
risk, achievement of each Fund's investment objectives may be more dependent on
Banc One Investment Advisor's credit analysis than would be the case if the
Funds were investing in higher rated securities. One Group Income may seek to
hedge investments through transactions in options, futures contracts and related
options. One Group Income also may use swap agreements to further manage
exposure to lower rated securities.
DERIVATIVES: One Group Income invests in securities that may be considered
to be derivatives. The value of derivative 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 may decline. Derivatives generally are more volatile and are riskier in
terms of both liquidity and value than traditional investments. Derivatives that
One Group Income may purchase include:
- Options, futures contracts, and options on futures contracts.
- Warrants.
- Mortgage-backed securities, including collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and
REMICs) and stripped mortgage-backed securities (IOs and POs).
- Asset-backed securities.
- New financial products.
- Structured instruments.
The above discussion is qualified in its entirety by the disclosure in the
Prospectus of One Group Income accompanying this Combined Prospectus/Proxy
Statement.
20
<PAGE> 22
MANAGEMENT OF THE FUNDS AND
DISCUSSION OF FUND PERFORMANCE
ONE GROUP MUTUAL FUNDS AND ONE GROUP INCOME BOND FUND
The management and affairs of One Group Mutual Funds and One Group Income
are supervised by a Board of Trustees. The Trustees have approved contracts
under which, as described below, certain companies provide essential management
services to One Group Mutual Funds and One Group Income.
The Investment Advisor
Banc One Investment Advisors Corporation (1111 Polaris Parkway, P.O. Box
710211, Columbus, Ohio 43271-0211) makes the day-to-day investment decisions for
One Group Mutual Funds and One Group Income, 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 One Group Mutual Funds
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, 2000, Banc One Investment Advisors, an
indirect wholly-owned subsidiary of Bank One Corporation, managed over $131
billion in assets. Banc One Investment Advisors is paid a fee based on an annual
percentage of the average daily net assets of One Group Income. For the most
recent fiscal year, One Group Income paid advisory fees at an annual rate of
.39% of its average daily net assets.
The Sub-Advisor
Banc One High Yield Partners, LLC (1111 Polaris Parkway, P.O. Box 710211,
Columbus, Ohio 43271-0211), is the sub-advisor to the One Group Income. Banc One
High Yield Partners was formed in June, 1998 to provide investment advisory
services related to high yield, high risk investments to various advisory
clients. Banc One High Yield Partners is controlled by Banc One Investment
Advisors and Pacholder Associates, Inc. As of June 30, 2000, Banc One High Yield
Partners had approximately $357 million in assets under management. Banc One
High Yield Partners is paid out of the fee paid to Banc One Investment Advisors;
One Group Income does not pay a separate fee to Banc One High Yield Partners.
The Fund Managers
One Group Income is managed by teams of fund managers, research analysts,
and fixed income traders. The team works together to establish general duration
and sector strategies for One Group Income. Each team member makes
recommendations about securities in the Fund. The research analysts and trading
personnel provide individual security and sector recommendations, while the
portfolio managers select and allocate individual securities in a manner
designed to meet the investment objectives of the Fund.
The Administrator
One Group Administrative Services, Inc., an indirect, wholly-owned
subsidiary of Bank One Corporation, serves as Administrator for One Group Mutual
Funds and One Group Income. The Administrator is responsible for providing the
Fund with administrative services, including regulatory reporting and all
necessary office space, equipment, personnel and facilities. The Administrator
is paid a fee at an annual rate of .16% of the Fund's average daily net assets.
The Custodian and Transfer Agent
State Street Bank and Trust Company, P.O. Box 8520, Boston, Massachusetts
acts as Transfer Agent and Custodian for One Group Mutual Funds and One Group
Income.
Discussion of Fund Performance
For a discussion by the management of One Group Income of the Fund's
performance for the fiscal year ended June 30, 2000, please see Exhibit D.
21
<PAGE> 23
CIRCLE INCOME SHARES, INC.
The management and affairs of Circle Income are supervised by a Board of
Directors. The Directors have approved contracts under which, as described
below, certain companies provide essential management services to Circle Income.
The Investment Advisor
Banc One Investment Advisors also serves as investment adviser to Circle
Income. Banc One Investment Advisors (or a predecessor firm) has served in this
capacity since Circle Income's inception. Circle Income pays Banc One Investment
Advisors an advisory fee based on weekly net assets at an annual rate of .50% on
the first $50 million and .40% on the excess over $50 million.
The Fund Managers
Circle Income is co-managed by Jeffrey W. Fountain and Thomas F. Wilson.
Both Mr. Fountain and Mr. Wilson also are members of the team of fund managers,
research analysts, and fixed income traders who manage One Group Income.
Jeffrey W. Fountain, CFA
Senior Fixed Income Research Analyst
Mr. Fountain has managed fixed income portfolios for the past 15 years. He
currently provides sector and issuer research to Banc One Investment Advisors'
mutual fund and National Account money managers. He joined Banc One Investment
Advisors in 1992 and built the specialized fixed income research function of the
firm.
Mr. Fountain has more than 20 years of investment experience.
Thomas F. Wilson
Senior Portfolio Manager
Mr. Wilson, who has 27 years of investment experience, is a senior
portfolio manager for Banc One Investment Advisors' Taxable Bond Team. He serves
as a manager of core fixed income accounts for institutional clients.
He has been with Banc One Investment Advisors since 1983.
The Administrator
Banc One Investment Advisors also serves as administrator to Circle Income.
The Administrator is responsible for providing administrative services,
including regulatory reporting, Fund accounting, and all necessary office space,
equipment, personnel and facilities. The Administrator also provides personnel
to serve as Fund officers and operates the dividend reinvestment plan. The
Administrator is not paid a separate fee for its services.
The Custodian
Bank One Trust Company, NA, 100 E. Broad Street, Columbus, Ohio serves as
the Custodian for Circle Income.
The Transfer and Dividend Disbursing Agent
Computershare Investor Services, L.L.C., P.O. Box 2388, Chicago, Illinois
serves as Circle Income's Transfer and Dividend Disbursing Agent.
Discussion of Fund Performance
Please see Exhibit D for a discussion by the management of Circle Income of
the Fund's performance for the fiscal year ended June 30, 2000.
22
<PAGE> 24
INFORMATION ABOUT THE PROPOSED TRANSACTION
INTRODUCTION
This Combined Prospectus/Proxy Statement is furnished in connection with
the solicitation of proxies from the shareholders of Circle Income by and on
behalf of the Board of Directors of Circle Income for use at a Special Meeting
to approve the reorganization of Circle Income. The Special Meeting will be held
in Suite 500, The Columbia Club, 121 Monument Circle, Indianapolis, Indiana on
Tuesday, January 9, 2001 at 1 p.m. Central Time. This Combined Prospectus/Proxy
Statement and the enclosed proxy are being mailed to shareholders of Circle
Income on or about November 27, 2000.
Any shareholder may revoke a proxy once the proxy is given. The shareholder
revoking such proxy must submit to Circle Income a subsequently dated proxy,
deliver to Circle Income a written notice of revocation, or otherwise give
written notice of revocation in person at the Meeting.
All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy, or, if no specification is made, FOR the
proposal set forth in Item (1) of the Notice of Special Meeting of Shareholders.
Only shareholders of record on November 20, 2000 will be entitled to notice
of, and to vote at, the Meeting. Each share as of the close of business on
November 20, 2000, is entitled to one vote.
The Board of Directors of Circle Income knows of no matters other than the
proposal for reorganization to be brought before the Meeting. If, however, any
other matters properly come before the Meeting and the Directors have not had
reasonable advance notice of such other matters, it is the Directors' intention
that proxies will be voted on such matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
TERMS OF THE PROPOSED TRANSACTION
Shareholders of Circle Income are being asked to vote for or against the
approval of an Agreement and Plan of Reorganization, dated as of October 18,
2000 (the "Agreement") between Circle Income and One Group Mutual Funds.
According to the Agreement, Circle Income will transfer all of its assets and
liabilities to One Group Income on or about January 22, 2001 (the "Exchange
Date") in exchange for Class A shares of One Group Income having an aggregate
net asset value equal to the aggregate value of the net assets acquired from
Circle Income. The assets and liabilities of Circle Income and One Group Income
will be valued as of the close of trading on the New York Stock Exchange on the
business day next preceding the Exchange Date. Under the Agreement, the
valuation date would be on or about January 19, 2001 (the Valuation Date"). The
following discussion is qualified in its entirety by the full text of the
Agreement, which is attached as Exhibit A to this Combined Prospectus/Proxy
Statement.
Following the transfer between One Group Income and Circle Income, Circle
Income will be liquidated and dissolved. In liquidation, Circle Income will
distribute shares of One Group Income received in the transfer to its
shareholders, except those asserting their right to dissent from the
Transaction, as soon as practicable after the Exchange Date. As a result, a
Circle Income shareholder of record on the Exchange Date will receive, on a tax-
free basis, a number of full and fractional Class A shares equal in value to the
shareholder's beneficial interest of Circle Income on the Valuation Date. The
share transfer record of Circle Income will close on the Exchange Date, and,
except for manifest error, shall constitute conclusive evidence of the value and
identity of Circle Income shareholders entitled to distribution of One Group
Income shares. Physical stock certificates, if any, will be deemed void on the
Exchange Date and should be destroyed by the Circle Income shareholder. For
Circle Income shareholders asserting their right to dissent, please see "Rights
of Dissenting Shareholders" which begins on page 63 of this Combined
Prospectus/Proxy Statement.
Circle Income will pay to One Group Income any interest and cash dividends
received by Circle Income after the Exchange Date with respect to the
investments transferred to One Group Income. In addition, Circle Income will
transfer to One Group Income any rights, stock dividends or other securities
received by Circle Income after the Exchange Date as stock dividends or other
distributions with respect to the investments transferred. Such rights, stock
dividends and other securities shall be deemed included in the assets
transferred to
23
<PAGE> 25
the One Group Income at the Exchange Date and shall not be separately valued, in
which case any such distribution that remains unpaid as of the Exchange Date
shall be included in the determination of the value of the assets of Circle
Income acquired by One Group Income.
At a meeting on October 18, 2000, the Board of Directors of Circle Income
unanimously approved the Agreement and determined that the reorganization of
Circle Income and One Group Income would be in the best interests of Circle
Income. The Directors further determined that the interests of existing
shareholders of Circle Income would not be diluted upon effectuation of the
reorganization.
Consequently, the Directors recommend approval of the Agreement for the
following principal reasons:
1. Elimination of Discount. The Transaction will result in an immediate
increase in the value of each Circle Income shareholders' interest.
Circle Income shareholders will receive shares of One Group Income
equal to their ownership interest in Circle Income at net asset
value (NAV) rather than the lower market value at which Circle
Income shares typically trade. On October 19, 2000, Circle Income
shares were trading at a 14.10% discount. Due to trading in
anticipation of the proposed Transaction, Circle Income's share
price and NAV per share may be the same, if and when the Transaction
is consummated.
2. NAV Return vs. Shareholder Equity Return. Circle Income shareholders
will benefit from an open-end structure. The total return for Circle
Income's investment portfolio has consistently exceeded the total
return on Circle Income shares. An open-end structure will enable
shareholders to better participate completely in the portfolio's
performance.
3. Reduction in Expense Ratio. The current expense ratio for One Group
Income is lower than the expense ratio for Circle Income. Banc One
Investment Advisors Corporation and One Group's Administrator have
contractually agreed to waive fees and/or reimburse expenses to
limit One Group Income's total operating expenses to .92%. This
contractual waiver is for the period from November 1, 2000, through
October 31, 2001. Banc One Investment Advisors has agreed not to
recommend that the One Group Board of Trustees approve total
operating expenses for One Group Income in excess of .99% for at
least one year from the date of the Transaction. Consequently,
Circle Income shareholders will not incur additional costs to
receive the benefits discussed herein.
4. Tax Free Reorganization. The transaction is intended to be accounted
for as a tax-free reorganization.
5. No Dilution. Shareholders of Circle Income or One Group Income will
not suffer a dilution of their interests because the transaction
will occur on a relative net asset value basis. The Transaction will
take place using valuation methodology employed by One Group Mutual
Funds. Securities held by Circle Income and One Group Mutual Funds
are valued using the same pricing services.
6. Dividend Reinvestment. Shareholders who choose to reinvest dividend
payments can continue to do so with One Group Income. Also,
additional capital investments can be facilitated easily through
systematic investment plans with ACH capability.
7. Reduced Pricing Risk. Circle Income's current stock price is
affected by the value of Circle Income's assets, investor
expectations and market psychology. By contrast, One Group Income
shares are affected only by the value of the assets held by One
Group Income.
8. Greater Diversification. Circle Income has assets of approximately
$31 million. The Fund's small asset size limits its ability to
diversify efficiently among a large number of issuers, thereby
increasing the Fund's risk of loss if an issuer fails to make
interest or principal payments or if the market value of a security
declines. One Group Income has over $1.35 billion in net assets. The
larger asset size allows greater diversification among issuers. One
Group Income has more than 450 holdings compared to just under 70
holdings for Circle Income.
9. Greater Fund Efficiencies. The Transaction creates the potential for
growth. As an open-end investment company, One Group Income engages
in a continuous offering; assets grow as
24
<PAGE> 26
additional shares are sold. Larger asset size generally reduces
transaction costs (transaction costs are lower for round-lots than
for odd-lots) and creates economies of scale.
10. Increased Leverage and Market Presence. As part of a $70 billion
mutual fund group, One Group Income has greater leverage and market
presence than does Circle Income. Investment opportunities generally
increase as assets grow, providing the potential for enhanced
performance.
11. Increased Investment Options for Shareholders. Through exchange
privileges, after the proposed transaction, former Circle Income
shareholders will be able to exchange at NAV their new One Group
Income shares for any of the 50 other funds currently being offered
by One Group Mutual Funds. Investors in One Group Mutual Funds enjoy
a wide variety of investment options and strategies, ranging from
various equity styles and state specific municipal bond funds, to
taxable and tax-advantaged bond funds and funds-of-funds. This range
of strategies permits an investor in One Group Mutual Funds to
participate at any point in time in a broad range of asset
allocation. Thus, if the Transaction is approved, you will have
increased investment options and greater flexibility to change
investments.
12. Strong Back Office. With BISYS Fund Services, Inc. and One Group
Administrative Services, Inc., One Group Mutual Funds has built a
strong back office infrastructure. BISYS Fund Services, Inc. is a
leading provider of fund accounting, blue sky and related services
to the investment company industry. One Group Administrative
Services, Inc. is a subsidiary of Bank One Corporation dedicated to
providing administrative, financial, and compliance services to
investment companies.
13. Enhanced Shareholder Services. Circle Income shareholders will have
access to a higher level of shareholder servicing, including a
state-of-the-art website and a 24 hours-a-day voice response unit
which allows investors to purchase and exchange shares of their One
Group Mutual Funds. One Group's website is directly linked to the
Bank One Corporation website for convenient use; contains up-to-date
investor tools such as pricing and account history queries,
retirement planning, and investment profiling tools and economic
updates; and allows on-line prospectus access. The voice response
unit also facilitates account history inquiries, economic updates
and pricing updates.
14. Same Investment Advisor. Banc One Investment Advisors Corporation
serves as investment adviser to both One Group Income and Circle
Income. Thus, Circle Income shareholders will not experience a
change in the party providing advisory services.
15. Performance. The average annual total returns of One Group Income
are competitive with, and in most cases superior to, those of Circle
Income. Of course, past performance does not predict future results.
<TABLE>
<CAPTION>
CIRCLE INCOME
(AT MARKET ONE GROUP INCOME
VALUE) CLASS A
------------- ----------------
<S> <C> <C>
Fiscal YTD Ending 8/31/00 (2 months)............. 2.02% 2.26%
1 Year Annualized -- 6/30/00..................... (2.59)% 3.80%
3 Year Annualized -- 6/30/00..................... 2.75% 5.18%
5 Year Annualized -- 6/30/00..................... 5.61% 5.38%
1 Year Annualized -- 9/30/00..................... 3.69% 6.23%
3 Year Annualized -- 9/30/00..................... 2.20% 5.06%
5 Year Annualized -- 9/30/00..................... 6.49% 5.57%
Since Inception of One Group Income (3/5/93)..... 4.65% 5.44%
</TABLE>
Below are the distribution yields for Circle Income and One Group
Income. The distribution yield for Circle Income is higher in part
because it does not amortize premiums as One Group, and most other
taxable bond funds, do. By not amortizing premiums, Circle Income is
able to increase its ordinary
25
<PAGE> 27
income distributions. However, this has the effect of decreasing Circle
Income's NAV by the same amount.
<TABLE>
<S> <C> <C>
Income Distribution Comparison (6/30/00)
One Group Income................................. 6.270%
Circle Income at NAV............................. 7.122%
Circle Income at Market.......................... 8.376%
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP INCOME
CIRCLE INCOME (ALL CLASSES)
------------- ----------------
<S> <C> <C>
Average Net Assets for Fiscal Year Ended 6/30/00........ $31,226,818 $1,362,748,073
Total Fund Net Assets -- 6/30/00........................ $30,703,875 $1,358,968,665
</TABLE>
FEDERAL TAX OPINIONS
As a condition to the Transaction, One Group Mutual Funds will have
received an opinion of Ropes & Gray, counsel to One Group Mutual Funds,
addressed to One Group Mutual Funds on behalf of One Group Income and to Circle
Income, in a form reasonably satisfactory to One Group Mutual Funds and Circle
Income and dated the Exchange Date, to the effect that, on the basis of the
existing provisions of the Code and Treasury Regulations thereunder, current
administrative rules, court decisions, and certain representations by One Group
Income and Circle Income, for Federal income tax purposes (i) under Section 361
of the Code, no gain or loss will be recognized by Circle Income upon the
transfer of its assets to One Group Income in exchange for shares of One Group
Income and the assumption by One Group Income of the liabilities of Circle
Income; (ii) under Section 354 of the Code, no gain or loss will be recognized
by the shareholders of Circle Income upon the exchange of their shares for Class
A shares of One Group Income; (iii) under Section 358 of the Code, the aggregate
basis of the shares a Circle Income shareholder receives in connection with the
transaction will be the same as the aggregate basis of his or her Circle Income
shares exchanged therefor; (iv) under Section 1223(1) of the Code, a Circle
Income shareholder's holding period for his or her shares of One Group Income
will be determined by including the period for which he or she held Circle
Income shares exchanged therefor, provided that he or she held the shares as
capital assets; (v) under Section 1032 of the Code, no gain or loss will be
recognized by One Group Income upon the receipt of the assets of Circle Income
in exchange for Class A shares and the assumption by One Group Income of the
liabilities of Circle Income; (vi) under Section 362 of the Code, the basis in
the hands of One Group Income of the Circle Income assets transferred to One
Group Income will be the same as the basis of the assets in the hands of Circle
Income immediately prior to the transfer; and (vii) under Section 1223(2) of the
Code, the holding periods of the Circle Income assets in the hands of One Group
Income will include the periods during which such assets were held by the Circle
Income.
Circle Income shareholders should consult their tax advisers regarding the
effect, if any, of the Transaction in light of their individual circumstances.
Because the foregoing only relates to the Federal income tax consequences of the
Transaction, Circle Income shareholders also should consult their tax advisers
about state and local tax consequences, if any, of the Transaction.
FEES AND EXPENSES OF THE TRANSACTION
All fees and expenses, including, without limitation, accounting expenses,
the costs of proxy materials and proxy solicitation, legal expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Transaction will be paid directly by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid by
the party directly incurring such expenses if and to the extent that the payment
by Banc One Investment Advisors Corporation of such expenses would result in the
disqualification of either One Group Income or Circle Income as a "regulated
investment company" under the Code. Circle Income shareholders will pay their
respective expenses, if any, incurred in connection with the Transaction.
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<PAGE> 28
COMPARISON OF SHAREHOLDER RIGHTS
As shown above, each Fund has substantially different purchase and
redemption procedures, sales charge structure, exchange and conversion
privileges, and voting rights. For further information, please read, "Comparison
of Shareholder Policies and Practices" in this Combined Prospectus/Proxy
Statement.
EXISTING AND PRO FORMA CAPITALIZATION
The following table set forth as of June 30, 2000, (i) the capitalization
of One Group Income and Circle Income; and (ii) the pro forma capitalization of
One Group Income, as adjusted giving effect to the proposed acquisition of net
assets at net asset value:
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
ONE GROUP
INCOME CIRCLE INCOME PROFORMA COMBINED
NET ASSETS NET ASSETS NET ASSETS
6/30/00 6/30/00 6/30/00
-------------- ------------- -----------------
<S> <C> <C>
$1,358,968,665 $30,703,875 $1,389,672,440
</TABLE>
VOTING INFORMATION
The Board of Directors of Circle Income has fixed the close of business on
November 20, 2000 as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Special Meeting and at any
postponements or adjournments. On that date, the number of issued and
outstanding voting shares of Circle Income was 2,803,476 shares. Each share is
entitled to one vote.
WHAT IS THE REQUIRED VOTE?
Approval of the Transaction requires the affirmative vote of the majority
of shares outstanding and entitled to vote at the Special Meeting. Votes cast by
proxy or in person at the Special Meeting will be counted by the Inspector of
Election appointed by Circle Income. The Inspector of Election counts the total
number of "FOR" votes to determine if sufficient affirmative votes have been
cast to approve the Transaction.
If shareholders do not approve the Transaction, Circle Income Directors may
consider possible alternative arrangements in the best interests of Circle
Income and its shareholders.
WHAT ARE THE VOTING PROCEDURES?
If you hold Circle Income shares directly in your name and not through a
broker or nominee, please promptly vote your shares by using either ONE of the
following convenient methods:
1. Mail: vote, sign and date the enclosed proxy and return it in the
postage-paid envelope provided.
2. Phone: call Computershare Investors Services LLC toll-free at
1-877-265-9598 using a touch-tone telephone to vote 24 hours a day, 7
days a week.
Shareholders who vote by telephone do NOT need to mail the Proxy.
The voting procedures, including use of the Control Number on the
shareholder's proxy card, are designed to verify shareholders' identities, to
allow shareholders to give their voting instructions and to confirm that
shareholders' instructions have been recorded properly. For example, when voting
by telephone, you will be asked to provide the Control Number and your social
security number (in the case of an individual) or taxpayer identification number
(in the case of an entity) and to confirm that you have received this Combined
Prospectus/Proxy Statement and proxy in the mail.
Further instructions for shareholders of record who wish to use the
telephone voting procedures are included with the enclosed proxy card.
If voting by telephone, your vote selection will be repeated back to you
and you will have an opportunity to confirm that your vote has been properly
recorded.
27
<PAGE> 29
If you are the beneficial owner of shares held in the name of a broker or
nominee, please follow the voting instructions provided to you by the broker or
nominee.
WILL MY SHARES BE VOTED ACCORDING TO MY INSTRUCTIONS?
Yes.
Properly executed and timely received proxies will be voted in accordance
with shareholders' instructions on all matters that may properly come before the
Special Meeting or any adjournment. For more information on adjournment of the
Meeting, see "Quorum" below. If no instructions are given, proxies will be voted
"FOR" the Transaction, in accordance with the recommendation of Circle Income's
Board of Directors as set forth in this Combined Prospectus/Proxy Statement.
HOW WILL ABSTENTIONS BE TREATED?
Shares represented by proxies that are marked "ABSTAIN" regarding the
Proposal will be counted as shares present for purposes of determining the
presence of a quorum. These abstention votes will have the same effect as a vote
"AGAINST" the Transaction or any adjournment.
WHAT ARE BROKER NON-VOTES AND HOW WILL THEY BE TREATED?
Properly executed proxies may also represent "broker non-votes" or "street
name" shares. These shares are held in the name of brokers or nominees, but
voting instructions from the shares' beneficial owner (or persons entitled to
vote) have not been received by the broker or nominee and the broker or nominee
does not have discretionary power to vote the shares. These shares will be
counted as present at the Special Meeting for purposes of determining the
presence of quorum. Because the Transaction must be approved by a majority of
the outstanding shares, the broker non-votes will have the same effect as a vote
"AGAINST" the Transaction.
HOW CAN I REVOKE MY PROXY?
Submitting your proxy immediately does not affect your right to vote IN
PERSON at the Special Meeting because your proxy is revocable at any time prior
to exercise. You may revoke your proxy by: (i) submitting a subsequently dated
proxy, (ii) delivering a written notice of revocation to the office of
Jacqueline A. Weitz, Secretary, or (iii) personally voting at the Special
Meeting.
WHAT CONSTITUTES QUORUM?
A quorum for the Special Meeting will consist of the presence, in person or
by proxy, of a majority of the outstanding shares entitled to vote at the
Meeting. If a quorum is not present at the Special Meeting, or if a quorum is
present but insufficient votes have been received to approve the Proposal, the
Proxies may propose one or more adjournments of the Special Meeting to permit an
opportunity for further proxy solicitations. A majority of those shares affected
by the adjournment that are represented at the Special Meeting in person or by
proxy must vote "FOR" the adjournment. If a quorum is present, the Proxies will
vote those shares, which they are entitled to vote "FOR" the Proposal, "FOR" the
adjournment, and the Proxies will vote those shares voted "AGAINST" the
Proposal, "AGAINST" any adjournment.
WILL PROXY SOLICITORS BE USED?
Yes, if necessary.
The cost of soliciting proxies will be borne by Banc One Investment
Advisors. Proxies are being solicited primarily by mail, but also may be made by
telephone, facsimile or personal interview conducted by certain officers or
employees of Circle Income without additional remuneration. Shareholder
Communications Corporation has been retained to assist in the solicitation of
proxies primarily by contacting shareholders by telephone or facsimile.
Shareholder Communications Corporation will receive a fee of approximately
$11,000.00 for its solicitation services, plus reimbursement of out-of-pocket
expenses.
28
<PAGE> 30
For further information about voting instructions or the proxy generally,
please contact Computershare Investor Servicers LLC toll-free at 1-877-265-9598.
OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of November 7, 2000, the officers and directors of Circle Income as a
group beneficially owned less than 1% of the outstanding shares of Circle
Income. As of November 7, 2000, to the best knowledge of Circle Income, CEDE &
CO., C/O Depository Trust Co, 55 Water Street, New York, NY 10041, was the
record owner of 74.42% of Circle Income's shares. CEDE & CO. was the only
shareholder of record owning 5% or more (and, in this case, more than 25%) of
the outstanding voting securities of Circle Income. For purposes of the
Investment Company Act of 1940, any person who owns, directly or through one or
more controlled companies, more than 25% of the voting securities of a company
is presumed to "control" such company. However, please note that CEDE & CO. is a
nominee name for the Depository Trust Company, which itself represents numerous
brokerages. Thus, CEDE & Co.'s 74.42% represents the holdings of numerous
shareholders, none of whom, to the best knowledge of Circle Income, individually
own 5% or more of Circle Income's outstanding voting securities.
Bank One Corporation and its subsidiaries will cast votes attributable to
any shares for which it serves as fiduciary in the same proportion as votes cast
by other shareholders.
The votes of the shareholders of One Group Income are not being solicited,
since their approval or consent is not necessary for the approval of the
Agreement. However, the vote required for approval of the proposal, including
the treatment of abstention and "broker nonvotes" would be the same as that of
Circle Income. Also, whole shares of One Group Income would be entitled to one
vote and fractional shares would be entitled to a proportionate fractional vote.
As of November 7, 2000, as shown on the books of One Group Income, there were
180,981,700.052 issued and outstanding shares of One Group Income, of which
3,831,063.147 were Class A shares of beneficial interest of One Group Income.
As of November 7, 2000, the officers and Trustees of One Group Mutual Funds
as a group beneficially owned less than 1% of the outstanding shares of Class A
shares of One Group Income. As of November 7, 2000, to the best knowledge of One
Group, the following owned beneficially 5% or more of the outstanding shares of
One Group and/or 5% or more of the outstanding shares of Class A of One Group
Income:
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Northern Trust Bank of AZ TTEE....... Arizona Municipal Bond Fund 14.14% Record
For Thomas A Brand & Rev Trust Class A
P.O. Box 92956
Chicago IL 60675
Northern Trust Bank of AZ TTEE....... Arizona Municipal Bond Fund 9.10% Record
Hazel I. Olson a/c# 02-01078 Class A
UA DTD 09/21/1999
PO Box 929586, 801 S. Canal
Chicago, IL 60675-2956
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 11.24% Record
Securities Corporation Inc. Class A
P.O. Box 2052
Jersey City, NJ 07303-2052
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Gust Trust Under Agreement 1/17...... Arizona Municipal Bond Fund 7.25% Record
Devens Gust & Mary Elizabeth Gust Class A
Co-Trustees
P.O. Box 25
Mule Creek, NM 88051-0025
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 10.46% Record
Securities Corporation Inc. Class A
P.O. Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 5.40% Record
Securities Corporation Inc. Class A
P.O. Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 24.02% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 10.86% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 7.07% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
Carolyn S Ward....................... Arizona Municipal Bond Fund 10.16% Record &
James D Ward JT TEN Class B Beneficial
825 W Annandale
Tucson, AZ 85737-6923
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 6.43% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
NFSC FEBO #APW-505048................ Arizona Municipal Bond Fund 6.08% Record
Marian J Bensink TTEE Class B
3175 W. Roundup St.
Apache Junction AZ 85220
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 31.03% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Arizona Municipal Bond Fund 99.55% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Invesco Trust Co. TTEE............... Balanced Fund 17.34% Record
Scott Companies Profit Sharing Plan Class A
PO Box 77405
Atlanta, GA 30357
Bisys BD Services, Inc............... Balanced Fund 6.41% Record
FBO Noe Corp. LLC Class C
PO Box 4054
Concord CA 94524-4054
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bisys BD Services, Inc............... Balanced Fund 8.34% Record
FBO NGK Spark Plug Mfg. (USA), IN Class C
PO Box 4054
Concord CA 94524-4054
Bisys BD Services, Inc............... Balanced Fund 10.09% Record
FBO Bernard Mechanical Contractors Class C
PO Box 4054
Concord CA 94524-4054
Donaldson Lufkin Jenrette............ Balanced Fund 13.26% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Balanced Fund 16.04% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Balanced Fund 91.58% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Putnam Fiduciary Trust Co. TTEE...... Bond Fund 6.95% Record
Elco Textron Inc. Class A
Attn: K. Barry
859 Willard St. MSE2C
Quincy, MA 02169-7428
Strafe & Co.......................... Bond Fund 7.92% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Kemper Service Co.................... Bond Fund 47.52% Record
FBO Participating Kemflex Plans Class C
811 Main St
Kansas City, MO 64105-2005
Merrill Lynch Pierce Fenner & Bond Fund 5.77% Beneficial
Smith................................ Class C
FBO Customers
4800 Deer Lake Dr. East
Jacksonville FL 32246
Strafe & Co.......................... Bond Fund 82.30% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Cor TTEE.................... Bond Fund 5.52% Beneficial
Savings and Investment Plan Class I
859 Willard St.
Quincy MA 02169
NBD Bank NA.......................... Cash Management Money Market Fund 37.53% Record &
Attn: Mary Ellen Bradley Class A Beneficial
9000 Haggerty Road
Belleville, MI 48111-1632
Bank One............................. Cash Management Money Market Fund 32.53% Record &
Attn: Mary Ellen Bradley Class A Beneficial
9000 Haggerty Road, Suite MI1-8217
Belleville, MI 48111-1632
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
First National Bank of Chicago....... Cash Management Money Market Fund 14.30% Record &
Attn: Commercial Products Class A Beneficial
9000 Haggerty Road
Belleville, MI 48111-1632
Bank One............................. Cash Management Money Market Fund 13.76% Record &
Attn: Mary Ellen Bradley Class A Beneficial
9000 Haggerty Road, Suite MI1-8217
Belleville, MI 48111-1632
Strafe & Co.......................... Cash Management Money Market Fund 64.74% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Trust Company............... Cash Management Money Market Fund 27.52% Record
Corporate Trust Administration Class I
Attn: Cash Sweep Dept
One N. State St., 9th Floor
Mail ST 0126
Chicago, IL 60602-3300
MI NCD Base Bldg Proj................ Cash Management Money Market 15.84% Beneficial
1111 Polaris Parkway Class I
Columbus OH 43240
Banc One Securities Corp............. Diversified Equity Fund 14.56% Record
FBO The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Strafe & Co.......................... Diversified Equity Fund 6.16% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Securities Corp............. Diversified Equity Fund 69.81% Record
FBO The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Kemper Service Company............... Diversified Equity Fund 18.54% Record
FBO Participating Kemplex Plans Class C
Attn: TA Accounting 7th Fl
811 Main St
Kansas City, MO 64105-2005
Strafe & Co.......................... Diversified Equity Fund 75.66% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One COR TTEE.................... Diversified Equity Fund 6.17% Record
FBO Bank One Corporation Class I
Investment & Savings Plan
Attn: Trading Services E26
859 Willard St
Quincy, MA 02169-7428
The One Group Investor Growth &
Income Fund........................ Diversified Equity Fund 6.72% Record &
C/O Mark S. Redman Class I Beneficial
3435 Stelzer Road
Columbus, OH 43219-6004
</TABLE>
32
<PAGE> 34
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co.......................... Diversified International Fund 8.07% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Loan Collateral Account.............. Diversified International 7.52% Record &
NBD Bank/Kurt Kilby Pledge Fund A
FBO Mario Michael Moscone Beneficial
235 Sheldon
Plymouth MI 48170-1524
Merrill Lynch Pierce Fenner & Diversified International Fund 48.32% Record &
Smith................................ Class C
FBO Customers Beneficial
4800 Deer Lake Dr. East
Jacksonville FL 32246
Donaldson Lufkin Jenrette............ Diversified International Fund 9.62% Record &
Securities Corporation Inc. Class C
PO Box 2052 Beneficial
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Diversified International Fund 5.90% Record &
Securities Corporation Inc. Class C
PO Box 2052 Beneficial
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Diversified International Fund 5.07% Record &
Securities Corporation Inc. Class C
PO Box 2052 Beneficial
Jersey City, NJ 07303-2052
Strafe & Co.......................... Diversified International Fund 77.96% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Investor Growth &
Income Fund........................ Diversified International Fund 6.95% Record &
C/O Mark Redman Class I
The One Group Services Company Beneficial
3435 Stelzer Rd
Columbus, OH 43219-6004
Bisys BD Services, Inc............... Diversified Mid Cap Fund 5.25% Record
FBO FANUC Robotics Class A
PO Box 4054
Concord CA 94524
Consolidated Natural Gas............. Diversified Mid Cap Fund 10.92% Record
Attn: Ronda M. Spurr Class A
135 Santili Highway
Everett, MA 02149-1906
State Street Bank & Trust Co......... Diversified Mid Cap Fund 9.02% Record
Cust for the IRA of Jim Ernest Class C
67108 Locke St.
Mandeville LA 70471
State Street Bank & Trust Co......... Diversified Mid Cap Fund 7.80% Record
Cust for the IRA of Russell Class C
McGlinchey
3609 Miller Rd.
Flint MI 48503
Merrill Lynch Pierce Fenner & Diversified Mid Cap Fund 66.51% Record &
Smith................................ Class C
FBO Customers Beneficial
4800 Deer Lake Dr. East
Jacksonville FL 32246
</TABLE>
33
<PAGE> 35
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co.......................... Diversified Mid Cap Fund 79.04% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271
The One Group Investor Growth &
Income Fund........................ Diversified Mid Cap Fund 7.54% Record &
C/O Mark Redman Class I Beneficial
The One Group Services Company
3435 Stelzer RD
Columbus, OH 43219-6004
The One Group Investor Growth Fund... Diversified Mid Cap Fund 6.83% Record &
C/O Mark Redman Class I Beneficial
The One Group Services Company
3435 Stelzer RD
Columbus, OH 43219-6004
Bisys BD Services, Inc............... Mid Cap Value Fund 7.64% Record
FBO Rapistan Demag Class A
PO Box 5054
Concord, CA 94524-4054
State Street Bank & Trust Co......... Mid Cap Value Fund 5.12% Record &
Cust for the IRA of Randy J Parker Class C Beneficial
258 Alligator Ln Box 5
Akers, LA 70421
Donaldson Lufkin Jenrette............ Mid Cap Value Fund 17.50% Record &
Securities Corporation Inc Class C Beneficial
P.O. Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Mid Cap Value Fund 7.86% Record &
Securities Corporation Inc Class C Beneficial
P.O. Box 2052
Jersey City, NJ 07303-2052
Bisys BD Services, Inc............... Mid Cap Value Fund 6.74% Record
FBO Premier Truck Parts, Inc. Class C
P.O. Box 4054
Concord, CA 94524-4054
Donaldson Lufkin Jenrette............ Mid Cap Value Fund 6.98% Record &
Securities Corporation Inc Class C Beneficial
P.O. Box 2052
Jersey City, NJ 07303-2052
Bisys BD Services, Inc............... Mid Cap Value Fund 8.55% Record
FBO Iddings Trucking, Inc. Class C
P.O. Box 4054
Concord, CA 94524-4054
Bisys BD Services, Inc............... Mid Cap Value Fund 7.10% Record
FBO Methanex Management, Inc. Class C
P.O. Box 4054
Concord, CA 94524-4054
Bisys BD Services, Inc............... Mid Cap Value Fund 7.91% Record
FBO Methanex Management, Inc. Class C
P.O. Box 4054
Concord, CA 94524-4054
Merrill Lynch Pierce Fenner & Smith Mid Cap Value Fund 7.06% Record &
Inc.................................. Class C Beneficial
For the Sole Benefit of Customers
4800 Deer Lake Dr East
Jacksonville FL 32246-6484
</TABLE>
34
<PAGE> 36
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co.......................... Mid Cap Value Fund 82.68% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Investor
Growth & Income Fund............... Mid Cap Value Fund 6.60% Record &
C/O Mark S. Redman Class I Beneficial
The One Group Services Co.
3435 Stelzer Rd.
Columbus, OH 43219-6004
The One Group Investor Growth Fund... Mid Cap Value Fund 5.96% Record &
C/O Mark S. Redman Class I Beneficial
The One Group Services Co.
3435 Stelzer Rd.
Columbus, OH 43219-6004
Banc One Securities Corp ............ Mid Cap Growth Fund 18.60% Record
FBO The One Investment Solution Class A
733 Greencrest Dr
Westerville, OH 43081-4903
Banc One Securities Corp ............ Mid Cap Growth Fund 73.98% Record
FBO The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Kemper Service Company............... Mid Cap Growth Fund 9.13% Record
FBO Participating Kemplex Plans Class C
Attn: TA Accounting 7th Fl
811 Main St
Kansas City, MO 64105-2005
Strafe & Co.......................... Mid Cap Growth Fund 77.69% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Cor TTEE.................... Mid Cap Growth Fund 7.65% Beneficial
FBO Savings and Investment Plan Class I
Attn: Trading Services E26
859 Willard St
Quincy, MA 02169-7428
Strafe & Co.......................... Income Bond Fund 5.71% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bisys BD Services, Inc............... Income Bond Fund 37.47% Record
FBO Peabody's Interiors, Inc Class C
PO Box 4054
Concord CA 94524-4054
Bisys BD Services, Inc............... Income Bond Fund 8.27% Record
FBO Retail Fixture Corp. Class C
PO Box 4054
Concord CA 94524-4054
Bisys BD Services, Inc............... Income Bond Fund 6.45% Record
FBO Chemguard, Inc. Class C
PO Box 4054
Concord CA 94524-4054
</TABLE>
35
<PAGE> 37
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bisys BD Services, Inc............... Income Bond Fund 20.16% Record
FBO Airolite Company Class C
PO Box 4054
Concord CA 94524-4054
Bisys BD Services, Inc............... Income Bond Fund 9.45% Record
FBO Louisiana Wholesale Florists, Class C
Inc.
PO Box 4054
Concord CA 94524-4054
Little B Taylor...................... Income Bond Fund 14.99% Beneficial
190 E Grand Blvd Apt Class C
Detroit MI 48207-3772
Strafe & Co.......................... Income Bond Fund 84.45% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Investor Balanced FD... Income Bond Fund 6.04% Record &
C/O Mark S. Redman Class I
The One Group Services Company Beneficial
3435 Stelzer Rd
Columbus, OH 43219-6004
The One Group Investor Growth
& Income Fund...................... Income Bond Fund 5.02% Record &
C/O Mark S. Redman Class I
The One Group Services Company Beneficial
3435 Stelzer Rd
Columbus, OH 43219-6004
Strafe & Co.......................... Institutional Prime Money Market Fund 28.24% Record
BOIA -- One Group Operations Institutional
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Trust Company............... Institutional Prime Money Market Fund 41.55% Record
Attn: SEI Corporate Trust Institutional
Database OH1-0211
1111 Polaris Parkway
Columbus, OH 43240-2050
Crossroads Constitution Institutional Prime Money Market Fund 13.30% Record &
Partnership.......................... Institutional
1111 Polaris Parkway Beneficial
Columbus OH 43240
Bank One NA.......................... Institutional Prime Money Market Fund 65.16% Record
Attn Cash Mgmt Operations Class S
1111 Polaris Pkwy
Columbus, OH 43240-2050
Bisys Fund Services, Inc............. Institutional Prime Money Market Fund 20.31% Record
FBO Banc One Securities Class S
Attn Mike Bryan
3435 Stelzer Rd Ste 1000
Columbus, OH 43219-6004
Green Thumb Lawnscaping Inc.......... Institutional Prime Money Market Fund 5.61% Record
DBA Zito Construction Class S
G-8033 Fenton Road
Grand Blanc MI 48439
Pioneer State Mutual Insurance ...... Institutional Prime Money Market Fund 5.04% Record
C/O Karlan Gingrich Class S
1510 N Elms Rd
Flint MI 48532-2000
</TABLE>
36
<PAGE> 38
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Pershing AS Agent -- Omnibus Prime Money Market Fund 32.25% Record
Account.............................. Class A
FBO One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
Bank One National Sweep Operations... Prime Money Market Fund 31.11% Record
Attn: Terri McKibben Class A
PO Box 711214
Columbus, OH 43271-0001
Bisys BD Services, Inc............... Prime Money Market Fund 99.33% Record
PO Box 4054 Class C
Concord CA 94524-4054
Strafe & Co.......................... Prime Money Market Fund 64.94% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Trust Company NA............ Prime Money Market Fund 5.94% Record
Omnibus-Corporate Cash Sweep AC Class I
Attn Cash Management DB3
235 W Schrock Rd
Westerville OH 43081-2874
Bank One Trust Company............... Prime Money Market Fund 8.74% Record
Attn SEI Corporate Trust Class I
Database OH1-0211
1111 Polaris Pkwy
Columbus, OH 43240-2050
Banc One Cor TTEE.................... Prime Money Market Fund 5.34% Record
FBO Savings and Investment Plan Class I
Attn: Trading Services E26
859 Willard St
Quincy, MA 02169-7428
Pershing As Agent -- Omnibus Prime Money Market Fund 99.93% Record
Account.............................. Class S
For Exclusive Benefit of
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
Pershing As Agent -- Omnibus US Treasury Securities Money Market Fund 17.70% Record
Account.............................. Class A
For Exclusive Benefit of
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
BISYS Fund Services Inc.............. US Treasury Securities Money Market Fund 20.00% Record
FBO Bank One Texas Sweep Class A
Attn: Mike Bryan
3435 Stelzer Road Suite 1000
Columbus OH 43219-6004
BISYS Fund Services Inc.............. US Treasury Securities Money Market Fund 10.85% Record
FBO Bank One Securities Class A
Attn: Mike Bryan
3435 Stelzer Road Suite 1000
Columbus OH 43219-6004
Bank One National Sweep Operations... US Treasury Securities Money Market Fund 39.02% Record
Attn: Terri McKibben Class A
PO Box 711214
Columbus, OH 43271-0001
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette............ US Treasury Securities Money Market Fund 7.46% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ US Treasury Securities Money Market Fund 10.22% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ US Treasury Securities Money Market Fund 12.02% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ US Treasury Securities Money Market Fund 13.09% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ US Treasury Securities Money Market Fund 8.51% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Bisys BD Services, Inc............... US Treasury Securities Money Market Fund 14.39% Record
FBO Chemguard, Inc. Class C
PO Box 4054
Concord, CA 94524-4054
Bisys BD Services, Inc............... US Treasury Securities Money Market Fund 12.54% Record
FBO Noe Corp. LLC Class C
PO Box 4054
Concord, CA 94524-4054
Bisys BD Services, Inc............... US Treasury Securities Money Market Fund 7.61% Record
FBO Iddings Trucking, Inc. Class C
PO Box 4054
Concord, CA 94524-4054
Bisys BD Services, Inc............... US Treasury Securities Money Market Fund 7.41% Record
FBO Agrivest, Inc. Class C
PO Box 4054
Concord, CA 94524-4054
Bisys BD Services, Inc............... US Treasury Securities Money Market Fund 9.30% Record
FBO Bruce Fox, Inc. Class C
PO Box 4054
Concord, CA 94524-4054
Strafe & Co (N)...................... US Treasury Securities Money Market Fund 23.17% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Trust Company NA............ US Treasury Securities Money Market Fund 11.60% Record
Omnibus -- Corporate Cash Sweep AC Class I
Attn Cash Management DB3
235 W Schrock Rd
Westerville OH 43081-2874
Bank One Trust Company............... US Treasury Securities Money Market Fund 63.92% Record
Attn SEI Corporate Trust Class I
Database OH1-0211
1111 Polaris Pkwy
Columbus, OH 43240-2050
</TABLE>
38
<PAGE> 40
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Pershing As Agent -- Omnibus US Treasury Securities Money Market Fund 96.66% Record
Account.............................. Class S
For Exclusive Benefit of
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
Pershing As Agent -- Omnibus Municipal Money Market Fund 46.48% Record
Account.............................. Class A
For Exclusive Benefit of
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
Bank One National Sweep Operations... Municipal Money Market Fund 25.12% Record
Attn Terri McKibben Class A
PO Box 711214
Columbus, OH 43271-0001
NBD Michigan......................... Municipal Money Market Fund 6.51% Record &
Attn M E Bradley Class A Beneficial
9000 Haggerty Road
Belleville MI 48111-1632
Strafe & Co.......................... Municipal Money Market Fund 94.87% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Pershing As Agent -- Omnibus Municipal Money Market Fund 98.72% Record
Account.............................. Class S
For Exclusive Benefit of
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
Donaldson Lufkin Jenrette............ Equity Income Fund 8.46% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Bisys BD Services, Inc............... Equity Income Fund 6.49% Record
FBO Ranger Excavating, Inc. Class C
PO Box 4054
Concord, CA 94524-4054
Bisys BD Services, Inc............... Equity Income Fund 13.20% Record
FBO N G K Spark Plug MFG. (USA) Class C
PO Box 4054
Concord, CA 94524-4054
Strafe & Co.......................... Equity Income Fund 93.39% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Securities Corp............. Equity Index Fund 22.43% Record
FBO The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Banc One Securities Corp............. Equity Index Fund 54.16% Record
FBO The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
</TABLE>
39
<PAGE> 41
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co.......................... Equity Index Fund 81.54% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One COR TTEE.................... Equity Index Fund 14.03% Record
FBO Bank One Corporation Class I
Savings and Investment Plan
Attn: Trading Services E26
859 Willard St
Quincy, MA 02169-7428
Banc One Securities Corp............. Large Cap Growth Fund 53.25% Record
FBO The One Investment Solution Class C
733 Greencrest Dr.
Westerville, OH 43081-4903
Kemper Service Company............... Large Cap Growth Fund 15.84% Record
Master Account Class C
FBO Participating Kemflex Plans
Attn: TA Accounting 7th Floor
811 Main Street
Kansas City, MO 64105-2005
Strafe & Co.......................... Large Cap Growth Fund 77.57% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One COR TTEE.................... Large Cap Growth Fund 9.11% Record
FBO Bank One Corporation Class I
Saving and Investment Plan
Attn: Trading Services E26
859 Willard St
Quincy, MA 02169-7428
Invesco Trust Company TTEE........... Large Cap Value Fund 7.56% Record
Beazer Homes USA Inc. 401K Plan Class A
PO Box 77405
Atlanta, GA 30357-1405
Kemper Service Company............... Large Cap Value Fund 43.24% Record
Master Account Class C
FBO Participating Kemflex Plans
Attn: TA Accounting
7th Floor, 811 Main Street
Kansas City, MO 64105-2005
Merrill Lynch Pierce Fenner & Large Cap Value Fund 19.05% Record
Smith................................ Class C
For the Sole Benefit of Customers
4800 Deer Lake Dr East
Jacksonville, FL 32246-6484
Bisys BD Services, Inc............... Large Cap Value Fund 5.96% Record
FBO Peabody's Interiors, Inc. Class C
PO Box 4054
Concord, CA 94524-4054
Strafe & Co.......................... Large Cap Value Fund 70.47% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
40
<PAGE> 42
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
The One Group Investor Growth &
Income Fund........................ Large Cap Value Fund 7.91% Record &
The One Group Services Company Class I
3435 Stelzer Road Beneficial
Columbus, OH 43219-6004
The One Group Investor Growth Fund... Large Cap Value Fund 6.19% Record &
C/O Mark S. Redman Class I
3435 Stelzer Road Beneficial
Columbus, OH 43219-6004
Donaldson Lufkin Jenrette............ Ohio Municipal Bond Fund 17.69% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Ohio Municipal Bond Fund 6.38% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Ohio Municipal Bond Fund 5.89% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Ohio Municipal Bond Fund 98.33% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Firstar Trust Co TTEE................ International Equity Index Fund 8.01% Record
FBO Milwaukee Foundation -- Equity Class A
P.O. Box 1787
Milwaukee WI 53201-1787
Banc One Securities Corp............. International Equity Index Fund 9.14% Record
FBO The One Investment Solution Class A
733 Greencrest Dr.
Westerville, OH 43081-4903
Banc One Securities Corp............. International Equity Index 67.75% Record
FBO The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
Kemper Service Company............... International Equity Index Fund 10.28% Record
Master Account Class C
FBO Participating Kemflex Plans
Attn: TA Accounting 7th Floor
811 Main Street
Kansas City, MO 64105-2005
Strafe & Co.......................... International Equity Index Fund 87.91% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Strafe & Co.......................... Short-Term Bond Fund 22.30% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
</TABLE>
41
<PAGE> 43
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co.......................... Short-Term Bond Fund 90.29% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Strafe & Co.......................... Louisiana Municipal Bond Fund 95.47% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bisys BD Services, Inc............... Small Cap Growth Fund 9.75% Record
FBO Rapistan Demag Class A
PO Box 4054
Concord, CA 94524-4054
State Street Bank & Trust Co......... Small Cap Growth Fund 7.69% Record
Cust for the Rollover IRA of Class C
Hyppolete J Astugue
4437 Newlands
Matairie, LA 70006-4135
Donaldson Lufkin Jenrett............. Small Cap Growth Fund 5.10% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Small Cap Growth Fund 6.41% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrett............. Small Cap Growth Fund 5.70% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Small Cap Growth Fund 87.64% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Strafe & Co.......................... Small Cap Value Fund 7.49% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Donaldson Lufkin Jenrette............ Small Cap Value Fund 18.63% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Small Cap Value Fund 18.37% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
The One Group Services Co............ Small Cap Value Fund 9.46% Record &
3435 Stelzer Road Class C
Columbus, OH 43219-6004 Beneficial
State Street Bank & Trust Co......... Small Cap Value Fund 26.32% Record &
Cust for the IRA of Randy J. Parker Class C
258 Alligator Ln Box 5 Beneficial
Akers, LA 70421
</TABLE>
42
<PAGE> 44
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
State Street Bank & Trust Co......... Small Cap Value Fund 8.18% Record &
Cust for the IRA of Rebecca S. Class C
Edwards Beneficial
242 Trace Loop
Mandeville, LA 70448-7563
Donaldson Lufkin Jenrette............ Small Cap Value Fund 9.05% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Small Cap Value Fund 84.24% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
The One Group Investor Growth Fund... Small Cap Value Fund 6.17% Record &
C/O Mark S. Redman Class I
The One Group Services Company Beneficial
3435 Stelzer Rd
Columbus, OH 43219-6004
Donaldson Lufkin Jenrette............ Tax-Free Bond Fund 5.04% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Tax-Free Bond Fund 99.70% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Donaldson Lufkin Jenrette............ Treasury & Agency Fund 19.32% Record
Securities Corporation Inc. Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Treasury & Agency Fund 13.25% Record
Securities Corporation Inc. Class A
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Treasury & Agency Fund 99.81% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
NBD Bank NA.......................... Treasury Cash Management Money Market Fund 28.90% Record &
Attn: Mary Ellen Bradley Class A
9000 Haggerty Road Beneficial
Belleville, MI 48111-1632
Bank One............................. Treasury Cash Management Money Market Fund 22.02% Record &
Attn: Mary Ellen Bradley Class A
9000 Haggerty Road Beneficial
Suite MI1-8217
Belleville, MI 48111-1632
</TABLE>
43
<PAGE> 45
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bank One............................. Treasury Cash Management Money Market Fund 33.45% Record &
Attn: Mary Ellen Bradley Class A
9000 Haggerty Road Beneficial
Suite MI1-8217
Belleville, MI 48111-1632
First National Bank of Chicago....... Treasury Cash Management Money Market Fund 15.63% Record
Attn: Commercial Products Class A
9000 Haggerty Rd.
Belleville, MI 48111-8217
Bank One Trust Company............... Treasury Cash Management Money Market Fund 91.38% Record
Attn: SEI Corporate Trust Class I
Database OH1-0211
1111 Polaris Parkway
Columbus, OH 43240-2050
Bank One Illinois.................... Treasury Cash Management Money Market Fund 6.80% Record
Cash Management Dept Class I
Attn Tony Long
525 W Monroe ST 6th Ste 0256
Chicago IL 60661-3629
MMBA DW SRF Released Money A/C....... Treasury Cash Management Money Market Fund 7.63% Beneficial
1111 Polaris Parkway Class I
Columbus OH 43240
Strafe & Co.......................... Treasury Only Money Market Fund 29.16% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Trust Company............... Treasury Only Money Market Fund 66.79% Record
Attn: SEI Corporate Trust Class I
Database OH1-0211
1111 Polaris Parkway
Columbus, OH 43240-2050
CHGO Wtr Rev 97 Const Acct........... Treasury Only Money Market Fund 15.57% Beneficial
1111 Polaris Parkway Class I
Columbus OH 43240
Bank One National Sweep Operations... Treasury Only Money Market Fund 67.35% Record
Attn Terri McKibben Class S
PO Box 711214
Columbus, OH 43271-0001
Bisys Fund Services, Inc............. Treasury Only Money Market Fund 29.53% Record
FBO Banc One Securities Class S
Attn Mike Bryan
3435 Stelzer Rd Ste 1000
Columbus, OH 43219-6004
Bank One............................. Treasury Prime Cash Management Money 21.70% Record &
Attn: Mary Ellen Bradley Market Fund
9000 Haggerty Rd., Ste MI1-8217 Class A Beneficial
Belleville, MI 48111-9787
First National Bank of Chicago....... Treasury Prime Cash Management Money 14.47% Record &
Attn: Commercial Products Market Fund
9000 Haggerty Rd. Class A Beneficial
Belleville, MI 48111-8217
</TABLE>
44
<PAGE> 46
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bank One............................. Treasury Prime Cash Management Money 12.29% Record &
Attn: Mary Ellen Bradley Market Fund
9000 Haggerty Rd. Class A Beneficial
Suite MI1-8217
Belleville, MI 48111-1632
Bank One Trust Company............... Treasury Prime Cash Management Money 44.09% Record
Attn: Corporate Trust Market Fund
Database OH1-0211 Class A
1111 Polaris Pkwy
Columbus, OH 43240-2050
NBD Bank NA.......................... Treasury Prime Cash Management Money 7.45% Record
Attn: Mary Ellen Bradley Market Fund
9000 Haggerty Road Class A
Belleville, MI 48111-9787
Strafe & Co.......................... Treasury Prime Cash Management Money 31.22% Record
BOIA -- One Group Operations Market Fund
1111 Polaris Parkway Class I
P.O. Box 710211
Columbus, OH 43271-0211
Bank One Illinois NA................. Treasury Prime Cash Management Money 9.64% Record &
Cash Management Department Market Fund
Attn: Tony Long Class I Beneficial
Suite 0256 6th Floor
525 W. Monroe St.
Chicago, IL 60661-3629
Bank One Trust Company............... Treasury Prime Cash Management Money 59.13% Record
Attn: SEI Corporate Trust Market Fund
Database OH1-0211 Class I
1111 Polaris Pkwy
Columbus, OH 43240-2050
Bank One............................. US Government Securities Cash Management 12.63% Record &
Attn: Mary Ellen Bradley Money Market Fund
9000 Haggerty Rd., Ste MI1-8217 Class A Beneficial
Belleville, MI 48111-9787
First National Bank of Chicago....... US Government Securities Cash Management 19.25% Record &
Attn: Commercial Products Money Market Fund
9000 Haggerty Rd. Class A Beneficial
Belleville, MI 48111-1632
Bank One............................. US Government Securities Cash Management 38.23% Record &
Attn: Mary Ellen Bradley Money Market Fund
9000 Haggerty Rd., Suite MI1-8217 Class A Beneficial
Belleville, MI 48111-9787
Bank One Trust Company............... US Government Securities Cash Management 24.54% Record
Attn Corporate Trust Money Market Fund
Database OH1-0211 Class A
1111 Polaris Pkwy
Columbus, OH 43240-2050
NBD Bank NA.......................... US Government Securities Cash Management 5.03% Record &
Attn Mary Ellen Bradley Money Market Fund
9000 Haggerty Road Class A Beneficial
Belleville MI 48111-9787
Strafe & Co.......................... US Government Securities Cash Management 10.53% Record
BOIA -- One Group Operations Money Market Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus OH 43271-0211
</TABLE>
45
<PAGE> 47
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bank One Trust Company............... US Government Securities Cash Management 86.57% Record
Attn Corporate Trust Money Market Fund
Database OH1-0211 Class I
1111 Polaris Pkwy
Columbus, OH 43240-2050
Beckman/Coulter Escrow due 10/2000... US Government Securities Cash Management 13.49% Record
1111 Polaris Parkway Money Market Fund
Columbus OH 43240 Class I
Pershing As Agent -- Omnibus Ohio Municipal Money Market Fund 98.00% Record
Account.............................. Class A
For Exclusive Benefit of
One Group Customer Accounts
1 Pershing Plaza
Jersey City, NJ 07399-0001
Strafe & Co.......................... Ohio Municipal Money Market Fund 90.98% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Trust Company............... Ohio Municipal Money Market Fund 7.60% Record
Attn Corporate Trust Class I
Database OH1-0211
1111 Polaris Pkwy
Columbus, OH 43240-2050
Wallick Properties Inc............... Ohio Municipal Money Market Fund 18.77% Record
1111 Polaris Parkway Class I
Columbus OH 43240
Banc One Securities Corp............. Municipal Income Fund 37.65% Record
FBO The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Banc One Securities Corp............. Municipal Income Fund 65.72% Record
FBO The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
Strafe & Co.......................... Municipal Income Fund 99.13% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Donaldson Lufkin Jenrette............ Kentucky Municipal Bond Fund 11.42% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Kentucky Municipal Bond Fund 6.02% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Kentucky Municipal Bond Fund 96.11% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 13.51% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
</TABLE>
46
<PAGE> 48
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 11.18% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 9.69% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 8.69% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 7.32% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 6.20% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 5.90% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ West Virginia Municipal Bond Fund 5.42% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
LPL Financial Services............... West Virginia Municipal Bond Fund 6.28% Record
A/C 1127-1583 Class A
9785 Towne Centre Drive
San Diego CA 92121-1968
Strafe & Co.......................... West Virginia Municipal Bond Fund 94.04% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Donaldson Lufkin Jenrette............ Government Bond Fund 19.49% Record
Securities Corporation Inc. Class C
P.O. Box 2052
Jersey City, NJ 07303-2052
Banc One Securities Corp............. Government Bond Fund 65.71% Record
FBO The One Investment Solution Class C
733 Greencrest Drive
Westerville, OH 43081-4903
Strafe & Co.......................... Government Bond Fund 83.03% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
One Group Investor Balanced FD....... Government Bond Fund 6.50% Record &
C/O Mark S Redman Class I Beneficial
The One Group Services Company
3435 Stelzer Rd
Columbus, OH 43219-6004
</TABLE>
47
<PAGE> 49
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
The One Group Investor Growth &
Income Fund........................ Government Bond Fund 5.60% Record &
C/O Mark S Redman Class I
The One Group Services Company Beneficial
3435 Stelzer Rd
Columbus, OH 43219-6004
Investment Company Institute......... Ultra Short Term Bond Fund 7.91% Record
Attn: Mark Delcoco Class A
1401 H St NW
Washington, DC 20005-2110
Donaldson Lufkin Jenrette............ Ultra Short Term Bond Fund 5.78% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Ultra Short Term Bond Fund 5.55% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Ultra Short Term Bond Fund 83.84% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp............. Intermediate Bond Fund 49.42% Record
FBO The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Strafe & Co.......................... Intermediate Bond Fund 5.08% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Securities Corp............. Intermediate Bond Fund 91.44% Record
FBO The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
Strafe & Co.......................... Intermediate Bond Fund 90.89% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Kemper Service Company............... Investor Growth Fund 7.61% Record
Master Account Class C
FBO Participating Kemplex Plans
Attn: TA Accounting 7th Fl
811 Main St
Kansas City MO 64105-2005
Strafe & Co.......................... Investor Growth Fund 68.58% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bisys Brokerage Services, Inc........ Investor Growth Fund 18.88% Record
Bank One TTEE Class I
FBO Brillion Iron Works P/S
PO Box 4054
Concord CA 94524-4054
</TABLE>
48
<PAGE> 50
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bisys Brokerage Services, Inc........ Investor Growth Fund 6.23% Record
Bank One TTEE Class I
FBO Kearfott Guidance & Navigation
Corp Deferred Savings
PO Box 4054
Concord CA 94524-4054
Bank One Trust Co. NA TTEE........... Investor Growth & Income Fund 8.71% Record
Clarian Health Partners Inc. Class A
Defined Contribution Plan
900 Tower Drive
MI1-8380
Troy, MI 48098-2810
BISYS BD Services Inc................ Investor Growth & Income Fund 5.93% Record
FBO Kelly Retirement Plus Class A
PO Box 4054
Concord, CA 94524-4054
Kemper Service Company............... Investor Growth & Income Fund 13.60% Record
Master Account Class C
FBO Participating Kemflex Plans
Attn: TA Accounting, 7th Floor
811 Main Street
Kansas City, MO 64105-2005
Strafe & Co.......................... Investor Growth & Income Fund 45.31% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Cor TTEE.................... Investor Growth & Income Fund 47.27% Record
FBO Bank One Corporation Class I
Savings and Investments Plan
Attn: Trading Services E26
859 Willard St
Quincy, MA 02169-7428
Strafe & Co.......................... Investor Balanced Fund 5.30% Record
BOIA -- One Group Operations Class A
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Kemper Service Company............... Investor Balanced Fund 17.47% Record
Master Account Class C
FBO Participating Kemflex Plans
Attn: TA Accounting, 7th Floor
811 Main Street
Kansas City, MO 64105-2005
Donaldson Lufkin Jenrette............ Investor Balanced Fund 5.34% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Investor Balanced Fund 87.77% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Donaldson Lufkin Jenrette............ Investor Conservative Growth Fund 8.41% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
</TABLE>
49
<PAGE> 51
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Kemper Services Company.............. Investor Conservative Growth Fund 9.54% Record
Master Account Class C
FBO Participating Kemplex Plans
Attn: TA Accounting 7th Fl
811 Main St
Kansas City, MO 64105-2005
State Street Bank & Trust Co......... Investor Conservative Growth Fund 5.55% Record &
Cust for the IRA Rollover of Class C
George L Allison Beneficial
768 E Indiana Ave.
Spencer IN 74760-1538
Strafe & Co.......................... Investor Conservative Growth Fund 44.43% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Cor TTEE.................... Investor Conservative Growth Fund 49.50% Beneficial
FBO Bank One Corporation Class I
Savings and Investments Plan
Attn: Trading Services E26
859 Willard St
Quincy, MA 02169-7428
Strafe & Co.......................... Government Money Market Fund 69.09% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Trust Company............... Government Money Market Fund 12.60% Record
Attn SEI Corporate Trust Class I
Database OH1-0211
1111 Polaris Pkwy
Columbus, OH 43240-2050
Bank One NA.......................... Government Money Market Fund 7.37% Record
Attn Cash Management Operations Class I
1111 Polaris Pkwy
Columbus, OH 43240-2050
USA Group Foundation................. Government Money Market Fund 15.28% Record
1111 Polaris Parkway Class I
Columbus OH 43240
Bank One National Sweep Operations... Government Money Market Fund 80.24% Record
Attn Terri McKibben Class S
PO Box 711214
Columbus, OH 43271-0001
Bank One National Sweep Operations... Government Money Market Fund 5.06% Record
Attn Terri McKibben Class S
PO Box 711214
Columbus, OH 43271-0001
Bank One NA.......................... Government Money Market Fund 5.03% Record
Attn Cash Mgmt Operations Class S
1111 Polaris Pkwy
Columbus, OH 43240-2050
Banc One Securities Corp............. High Yield Bond Fund 11.63% Record
FBO The One Investment Solution Class A
733 Greencrest Dr
Westerville, OH 43081-4903
</TABLE>
50
<PAGE> 52
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Banc One Securities Corp............. High Yield Bond Fund 65.41% Record &
FBO The One Investment Solution Class C
733 Greencrest Dr. Beneficial
Westerville, OH 43081-4903
Donaldson Lufkin Jenrette............ High Yield Bond Fund 6.57% Record &
Securities Corporation Inc. Class C
PO Box 2052 Beneficial
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ High Yield Bond Fund 5.13% Record &
Securities Corporation Inc. Class C
PO Box 2052 Beneficial
Jersey City, NJ 07303-2052
Strafe & Co.......................... High Yield Bond Fund 51.08% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
The One Group Investor Growth &
Income Fund.......................... High Yield Bond Fund 20.81% Record &
3435 Stelzer Road Class I
Columbus OH 43219-6004 Beneficial
The One Group Investor Balanced High Yield Bond Fund 15.65% Record &
Fund................................. Class I
3435 Stelzer Road Beneficial
Columbus OH 43219-6004
The One Group Investor Growth Fund... High Yield Bond Fund 6.47% Record &
3435 Stelzer Road Class I
Columbus OH 43219-6004 Beneficial
Donaldson Lufkin Jenrette............ Market Expansion Index Fund 5.09% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Taylor, Porter, Brooks & Phillips.... Market Expansion Index Fund 5.27% Beneficial
P/S Plan Class A
Putnam Fiduciary Trust Co
Attn Trading Services
859 Willard St #E-2-C
Quincy, MA 02168-7428
Donaldson Lufkin Jenrette............ Market Expansion Index Fund 10.11% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Market Expansion Index Fund 28.26% Record
Securities Corporation Inc. Class C
PO Box 2052
Jersey City, NJ 07303-2052
Merrrill Lynch Pierce Fenner & Smith, Market Expansion Index Fund 24.80% Record &
Inc.................................. Class C
For the Sole Benefit of Customers Beneficial
4800 Deer Lake DR East
Jacksonville, FL 32246-6484
Strafe & Co.......................... Market Expansion Index Fund 99.94% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
51
<PAGE> 53
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
James R Donahey...................... Michigan Municipal Bond Fund 13.55% Record &
Pat J Donahey JT Ten Class A Beneficial
421 Highland
Ann Arbor, MI 48104-1729
Strafe & Co.......................... Michigan Municipal Bond Fund 99.59% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Pershing As Agent -- Omnibus Michigan Municipal Money Market Fund 48.59% Record
Account.............................. Class A
For Exclusive Benefit of
One Group Customer Accounts
1 Pershing Plz
Jersey City, NJ 07399-0001
NBD Michigan......................... Michigan Municipal Money Market Fund 32.56% Record &
Attn: M.E. Bradley Class A
9000 Haggerty Road Beneficial
Belleville, MI 48111-1632
Strafe & Co.......................... Michigan Municipal Money Market Fund 95.17% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Terrence Adderly Rev Tr.............. Michigan Municipal Money Market Fund 14.81% Beneficial
1111 Polaris Parkway Class I
Columbus OH 43240
NBD Bank............................. Municipal Cash Management Money Market 53.62% Record &
Attn M E Bradley Fund
9000 Haggerty Road Class A Beneficial
Belleville, MI 48111-9787
Bank One............................. Municipal Cash Management Money Market 39.67% Record &
Attn M E Bradley Fund
9000 Haggerty Road Ste MI1-8217 Class A Beneficial
Belleville, MI 48111-9787
Bank One............................. Municipal Cash Management Money Market 6.70% Record &
Attn M E Bradley Fund
9000 Haggerty Road Class A Beneficial
Belleville, MI 48111-9787
Strafe & Co.......................... Municipal Cash Management Money Market 100.00% Record
BOIA -- One Group Operations Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus OH 43271-0211
Victor Morgenstern................... Municipal Cash Management Money Market 15.98% Beneficial
1111 Polaris Parkway Fund
Columbus OH 43240 Class I
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 31.06% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 6.54% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
</TABLE>
52
<PAGE> 54
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond 7.38% Record
Securities Corporation Inc Fund
PO Box 2052 Class A
Jersey City, NJ 07303-2052
Salomon Smith Barney Inc............. Short-Term Municipal Bond Fund 15.13% Record
Acct 71b00312 Class A
333 West 34th Street-3rd Floor
New York, NY 10001
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 8.39% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 15.24% Record
Securities Corporation Inc Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 9.68% Record
Securities Corporation Inc Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 10.01% Record
Securities Corporation Inc Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 7.37% Record
Securities Corporation Inc Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 5.01% Record
Securities Corporation Inc Class B
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Short-Term Municipal Bond Fund 6.37% Record
Securities Corporation Inc Class B
PO Box 2052
Jersey City, NJ 07303-2052
Carlos C Cook........................ Short-Term Municipal Bond Fund 9.71% Record
Myra J Cook JT Ten Class B
35231 Davidson
Sterling Heights, MI 48310-5151
Strafe & Co.......................... Short-Term Municipal Bond Fund 99.91% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Donaldson Lufkin Jenrette............ Intermediate Tax Free Bond Fund 5.73% Record
Securities Corporation Inc Class A
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Intermediate Tax Free Bond Fund 99.36% Record &
BOIA -- One Group Operations Class I Beneficial
1111 Polaris Pkwy
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
53
<PAGE> 55
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette............ Technology Fund 16.95% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette............ Technology Fund 8.09% Record
Securities Corporation Inc Class C
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Technology Fund 97.68% Record
BOIA -- One Group Operations Class I
1111 Polaris Pkwy
PO Box 710211
Columbus, OH 43271-0211
The One Group Services Company....... Mortgage Backed Bond 46.90% Record &
C/O Fund Administration Class A Beneficial
3435 Stelzer Road
Columbus, OH 43219-6004
One Group Administrative Serv Inc.... Mortgage Backed Bond 46.09% Record
Seed Money Account Class A
Attn: Ric Butler
1111 Polaris Parkway
P O Box 710211
Columbus, OH 43271-0211
Starfe & Co.......................... Mortgage Backed Bond 98.93% Record
BOIA -- One Group Operations Class I
1111 Polaris Pkwy
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
In addition, as of November 7, 2000, the following persons were the
beneficial owners of more than 25% of the outstanding shares of One Group and/or
more than 25% of the outstanding shares of Class A of One Group Income:
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Donaldson Lufkin Jenrette............ Arizona Municipal Bond Fund 31.03% Record
Securities Corporation Inc. Class B
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Arizona Municipal Bond Fund 99.55% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co.......................... Balanced Fund 91.58% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Kemper Service Company............... Bond Fund 47.52% Record
BOIA -- One Group Operations Class C
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
54
<PAGE> 56
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co.......................... Bond Fund 82.30% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
NBD Bank NA.......................... Cash Management Money Market Fund 37.53% Record &
Attn: Mary Ellen Bradley Class A Beneficial
9000 Haggerty Road
Belleville, MI 48111-1632
Bank One............................. Cash Management Money Market Fund 32.53% Record &
Attn: Mary Ellen Bradley Class A Beneficial
9000 Haggerty Road, Suite MI1-8217
Belleville, MI 48111-1632
Strafe & Co.......................... Cash Management Money Market Fund 64.74% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Trust Company............... Cash Management Money Market Fund 27.52% Record
BOIA -- SEI Corporate Trust Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Securities Corp............. Diversified Equity Fund 69.81% Record
The One Investment Solution Class C
733 Greencrest Drive
Westerville, OH 43081-4903
Strafe & Co.......................... Diversified Equity Fund 75.66% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Merrill Lynch Pierce Fenner &
Smith Inc For The Sole Benefit Of Diversified International Fund 48.32% Record &
Cust................................. Class C Beneficial
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Strafe & Co.......................... Diversified International Fund 77.96% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Merrill Lynch Pierce Fenner &
Smith Inc For The Sole Benefit Of
Cust................................. Diversified Mid Cap Fund 66.51% Record
4800 Deer Lake Drive East Class C
Jacksonville, FL 32246-6484
Strafe & Co.......................... Diversified Mid Cap Fund 79.04% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Mid Cap Value Fund 82.68% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
55
<PAGE> 57
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Banc One Securities Corp FBO......... Mid Cap Growth Fund 73.98% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. ........................ Mid Cap Growth Fund 77.69% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bisys BD Services, Inc. ............. Income Bond Fund 37.47% Record
FBO Peabody's Interiors, Inc Class C
PO Box 4054
Concord, CA 94524-4054
Strafe & Co. ........................ Income Bond Fund 84.45% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Institutional Prime Money 28.24% Record
BOIA -- One Group Operations Market Fund
1111 Polaris Parkway Inst
PO Box 710211
Columbus, OH 43271-0211
Bank One Trust Company............... Institutional Prime Money 41.55% Record
Attn: SEI Corporate Trust Market Fund
Database OH1-0211 Inst
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One NA.......................... Institutional Prime Money 65.16% Record
Attn: Cash Mgmt Operations Market Fund
1111 Polaris Parkway Class S
Columbus, OH 43240-2050
Pershing As Agent -- Omnibus Account
For Exclusive Benefit of
One Group Customer Accounts.......... Prime Money Market Fund 32.25% Record
1 Pershing Plz Class A
Jersey City, NJ 07399-0001
Bank One National Sweep Operations... Prime Money Market Fund 31.11% Record
Attn: Terri McKibben Class A
PO Box 711214
Columbus, OH 43271-0001
Bisys BD Services, Inc. ............. Prime Money Market Fund 99.33% Record
PO Box 4054 Class C
Concord, CA 94524-4054
Strafe & Co. ........................ Prime Money Market Fund 64.94% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Pershing As Agent -- Omnibus Account
For Exclusive Benefit of
One Group Customer Accounts.......... Prime Money Market Fund 99.93% Record
1 Pershing Plz Service Class
Jersey City, NJ 07399-0001
</TABLE>
56
<PAGE> 58
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bank One National Sweep Operations... US Treasury Securities Money 39.02% Record
Attn: Terri McKibben Market Fund
PO Box 711214 Class A
Columbus, OH 43271-0001
Bank One Trust Company............... US Treasury Securities Money 63.92% Record
Attn: SEI Corporate Trust Market Fund
Database OH1-0211 Class I
1111 Polaris Parkway
Columbus OH 43240-2050
Pershing As Agent -- Omnibus Account
For Exclusive Benefit of
One Group Customer Accounts.......... US Treasury Securities Money 96.66% Record
1 Pershing Plz Market Fund
Jersey City, NJ 07399-0001 Service Class
Pershing As Agent -- Omnibus Account
For Exclusive Benefit of
One Group Customer Accounts.......... Municipal Money Market Fund 46.48% Record
1 Pershing Plz Class A
Jersey City, NJ 07399-0001
Bank One National Sweep Operations... Municipal Money Market Fund 25.12% Record
Attn: Terri McKibben Class A
PO Box 711214
Columbus, OH 43271-0001
Strafe & Co. ........................ Municipal Money Market Fund 94.87% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Pershing As Agent -- Omnibus Account
For Exclusive Benefit of
One Group Customer Accounts.......... Municipal Money Market Fund 98.72% Record
1 Pershing Plz Service Class
Jersey City, NJ 07399-0001
Strafe & Co. ........................ Equity Income Fund 93.39% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp FBO......... Equity Index Fund 54.16% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. ........................ Equity Index Fund 81.54% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp FBO......... Large Cap Growth Fund 53.25% Record
The One Investment Solution Class C
733 Greencrest Drive
Westerville, OH 43081-4903
Strafe & Co. ........................ Large Cap Growth Fund 77.57% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
57
<PAGE> 59
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Kemper Service Company............... Large Cap Value Fund 43.24% Record
Master Account Class C
FBO Participating Kemflex Plans
Attn: TA Accounting
7th Floor, 811 Main Street
Kansas City, MO 64105-2005
Strafe & Co. ........................ Large Cap Value Fund 70.47% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Ohio Municipal Bond Fund 98.33% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp FBO......... International Equity Index Fund 67.75% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. ........................ International Equity Index Fund 87.91% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Short-Term Bond Fund 90.29% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Louisiana Municipal Bond Fund 95.47% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Small Cap Growth Fund 87.64% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
State Street Bank & Trust Co. ....... Small Cap Value Fund 26.32% Record
Cust for the IRA of Class C
Randy J. Parker
258 Alligator Lane Box 5
Akers, LA 70421
Strafe & Co. ........................ Small Cap Value Fund 84.24% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Tax-Free Bond Fund 99.70% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
58
<PAGE> 60
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co. ........................ Treasury & Agency Fund 99.81% Record
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
NBD Bank NA.......................... Treasury Cash Management 28.90% Record &
Attn: Mary Ellen Bradley Money Market Fund
9000 Haggerty Road Class A Beneficial
Belleville, MI 48111-1632
Bank One............................. Treasury Cash Management 33.45% Record &
Attn: Mary Ellen Bradley Money Market Fund
9000 Haggerty Road Class A Beneficial
Suite MI1-8217
Belleville, MI 48111-1632
Bank One Trust Company............... Treasury Cash Management 91.38% Record
Attn: SEI Corporate Trust Money Market Fund
Database OH1-0211 Class I
1111 Polaris Parkway
Columbus, OH 43240-2050
Bank One Trust Company............... Treasury Only Money Market 66.79% Record
Attn: SEI Corporate Trust Fund
Database OH1-0211 Institutional
1111 Polaris Parkway
Columbus, OH 43240-2050
Strafe & Co. ........................ Treasury Only Money Market 29.16% Record
BOIA -- One Group Operations Fund
1111 Polaris Parkway Institutional
PO Box 710211
Columbus, OH 43271-0211
Bisys Fund Services Inc. ............ Treasury Only Money Market 29.53% Record
FBO Banc One Securities Fund
3435 Stelzer Rd Ste 1000 Class S
Columbus, OH 43219-6004
Bank One National Sweep
Operations........................... Treasury Only Money Market 67.35% Record
Fund
Attn: Terri McKibben Class S
PO Box 711214
Columbus, OH 43271-0001
Bank One Trust Company............... Treasury Prime Cash 44.09% Record &
Attn: SEI Corporate Trust Management Money Market Fund Beneficial
Database OH1-0211 Class A
1111 Polaris Parkway
Columbus, OH 43240-2050
Bank One Trust Company............... Treasury Prime Cash 59.13% Record
Attn: SEI Corporate Trust Management Money Market Fund
Database OH1-0211 Class I
1111 Polaris Parkway
Columbus, OH 43240-2050
Strafe & Co. ........................ Treasury Prime Cash 31.22% Record
BOIA -- One Group Operations Management Money Market Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus, OH 43271-0211
Bank One............................. US Government Securities Cash 38.23% Record &
Management Money Market Fund
Attn: Mary Ellen Bradley Class A Beneficial
9000 Haggerty Rd., Ste MI1-8217
Belleville, MI 48111-1632
</TABLE>
59
<PAGE> 61
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Bank One Trust Company............... US Government Securities Cash 86.57% Record
Management Money Market Fund
Attn: SEI Corporate Trust Class I
Database OH1-0211
1111 Polaris Parkway
Columbus, OH 43240-2050
Pershing As Agent --
Omnibus Account
For Exclusive Benefit of
One Group Customer Accounts.......... Ohio Municipal Money Market Fund 98.00% Record
Class A
1 Pershing Plaza
Jersey City, NJ 07399-0001
Strafe & Co.......................... Ohio Municipal Money 90.98% Record
Market Fund
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp FBO......... Municipal Income Fund 37.65% Record
Class A
The One Investment Solution
733 Greencrest Dr
Westerville, OH 43081-4903
Banc One Securities Corp FBO......... Municipal Income Fund 65.72% Record
Class C
The One Investment Solution
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. ........................ Municipal Income Fund 99.13% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Kentucky Municipal Bond Fund 96.11% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ West Virginia Municipal Bond 94.04% Record
Fund
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Securities Corp FBO......... Government Bond Fund 65.71% Record
Class C
The One Investment Solution
733 Greencrest Drive
Westerville, OH 43081-4903
Strafe & Co. ........................ Government Bond Fund 83.03% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Ultra Short Term Bond Fund 83.84% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Securities Corp FBO......... Intermediate Bond Fund 49.42% Record
Class A
The One Investment Solution
733 Greencrest Dr
Westerville, OH 43081-4903
</TABLE>
60
<PAGE> 62
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Banc One Securities Corp FBO......... Intermediate Bond Fund 91.44% Record
Class C
The One Investment Solution
733 Greencrest Dr
Westerville, OH 43081-4903
Strafe & Co. ........................ Intermediate Bond Fund 90.89% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Intermediate Tax Free Bond Fund 99.36% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Investor Growth Fund 68.58% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Investor Growth & Income Fund 45.31% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Cor TTE EFBO................ Investor Growth & Income Fund 47.27% Record
Class I
Bank One Corp
Savings & Investments Plans
Attn: Trading Services F26
859 Willard Street
Quincy, MA 02169-7428
Strafe & Co. ........................ Investor Balanced Fund 87.77% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Investor Conservative Growth Fund 44.43% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One Cor TTEE FBO................ Investor Conservative Growth Fund 49.50% Beneficial
Class I
Bank One Corporation
Savings and Investments Plan
Attn: Trading Services E26
859 Williard Street
Quincy, MA 02169-7428
Strafe & Co. ........................ Government Money Market Fund 69.09% Record
Institutional
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Bank One National Sweep Operations... Government Money Market Fund 80.24% Record
Class S
Attn: Terri McKibben
PO Box 711214
Columbus, OH 43271-0001
</TABLE>
61
<PAGE> 63
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Banc One Securities Corp FBO......... High Yield Bond Fund 65.41% Record &
Class C
The One Investment Solution Beneficial
733 Greencrest Dr.
Westerville, OH 43081-4903
Strafe & Co. ........................ High Yield Bond Fund 51.08% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Donaldson Lufkin Jenrette
Securities Corporation Inc........... Market Expansion Index Fund 28.26% Record
Class C
PO Box 2052
Jersey City, NJ 07303-2052
Strafe & Co.......................... Market Expansion Index Fund 99.94% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Michigan Municipal Bond Fund 99.59% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Pershing As Agent --Omnibus Account
For Exclusive Benefit of
One Group Customer Accounts.......... Michigan Municipal Money 48.59% Record
Market Fund
1 Pershing Plz Class A
Jersey City, NJ 07399-0001
NBD Michigan......................... Michigan Municipal Money 32.56% Record
Market Fund
Attn: M E Bradley Class A
9000 Haggerty Road
Belleville, MI 48111-1632
Strafe & Co. ........................ Michigan Municipal Money 95.17% Record
Market Fund
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
NBD Bank............................. Municipal Cash Management 53.62% Record &
Money Market Fund
9000 Haggerty Road Class A Beneficial
Belleville, MI 48111-1632
Bank One............................. Municipal Cash Management 39.67% Record &
Money Market Fund
Attn: Mary Ellen Bradley Class A Beneficial
9000 Haggerty Road STE MI1-8217
Belleville, MI 48111-9787
Strafe & Co. ........................ Municipal Cash Management 100.00% Record
Money Market Fund
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Donaldson Lufkin Jenrette
Securities Corporation Inc........... Short-Term Municipal Bond Fund 31.06% Record
Class A
PO Box 2052
Jersey City, NJ 07303-2052
</TABLE>
62
<PAGE> 64
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
---------------- ---------- ------------- ----------
<S> <C> <C> <C>
Strafe & Co. ........................ Short-Term Municipal Bond Fund 99.91% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Strafe & Co. ........................ Technology Fund 97.68% Record
Class I
BOIA -- One Group Operations
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
The One Group Services Company....... Mortgage Backed Bond 46.90% Record &
Class A Beneficial
C/O Fund Administration
3435 Stelzer Road
Columbus, OH 43219-6004
One Group Administrative Serv Mortgage Backed Bond 46.09 Record
Inc. ................................ Class A
Seed Money Account
Attn: Ric Butler
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Starfe & Co.......................... Mortgage Backed Bond 98.93% Record
Class I
BOIA -- One Group Operations
1111 Polaris Pkwy
PO Box 710211
Columbus, OH 43271-0211
</TABLE>
AS A RESULT, THE AFOREMENTIONED PERSONS MAY BE DEEMED TO BE "CONTROLLING
PERSONS" OF THE CLASS OF SHARES OF THE FUND IN WHICH THEY OWN SUCH SHARES UNDER
THE 1940 ACT.
Upon consummation of the proposed Transaction, the percentage of shares of
One Group and One Group Income to be owned by the above named persons will not
materially change.
RIGHTS OF DISSENTING SHAREHOLDERS
Shareholders may be entitled to dissent from the Transaction and receive
payment of the "fair value" of their shares in cash. Any such entitlement with
respect to the Transaction would be governed by Chapter 23-1-44 of the Indiana
Business Corporation Law, as amended (the "IBCL").
A shareholder contemplating the assertion of dissenters' rights is urged to
review carefully the complete provisions of Chapter 23-1-44 of the IBCL. Set
forth below, to be read in conjunction with the full text of Chapter 23-1-44, is
a summary of the principal steps to be taken if the right of dissent is to be
asserted. EACH STEP MUST BE TAKEN IN STRICT COMPLIANCE WITH THE APPLICABLE
PROVISIONS OF THE STATUTE IN ORDER TO PERFECT DISSENTERS' RIGHTS.
A shareholder desiring to dissent from the Transaction must deliver to
Circle Income written notice PRIOR TO THE DATE OF THE SPECIAL MEETING of the
shareholder's intent to demand payment for his or her shares, if the Transaction
is consummated. It is recommended that all required documents be delivered by
registered or certified mail with return receipt requested.
If a shareholder desires to dissent from the Transaction, all shares of
Circle Income beneficially owned by such shareholder ("Dissenting Shares") must
not be voted in favor of the Transaction, but such shares need not be voted
against the Transaction.
If the Transaction is approved by Circle Income's shareholders, Circle
Income will, within ten days after the date of such approval, send a notice (the
"Dissenters' Notice") to all shareholders who delivered notice to Circle Income
and voted their shares (or abstained from voting) in accordance with the
preceding two paragraphs. The
63
<PAGE> 65
Dissenters' Notice will state, among other things, a date by which Circle Income
must receive a demand for payment for Dissenting Shares (the "First Demand"). A
shareholder sent a Dissenters' Notice must make the First Demand and take all
other actions required by the Dissenters' Notice. A SHAREHOLDER WHO DOES NOT
MAKE THE FIRST DEMAND AND TAKE ALL OTHER ACTIONS REQUIRED BY THE DISSENTERS'
NOTICE AS REQUIRED BY THE DISSENTERS' NOTICE WILL NOT BE ENTITLED TO RECEIVE
PAYMENT AS A DISSENTER AND WILL BE CONSIDERED TO HAVE VOTED IN FAVOR OF THE
TRANSACTION.
Except as described below, following consummation of the Transaction,
Circle Income will pay to each holder of Dissenting Shares who has complied with
the statutory provisions summarized above what Circle Income estimates to be the
fair value of such shareholder's Dissenting Shares. The fair value of the
Dissenting Shares will be determined as the value of such shares immediately
before the consummation of the Transaction, excluding any appreciation or
depreciation in anticipation of the Transaction (unless exclusion would be
inequitable), and may be more or less than is received by nondissenting
shareholders in the Transaction.
Within 30 days after Circle Income makes or offers payment, as the case may
be, a dissenter may notify Circle Income in writing of his or her own estimate
of the fair value of the Dissenting Shares and demand payment of such amount
(less the amount already paid), or may reject Circle Income's offer and demand
payment of the fair value of the Dissenting Shares (in either case, the "Second
Demand") if (i) the dissenter believes the amount paid or offered is less than
the fair value of the Dissenting Shares; or (ii) Circle Income fails to make
payment within 60 days after the date set for making the First Demand in the
Dissenters' Notice.
If a Second Demand remains unsettled, Circle Income will commence a
proceeding in the Circuit or Superior Court of Marion County, Indiana, to
determine the fair value of the Dissenting Shares within 60 days after receiving
the Second Demand. If Circle Income fails to commence such a proceeding within
60 days, it will pay to such dissenters the amount demanded in the Second
Demand.
A shareholder who perfects his or her right to dissent by making the First
Demand and taking all other actions required by the Dissenters' Notice will,
effective retroactively as of the consummation of the Transaction, cease to be a
shareholder and will have no rights with respect to his or her Dissenting Shares
except the right to receive payment of the fair value thereof.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
Banc One Investment Advisors may be deemed to have an interest in the
Transaction because it provides investment advisory services to the One Group
and Circle Income pursuant to advisory agreements with One Group and Circle
Income. Future growth of assets of One Group can be expected to increase the
total amount of fees payable to Banc One Investment Advisors and to reduce the
amount of fees required to be waived to maintain total fees of the Funds at
agreed upon levels. Certain affiliates of Banc One Investment Advisors receive
distribution and/or shareholder servicing fees from One Group pursuant to
agreements between One Group and such affiliates.
LITIGATION
Neither Circle Income nor One Group Income is involved in any litigation
that would have a material adverse effect on either Circle Income or One Group
Income.
FINANCIAL STATEMENTS
The audited financial statements of Circle Income as of June 30, 2000, have
been incorporated by reference into the Statement of Additional Information for
this Prospectus/Proxy Statement in reliance on the reports of Arthur Andersen
LLP, independent accountants, given on the authority of such firm as an expert
in accounting and auditing.
The audited financial statements of the One Group Mutual Funds as of June
30, 2000, have been incorporated by reference into the Statement of Additional
Information for this Prospectus/Proxy Statement in
64
<PAGE> 66
reliance on the reports of PricewaterhouseCoopers, LLP, independent accountants,
given on authority of such firm as an expert in accounting and auditing.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE AGREEMENT AND PLAN OF REORGANIZATION.
INFORMATION FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
Information about One Group Income is included in the Prospectus
accompanying the Combined Prospectus/Proxy Statement, which is incorporated
herein by reference. Additional information about One Group Income is included
in the One Group Statement of Additional Information dated November 1, 2000,
which has been filed with the SEC under the Securities Act of 1933 and the
Investment Company Act of 1940. The file numbers for the One Group Income
Prospectus and Statement of Additional Information are Registration Nos.
2-95973/811-04236. A copy of the Statement of Additional Information may be
obtained without charge by calling 1-800-480-4111. The SEC file number for
Circle Income's Prospectus is Registration No. 811-02378.
One Group and Circle Income are subject to the informational requirements
of the Securities Exchange Act of 1934 and in accordance therewith file reports
and other information with the SEC. Proxy material, reports, proxy and
information statements, registration statements and other information filed by
One Group and Circle Income can be inspected and copied at the SEC's public
reference facilities located at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such filings may be available at the following SEC regional offices: 7
World Trade Center, Suite 1300, New York, NY 10048; 73 Tremont Street, Suite
600, Boston, MA 02108; 1401 Brickell Avenue, Suite 200, Miami, FL 33131; 1801
California Street, Suite 4800, Denver, CO 80202; 801 Cherry Street, 19(th)
Floor, Fort Worth, TX 76102; 50 South Main Street, Suite 500, Salt Lake City, UT
84144; 5670 Wilshire Boulevard, 11(th) Floor, Los Angeles, CA 90036; 44
Montgomery Street, Suite 1100, San Francisco, CA 94104; 500 West Madison Street,
Suite 1400, Chicago, IL 60611; and 601 Walnut Street, Suite 1120E, Philadelphia,
PA 19106. Copies of such materials can also be obtained by mail from the Public
Reference Branch, Office of Consumer Affairs and Informational Services, SEC,
Washington, D.C. 20549 at prescribed rates.
65
<PAGE> 67
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
(DATED AS OF OCTOBER 18, 2000)
A-1
<PAGE> 68
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
October 18, 2000 by and between One Group(R) Mutual Funds ("One Group"), a
Massachusetts business trust, on behalf of its series, One Group Income Bond
Fund ("One Group Income"), and Circle Income Shares, Inc., a diversified
closed-end investment company incorporated under the laws of the State of
Indiana ("Circle Income"). The capitalized terms used herein shall have the
meaning ascribed to them in this Agreement.
I. PLAN OF REORGANIZATION
(a) Circle Income will sell, assign, convey, transfer and deliver to One
Group, and One Group will acquire, on the Exchange Date (as defined herein) all
of the properties and assets existing at the Valuation Time (as defined herein)
in Circle Income, such acquisition to be made on behalf of One Group Income. In
consideration therefor, One Group, on behalf of One Group Income, shall on the
Exchange Date, assume all of the liabilities of Circle Income in exchange for a
number of full and fractional Class A shares of One Group Income (the "Shares")
having an aggregate net asset value equal to the value of all of the assets of
Circle Income transferred to One Group on such date less the value of all of the
liabilities of Circle Income assumed by One Group on that date. It is intended
that the reorganization described in this Agreement shall be a tax-free
reorganization under the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, Circle Income shall distribute in complete liquidation to its
respective shareholders of record as of the Exchange Date the Shares received by
it, each shareholder being entitled to receive that number of Shares equal to
the proportion which the number of shares of beneficial interest of Circle
Income held by such shareholder bears to the number of such shares of Circle
Income outstanding on such date.
II. AGREEMENT
One Group and Circle Income represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF CIRCLE INCOME. Circle Income
represents and warrants to and agrees with One Group that:
(a) Circle Income is a corporation duly established and validly
existing under the laws of Indiana and has power to own all of its
properties and assets and to carry out its obligations under this
Agreement. Circle Income is not required to qualify as a foreign
association in any jurisdiction. Circle Income has all necessary federal,
state and local authorizations to carry on its business as now being
conducted and to fulfill the terms of this Agreement, except as set forth
in Section l(l).
(b) Circle Income is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a diversified closed-end investment
company, and such registration has not been revoked or rescinded and is in
full force and effect. Circle Income has elected to qualify and has
qualified as a regulated investment company under Part I of Subchapter M of
the Code, as of and since its first taxable year, and qualifies and intends
to continue to qualify as a regulated investment company for its taxable
year ending upon its liquidation. Circle Income has been a regulated
investment company under such sections of the Code at all times since its
inception.
(c) The statements of assets and liabilities, statements of
operations, statements of changes in net assets and schedules of portfolio
investments (indicating their market values) for Circle Income at and for
the year ended June 30, 2000, such statements and schedules having been
audited by Arthur Andersen, LLP, independent accountants to Circle Income,
have been furnished to One Group.
(d) The Policy Manual of Circle Income, as revised in March, 1995,
which has been previously furnished to One Group, did not as of March,
1995, and does not as of the date hereof, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
A-2
<PAGE> 69
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Circle Income, threatened against Circle
Income which assert liability on the part of Circle Income.
(f) There are no material contracts outstanding to which Circle Income
is a party, other than as disclosed in the Circle Income prospectus, or in
the Registration Statement and the Proxy Statement as defined herein.
(g) Circle Income has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
statement of assets and liabilities as of June 30, 2000, and those incurred
in the ordinary course of Circle Income's business as an investment company
since that date. Prior to the Exchange Date, Circle Income will advise One
Group of all known material liabilities, contingent or otherwise, incurred
by it subsequent to June 30, 2000, whether or not incurred in the ordinary
course of business.
(h) As used in this Agreement, the term "Investments" shall mean
Circle Income's investments shown on the schedule of its portfolio
investments as of June 30, 2000 referred to in Section l(c) hereof, as
supplemented with such changes as Circle Income shall make after June 30,
2000, which changes have been disclosed to One Group, and changes resulting
from stock dividends, stock split-ups, mergers and similar corporate
actions.
(i) Circle Income has filed or will file all federal and state tax
returns which, to the knowledge of Circle Income's officers, are required
to be filed by Circle Income and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by
Circle Income. All tax liabilities of Circle Income have been adequately
provided for on its books, and no tax deficiency or liability of Circle
Income has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval as described in Section 8(a) and otherwise as
described in Section l(l), Circle Income will have full right, power and
authority to sell, assign, transfer and deliver the Investments and any
other assets and liabilities of Circle Income to be transferred to One
Group Income pursuant to this Agreement. At the Exchange Date, subject only
to the delivery of the Investments and any such other assets and
liabilities as contemplated by this Agreement, One Group will, on behalf of
One Group Income, acquire the Investments and any such other assets subject
to no encumbrances, liens or security interests in favor of any third party
creditor of Circle Income and, except as described in Section l(k), without
any restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as amended (the
"1933 Act"), of any of the Investments would be required if they were, as
of the time of such transfer, the subject of a public distribution by
either of Circle Income or One Group, except as previously disclosed to One
Group by Circle Income.
(1) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Circle Income of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, state securities or blue sky laws
(which term as used herein shall include the laws of the District of
Columbia and of Puerto Rico) or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "H-S-R Act").
(m) The registration statement (the "Registration Statement") filed
with the United States Securities and Exchange Commission (the
"Commission") by One Group on Form N-14 relating to the Shares issuable
hereunder, and the proxy statement of Circle Income included therein (the
"Proxy Statement"), on the effective date of the Registration Statement and
insofar as they relate to Circle Income, (i) will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations thereunder and (ii) will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders' meeting referred to in
Section 8(a) below and on the Exchange Date, the prospectus contained in
the Registration Statement of which the Proxy Statement is a part (the
"Prospec-
A-3
<PAGE> 70
tus"), as amended or supplemented by any amendments or supplements filed
with the Commission by One Group, insofar as it relates to Circle Income,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the
representations and warranties in this subsection shall apply only to
statements of fact relating to Circle Income contained in the Registration
Statement, the Prospectus or the Proxy Statement, or omissions to state in
any thereof a material fact relating to Circle Income, made in reliance
upon and in conformity with information furnished by Circle Income for use
in the Registration Statement, the Prospectus or the Proxy Statement, as
such Registration Statement, Prospectus and Proxy Statement shall be
furnished to Circle Income in definitive form as soon as practicable
following effectiveness of the Registration Statement and before any public
distribution of the Prospectus or Proxy Statement. None of the
representations and warranties in this subsection shall apply to statements
of fact relating to One Group or One Group Income contained in the
Registration Statement, the Prospectus or the Proxy Statement, or omissions
to state in any thereof a material fact relating to One Group or One Group
Income.
(n) All of the issued and outstanding shares of beneficial interest of
Circle Income have been offered for sale and sold in conformity with all
applicable federal and state securities laws.
(o) Circle Income is qualified, and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company"
under Sections 851 and 852 of the Code.
(p) At the Exchange Date, Circle Income will have sold such of its
assets, if any, as necessary to assure that, after giving effect to the
acquisition of the assets pursuant to this Agreement, One Group Income will
remain a "diversified company" within the meaning of Section 5(b) (1) of
the 1940 Act and in compliance with such other mandatory investment
restrictions as are set forth in the One Group Prospectus previously
furnished to Circle Income. One Group agrees to advise Circle Income prior
to the Exchange Date of any assets that, after giving effect to the
acquisition of the assets pursuant to this Agreement, would cause One Group
Income not to be in compliance with Section 5(b)(1) of the 1940 Act and
with such other mandatory investment restrictions as are set forth in the
One Group Prospectus.
2. REPRESENTATIONS AND WARRANTIES OF ONE GROUP. One Group, for itself and
on behalf of One Group Income, represents and warrants to and agrees with Circle
Income that:
(a) One Group is a business trust duly established and validly
existing under the laws of The Commonwealth of Massachusetts and has power
to carry on its business as it is now being conducted and to carry out this
Agreement. Neither One Group nor One Group Income is required to qualify as
a foreign association in any jurisdiction. One Group and One Group Income
have all necessary federal, state and local authorizations to own all of
their properties and assets and to carry on their business as now being
conducted and to fulfill the terms of this Agreement, except as set forth
in Section 2(i).
(b) One Group is registered under the 1940 Act as an open-end
management investment company, and such registration has not been revoked
or rescinded and is in full force and effect. One Group Income has elected
to qualify and has qualified as a regulated investment company under Part I
of Subchapter M of the Code, as of and since its first taxable year, and
qualifies and intends to continue to qualify as a regulated investment
company. One Group Income has been a regulated investment company under
such sections of the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of
operations, statements of changes in net assets and schedules of portfolio
investments (indicating their market values) for One Group for the year
ended June 30, 2000, such statements and schedules having been audited by
PricewaterhouseCoopers LLP, independent accountants to One Group, have been
furnished to Circle Income. Such statements of assets and liabilities and
schedules fairly present the financial position of One Group as of their
respective dates, and said statements of operations and changes in net
assets fairly reflect the results of its operations and changes in
financial position for the periods covered thereby in conformity with
generally accepted accounting principles.
A-4
<PAGE> 71
(d) The prospectus of One Group Income dated November 1, 1999, (the
"One Group Prospectus") and the Statement of Additional Information for the
One Group Funds, dated November 1, 1999, and on file with the Commission,
which have been previously furnished to Circle Income, did not as of their
dates and do not as of the date hereof contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of One Group or One Group Income, threatened
against One Group or One Group Income which assert liability on the part of
One Group or One Group Income.
(f) There are no material contracts outstanding to which One Group or
One Group Income is a party, other than as disclosed in the One Group
Prospectus and the corresponding Statement of Additional Information or in
the Registration Statement.
(g) Neither One Group nor One Group Income has any known liabilities
of a material nature, contingent or otherwise, other than those shown on
its statement of assets and liabilities as of June 30, 2000 referred to
above and those incurred in the ordinary course of the business of One
Group as an investment company or One Group Income since such date. Prior
to the Exchange Date, One Group will advise Circle Income of all known
material liabilities, contingent or otherwise, incurred by it and One Group
Income subsequent to June 30, 2000, whether or not incurred in the ordinary
course of business.
(h) One Group Income has filed or will file all federal and state tax
returns which, to the knowledge of One Group's officers, are required to be
filed by One Group Income and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by One
Group Income. All tax liabilities of One Group Income have been adequately
provided for on its books, and no tax deficiency or liability of One Group
Income has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by One Group or One Group Income
of the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the 1934 Act, the 1940 Act, state securities
or Blue Sky laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise
as described in Section 2 (i), One Group on behalf of One Group Income will
have full right, power and authority to purchase the Investments and any
other assets and assume the liabilities of Circle Income to be transferred
to One Group Income pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy
Statement, on the effective date of the Registration Statement and insofar
as they relate to One Group and One Group Income: (i) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders' meeting referred to in
Section 8(a) and at the Exchange Date, the Prospectus, as amended or
supplemented by any amendments or supplements filed with the Commission by
One Group or One Group Income, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in this
subsection shall apply only to statements of fact relating to One Group or
One Group Income contained in the Registration Statement, the Prospectus or
the Proxy Statement, or omissions to state in any thereof a material fact
relating to One Group or One Group Income. None of the representations and
warranties in this subsection shall apply to statements in or omissions
from the Registration Statement, the Prospectus or the Proxy Statement made
in reliance upon and in conformity with information furnished by Circle
Income for use in the Registration Statement, the Prospectus or the Proxy
Statement.
(1) Shares to be issued to Circle Income have been duly authorized
and, when issued and delivered pursuant to this Agreement and the
Prospectus, will be legally and validly issued and will be fully paid and
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nonassessable by One Group and no shareholder of One Group will have any
preemptive right of subscription or purchase in respect thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) One Group Income is qualified and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company"
under Sections 851 and 852 of the Code.
3. REORGANIZATION. (a) Subject to the requisite shareholder approval as
described in Section 8(a) and to the other terms and conditions contained herein
(including Circle Income's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof), Circle Income agrees to sell, assign,
convey, transfer and deliver to One Group, on behalf of One Group Income, and
One Group, on behalf of One Group Income, agrees to acquire from Circle Income,
on the Exchange Date all of the Investments and all of the cash and other assets
of Circle Income in exchange for that number of Shares of One Group Income
provided for in Section 4 and the assumption by One Group Income of all the
liabilities of Circle Income. Pursuant to this Agreement, Circle Income will, as
soon as practicable after the Exchange Date, distribute in liquidation all of
the Shares received by it to its shareholders in exchange for their shares of
beneficial interest of Circle Income.
(b) Circle Income will pay or cause to be paid to One Group Income any
interest and cash dividends received by it on or after the Exchange Date
with respect to the Investments transferred to One Group Income hereunder.
Circle Income will transfer to One Group Income any rights, stock dividends
or other securities received by Circle Income after the Exchange Date as
stock dividends or other distributions on or with respect to the
Investments transferred, which rights, stock dividends and other securities
shall be deemed included in the assets transferred to One Group Income at
the Exchange Date and shall not be separately valued, in which case any
such distribution that remains unpaid as of the Exchange Date shall be
included in the determination of the value of the assets of Circle Income
acquired by One Group, on behalf of One Group Income.
4. EXCHANGE DATE VALUATION TIME. On the Exchange Date, One Group will
deliver to Circle Income a number of Shares having an aggregate net asset value
equal to the value of the assets of Circle Income acquired by One Group, on
behalf of One Group Income, less the value of the liabilities of Circle Income
assumed, determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of Circle Income's net
assets will be computed as of the Valuation Time using the valuation
procedures for One Group Income as set forth in the One Group Prospectus
for One Group Income.
(b) Subject to Section 4(d) hereof, the net asset value of a share of
One Group Income will be determined to the nearest full cent as of the
Valuation Time, using the valuation procedures set forth in the One Group
Prospectus for One Group Income.
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m.
Eastern Standard time on January 19, 2001 or such earlier or later day as
may be mutually agreed upon in writing by the parties hereto (the
"Valuation Time").
(d) No formula will be used to adjust the net asset value of Circle
Income or One Group Income to take into account differences in realized and
unrealized gains and losses.
(e) One Group shall issue One Group Income Shares to Circle Income on
one share deposit receipt registered in the name of Circle Income. Circle
Income shall distribute in liquidation the Shares received by it hereunder
pro rata to its shareholders of each class of shares by redelivering such
share deposit receipt to One Group's transfer agent which will as soon as
practicable set up open accounts for each Circle Income shareholder in
accordance with written instructions furnished by Circle Income.
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(f) One Group, on behalf of One Group Income, shall assume all
liabilities of Circle Income, whether accrued or contingent, in connection
with the acquisition of assets and subsequent dissolution of Circle Income
or otherwise.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5 (e), all
fees and expenses, including, without limitation, accounting expenses, the costs
of proxy materials and proxy solicitation, legal expenses, portfolio transfer
taxes (if any) or other similar expenses, incurred in connection with the
transactions will be paid directly by Banc One Investment Advisors Corporation;
provided however, that such expenses will in any event be paid by the party
directly incurring such expenses if and to the extent that the payment by Banc
One Investment Advisors Corporation of such expenses would result in the
disqualification of either Circle Income or One Group Income as a regulated
investment company under the Code. Circle Income shareholders will pay their
respective expenses, if any, incurred in connection with the transactions.
(b) In the event the transactions contemplated by this Agreement are
not consummated by reason of Circle Income being either unwilling or unable
to go forward (other than by reason of the nonfulfillment or failure of any
condition to Circle Income's obligations referred to in Section 8(a) or
Section 10) Circle Income shall pay directly all reasonable fees and
expenses incurred by One Group in connection with such transactions,
including, without limitation, legal, accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are
not consummated by reason of One Group being either unwilling or unable to
go forward (other than by reason of the nonfulfillment or failure of any
condition to One Group's obligations referred to in Section 8(a) or Section
9), One Group shall pay directly all reasonable fees and expenses incurred
by Circle Income in connection with such transactions, including without
limitation legal, accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are
not consummated for any reason other than (i) One Group or Circle Income
being either unwilling or unable to go forward or (ii) the nonfulfillment
or failure of any condition to Circle Income or One Group's obligations
referred to in Section 8(a), Section 9 or Section 10 of this Agreement,
then each of Circle Income and One Group shall bear the expenses it
actually incurred in connection with such transactions.
(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated,
no party shall be liable to the other party for any damages resulting
therefrom, including without limitation consequential damages, except as
specifically set forth above.
6. PERMITTED ASSETS. One Group agrees to advise Circle Income promptly if
at any time prior to the Exchange Date the assets of Circle Income include any
assets that One Group Income is not permitted, or reasonably believes to be
unsuitable for it, to acquire, including without limitation any security that,
prior to its acquisition by Circle Income, One Group has informed Circle Income
is unsuitable for One Group Income to acquire.
7. EXCHANGE DATE. Delivery of the assets of Circle Income to be
transferred, assumption of the liabilities of Circle Income to be assumed, and
the delivery of Shares to be issued shall be made at the offices of Banc One
Investment Advisors Corporation at 9:00 a.m. on January 22, 2001, or at such
other time and date agreed to by Circle Income and One Group, the date and time
upon which such delivery is to take place being referred to herein as the
"Exchange Date."
8. SPECIAL MEETING OF SHAREHOLDERS: DISSOLUTION. (a) Circle Income agrees
to call a special meeting of the shareholders of Circle Income as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of Circle Income to and the
assumption of all of the liabilities of Circle Income by One Group Income as
herein provided, adopting this Agreement, and authorizing the liquidation and
dissolution of Circle Income, and, except as set forth in Section 13, it shall
be a condition to the obligations of each of the parties hereto that the holders
of the shares of beneficial interest of Circle Income shall have approved this
Agreement and the transactions contemplated herein in the manner required by law
and Circle Income's Articles of Incorporation at such a meeting on or before the
Valuation Time.
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(b) Circle Income agrees that the liquidation and dissolution of
Circle Income will be effected in the manner provided in Circle Income's
Articles of Incorporation in accordance with applicable law, and that it
will not make any distributions of any Shares to the shareholders of Circle
Income without first paying or adequately providing for the payment of all
of Circle Income's known debts, obligations and liabilities.
(c) Each of One Group and Circle Income will cooperate with the other,
and each will furnish to the other the information relating to itself
required by the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder to be set forth in the Registration Statement,
including the Prospectus and the Proxy Statement.
9. CONDITIONS TO ONE GROUP OBLIGATIONS. The obligations of One Group, on
behalf of One Group Income, hereunder shall be subject to the following
conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of Circle
Income, shall have been approved as set forth in Section 8(a).
(b) Circle Income shall have furnished to One Group a statement of
Circle Income's assets and liabilities, with values determined as provided
in Section 4 of this Agreement, together with a list of Investments with
their respective tax costs, all as of the Valuation Time, certified on
Circle Income's behalf by its President (or any Vice President) and
Treasurer, and a certificate of both such officers, dated the Exchange
Date, to the effect that as of the Valuation Time and as of the Exchange
Date there has been no material adverse change in the financial position of
Circle Income since June 30, 2000, other than changes in the Investments
since that date or changes in the market value of the Investments, or
changes due to net redemptions of shares of Circle Income, dividends paid
or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Circle Income made in this Agreement are
true and correct in all material respects as if made at and as of such
dates, Circle Income has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to each
of such dates, and Circle Income shall have furnished to One Group a
statement, dated the Exchange Date, signed by Circle Income's President (or
any Vice President) and Treasurer certifying those facts as of such dates.
(d) Circle Income shall have delivered to One Group a letter from
Arthur Andersen LLP dated the Exchange Date stating that such firm reviewed
the federal and state income tax returns of Circle Income for the year
ended June 30, 2000 and that, in the course of such review, nothing came to
their attention which caused them to believe that such returns did not
properly reflect, in all material respects, the federal and state income
taxes of Circle Income for the periods covered hereby, or that Circle
Income would not qualify as a regulated investment company for federal
income tax purposes.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) One Group shall have received an opinion of Baker & Daniels, in
form reasonably satisfactory to One Group and dated the Exchange Date, to
the effect that (i) Circle Income is a corporation duly and validly
existing under the laws of Indiana, (ii) this Agreement has been duly
authorized, executed, and delivered by Circle Income and, assuming that the
Registration Statement, the Prospectus and the Proxy Statement comply with
the 1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by One Group, is a valid and
binding obligation of Circle Income, (iii) Circle Income has power to sell,
assign, convey, transfer and deliver the Investments and other assets
contemplated hereby, (iv) the execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated hereby will not,
violate Circle Income's Articles of Incorporation, or By-laws , as amended,
or any provision of any agreement known to such counsel to which Circle
Income is a party or by which it is bound, it being understood that with
respect to investment restrictions as contained in Circle Income's Policy
Manual, such counsel may rely upon a certificate of an officer of Circle
Income whose responsibility it is to advise Circle Income with respect to
such matters and (v) no consent, approval, authorization or order of any
court or governmental authority is required for the consummation by Circle
Income of the transactions contemplated hereby, except such as have been
obtained under the 1933 Act, the
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1934 Act and the 1940 Act and such as may be required under state
securities or blue sky laws and the H-S-R Act, and it being understood that
such opinion shall not be deemed to apply to One Group's compliance
obligations under the 1933 Act, 1934 Act, 1940 Act, state securities or
blue sky laws and H-S-R Act.
(g) One Group shall have received an opinion of Ropes & Gray, counsel
to One Group addressed to One Group, in form reasonably satisfactory to One
Group and dated the Exchange Date, to the effect that for Federal income
tax purposes (i) no gain or loss will be recognized by Circle Income upon
the transfer of the assets to One Group, on behalf of One Group Income, in
exchange for Shares and the assumption by One Group, on behalf of One Group
Income, of the liabilities of Circle Income or upon the distribution of
Shares by Circle Income to its shareholders in liquidation; (ii) no gain or
loss will be recognized by the shareholders of Circle Income upon the
exchange of their shares for Shares; (iii) the aggregate basis of the
Shares a Circle Income shareholder receives in connection with the
transaction will be the same as the aggregate basis of his or her Circle
Income shares exchanged therefor; (iv) a Circle Income shareholder's
holding period for his or her Shares will be determined by including the
period for which he or she held the Circle Income shares exchanged
therefor, provided that he or she held such Circle Income shares as capital
assets; (v) no gain or loss will be recognized by One Group Income upon the
receipt of the assets of Circle Income in exchange for Shares and the
assumption by One Group Income of the liabilities of Circle Income; (vi)
the basis in the hands of One Group Income of the assets of Circle Income
transferred to One Group Income in the transaction will be the same as the
basis of the assets in the hands of Circle Income immediately prior to the
transfer; and (vii) the holding periods of the assets of Circle Income in
the hands of One Group Income will include the periods for which such
assets were held by Circle Income.
(h) The assets of Circle Income to be acquired by One Group, on behalf
of One Group Income, will include no assets which One Group Income, by
reason of limitations contained in its Declaration of Trust or of
investment restrictions disclosed in the One Group Prospectus in effect on
the Exchange Date, may not properly acquire.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable blue sky provisions, and no stop order suspending
such effectiveness shall have been instituted or, to the knowledge of One
Group, contemplated by the Commission and or any state regulatory
authority.
(j) All proceedings taken by Circle Income in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to One Group
and Ropes & Gray.
(k) Prior to the Exchange Date, Circle Income shall have declared a
dividend or dividends which, together with all previous such dividends,
shall have the effect of distributing to its shareholders all of its
investment company taxable income for its taxable year ended June 30, 2000
and the short taxable year beginning on July 1, 2000 and ending on the
Exchange Date (computed without regard to any deduction for dividends
paid), and all of its net capital gain realized in its taxable year ended
June 30, 2000 and the short taxable year beginning on July 1, 2000 and
ending on the Exchange Date (after reduction for any capital loss
carryover).
(l) Circle Income shall have furnished to One Group a certificate,
signed by the President (or any Vice President) and the Treasurer of Circle
Income, as to the tax cost and acquisition date to One Group of the
securities delivered to One Group pursuant to this Agreement, together with
any such other evidence as to such tax cost as One Group may reasonably
request.
(m) Circle Income's custodian shall have delivered to One Group a
certificate identifying all of the assets of Circle Income held by such
custodian as of the Valuation Time.
(n) Circle Income's transfer agent shall have provided to One Group
(i) the originals or true copies of all of the records of Circle Income in
the possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of Circle Income outstanding
as of the Valuation Time and (iii) the name, address and tax identification
number of each holder of record of any such shares of Circle Income and the
number of shares held of record by each such shareholder.
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(o) All of the issued and outstanding shares of beneficial interest of
Circle Income shall have been offered for sale and sold in conformity with
all applicable federal or state securities or blue sky laws and, to the
extent that any audit of the records of Circle Income or its transfer agent
by One Group or its agents shall have revealed otherwise, either (i) Circle
Income shall have taken all actions that in the reasonable opinion of One
Group or Ropes & Gray are necessary to remedy any prior failure on the part
of Circle Income to have offered for sale and sold such shares in
conformity with such laws or (ii) Circle Income shall have furnished (or
caused to be furnished) surety, or deposited (or caused to be deposited)
assets in escrow, for the benefit of One Group in amounts sufficient and
upon terms satisfactory, in the opinion of One Group or its counsel, to
indemnify One Group against any expense, loss, claim, damage or liability
whatsoever that may be asserted or threatened by reason of such failure on
the part of Circle Income to have offered and sold such shares in
conformity with such laws.
(p) Circle Income shall have duly executed and delivered to One Group
bills of sale, assignments, certificates and other instruments of transfer
("Transfer Documents") as One Group may deem necessary or desirable to
transfer all of Circle Income's entire right, title and interest in and to
the Investments and all other assets of Circle Income.
10. CONDITIONS TO CIRCLE INCOME'S OBLIGATIONS. The obligations of Circle
Income hereunder shall be subject to the following conditions:
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of Circle
Income, shall have been approved as described in Section 8(a).
(b) One Group shall have furnished to Circle Income a statement of One
Group Income's net assets, together with a list of portfolio holdings with
values determined as provided in Section 4, all as of the Valuation Time,
certified on One Group's behalf by its President (or any Vice President)
and Treasurer (or any Assistant Treasurer), and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation
Time and as of the Exchange Date there has been no material adverse change
in the financial position of One Group Income since June 30, 2000, other
than changes in its portfolio securities since that date, changes in the
market value of its portfolio securities, changes due to net redemptions,
dividends paid or losses from operations.
(c) One Group shall have executed and delivered to Circle Income an
agreement dated as of the Exchange Date pursuant to which One Group, on
behalf of One Group Income, will assume all of the liabilities of Circle
Income existing at the Valuation Time in connection with the transactions
contemplated by this Agreement (an "Assumption of Liabilities").
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of One Group, for itself and on behalf of
One Group Income, made in this Agreement are true and correct in all
material respects as if made at and as of such dates, One Group and One
Group Income have complied with all of the agreements and satisfied all of
the conditions on their part to be performed or satisfied at or prior to
each of such dates, and One Group shall have furnished to Circle Income a
statement, dated the Exchange Date, signed by One Group's President (or any
Vice President) and Treasurer certifying those facts as of such dates.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) Circle Income shall have received an opinion of Ropes & Gray, in
form reasonably satisfactory to Circle Income and dated the Exchange Date,
to the effect that (i) One Group is a business trust and validly existing
in conformity with the laws of The Commonwealth of Massachusetts, and, (to
the knowledge of such counsel), neither One Group nor One Group Income is
required to qualify to do business as a foreign association in any
jurisdiction, (ii) the Shares to be delivered to Circle Income as provided
for by this Agreement are duly authorized and upon such delivery will be
validly issued and will be fully paid and nonassessable by One Group and no
shareholder of One Group has any preemptive right to subscription or
purchase in respect thereof, (iii) this Agreement has been duly authorized,
executed and delivered by One Group and, assuming that the Prospectus, the
Registration Statement and the Proxy Statement comply with
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the 1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Circle Income, is a valid and
binding obligation of One Group, (iv) the execution and delivery of this
Agreement did not, and the consummation of the transactions contemplated
hereby will not, violate One Group's Declaration of Trust, as amended, or
Code of Regulations, or any provision of any agreement known to such
counsel to which One Group or One Group Income is a party or by which it is
bound, it being understood that with respect to investment restrictions as
contained in One Group's Declaration of Trust, as amended, Code of
Regulations or then-current prospectus or statement of additional
information of One Group , such counsel may rely upon a certificate of an
officer of One Group whose responsibility it is to advise One Group with
respect to such matters, (v) no consent, approval, authorization or order
of any court or governmental authority is required for the consummation by
One Group, on behalf of One Group Income, of the transactions contemplated
herein, except such as have been obtained under the 1933 Act, the 1934 Act
and the 1940 Act and such as may be required under state securities or blue
sky laws and the H-S-R Act and it being understood that such opinion shall
not be deemed to apply to Circle Income's compliance obligations under the
1933 Act, 1934 Act, 1940 Act, state securities or blue sky laws and the
H-S-R Act; and (vi) the Registration Statement has become effective under
the 1933 Act, and to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act.
(g) Circle Income shall have received an opinion of Ropes & Gray
addressed to Circle Income, and in a form reasonably satisfactory to Circle
Income and dated the Exchange Date, with respect to the matters specified
in Section 9(g) of this Agreement.
(h) All proceedings taken by One Group in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to Circle
Income and Baker & Daniels.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable blue sky provisions, and no stop order suspending
such effectiveness shall have been instituted or, to the knowledge of
Circle Income, contemplated by the Commission or any state regulatory
authority.
(j) Circle Income shall have received evidence, in form and substance
satisfactory to Circle Income, of (1) the liability coverage for the
directors of Circle Income and (2) One Group's agreement to indemnify the
directors of Circle Income, in each case, pursuant to the covenants set
forth in paragraph 11(c) hereof.
11. INDEMNIFICATION. (a) Circle Income will indemnify and hold harmless One
Group, its trustees and its officers (for purposes of this subparagraph, the
"Indemnified Parties") against any and all expenses, losses, claims, damages and
liabilities at any time imposed upon or reasonably incurred by any one or more
of the Indemnified Parties in connection with, arising out of, or resulting from
any claim, action, suit or proceeding in which any one or more of the
Indemnified Parties may be involved or with which any one or more of the
Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to Circle Income contained
in the Registration Statement, the Prospectus or the Proxy Statement or any
amendment or supplement to any of the foregoing, or arising out of or based upon
the omission or alleged omission to state in any of the foregoing a material
fact relating to Circle Income required to be stated therein or necessary to
make the statements relating to Circle Income therein not misleading, including,
without limitation, any amounts paid by any one or more of the Indemnified
Parties in a reasonable compromise or settlement of any such claim, action, suit
or proceeding or threatened claim, action, suit or proceeding made with the
prior consent of Circle Income. The Indemnified Parties will notify Circle
Income in writing within ten days after the receipt by any one or more of the
Indemnified Parties of any notice of legal process or any suit brought against
or claim made against such Indemnified Party as to any matters covered by this
Section 11(a). Circle Income shall be entitled to participate at its own expense
in the defense of any claim, action, suit or proceeding covered by this Section
11(a), or, if it so elects, to assume at its expense by counsel satisfactory to
the Indemnified Parties the defense of any such claim, action, suit or
proceeding, and if Circle Income elects to assume such defense, the Indemnified
Parties shall be entitled to participate in the defense of any such claim,
action, suit or proceeding at their expense. Circle Income's obligation under
this Section 11(a) to indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that Circle Income will pay in the first
instance any
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expenses, losses, claims, damages and liabilities required to be paid by it
under this Section 11(a) without the necessity of the Indemnified Parties first
paying the same.
(b) One Group, on behalf of One Group Income, will indemnify and hold
harmless Circle Income, its directors and its officers (for purposes of
this subparagraph, the "Indemnified Parties") against any and all expenses,
losses, claims, damages and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parties in
connection with, arising out of, or resulting from any claim, action, suit
or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement of
a material fact relating to One Group or One Group Income contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any
amendment or supplement to any of the foregoing, or arising out of or based
upon the omission or alleged omission to state in any of the foregoing a
material fact relating to One Group or One Group Income required to be
stated therein or necessary to make the statements relating to One Group or
One Group Income therein not misleading, including, without limitation, any
amounts paid by any one or more of the Indemnified Parties in a reasonable
compromise or settlement of any such claim, action, suit or proceeding, or
threatened claim, action, suit or proceeding made with the prior consent of
One Group. The Indemnified Parties will notify One Group in writing within
ten days after the receipt by any one or more of the Indemnified Parties of
any notice of legal process or any suit brought against or claim made
against any Indemnified Party as to any matters covered by this Section
11(b). One Group shall be entitled to participate at its own expense in the
defense of any claim, action, suit or proceeding covered by this Section
11(b), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim,
action, suit or proceeding, and, if One Group elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their own expense.
One Group's obligation under this Section 11(b) to indemnify and hold
harmless the Indemnified Parties shall constitute a guarantee of payment so
that One Group will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this Section 11(b)
without the necessity of the Indemnified Parties first paying the same.
(c)(i) Effective upon the Closing Date, One Group shall assume and be
responsible for all obligations of Circle Income to indemnify the present
and former directors of Circle Income (the "Indemnified Directors") to the
fullest extent permitted by law under the Articles of Incorporation of
Circle Income as in effect on the date hereof; provided, however, that any
determination required to be made with respect to whether a director's
conduct complies with the standards set forth under Indiana law and the
Articles of Incorporation shall be made by independent counsel selected by
One Group. One Group agrees that all rights to indemnification existing in
favor of the Indemnified Directors, acting in their capacities as directors
of Circle Income, under Circle Income's Articles of Incorporation as in
effect as of the date of this Agreement shall survive the Reorganization as
obligations of One Group, shall continue in full force and effect without
any amendment thereto, and shall constitute rights which may be asserted
against One Group.
(c)(ii) To the extent subparagraph (c)(i) shall not serve to indemnify
and hold harmless an Indemnified Director, after the Closing Date, One
Group shall, subject to the terms set forth herein, indemnify and hold
harmless, to the fullest extent permitted under applicable law (and shall
also advance expenses as incurred to the fullest extent permitted under
applicable law provided the person to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that
such person is not entitled to indemnification), each Indemnified Director
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to the Transactions contemplated by this
Agreement; provided that, in the event any claim or claims are asserted or
made, all rights to indemnification in respect of any such claim or claims
shall continue until final disposition of any and all such claims. Any
Indemnified Director wishing to claim indemnification under this
subparagraph (c)(ii), upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify One Group thereof, but
the failure to so notify shall not relieve One Group of any liability it
may have to such Indemnified Director if such failure does not materially
prejudice One Group. In the event of any such claim, action, suit,
proceeding or investigation
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(whether arising before or after the Closing Date), (i) One Group shall
have the right to assume the defense thereof and One Group shall not be
liable to such Indemnified Director for any legal expenses of other counsel
or any other expenses subsequently incurred by such Indemnified Director in
connection with the defense thereof, except that if One Group elects not to
assume such defense or counsel for the Indemnified Directors advises that
there are issues which raise conflicts of interest between One Group and
the Indemnified Directors, the Indemnified Directors may retain counsel
satisfactory to them, and One Group shall pay all reasonable fees and
expenses of such counsel for the Indemnified Directors promptly as
statements therefor are received; provided, however, that One Group shall
be obligated pursuant to this subparagraph (c)(ii) to pay for only one firm
of counsel for all Indemnified Directors in any jurisdiction (unless the
use of one counsel for such Indemnified Directors would present such
counsel with a conflict of interest), (ii) the Indemnified Directors will
cooperate in the defense of any such matter and (iii) One Group shall not
be liable for any settlement effected without its prior written consent;
and provided further, that One Group shall not have any obligation
hereunder to any Indemnified Director when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Director in the
manner contemplated hereby is prohibited by applicable law.
(c)(iii) For the period beginning at the effective time of the
Reorganization and ending not less than three years thereafter, One Group
shall provide or cause to be provided, liability coverage for the
Indemnified Directors which covers the actions of the Indemnified Directors
for the period they served as such.
(c)(iv) The Indemnified Directors shall be deemed third party
beneficiaries of this subparagraph 11(c), and the rights provided to each
Indemnified Director by this subparagraph 11(c) shall be enforceable
against One Group by each Indemnified Director (and each director of Circle
Income shall be presumed to have relied upon this subparagraph 11(c)(iv) in
continuing to serve as a director of Circle Income after the date hereof).
(c)(v) One Group Income's obligation under this Section 11(c) to
indemnify and hold harmless the Indemnified Directors shall constitute a
guarantee of payment so that One Group Income will pay in the first
instance any expenses, losses, claims, damages and liabilities required to
be paid by it under this Section 11(c) without the necessity of the
Indemnified Directors first paying the same.
(d) All provisions of this Section 11 shall survive the termination or
expiration of this Agreement, and the closing of the transactions
contemplated hereby.
12. NO BROKER, ETC. Each of One Group and Circle Income represents that
there is no person who has dealt with it who by reason of such dealings is
entitled to any broker's or finder's or other similar fee or commission arising
out of the transactions contemplated by this Agreement.
13. TERMINATION. One Group and Circle Income may, by mutual consent of
their respective trustees and directors, terminate this Agreement, and One Group
or Circle Income, after consultation with counsel and by consent of their
respective trustees and directors, or an officer authorized by such trustees and
directors, may waive any condition to their respective obligations hereunder. If
the transactions contemplated by this Agreement have not been substantially
completed by March 13, 2001, this Agreement shall automatically terminate on
that date unless a later date is agreed to by One Group and Circle Income.
14. RULE 145. Pursuant to Rule 145 under the 1933 Act, One Group will, in
connection with the issuance of any Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a party to the
transaction pursuant to Rule 145 (c), cause to be affixed upon the certificates
issued to such person (if any) a legend as follows:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO ONE
GROUP OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS
A-13
<PAGE> 80
AMENDED, OR (ii) IN THE OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
ONE GROUP, SUCH REGISTRATION IS NOT REQUIRED."
and, further, One Group will issue stop transfer instructions to One Group's
transfer agent with respect to such shares. Circle Income will provide One Group
on the Exchange Date with the name of any shareholder of Circle Income who is to
the knowledge of Circle Income an affiliate of Circle Income on such date.
15. COVENANT, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf
16. SOLE AGREEMENT: AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
17. AGREEMENT AND DECLARATION OF TRUST. Circle Income Shares, Inc. is a
corporation organized under Indiana law and under its Articles of Incorporation,
to which reference is hereby made and a copy of which is on file at the office
of the Secretary of the State of Indiana and elsewhere as required by law, and
to any and all amendments thereto so filed or hereafter filed. The obligations
of "Circle Income Shares, Inc." entered into in the name or on behalf thereof by
any of the directors, officers, employees or agents are made not individually,
but in such capacities, and are not binding upon any of the directors, officers,
employees, agents or shareholders of Circle Income personally, but bind only the
assets of Circle Income, and all persons dealing with Circle Income must look
solely to the assets of Circle Income for the enforcement of any claims against
Circle Income. The names "One Group Mutual Funds" and "Trustees of One Group"
refer respectively to One Group and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated May 23, 1985, to which reference is hereby made and a copy of which
is on file at the office of the Secretary of The Commonwealth of Massachusetts
and elsewhere as required by law, and to any and all amendments thereto so filed
or hereafter filed. The obligations of "One Group Mutual Funds" entered into in
the name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, shareholders or representatives of One Group personally, but
bind only the assets of One Group, and all persons dealing with any series of
One Group, and all persons dealing with One Group Income must look solely to the
assets of One Group belonging to such series for the enforcement of any claims
against One Group.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
CIRCLE INCOME SHARES, INC.
By:
/s/ Bruce Glor
----------------------------------------
ONE GROUP MUTUAL FUNDS
By:
/s/ Mark A. Beeson
----------------------------------------
A-14
<PAGE> 81
EXHIBIT B
CIRCLE INCOME SHARES, INC.
DIVIDEND REINVESTMENT PLAN
All registered holders of Circle Income's Common Stock have the opportunity
to participate in Circle Income's Dividend Reinvestment Plan (the "Plan"). The
Transfer & Dividend Agent (the "Agent") acts on behalf of stockholders electing
to participate in the Plan. Upon purchase of shares, shareholders are mailed a
notice of their right to elect to participate in the Plan. Notice of election to
participate in the Plan will apply to a distribution if it is received by the
Agent at least 15 days before the record date for such distribution. Brokers and
nominees of banks or other financial institutions may elect to be included in
the Plan.
Under the Plan, dividends and other distributions will be automatically
invested in additional shares of Circle Income. Stockholders may, however,
terminate their participation in the Plan at any time and elect to receive
declared dividends and other distributions in cash by notifying the Agent in
writing at least 15 days prior to the record date for such distribution. There
will be no penalty or charge for termination of participation in the Plan.
Stockholders may rejoin the Plan at any time.
THE PLAN PRESENTLY OPERATES AS FOLLOWS.
Whenever Circle Income declares a dividend or other distribution, it pays
the amount thereof to the Agent on behalf of stockholders under the Plan either
(i) in shares of Circle Income's Common Stock or (ii) in cash which the Agent
will use to buy shares in the open market. At the close of business on the fifth
trading day preceding the dividend payment date, the Agent will compare the net
asset value per share of Circle Income's Common Stock with the market price
(including brokerage commissions) per share of its Common Stock. If such net
asset value is lower than market price (including brokerage commissions), the
Agent will request payment of the dividend or distribution from Circle Income
in, and Circle Income will issue, additional shares at net asset value. If the
market price (including brokerage commissions) is lower than net asset value,
the Agent will request payment from Circle Income in cash which it will use, to
the extent permitted by law, to buy shares of Circle Income's Common Stock in
the open market consistent with the policy of best market price and execution.
If, at any time the Agent is purchasing shares of Circle Income's Common Stock
in the open market, the market price (including brokerage commissions) exceeds
the net asset value per share determined as of the close of business on such
fifth trading day or further purchases are prohibited by law, the Agent will
cease open market purchases and, so long as such market price exceeds such net
asset value or such prohibition exists, the Agent will request and receive
shares of Common Stock from Circle Income at such net asset value.
Since Common Stock will be purchased in the market when market price per
share (including brokerage commissions) is lower than net asset value per share,
there will be no dilution in the net asset value per share of outstanding Common
Stock.
The Agent maintains the stockholder's account and furnishes the stockholder
with written confirmation of all transactions in the account, including
information needed for personal and tax records. There is no direct charge to
participants in the Plan except for brokerage commissions and transfer taxes.
All other costs of the Plan, except those of registration under applicable
securities laws, if any, are borne by the Adviser, although the Plan may be
amended to provide for a direct charge to participants. Applicable regulatory
requirements may necessitate modifications of the Plan. Moreover, experience
under the Plan may indicate that changes are desirable. Accordingly, the Plan
may be amended or terminated at any time on 30 days' notice to the Agent, and
such notice will become effective as to all distributions by Circle Income for
which the record dates are subsequent to the effective date of such notice.
B-1
<PAGE> 82
EXHIBIT C
<TABLE>
<CAPTION>
(1) (2) (3) (4)
AMOUNT
AMOUNT HELD BY OUTSTANDING
REGISTRANT OR FOR EXCLUSIVE OF AMOUNT
TITLE OF CLASS AMOUNT AUTHORIZED ITS ACCOUNT SHOWN UNDER (3)
-------------- ----------------- ----------------- -------------------
<S> <C> <C> <C>
Common 10,000,000 0 2,803,476
</TABLE>
C-1
<PAGE> 83
EXHIBIT D
MANAGEMENT DISCUSSION REGARDING EACH FUND'S PERFORMANCE
D-1
<PAGE> 84
ONE GROUP INCOME
PORTFOLIO PERFORMANCE REVIEW
HOW DID CLASS AND THE FUND PERFORM?
One Group Income A share class posted a total return of 3.80% (without the
sales charge) for the year ended June 30, 2000.
Rising interest rates and widening yield spreads had a negative effect on
the Fund's one-year total return. (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, and vice versa.) With yields generally higher
across the yield curve, bond prices declined. But the Fund's income level was
enough to offset the price declines, resulting in a positive total return.
HOW DID THE FUND'S YIELD CHANGE?
The Fund's yield increased throughout the year as a result of higher market
interest rates and the addition of a modest allocation to high-yield securities.
The Fund's 30-day SEC yield on I shares was 7.10% on June 30, 2000, compared to
5.88% on June 30, 1999.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our ongoing strategy is to search for and purchase undervalued securities
and market sectors. During the past fiscal year, the sectors that we believe
represented the best value included spread products in general and, more
specifically, mortgage-backed securities. As such, we increased the Fund's
allocations to mortgages and decreased its weightings primarily in Treasury
securities. This action helped increase the Fund's yield and positions the
portfolio nicely to take advantage of historically wide spreads.
We also added a small high-yield component to the Fund. While this action
helped increase the Fund's yield, it also had a negative effect on the Fund's
principal return. High-yield bonds suffered during our holding period due to
credit quality concerns and a lack of demand. We were able to minimize the
effects of this due to our small and broadly diversified position in these
bonds.
The yield curve took on an inverted shape during the year, meaning that
shorter-term bonds offered higher yields than long-term bonds. Our yield curve
positioning in the zero to three-year range as well as our long-term Treasury
holdings helped the Fund make the most of this situation.
HOW WAS THE FUND STRUCTURED IN TERMS OF SECTORS AND QUALITY?*
The Fund's average quality changed only slightly due to the addition of
high-yield securities. As of June 30, 2000, the Fund's average quality was "AA,"
and 64% of the portfolio was invested in "AAA"-rated securities. Securities
rated "AA" comprised 5% of the portfolio; those rated "A" comprised 16%,
securities rated "BBB" comprised 9%, and high-yield bonds comprised 6%.
U.S. Treasuries comprised 19% of the Fund at fiscal year end, while 29% was
invested in mortgage-backed securities, 35% in corporate bonds, 12% in asset
backed securities, 4% in agency securities and 1% in money market securities.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Over time, we believe the Federal Reserve will remain committed to
controlling inflation and will be successful in its efforts to slow down the
economy. This should contribute to a positive bond market environment. Supply
and demand changes in the market may cause spreads to remain volatile and wider
than their historical
D-2
<PAGE> 85
averages. Nonetheless, we believe that over the long-term non-Treasury
securities will continue to present attractive investment opportunities.
/s/ Douglas S. Swanson
Team Leader, Taxable Bond Team
Banc One Investment Advisors Corporation
/s/ Gary L. Madich, CFA
Chief Investment Officer of Fixed Income Securities
Banc One Investment Advisors Corporation
The Fund's composition is subject to change.
The high-yield portion of the Fund is sub-advised by Banc One High Yield
Partners, LLC. Banc One High Yield Partners, LLC is a joint venture between Banc
One Investment Advisors, the Fund's adviser, and Pacholder Associates, Inc.
ONE GROUP INCOME
JUNE 30, 2000
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (3/5/93)
<S> <C> <C> <C> <C>
Class A 3.80% 5.38% 5.44%
Class A* (0.85)% 4.42% 4.78%
</TABLE>
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
LEHMAN BROTHERS LIPPER INTERMEDIATE
AGGREGATE BOND INVESTMENT GRADE
CLASS A CLASS A* INDEX INDEX
------- -------- --------------- -------------------
<S> <C> <C> <C> <C>
3/93 10000.00 9554.00 10000.00 10000.00
6/93 10151.00 9698.00 10308.00 10300.00
6/94 10187.00 9733.00 10174.00 10164.00
6/95 11341.00 10835.00 11450.00 11293.00
6/96 11826.00 11299.00 12025.00 11829.00
6/97 12666.00 12101.00 13005.00 12767.00
6/98 13956.00 13334.00 14376.00 14000.00
6/99 14197.00 13564.00 14828.00 14347.00
6/00 14736.00 14080.00 15506.00 14886.00
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The above-quoted performance data includes the performance of the Pegasus
Multi Sector Bond Fund prior to the acquisition by the One Group Income Bond
Fund on March 11, 1999.
The performance of the Income Bond Fund is measured against the Lehman
Brothers Aggregate Bond Index, an unmanaged index comprised of US Government,
mortgage, corporate and asset-backed securities. 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.
The Lipper Intermediate Investment Grade Index consists of the equally
weighted average monthly returns of the largest funds within the universe of all
funds in the category.
D-3
<PAGE> 86
CIRCLE INCOME
REPORT FROM MANAGEMENT
This Annual Report reviews Circle Income Shares' results for the fiscal
year ended June 30, 2000. Net investment income for the latest fiscal year,
$2,204,683 or $0.79 per share was nearly equal to the 1999 fiscal year's net
investment income of $2,208,420 or $0.79 per share. Higher interest rates at the
close of the fiscal year, however, generated a lower per share net asset value
of $10.95, a decrease from $11.44 per share from the prior fiscal year-end.
Total net assets at fiscal year-end were $30,703,875.
Dividends during the 2000 fiscal period were paid at the monthly rate of
$0.065. Total annual distributions per share for the fiscal year were $0.78. It
has been your Company's practice to make dividend payments on the first Friday
of each month to shareholders of record two weeks prior to payment date.
During the first half of the fiscal year, interest rates generally moved
higher. The ten-year maturity United States Treasury yield began the fiscal year
at 5.79% and increased 100 basis points to reach a fiscal year high in January
2000 of 6.79%. Ten-year Treasury yields declined during the first calendar
quarter 2000, reaching a second-half fiscal year low of 5.77% in early April.
During the final quarter of the fiscal year, yields soared to 6.56% and then
dropped to approximately 6.00% at June 30th fiscal year-end.
Strong economic growth and the fear of higher inflation drove interest
rates upward during the last six months of the year 1999. Real GDP growth
rocketed from a 1999 2nd quarter 1.9% to 5.7% and 7.3% in the 3rd and 4th
quarters, respectively. The Federal Reserve began raising short-term interest
rates in an effort to slow a racing economy. The first rate increase came on
June 30th, 1999. The Federal Reserve has increased the federal funds rate a
total of six times during the last twelve months. The federal funds rate
presently stands at 6.5%, up from 4.75% a year ago. Increased productivity has
enabled the economy to grow rapidly without dramatically increasing price
inflation. Prices, as measured by the Consumer Price Index, are expected to rise
approximately 3.2% during the year 2000, an increase over the low 2.7% rate for
the year 1999. Unemployment levels hit 30-year lows with the vigorous economic
growth and the increased demand for labor. Consumer confidence has remained
ebullient as evidenced by strong consumer spending levels.
The Federal Reserve's goal of slower economic growth increased fear in the
credit sectors. Investors, worried about increased default rates in a slowing
economy, demanded higher yields in corporate sectors. Both investment grade and
high-yield corporate sectors, along with mortgage-backed securities,
underperformed Treasuries during the past twelve months. The Circle Income
Portfolio, consisting of these three sectors for the realization of higher
yields relative to Treasuries, experienced less total return than the Lehman
Aggregate Index during the latest twelve month period.
We expect the Federal Reserve to continue to increase short-term interest
rates until the economy has slowed to a sustainable, less inflationary, 3%
growth rate. Treasury bond yields will likely continue to rise in this
environment. Economic growth will remain positive with a moderating rate of
price inflation. There is little expectation for a recession in the near future.
Your Company's portfolio will continue to be invested in the higher yielding
mortgage-backed, investment grade corporate and high-yield corporate sectors,
thus seeking to provide a high level of current income consistent with the
prudent management of investment risk.
<TABLE>
<S> <C>
/s/ Bruce J. Glor /s/ Jeffrey W. Fountain
President Executive Vice President & Chief Investment
Officer
</TABLE>
July 6, 2000
D-4
<PAGE> 87
CIRCLE INCOME SHARES, INC.
THIS IS YOUR PROXY CARD. PLEASE MARK VOTE
IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Approval of the Agreement and Plan of Reorganization dated as of
October 18, 2000 pursuant to which all of the assets and liabilities of
Circle Income will be transferred to One Group Income Bond Fund ("One
Group Income") in return for Class A shares of One Group Income,
followed by the distribution of shares of One Group Income to the
shareholders of Circle Income and the liquidation and dissolution of
Circle Income.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
The signatory acknowledges receipt of the accompanying Notice of Special Meeting
of Shareholders and the Combined Prospectus/Proxy Statement.
Signature of Shareholder(s)
-----------------------------------
-----------------------------------
Dated: ------------------
NOTE: Please sign exactly as the name
appears on this card. EACH joint owner
must sign the proxy. When signing as
executor, administrator, attorney,
trustee or guardian, or as custodian for
a minor, please give the FULL title of
such. If a corporation, please give the
FULL corporate name and indicate the
signer's office. If a partner, please
sign in the partnership name.
CONTROL NUMBER
INSTRUCTIONS FOR VOTING BY TELEPHONE OR MAIL
Please take this opportunity to use either one of the two voting methods
detailed below to vote your shares.
1. VOTE BY PHONE. Call toll-free 1-877-265-9598 using a touch-tone
telephone to vote 24 hours a day, 7 days a week. Have your proxy card
(above) and social security number in hand when you call. Please enter
the 6-digit Control Number (above). For Proposal 1 (Approval of the
Agreement and Plan of Reorganization), to vote FOR, press 1; to vote
AGAINST, press 9 and to ABSTAIN, press 0. Your vote will be repeated
back to you and you will have an opportunity to confirm it.
2. VOTE BY MAIL. Please vote, sign, date and return the proxy card using
the enclosed postage-paid envelope.
E-1
<PAGE> 88
PROXY PROXY
CIRCLE INCOME SHARES, INC.
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
TO BE HELD ON TUESDAY, JANUARY 9, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CIRCLE
INCOME SHARES, INC.
The undersigned hereby appoints Jacqueline A. Weitz and Robert L. Young,
each of them with full power of substitution as proxies, to vote all of the
shares of beneficial interest in Circle Income which the shareholder would be
entitled to vote upon if personally present at the Special Meeting of
Shareholders of Circle Income Shares, Inc. ("Circle Income") to be held in Suite
500, The Columbia Club, 121 Monument Circle, Indianapolis, Indiana on January 9,
2001 at 1:00 p.m., Central Time, and at any adjournments thereof, upon the
matters referred to on the reverse side and, in their discretion, upon such
other matters as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
Please take this opportunity to use either one of the two voting methods
detailed on the reverse side to vote your shares.
(Continued and to be signed on reverse side.)
E-2
<PAGE> 89
--------------------------------------------------------------------------------
CIRCLE INCOME SHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, JANUARY 9, 2001
--------------------------------------------------------------------------------
Dear Shareholder:
Recently we distributed proxy material regarding the Special Meeting of
Shareholders scheduled to take place on Tuesday, January 9, 2001 (the
'Meeting'). Circle Income records indicate that as of November 20, 2000,
("Record Date") you held shares of Circle Income entitled to vote at the
Meeting. To date, we have not yet received voting instructions from you.
All votes are important. Your shares cannot be voted unless we receive your
executed proxy or you are present at the meeting. We urge you to act promptly in
order to allow us to obtain a sufficient number of votes to avoid adjourning the
meeting. Unless you attend the meeting and vote in person, we must receive your
vote no later than 1:00 p.m., Central Time on Tuesday, January 9, 2001.
The purpose of the Special Meeting is to approve a proposed Agreement and
Plan of Reorganization. The Agreement provides that Circle Income will transfer
all of its assets and liabilities to One Group Mutual Funds, specifically One
Group Income Bond Fund. Based upon its evaluation, Circle Income's Board of
Directors unanimously determined that the proposed transaction is in the best
interests of the shareholders and that the interests of such shareholders will
not be diluted as a result of the proposal.
Please register your vote by calling Computershare Investor Services LLC
toll-free at 1-877-265-9598 using a touch-tone telephone 24 hours a day, 7 days
a week.
If you have any questions regarding the meeting agenda or the execution of your
proxy, please call Computershare Investor Services LLC toll-free at
1-877-265-9598.
Thank you for your prompt attention.
Jacqueline A. Weitz
Secretary
E-3
