<PAGE> 1
File No. 33-47811
File No. 811-6675
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 8 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 10 [X]
ONE FUND, INC.
(Exact Name of Registrant)
One Financial Way
Cincinnati, Ohio 45242
(Address of Principal Executive Office)
Area Code (513) 794-6316
(Registrant's Telephone Number)
Ronald L. Benedict, Secretary
ONE Fund, Inc.
One Financial Way
Cincinnati, Ohio 45242
(Name and Address of Agent for Service)
Notice to:
W. Randolph Thomspon, Esq.
Of Counsel
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson Street, NW
Washington, D.C. 20007
Approximate Date of Proposed Public Offering: as soon after the effective date
of this registration statement as is practicable.
Registrant has heretofore registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 and on August 14, 1996 filed
its Rule 24f-2 Notice for its most recent fiscal year.
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
---
on (date) pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(i)
---
on (date) pursuant to paragraph (a)(i)
---
75 days after filing pursuant to paragraph (a)(ii)
---
X on November 1,1996 pursuant to paragraph (a)(3) of Rule 485.
---
If appropriate, check the following box:
this post-effective amendment designates a new effective date
--- for a previously filed post-effective amendment.
<PAGE> 2
ONE FUND, INC.
CROSS REFERENCE TO ITEMS
REQUIRED BY Rule 404(a)
N-1A Item
Part A Caption in Prospectus
1. Cover Page
2. Summary of ONE Fund Expenses
Key Features of ONE Fund
ONE Fund with Five Portfolios
Professional Management
Diversification
Liquidity
Flexibility
Service
3.(a) Financial Highlights
3.(b) Not applicable
3.(c) Fund Performance
4. About ONE Fund
Money Market Portfolio
Tax-Free Income Portfolio
Income Portfolio
Income & Growth Portfolio
Growth Portfolio
Core Growth Portfolio
Small Cap Portfolio
International Portfolio
Global Contrarian Portfolio
Diversification
Foreign Securities
Hedging Transactions
Risk Factors
Credit and Market Risks
Money Market Portfolio
Tax-Free Income Portfolio
Income Portfolio
Income & Growth Portfolio
Growth Portfolio
Small Cap Portfolio
International Portfolio
Global Contrarian Portfolio
Foreign Investments
<PAGE> 3
5. ONE Fund Management
ONIMCO
ONIMCO's Investment Style
ONIMCO's Compensation
Custody of Assets
About ONE Fund
5A. Management's Discussion of ONE Fund Performance
Comparisons of Change in Value of $10,000
Investments
6. About ONE Fund
ONE Fund Management
Key Features of ONE Fund
Service
Dividends, Distributions and Taxes
7. Buying Shares
Purchase Price
Sales Charges
Reducing the Sales Charges
Concurrent Purchases
Letter of Intent
Right of Accumulation
Combined Purchases
Group Purchases
Group Letter of Intent
Purchases Without a Sales Charge
Flexibility Features
Open Accounts
Automatic Investing
Automatic Reinvesting
Cross Investing
Transferring
Telephone Transfers
Automatic Transfers
Sales Charge on Certain Transfers
8. Check Writing
Automatic Withdrawal
Redeeming Shares
Request in Writing
By Telephone
Automatically
9. Not Applicable
<PAGE> 4
Part B Caption in Statement of Additional Information
10. Cover Page
11. Table of Contents
12. ONE Fund
13. Investment Policies
Repurchase Agreements
Reverse Repurchase Agreements
Money Market Instruments
Hedging Transactions
Covered Call Options and Put Options
Risk Factors with Options
Futures Contracts
Options on Futures Contracts and Financial Indexes
Risk Factors with Futures, Options on Futures and
Options on Indexes
Risk Factors with Foreign Investments
Foreign Currency Hedging Transactions
Risk Factors with High-Yield, High-Risk Securities
Investment Restrictions
(Fundamental)
(Nonfundamental)
Portfolio Turnover
14. ONE Fund
Management of ONE Fund
Directors and Officers
Shareholders' Meetings
15. Controlling Persons and Principal Shareholders
16. Investment Advisory and Other Services
17. Brokerage Allocation
18. ONE Fund
19. Purchase and Redemption of Shares
Reducing the Sales Charge
20. Tax Status
21. Underwriters
<PAGE> 5
22. ONE Fund Performance
Current Yield of Money Market Portfolio
Current Yield of Tax-Free Income, Income,
and Income & Growth Portfolios
Total Return
23. Financial Statements
Part C Other Information Caption
24. Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control with
Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
Business and Other Connections of Sub-adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Not Applicable
32. Undertakings
<PAGE> 6
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 7
PROSPECTUS One Financial Way
NOVEMBER 1, 1996 Cincinnati, Ohio 45242
ONE FUND, INC. Telephone 1-800-578-8078
<TABLE>
<CAPTION>
CONTENTS
- --------
<S> <C>
2 Key Features One Fund Inc. ("ONE Fund") is an open-end management investment
company with 9 diversified portfolios, Through the different
portfolios, ONE Fund's objectives are to provide:
3 Summary of Expenses MONEY MARKET PORTFOLIO - current income consistent with preservation
of capital and liquidity
5 Financial Highlights TAX FREE INCOME PORTFOLIO - high current income exempt from federal
income taxes.
12 About ONE Fund INCOME PORTFOLIO - high current income. Preservation of capital is a
secondary objective.
23 Dividends, Distributions INCOME & GROWTH PORTFOLIO - moderate income with the potential for
and Taxes increasing income over time. Growth of capital is also a primary
objective.
23 ONE Fund GROWTH PORTFOLIO - long-term capital growth.
Management
CORE GROWTH PORTFOLIO - long-term capital appreciation.
27 Buying Shares SMALL CAP PORTFOLIO - maximum capital growth by investing primarily
in common stocks of small and medium sized companies
28 Reducing the Sales Charge INTERNATIONAL PORTFOLIO - long-term capital growth by investing
primarily in common stocks of foreign companies.
30 Flexibility Features GLOBAL CONTRARIAN PORTFOLIO - long-term growth of capital by
investing in foreign and domestic securities believed to be
undervalued or presently out of favor.
32 Redeeming shares This prospectus sets forth concisely the information about ONE Fund
34 Fund Performance that you should know before investing. This prospectus should be
retained for future reference. Additional information about ONE Fund
has been filed with the Securities and Exchange Commission in a
Statement of Additional Information, dated November 1, 1996, which is
incorporated herein by reference. The Statement of Additional
Information is available upon request and without charge by calling
or writing ONE Fund at the toll-free telephone number or the address
shown above.
</TABLE>
INVESTMENTS IN THE MONEY MARKET PORTFOLIO ARE NEITHER INSURED NOR GUARANTEED BY
THE UNITED STATES GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE> 8
KEY FEATURES OF ONE FUND
ONE FUND WITH
8 PORTFOLIOS ONE Fund is a series mutual fund offering you a
selection of 9 investment options (portfolios). See
"About ONE Fund" on page 12. ONE Fund shares are
subject to the risks that the securities in which
each portfolio is invested might decrease in value
(market risk) or that issuers of income-producing
securities might not be able to pay the interest or
principal when due (credit risk). Changes in
interest rates, securities markets in general or
the overall economy can affect the value of ONE
Fund shares or the level of dividends.
PROFESSIONAL MANAGEMENT ONE Fund's assets are managed by Ohio National
Investments, Inc. (the "Adviser"). It receives
annual compensation, based on each portfolio's net
assets, at maximum rates of 0.30% for the Money
Market Portfolio, 0.50% for the Income, Income &
Growth and Growth Portfolios, 0.60% for the
Tax-Free Income Portfolio, 0.65% for the Small Cap
Portfolio, 0.90% for the International and Global
Contrarian Portfolios and 0.95% for the Core Growth
Portfolio. See "The Adviser" on page 24 and "The
Adviser's Compensation" on page 26. The Adviser
contracts with Pilgrim Baxter & Associates, Ltd.
("PBA") (see page 26) for the management of the
Core Growth Portfolio and Societe Generale Asset
Management Corp. ("SGAM") (See page 27) for the
management of the International and Global
Contrarian Portfolios.
DIVERSIFICATION ONE Fund's portfolios are fully diversified. Your
investments are pooled with those of other
investors to purchase a greater variety of
securities than you might purchase by yourself. See
"Diversification" on page 21, and "About ONE Fund"
on page 12.
LIQUIDITY ONE Fund shares may be redeemed, in whole or in
part, at their net asset value upon request. See
"Redeeming Shares" on page 33.
FLEXIBILITY ONE Fund offers a number of privileges designed to
increase your flexibility. Some of these features
include the open account plan, dividend payment
options, exchange privileges and the automatic
withdrawal plan. See "Dividends, Distributions and
Taxes" on page 23, and "Flexibility Features" on
page 30.
SERVICE ONE Fund's principal underwriter is The O.N. Equity
Sales Company ("ONESCO"). However, upon receipt of
necessary regulatory approvals, Ohio National
Equities, Inc. ("ONE, Inc.") an affiliate of
ONESCO, will become the principal underwriter. You
may purchase ONE Fund shares at any time by
contacting your registered representative. The
purchase of ONE Fund shares includes a maximum
sales charge of 5% of the offering price (3% for
the Tax-Free Income and Income Portfolios). A
number of methods are available for reducing or
eliminating the sales charge. There is no sales
charge for the Money Market Portfolio. See "Sales
Charges" on page 28, and "Reducing the Sales
Charge" on page 28.
2
<PAGE> 9
ONE Fund investors may direct service requests to
their registered representative or directly to ONE
Fund at the toll-free telephone number and address
shown on page 1. A shareholder service fee, not to
exceed an annual rate of 0.30% (0.17% maximum for
the Money Market Portfolio) is paid to ONESCO and
other qualified dealers. See "Sales Charges" on
page 28.
SUMMARY OF ONE FUND EXPENSES
This table and example are provided to help you understand the expenses of
investing in ONE Fund and your share of ONE Fund's operating expenses. A variety
of ways to reduce the sales charge are available. See "Sales Charges" on page
28, and "Reducing the Sales Charge" on page 28.
The Example enables you to compare the long-term cost of owning ONE Fund
versus other funds. Funds with higher recurring operating expenses might, over
time, be more expensive than a fund with a higher sales charge but lower
recurring operating expenses.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)
(1)
Money Market Portfolio None
Tax-Free Income Portfolio 3.00%
Income Portfolio 3.00%
Income & Growth Portfolio 5.00%
Growth Portfolio 5.00%
Core Growth Portfolio 5.00%
Small Cap Portfolio 5.00%
International Portfolio 5.00%
Global Contrarian Portfolio 5.00%
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
<TABLE>
<CAPTION>
TOTAL OPERATING
MANAGEMENT FEES 12b-1 OTHER EXPENSES
(AFTER WAIVER)(2) FEES(3) EXPENSES (AFTER WAIVER)
----------------- ------- -------- --------------
<S> <C> <C> <C> <C>
Money Market Portfolio 0.00% 0.15% 0.42% 0.57%
Tax-Free Income Portfolio 0.30% 0.25% 0.39% 0.94%
Income Portfolio 0.25% 0.25% 0.47% 0.97%
Income & Growth Portfolio 0.25% 0.25% 0.39% 0.89%
Growth Portfolio 0.25% 0.25% 0.40% 0.90%
Core Growth Portfolio (4) 0.95% 0.25% 0.65% 1.85%
Small Cap Portfolio 0.325% 0.25% 0.37% 0.94%
International Portfolio 0.90% 0.25% 0.57% 1.72%
Global Contrarian Portfolio 0.90% 0.25% 0.99% 2.14%
</TABLE>
3
<PAGE> 10
EXAMPLE:
A hypothetical investment of $1,000 would incur the following expenses, assuming
a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Portfolio $ 6 $ 18 $ 32 $ 72
Tax-Free Income Portfolio 39 59 81 142
Income Portfolio 40 60 82 146
Income & Growth Portfolio 59 77 97 154
Growth Portfolio 59 77 98 156
Core Growth Portfolio (4) 68 106 146 258
Small Cap Portfolio 59 79 100 160
International Portfolio 67 102 139 244
Global Contrarian Portfolio 71 114 160 287
</TABLE>
If the maximum management fees and 12b-1 fees were assessed, the expenses in
this hypothetical example would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Portfolio $ 9 29 50 110
Tax-Free Income Portfolio 43 70 99 182
Income Portfolio 43 69 98 180
Income & Growth Portfolio 62 86 112 188
Growth Portfolio 62 86 113 189
Core Growth Portfolio (4) 69 107 148 263
Small Cap Portfolio 63 90 119 202
International Portfolio 67 103 142 249
Global Contrarian Portfolio 71 116 163 292
</TABLE>
(1) The Maximum Sales Charge scales down for purchases of $25,000 or more
and becomes a contingent deferred sales charge of 0.5%, for 2 years
following purchase, for accounts of at least $1 million.
(2) The Management Fee of 0.30% is presently being waived entirely by the
Adviser, and the Adviser is voluntarily receiving only half of its
0.50% Management Fee for the Income, Income & Growth and Growth
Portfolios, half its 0.60% Management Fee for the Tax-Free Income
Portfolio and half of its 0.65% Management Fee for the Small Cap
Portfolio. Without those waivers, the Management Fees would be 0.30%
for the Money Market Portfolio, 0.60% for the Tax-Free Income
Portfolio, 0.50% for the Income, Income & Growth and Growth Portfolios,
and 0.65% for the Small Cap Portfolio and the Total Operating Expenses
would have been 0.87% for the Money Market Portfolio, 1.24% for the
Tax-Free Income Portfolio, 1.22% for the Income Portfolio, 1.14% for
the Income & Growth Portfolio, 1.15% for the Growth Portfolio and 1.27%
for the Small Cap Portfolio.
(3) The 12b-1 Fees shown are based on an estimate that no individual sales
representative will reach critical production levels this year. In
later years, these fees could be slightly higher, but no higher than
0.17% for the Money Market Portfolio and 0.30% for the other
portfolios.
(4) For the Core Growth Portfolio, the "Other Expenses" (and, accordingly,
the Total Operating Expenses) are based on estimates.
4
<PAGE> 11
ONE FUND, INC.
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP, independent
certified public accountants, and is an integral part of ONE Fund's audited
financial statements which appear in the Statement of Additional Information
(which may be obtained by shareholders), incorporated by reference herein, and
should be read in conjunction with the financial statements.
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------------
MONEY MARKET TAX-FREE INCOME
---------------------------------------- -----------------
8-18-92 YEAR 11-1-94
YEAR ENDED JUNE 30, TO ENDED TO
1996 1995 1994 6-30-93 6-30-96 6-30-95
---- ---- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period ................................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $10.66 $10.00
Income from investment operations:
Net investment income .................................... 0.05 0.05 0.03 0.02 0.56 0.35
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions .......................... 0.00 0.00 0.00 0.00 0.13 0.66
------ ------ ------ ------ ------ ------
Total from investment operations .................... 0.05 0.05 0.03 0.02 0.69 1.01
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ...................................... (0.05) (0.05) (0.03) (0.02) (0.56) (0.35)
Distributions from net realized
capital gains and foreign
currency transactions ................................ 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------
Total distributions ......................................... (0.05) (0.05) (0.03) (0.02) (0.56) (0.35)
------ ------ ------ ------ ------ ------
Net asset value, end of period .............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $10.79 $10.66
====== ====== ====== ====== ====== ======
Total return (a) ............................................ 5.18% 5.06% 3.06% 2.67%(b) 6.59% 10.26%(b)
====== ====== ====== ====== ====== ======
Ratio (to average net assets)/ supplemental data:
Ratios net of fees waived by adviser (d,e):
Expenses ................................................. 0.57% 0.51% 0.44% 0.43%(c) 0.94% 0.91%(c)
Net investment income .................................... 5.14% 4.99% 2.97% 2.70%(c) 5.20% 5.04%(c)
Ratios assuming no waiver of management fees by adviser (d,e):
Expenses ................................................ 0.87% 0.81% 0.74% 0.73%(c) 1.24% 1.21%(c)
Net investment income ................................... 4.84% 4.69% 2.67% 2.40%(c) 4.90% 4.74%(c)
Portfolio turnover rate ..................................... N/A N/A N/A N/A 8% 0%
Net assets at end of period (millions) ...................... $ 15.8 $ 14.1 $ 12.3 $ 21.3 $ 6.3 $ 5.7
</TABLE>
(a) Total return does not reflect the initial sales charge imposed on
purchases (see page 28).
(b) Calculated on an aggregate basis (not annualized).
(c) Annualized.
(d) For the periods shown, the investment adviser elected to waive the
entire management fee for the Money Market Protfolio and one-half of
the management fees for the Tax-Free Income, Income, Income & Growth,
and Small Cap Protfolios, but it may cease those waivers, in whole or
in part, without prior notice.
(e) The investment adviser has reimbursed certain operating expenses of the
International and Global Contrarian Portfolios. Had the investment
adviser not reimbursed such expenses, the annualized ratio of expenses
to net assets would have been 1.72, 1.51%, 2.22% and 4.13% for the
International Portfolio for the periods ended June 30, 1996, 1995, 1994
and 1993 respectively, and 2.40% and 2.59% for the Global Contrarian
Portfolio for the periods ended June 30, 1996 and 1995, respectively.
The annualized ratio of net investment income to net assets would have
been .70%, (1.10%), (.26%) and .12% for the International Portfolio for
the periods ended June 30, 1996, 1995, 1994 and 1993 respectively, and
1.23% and (2.31%) for the Global Contrarian Portfolio for the periods
ended June 30, 1996 and 1995, respectively.
5
<PAGE> 12
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------------------
INCOME INCOME & GROWTH
-------------------------------------- ----------------------------------
8-18-92 8-18-92
YEAR ENDED JUNE 30, TO YEAR ENDED JUNE 30, TO
1996 1995 1994 6-30-93 1996 1995 1994 6-30-95
-------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period ....................................... $ 9.78 $ 9.39 $10.43 $10.00 $11.57 $10.65 $10.96 $10.00
Income from investment operations:
Net investment income ........................ 0.63 0.65 0.62 0.45 0.38 0.41 0.33 0.27
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions .............. (0.19) 0.39 (0.98) 0.45 1.27 1.54 (0.11) 0.96
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations ........ 0.44 1.04 (0.36) 0.90 1.65 1.95 0.22 1.23
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income .......................... (0.63) (0.65) (0.62) (0.45) (0.37) (0.41) (0.33) (0.27)
Distributions from net realized
capital gains and foreign
currency transactions ..................... 0.00 0.00 (0.06) (0.02) (0.07) (0.62) (0.20) 0.00
------ ------ ------ ------ ------ ------ ------ ------
Total distributions ............................. (0.63) (0.65) (0.68) (0.47) (0.44) (1.03) (0.53) (0.27)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period .................. $ 9.59 $ 9.78 $ 9.39 $10.43 $12.78 $11.57 $10.65 $10.96
====== ====== ====== ====== ====== ====== ====== ======
Total return (a) ................................ 4.61% 11.58% (3.79%) 9.56%(b) 14.50% 19.41% 1.96% 12.49%(b)
====== ====== ====== ====== ====== ====== ====== ======
Ratio (to average net assets)/ supplemental data:
Ratios net of fees waived by advisor (d,e):
Expenses ..................................... 0.97% 0.85% 1.02% 1.11%(c) 0.89% 0.81% 0.94% 1.07%(c)
Net investment income ........................... 6.50% 6.80% 6.10% 5.07%(c) 3.10% 3.69% 3.08% 3.09%(c)
Ratios assuming no waiver of management
fees by adviser (d,e):
Expenses .................................... 1.22% 1.10% 1.27% 1.36%(c) 1.14% 1.06% 1.19% 1.32%(c)
Net investment income ....................... 6.25% 6.55% 5.85% 4.82%(c) 2.85% 3.44% 2.83% 2.84%(c)
Portfolio turnover rate ......................... 9% 4% 6% 6% 7% 25% 14% 24%
Net assets at end of period (millions) .......... $ 7.0 $ 7.1 $ 4.6 $ 5.7 $ 10.8 $ 7.7 $ 7.5 $ 6.7
</TABLE>
6
<PAGE> 13
<TABLE>
<CAPTION>
PORTFOLIO
- ---------------------------------------------------------------------------------
GROWTH SMALL CAP
- -------------------------------------------------- ----------------------
8-18-92 YEAR 11-1-94
YEAR ENDED JUNE 30, TO ENDED TO
1996 1995 1994 6-30-93 6-30-96 6-30-95
- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 13.03 $ 11.67 $ 11.63 $ 10.00 $ 10.63 $ 10.00
0.14 0.16 0.12 0.12 0.26 0.22
2.72 2.17 0.22 1.69 2.26 0.67
- -------- -------- -------- -------- -------- --------
2.86 2.33 0.34 1.81 2.52 0.89
- -------- -------- -------- -------- -------- --------
(0.14) (0.16) (0.12) (0.12) (0.25) (0.22)
(0.28) (0.81) (0.18) (0.06) (0.08) (0.04)
- -------- -------- -------- -------- -------- --------
(0.42) (0.97) (0.30) (0.18) (0.33) (0.26)
- -------- -------- -------- -------- -------- --------
$ 15.47 $ 13.03 $ 11.67 $ 11.63 $ 12.82 $ 10.63
======== ======== ======== ======== ======== ========
22.22% 20.54% 2.85% 18.26%(b) 24.10% 8.91%(b)
======== ======== ======== ======== ======== ========
0.90% 0.83% 1.04% 1.30%(c) 0.94% 1.00%(c)
0.99% 1.35% 1.04% 1.31%(c) 2.21% 3.19%(c)
1.15% 1.08% 1.30% 1.55%(c) 1.27% 1.31%(c)
0.74% 1.10% 0.79% 1.06%(c) 1.88% 2.88%(c)
22% 24% 8% 26% 34% 8%
$ 11.8 $ 7.0 $ 5.3 $ 4.3 $ 4.5 $ 2.9
</TABLE>
7
<PAGE> 14
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------------
INTERNATIONAL GLOBAL CONTRARIAN
-------------------------------------- ------------------
4-30-93 YEAR 11-1-94
YEAR ENDED JUNE 30, TO ENDED TO
1996 1995 1994 6-30-93 6-30-96 6-30-95
-------- -------- ------ ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period .................................................... $ 12.89 $ 13.32 $ 9.90 $10.00 $ 10.01 $10.00
Income from investment operations:
Net investment income ..................................... 0.10 0.14 0.05 0.03 0.16 0.17
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ........................... 2.24 0.63 4.01 (0.10) 1.61 0.13
-------- -------- ------ ------ -------- ------
Total from investment operations ..................... 2.34 0.77 4.06 (0.07) 1.77 0.30
-------- -------- ------ ------ -------- ------
Less distributions:
Dividends from net
investment income ....................................... (0.39) (0.14) (0.05) (0.03) (0.23) (0.17)
Distributions from net realized
capital gains and foreign
currency transactions .................................. (0.37) (1.06) (0.59) 0.00 (0.07) (0.12)
-------- -------- ------ ------ -------- ------
Total distributions .......................................... (0.76) (1.20) (0.64) (0.03) (0.30) (0.29)
-------- -------- ------ ------ -------- ------
Net asset value, end of period ............................... $ 14.47 $ 12.89 $13.32 $ 9.90 $ 11.48 $10.01
======== ======== ====== ====== ======== ======
Total return (a) ............................................. 18.65% 6.44% 40.65% (0.68%)(b) 17.84% 2.99%(b)
======== ======== ====== ====== ======== ======
Ratio (to average net assets)/ supplemental data:
Ratios net of fees waived by advisor (d,e):
Expenses .................................................. 1.72% 1.50% 1.50% 2.32%(c) 2.14% 2.05%(c)
Net investment income ..................................... 0.70% 1.11% 0.46% 1.93%(c) 1.49% 2.85%(c)
Ratios assuming no waiver of management fees by advisor (d,e):
Expenses ................................................. 1.72% 1.50% 1.50% 2.32%(c) 2.14% 2.05%(c)
Net investment income .................................... 0.70% 1.11% 0.46% 1.93%(c) 1.49% 2.85%(c)
Portfolio turnover rate ...................................... 20% 39% 27% 0% 26% 8%
Net assets at end of period (millions) ....................... $ 15.1 $ 12.0 $ 10.4 $ 3.2 $ 5.7 $ 3.9
</TABLE>
8
<PAGE> 15
COMPARISONS OF CHANGE IN VALUE OF $10,000 INVESTMENTS
IN ONE FUND PORTFOLIOS AND VARIOUS INDEXES
<TABLE>
<CAPTION>
TAX FREE INCOME &
INCOME INCOME GROWTH GROWTH
------ ------ ------ ------
<S> <C> <C> <C> <C>
8/18/92 ----- $9,700 $9,500 $9,500
12/31/92 ----- 9,758 9,487 10,178
4/30/93 ----- ----- ----- -----
6/30/93 ----- 10,628 10,687 11,234
12/31/93 ----- 10,850 11,048 11,917
6/30/94 ----- 10,224 10,896 11,554
11/1/94 $9,700 ----- ----- -----
12/31/94 9,863 10,263 11,073 11,989
6/30/95 10,694 11,407 12,865 13,928
12/31/95 11,447 11,980 13,798 15,366
6/30/96 11,356 11,933 14,730 17,022
</TABLE>
<TABLE>
<CAPTION>
SMALL GLOBAL
CAP INTERNATIONAL CONTRARIAN
--- ------------- ----------
<S> <C> <C> <C>
8/18/92 ----- ----- -----
12/31/92 ----- ----- -----
4/30/93 ----- $9,500 -----
6/30/93 ----- 9,435 -----
12/31/93 ----- 12,271 -----
6/30/94 ----- 13,270 -----
11/1/94 $9,500 ----- $9,500
12/31/94 9,537 13,443 9,145
6/30/95 10,343 14,086 9,781
12/31/95 11,979 15,061 10,523
6/30/96 12,835 16,713 11,526
</TABLE>
9
<PAGE> 16
<TABLE>
<CAPTION>
LEHMAN LEHMAN
MUNICIPAL INTERMEDIATE S&P 500
--------- ------------ -------
<S> <C> <C> <C>
8/18/92 ----- $10,000 $10,000
12/31/92 ----- 10,200 10,452
4/30/93 ----- ----- -----
6/30/93 ----- 10,842 10,966
12/31/93 ----- 11,105 11,353
6/30/94 ----- 10,814 10,814
11/1/94 $10,000 ----- ----
12/31/94 10,035 10,891 11,290
6/30/95 11,003 11,937 13,571
12/31/95 11,787 13,134 16,028
6/30/96 11,734 13,013 17,643
</TABLE>
<TABLE>
<CAPTION>
RUSSELL MORGAN MORGAN
2,000 EAFE WORLD
----- ---- -----
<S> <C> <C> <C>
8/18/92 ----- ----- -----
12/31/92 ----- ----- -----
4/30/93 ----- $10,000 -----
6/30/93 ----- 10,052 -----
12/31/93 ----- 10,724 -----
6/30/94 ----- 11,595 -----
11/1/94 $10,000 ----- $10,000
12/31/94 9,877 11,481 9,667
6/30/95 11,190 11,683 10,460
12/31/95 12,656 12,957 11,080
6/30/96 13,972 13,543 11,800
</TABLE>
10
<PAGE> 17
MANAGEMENT'S DISCUSSION OF ONE FUND
PERFORMANCE
(FISCAL YEAR JULY 1995 THROUGH JUNE 1996)
Economic conditions in the U.S. were favorable in
the second half of 1995 with rising sales, strong
corporate earnings, declining interest rates and
low inflation. Stocks and bonds advanced strongly,
but, foreign markets were generally more volatile
and did not share in this rally. As 1995 drew to a
close, our economy was growing at a moderate pace.
However, inflationary pressures began to be felt in
1996 with growing consumer debt and spending, wage
growth, lower savings, higher interest rates and
labor shortages. Both domestic and foreign stocks
generally finished the fiscal year on a strong note
despite increasing price volatility and growing
uncertainties. Bond prices weakened in the face of
rising interest rates during the first half of
1996.
TAX FREE INCOME PORTFOLIO The emphasis has been on high quality municipal
bonds with intermediate or longer maturities. The
average maturity at the end of the fiscal year was
17 years, while short-term balances (short-term
debt securities and cash equivalents) were
approximately 8% of the portfolio.
INCOME PORTFOLIO During the fiscal year, purchase activity continued
to focus on corporate bonds with 5 to 10 year
maturities. The average maturity at the end of the
fiscal year was about 7 years. During the fiscal
year, short-term balances were decreased from about
10% to 2%.
INCOME & GROWTH During the fiscal year, most purchases were in
PORTFOLIO dividend-paying common stocks with moderate growth
potential. At the end of the fiscal year, the
portfolio was 71% common and preferred stocks, 16%
bonds and 13% short-term balances.
GROWTH PORTFOLIO During the fiscal year, most purchases were in
common stocks with above-average growth potential.
The portfolio's short-term balances were increased
during the year and, at the end of June 1996, the
portfolio was 89% invested in common and preferred
stocks.
SMALL CAP PORTFOLIO The portfolio continued to purchase stocks of small
to medium sized companies with moderate to above
average growth potential. At the end of the fiscal
year, the portfolio was 91% common and preferred
stocks and 9% short-term balances.
11
<PAGE> 18
INTERNATIONAL PORTFOLIO During the fiscal year, SGAM remained cautious
while continuing to seek investment opportunities
in specific stocks expected to provide good value
and attractive long-term returns. Foreign stocks
remained at approximately 89% of assets during the
fiscal year while most of the remainder consisted
of foreign short-term investments and convertible
debentures.
GLOBAL CONTRARIAN This portfolio has maintained a significant
PORTFOLIO exposure to both U.S. and foreign "hard asset"
commodity-related stocks based on SGAM's belief
that this category, having performed poorly in
recent years, will rebound. In fact, this category
did begin to perform better in the first quarter of
1996, but remained uncertain as the fiscal year
ended. The portfolio was, at fiscal year-end,
invested approximately 34% in U.S. stocks, 50% in
foreign stocks, 6% in domestic short-term balances
and 10% in foreign bonds.
ABOUT ONE FUND
ONE Fund was incorporated in Maryland on April 24,
1992. It is an open-end management investment
company, commonly called a "mutual fund". ONE Fund
has 9 fully diversified portfolios as described
below. Equity interests in each portfolio are
represented by a separate class of ONE Fund's
capital shares having a par value of one tenth of
one cent per share.
Shares of each portfolio All shares of all portfolios have one vote per
participate equally in share and are freely transferable, except that only
its assets and dividends. shares of a particular portfolio are entitled to
vote on matters affecting only that portfolio.
Approval of certain matters by a vote of all ONE
Fund shareholders may not be binding on a portfolio
whose shareholders have not approved that matter.
Each share of each portfolio is entitled to
participate equally in its dividends, distributions
and net assets.
The Adviser is a wholly-owned subsidiary of The
Ohio National Life Insurance Company ("ONLI"). They
and other Ohio National companies are located at
One Financial Way, Cincinnati, Ohio 45242.
Each portfolio has its Each portfolio of ONE Fund has a different
own investment objectives investment objective and pursues that objective
and policies. through its own investment policies. These
differences mean that the total returns and risks
for each portfolio will be different. Of course,
the achievement of investment objectives cannot be
assured because of the risks of fluctuating prices
of the underlying securities.
The investment objectives and the fundamental
investment restrictions (which are described in the
Statement of Additional Information) for
12
<PAGE> 19
each portfolio can only be changed if approved by a
vote of the shareholders of the affected portfolio.
All other investment practices may be changed by
ONE Fund's Board of Directors.
MONEY MARKET PORTFOLIO The objective of the Money Market Portfolio is to
Current income, provide current income consistent with preservation
preservation of capital of capital and liquidity. Essentially all the
and liquidity. assets of this portfolio will be invested in high
quality cash equivalent securities maturing in 13
months or less, including securities issued by (or
guaranteed by) the U.S. Government or its agencies
or instrumentalities, commercial paper, corporate
bonds and notes, certificates of deposit, bankers'
acceptances and repurchase agreements. Commercial
paper consists of unsecured promissory notes issued
by corporations to finance short-term credit needs.
The dollar-weighted average maturity of all
securities in this portfolio will never be more
than 90 days. The Statement of Additional
Information provides a more complete description of
the types of financial instruments in which this
portfolio may invest.
Money Market Portfolio The Money Market Portfolio offers a high degree of
risk factors. safety (although not guaranteed), but little
opportunity for above-average long-term return.
Income will fluctuate with changes in the level of
short-term interest rates.
ONE Fund intends to maintain the net asset value of
the Money Market Portfolio at a constant $1 per
share by paying out all income in the form of daily
share dividends. To avoid fluctuations in the
prices of portfolio securities, ONE Fund intends to
hold all securities in this portfolio to maturity
and to value securities based on the amortized-cost
method. That is, securities are valued at their
cost on the date acquired, and a daily adjustment
is made to accrue income and to reflect the
amortization of premium or accretion of discount to
the maturity date of such securities. If, at any
time, the amortized-cost of portfolio securities
results in a deviation of more than 1/2 of 1% from
the value based on available market quotations, the
Board of Directors will promptly determine the
appropriate action. Such action could include
selling portfolio securities before maturity,
withholding daily dividends, recapitalizing
outstanding shares, requiring shareholders to
contribute shares to capital (reverse dividends),
or pricing based on available market quotations.
13
<PAGE> 20
At least 95% of the assets of the Money Market
Portfolio will be invested in "first-tier"
short-term debt instruments. Purchases of other
short-term debt instruments of a single issuer will
be limited to the greater of 1% of its total assets
or $1 million. In addition to U.S. Government
securities, the first tier includes commercial
paper, certificates of deposit and bankers'
acceptances that have received the highest rating
by any two nationally recognized statistical rating
organizations ("NRSROs"), or the highest rating by
one NRSRO if that is the only NRSRO having rated
the security, or whose issuer has received such a
rating or ratings with respect to a class of short
term debt obligations that is now comparable in
priority and security to those to be purchased.
TAX-FREE INCOME PORTFOLIO The objective of the Tax-Free Income Portfolio is
High current income exempt to provide high current income exempt from federal
from federal income taxes. income taxes. Preservation of capital is a
secondary objective.
Normally, substantially all (at least 85%) of the
assets of this portfolio will be invested in
investment grade municipal securities. As a
temporary defensive measure, during times of
adverse market conditions, up to 50% of the
portfolio's assets may be invested in short-term
securities, including those which are not municipal
securities. Interest income from investments other
than municipal securities will be taxable to you as
ordinary income.
Municipal securities are debt obligations issued by
or on behalf of states, cities, municipalities and
other public authorities. The two principal
classifications of municipal securities that may be
held by the Portfolio are "general obligation"
securities and "revenue" securities. General
obligation securities are secured by the issuer's
pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue
securities are payable only from the revenues
derived from a particular facility or class of
facilities or, in some cases, from the proceeds of
a special excise tax or other specific revenue
source such as the user of a facility being
financed. Revenue securities may include private
activity bonds. Such bonds may be issued by or on
behalf of public authorities to finance various
privately operated facilities and are not payable
from the unrestricted revenues of the issuer. As a
result, the credit quality of private activity
bonds is frequently related directly to the credit
standing of private corporations or other entities.
In addition, the interest on private activity bonds
issued after August 7, 1986 is subject to the
federal alternative minimum tax. The Portfolio will
not be restricted with respect to the proportion of
its assets that may be invested in such
obligations. Accordingly, the Portfolio may not be
a suitable investment vehicle for individuals or
corporations that are subject to the federal
alternative minimum tax.
14
<PAGE> 21
Investment grade This portfolio will only purchase investment grade
Municipal securities. securities. Generally, bonds rated in one of the
top four rating categories are considered
investment grade. No more than 25% of its assets
may be invested in securities having, at the time
of purchase, the fourth highest rating (Baa by
Moody's and BBB by Standard & Poor's).
Tax-Free Income The financial risk for this portfolio is kept
Portfolio risk factors. fairly low by restricting purchases to
investment grade securities and further restricting
the purchase of securities in the fourth highest
rating category to a maximum of 25% of assets.
Securities in the fourth highest category, while
considered investment grade, may have some
speculative characteristics and the issuer's
ability to pay interest or repay principal may be
weaker under adverse economic conditions or
changing circumstances.
The degree of market risk for debt securities
increases with the length of time remaining to
their maturity. During periods of rising interest
rates, the market prices of all income producing
securities tend to decline. Conversely, when
interest rates fall, the market prices of such
securities tend to rise. The values of such
securities will also vary as a result of changing
economic conditions or changing evaluations by
investors and rating organizations of the ability
of the issuers to meet interest and principal
payments. Thus, there is always a risk of principal
loss or gain associated with the portfolio.
However, changes in the values of municipal
securities held by the portfolio will not affect
income derived from those securities unless the
issuer defaults on its interest payments.
From time to time, proposals have been introduced
before Congress for the purpose of restricting or
eliminating the federal income tax exemption for
interest on municipal securities.
INCOME PORTFOLIO The objective of the Income Portfolio is to provide
High current income and high current income. Preservation of capital is a
preservation of capital. secondary objective. The Adviser will seek to
preserve capital by shortening the average maturity
of this portfolio during times of volatile interest
rates. Shorter maturities reduce exposure to
interest risk and correspondingly reduce the risk
of loss of capital.
15
<PAGE> 22
Normally, at least 85% of the assets of this
portfolio will be invested in investment-grade
fixed income securities and the equivalent,
including corporate bonds, securities issued by (or
guaranteed by) the U.S. Government or its agencies
or instrumentalities, mortgage-backed securities,
and cash equivalents. The remainder may be invested
in below-investment-grade corporate bonds.
Generally, bonds rated in one of the top four
rating categories are considered investment grade.
However, those in the fourth highest category
(Moody's Baa or Standard & Poor's BBB) may have
speculative characteristics and the issuer's
ability to pay interest or repay principal under
adverse economic conditions or changing
circumstances may be weaker.
While this portfolio may invest in high-yield, or
"junk" bonds, at no time will any such bond be
purchased if it would result in more than 15% of
the assets of this portfolio being represented by
such securities. Bonds rated below the second
highest below-investment grade category (B) by
Moody's or Standard & Poor's will not be purchased.
Income Portfolio The Income Portfolio is primarily invested in
risk factors. securities that the Adviser believes present
relatively low risk. To the extent deemed prudent,
the Adviser will also seek to increase the income
to this portfolio by positioning no more than 15%
of its assets in junk bonds, provided that the
differences in yield appear to be sufficient to
justify the higher risks involved. The market value
of such a security is likely to fluctuate more than
that of an investment grade bond, especially during
periods of economic uncertainty or when the
issuer's ability to pay the interest or principal
might be in doubt. At times when an issuer's
credit-worthiness is not perceived to be sound, the
portfolio's ability to sell the security or to
obtain current pricing information might also be
impaired. With debt securities, the degree of
financial risk generally increases the lower the
security is rated, and the degree of market risk
increases with the length of time remaining to
maturity. During periods of rising interest rates,
the market prices of all income producing
securities will tend to decline. Conversely, when
interest rates fall, the market prices of such
securities will tend to rise. Thus, there is always
a risk of principal loss or gain associated with
this portfolio. In addition, changes in economic
conditions in general, or changes in an issuer's
financial condition, might impair the ability of an
issuer to timely pay interest and principal, thus
adversely affecting the market price of such
securities.
16
<PAGE> 23
INCOME & GROWTH The objective of the Income & Growth Portfolio is
PORTFOLIO to provide moderate income with the potential for
Moderate income with the increasing income over time. Growth of capital is
potential for increasing also a primary objective.
income and growing capital.
At least 90% of the assets of this portfolio will
be invested in income producing securities.
Normally, at least 50% of the assets will be
invested in dividend-paying common stocks. The
remaining assets will be invested in preferred
stocks, corporate bonds, convertible bonds,
securities issued by (or guaranteed by) the U.S.
Government or its agencies or instrumentalities,
mortgage-backed securities, or cash and cash
equivalents. See the discussion of investment grade
bonds under "Income Portfolio," above.
Income & Growth The risk factors related to the Income Portfolio
Portfolio risk factors. will also apply to the debt security portion of
this portfolio, and the risk factors related to the
Growth Portfolio will apply to the stock portion of
this portfolio. However, market risk factors for
debt securities and stocks often (but not always)
tend to offset each other.
GROWTH PORTFOLIO The objective of the Growth Portfolio is to provide
Long-term growth. long-term capital growth. Current income is
incidental to the objective of capital growth.
Normally, at least 90% of the assets of this
portfolio will be invested in common stocks and
securities convertible into common stocks.
Selection of stocks is not limited with regard to
whether the stocks are exchange-listed or
dividend-paying or whether they are issued by
companies of any particular size. The remaining
assets will be held in preferred stocks, investment
grade corporate bonds, U.S. Government securities,
or short term obligations and cash equivalents.
There may be circumstances where the Adviser deems
it prudent to temporarily invest a larger portion
of the assets in cash or cash equivalents for
defensive purposes or to meet anticipated
redemption requests.
Growth Portfolio risk Stocks are selected for this portfolio based on
factors. their equity characteristics. Securities ratings
are generally not a factor in stock selection.
While common stocks offer greater opportunities
than other securities for long-term total return,
their prices are subject to substantial
fluctuation. Among factors affecting stock prices
in general are economic and financial trends,
expectations about business activity, and
anticipation of changes in corporate earnings.
17
<PAGE> 24
CORE GROWTH PORTFOLIO The objective of the Core Growth Portfolio is to
Long-term capital provide long-term capital appreciation by investing
appreciation. primarily in equity securities of large, medium and
small companies that PBA believes have strong
earnings growth and long-term capital appreciation
prospects. PBA seeks companies poised for rapid
growth that have a history of above-average
earnings growth, demonstrate the ability to sustain
that growth, and operate in industries or markets
experiencing increased demand for their products or
services.
PBA's investment In managing the Core Growth Portfolio, PBA uses
process. both quantitative and fundamental processes
focusing on quality earnings growth. PBA begins by
creating a universe of rapidly growing companies
having desired quality characteristics. Using
proprietary software and research models that
incorporate attributes of successful growth (such
as positive earnings surprises, upward earnings
estimate revisions, and accelerating sales and
earnings growth), PBA creates a universe of growing
companies. Then, using fundamental research, PBA
evaluates each company's earnings quality and
assesses the sustainability of the company's
current growth trends. Through this highly
disciplined process, PBA seeks to construct an
investment portfolio having strong growth
characteristics.
Core Growth Portfolio This portfolio's investments in small and medium
risk factors. capitalization companies may experience greater
price volatility than portfolios investing
primarily in larger, more established companies.
Because the universe of companies in which this
portfolio invests will experience stock price
volatility, it is important that investors maintain
a long-term investment perspective. There can be no
assurance that PBA's techniques will be successful.
SMALL CAP PORTFOLIO The objective of the Small Cap Portfolio is to
Capital growth through provide maximum capital growth by investing
stocks of small and medium primarily in common stocks of small and medium
sized companies. sized companies. Ordinarily, these companies are
not listed on a national securities exchange but
will be traded over the counter.
Under normal market conditions, at least 65% of
this portfolio's assets will be invested in common
stocks of companies with market capitalizations of
less than $1 billion. However, under unusual market
conditions, it may invest more than 35% of its
assets in larger companies if they appear to
present better prospects for capital appreciation.
Small Cap Portfolio Investments in this portfolio generally involve a
risk factors. high degree of market and financial risk. Small
and medium sized companies selected for this
portfolio are generally those that are still in the
developing stages of their life cycles and are able
to achieve rapid growth in sales,
18
<PAGE> 25
earnings and share prices. Investments in these
companies involve greater risk than is customarily
associated with more established companies because
smaller or newer companies often (a) are dependent
on one-person management, (b) have limited product
lines, markets or financial resources, (c) their
securities may have limited marketability, and (d)
the price of their common stock may be subject to
more abrupt or erratic movements than securities of
larger, more established companies or the market
averages.
INTERNATIONAL PORTFOLIO The objective of the International Portfolio is to
Long-term growth provide long-term capital growth by investing
through foreign stocks. primarily in common stocks (and securities
convertible into common stocks) of foreign
companies. This portfolio may also invest in
fixed-income securities of foreign issuers. When
deemed appropriate for temporary defensive
purposes, it may invest in short-term debt
instruments of U.S. or foreign issuers, in U.S.
Government obligations, or in U.S. common stocks.
As a nonfundamental policy, this portfolio will not
invest more than 20% of its assets in securities of
issuers located in any one foreign country, except
that up to an additional 5% of its assets may be
invested in securities of issuers located in each
of any three of Australia, Canada, France, Germany,
Japan or the United Kingdom. While there is no
restriction limiting the countries in which the
portfolio may invest, it normally will invest only
in countries with developed securities markets and
developed or developing economies, and for which
the Board of Directors has specifically approved
custody arrangements.
International Portfolio This portfolio provides a means for you to
risk factors. diversify your investments by participating in
companies and economies outside the U.S. . However,
as described below, investing in foreign securities
may involve a greater degree of risk than investing
in domestic securities. See the discussion of risk
factors under "Foreign Securities" on page 22.
19
<PAGE> 26
GLOBAL CONTRARIAN The objective of the Global Contrarian Portfolio
PORTFOLIO is to provide long-term growth of capital by
Long-term growth. investing in foreign and domestic securities
Foreign and domestic that, in the judgment of the portfolio manager,
undervalued or out-of-favor are undervalued or presently out of favor with
securities. other investors, including securities that
are presently trading below their historic prices,
but have positive prospects for eventual recovery.
While this portfolio will primarily invest in
common stocks (and securities convertible into
common stocks), it may also invest in fixed income
securities that appear to be undervalued or out of
favor. Not more than 20% of the Portfolio's assets
may be invested in fixed income securities rated
below investment grade. Under normal market
conditions, at least 65% of the Portfolio's assets
will be invested in conformity with its investment
objectives.
As a nonfundamental policy, this portfolio will not
invest more than 20% of its assets in securities of
issuers located in any one foreign country, except
that up to an additional 5% of its assets may be
invested in securities of issuers located in each
of any three of Australia, Canada, France, Germany,
Japan or the United Kingdom. There is no other
restriction limiting the countries in which the
portfolio may invest, but it will only invest in
countries for which the Board of Directors has
specifically approved custody arrangements.
Global Contrarian A substantial portion of this portfolio (not less
Portfolio risk factors. than 25%) will be invested in foreign securities,
in at least three countries, under normal market
conditions. To that extent, the risk factors
described under "Foreign Securities" will apply.
See page 22. Fixed income securities rated below
investment grade present the higher risk
characteristics described under "Income Portfolio
risk factors" on page 16. In addition, "contrarian"
investing generally involves substantial risks,
particularly in the short term. Companies or market
segments that appear to be undervalued or are out
of favor with investors may remain so for an
extended period of time or may never recover.
Investors should only consider this portfolio for
long-term investments and to the extent that they
are willing to be exposed to a higher degree of
risk than is present with the other portfolios.
20
<PAGE> 27
DIVERSIFICATION Each portfolio is fully diversified. No more than
No more than 5% will 5% of the value of the total assets of each
be invested in one company portfolio, as of the time any portfolio security is
and 25% in one industry. purchased, will be invested in the securities of
any one issuer. No more than 25% of the value of
the total assets of each portfolio, as of the time
any portfolio security is purchased, will be
invested in any one industry. For the Money Market
Portfolio, these restrictions do not apply to U.S.
Government securities, and the "industry"
restriction does not apply to financial
institutions or, with respect to the Tax-Free
Income Portfolio, to municipal securities (other
than industrial revenue bonds). Each portfolio
other than the Money Market and Tax-Free Income
Portfolios, to the limited extent permitted by its
investment restrictions and applicable law,
reserves the right to purchase securities of
closed-end investment companies with appropriate
investment restrictions.
CREDIT AND MARKET RISKS All securities are subject, to some degree, to
credit risk and market risk. Credit risk refers to
the ability of an issuer of a debt security to pay
its principal and interest, and to the earnings
stability and overall financial soundness of an
issuer of an equity security. Market risk refers to
the volatility of a security's price in response to
changes in conditions in securities markets in
general and, particularly in the case of debt
securities, changes in the overall level of
interest rates. Higher risk levels are usually
equated to higher potential total return, but
higher risk investments have a greater potential
for loss as well.
Generally, the greatest degree of market and credit
risk can be expected with the International
Portfolio, and the lowest degree of such risks can
be expected with the Money Market Portfolio. A more
detailed summary of risk factors is contained in
the Statement of Additional Information.
FOREIGN SECURITIES The Income, Income & Growth, Growth, Core Growth
Up to 20% may be and Small Cap Portfolios may each invest up to 20%
invested in other countries. of its assets in the securities of foreign issuers
(including private issuers and foreign governments
or political subdivisions, agencies or
instrumentalities of foreign governments), American
Depository Receipts, and the securities of United
States domiciled issuers that are denominated in
foreign currency. The Money Market Portfolio may
invest up to 50% of its assets in such securities,
provided they are denominated in U.S. dollars and
held in custody in the United States. The Tax-Free
Income Portfolio will not invest in foreign
securities. At least 25% of Global Contrarian
Portfolio assets, and normally all of International
Portfolio assets, will be invested in foreign
securities at all times.
21
<PAGE> 28
Foreign Securities Investments in foreign securities involve added
risk factors. risk factors. These factors include changes in
currency exchange rates, currency exchange control
regulations, the possibility of seizure or
nationalization of companies, political or economic
instability, imposition of unforeseen taxes, the
possibility of financial information being
difficult to obtain or difficult to interpret under
foreign accounting standards, the necessity of
trading in markets that in relation to U.S. markets
may be more volatile or less efficient and have
available less information concerning issuers, or
the imposition of other restraints that might
adversely affect investments.
Except for the International and Global Contrarian
Portfolios, foreign investments will not normally
constitute a substantial portion of ONE Fund
assets. However, the Adviser may invest in foreign
securities whenever deemed prudent, particularly
when deemed advantageous to offset market or
economic factors prevailing in the U.S. In
addition, a number of large, multi-national foreign
corporations have a substantial business presence
in the U.S. and their securities are widely traded
in this country.
HEDGING TRANSACTIONS Each portfolio, other than the Money Market
Hedging transactions seek Portfolio, for hedging purposes, may (a) write call
to limit portfolio options traded on a registered national securities
volatility. exchange, if the portfolio owns the underlying
securities, and purchase call options for the
purpose of closing out options it has written, (b)
purchase put options on securities owned, and sell
such options in order to close its positions in put
options, (c) purchase and sell financial futures
contracts and options thereon, (d) purchase and
sell financial index options, and (e) engage in
forward foreign currency contracts, foreign
currency options and foreign currency futures
contracts in connection with the purchase, sale or
ownership of specific securities. However, no
option or futures contract shall be purchased or
sold if, as a result, more than one-third of the
total assets of a portfolio would be hedged by
options or futures contracts, and no more than 5%
of the total assets, at market value, of a
portfolio may be used for premiums on open options
and initial margin deposits on futures contracts,
and not more than 5% of portfolio's assets may be
invested in foreign currency hedging transactions.
Each type of instrument listed above is commonly
known as a "derivative" instrument and involves
risks even when used solely for hedging purposes.
Hedging transactions and their associated risks are
more fully described in the Statement of Additional
Information.
22
<PAGE> 29
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each portfolio intends to qualify as a regulated
investment company under Subchapter M of the
Internal Revenue Code. It is ONE Fund's policy to
comply with the provisions of the Code regarding
distributions of net investment income and net
realized capital gains so that ONE Fund will not be
subject to federal income tax on amounts
distributed. Consequently, ONE Fund distributes to
its shareholders each year substantially all of its
net investment income and net realized capital
gains (if any).
ONE Fund shareholders are taxed on distributed
income and capital gains. To the extent that
Tax-Free Income Portfolio dividends are derived
from tax-exempt interest, they are exempt from
federal income tax, but you are still required to
report them as tax-exempt interest income on your
tax return. Shareholders who are not subject to
income tax would not be required to pay tax on
amounts distributed to them. ONE Fund will inform
shareholders of the amount and federal income tax
status of distributed income and capital gains.
Money Market, For the Money Market, Tax-Free Income, and Income
Tax-Free Income, Portfolios, all of the undistributed net income is
and Income Portfolio accrued as daily dividends to shareholders of
dividends are accrued record immediately before each computation of the
daily and paid monthly. net asset value of these portfolios. Dividends
(representing net investment income) will normally
be paid monthly to shareholders of those 3
portfolios.
Dividends for the other Dividends will normally be paid at the end of
portfolios are paid at March, June, September and December to Income &
the end of each quarter. Growth, Growth, Core Growth, Small Cap,
International. and Global Contrarian Portfolio
shareholders. Any net realized capital gains for
all portfolios will be distributed annually.
However, ONE Fund's Board of Directors may declare
such dividends at other intervals.
ONE FUND MANAGEMENT
The Directors are The Board of Directors is responsible for ONE
elected by the shareholders Fund's overall management and direction. The Board
and are responsible for approves all significant agreements including those
overall management. with the Adviser, the Core Growth Portfolio's
subadviser (PBA), the International and Global
Contrarian Portfolios' subadviser (SGAM), ONE
Fund's principal underwriter
23
<PAGE> 30
(ONESCO), its custodians (Investors Fiduciary Trust
Co. for the International and Global Contrarian
Portfolios and The Provident Bank for the other
portfolios), and its transfer agent (The Provident
Bank). Board members are elected by the
shareholders for three-year terms. Shareholder
meetings are normally held every 3 years. As a
result of ONLI's ownership of ONE Fund shares, it
is a controlling person of each portfolio of ONE
Fund other than the International Portfolio.
THE ADVISER The Adviser manages the investment and reinvestment
of ONE Fund assets, subject to the supervision of
the Board of Directors.
The Adviser also serves as the investment adviser
to Ohio National Fund, Inc. It has served in both
advisory capacities since May 1, 1996. The
Adviser's predecessor, O.N. Investment Mangement
Company, was the investment adviser to ONE Fund
since ONE Fund's inception in 1992 and to Ohio
National Fund, Inc. since its inception in 1970.
The Adviser, like its predecessor, uses ONLI's
investment personnel and administrative systems.
ONE Fund's Portfolio The individuals primarily responsible for the
Managers. day-to-day management of ONE Fund's portfolios from
their inception are Joseph Brom, Michael Boedeker,
Stephen Williams, James McCall, Christine Baxter,
Gary Pilgrim and Jean-Marie Eveillard.
Joseph Brom is president of the Adviser and senior
vice president and chief investment officer of
ONLI. He oversees the management of the Money
Market, Tax-Free Income, Income, Income & Growth,
Growth and Small Cap Portfolios. He is a chartered
financial analyst with a bachelor's degree in
economics and finance and a law degree from the
University of Wisconsin. He has been an investment
officer of ONLI since 1975 and previously had 15
years of experience in securities management.
Michael Boedeker, a vice president of the Adviser,
manages the Money Market, Tax-Free Income, and
Income Portfolios. He is a chartered financial
analyst with a bachelor's degree in business and a
master of business administration degree in finance
from Indiana University. He has been vice president
of fixed income securities for ONLI since 1989 and
previously had over 20 years of experience in fixed
income securities and mutual fund management, most
recently as senior vice president and chief
investment office of Mutual Security Life Insurance
Co. for more than 5 years.
24
<PAGE> 31
Stephen Williams, a vice president of the Adviser,
manages the Income & Growth, Growth, and Small Cap
Portfolios. He has a bachelor's degree in finance
from the University of Cincinnati. He has been an
investment analyst and director of securities for
ONLI since 1977.
James McCall, Christine Baxter and Gary Pilgrim
jointly manage the Core Growth Portfolio. Mr.
McCall serves as the lead portfolio manager. He has
been a portfolio manager with PBA since 1994 and
prior to that was a portfolio manager with First
National Bank of Maryland. Ms. Baxter is a
chartered financial analyst and has been an equity
analyst and portfolio manager for PBA since 1991.
Mr. Pilgrim is a chartered financial analyst. He
has been president of PBA since 1993 and its chief
investment officer since 1990.
Jean-Marie Eveillard, president of SGAM, manages
the International and Global Contrarian Portfolios.
He is a graduate of the Ecole des Hautes Etudes
Commerciales in Paris. He has been president of
SoGen International Fund since 1984 and for 21
years prior to that had been a securities analyst
and mutual fund manager of Societe Generale and
SoGen International Fund.
THE ADVISER'S The Adviser's basic mutual fund investment
INVESTMENT STYLE philosophy is to seek value at reasonable prices.
This philosophy is implemented through both
macroeconomic and microeconomic analyses using both
quantitative and qualitative measurements.
The Adviser's value The macroeconomic (top-down) analysis generates a
investing style uses both a forecast based on economic, political and
top-down and a bottom-up demographic trends. This macro view identifies
approach. those business sectors and industries most likely
to benefit from expected conditions or events. Once
these sectors and industries are determined, a
universe of potential investments is selected. The
macroeconomic analysis also tests the
reasonableness of current securities valuations in
anticipation of short-term and intermediate-term
capital market movements.
The microeconomic (bottom-up) analysis of the
selected universe of securities is carried out
jointly by the Adviser's securities analysts and
portfolio managers.
25
<PAGE> 32
Stock selection is based Stock selection is determined primarily through
on fundamental research fundamental research. Through both proprietary and
and technical indicators. nonproprietary research capabilities, the Adviser
anticipates a company's future earnings potential.
Then, certain quantitative factors are reviewed to
assure that the stock's current price is consistent
with its historical range and earnings potential.
These and other technical indicators are reviewed
to gain an understanding of how investors perceive
the stock relative to its industry and the overall
market.
Bond selection is based on Bond selection is determined primarily through
credit analysis and credit analysis. Initially, credit analysis
interest rate forecasts. evaluates the probability that the issuer will meet
its scheduled interest and principal payments. This
requires the Adviser to conduct industry-, company-
and indenture-specific analyses. A second dimension
of bond selection is to anticipate bond price
movements which are caused by changes in prevailing
interest rates.
The Adviser uses The value investing approach is used by the Adviser
sell disciplines. both to determine securities to be acquired and
those to be sold.
THE ADVISER'S ONE Fund pays the Adviser a quarterly management
COMPENSATION fee as compensation for its investment advisory
services. The fee is based on the average daily net
asset value of each portfolio's assets. Presently
the fee, as an annualized percentage of net assets,
after any applicable voluntary fee waiver, is 0.00%
for the Money Market Portfolio, 0.30% for the
Tax-Free Income Portfolio, 025% for the Income,
Income & Growth, and Growth Portfolios, 0.95% for
the Core Growth Portfolio, 0.325% for the Small Cap
Portfolio, and 0.90% for the International and
Global Contrarian Portfolios. The fees paid by the
Core Growth, International and Global Contrarian
Portfolios are higher than the fees paid by many
funds, but are not higher than the fees paid by
many funds with similar investment objectives and
policies.
The Adviser is now waiving all of the fees to which
it is entitled from the Money Market Portfolio and
half of those fees from the Tax-Free Income,
Income, Income & Growth, Growth and Small Cap
Portfolios, but it may cease those waivers, in
whole or in part, without prior notice.
PBA PBA manages the assets of the Core Growth Portfolio
Sub-adviser for the under the Adviser's supervision. PBA is located at
Core Growth Portfolio. 1255 Drummer's Lane in Wayne, Pennsylvania. Its
controlling shareholder is United Asset Management
Corp. located in Boston, Massachusetts. With its
predecessors, PBA has been an investment adviser
since 1982 and it
26
<PAGE> 33
manages the PBHG mutual funds. The Adviser pays
PBA, for its services as sub-adviser, a fee at an
annual rate of 0.75% of the average daily net asset
value of the first $50 million of Core Growth
Portfolio assets, 0.70% of the next $100 million
and 0.50% of Portfolio assets in excess of $150
million.
SGAM SGAM manages the assets of the International and
Sub-adviser for the Global Contrarian Portfolios under the Adviser's
International and Global supervision. SGAM is located at 1221 Avenue of the
Contrarian Portfolios. Americas in New York City and is owned by Societe
Generale, one of the largest banks in Europe. SGAM
and its predecessors have been investment advisers
to international mutual funds since 1970. The
Adviser pays SGAM, for its services as sub-adviser,
fees at an annual rate of 0.75% of the average
daily net asset value of the International and
Global Contrarian Portfolios.
CUSTODY OF ASSETS The Provident Bank, One East Fourth Street,
Cincinnati, Ohio 45202, is the custodian for all
ONE Fund assets except those of the International
and Global Contrarian Portfolios. The assets of
those two portfolios are in the custody of
Investors Fiduciary Trust Company, 127 West Tenth
Street, Kansas City, Missouri 64105. For assets
held outside the United States, Investors Fiduciary
Trust Company enters into subcustodial agreements,
subject to approval by the Board of Directors. The
Provident Bank also serves as ONE Fund's transfer
agent and its agent for bookkeeping, dividend
disbursing and certain shareholder services.
BUYING SHARES
ONE Fund's shares are continuously offered through
its principal underwriter, ONESCO, and through
other securities dealers that execute a
distribution agreement with ONESCO.
Investments can be The minimum initial investment is $500. Subsequent
as small as $50. investments must be at least $50. These minimums
may be waived when the shares are purchased through
plans providing for regular periodic investments.
ONE Fund and ONESCO reserve the right to refuse any
purchase order.
PURCHASE PRICE The net asset value of the shares of each portfolio
ONE Fund shares are is determined at 4p.m. Eastern time on each day
valued each day the the New York Stock Exchange is open for
NYSE is open. unrestricted trading. The net asset value of each
portfolio is computed by dividing the value of the
securities in that portfolio plus any cash or other
assets less all liabilities of the portfolio, by
the number of capital shares outstanding for that
portfolio. Securities held by the Money Market
Portfolio are valued at amortized cost. Securities
held by the other portfolios are valued at current
market value.
27
<PAGE> 34
ONE Fund's shares are offered at the public
offering price. This is the net asset value per
share plus a sales charge, if applicable. The sales
charge is a variable percentage of the offering
price depending upon the amount of the sale. The
Money Market Portfolio seeks to maintain a constant
price of $1 per share.
SALES CHARGES THE SALES CHARGE DOES NOT APPLY TO THE MONEY MARKET
PORTFOLIO.
<TABLE>
<CAPTION>
TAX-FREE INCOME AND
INCOME PORTFOLIOS OTHER PORTFOLIOS
------------------------------------- ----------------------------------------
SALES CHARGE AS A % OF: SALES CHARGE AS A % OF:
AMOUNT OF OFFERING NET AMOUNT DEALER OFFERING NET AMOUNT DEALER
PURCHASE PRICE INVESTED CONCESSION PRICE INVESTED CONCESSION
- -------- ----- -------- ---------- ----- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Less than $25,000 3.00% 3.09% 2.80% 5.00% 5.26% 4.70%
$25,000 - $49,999 3.00% 3.09% 2.80% 4.50% 4.71% 4.25%
$50,000 - $99,999 2.50% 2.56% 2.35% 4.00% 4.17% 3.80%
$100,000 - $249,999 2.50% 2.56% 2.35% 3.50% 3.63% 3.35%
$250,000 - $499,999 2.00% 2.04% 1.90% 2.50% 2.56% 2.40%
$500,000 - $999,999 1.50% 1.52% 1.45% 2.00% 2.04% 1.95%
$1,000,000 and over None* None* None** None* None* None**
</TABLE>
* While no initial sales charge is imposed on investments of $1 million or more,
a contingent deferred sales charge of 0.5% of the amount redeemed (up to 0.5%
of the amount invested with no initial sales charge) is imposed within 2 years
of such a purchase. This charge does not apply to amounts held continuously in
the Money Market Portfolio. See "Redeeming Shares" on page 33.
** ONESCO will pay a dealer concession of 0.50% to securities dealers who
initiate and are responsible for any purchase of $1 million or more.
ONESCO and other qualified dealers are paid a
continuing shareholder service fee not to exceed
0.30% (0.17% for the Money Market Portfolio)
annually to compensate them for providing certain
services to shareholders and to promote growth of
ONE Fund's assets. These services include
submitting purchase and redemption transactions,
establishing shareholder accounts and providing
information and assistance regarding ONE Fund. The
proceeds of ONE Fund's 12b-1 Distribution Plan are
used only to pay these shareholder service fees.
REDUCING THE SALES CHARGE
For purposes of Right of Accumulation, Combined
Purchases and Group Purchases, "holdings" means the
current value of your shares at the full offering
price. Your registered representative can help you
to take advantage of any of the following methods
of reducing the sales charge if you qualify. These
rights may be requested on your ONE Fund account
application.
28
<PAGE> 35
CONCURRENT PURCHASES You may qualify for a reduced sales charge by
... combining your purchases combining concurrent products underwritten by
of ONE Fund and contracts ONESCO or its affiliates (the Ohio National
issued by its affiliates. companies). A concurrent purchase occurs
whenever ONE Fund shares are purchased at any
time from the day any Ohio National annuity or
insurance policy is applied for until 5 days
after that contract is delivered. The amount of
the annual (or single) premium of the Ohio
National annuity or insurance policy will then be
added to the amount of your concurrent ONE Fund
purchase to determine the percentage of sales
charge to apply to your ONE Fund purchase.
LETTER OF INTENT You may reduce sales charges on all investments
...committing to invest a by meeting the terms of a nonbinding letter of
certain amount over 13 months. your intent to invest a certain amount within
a 13-month period. Shares representing up to 5%
of the intended amount will be held in escrow
to cover additional sales charges that may be
due if your total investments, net of
redemptions, over the stated period are
insufficient to qualify for a sales charge
reduction. You have up to 90 days after
investing to sign a letter of intent to reduce
the sales charges on your investments including
the investments made in the 90 days before the
letter. Shares you currently own will apply
toward meeting your letter of intent.
RIGHT OF ACCUMULATION Your sales charge may also be reduced by taking
...adding up all your into account your existing holdings in ONE Fund.
ONE Fund holdings. Holdings will be valued at the greater of their
full offering price at the time a new purchase
is made under a right of accumulation or the
sum of all your purchases (including reinvested
dividends) less any redemptions.
COMBINED PURCHASES Your sales charge may be reduced by aggregating
...with those of your holdings for the account(s) of you, your spouse,
family members. your children and grandchildren. This may
include purchases through employee benefit
plans such as an IRA, an individual-type 403(b)
plan or a single-participant Keogh plan, or by
a business solely controlled by these
individuals (for example, they own the entire
business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals.
GROUP PURCHASES A member of a qualified group may purchase ONE
...by members of a Fund shares at the reduced sales charge
qualified group. applicable to the aggregate holdings of the group
as a whole. (For example, if members of the group
had previously purchased $100,000 of ONE Fund
shares and still held those shares, and now were
purchasing an additional $25,000, the sales
charge would be 3.50%, or 2.50% for the Tax-Free
Income and Income Portfolios.)
29
<PAGE> 36
A "qualified group" is one that (a) has been in
existence more than 6 months (unless it is a
tax-qualified plan), (b) has a purpose other than
acquiring mutual fund shares, and (c) satisfies
uniform criteria enabling ONESCO to realize
economies of scale in its costs of distributing
shares. A qualified group must have at least 6
members, must be available to arrange for group
meetings between representatives of dealers who
sell ONE Fund shares and the members, must agree
to include sales literature and other materials
relating to ONE Fund in its publications and
mailings to members at reduced or no cost to ONE
Fund or to dealers that sell its shares, and must
seek to arrange for payroll deduction or other
bulk transmission of ONE Fund purchases.
GROUP LETTER OF INTENT Qualified groups may reduce sales charges on all
...by qualified groups investments by meeting the terms of a nonbinding
committing to invest a certain letter of the group's intention to invest a
amount over 24 months. certain amount over a 24-month period. Shares
representing 5% of the investments of each group
member during that period will be held in escrow
to cover additional sales charges. The group has
up to 90 days after investing to enter into the
group letter of intent.
PURCHASES WITHOUT Within 60 days preceding their purchase of ONE
A SALES CHARGE Fund shares, investors who have redeemed an
...by redeeming other investment in another mutual fund that imposed a
shares that had a sales sales charge and which has investment objectives
charge. similar to any portfolio(s) of ONE Fund, may
purchase ONE Fund shares, up to the amount
redeemed, without paying any sales charge.
Officers, directors, employees, retirees, agents
and registered representatives of the Ohio
National companies, any employee benefit plan
with respect to them, and their spouses, children
and grandchildren, may purchase ONE Fund shares
without a sales charge.
FLEXIBILITY FEATURES
OPEN ACCOUNTS Your account is opened in accordance with your
You will receive statements registration instructions. It offers many
every quarter. features allowing you to change your investment
program at any time as circumstances change.
Transactions in your account, such as additional
investments and dividend reinvestments, will be
reflected on regular confirmation statements from
The Provident Bank. Any of the following features
may be established through your ONE Fund account
application or by contacting your registered
representative or ONE Fund.
30
<PAGE> 37
AUTOMATIC INVESTING You may make regular monthly or quarterly
...from your bank account investments through automatic charges to your
or pay check. bank account or, if your employer approves, from
your pay check. Once a plan is established, your
account will normally be charged on the 1st or
15th day of the month, as you choose.
AUTOMATIC REINVESTING Unless you indicate otherwise in your account
...of income and capital application, dividends and capital gains
gains. distributions are reinvested in additional shares
at no sales charge. You may elect to have
dividends and/or capital gains distributions paid
to you by check.
CROSS INVESTING You may elect to have your dividends or dividends
...of income and and capital gains distributions from one
capital gains into portfolio invested in another portfolio. To use
other portfolios. this service, the value of your account in the
paying portfolio must be at least $5,000.
TRANSFERRING You may transfer your account balances among the
...among the various portfolios in amounts of at least $50.
9 portfolios. There is currently no charge for transfers.
The transfer privilege is available in any state
where it may legally be made. ONE Fund reserves
the right to limit the number, frequency, method
or amount of transfers or to impose charges on
transfers. Transfers from any portfolio on any
one day may be limited to 1% of the previous
day's total net assets of that portfolio if ONE
Fund or the Adviser, in its or their discretion,
believes that the portfolio might otherwise be
damaged.
TELEPHONE TRANSACTIONS If you have previously authorized it in writing,
You must preauthorize you or your registered representative may do the
in writing. following transactions by telephoning ONE Fund at
1-800-578-8078:
-- Make transfers among the portfolios as
provided above under "Transferring."
-- Change the amount of automatic investments,
or discontinue them as provided above under
"Automatic Investing."
-- Change your election for payment of dividends
and capital gains as provided above under
"Automatic Reinvesting" and "Cross
Investing."
-- Redeem your shares as provided under "By
Telephone"on page 33. Initiate, change or
discontinue automatic redemptions of your
shares as provided under "Automatically" on
page 34.
-- Change your address on our records.
31
<PAGE> 38
Telephone transaction requests received after 4
p.m. Eastern time will be made at the net asset
values computed at the close of the following
business day. ONE Fund and its transfer agent
will honor telephone transaction instructions
from anyone giving such instructions who is able
to provide the personal identifying information
requested, but we reserve the right to refuse to
honor any such request if that seems prudent. ONE
Fund will use reasonable procedures to confirm
that telephone instructions are genuine. If we do
not, ONE Fund may be liable for any losses due to
unauthorized or fraudulent instructions. ONE Fund
will send you a written confirmation of each
telephone transaction. During periods of drastic
market fluctuations or technical difficulties, it
might be difficult to execute telephone
transactions. In such situations, you may need to
send written instructions to ONE Fund. Telephone
transaction privileges may be modified or
discontinued at any time.
AUTOMATIC TRANSFERS You may automatically transfer shares (in
... among the 9 portfolios. increments of $50 or more) among any of the
portfolios. This will occur on or about the 10th
day of each month. Automatic transfers may be
used, for example, to implement a
"dollar-cost-averaging" investment strategy.
SALES CHARGE ON No sales charge applies for transfers to a
CERTAIN TRANSFERS portfolio having a sales charge equal to or less
than that of the portfolio from which the
transfer is made. For transfers from a portfolio
with a lower sales charge to one with a higher
sales charge, an additional charge is made equal
to the difference between the sales charge for
the portfolio being purchased and any sales
charges that previously applied to the account
balance being transferred.
CHECK WRITING You may write checks against the balance of your
...for the Money Market Money Market Portfolio account. Checks will be
Portfolio. provided free, upon request. You may not write a
check for less than $100. Checks will be written
through The Provident Bank. Provident will charge
$15 for any check that is not honored because of
an insufficient Money Market Portfolio account
balance. Checks may not be written against
account balances held for less than 15 days. ONE
Fund reserves the right to amend, suspend or
discontinue check-writing privileges at any time
without prior notice.
32
<PAGE> 39
REDEEMING SHARES
Payment is normally You may redeem your shares at any time by
sent within contacting ONE Fund or the broker-dealer through
3 business days. whom you purchased your shares. If you are no
longer serviced by an authorized registered
representative, you may contact ONESCO's
principal office by calling 1-800-578-8078, or by
writing to P. O. Box 371, Cincinnati, Ohio 45201.
The price you receive for redeemed shares is the
next net asset value after your request is
received. Payment is normally sent within 3
business days. However, the proceeds of
redemption will not be sent until after your
check for your investment has cleared (which may
take up to 15 days). (Note also, the contingent
deferred sales charge of 0.5% on certain
redemptions, within 2 years of purchase with no
initial sales charge, of investments of $1
million or more as described under "Sales
Charges" on page 28.)
REQUEST IN WRITING When making a written request for redemption,
specify the name of the portfolio, the number of
shares or dollar amount to be redeemed (if less
than your entire account), your name and address,
account number and your signature. In addition,
(a) for any redemption over $50,000, or (b) for
redemptions of $50,000 or less where the check is
to be paid or mailed to someone other than you at
your address of record, a signature guarantee is
required. You may obtain a signature guarantee
from a bank or savings & loan that is federally
insured or from a member firm of the National
Association of Securities Dealers, Inc., or any
other eligible guarantor institution. Additional
documentation may be required for redemption of
shares held in corporate, partnership or
fiduciary accounts.
BY TELEPHONE As provided under "Telephone Transactions" on
page 31, you or your registered representative
may call ONE Fund to redeem up to $50,000. You
may pre-authorize that the proceeds be (a) in a
check, payable to you and mailed to your address
of record, or (b) by wire to your bank account.
Checks will normally be mailed 3 business days,
and no more than 7 days, after your request. Wire
transfers to your bank account will normally be
made the next business day. Wire proceeds may not
be for less than $1,000. The Provident Bank will
deduct a fee (presently $10) from the proceeds of
each wire redemption.
33
<PAGE> 40
AUTOMATICALLY If your account is $5,000 or more, you may
establish an automatic withdrawal plan. More than
one plan may be set up if your account is at
least $10,000. Under each plan, you may make
automatic withdrawals for $50 or more each at
specified intervals. Automatic withdrawals are
made on or about the 10th day of each designated
month and, if withdrawals are to be made
semimonthly, also on or about the 25th day of
each month. Additional purchases (other than to
the Money Market Portfolio) may be inadvisable,
when an automatic withdrawal plan is in effect,
because of sales charges and possible tax
liabilities. If, due to your redemptions, your
account balance is less than $300 (or a larger
amount specified by the Board of Directors), ONE
Fund may choose to close your account by
redeeming your shares and sending you the
proceeds. ONE Fund will give you at least 30
days' written notice before closing your account,
and you may purchase additional ONE Fund shares
to avoid the closing.
FUND PERFORMANCE
From time to time, the current yield, average
annual total return and cumulative total returns
for the portfolios will be advertised. The
results might be compared to other similar mutual
funds or unmanaged indices.
For the Money Market Portfolio, yield refers to
the income generated by an investment in the
portfolio over a recent 7-day period. This income
is then "annualized" by assuming that the same
amount of income is generated over a 52-week
period. "Effective" yield is calculated similarly
but, when annualized, the income earned by an
investment in the portfolio is assumed to be
reinvested. The effective yield will be slightly
higher than the yield because of the compounding
effect of this assumed reinvestment. For the
other portfolios, yield is calculated by dividing
a portfolio's annualized net investment income
per share during a recent 30-day period by the
public offering price per share (including the
maximum sales charge) on the last day of that
period.
Average annual total return is based on a
hypothetical $1,000 investment, reflecting the
reinvestment of all dividends and distributions
and the impact of the maximum sales charge at the
beginning of each 1-, 5- and 10- year period
shown. Cumulative total return reflects the
aggregate performance of a portfolio, expressed
as a dollar amount change, during the period.
ALL PERFORMANCE QUOTATIONS ARE BASED ON
HISTORICAL INVESTMENT PERFORMANCE AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE.
34
<PAGE> 41
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 42
ONE FUND, INC.
One Financial Way
Cincinnati, Ohio 45242
Telephone 1-800-578-8078
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1996
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the prospectus of ONE Fund, Inc. ("ONE Fund") as amended
November 1, 1996.
To obtain a free copy of ONE Fund's prospectus, call or write ONE Fund at the
toll-free telephone number or the address shown above.
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Page Table of Contents
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3 ONE Fund
3 ONE Fund Performance
Current Yield of Money Market Portfolio
Current Yield of Tax-Free Income, Income and Income & Growth Portfolios
Total Return
5 Portfolio Turnover
7 Investment Restrictions
(Fundamental)
(Nonfundamental)
10 Investment Policies
Money Market Instruments
Repurchase Agreements
Reverse Repurchase Agreements
Hedging Transactions
Covered Call Options and Put Options
Risk Factors with Options
Futures Contracts
Options on Futures Contracts and Financial Indexes
Risk Factors with Futures, Options on Futures and Options on Indexes
Risk Factors with Foreign Investments
Foreign Currency Hedging Transactions
Risk Factors with High-Yield, High-Risk Securities
17 Management of ONE Fund
Directors and Officers
Compensation of Directors
Shareholders' Meetings
Controlling Persons and Principal Shareholders
Investment Advisory and Other Services
22 Brokerage Allocation
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<TABLE>
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23 Purchase and Redemption of Shares
Reducing the Sales Charge
25 Tax Status
26 Underwriters
26 Experts
26 Legal Counsel
27 Financial Statements
48 Appendix
Debt Security Ratings
</TABLE>
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ONE FUND
ONE Fund is an open-end diversified management investment company which
presently consists of 9 separate portfolios - Money Market Portfolio, Tax-Free
Income Portfolio, Income Portfolio, Income & Growth Portfolio, Growth Portfolio,
Core Growth, Small Cap Portfolio, International Portfolio and Global Contrarian
Portfolio. The investments held by each portfolio are maintained separately from
those held by the other portfolios. ONE Fund was incorporated in Maryland on
April 24, 1992. The Money Market, Income, Income & Growth, and Growth Portfolios
were first offered in August 1992, the International Portfolio in May 1993, the
Tax-Free Income, Small Cap and Global Contrarian Portfolios in November 1994,
and the Core Growth Portfolio in November 1996.
The investment and reinvestment of ONE Fund assets other than International and
Global Contrarian Portfolio assets is directed by ONE Fund's investment adviser,
Ohio National Investments, Inc. (the "Adviser"), a wholly-owned subsidiary of
The Ohio National Life Insurance Company ("ONLI"). The Adviser is also the
investment adviser to Ohio National Fund, Inc. ("ONF"), a mutual fund formed by
ONLI to support variable benefits under variable annuities and variable life
insurance policies written by ONLI and its subsidiary, Ohio National Life
Assurance Corporation. The principal business address of all these Ohio National
companies is One Financial Way, Cincinnati, Ohio 45242. The investment and
reinvestment of Core Growth Portfolio assets is managed by Pilgrim Baxter &
Associates, Ltd. ("PBA") as sub-adviser. The principal business address of PBA
is 1255 Drummers Lane, Wayne, Pennsylvania 19087. The investment and
reinvestmeent of International and Global Contrarian Portfolio assets is managed
by Societe Generale Asset Management Corp. ("SGAM") as sub-adviser. The
principal business address of SGAM is 1221 Avenue of the Americas, New York, New
York 10020.
The shares of each portfolio, when issued, will be fully paid and
non-assessable, have no preemptive, conversion, cumulative dividend or similar
rights, and are freely transferable. ONE Fund shares do not have cumulative
voting rights, which means the holders of more than half of the ONE Fund shares
voting for election of directors can elect all of the directors if they so
choose. In such event, the holders of the remaining shares would not be able to
elect any directors.
ONE FUND PERFORMANCE
ONE Fund may distribute sales literature using graphs, charts, tables or
examples comparing the performance of its portfolios to the Consumer Price Index
or to established market indices including, but not limited to, the Dow Jones
Industrial Average, the Standard & Poor's 500 Index, IBC's Money Fund Reports,
one or more of Lehman Brothers Bond Indices, Value Line Composite Index, New
York Stock Exchange Composite Index, Russell 2000 Index, Morgan Stanley Europe
Australia and Far East Index, Morgan Stanley World Index, American Stock
Exchange Index, National Association of Securities Dealers Automated Quotations
Composite Index, Investors Business Daily 6000 Index, or other mutual funds
having investment objectives similar to the portfolio being compared. These
comparisons may include graphs, charts, tables or examples. The average total
return and cumulative total returns for each portfolio may also be advertised.
ONE Fund may also advertise the performance rankings assigned to certain
portfolios or their subadvisers by various statistical services, including
Morningstar, Inc. and Lipper Analytical Services, Inc., or as they appear in
various publications including The Wall Street Journal, Investors Business
Daily, The New York Times, Barron's, Forbes, Fortune, Business Week, Financial
Services Week, Financial World, Kiplinger's Personal Finance and Money Magazine.
The prospectus sets forth in tabular form, under the caption "Financial
Highlights" certain information concerning ONE Fund and its individual
portfolios. The following discussion describes
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the methods of calculating current yields and total return, and states ONE
Fund's policy with respect to each portfolio's turnover rate.
CURRENT YIELD OF MONEY MARKET PORTFOLIO
Current yield quotations for the Money Market Portfolio are based on that
portfolio's net investment income for a seven-day period and exclude any
realized or unrealized gains or losses on portfolio securities. Current yield is
computed by determining the net change (exclusive of realized gains and losses
from the sale of securities and unrealized appreciation and depreciation) in the
value of a hypothetical account having a balance of one share at the beginning
of such seven-day period, dividing such net change in account value by the value
of the account at the beginning of the period, and annualizing this quotient on
a 365-day basis. The net change in account value reflects the value of any
additional shares (or fraction thereof) purchased with dividends from the
original share in the account during the seven-day period, any dividends
declared on such original share and any such additional shares during the
period, and expenses accrued during the period. ONE Fund may also disclose the
effective yield of the Money Market Portfolio for a seven-day period for which
the current annualized yield is computed by expressing the unannualized return
on a compounded, annualized basis.
CURRENT YIELD OF TAX-FREE INCOME, INCOME, AND INCOME & GROWTH PORTFOLIOS
Current yield for these three portfolios is calculated by dividing the net
investment income per share earned during a recent 30-day period by the
portfolio's maximum offering price on the last day of the period, and
annualizing the result (assuming compounding of interest) in order to arrive at
an annual percentage rate. In some instances, it may be necessary to use an
estimate of the expected dividends and expenses. When estimates are used to
calculate yields, actual dividends and expenses for that period may be different
because the composition of the portfolio may change, resulting in a change in
actual yield. When yield is used in sales literature for these portfolios, their
total return will also be shown.
TOTAL RETURN
Total returns quoted in advertising reflect all aspects of a portfolio's
investment return, including the effects of reinvesting dividends and capital
gain distributions as well as changes in the portfolio's net asset value per
share over the period shown. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in a portfolio over a stated period, and then calculating the annual
compounded percentage rate that would have produced the same result had the rate
of growth or decline been constant over that period. While average annual
returns are a convenient means of comparing investment alternatives, no
portfolio will experience a constant rate of growth or decline over time.
The average annual compounded rate of return for a portfolio over a given period
is found by equating the initial amount invested to the ending redeemable value
using the following formula:
P(1 + T)n = ERV
where: P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV= the ending redeemable value of a hypothetical $1,000
beginning-of-period payment at the end of the period (or
fractional portion thereof).
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The average annual and aggregate total return rates for each of the portfolios
from its inception (assuming payment of the maximum applicable sales charge) and
for the year ended on June 30, 1996, are as follows:
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Avg. Annual Aggregate
One From From Inception
Year Inception Inception Date
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Money Market 5.18% 4.13% 16.93% 8/18/92
Tax-Free Income 6.59% 10.19% 13.56% 11/01/94
Income 4.61% 5.50% 19.33% 8/18/92
Income & Growth 14.50% 12.01% 47.30% 8/18/92
Growth 22.22% 16.27% 70.22% 8/18/92
Core Growth N/A N/A N/A 11/01/96
Small Cap 24.10% 19.86% 28.35% 11/01/94
International 18.65% 19.54% 67.13% 4/30/93
Global Contrarian 17.84% 12.33% 15.26% 11/01/94
</TABLE>
In addition to total return rates, advertising may reflect cumulative total
returns that simply reflect the change in value of an investment in a portfolio
over a period. This may be expressed as either a percentage change, from the
beginning to the end of the period, or the end-of-period dollar value of an
initial hypothetical investment. The cumulative total returns for each of the
portfolios from its inception and for the year ended on June 30, 1996 (assuming
a hypothetical initial investment of $1,000 and payment of the maximum
applicable sales charge) were as follows:
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One From Inception
Year Inception Date
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<S> <C> <C> <C>
Money Market $1,052 $1,169 8/18/92
Tax-Free Income $1,034 $1,136 11/01/94
Income $1,015 $1,193 8/18/92
Income & Growth $1,088 $1,473 8/18/92
Growth $1,161 $1,702 8/18/92
Core Growth N/A N/A 11/01/96
Small Cap $1,179 $1,280 11/01/94
International $1,127 $1,671 4/30/93
Global Contrarian $1,119 $1,153 11/01/94
</TABLE>
PORTFOLIO TURNOVER
Each portfolio has a different expected rate of portfolio turnover. However, the
rate of portfolio turnover will not be a limiting factor when the management of
ONE Fund deems it appropriate to purchase or sell securities for a portfolio,
except in the following circumstances. ONE Fund intends to comply with the
various requirements of the Internal Revenue Code so as to qualify as a
"regulated investment company" thereunder. Among such requirements is a
limitation of less than 30% of the amount of gross income which each portfolio
may derive from gains on the sale or other disposition of securities held for
less than three months. Accordingly, the ability of any portfolio to effect
certain portfolio transactions at a given time may be limited. ONE Fund's policy
with respect to each portfolio is as follows:
Money Market Portfolio - Since the assets of the Money Market Portfolio
consist of short-term instruments, replacement of portfolio securities
will occur frequently. However, since purchases are generally effected
with dealers or issuers on a net basis, it is not expected that the Money
Market Portfolio will incur significant brokerage commissions.
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Tax-Free Income Portfolio - Transactions in the securities of this
portfolio may be made without regard to the length of time particular
investments have been held if the Adviser believes that such transactions
will help achieve the overall objectives of the portfolio. Portfolio
securities may or may not be held to maturity. The rate of portfolio
turnover will vary from time to time, but is not expected to exceed 75%
annually. It was 8% for the last fiscal year.
Income Portfolio - The Income Portfolio will engage in transactions when
the Adviser believes that they will help to achieve the overall objectives
of this portfolio. Portfolio securities may or may not be held to
maturity. The rate of portfolio turnover will vary from time to time but
is not expected to exceed 50% annually. It was 9% for the last fiscal
year.
Income & Growth Portfolio - The rate of portfolio turnover will vary from
time to time but is not expected to exceed 50% annually. It was 7% for the
last fiscal year.
Growth Portfolio - Although this portfolio will not normally purchase
securities with the intention of obtaining short-term capital
appreciation, purchases and sales will be made whenever deemed prudent and
consistent with the investment objectives of the portfolio. During periods
of relatively stable market and economic conditions, it is anticipated
that the annual portfolio turnover rate of the Growth Portfolio is not
expected to exceed 75% annually. During periods when changing market or
economic conditions are foreseen, shifts in portfolio emphasis may cause
the rate of portfolio turnover to increase. The rate was 22% for the last
fiscal year.
Core Growth Portfolio - Although this portfolio will not normally engage
in short-term trading, turnover will tend to rise during periods of
economic turbulence. Under normal market conditions, the annual portfolio
turnover rate is not expected to exceed 100%.
Small Cap Portfolio - While this portfolio purchases and holds securities
with the goal of meeting its investment objectives, portfolio changes are
made whenever the Adviser believes they are advisable, usually without
reference to the length of time a security has been held. The engagement
in a number of short-term transactions may result in relatively high
portfolio turnover rates, but the rate is not normally expected to exceed
150%. It was 34% for the last fiscal year.
International Portfolio - Although this portfolio will not normally engage
in short-term trading, purchases and sales of securities will be made
whenever deemed appropriate to achieve the portfolio's objective of
long-term capital growth. The rate of portfolio turnover will not be a
limiting factor when portfolio changes are deemed appropriate to achieve
this portfolio's stated objective. Under normal circumstances, the
portfolio turnover rate for this portfolio is not expected to exceed 75%
annually. It was 20% for the last fiscal year.
Global Contrarian Portfolio - Because of the long-term growth objective
and the purchase of under-valued and out-of-favor securities, this
portfolio will generally tend to hold portfolio securities for a
relatively longer time with the expectation of eventual price
appreciation. As a result, the portfolio turnover rate is not expected to
exceed 50% annually. However, it could be substantially higher at times
due to repositioning of the portfolio. It was 26% for the last fiscal
year.
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INVESTMENT RESTRICTIONS
The prospectus lists the most significant investment restrictions to which ONE
Fund is subject. (See "About ONE Fund" in the prospectus.) A complete list of
ONE Fund's investment restrictions is shown below. The first nine investment
restrictions are fundamental policies that may not be changed without the
affirmative vote of the majority of the outstanding voting securities of ONE
Fund or a particular portfolio, as appropriate. A "majority vote" means the vote
of the lesser of (i) 67% of the shares represented at a meeting at which more
than 50% of the outstanding shares are represented or (ii) more than 50% of the
outstanding voting securities. With respect to the submission of a change in an
investment policy to the holders of outstanding voting securities of a
particular portfolio, such matter shall be deemed to have been effectively acted
upon with respect to that portfolio if a majority of the outstanding voting
securities of the portfolio vote for the approval of such matter,
notwithstanding (1) that the matter has not been approved by the holders of a
majority of the outstanding voting securities of any other portfolio affected by
the matter, and (2) that the matter has not been approved by the vote of a
majority of the outstanding voting securities of ONE Fund. Investment
restrictions 10 and following are nonfundamental. They may be changed by the
Board of Directors without shareholder approval.
ONE Fund may not issue senior securities, except to the extent that the
borrowing of money in accordance with restriction 4. or the purchase of reverse
repurchase agreements may constitute the issuance of a senior security, and each
portfolio of ONE Fund will not:
(Fundamental)
l. invest more than 5% of the value of its total assets in the
securities of any one issuer (except U.S. Government securities);
2. purchase more than l0% of the outstanding voting securities of any
one issuer, and the Money Market Portfolio will not acquire the
voting securities of any issuer except in connection with a merger,
consolidation or other reorganization;
3. invest more than 25% of the value of its total assets in any one
industry, except that the Money Market Portfolio may invest more
than 25% of the value of its total assets in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
or in certificates of deposit, bankers' acceptances, bank time
deposits or other obligations of banks, and the Tax-Free Income
Portfolio may invest more than 25% of its assets in municipal
securities; (For purposes of this restriction, ONE Fund considers
each foreign government to constitute an "industry." ONE Fund
interprets the word "bank," as used in this investment restriction,
to mean "domestic bank.")
4. borrow money, except by means of reverse repurchase agreements or,
for temporary or emergency purposes, from banks, and the aggregate
amount borrowed shall not exceed 5% of the value of the assets of
the portfolio (In the case of such borrowing, each portfolio may
pledge, mortgage or hypothecate up to 5% of its assets);
5. purchase or sell commodities or commodity contracts except that each
portfolio other than the Money Market Portfolio may, for hedging
purposes, purchase and sell financial futures contracts and options
thereon;
6. underwrite securities of other issuers except insofar as ONE
Fund may be considered an underwriter under the Securities Act of
l933 in selling portfolio securities;
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<PAGE> 49
7. purchase or sell real estate, including limited partnerships, except
that each portfolio may invest in securities secured by real estate
or interests therein or securities issued by companies which invest
in real estate or interests therein (For purposes of this
restriction, "real estate" does not include investments in readily
marketable notes or other evidence of indebtedness secured by
mortgages or deeds of trust relating to real property);
8. lend money or other assets to other persons, in excess of 5% of a
portfolio's total assets, except by the purchase of obligations in
which the portfolio is authorized to invest and by entering into
repurchase agreements (Portfolio securities may be loaned if
collateral values are continuously maintained at no less than 100%
by marking to market daily);
9. purchase securities of other investment companies, except in
connection with a merger, consolidation or reorganization, or except
the purchase by any portfolio other than the Money Market or
Tax-Free Income Portfolio of the securities of closed-end investment
companies if after the purchase: (i) the portfolio does not own more
than 3% of the total outstanding voting stock of the other
investment company or (ii) the value of the securities of all
investment companies held by such portfolio does not exceed 10% of
the value of the total assets of that portfolio (Purchases of
investment company securities will be made (a) only on the open
market or through dealers or underwriters receiving the customary
sales loads, or (b) as part of a merger, consolidation or plan of
reorganization);
(Nonfundamental)
10. invest more than 15% (or such lesser amount as might be required by
federal or state regulatory authorities, currently 10%) of the value
of its assets in securities or other investments, including
repurchase agreements maturing in more than seven days, that are not
readily marketable;
11. purchase or sell put or call options, except that each
portfolio other than the Money Market Portfolio may, for hedging
purposes, (a) write call options traded on a registered national
securities exchange if the portfolio owns the underlying securities
subject to such options, and purchase call options for the purpose
of closing out positions in options it has written; (b) purchase put
options on securities owned, and sell such options in order to close
its positions in put options; (c) purchase and sell financial
futures contracts and options thereon; and (d) purchase and sell
financial index options; provided, however, that no option or
futures contract shall be purchased or sold if, as a result, more
than one-third of the total assets of the portfolio would be hedged
by options or futures contracts, and no more than 5% of any
portfolio's total assets, at market value, may be used for premiums
on open options and initial margin deposits on futures contracts;
12. other than the International and Global Contrarian Portfolios,
invest in securities of foreign issuers except that (a) each of the
Income, Income & Growth, Growth, Core Growth and Small Cap
Portfolios may invest up to 20% of its assets in securities of
foreign issuers (including foreign governments or political
subdivisions, agencies or instrumentalities of foreign governments)
American Depository Receipts, and securities of United States
domestic issuers denominated in foreign currency, and (b) the Money
Market Portfolio may invest up to 50% of its assets in such
securities, provided they are denominated in U.S. dollars and held
in custody in the United States; (For purposes of this restriction,
U.S. dollar denominated depository receipts traded in domestic
markets do not constitute foreign securities.)
13. sell securities short or purchase securities on margin except
such short-term credits as are required to clear transactions;
14. participate on a joint or joint and several basis in any
trading account in securities;
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15. purchase securities for the purpose of exercising control or
management;
16. invest in any oil, gas or other mineral exploration, development or
leasing program;
17. invest in warrants, valued at the lower of cost or market,
exceeding 5% of its net assets (Warrants not listed on the New York
or American Stock Exchange shall not exceed 2% of net assets);
18. invest more than 5% of its total assets in repurchase agreements;
19. invest more than 5% of its total assets in securities on a "when
issued" basis;
20. as to the International and Global Contrarian Portfolios, invest
more than 20% of its assets in securities of issuers located in any
one foreign country, except that up to an additional 5% of its
assets may be invested in securities of issuers located in each of
any three of Australia, Canada, France, Germany, Japan or the United
Kingdom, or
21. invest in foreign currency contracts or options except that, in
order to hedge against changes in the exchange rates of foreign
currencies in relation to the U.S. dollar, each portfolio other than
the Money Market and Tax-Free Income Portfolios may engage in
forward foreign currency contracts, foreign currency options and
foreign currency futures contracts in connection with the purchase,
sale or ownership of specific securities (but not more than 5% of a
portfolio's assets may be invested in such currency hedging
contracts).
In addition to the above restrictions, in order to comply with Rule 2a-7 under
the Investment Company Act of 1940, no more than 5% of the assets of the Money
Market Portfolio will be invested in "second-tier" short-term debt instruments,
that is those receiving the second highest rating by any two nationally
recognized statistical rating organizations ("NRSRO's") (or by one NRSRO if (a)
that is the only NRSRO having rated the security or (b) one other NRSRO has
given the security its highest rating), or whose issuer has received such a
rating or ratings with respect to a class of short-term debt obligations that is
now comparable in priority and security to those to be purchased. In addition,
not more than $1 million (or 1% of this portfolio's assets, if greater) may be
invested in the second-tier instruments of any one issuer.
Under normal market conditions, at least 65% of the assets of the International
Portfolio and at least 25% of the assets of the Global Contrarian Portfolio will
be invested in foreign securities, including securities of issuers in at least
three different foreign countries. As of the date of this Statement of
Additional Information, the Board of Directors has approved investment by those
portfolios other than the Money Market and Tax-Free Income Portfolios in 50
countries with developed securities markets, including the following countries
with developed economies: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Israel, Italy, Japan, Luxembourg, Netherlands, New
Zealand, Norway, Spain, Sweden, Switzerland and the United Kingdom; and the
following countries with developing economies: Argentina, Bangla Desh, Brazil,
Chile, China (Shanghai and Shenzhen Exchanges), Czech Republic, Egypt, Greece,
Hong Kong, Hungary, Indonesia, Jordan, Malaysia, Mexico, Morocco, Pakistan,
Peru, Philippines, Poland, Portugal, Singapore, South Africa, South Korea, Sri
Lanka, Taiwan, Thailand, Turkey Uruguay, Venezuela and Zimbabwe.
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<PAGE> 51
INVESTMENT POLICIES
The following descriptions of money market instruments supplement the investment
objectives and policies (see "Money Market Portfolio") set forth in ONE Fund's
prospectus. The Money Market Portfolio will invest extensively in these
instruments. The other portfolios may invest in such instruments to a very
limited extent (to invest otherwise idle cash) or on a temporary basis for
defensive purposes. The debt security ratings referred to in the prospectus in
connection with the investment policies of the portfolios are defined in the
Appendix to this Statement of Additional Information.
MONEY MARKET INSTRUMENTS
U.S. Government Obligations - Bills, notes, bonds and other debt
securities issued or guaranteed as to principal or interest by the United
States or by agencies or authorities controlled or supervised by and
acting as instrumentalities of the U.S. Government established under
authority granted by Congress, including, but not limited to, the
Government National Mortgage Association, the Tennessee Valley Authority,
the Bank for Cooperatives, the Farmers Home Administration, and Federal
Home Loan Banks. Some obligations of U.S. Government agencies, authorities
and other instrumentalities are supported by the full faith and credit of
the U.S. Treasury; others by the right of the issuer to borrow from the
U.S. Treasury; and others only by the credit of the issuer. Certain of the
foregoing may be purchased on a "when issued" basis at which time the rate
of return will not have been set.
Certificates of Deposit - Certificates issued against funds deposited in a
bank for a definite period of time, at a specified rate of return.
Normally they are negotiable.
Bankers' Acceptances - Short-term credit instruments issued by
corporations to finance the import, export, transfer or storage of goods.
They are termed "accepted" when a bank guarantees their payment at
maturity and reflect the obligation of both the bank and drawer to pay the
face amount of the instrument at maturity.
Commercial Paper - Promissory notes issued by corporations to finance
their short-term credit needs. Commercial paper obligations may include
variable amount master demand notes. Variable amount master demand notes
are obligations that permit the investment of fluctuating amounts by the
portfolio at varying rates of interest pursuant to direct arrangements
between the portfolio, as lender, and the borrower. These notes permit
daily changes in the amounts borrowed. The portfolio has the right to
increase the amount under the note at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without penalty.
Because variable amount master demand notes are direct lending
arrangements between the lender and the borrower, it is not generally
contemplated that such instruments will be traded, and there is no
secondary market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at face value, plus accrued
interest, at any time. In connection with a master demand note
arrangement, the Adviser will monitor, on an ongoing basis, the earning
power, cash flow, and other liquidity ratios of the issuer and its ability
to pay principal and interest on demand. While master demand notes, as
such, are not typically rated by credit rating agencies, if not so rated
the portfolio may invest in them only if at the time of an investment the
issuer meets the criteria set forth above for all other commercial paper
issuers. Such notes will be considered to have a maturity of the longer of
the demand period or the period of the interest guarantee.
Corporate Obligations - Bonds and notes issued by corporations in order to
finance longer-term credit needs.
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REPURCHASE AGREEMENTS
Under a repurchase agreement, the portfolio purchases a security and obtains a
simultaneous commitment from the seller (a member bank of the Federal Reserve
System or a government securities dealer recognized by the Federal Reserve
Board) to repurchase the security at a mutually agreed upon price and date. It
may also be viewed as a loan of money by the portfolio to the seller. The resale
price is normally in excess of the purchase price and reflects an agreed upon
market rate. The rate is effective for the period of time the portfolio is
invested in the agreement and unrelated to the coupon rate on the purchased
security. The period of these repurchase agreements will usually be short, from
overnight to one week, and at no time will the portfolio invest in repurchase
agreements for more than one year. These transactions afford an opportunity for
the portfolio to earn a return on temporarily available cash. Although
repurchase agreements carry certain risks not associated with direct investments
in securities, ONE Fund intends to enter into repurchase agreements only with
financial institutions believed by the Adviser to present minimal credit risks
in accordance with criteria established by ONE Fund's Board of Directors. The
Adviser will review and monitor the creditworthiness of such institutions under
the Board's general supervision. ONE Fund will only enter into repurchase
agreements pursuant to a master repurchase agreement that provides that all
transactions be fully collateralized and that the collateral be in the actual or
constructive possession of ONE Fund. The agreement must also provide that ONE
Fund will always receive as collateral securities whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the portfolio in each agreement, and the portfolio will make payment for such
securities only upon physical delivery or evidence of book entry transfer to the
account of the custodian. If the seller were to default, the portfolio might
incur a loss if the value of the collateral securing the repurchase agreement
declines and may incur disposition costs in connection with liquidating the
collateral. In addition, if bankruptcy proceedings are commenced with respect to
the seller of the security, realization upon the collateral by the portfolio may
be delayed or limited and a loss may be incurred if the collateral securing the
repurchase agreement declines in value during the bankruptcy proceedings.
REVERSE REPURCHASE AGREEMENTS
Under a reverse repurchase agreement, a portfolio sells a debt security and
agrees to repurchase it at an agreed upon time and at an agreed upon price. The
portfolio retains record ownership of the security and the right to receive
interest and principal payments thereon. At an agreed upon future date, the
portfolio repurchases the security by remitting the proceeds previously
received, plus interest. The difference between the amount the portfolio
receives for the security and the amount it pays on repurchases is deemed to be
payment of interest. The portfolio will maintain in a segregated custodial
account cash, Treasury bills or other U.S. Government securities having an
aggregate value equal to the amount of such commitment to repurchase including
accrued interest, until payment is made. In certain types of agreements, there
is no agreed-upon repurchase date and interest payments are calculated daily,
often based on the prevailing overnight repurchase rate. The Securities and
Exchange Commission views these transactions as collateralized borrowings by the
portfolio and the portfolio will abide by the limitations set out in fundamental
investment restriction number 4 with respect to the borrowing of money.
11
<PAGE> 53
HEDGING TRANSACTIONS
The purpose of hedging transactions using put and call options on individual
securities, financial futures contracts, and options on such contracts and on
financial indexes, all to the extent provided in investment restrictions 5 and
11, is to reduce the risk of fluctuation of portfolio securities values or to
take advantage of expected market fluctuations. However, while such transactions
are defensive in nature and are not speculative, some risks remain.
The use of options and futures contracts may help ONE Fund to gain exposure or
to protect itself from changes in market values. For example, ONE Fund may have
a substantial amount of cash at the beginning of a market rally. Conventional
procedures of purchasing a number of individual issues requires time and may
result in missing a significant market movement. By using futures contracts, ONE
Fund can obtain immediate exposure to the market. The buying program will then
proceed and, once it is completed (or as it proceeds), the futures contracts
will be closed. Conversely, in the early stages of a market decline, market
exposure can be promptly offset by selling futures contracts, and individual
securities can be sold over a longer period under cover of the resulting short
contract position.
COVERED CALL OPTIONS AND PUT OPTIONS
In writing (i.e., selling) "covered" call options on securities owned by a
portfolio, the portfolio gives the purchaser of the call option the right to
purchase the underlying securities owned by the portfolio at a specified
"exercise" price at any time prior to the expiration of the option, normally
within nine months. In purchasing put options on securities owned by a
portfolio, the portfolio pays the seller of the put option a premium for the
right of the portfolio to sell the underlying securities owned by the portfolio
at a specified exercise price prior to the expiration of the option.
Whenever a portfolio has a covered call option outstanding, the underlying
securities will be segregated by ONE Fund's custodian and held in an escrow
account to assure that such securities will be delivered to the option holder if
the option is exercised. While the underlying securities are subject to the
option, the portfolio remains the record owner of the securities, entitling it
to receive dividends and to exercise any voting rights. In order to terminate
its position as the writer of a call option or the purchaser of a put option,
the portfolio may enter into a "closing" transaction, which is the purchase of a
call option or sale of a put option on the same underlying securities and having
the same exercise price and expiration date as the option previously sold or
purchased by the portfolio.
RISK FACTORS WITH OPTIONS
The purchaser of an option pays the option writer a "premium" for the option. In
the case of a covered call option written by a portfolio, if the purchaser does
not exercise the call option, the premium will generate additional capital gain
to the portfolio. If the market price of the underlying security declines, the
premium received for the call option will reduce the amount of the loss the
portfolio would otherwise incur. However, if the market price of the underlying
security rises above the exercise price and the call option is exercised, the
portfolio will lose its opportunity to profit from that portion of the rise
which is in excess of the exercise price plus the option premium. Therefore, ONE
Fund will write call options only when the Adviser believes that the option
premium will yield a greater return to the portfolio than any capital
appreciation that might occur on the underlying security during the life of the
option.
12
<PAGE> 54
In the case of a put option purchased by a portfolio, if the market price of the
underlying security remains or rises above the exercise price of the option, the
portfolio will not exercise the option and the premium paid for such option will
reduce the gain the portfolio would otherwise have earned. Conversely, if the
market price of the underlying security falls below the exercise price less the
premium paid for the option, the portfolio will exercise the option, thereby
reducing the loss the portfolio would have otherwise suffered. Accordingly, a
portfolio will purchase put options only when the Adviser believes that the
market price of the underlying security is more likely to decrease than
increase.
Whenever a portfolio enters into a closing transaction, the portfolio will
realize a gain (or loss) if the premium plus commission it pays for a closing
call option is less (or greater) than the premium it received on the sale of the
original call option. Conversely, the portfolio will realize a gain (or loss) if
the premium it receives, less commission, for a closing put option is greater
(or less) than the premium it paid for the original put option. The portfolio
will realize a gain if a call option it has written lapses unexercised, and a
loss if a put option it has purchased lapses unexercised.
FUTURES CONTRACTS
Each portfolio, other than the Money Market Portfolio, may invest in two kinds
of financial futures contracts: stock index futures contracts and interest rate
futures contracts. Stock index futures contracts are contracts developed by and
traded on national commodity exchanges whereby the buyer will, on a specified
future date, pay or receive a final cash payment equal to the difference between
the actual value of the stock index on the last day of the contract and the
value of the stock index established by the contract multiplied by the specific
dollar amount set by the exchange. Futures contracts may be based on broad-based
stock indexes such as the Standard & Poor's 500 Index or on narrow-based stock
indexes. A particular index will be selected according to the Adviser's
investment strategy for the particular port- folio. An interest rate futures
contract is an agreement whereby one party agrees to sell and another party
agrees to purchase a specified amount of a specified financial instrument (debt
security) at a specified price at a specified date, time and place. Although
interest rate futures contracts typically require actual future delivery of and
payment for financial instruments, the contracts are usually closed out before
the delivery date. A public market exists in interest rate futures contracts
covering primarily the following financial instruments: U.S. Treasury bonds;
U.S. Treasury notes; Government National Mortgage Association (GNMA) modified
pass-through mortgage-backed securities; three-month U.S. Treasury bills; 90-day
commercial paper; bank certificates of deposit; and Eurodollar certificates of
deposit. It is expected that futures contracts trading in additional financial
instruments will be authorized.
At the time a portfolio enters into a contract, it sets aside a small portion of
the contract value in an account with ONE Fund's custodian as a good faith
deposit (initial margin) and each day during the contract period requests and
receives or pays cash equal to the daily change in the contract value (variable
margin). ONE Fund, its futures commission merchant and ONE Fund's custodian
retain control of the initial margin until the contract is liquidated.
OPTIONS ON FUTURES CONTRACTS AND FINANCIAL INDEXES
Instead of entering into a financial futures contract, a portfolio may buy an
option giving it the right to enter into such a contract at a future date. The
price paid for such an option is called a premium. A portfolio also may buy
options on financial indexes that are traded on securities exchanges. Options on
financial indexes react to changes in the value of the underlying index in the
same way that options on financial futures contracts do. All settlements for
options on financial indexes also are for cash.
Financial futures contracts, options on such contracts and options on financial
indexes will only be used for hedging purposes and will, therefore, be
incidental to ONE Fund's activities in the securities market. Accordingly,
portfolio securities subject to options, or money market instruments having the
market value of any futures contracts, will be set aside to collateralize the
options or futures contracts.
13
<PAGE> 55
RISK FACTORS WITH FUTURES, OPTIONS ON FUTURES AND OPTIONS ON INDEXES
One risk of entering into financial futures contracts, buying options on such
contracts and buying options on financial indexes is that there may not be
enough buyers and sellers in the market to permit the portfolio to close a
position when it wants to do so. In such event, besides continuing to be subject
to the margin requirements, the portfolio would experience a gain or loss to the
extent that the price movement of the securities subject to the hedge differed
from the position. To limit the risk, the portfolios will invest only where
there is an established secondary market.
A risk applicable to both futures contracts and related options is that changes
in the value of the contracts or option may not correlate with changes in the
underlying financial index or with changes in the value of the securities
subject to hedge or both. This failure may be due, in part, to temporary
activity of speculators in the futures markets. To the extent there is not a
perfect correlation, changes in the value of a portfolio's assets would not be
offset by changes in the value of the contracts and options it had bought.
When a portfolio buys an option on a futures contract or an option on a
financial index, its risk of loss is limited to the amount of the premium paid.
When a portfolio enters into a futures contract, there is no such limit.
However, the loss on an options contract would exceed that of a futures contract
if the change in the value of the index does not exceed the premium paid for the
option.
The success of a hedge depends upon the Adviser's ability to predict increases
or decreases in the relevant financial index. If this expectation proves
incorrect, a portfolio could suffer a loss, and would be better off if those
futures contracts or options had not been purchased. The skills involved in
determining whether to enter into a futures contract or purchase or sell an
option are different from those involved in determining whether to buy or sell a
security. The Adviser has had only limited experience using financial futures
contracts, options on financial futures and options on financial indexes.
Because of the low margin deposits required, futures trading involves a high
degree of leverage. As a result, a relatively small price movement in a futures
contract may result in immediate and substantial gain or loss. A purchase or
sale of a futures contract may result in losses in excess of the amount invested
in the futures contract. However, the portfolio would presumably have sustained
comparable losses if, instead of the futures contract, it had invested in the
underlying financial instrument.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no more
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movements during a particular trading day and therefore does
not limit potential losses because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures and subjecting some futures
traders to substantial losses.
RISK FACTORS WITH FOREIGN INVESTMENTS
Investments in foreign securities involve considerations not normally associated
with investing in domestic issuers. Such factors include changes in currency
exchange rates, currency exchange control regulations, the possibility of
seizure or nationalization of companies, political or economic instability,
imposition of unforeseen taxes, the possibility of financial information being
difficult to obtain or difficult to interpret under foreign accounting
standards, the necessity of trading in markets that in
14
<PAGE> 56
relation to U.S. markets may be less efficient and have available less
information concerning issuers, or the imposition of other restraints that might
adversely affect investments.
In selecting foreign investments, each portfolio seeks to minimize these
factors. It seeks to invest in securities having investment characteristics and
qualities comparable to the kinds of domestic securities in which it invests.
Each portfolio seeks to avoid investments in countries with volatile or unstable
political or economic conditions.
The portfolios may invest in securities of foreign issuers either directly or in
the form of American Depository Receipts (ADRs). ADRs are securities typically
issued by an American bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. ADRs enable foreign
stocks to be traded and cleared on United States markets. They bear the same
investment risks as the underlying foreign stocks. The portfolios may invest in
both sponsored and unsponsored ADRs. There may be less financial and other
information available for unsponsored ADRs than for sponsored ADRs.
Since investments in foreign securities, other than U.S. dollar denominated
securities, involve currencies of foreign countries, the value of a portfolio's
assets, as measured in U.S. dollars may be affected favorably or unfavorably by
changes in currency exchange rates and in currency exchange control regulations.
FOREIGN CURRENCY HEDGING TRANSACTIONS
In order to hedge against changes in the exchange rates of foreign currencies in
relation to the U.S. dollar, each portfolio, other than the Money Market and
Tax-Free Income Portfolios, may engage, to the extent permitted in restriction
22, above, in forward foreign currency contracts, foreign currency options and
foreign currency futures contracts in connection with the purchase, sale or
ownership of a specific security.
The portfolios generally conduct their foreign currency exchange transactions on
a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange
currency market. When a portfolio purchases or sells a security denominated in a
foreign currency, it may enter into a forward foreign currency contract
("forward contract") for the purchase or sale, for a fixed amount of dollars, of
the amount of currency involved in the underlying security transaction. A
forward contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
In this manner, a portfolio may obtain protection against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the foreign currency during the period between the date the security is
purchased or sold and the date upon which payment is made or received. Although
such contracts tend to minimize the risk of loss due to the decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
which might result should the value of such currency increase.
Forward contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. Generally
a forward contract has no deposit requirement, and no commissions are charged.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference between the prices at which they buy
and sell various currencies. When the portfolio manager believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, a portfolio may enter into a forward contract to sell,
for a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of that portfolio's securities denominated in such foreign
currency. No portfolio will enter into such forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the portfolio to deliver an amount of foreign currency in excess of the
value of its assets denominated in that currency.
15
<PAGE> 57
At the consummation of a forward contract for delivery by a portfolio of a
foreign currency, the portfolio may either make delivery of the foreign currency
or terminate its contractual obligation to deliver the foreign currency by
purchasing an offsetting contract obligating it to purchase, at the same
maturity date, the same amount of the foreign currency. If the portfolio chooses
to make delivery of the foreign currency, it may be required to obtain such
currency through the sale of its securities denominated in such currency or
through conversion of other portfolio assets into such currency. It is
impossible to forecast the market value of portfolio securities at the
expiration of the forward contract. Accordingly, it may be necessary for the
portfolio to purchase additional foreign currency on the spot market (and bear
the expense of such purchase) if the market value of the security is less than
the amount of foreign currency the portfolio is obligated to deliver, and if a
decision is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary for the portfolio to sell on the spot market
some of the foreign currency received on the sale of its hedged security if the
security's market value exceeds the amount of foreign currency the portfolio is
obligated to deliver.
If the portfolio retains the hedged security and engages in an offsetting
transaction, it will incur a gain or loss to the extent that there has been
movement in spot or forward contract prices. If a portfolio engages in an
offsetting transaction, it may subsequently enter into a new forward contract to
sell the foreign currency. Should forward prices decline during the period
between the portfolio's entering into a forward contract for the sale of a
foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, the portfolio will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
portfolio will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
Buyers and sellers of foreign currency options and futures contracts are subject
to the same risks previously described with respect to options and futures
generally (see "Risk Factors with Options" and "Risk Factors with Futures,
Options on Futures and Options on Indexes," above). In addition, settlement of
currency options and futures contracts with respect to most currencies must
occur at a bank located in the issuing nation. The ability to establish and
close out positions on such options is subject to the maintenance of a liquid
market that may not always be available. Currency rates may fluctuate based on
political considerations and governmental actions as opposed to purely economic
factors.
Predicting the movements of foreign currency in relation to the U.S. dollar is
difficult and requires different skills than those necessary to predict
movements in the securities market. There is no assurance that the use of
foreign currency hedging transactions can successfully protect a portfolio
against loss resulting from the movements of foreign currency in relation to the
U.S. dollar. In addition, it must be remembered that these methods of protecting
the value of a portfolio's securities against a decline in the value of a
currency do not eliminate fluctuations in the underlying prices of the
securities. They simply establish rates of exchange which can be achieved at
some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to the decline in the value of the hedged
currency, at the same time they tend to limit any potential gain which might
result should the value of such currency increase.
RISK FACTORS WITH HIGH-YIELD, HIGH-RISK SECURITIES
The high-yield, high-risk securities in which the Income Portfolio may invest up
to 15% of its assets present special risks to investors. The market value of
lower-rated securities may be more volatile than that of higher-rated securities
and generally tends to reflect the market's perception of the creditworthiness
of the issuer and short-term market developments to a greater extent than more
highly-rated securities, which primarily reflect fluctuations in prevailing
interest rates. Periods of economic uncertainty and change can be expected to
result in increased volatility in the market value of lower-rated securities.
Further, such securities may be subject to greater risks of loss of income and
principal, particularly in the event of adverse economic changes or increased
interest rates, because their issuers generally are not as financially secure or
as creditworthy as issuers of higher-rated
16
<PAGE> 58
securities. Additionally, to the extent that there is no national market system
for secondary trading of lower-rated securities, there may be a low volume of
trading in such securities which may make it more difficult to value or sell
those securities than higher-rated securities. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk securities, especially in a thinly
traded market.
Investors should recognize that the market for high-yield, high-risk securities
is a relatively recent development that has not been fully tested by a prolonged
economic recession. An economic downturn may severely disrupt the market for
such securities and cause financial stress to the issuers which may adversely
affect the value of such securities held by the Income Portfolio and the ability
of the issuers of such securities to pay principal and interest. A default by an
issuer may result in the Income Portfolio incurring additional expenses to seek
recovery of the amounts due it.
MANAGEMENT OF ONE FUND
DIRECTORS AND OFFICERS OF ONE FUND
The directors and officers of ONE Fund, together with information as to their
principal occupations during the past five years are listed below:
<TABLE>
<CAPTION>
Position with Principal Occupation
Name and address the Fund during past five years
- ---------------- ------------- ----------------------
<S> <C> <C>
Ronald L. Benedict* Secretary and Second Vice President and Counsel and
One Financial Way Director and Assistant Secretary, ONLI; Secretary
Cincinnati, Ohio of O.N. Investment Management Company
("ONIMCO")and of the Adviser;
Secretary and Director of ONF.
George E. Castrucci Director Business consultant and private
8355 Old Stable Road investor; Chairman & Director of
Cincinnati, Ohio Baldwin Piano & Organ Co.;
Director of ONF; Formerly
President and Chief Operating
Officer of Great American
Communications Co. and Chief
Executive Officer of Great
American Broadcasting Co.; Director
of Benchmark Savings Bank.
Maurice H. Kirby, Jr. Director Retired; Director of ONF.
6726 Farmbrook Drive Formerly Senior Vice
Cincinnati, Ohio President, First National Bank
of Cincinnati.
George M. Vredeveld Director Professor of Economics, University of
University of Cincinnati Cincinnati; Director of Center for
P.O. Box 210223 Economic Education; Private Consultant;
Cincinnati, Ohio Director of Benchmark Savings Bank.
Donald J. Zimmerman* President and Director and Senior Vice President
One Financial Way Director Insurance Operations and
Cincinnati, Ohio Secretary, ONLI; President and
Director of ONF.
</TABLE>
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<PAGE> 59
<TABLE>
<S> <C> <C>
Michael A. Boedeker Vice President Vice President, Fixed Income
One Financial Way Securities, ONLI; Vice President
Cincinnati, Ohio and Director of ONIMCO and of
the Adviser; Vice President
of ONF.
Joseph P. Brom Vice President Senior Vice President & Chief
One Financial Way Investment Officer, ONLI; President
Cincinnati, Ohio and Director of ONIMCO and of
the Adviser; Vice President of ONF.
David G. McClure Vice President Vice President, Variable Product
One Financial Way Sales, ONLI; Vice President and
Cincinnati, Ohio Director of ONIMCO and of the Adviser.
Stephen T. Williams Vice President Director of Securities, ONLI;
One Financial Way Vice President and Director of ONIMCO
Cincinnati, Ohio and of the Adviser; Vice President of ONF.
Dennis R. Taney Treasurer Mutual Funds Financial Operations
One Financial Way Director, ONLI; Treasurer of ONIMCO
Cincinnati, Ohio and of the Adviser; Treasurer of ONF
Amy D. Starkey Assistant Secretary Compliance Director for ONLI's affiliated
One Financial Way broker-dealers. Prior to February 1994
Cincinnati, Ohio was a full-time graduate student and from
September 1990 to September 1992
was a bank internal auditor.
</TABLE>
* Indicates Directors who are "Interested Persons" as defined by the Investment
Company Act of 1940, as amended.
COMPENSATION OF DIRECTORS
Directors not affiliated with ONLI, the Adviser or SGAM were compensated as
follows during the fiscal year ended June 30, 1996:
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
Name of Director from ONE Fund from Fund Complex*
- ---------------- ---------------------- -------------------
<S> <C> <C>
James E. Baker $2,300 $ 7,500
George E. Castrucci 4,600 15,000
Maurice H. Kirby, Jr. 4,600 15,000
George M. Vredeveld 2,300 7,500
</TABLE>
*The "Fund Complex" consists of ONE Fund and ONF.
Directors and officers of ONE Fund who are affiliated with ONLI or the Adviser
receive no compensation from the Fund Complex. ONE Fund has no pension,
retirement or deferred compensation plan for its directors or officers.
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<PAGE> 60
SHAREHOLDERS' MEETINGS
ONE Fund's by-laws provide that shareholders' meetings need only be held every
three years unless matters requiring shareholder approval should occur more
frequently. It is anticipated that shareholders' meetings will generally occur
every three years.
CONTROLLING PERSONS AND PRINCIPAL SHAREHOLDERS
Because of its ownership of ONE Fund shares, ONLI is a controlling person of
each portfolio of ONE Fund other than the International Portfolio. As a result,
ONLI likely will be able to control the outcome of a shareholder vote for any of
those portfolios unless and until the percentage of shares of a portfolio held
by other investors significantly expands. ONLI is also a controlling person of
ONIMCO.
As of August 1, 1996, ONLI's ownership of ONE Fund shares was as follows:
<TABLE>
<CAPTION>
Number of Net Asset Percent of
Portfolio Shares Value Portfolio
- --------- ---------- ----------- ----------
<S> <C> <C> <C>
Money Market 11,199,783 $11,199,783 70.0%
Tax-Free Income 544,462 $ 5,916,822 93.1%
Income 496,855 $ 4,778,467 68.6%
Income & Growth 404,431 $ 4,974,496 47.7%
Growth 329,846 $ 4,723,395 42.7%
Small Cap 210,852 $ 2,485,949 58.8%
International 122 $ 1,711 0.0%
Global Contrarian 264,296 $ 2,936,328 53.0%
</TABLE>
In addition, as of that date, A. Wayne Phillips of Sherwood, Arkansas, owned
54,699 shares of the Income Portfolio having a total net asset value of $522,920
and representing 7.5% of the Portfolio; the KZF 401(k) Investment Plan (Fay
Bauer, trustee) of Cincinnati, Ohio, owned 54,464 shares of the Growth Portfolio
having a total net asset value of $779,924 and representing 7.1% of the
Portfolio; and Russell W. Ingram of Johnson City, Tennessee, owned 39,447 shares
of the Global Contrarian Portfolio having a total net asset value of $438,255
and representing 7.9% of the Portfolio. As of that date, no other shareholder
owned more than 5% of the shares of any ONE Fund portfolio. The amount of shares
of each portfolio of ONE Fund held by officers and directors of ONE Fund, as a
group, was less than 1%.
INVESTMENT ADVISORY AND OTHER SERVICES
The Adviser is an Ohio corporation organized on January 17, 1996 to provide
investment advice and management services to funds affiliated with ONLI. The
Adviser is a wholly-owned subsidiary of ONLI. The Adviser succeeded O.N.
Investment Management Company ("ONIMCO") as ONE Fund's investment adviser on May
1, 1996. Prior to that date, ONIMCO had been the investment adviser from ONE
Fund's inception. The Adviser, like ONIMCO before it, uses ONLI's investment
personnel and administrative systems.
The Adviser regularly furnishes to ONE Fund's Board of Directors recommendations
with respect to an investment program consistent with the investment policies of
each investment portfolio. Upon approval of an investment program by ONE Fund's
Board of Directors, the Adviser implements the program by placing the orders for
the purchase and sale of securities or, in the case of the International
Portfolio, delegates that implementation to SGAM.
The Adviser's services are provided under an Investment Advisory Agreement with
ONE Fund. Under the Investment Advisory Agreement, the Adviser provides
personnel, including executive officers for ONE Fund. The Adviser also furnishes
at its own expense or pays the expenses of ONE
19
<PAGE> 61
Fund for clerical and related administrative services (other than those provided
by the custodian and agency agreements with The Provident Bank and the custodian
agreement with Investors Fiduciary Trust Company), office space, and other
facilities. ONE Fund pays corporate expenses incurred in its operations,
including, among others, local income, franchise, issuance or other taxes;
certain printing costs; brokerage commissions on portfolio transactions;
custodial and transfer agent fees; auditing and legal expenses; and expenses
relating to registration of its shares for sale and shareholders' meetings.
As compensation for its services, the Adviser receives from ONE Fund an annual
investment advisory fee based on the average daily net asset value of each
portfolio's assets during the quarterly period for which the fee is paid based
on the following schedule: (a) for those assets held in the Income, Income &
Growth and Growth Portfolios, the fee is at an annual rate of 0.5% of the first
$l00 million of assets in each portfolio, 0.4% of the next $l50 million and 0.3%
of assets over $250 million; (b) as to assets held in the Money Market
Portfolio, the fee is at an annual rate of 0.3% of the first $100 million of
assets, 0.25% of the next $150 million, and 0.2% of assets over $250 million;
(c) for assets held in the Tax-Free Income Portfolio, the fee is at an annual
rate of 0.6% of the first $100 million of assets, 0.5% of the next $150 million,
and 0.4% of assets over $250 million; (d) for assets held in the Small Cap
Portfolio, the fee is at an annual rate of 0.65% of the first $100 million of
assets, 0.55% of the next $150 million, and 0.45% of assets over $250 million;
(e) for assets held in the International and Global Contrarian Portfolios, the
fee is at an annual rate of 0.9% of assets in each portfolio, and (f) for assets
held in the Core Growth Portfolio, the fee is at an annual rate of 0.95% of the
first $150 million of assets and 0.8% of assets over $150 million.
Under the Investment Advisory Agreement, ONE Fund authorizes the Adviser to
retain sub-advisers for the Core Growth, International and Global Contrarian
Portfolios, subject to the approval of ONE Fund's Board of Directors. The
Adviser has entered into a Sub-Advisory Agreement with PBA to manage the
investment and reinvestment of Core Growth Portfolio assets, subject to the
supervision of the Adviser. As compensation for its services, PBA receives from
the Adviser fees at the annual rate of 0.75% of the first $50 million, 0.70% of
the next $100 million, and 0.50% of the average daily net assets of that
portfolio in excess of $150 million during the quarter for which the fee is
paid. The Adviser has entered into a Sub-Advisory Agreement with SGAM to manage
the investment and reinvestment of International and Global Contrarian Portfolio
assets, subject to the supervision of the Adviser. As compensation for its
services, SGAM receives from the Adviser fees at the annual rate of 0.75% of the
average daily net assets of each of those portfolios during the quarter for
which the fee is paid.
For each of the fiscal years ended June 30, investment advisory fees from each
of ONE Fund's portfolios* were paid to ONIMCO (the Adviser's predecessor) and to
the Adviser as follows:
<TABLE>
<CAPTION>
1996 Earned Waived Net Fees
------ ------ --------
<S> <C> <C> <C>
Money Market $ 48,270 ($48,270) $ 0
Tax-Free Income 36,568 (18,284) 18,284
Income 36,190 (18,095) 18,095
Income & Growth 45,898 (22,949) 22,949
Growth 47,590 (23,795) 23,795
Small Cap 24,264 (12,132) 12,132
International 119,892 0 119,892
Global Contrarian 42,132 0 42,132
-------- -------- -------
$400,804 ($143,525) $257,279
</TABLE>
20
<PAGE> 62
<TABLE>
<CAPTION>
1995 Earned Waived Net Fees
------ ------ --------
<S> <C> <C> <C>
Money Market $ 40,669 ($ 40,669) $ 0
Tax-Free Income 21,136 ( 10,568) 10,568
Income 28,148 ( 14,074) 14,074
Income & Growth 36,964 ( 18,482) 18,482
Growth 31,091 ( 15,546) 15,545
Small Cap 10,790 ( 5,395) 5,395
International 104,197 0 104,197
Global Contrarian 19,262 0 19,262
--------- --------- ---------
$ 292,257 ($104,734) $ 187,523
</TABLE>
<TABLE>
<CAPTION>
1994 Earned Waived Net Fees
------ ------ --------
<S> <C> <C> <C>
Money Market $ 58,467 ($ 58,467) $ 0
Income 26,766 ( 13,383) 13,383
Income & Growth 36,266 ( 18,133) 18,133
Growth 24,244 ( 12,122) 12,122
International 56,712 0 56,712
--------- --------- ---------
$ 202,455 ($102,105) $ 100,350
</TABLE>
* All fees earned prior to May 1, 1996 were paid to ONIMCO. On and
after that date, fees were payable to the Adviser. The Tax-Free
Income, Small Cap and Global Contrarian Portfolios are not shown for
the year ended June 30, 1994 because they did not commence
operations until November 1, 1994. The Core Growth Portfolio is not
shown because it did not commence operations until November 1, 1996.
The Investment Advisory Agreement also provides that if, and to the extent that,
the total expenses applicable to any portfolio during any calendar quarter
(excluding taxes, brokerage commissions, interest and the investment advisory
fee) exceed l%, on an annualized basis, of the portfolio's average daily net
asset value, the Adviser will pay such expenses. During the last fiscal year,
ONIMCO and the Adviser reimbursed the Global Contrarian Portfolio $12,200 under
the same terms.
Under a Service Agreement among ONE Fund, the Adviser and ONLI, the latter has
agreed to furnish the Adviser, at cost, such research facilities, services and
personnel as may be needed by the Adviser in connection with its performance
under the Investment Advisory Agreement. The Adviser reimburses ONLI for its
expenses in this regard.
The Investment Advisory Agreement, the Service Agreement and the Sub-Advisory
Agreement for the International and Global Contrarian Portfolios were approved
by a vote of ONE Fund's Board of Directors on January 24, 1996, and the
shareholders on March 28, 1996. These agreements will continue in force from
year to year hereafter, if such continuance is specifically approved at least
annually by a majority of ONE Fund's directors who are not parties to such
agreements or interested persons of any such party, with votes to be cast in
person at a meeting called for the purpose of voting on such continuance, and
also by a majority of ONE Fund's Board of Directors or by a majority of the
outstanding voting securities of each portfolio voting separately. The foregoing
agreements were approved by the Board of Directors for continuance on August 22,
1996. The Investment Advisory Agreement, the Service Agreement and the
Sub-Advisory Agreement for the Core Growth Portfolio were approved by the Board
of Directors on August 22, 1996 and by the shareholders of the Core Growth
Portfolio on October ____, 1996.
The Investment Advisory, Sub-Advisory and Service Agreements may be terminated
at any time, without the payment of any penalty, on 60 days' written notice to
the Adviser by ONE Fund's Board of Directors or, as to any portfolio, by a vote
of the majority of the portfolio's outstanding voting securities. The Investment
Advisory Agreement may be terminated by the Adviser on 90 days'
21
<PAGE> 63
written notice to ONE Fund. The Service Agreement may be terminated, without
penalty, by the Adviser or ONLI on 90 days' written notice to ONE Fund and the
other party. The Sub-advisory Agreements may be terminated, without penalty, by
the Adviser or the sub-adviser (PBA or SGAM) on 90 days' written notice to ONE
Fund and the other party. The Agreements will automatically terminate in the
event of their assignment.
ONE Fund's 12b-1 Plan is used solely to compensate broker-dealers that sell ONE
Fund shares (the "Selling Dealers") for shareholder services and for sales. The
basic payment is 0.15% (on an annualized basis) of the average net assets of the
Money Market Portfolio and 0.25% of the average net assets of each other
portfolio. The fees are increased to the extent necessary to pay incentive
bonuses to individual registered representatives who service $5 million or more
of ONE Fund shares. Such increases can never increase the fees paid to more than
0.17% and 0.30% respectively. No interested person of ONE Fund other than the
Selling Dealers has a direct or indirect financial interest in ONE Fund's 12b-1
Plan. ONE Fund benefits from the 12b-1 Plan payments to Selling Dealers by
having the registered representatives of those dealers answer shareholder
questions and by having those registered representatives motivated to sell ONE
Fund shares to persons likely to remain shareholders for a period of time.
BROKERAGE ALLOCATION
The Adviser buys and sells the portfolio securities for all the portfolios,
other than the International and Global Contrarian Portfolios, and selects the
brokers to handle such transactions. It is the Adviser's intention to place
orders for the purchase and sale of securities with the primary objective of
obtaining the most favorable price consistent with good brokerage service. The
cost of securities transactions for each portfolio will consist primarily of
brokerage commissions or dealer or underwriter spreads. Bonds and money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the Adviser will,
where possible, deal directly with dealers that make a market in the securities
unless better prices and execution are available elsewhere. Such dealers usually
act as principals for their own account.
In selecting brokers through which to effect transactions, the Adviser considers
a number of factors including the value, quality, efficiency of execution and
research, statistical, quotation and valuation services provided. Research
services by brokers include advice, either directly or through publications or
writings, as to the value of securities, the advisability of purchasing or
selling securities, the availability of securities or purchasers or sellers of
securities, and analyses and reports concerning issuers, industries, securities,
economic factors and trends and portfolio strategy. In making such
determination, the Adviser may use a broker whose commission in effecting a
securities transaction is in excess of that of some other broker if the Adviser
determines in good faith that the amount of such commission is reasonable in
relation to the value of the research and related services provided by such
broker.
It is not possible to place a dollar value on research and related services
provided by brokers and receipt of such services is not expected to
significantly affect the Adviser's expenses. Research, statistical and similar
information furnished by brokers may be of incidental assistance to ONLI, ONF or
other clients or affiliates of the Adviser and conversely, transaction costs
paid by ONLI, ONF or other clients or affiliates of the Adviser may generate
information which is beneficial to ONE Fund.
PBA selects brokers and dealers to effect securities transactions for the Core
Growth Portfolio. PBA seeks to obtain the most favorable net results by taking
into account various factors, including price, commission, if any, size of
transactions and difficulty of execution, the firm's general execution and
operational facilities and the firm's risk in positioning the securities
involved. While PBA seeks reasonably competitive spreads or commissions, it will
not necessarily obtain the lowest available.
22
<PAGE> 64
PBA looks for brokers and dealers that offer best price and execution or other
services of benefit to the Core Growth Portfolio. Consistent with the
Portfolio's interests, PBA may select brokers on the basis of research services
provided to PBA. If, in PBA's judgment, the Portfolio or other accounts managed
by PBA will be benefited by supplemental research services, it may pay the
broker furnishing those services higher commissions than those that another
broker might charge for effecting the same transaction. Portfolio transactions
may be executed through firms affiliated with PBA, for a commission in
conformity with the 1940 Act, the Securities Exchange Act of 1934 and rules
thereunder.
SGAM selects the brokers and dealers that execute orders for the purchase and
sale of International and Global Contrarian Portfolio securities. SGAM seeks to
obtain the best price and execution available after taking into account research
services provided by such brokers and dealers for the International Portfolio's
benefit. Consistent with this policy, portfolio transactions may be executed by
brokers affiliated with Societe Generale (SGAM's ultimate controlling person) so
long as the commission paid to the affiliated broker is reasonable and fair
compared to the commission that would be charged by an unaffiliated broker in a
comparable transaction.
For each of the fiscal years ended June 30, the following brokerage commission
amounts were paid by each portfolio:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Money Market None None None
Tax-Free Income None None N/A
Income $ 720 None None
Income & Growth 4,438 $ 5,101 $ 960
Growth 8,034 3,776 795
Core Growth N/A N/A N/A
Small Cap 4,880 5,074 N/A
International 22,094 26,616 28,128
Global Contrarian 10,126 11,278 N/A
------- ------- --------
Total $50,291 $51,845 $ 29,883
</TABLE>
During the fiscal year ended June 30, 1996, 100% of such commissions were paid
to brokers who furnished statistical data and research information to the
Adviser or ONIMCO (the predecessor to the Adviser) or SGAM. The Tax-Free Income,
Small Cap and Global Contrarian Portfolios did not commence operations until
November 1, 1994. The Core Growth Portfolio did not commence operations until
November 1, 1996.
PURCHASE AND REDEMPTION OF SHARES
ONE Fund shares are sold at the public offering price, which is their net asset
value plus a sales charge, as described in the prospectus, if applicable. They
may be redeemed at their net asset value next computed after a purchase or
redemption order is received by ONE Fund. (The net asset value for the Money
Market Portfolio is normally $1 per share.)
Depending upon the net asset values at that time, the amount paid upon
redemption may be more or less than the cost of the shares redeemed. Payment for
shares redeemed will be made as soon as possible, but in any event within seven
days after evidence of ownership of the shares is tendered to ONE Fund. However,
ONE Fund may suspend the right of redemption or postpone the date of payment
beyond seven days during any period when (a) trading on the New York Stock
Exchange is restricted, as determined by the Securities and Exchange Commission,
or such Exchange is closed for other than weekends and holidays; (b) an
emergency exists, as determined by the Commission, as a result of which disposal
by ONE Fund of securities owned by it is not reasonably practicable, or it is
not reasonably practicable for ONE Fund fairly to determine the value of its net
assets; or (c) the Commission by order so permits for the protection of security
holders of ONE Fund.
23
<PAGE> 65
Redemptions of shares of any ONE Fund portfolio by any shareholder during any
90-day period will be paid in cash, up to the lesser of (a) $250,000 or (b) 1%
of the portfolio's total net asset value. Larger redemptions may, at ONE Fund's
discretion, be paid wholly or in part by securities or other assets of the
portfolio. A shareholder who receives securities would likely incur brokerage
expenses in disposing of them.
Shares of one portfolio may be exchanged for shares of another portfolio of ONE
Fund on the basis of the relative net asset values next computed after an
exchange order is received by ONE Fund. However, in the case of transfers from
the Money Market Portfolio to another portfolio, the sales charge will be levied
unless such assets had previously been subjected to a sales charge by having
been earlier transferred from another portfolio to the Money Market Portfolio.
The net asset value of ONE Fund's shares is determined at 4 p.m. Eastern time on
each day the New York Stock Exchange is open for unrestricted trading. That is
normally each weekday (Monday through Friday) except for the following holidays:
New Years Day, Presidents Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas. The net asset value of each portfolio
is computed by dividing the value of the securities in that portfolio plus any
cash or other assets less all liabilities of the portfolio, by the number of
shares outstanding for that portfolio.
Securities which are held in a portfolio and listed on a securities exchange are
valued at the last sale price or, if there has been no sale that day, at the
last bid price reported as of 4 p.m. Eastern time. Over-the-counter securities
are valued at the last bid price as of 4 p.m. Eastern time.
Short-term debt securities in all portfolios with remaining maturities of 60
days or less are valued at amortized cost. All other assets (not including those
of the Money Market Portfolio), including restricted debt securities and other
investments for which market quotations are not readily available, are valued at
their fair value as determined in good faith by ONE Fund's Board of Directors.
ONE Fund relies on Rule 2a-7 under the Investment Company Act of 1940 to value
the assets of the Money Market Portfolio on the basis of amortized cost with a
view toward stabilizing the net asset value at $l per share and allowing
dividend payments to reflect net interest income as earned. Accordingly, the
short-term debt assets of the Money Market Portfolio are valued at their cost on
the date of acquisition with a daily adjustment being made to accrued income to
reflect amortization of premium or accretion of discount to the maturity date.
In relying on Rule 2a-7 with respect to short-term debt securities in its Money
Market Portfolio, ONE Fund has agreed to maintain a dollar-weighted average
portfolio maturity of not more than 90 days and to not purchase any such debt
security having a maturity of more than 397 days. The dollar- weighted average
maturity of short-term debt securities is determined by dividing the sum of the
dollar value of each such security times the remaining days to maturity of such
security by the sum of the dollar value of all short-term debt securities.
Should the disposition of a short-term debt security result in a dollar-weighted
average maturity of more than the number of days allowed under the exemptive
order or Rule 2a-7, as the case may be, the Money Market Portfolio will invest
any available cash so as to reduce such average maturity to the required number
of days or less as soon as reasonably practicable. ONE Fund normally holds
short-term debt securities to maturity and realizes par therefor unless an
earlier sale is required to meet redemption requirements.
In addition, the Money Market Portfolio is required to limit its short-term debt
investments, including repurchase agreements, to those United States dollar
denominated instruments which the Board of Directors determines present minimal
credit risks and which are in the top two rating categories of any nationally
recognized statistical rating organizations or, in the case of any instrument
that is not rated, of comparable quality as determined by the Board of
Directors. Although the use of amortized cost provides certainty in valuation,
it may result in periods during which value so determined is higher or lower
than the price the portfolio would receive if it liquidated its securities.
ONE Fund's Board of Directors is obligated, as a particular responsibility
within the overall duty of care owed to the Money Market Portfolio shareholders,
to establish procedures reasonably designed,
24
<PAGE> 66
taking into account current market conditions and the investment objective of
such portfolio, to stabilize the portfolio's net asset value per share as
computed for the purpose of distribution, redemption and repurchase, at $l per
share. The procedures adopted by the Board of Directors include periodically
reviewing, as it deems appropriate and at such intervals as are reasonable in
light of current market conditions, the extent of deviation, if any, between the
net asset value per share based on available market quotations and such value
based on the portfolio's $l amortized cost price. If such deviation exceeds 1/2
of 1 percent, or if there is any other deviation which the Board of Directors
believes would result in a material dilution to shareholders or purchasers, the
Board of Directors will promptly consider what action, if any, it should
initiate. Such action may include redemption in kind; selling portfolio
instruments prior to maturity to realize capital gains or losses, or to shorten
the average portfolio maturity; withholding dividends; splitting, combining or
otherwise recapitalizing outstanding shares; or using available market
quotations to determine net asset value per share. The Money Market Portfolio
may reduce the number of its outstanding shares by requiring shareholders to
contribute to capital proportionately the number of full and fractional shares
as is necessary to maintain the net asset value per share of $1.
REDUCING THE SALES CHARGE
The prospectus describes a variety of ways you may qualify for scheduled
reductions in sales load for large purchases. In general, these special purchase
methods permit you to treat your purchase as if it were part of a larger
purchase. Certain ways to reduce sales load are available to you individually,
and other ways in combination with other investors. First, you may make a single
purchase (of shares of one or more ONE Fund portfolios) in an aggregate amount
that qualifies for a reduced sales charge (at least $25,000). Second, you may
add the amount of your existing ONE Fund holdings to the amount being purchased
(with the sum equaling your "accumulated holdings"), and pay only the percentage
sales charge that would apply to your purchase if it were part of a purchase the
size of your accumulated holdings. Third, you may add to your accumulated
holdings the amount of the annual or single premium of any Ohio National annuity
or insurance policy you purchase concurrently with the ONE Fund shares (i.e.,
ONE Fund shares are purchased in the time between application for, and 5 days
after delivery of, an Ohio National annuity or insurance policy) and pay only
the sales charge that would apply to your purchase if it were part of a purchase
the size of your accumulated holdings plus the amount of your concurrent
purchase. Fourth, you may add to your accumulated holdings (and your concurrent
purchases, if any) an amount of ONE Fund shares you state (in a letter of
intent) that you intend to purchase within a 13-month period and pay only the
sales charge that would apply to that total. To the extent that your sales
charge reduction depends on purchases pursuant to a letter of intent, a number
of the shares you purchase will be escrowed to pay the sales charge that would
apply if some or all of the future purchases under the letter of intent are not
made.
In addition, you may be able to aggregate the holdings or purchases of other
persons with the amounts determined in the methods described in the prior
paragraph. First, you are entitled to aggregate your accumulated holdings with
purchases and holdings of ONE Fund shares by your spouse, children and
grandchildren. Second, if you are a member of a "qualified group" (as described
in "Group Purchases" in the prospectus), you may aggregate your holdings and
purchases with those of the entire qualified group. However, you may not
aggregate purchases of your family members with those of a qualified group, to
which such family members do not belong, for purposes of qualifying for a
reduced sales charge. In addition, you may not aggregate the holdings or
purchases of more than one qualified group with your own holdings or purchases.
TAX STATUS
ONE Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code (the "Code"). Under such provisions, ONE Fund is
not subject to federal income tax on such part of its net ordinary income and
net realized capital gains which it distributes to shareholders. Each portfolio
is treated as a separate entity for federal income tax purposes, including
determining
25
<PAGE> 67
whether it qualifies as a regulated investment company and determining its net
ordinary income (or loss) and net realized capital gains (or losses). To qualify
for treatment as a regulated investment company, each portfolio must, among
other things, derive in each taxable year at least 90% of its gross income from
dividends, interest and gains from the sale or other disposition of securities
and derive less than 30% of its gross income in each taxable year from the gains
(without deduction for losses) from the sale or other disposition of securities
held for less than three months.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury Regulations promulgated thereunder. Shareholders should consult their
own tax advisers with regard to the tax status of ONE Fund distributions.
UNDERWRITERS
The O.N. Equity Sales Company, a wholly-owned subsidiary of ONLI, has served as
principal underwriter for ONE Fund shares from ONE Fund's inception. However, on
January 17, 1996, ONLI formed another wholly-owned subsidiary, Ohio National
Equities, Inc., which will serve as ONE Fund's principal underwriter once it has
obtained all necessary regulatory approvals. ONE Fund shares are offered by the
registered representatives of The O.N. Equity Sales Company and other
broker-dealers with whom the principal underwriter enters into distribution
agreements. ONE Fund shares are offered on a best-efforts basis. The offering is
continuous.
EXPERTS
The financial statements of ONE Fund as of June 30, 1996 and for the periods
indicated herein included in this Statement of Additional Information and the
Financial Highlights included in the prospectus dated November 1, 1996 have been
included herein and in the prospectus in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing in this
Statement of Additional Information, and upon the authority of said firm as
experts in accounting and auditing. KPMG Peat Marwick LLP's business address is
201 East Fifth Street, Cincinnati, Ohio 45202.
LEGAL COUNSEL
Messrs. Jones & Blouch L.L.P., Washington, D.C., have passed on matters
pertaining to the federal securities laws and Ronald L. Benedict, Esq.,
Secretary of ONE Fund and Second Vice President and Counsel of ONLI, has passed
on all other legal matters relating to the legality of the shares described in
the prospectus and this Statement of Additional Information.
26
<PAGE> 68
ONE FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1996
PORTFOLIO
------------------------------------------------------------------------
MONEY TAX-FREE INCOME
MARKET INCOME INCOME & GROWTH GROWTH
-------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in securities at market
value (note 1) $15,827,578 $ 6,166,452 $ 6,828,676 $10,872,933 $11,744,734
Cash in bank 52,331 50,007 78,381 44,819 59,346
Unrealized gain on forward currency
contracts (note 5) 0 0 0 0 0
Receivable for fund shares sold 0 0 0 0 0
Dividends and accrued interest receivable 0 107,298 127,556 49,029 8,995
Deferred organizational expenses (note 1) 3,926 1,735 3,926 3,926 3,895
Other 852 116 88 1,848 128
----------- ----------- ----------- ----------- -----------
Total assets 15,884,687 6,325,608 7,038,627 10,972,555 11,817,098
----------- ----------- ----------- ----------- -----------
Liabilities:
Unrealized loss on forward currency
contracts (note 5) 0 0 0 0 0
Payable for securities purchased 0 0 0 100,800 0
Payable for fund shares redeemed 0 0 0 0 0
Payable for investment management
services (note 3) 0 4,632 4,348 6,602 7,222
Accrued 12b-1 fees (note 6) 5,784 3,709 4,127 6,363 6,977
Other accrued expenses 10,943 9,296 13,080 8,500 12,852
Dividends Payable 58,077 24,343 34,499 81,087 32,193
----------- ----------- ----------- ----------- -----------
Total liabilities 74,804 41,980 56,054 203,352 59,244
----------- ----------- ----------- ----------- -----------
NET ASSETS AT MARKET VALUE $15,809,883 $ 6,283,628 $ 6,982,573 $10,769,203 $11,757,854
=========== =========== =========== =========== ===========
Net assets consist of:
Par value, $.001 per share $ 15,810 $ 582 $ 728 $ 842 $ 760
Paid-in capital in excess of par value 15,794,073 5,880,875 7,084,483 8,718,708 8,832,453
Accumulated undistributed net realized
gain (loss) on investments 0 (7,298) (110,897) 233,926 402,972
Net unrealized appreciation (depreciation) on:
Investments 0 409,469 8,259 1,813,724 2,521,894
Foreign currency related transactions 0 0 0 0 0
Forward currency contracts 0 0 0 0 0
Undistributed (overdistributed) net
investment income 0 0 0 2,003 (225)
----------- ----------- ----------- ----------- -----------
NET ASSETS AT MARKET VALUE $15,809,883 $ 6,283,628 $ 6,982,573 $10,769,203 $11,757,854
=========== =========== =========== =========== ===========
SHARES OUTSTANDING 15,809,883 582,283 728,240 842,340 759,837
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE PER SHARE $ 1.00 $ 10.79 $ 9.59 $ 12.78 $ 15.47
=========== =========== =========== =========== ===========
MAXIMUM OFFERING PRICE PER SHARE $ 1.00 $ 11.12 $ 9.89 $ 13.45 $ 16.28
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------
Small Global
Cap International Contrarian
-------------- ------------- ------------
<S> <C> <C> <C>
Assets:
Investments in securities at market $ 4,434,476 $ 15,003,155 $ 5,640,688
value (note 1) 46,913 55,230 10,318
Cash in bank
Unrealized gain on forward currency 0 196,091 33,546
contracts (note 5) 0 16,457 965
Receivable for fund shares sold 5,036 51,482 44,352
Dividends and accrued interest receivable 1,735 4,440 1,735
Deferred organizational expenses (note 1) 63 0 0
Other -- -- --
------------ ------------ ------------
Total assets 4,488,223 15,326,855 5,731,604
------------ ------------ ------------
Liabilities:
Unrealized loss on forward currency 0 829 0
contracts (note 5) 0 83,780 0
Payable for securities purchased 0 16,000 0
Payable for fund shares redeemed
Payable for investment management 3,518 32,971 12,387
services (note 3) 2,288 9,159 3,441
Accrued 12b-1 fees (note 6) 7,896 6,508 15,251
Other accrued expenses 12,188 94,263 37,480
Dividends Payable 25,890 243,510 68,559
------------ ------------ ------------
Total liabilities $ 4,462,333 $ 15,083,345 $ 5,663,045
============ ============ ============
NET ASSETS AT MARKET VALUE
Net assets consist of: $ 348 $ 1,042 $ 493
Par value, $.001 per share 3,600,524 12,709,293 4,998,591
Paid-in capital in excess of par value
Accumulated undistributed net realized 359,646 214,217 156,242
gain (loss) on investments
Net unrealized appreciation (depreciation) on: 502,030 1,955,327 471,307
Investments 0 16 (58)
Foreign currency related transactions 0 195,262 33,546
Forward currency contracts
Undistributed (overdistributed) net
investment income (215) 8,188 2,924
------------ ------------ ------------
NET ASSETS AT MARKET VALUE $ 4,462,333 $ 15,083,345 $ 5,663,045
============ ============ ============
SHARES OUTSTANDING 347,962 1,042,150 493,235
------------ ------------ ------------
$ 12.82 $ 14.47 $ 11.48
NET ASSET VALUE PER SHARE ============ ============ ============
$ 13.49 $ 15.23 $ 12.08
MAXIMUM OFFERING PRICE PER SHARE ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 69
ONE FUND, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended June 30, 1996
PORTFOLIO
---------------------------------------------------------------------------
MONEY TAX-FREE INCOME
MARKET INCOME INCOME & GROWTH GROWTH
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ 917,989 $ 373,032 $ 484,744 $ 204,015 $ 70,706
Dividends 0 0 53,510 161,989 108,351
----------- ----------- ----------- ----------- -----------
Total investment income 917,989 373,032 538,254 366,004 179,057
----------- ----------- ----------- ----------- -----------
Expenses:
12b-1 fees (note 6) 24,520 15,225 18,095 22,949 23,795
Management fees (note 3) 48,270 36,568 36,190 45,898 47,590
Custodian fees (note 3) 29,424 10,982 13,029 16,523 17,133
Directors' fees (note 3) 4,003 1,892 4,293 1,834 1,950
Professional fees 11,904 3,779 4,619 5,038 5,460
Other 18,394 6,574 8,109 8,825 9,483
Organizational expense (note 1) 3,481 523 3,481 3,481 3,455
----------- ----------- ----------- ----------- -----------
Total expenses 139,996 75,543 87,816 104,548 108,866
Less expenses voluntarily reduced or
reimbursed (note 3) (48,270) (18,284) (18,095) (22,949) (23,795)
----------- ----------- ----------- ----------- -----------
Net expenses 91,726 57,259 69,721 81,599 85,071
----------- ----------- ----------- ----------- -----------
Net investment income 826,263 315,773 468,533 284,405 93,986
----------- ----------- ----------- ----------- -----------
Realized and unrealized gain (loss)
on investments and foreign currency
Net realized gain (loss) from:
Investments 0 (7,298) (49,166) 285,463 586,710
Forward currency related transactions 0 0 0 0 0
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments 0 71,682 (89,116) 627,931 1,174,130
Foreign currency related transactions 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments 0 64,384 (138,282) 913,394 1,760,840
----------- ----------- ----------- ----------- -----------
Net increase in net assets
from operations $ 826,263 $ 380,157 $ 330,251 $ 1,197,799 $ 1,854,826
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------
SMALL GLOBAL
CAP INTERNATIONAL CONTRARIAN
----------- ------------- ----------
<S> <C> <C> <C>
Investment income:
Interest $ 35,722 $ 39,938 $ 63,707
Dividends 81,962 283,205 (a) 107,079(b)
----------- ----------- -----------
Total investment income 117,684 323,143 170,786
----------- ----------- -----------
Expenses:
12b-1 fees (note 6) 9,332 33,304 11,703
Management fees (note 3) 24,264 119,892 42,132
Custodian fees (note 3) 6,719 44,999 44,000
Directors' fees (note 3) 750 2,850 900
Professional fees 2,099 7,980 3,214
Other 3,627 18,737 10,377
Organizational expense (note 1) 523 2,328 523
----------- ----------- -----------
Total expenses 47,314 230,090 112,849
Less expenses voluntarily reduced or
reimbursed (note 3) (12,132) 0 (12,200)
----------- ----------- -----------
Net expenses 35,182 230,090 100,649
----------- ----------- -----------
Net investment income 82,502 93,053 70,137
----------- ----------- -----------
Realized and unrealized gain (loss)
on investments and foreign currency
Net realized gain (loss) from:
Investments 385,689 547,563 184,706
Forward currency related transactions 0 298,575 32,490
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments 338,621 1,151,993 432,588
Foreign currency related transactions 0 193,633 33,319
----------- ----------- -----------
Net gain (loss) on investments 724,310 2,191,764 683,103
----------- ----------- -----------
Net increase in net assets
from operations $ 806,812 $ 2,284,817 $ 753,240
=========== =========== ===========
</TABLE>
(a) Net of $23,745 foreign taxes withheld.
(b) Net of $5,232 foreign taxes withheld.
The accompanying notes are an integral part of these financial statements.
<PAGE> 70
ONE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended June 30, 1996 and 1995
PORTFOLIO
-----------------------------------------------------------------
MONEY MARKET TAX FREE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-96 6-30-95 6-30-96 6-30-95 (B)
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
From operations:
Net investment income $ 826,263 $ 676,851 $ 315,773 $ 180,809
Realized gain (loss) on investments and
foreign currency related transactions 0 0 (7,298) 0
Unrealized gain (loss) on investments and
foreign currency related transactions 0 0 71,682 337,787
------------ ------------ ------------ ------------
Net increase in assets from
operations 826,263 676,851 380,157 518,596
------------ ------------ ------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income (826,263) (676,851) (315,773) (180,809)
Capital gains distribution 0 0 0 0
------------ ------------ ------------ ------------
Total dividends and distributions (826,263) (676,851) (315,773) (180,809)
------------ ------------ ------------ ------------
From capital share transactions (note 4):
Received from shares sold 13,411,231 9,788,975 315,892 5,175,095
Received from dividends reinvested 821,475 655,189 311,840 155,845
Paid for shares redeemed (12,570,685) (8,595,276) (65,222) (11,993)
------------ ------------ ------------ ------------
Increase (decrease) in net assets derived
from capital share transactions 1,662,021 1,848,888 562,510 5,318,947
------------ ------------ ------------ ------------
Increase (decrease) in net assets 1,662,021 1,848,888 626,894 5,656,734
Net Assets:
Beginning of period 14,147,862 12,298,974 5,656,734 0
------------ ------------ ------------ ------------
End of period (a) $ 15,809,883 $ 14,147,862 $ 6,283,628 $ 5,656,734
============ ============ ============ ============
(a) Includes undistributed net investment
income of $ 0 $ 0 $ 0 $ 0
============ ============ ============ ============
</TABLE>
(b) Commenced operations November 1, 1994.
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------
INCOME INCOME & GROWTH
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-96 6-30-95 6-30-96 6-30-95
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
From operations: $ 468,533 $ 385,323 $ 284,405 $ 274,032
Net investment income
Realized gain (loss) on investments and (49,166) (61,593) 285,463 402,083
foreign currency related transactions
Unrealized gain (loss) on investments and (89,116) 374,895 627,931 655,646
foreign currency related transactions ------------ ------------ ------------ ------------
Net increase in assets from 330,251 698,625 1,197,799 1,331,761
operations ------------ ------------ ------------ ------------
Dividends and distributions to shareholders: (468,533) (385,323) (282,680) (273,755)
Dividends paid from net investment income 0 0 (51,537) (402,083)
Capital gains distribution ------------ ------------ ------------ ------------
(468,533) (385,323) (334,217) (675,838)
Total dividends and distributions ------------ ------------ ------------ ------------
From capital share transactions (note 4): 779,610 2,020,251 2,570,771 743,255
Received from shares sold 431,894 369,674 423,830 606,182
Received from dividends reinvested (1,233,852) (165,975) (804,922) (1,767,322)
Paid for shares redeemed ------------ ------------ ------------ ------------
Increase (decrease) in net assets derived (22,348) 2,223,950 2,189,679 (417,885)
from capital share transactions ------------ ------------ ------------ ------------
(160,630) 2,537,252 3,053,261 238,038
Increase (decrease) in net assets
Net Assets: 7,143,203 4,605,951 7,715,942 7,477,904
Beginning of period ------------ ------------ ------------ ------------
$ 6,982,573 $ 7,143,203 $ 10,769,203 $ 7,715,942
End of period (a) ============ ============ ============ ============
(a) Includes undistributed net investment $ 0 $ 0 $ 2,003 $ 277
income of ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 71
ONE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended June 30,1996 and 1995
Portfolio
-----------------------------------------------------------------
GROWTH SMALL CAP
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-96 6-30-95 6-30-96 6-30-95 (b)
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
From operations:
Net investment income $ 93,986 $ 84,042 $ 82,502 $ 55,079
Realized gain on investments and foreign
currency related transactions 586,710 425,561 385,689 9,797
Unrealized gain (loss) on investments and
foreign currency related transactions 1,174,130 701,680 338,621 163,409
------------ ------------ ------------ ------------
Net increase in assets from
operations 1,854,826 1,211,283 806,812 228,285
------------ ------------ ------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income (94,036) (84,216) (82,824) (54,972)
Capital gains distribution (185,263) (424,275) (26,043) (9,797)
------------ ------------ ------------ ------------
Total dividends and distributions (279,299) (508,491) (108,867) (64,769)
------------ ------------ ------------ ------------
From capital share transactions (note 4):
Received from shares sold 3,491,377 1,480,257 1,141,411 2,800,024
Received from dividends reinvested 530,826 226,740 111,230 47,418
Paid for shares redeemed (811,763) (783,929) (404,162) (95,049)
------------ ------------ ------------ ------------
Increase in net assets derived from
capital share transactions 3,210,440 923,068 848,479 2,752,393
------------ ------------ ------------ ------------
Increase in net assets 4,785,967 1,625,860 1,546,424 2,915,909
Net Assets:
Beginning of period 6,971,887 5,346,027 2,915,909 0
------------ ------------ ------------ ------------
End of period (a) $ 11,757,854 $ 6,971,887 $ 4,462,333 $ 2,915,909
============ ============ ============ ============
(a) Includes undistributed (overdistributed)
net investment income of ($225) ($174) ($215) $ 107
============ ============ ============ ============
</TABLE>
(b) Commenced operations November 1, 1994.
<TABLE>
<CAPTION>
Portfolio
----------------------------------------------------------------------
INTERNATIONAL GLOBAL CONTRARIAN
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-96 6-30-95 6-30-96 6-30-95 (b)
------------------------------ ---------------------------------
<S> <C> <C> <C> <C>
From operations:
Net investment income $ 93,053 $ 128,938 $ 70,137 $ 63,746
Realized gain on investments and foreign
currency related transactions 846,138 881,819 217,196 43,112
Unrealized gain (loss) on investments and
foreign currency related transactions 1,345,626 (235,774) 465,907 38,889
------------ ------------ ------------ ------------
Net increase in assets from
operations 2,284,817 774,983 753,240 145,747
------------ ------------ ------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income (383,429) (128,598) (99,748) (63,598)
Capital gains distribution (347,520) (868,069) (28,591) (43,088)
------------ ------------ ------------ ------------
Total dividends and distributions (730,949) (996,667) (128,339) (106,686)
------------ ------------ ------------ ------------
From capital share transactions (note 4):
Received from shares sold 3,712,934 6,323,833 1,281,031 3,771,274
Received from dividends reinvested 612,162 955,687 90,643 106,380
Paid for shares redeemed (2,767,518) (5,489,358) (190,480) (59,765)
------------ ------------ ------------ ------------
Increase in net assets derived from
capital share transactions 1,557,578 1,790,162 1,181,194 3,817,889
------------ ------------ ------------ ------------
Increase in net assets 3,111,446 1,568,478 1,806,095 3,856,950
Net Assets:
Beginning of period 11,971,899 10,403,421 3,856,950 0
------------ ------------ ------------ ------------
End of period (a) $ 15,083,345 $ 11,971,899 $ 5,663,045 $ 3,856,950
============ ============ ============ ============
(a) Includes undistributed (overdistributed)
net investment income of $ 8,188 ($11) $ 2,924 $ 45
============ ============ ============ ============
</TABLE>
(b) Commenced operations November 1, 1994.
The accompanying notes are an integral part of these financial statements.
<PAGE> 72
ONE FUND, INC.
SCHEDULE OF INVESTMENTS
June 30, 1996
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (9.9%)
$680,000 Ford Motor Credit Corp.
5.290% 07-30-96 $ 677,255
100,000 Ford Motor Credit Corp.
5.380% 07-30-96 99,414
790,000 General Motors Acceptance Corp.
5.320% 09-03-96 782,528
----------
1,559,197
----------
CONSUMER DURABLES (3.2%)
500,000 Glaxo Wellcome plc
5.240% 07-19-96 498,690
----------
EDUCATION (3.3%)
525,000 University of Chicago
5.400% 09-10-96 519,409
----------
ELECTRONIC EQUIPMENT (3.2%)
500,000 G.E. Capital
5.270% 07-22-96 498,463
----------
ENTERTAINMENT AND LEISURE (4.4%)
700,000 Walt Disney Co.
5.290% 07-10-96 699,074
----------
FINANCE (19.1%)
795,000 American Express Credit Corp.
5.270% 08-22-96 788,948
800,000 Ameritech Capital Fund
5.280% 07-02-96 799,883
700,000 Heller Financial Inc.
5.350% 08-05-96 696,359
500,000 IBM Corp.
5.370% 08-19-96 496,345
250,000 Prudential Funding Corp.
5.380% 08-14-96 248,356
----------
3,029,891
----------
FOOD AND RELATED (5.0%)
790,000 Quaker Oats Co.
5.500% 07-02-96 789,879
----------
FORESTRY AND PAPER PRODUCTS (2.5%)
400,000 Temple Inland Inc.
5.370% 07-30-96 398,270
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ----------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL (7.7%)
$425,000 Dupont (EI) de Nemours
5.270% 07-12-96 $ 424,316
800,000 Echlin Inc.
5.330% 07-08-96 799,171
-----------
1,223,487
-----------
INSURANCE (2.7%)
425,000 Liberty Mutual Capital
5.400% 08-27-96 421,366
-----------
MACHINERY AND EQUIPMENT (13.2%)
800,000 Deere and Company
5.290% 07-11-96 798,824
500,000 Stanley Works
5.370% 08-23-96 496,047
800,000 Stanley Works
5.300% 07-09-96 799,058
-----------
2,093,929
-----------
RETAIL (16.1%)
780,000 Hasbro Inc.
5.230% 08-16-96 774,787
600,000 Sears Roebuck Acceptance Corp.
5.290% 08-26-96 594,961
100,000 Sears Roebuck Acceptance Corp.
5.310% 08-26-96 99,276
575,000 Sherwin Williams
5.360% 08-12-96 571,404
500,000 Wal-Mart Stores Inc.
5.280% 07-05-96 499,707
-----------
2,540,135
-----------
TRANSPORTATION (4.4%)
700,000 Consolidated Rail Corp.
5.360% 07-19-96 698,124
-----------
UTILITIES (5.4%)
435,000 AT&T Corp.
5.230% 08-08-96 432,599
426,000 Alabama Power Co.
5.270% 07-16-96 425,065
-----------
857,664
-----------
TOTAL HOLDINGS
(COST $15,827,578) (A) $15,827,578
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 73
ONE FUND, INC. June 30, 1996
SCHEDULE OF INVESTMENTS TAX-FREE PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT MUNICIPAL BONDS VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
GENERAL OBLIGATION BONDS (15.0%)
$200,000 Charleston County S. Carolina
7.250% 02-01-02 $ 207,870
100,000 Clairborne County Mississippi
7.300% 05-01-25 103,000
150,000 Commonwealth of Puerto Rico
5.500% 07-01-17 142,500
250,000 State of Nevada
6.600% 12-01-13 268,125
250,000 State of Washington
5.000% 05-01-17 223,438
-----------------
944,933
-----------------
INSURED BONDS (17.3%)
250,000 Atlanta RTA
6.800% 07-01-14 270,938
250,000 Mataroda Texas
6.700% 03-01-27 267,600
250,000 New York State Med Care
6.750% 08-15-14 269,375
250,000 Pennsylvania Intergovernment Corp.
6.750% 06-15-21 279,375
-----------------
1,087,188
-----------------
AIRPORT REVENUE (3.6%)
250,000 Chicago Illinois O'Hare Airport
5.000% 01-01-13 226,250
-----------------
HOSPITAL REVENUE (7.2%)
250,000 Massachusetts State Hospital
6.200% 10-01-16 252,812
200,000 Wisconsin Health and Education
6.125% 11-15-15 199,750
-----------------
452,562
-----------------
HOUSING REVENUE (2.3%)
150,000 Alaska Housing
5.875% 12-01-24 144,563
-----------------
POLLUTION CONTROL &
INDUSTRIAL REVENUE (15.4%)
250,000 Lawrenceburg, Indiana
5.900% 11-01-19 234,375
250,000 Richland County, S. Carolina
6.550% 11-01-20 261,875
250,000 San Diego, California
7.625% 07-01-21 206,894
250,000 West Feliciana, Louisiana
8.000% 12-01-24 265,625
-----------------
968,769
-----------------
POWER REVENUE (18.8%)
250,000 Jacksonville Florida Municipal Electric
5.500% 10-01-14 $ 240,937
250,000 Mobile Alabama
6.950% 01-01-20 257,187
250,000 North Carolina Eastern Power
6.000% 01-01-22 244,063
250,000 Salt River Arizona Project
5.000% 01-01-13 230,000
200,000 Southern California Public Power
6.000% 07-01-18 210,000
-----------------
1,182,187
-----------------
WATER REVENUE (3.8%)
250,000 Metropolitan Water District of
S. California
5.500% 07-01-13 239,375
-----------------
ADVANCE REFUNDED (4.4%)
250,000 Clark County, Nevada School District
7.0005 06-01-09 275,625
-----------------
CONVENTION COMPLEX &
HOSPITALITY FACILITIES (3.2%)
200,000 Metropolitan Pier
6.250% 07-01-17 195,000
-----------------
TOTAL MUNICIPAL BONDS (91.0%)
(COST $5,306,983) $ 5,716,452
-----------------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
BANKING (7.2%)
$450,000 Provident Bank 4.700% due 07-01-96
repurchase price $450,235 $ 450,000
collateralized by U.S. Treasury Notes, -----------------
due 08-15-96 (Cost $450,000)
TOTAL REPURCHASE AGREEMENTS
(7.2%) (COST $450,000) $ 450,000
-----------------
TOTAL HOLDINGS
(COST $5,766,983) (a) $ 6,166,452
=================
</TABLE>
<PAGE> 74
ONE FUND, INC. June 30, 1996
SCHEDULE OF INVESTMENTS INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM NOTES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (25.9%)
$1,000,000 U.S. Treasury Note
6.375% 08-15-02 $ 991,540
800,000 U.S. Treasury Note
7.375% 11-15-97 814,504
-----------------
1,806,044
-----------------
COMPUTER AND RELATED (3.6%)
250,000 IBM Corp.
7.250% 11-01-02 254,062
----------------
CONSUMER GOODS (3.4%)
250,000 RJR Nabisco, Inc.
7.625% 09-15-03 238,125
----------------
FORESTRY AND PAPER PRODUCTS (3.6%)
250,000 ITT Rayonier, Inc.
7.500% 10-15-02 253,437
----------------
HOTEL/LODGING (2.9%)
200,000 Marriott International
7.875% 04-15-05 203,500
----------------
MEDICAL AND RELATED (6.6%)
250,000 Bergen Brunswig Corp.
7.375% 01-15-03 252,500
200,000 Manor Care, Inc.
9.500% 11-15-02 211,750
----------------
464,250
----------------
OIL, ENERGY AND NATURAL GAS (15.0%)
250,000 Maxus Energy
9.875% 10-15-02 248,438
200,000 PDV America, Inc.
7.875% 08-01-03 192,500
262,801 Puget Power
6.450% 04-11-05 258,257
100,000 Seagull Energy
7.875% 08-01-03 94,125
250,000 Tenneco Inc.
7.875% 10-01-02 257,188
----------------
1,050,508
----------------
REAL ESTATE (2.8%)
200,000 Avalon Properties Inc.
7.375% 09-15-02 195,250
----------------
RETAIL (1.4%)
100,000 Genesco, Inc.
10.375% 02-01-03 97,875
----------------
TEXTILES AND RELATED (3.7%)
$250.000 Fruit of the Loom Corp.
7.875% 10-15-99 $ 255,312
----------------
TRANSPORTATION (3.4%)
250,000 Illinois Central Gulf Railroad
6.750% 05-15-03 240,312
----------------
UTILITIES (11.3%)
250,000 El Paso Electric Co.
8.900% 02-01-06 247,812
250,000 Mississippi Power and Light
8.800% 04-01-05 255,938
300,000 Texas Utilities Electric
7.480% 01-01-17 283,500
----------------
787,250
----------------
MISCELLANEOUS (4.2%)
300,000 ITT Destinations Inc.
6.750% 11-15-05 285,751
----------------
TOTAL LONG-TERM NOTES (87.8%)
(COST $6,137,917) $ 6,131,676
----------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (2.1%)
$145,000 General Motors
5.250% 07-01-96 $145,000
-----------------
TOTAL SHORT-TERM NOTES (2.1%)
(COST $145,000) $145,000
-----------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (3.0%)
8,000 GTE Delaware, 8.750% Series B $ 209,000
-----------------
FINANCE (2.5%)
7,000 Connecticut Light, Power & Capital 172,375
9.300% Series A -----------------
OIL, ENERGY AND NATURAL GAS (2.4%)
6,500 Phillips Gas Co., 9.320%, Series A 170,625
-----------------
TOTAL PREFERRED STOCK (7.9%)
(COST $537,500) $ 552,000
-----------------
TOTAL HOLDINGS
(COST $6,820,417) (A) $ 6,828,676
=================
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 75
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS INCOME AND GROWTH PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM NOTES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER AND RELATED (2.4%)
$250,000 IBM Corp.
7.250% 11-01-02 $ 254,063
----------
FORESTRY AND PAPER PRODUCTS (2.4%)
250,000 ITT Rayonier, Inc.
7.500% 10-15-02 253,438
----------
OIL, ENERGY AND NATURAL GAS (9.7%)
250,000 Maxus Energy
9.875% 10-15-02 248,437
300,000 PDV America, Inc.
7.875% 08-01-03 288,750
250,000 Tenneco, Inc.
7.875% 10-01-02 257,187
250,000 Union Texas Petroleum
8.250% 11-15-99 256,562
----------
1,050,936
----------
UTILITIES (1.9%)
200,000 Mississippi Power and Light
8.800% 04-01-05 204,750
----------
TOTAL LONG-TERM NOTES (16.4%)
(COST $1,743,353) $1,763,187
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (2.2%)
$225,000 Ford Motor Credit Corp.
5.400% 07-09-96 $ 224,730
----------
FINANCE (9.4%)
416,000 American Express Credit Corp.
5.320% 07-02-96 415,938
350,000 Associates Corp.
5.200% 07-03-96 349,896
250,000 Household Finance Corp.
5.370% 07-08-96 249,739
----------
1,015,573
----------
OIL, ENERGY AND GAS (2.0%)
220,000 Chevron Oil
5.330% 07-05-96 219,870
----------
TOTAL SHORT-TERM NOTES (13.6%)
(COST $1,460,173) $1,460,173
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE (2.7%)
5,000 Allied Signal, Inc. $ 285,625
----------
AUTOMOTIVE AND RELATED (4.7%)
1,650 Chrysler Corp. 102,300
8,000 * Custom Chrome Inc. 215,000
4,000 Magna International, Inc. 184,000
----------
501,300
----------
BANKING (3.1%)
5,500 Community First Bankshares $129,250
10,000 First Colorado Bancorp 132,500
2,500 Susquehanna Bancshares 66,875
----------
328,625
----------
BUSINESS SERVICES (7.4%)
2,500 First Data Corp. 199,063
3,500 Manpower Inc. 137,375
3,000 Reynolds and Reynolds 159,750
7,000 * Verifone, Inc. 295,750
----------
791,938
----------
CHEMICALS (2.3%)
5,000 Learonal Inc. 125,000
3,000 OM Group Inc. 117,750
----------
242,750
----------
COMMUNICATIONS (0.6%)
6,500 * American Portable Telecom 69,875
----------
COMPUTER AND RELATED (8.7%)
2,000 Hewlett Packard Co. 199,250
3,000 Intel Corp. 220,312
10,000 MacNeal-Schwendler Corp. 75,000
1,000 * Microsoft Corp. 120,125
5,000 * Novell Inc. 69,375
2,750 * Teradyne Inc. 47,437
4,000 Texas Instruments, Inc. 199,500
----------
930,999
----------
CONSUMER PRODUCTS (2.6%)
3,000 Panamerican Beverages Inc. 134,250
2,000 Stanhome, Inc. 53,000
7,000 Versa Technologies 94,500
----------
281,750
----------
ELECTRICAL EQUIPMENT (1.4%)
3,000 Varian Associates, Inc. 155,250
----------
ENTERTAINMENT AND LEISURE (1.7%)
5,000 Cedar Fair 186,875
----------
FINANCE (3.9%)
15,000 Bando McGlocklin Capital 165,000
10,000 Hanson Trust, PLC 142,500
2,000 PHH Corp. 114,000
----------
421,500
----------
FOOD AND RELATED (0.8%)
3,000 H.J. Heinz Co. 91,125
----------
INDUSTRIAL SERVICES (6.2%)
5,000 Minerals Technologies, Inc. 171,250
12,000 Regal Beloit Corp. 237,000
5,000 York International, Corp. 258,750
----------
667,000
----------
MEDICAL AND RELATED (3.6%)
2,500 Baxter International 118,125
5,000 Health Care Realty Trust 118,750
4,500 National Health Investors 147,375
----------
384,250
----------
</TABLE>
(continued)
<PAGE> 76
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS INCOME AND GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
METALS AND MINING (1.4%)
8,000 Easco Inc. $ 66,000
6,000 Greenbrier Companies Inc. 83,250
----------
149,250
----------
OIL, ENERGY AND GAS (6.5%)
8,000 Camco International, Inc. 271,000
3,000 WD-40 Co. 141,000
8,000 Westcoast Energy, Inc. 120,000
3,500 Williams Cos., Inc. 173,250
----------
705,250
----------
REAL ESTATE (1.9%)
8,000 Commercial Net Lease Realty 111,000
4,000 First Industrial Realty Trust 94,000
----------
205,000
----------
RETAIL (0.9%)
4,800 National Propane Partners 100,800
----------
TEXTILES AND RELATED (1.2%)
8,000 Oxford Industries, Inc. 129,000
----------
TRANSPORTATION (3.9%)
3,723 Burlington Northern, Inc. 301,098
1,000 Conrail, Inc. 66,375
2,500 Consolidated Freightways Inc. 52,813
----------
420,286
----------
TOTAL COMMON STOCK (65.5%)
(COST $5,259,783) $7,048,448
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (2.1%)
12,000 Westinghouse Electric Co., red.,
cum., conv. $ 225,000
-----------
OIL, ENERGY AND GAS (1.4%)
3,000 Howell Corp.
$3.50 Series A 147,000
-----------
REAL ESTATE (0.6%)
2,500 Oasis Residential, Inc.,
9.000% Series A 63,750
-----------
UTILITIES (1.5%)
6,300 Phillips Gas Co., 9.320% Series A 165,375
-----------
TOTAL PREFERRED STOCK (5.6%)
(COST $595,900) $ 601,125
-----------
TOTAL HOLDINGS
(COST $9,059,209) (a) $10,872,933
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
The accompanying notes are an integral part of these financial state
<PAGE> 77
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS GROWTH PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (2.5%)
$300,000 Ford Motor Credit Corp.
5.400% 07-09-96 $ 299,640
----------
FINANCE (5.9%)
295,000 Associates Corp.
5.200% 07-03-96 294,912
400,000 Household Finance Corp.
5.370% 07-08-96 399,583
----------
694,495
----------
OIL, ENERGY AND NATURAL GAS (2.5%)
290,000 Chevron Oil
5.330% 07-05-96 289,828
----------
TOTAL SHORT-TERM NOTES (10.9%)
(COST $1,283,963) $1,283,963
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE (4.1%)
4,500 Allied Signal, Inc. $ 257,063
4,000 Rockwell International Corp. 229,000
----------
486,063
----------
AUTOMOTIVE AND RELATED (6.6%)
5,500 Arvin Industries, Inc. 122,375
1,500 Chrysler Corp. 93,000
7,000 * Custom Chrome Inc. 188,125
5,000 Magna International, Inc. 230,000
7,000 Walbro Corp. 141,750
----------
775,250
----------
BANKING (4.6%)
3,000 Charter One Financial Inc. 104,625
5,000 Community First Bankshares 117,500
10,000 First Colorado Bancorp 132,500
11,025 Franklin National Bank 115,763
2,500 Susquehanna Bancshares 66,875
----------
537,263
----------
BUILDING AND CONSTRUCTION (2.3%)
8,500 Hardinge Inc. 269,875
----------
BUSINESS SERVICES (9.4%)
2,500 First Data Corp. 199,063
6,500 Manpower Inc. 255,125
4,250 * Mastec Inc. 107,312
3,000 Reynolds and Reynolds 159,750
7,000 * Verifone, Inc. 295,750
4,500 Wackenhut Corp. Class B 82,687
----------
1,099,687
----------
CHEMICALS (1.2%)
11,000 * Canisco Resources Inc. 27,500
3,000 OM Group Inc. 117,750
----------
145,250
----------
CONSUMER GOODS (2.4%)
9,000 * Globe Business Resources 90,000
3,000 Panamerican Beverages Inc. 134,250
2,000 Stanhome Inc. 53,000
----------
277,250
----------
COMMUNICATIONS (5.1%)
6,500 * American Portable Telecom $69,875
7,000 * Atlantic Tele-network Inc. 168,000
7,000 * General Cable PLC 107,625
6,000 * Granite Broadcasting, Corp. 77,625
6,500 * Xpedite Systems Inc. 173,875
----------
597,000
----------
COMPUTER AND RELATED (14.5%)
6,000 * American Business Info. 109,500
9,000 * Cisco Systems Inc. 509,625
5,000 * Computron Software Inc. 24,375
9,000 * Continental Circuits Corp. 105,750
2,000 Hewlett Packard Co. 199,250
2,000 Intel Corp. 146,875
10,000 MacNeal-Schwendler Corp. 75,000
10,000 * Medar Inc. 103,750
1,000 * Microsoft Corp. 120,125
5,000 * Novell Inc. 69,375
2,750 * Teradyne Inc. 47,437
4,000 Texas Instruments, Inc. 199,500
----------
1,710,562
----------
DURABLE GOODS (0.8%)
5,000 * Zebra Technology Corp. 88,750
----------
ELECTRICAL EQUIPMENT (3.9%)
5,000 * Analog Devices, Inc. 127,500
4,500 BMC Industries, Inc. 129,375
4,000 Varian Associates, Inc. 207,000
----------
463,875
----------
ENTERTAINMENT AND LEISURE (1.6%)
5,000 Cedar Fair 186,875
----------
FINANCE (3.1%)
4,250 * Olympic Financial Ltd. 97,750
2,000 PHH Corp. 114,000
7,500 SEI Corp. 158,438
----------
370,188
----------
FOOD AND RELATED (1.0%)
10,000 * Buffets, Inc. 122,500
----------
INDUSTRIAL SERVICES (4.2%)
4,500 Minerals Technologies, Inc. 154,125
8,000 Regal Beloit Corp. 158,000
3,500 York International Corp. 181,125
----------
493,250
----------
INSURANCE (0.9%)
1,900 St. Paul Cos. 101,650
----------
MACHINERY (2.2%)
5,000 * Bridgeport Machines Inc. 82,500
2,900 Kysor Industrial Corp. 70,325
3,000 Trinity Industries, Inc. 102,000
----------
254,825
----------
</TABLE>
(continued)
<PAGE> 78
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL AND RELATED (5.8%)
3,500 Baxter International 165,375
5,500 * Cephalon Inc. 108,625
4,400 Columbia HCA Healthcare 234,850
3,000 * Foundation Health Corp. 107,625
2,000 * Humana Inc. 35,750
1,000 * Quorum Health Group Inc. 26,375
-----------
678,600
-----------
METAL FABRICATING (1.7%)
10,000 Amcast Industrial Corp. 202,500
-----------
METALS AND MINING (1.2%)
7,500 Easco Inc. 61,875
6,000 Greenbrier Companies Inc. 83,250
-----------
145,125
-----------
OIL, ENERGY AND NATURAL GAS (5.3%)
5,000 * Cairn Energy USA Inc. 71,875
6,000 Camco International, Inc. 203,250
7,000 * Louis Dreyfus Natural Gas 105,000
8,000 Santa Fe Energy Resources 95,000
3,000 Williams Cos., Inc. 148,500
-----------
623,625
-----------
RETAIL (1.5%)
10,000 Family Dollar Stores 173,750
-----------
TEXTILES AND RELATED (1.1%)
8,000 Oxford Industries, Inc. 129,000
-----------
TRANSPORTATION (2.1%)
1,595 Burlington Northern Inc. 128,996
1,000 Conrail, Inc. 66,375
2,500 Consolidated Freightways Inc. 52,812
-----------
248,183
-----------
TOTAL COMMON STOCK (86.6%)
(COST $7,657,027) $10,180,896
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (1.3%)
8,000 Westinghouse Electric Co., red.,
cum., conv. $ 150,000
-----------
OIL, ENERGY AND NATURAL GAS (0.8%)
2,000 Howell Corp.
$3.50 Series A 98,000
-----------
REAL ESTATE (0.3%)
1,250 Oasis Residential Inc., 9.000%
Series A 31,875
-----------
TOTAL PREFERRED STOCK (2.4%)
(COST $281,850) $ 279,875
-----------
TOTAL HOLDINGS
(COST $9,222,840)(A) $11,744,734
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
The accompanying notes are an integral part of these financial statements.
<PAGE> 79
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (3.8%)
3,500 * Custom Chrome Inc. $ 94,063
6,000 Defiance Inc. 36,750
2,000 Walbro Corp. 40,500
----------
171,313
----------
BANKING (6.1%)
4,000 Community First Bankshares 94,000
5,000 First Colorado Bancorp 66,250
5,407 Franklin National Bank 56,779
2,000 Susquehanna Bancshares 53,500
----------
270,529
----------
BUILDING AND CONSTRUCTION (4.1%)
4,000 Hardinge Inc. 127,000
4,000 * Zaring Homes, Inc. 55,000
----------
182,000
----------
BUSINESS SERVICES (3.4%)
2,000 Reynolds & Reynolds 106,500
2,500 Wackenhut Corp. Class B 45,937
----------
152,437
----------
CHEMICALS (3.0%)
3,000 Learonal Inc. 75,000
1,500 OM Group Inc. 58,875
----------
133,875
----------
COMMUNICATIONS (7.7%)
3,500 * American Portable Telecom 37,625
3,000 * Atlantic Tele-Network Inc. 72,000
5,000 * Comdial Corp. 43,125
3,000 * General Cable PLC 46,125
4,000 * Granite Broadcasting, Corp. 51,750
3,500 * Xpedite Systems Inc. 93,625
----------
344,250
----------
COMPUTER AND RELATED (6.3%)
4,000 * American Business Info. 73,000
3,000 * Computron Software Inc. 14,625
6,000 * Continental Circuits Corp. 70,500
3,000 * Ikos Systems, Inc. 63,375
5,000 MacNeal-Schwendler Corp. 37,500
2,000 * Medar Inc. 20,750
----------
279,750
----------
CONSUMER PRODUCTS (3.4%)
6,000 * Globe Business Resources 60,000
1,500 Stanhome Inc. 39,750
4,000 Versa Technologies 54,000
----------
153,750
----------
DURABLE GOODS (4.4%)
3,250 * Mastec Inc. 82,062
3,300 Myers Industries 61,462
3,000 * Zebra Technology Corp. 53,250
----------
196,774
----------
ELECTRICAL EQUIPMENT (2.7%)
2,500 BMC Industries Inc. 71,875
2,000 Federal Signal Corp. 47,000
----------
118,875
----------
ENTERTAINMENT AND LEISURE (1.3%)
1,500 Cedar Fair 56,062
----------
FINANCE (6.8%)
6,500 Bando McGlocklin Capital $ 71,500
2,750 * Olympic Financial LTD 63,250
1,500 PHH Corp. 85,500
4,000 SEI Corp. 84,500
----------
304,750
----------
FOOD AND RELATED (1.6%)
6,000 * Buffets, Inc. 73,500
----------
FORESTRY AND PAPER PRODUCTS (2.0%)
6,000 * Specialty Paperboard 87,750
----------
MACHINERY (2.1%)
2,000 * Bridgeport Machines Inc. 33,000
2,500 Kysor Industrial Corp. 60,625
----------
93,625
----------
MEDICAL AND RELATED (6.4%)
9,000 * Bio Whittaker Inc. 75,375
3,000 * Cephalon Inc. 59,250
4,000 Healthcare Realty Trust 95,000
3,000 * ICU Medical 41,250
625 * Quorum Health Group Inc. 16,484
----------
287,359
----------
METAL AND MINING (3.1%)
2,500 Amcast Industrial Corp. 50,625
4,500 Easco Inc. 37,125
3,500 Greenbrier Companies Inc. 48,563
----------
136,313
----------
OIL, ENERGY AND NATURAL GAS (9.4%)
5,000 * Cairn Energy USA Inc. 71,875
2,500 Camco International, Inc. 84,688
5,000 * Louis Dreyfus Natural Gas 75,000
8,000 Santa Fe Energy Resources 95,000
2,000 WD-40 Co. 94,000
----------
420,563
----------
REAL ESTATE (4.8%)
6,000 Commercial Net Lease Realty 83,250
3,000 First Industrial Realty Trust 70,500
3,000 Liberty Property Trust 59,625
----------
213,375
----------
RETAIL (1.9%)
5,000 Family Dollar Stores 86,875
----------
TRANSPORTATION (0.7%)
1,500 * Genesee & Wyoming 30,750
----------
MISCELLANEOUS (4.5%)
6,000 * Offshore Logistics Inc. 83,250
2,000 Pittston Brink's Group 58,250
1,000 Pittston Burlington Group 21,625
1,000 * Whittman-Hart Inc. 36,000
----------
199,125
----------
TOTAL COMMON STOCK (89.5%)
(COST $3,850,096) $3,993,600
----------
</TABLE>
(continued)
<PAGE> 80
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS SMALL CAP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE (0.7%)
1,250 Oasis Residential, Inc.,
9.000% Series A $ 31,876
----------
OIL, ENERGY AND NATURAL GAS (1.1%)
1,000 Howell Corp.
$3.50 Series A 49,000
----------
TOTAL PREFERRED STOCK (1.8%)
(COST $82,350) $ 80,876
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENT VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
BANKING (8.1%)
$360,000 Provident Bank 4.700% due 07-01-96
repurchase price $360,188
collateralized by U.S. Treasury Notes,
due 08-15-96 (Cost $360,000) $ 360,000
----------
TOTAL REPURCHASE AGREEMENTS
(8.1%) (COST $360,000) $ 360,000
----------
TOTAL HOLDINGS
(COST $3,932,446)(a) $4,434,476
==========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities
The accompanying notes are an integral part of these financial statements.
<PAGE> 81
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (20.1%)
15,000 Aida Engineering Limited (19) $ 125,473
3,000 Asatsu Inc. (20) 129,989
3,000 Chofu Seisakusho (9) 74,709
50,000 Dai Tokyo Fire Marine Inc. Co. Ltd.(18) 376,283
35,000 Dowa Fire & Marine (18) 190,924
1,500 Hitachi Ltd. ADR (11) 140,625
12,000 Fuji Photo Film Co. Ltd. (9) 378,746
25,000 * Iino Kaiun Kaisha (5) 135,234
5,000 Ito-Yokado Co. Ltd. (28) 301,482
25,000 Nisshinbo Industries Inc. (8) 246,294
10,000 Shimano Inc. (9) 178,791
25,000 Shoei Co. (27) 294,185
1,800 Toho Co. (20) 318,541
3,000 Tsutsumi Jewelry Co. (9) 145,040
----------
3,036,316
----------
FRANCE (9.5%)
2,000 Compagnic Generale des Eaux (33) 223,143
2,500 Elf Aquitaine (12) 183,656
2,000 Emin Leydier (24) 176,574
3,000 Gaumont SA (20) 224,113
2,000 Legrand ADP (10) 234,785
1,000 Nicolas Schlumberger et Cie (19) 131,945
1,000 Promodes C.I. (28) 181,425
350 Taittinger (13) 74,976
----------
1,430,617
----------
LATIN AMERICA (7.5%)
30,000 Antofagasta Holding plc (21) 150,340
5,500 Bladex (3) 309,375
25,000 Cresud S.A. (1) 50,519
150,000 Ledesma S.A. (1) 216,081
300,000 Siderca S.A.I.C. (12) 409,654
----------
1,135,969
----------
SWITZERLAND (7.2%)
50 Bank for Intl. Settements (3) 438,772
500 Kuehne & Nagel Intl. AG (32) 282,010
75 Lindt & Sprungli AG PC (9) 128,640
50 Schindler Holding AG PC (5) 53,052
100 Schindler Warrants AG PC (5) 180
500 Sika Finanz AG Bearer (7) 121,659
200 Vetropack Holdings AG PC (23) 62,226
----------
1,086,539
----------
CANADA (5.1%)
10,000 Canadian Pacific Ltd. (34) 220,000
5,000 Dofasco, Inc. (30) 73,689
2,750 Franco-Nevada Mining Corp. (21) 174,414
15,000 Noranda, Inc. (21) 307,402
----------
775,505
----------
GERMANY (4.6%)
7,500 Bayer AG (7) 263,508
1,000 Buderus AG (5) 423,187
----------
686,695
----------
NETHERLANDS (4.3%)
4,500 German City Estates NV (27) 57,925
3,500 Apothekers Cooperatie OPG (17) 93,587
4,500 Randstad Holding NV (29) 331,754
5,000 Philips Electronics NV ADR (11) 163,125
----------
646,391
----------
NEW ZEALAND (4.2%)
50,000 Apple Fields, Ltd. (14) $21,973
100,549 Carter Holt Harvey Limited (14) 229,910
130,000 Shortland Properties, Ltd. (27) 73,197
240,260 Tasman Agriculture Limted (1) 206,218
15,000 Wilson & Horton Ltd. (1) 99,908
----------
631,206
----------
HONG KONG (3.7%)
500,000 CDL Hotels Intl. Ltd. (16) 274,523
250,000 Shaw Brothers (Hong Kong) Ltd.(20) 290,671
----------
565,194
----------
SINGAPORE (3.4%)
75,000 Clipsal Industries Ltd. (10) 210,750
15,000 Singapore Bus Service Ltd. (32) 106,293
100,000 Thakral Corporation (10) 75,500
50,000 Times Publishing Ltd. (25) 121,882
----------
514,425
----------
SWEDEN (3.3%)
8,500 AssiDoman AB (14) 197,811
12,000 Bylock & Nordsjofrakt AB 'B' (32) 118,393
7,000 IRO AB (19) 71,699
7,500 Orrefors Kosta Boda 'Free' (9) 111,841
----------
499,744
----------
INDONESIA (2.7%)
5,500 Freeport McMoRan Pfd. 'C' (22) 176,000
10,500 Freeport McmoRan Pfd. 'D' (22) 229,688
----------
405,688
----------
UNITED KINGDOM (1.8%)
25,000 Berisford plc (34) 70,205
45,000 * McBride plc (9) 91,461
25,000 Royal Doulton plc (9) 106,666
----------
268,332
----------
DENMARK (1.4%)
3,500 Carlsberg International A/S 'B' (9) 205,619
----------
NORWAY (1.3%)
15,000 Schibsted AS (20) 193,661
----------
ITALY (1.2%)
300,000 * Montedison NC Savings SPA (34) 179,661
----------
FINLAND (0.8%)
2,500 Vaisala Oy A (5) 126,037
----------
MEXICO (0.7%)
25,000 Industrias Penoles SA de CV (21) 114,371
----------
ISRAEL (0.6%)
35,000 Israel Land Development Co. Ltd. (34) 86,521
----------
SPAIN (0.5%)
1,000 Corporacion Financiera Alba SA (34) 83,076
----------
BELGIUM (0.6%)
571 Engrais Rosier SA (34) 83,029
----------
</TABLE>
(continued)
<PAGE> 82
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS INTERNATIONAL PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
SOUTH KOREA (0.5%)
10,000 L.G. Electronics Pfd GDR (11) $ 75,500
-----------
TURKEY (0.4%)
2,662,640 Medya Holdings SA (25) 58,129
-----------
MISCELLANEOUS (3.2%)
12,000 North European Oil Royalty Tr. (12) 160,500
3,000 Minorco ADR (34) 71,250
85,000 Lonrho plc (34) 243,973
-----------
475,723
TOTAL COMMON & PREFERRED STOCK -----------
(88.6%) ( COST $11,510,083) $13,363,948
===========
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (5.3%)
$138,000 American Express
5.390% 07-01-96 (15) $138,000
655,000 Unilever Capital Corp.
5.270% 07-09-96 (15) 654,233
--------
792,233
TOTAL SHORT-TERM NOTES (5.3%) --------
( COST $792,233) $792,233
--------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (0.8%)
$150,000 Federal Republic of Brazil 6.500%
due 04-15-06 (15) $120,516
--------
TOTAL NON CONVERTIBLE BONDS
(0.8%) ( COST $93,942) $120,516
--------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (3.6%)
$250,000 Cheil Foods & Chemicals Co.
3.000% due 12-31-06 (9) $ 307,500
75,000 Ssangyong Cement Co.
3.000% due 12-31-05 (6) 92,625
50,000 PT Pabrik Kertas Tjiwi Kimia
7.250% due 4-12-01 (24) 47,875
100,000 Tubos de Acero de Mexico SA
7.500% due 6-12-97 (12) 99,000
-----------
547,000
-----------
NON-U.S. DOLLAR (1.2%)
170,000 NZ Shortland Properties Inc.
7.500% due 12-31-98 (27) 101,556
7,000,000 JPY Nippon Yusen
2.000% due 09-29-00 (32) 77,902
-----------
179,458
Total Convertible Debentures -----------
(4.8%) ( Cost $651,570) $ 726,458
-----------
Total Holdings
(Cost $13,047,828)(a) $15,003,155
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
<TABLE>
<CAPTION>
FOREIGN CURRENCIES INDUSTRY CLASSIFICATIONS
<S> <C> <C>
NZ - New Zealand Dollar (1) Agriculture (18) Insurance
JPY - Japanese Yen (2) Automotive (19) Machinery
(3) Banking (20) Media
(4) Building Products (21) Metal (non-ferrous)
(5) Capital Goods (22) Mining
(6) Cement (23) Packaging
(7) Chemicals (24) Paper
(8) Computer Products (25) Publishing
(9) Consumer Products (26) Rail Equipment
(10) Electrical Products (27) Real Estate
(11) Electronics (28) Retailing
(12) Energy and Oil (29) Services
(13) Food & Beverage (30) Steel
(14) Forest Products (31) Textile
(15) Governmental (32) Transportation
(16) Hotels (33) Utilities
(17) Health Care (34) Miscellaneous
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 83
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
U.S STOCKS
CHEMICALS (1.1%)
5,000 Lawter International Inc. $ 62,500
----------
CAPITAL GOODS (0.8%)
1,000 Bandag Inc. Class 'A' 46,875
----------
CONSUMER PRODUCTS (6.1%)
2,000 Allen Organ Co. Class 'B' 75,500
1,300 Dole Foods Company, Inc. 55,900
10,000 Furniture Brands Intl., Inc. 110,000
5,000 Unifirst Corp. 105,625
----------
347,025
----------
ELECTRONICS (3.5%)
5,000 * Avid Technology, Inc. 92,500
5,000 Zero Corp. 106,875
----------
199,375
----------
FINANCE (4.8%)
5,000 * Classic Bancshares Inc. 52,500
7,000 East Texas Financial Services 101,500
5,000 * First Federal Financial Corp. 55,000
5,000 Southern Banc Company, Inc. 63,125
----------
272,125
----------
FOREST PRODUCTS (3.3%)
500 Georgia Pacific Corporation 35,500
2,500 Greif Brothers Corp. Class 'A' 78,438
2,000 Rayonier Inc. 76,000
----------
189,938
----------
MEDIA (2.0%)
2,000 Cowles Media Co. Pfd. 48,000
8,000 Integrity Music, Inc. 'A' 18,000
5,000 * Plasti Line, Inc. 45,000
----------
111,000
----------
METALS AND MINERALS (2.4%)
3,000 Asarco, Inc. 82,875
1,000 Reynolds Metals Company 52,125
----------
135,000
----------
OIL AND ENERGY (4.9%)
6,500 North European Oil Royalty Trust 86,938
1,300 Rochester & Pittsburgh Coal Co. 40,950
10,000 San Juan Basin Royalty Trust 61,250
2,957 * Weatherford Enterra Corporation 88,710
----------
277,848
----------
REAL ESTATE (2.7%)
2,000 Alico, Inc. 39,000
2,000 Catellus Development Pfd. 106,000
433 * Castle & Cooke, Inc. 6,928
----------
151,928
----------
UTILITIES (0.8%)
2,000 Montana Power Co. 44,500
----------
MISCELLANEOUS (1.1%)
6,000 * Kaiser Ventures Inc. 61,500
----------
TOTAL U.S. (33.5%) $1,899,614
----------
FOREIGN
JAPAN (8.2%)
5,000 Airport Facilities Co., Ltd. (32) $ 43,375
6,000 Dai Tokyo Fire & Marine Ins. Co., Ltd. (18) 45,154
10,000 Dowa Fire & Marine Ins. Co., Ltd. (18) 54,550
2,500 Fuji Photo Film Co. Ltd. (9) 78,905
7,000 Nittetsu Mining Co., Ltd. (22) 71,517
400 Toho Co. (20) 70,787
4,000 Tokio Marine Fire & Ins. Co., Ltd. (18) 53,272
3,000 Yoshimoto Kogyo Co. (20) 45,427
----------
462,987
----------
FRANCE (6.3%)
5 Bank for Intl. Settlements (3) 41,330
650 Emin Leydier (14) 57,386
83 FIMALAC SA (34) 36,381
1,100 Gaumont SA (20) 82,175
500 Legrand ADP (10) 58,696
250 Nicolas Schlumberger et Cie (19) 32,987
600 Rougier SA (14) 50,062
----------
359,017
----------
LATIN AMERICA (4.2%)
10,000 Antofagasta Holding plc (21) 50,113
150,000 * Grupo Fernandez Editores (25) 61,107
25,000 IRSA Inversiones y Rep. SA (27) 85,532
30,000 Ledesma SA (1) 43,216
----------
239,968
----------
GERMANY (4.1%)
2,500 Bayer AG (7) 87,836
200 Buderus AG (5) 84,637
100 Axel Springer Verlag AG (20) 62,330
----------
234,803
----------
SWITZERLAND (4.0%)
5 Bank for Intl. Settlements (3) 43,877
200 Kuehne & Nagel International AG (3) 112,804
65 Schindler Holding AG PC (5) 68,967
65 Schindler Holding AG 'Warrants' (5) 117
----------
225,765
----------
INDONESIA (3.2%)
2,500 Freeport McMoRan Pfd. 'D' (22) 54,687
4,000 Freeport McMoRan Pfd. 'C' (22) 128,000
----------
182,687
----------
NEW ZEALAND (3.2%)
50,000 Carter Holt Harvey Ltd. (14) 114,327
50,000 Shortland Properties, Ltd. (27) 28,153
50,000 Wrightson Ltd. (1) 36,736
----------
179,216
----------
BELGIUM (2.2%)
376 Engrais Rosier SA (34) 54,674
30 Socfinasia SA (34) 68,974
----------
123,648
----------
UNITED KINGDOM (2.2%)
45,000 ED & F Man (34) 121,482
----------
SOUTH AFRICA (2.1%)
10,000 Vaal Reefs Exploration Ltd. ADR (21) 80,000
2,500 Western Areas Gold Mining Ltd. (21) 38,968
----------
118,968
----------
</TABLE>
(continued)
<PAGE> 84
ONE FUND, INC. JUNE 30, 1996
SCHEDULE OF INVESTMENTS GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
HONG KONG (2.0%)
100,000 CDL Hotels Intl. Ltd. (16) $ 54,905
50,000 Shaw Brothers (Hong Kong) Ltd.(20) 58,134
----------
113,039
----------
PORTUGAL (1.8%)
8,000 Espirito Santo Financial Holdings (3) 102,000
----------
SWEDEN (1.7%)
5,000 Bylock & Nordsjofrakt AB 'B' (32) 49,331
2,500 Terra Mining AB (22) 47,824
----------
97,155
----------
CANADA (1.1%)
3,000 Noranda, Inc. (21) 61,480
----------
SINGAPORE (0.8%)
6,500 Singapore Bus Service Ltd. (32) 46,060
----------
AUSTRALIA (0.8%)
30,000 Barlile Corp. Limited (1) 44,862
----------
NETHERLANDS (0.6%)
2,500 German City Estates NV (27) 32,181
----------
ISRAEL (0.4%)
10,000 Israel Land Development Co. Ltd. (34) 24,720
----------
MISCELLANEOUS (1.3%)
25,000 Lonrho plc (34) 71,757
----------
TOTAL FOREIGN (50.2%) $2,841,795
----------
TOTAL COMMON & PREFERRED STOCK
(83.7%) (COST $4,315,737) $4,741,409
----------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (2.2%)
$121,000 American Express Credit Corp.
5.390% due 07-01-96 $121,000
--------
CONSUMER PRODUCTS (4.3%)
246,000 Coca Cola Co.
5.300% due 07-24-96 245,167
Total Short-Term Notes (6.5%) --------
(Cost $366,167) $366,167
--------
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR
$50,000 Aracruz Cellulose SA 9.000%
due 07-22-98 (14) $ 49,875
50,000 Cemex SA 10.000%
due 11-05-99 (6) 49,937
50,000 Noble Drilling 9.250%
due 10-01-03 (12) 49,875
150,000 Federal Republic Of Brazil EI FRN
6.500% due 04-15-06 (15) 120,516
148,500 Republic of Argentina FRB
6.312% due 03-31-05 (15) 116,062
50,000 PT Pabrik Kertas Tjiwi Kimia
13.250% due 08-01-01 (14) 56,063
--------
TOTAL NON-CONVERTIBLE BONDS
(7.8%) (COST $389,835) $442,328
--------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
NON U.S. DOLLAR
$100,000 NZ Shortland Properties Inc.
7.500% due 12-31-98 (27) $ 59,738
100,000 FF Immobilier Hoteliere
5.000% due 01-01-01 (16) 31,046
----------
TOTAL CONVERTIBLE DEBENTURES
(1.6%) (COST $97,642) $ 90,784
----------
TOTAL HOLDINGS
(COST $5,169,381)(A) $5,640,688
==========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
FOREIGN CURRENCIES
NZ - New Zealand Dollar
FF - French Franc
<TABLE>
<CAPTION>
INDUSTRY CLASSIFICATIONS
<S> <C> <C>
(1) Agriculture (12) Energy and Oil (23) Packaging
(2) Automotive (13) Food & Beverage (24) Paper
(3) Banking (14) Forest Products (25) Publishing
(4) Building Products (15) Governmental (26) Rail Equipment
(5) Capital Goods (16) Hotels (27) Real Estate
(6) Cement (17) Health Care (28) Retailing
(7) Chemicals (18) Insurance (29) Services
(8) Computer Products (19) Machinery (30) Steel
(9) Consumer Products (20) Media (31) Textile
(10) Electrical Products (21) Metal (non-ferrous) (32) Transportation
(11) Electronics (22) Mining (33) Utilities
(34) Miscellaneous
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 85
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(1) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
ONE Fund, Inc. (Fund) is registered under the Investment Company Act of
1940 as amended (the "1940 Act"), as a diversified open-end management
investment company. The Fund is a series investment company which consists
of eight separate investment portfolios that seek the following investment
objectives:
MONEY MARKET PORTFOLIO -- current income consistent with preservation of
capital and liquidity.
TAX-FREE INCOME PORTFOLIO -- high current income exempt from federal income
taxes.
INCOME PORTFOLIO -- high current income. Preservation of capital is a
secondary objective.
INCOME & GROWTH PORTFOLIO -- moderate income with the potential for
increasing income over time. Growth of capital is also a primary objective.
GROWTH PORTFOLIO -- long-term capital growth.
SMALL CAP PORTFOLIO -- maximum capital growth by investing primarily in
common stocks of small and medium sized companies.
INTERNATIONAL PORTFOLIO -- long-term capital growth by investing primarily
in common stocks of foreign companies.
GLOBAL CONTRARIAN PORTFOLIO -- long-term growth of capital by investing in
foreign and domestic securities believed to be under valued or presently
out of favor.
The following is a summary of significant accounting policies:
Investments in the Money Market Portfolio are valued at amortized cost in
accordance with Rule 2a-7 which approximates market value. Premiums and
discounts are amortized on a straight line basis. For the Money Market,
Income and the Tax-Free Income Portfolios, all of the undistributed net
income is accrued as daily dividends to shareholders of record immediately
before each computation of the net asset value of these portfolios.
Dividends (representing net investment income) will normally be paid
monthly to the shareholders of these three portfolios. Distributions
arising from net investment income from the remaining portfolios are
declared and paid to shareholders quarterly and are recorded on the
ex-dividend date. Accumulated net realized capital gains are distributed to
shareholders at least once a year.
For all other portfolios, securities which are traded on U.S. and foreign
stock exchanges or in the over-the-counter markets are valued at the last
sale price or, if there has been no sale that day, at the last bid price
reported as of 4 p.m. Eastern time on each day the New York Stock Exchange
is open for unrestricted trading. Over-the-counter securities are valued at
the last bid price as of that time. Short-term investments (investments
with remaining maturities of 60 days or less) are valued at amortized cost
and fixed income securities are valued by using market quotations, or
independent pricing services which use prices provided by market markers or
estimates of market values obtained from yield data relating to instruments
or securities with similar characteristics. All investments and cash quoted
in foreign currencies are valued daily in U.S. dollars on the basis of the
foreign currency exchange rates prevailing at the time of such valuation.
Foreign currency exchange rates are generally determined prior to 4 p.m.
Eastern time. Occasionally, events affecting the value of foreign
investments and such exchange rates occur between the time at which they
are determined and the time of valuation, which in the case of the
International and Global Contrarian Portfolios, would not be reflected in
the computation of the portfolios' net asset values. If events materially
affecting the value of such securities or currency exchange rates occurred
during such time period, the securities are valued at their fair value as
determined in good faith by or under the direction of the Fund's Board of
Directors.
In connection with purchases and sales of securities denominated in foreign
currencies, the Fund may enter into forward foreign currency exchange
contracts (forward contract). A forward contract is a commitment to
purchase or sell a foreign currency at a future date, at a negotiated rate.
Additionally, the Fund may enter into such contracts to hedge certain other
foreign currency denominated investments. These contracts are recorded at
market value, and the related realized and unrealized foreign exchange
gains and losses are included in the statement of operations. In the event
that counterparties fail to settle these currency contracts or the related
foreign security trades, the Fund could be exposed to foreign currency
fluctuations.
The Fund may invest in two kinds of financial futures contracts: stock
index futures contracts and interest rate futures contracts. Stock index
futures contracts are contracts developed by and traded on national
commodity exchanges whereby the buyer will, on a specified future date, pay
or receive a final cash payment equal to the difference between the actual
value of the stock index on the last day of the contract and the value of
the stock index established by the contract multiplied by the specific
dollar amount set by the exchange. Futures contracts may be based on
broad-based stock indexes such as the Standard & Poor's 500 Index or on
narrow-based stock indexes. A particular index will be selected according
to Ohio National Investments, Inc. ("ONI's"), the investment advisor to the
Fund, investment strategy for the particular portfolio. The Fund may enter
into such contracts to reduce the risk of fluctuation of portfolio
securities values or to take advantage of expected market flucuations.
(continued)
<PAGE> 86
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
Securities transactions are recorded on a trade date basis. Dividend income
is recognized on the ex-dividend date (except in the case of the
International and Global Contrarian Portfolios in which dividends are
recorded as soon after the ex-dividend date as the fund becomes aware of
such dividends), and interest income is accrued daily as earned. Net
realized gain or loss on investments and foreign exchange transactions are
determined on the basis of identified cost.
The books and records of the International and Global Contrarian Portfolios
are maintained in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars on the following basis:
(1) market value of investments, other assets and liabilities -- at
exchange rates prevailing at the end of the period.
(2) purchases and sales of investments, income and expenses -- at the rates
of exchange prevailing on the respective dates of such transactions.
Although the net assets and the market value of the portfolios are
presented at the foreign exchange rates at the end of the period, the
portfolios do not generally isolate the effect of fluctuations in foreign
exchange rates from the effect of changes in the market price of the
investments. However, the portfolios do isolate the effect of fluctuations
in foreign exchange rates when determining the gain or loss upon sale or
maturity of foreign-currency denominated debt obligations pursuant to
Federal income tax regulations.
Foreign investment and currency transactions may involve certain
considerations and risks not typically associated with investing in U.S.
companies and the U.S. Government. These risks, including re-evaluation of
currency and future adverse political and economic developments, could
cause investments and their markets to be less liquid and prices more
volatile than those of comparable U.S. companies and the U.S. Government.
Each portfolio may acquire repurchase agreements from member banks of the
Federal Reserve System which ONI deems creditworthy under guidelines
approved by the Board of Directors, subject to the seller's agreement to
repurchase such securities at a mutually agreed upon date and price. The
repurchase price generally equals the price paid by the portfolio plus
interest negotiated on the basis of current short-term rates, which may be
more or less than the rate on the underlying portfolio securities. The
seller, under a repurchase agreement, is required to maintain as collateral
for the repurchase transaction securities in which the portfolio has a
perfected security interest with a value not less than 100% of the
repurchase price (including accrued interest). Securities subject to
repurchase agreements are held by the Fund's custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system. Repurchase
agreements are considered to be loans by the portfolio under the 1940 Act.
For Federal income tax purposes, the Tax- Free Income and Income Portfolios
had net capital losses of $7,298 and $110,897 respectively at June 30,
1996. If not offset by subsequent capital gains, $50,933 will expire June
30, 2003 in the Income Portfolio and $7,298 and $59,964 will expire June
30, 2004 in the Tax-Free Income and Income Portfolios, respectively. The
Board of Directors does not intend to authorize a distribution of any net
realized gain for the portfolios until the capital loss carryovers have
been offset or expire.
It is the policy of the Fund to distribute to its shareholders
substantially all of its taxable income, thus gaining relief from Federal
income taxes under provisions of current tax regulations applicable to
investment companies of this type. Accordingly, no provision for Federal
income taxes has been made.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
The gross unrealized appreciation and depreciation of investments in each
portfolio as of June 30, 1996 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO
----------------------------------------------------------------------------------------------------
MONEY TAX-FREE INCOME & SMALL INTER- GLOBAL
MARKET INCOME INCOME GROWTH GROWTH CAP NATIONAL CONTRARIAN
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation .... $ -- $420,367 $ 85,528 $2,153,386 $3,070,363 $ 741,040 $2,580,415 $ 690,367
Depreciation .... (10,898) (77,269) (339,662) (548,469) (239,010) (625,088) (219,060)
----------------------------------------------------------------------------------------------------
Net unrealized
Appreciation .... $ -- $409,469 $ 8,259 $1,813,724 $2,521,894 $ 502,030 $1,955,327 $ 471,307
====================================================================================================
</TABLE>
(continued)
<PAGE> 87
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
The Money Market, Income, Income & Growth and Growth Portfolios were
organized on May 12, 1992 with the commencement of operations on August 18,
1992. The International Portfolio was organized on March 18, 1993 with
commencement of operations on April 30, 1993. The Small Cap, Tax-Free
Income and Global Contrarian Portfolios were organized on September 15,
1994 with the commencement of operations on November 1, 1994.
Organizational expenses of approximately $68,000 were incurred with the
start up of the original four portfolios, $11,590 with the start up of the
International Portfolio and $7,813 with the Small Cap, Tax-Free Income and
Global Contrarian Portfolios. Such expenses will be charged against
operations on a straight line basis over a period of 60 months from the
commencement of operations of the respective portfolios. The Fund's
sponsoring entity, Ohio National Life Insurance Company (ONLIC), has agreed
that it shall continue to hold the intial shares purchased by it for at
least as long as unamortized deferred organizational expenses continue to
be carried as an asset of the Fund. The initial shares purchased were
25,000 shares of the Money Market Portfolio, 2,500 shares each of the
Income, Income & Growth and Growth Portfolios and 100 shares each of the
International, Small Cap, Tax-Free Income and Global Contrarian Portfolios.
ONLIC and its affiliates have also purchased additional shares of each
portfolio and as of June 30, 1996 the additional shares owned were as
follows: 11,844,570 shares of the Money Market Portfolio, 544,462 shares of
the Tax-Free Income Portfolio, 496,855 shares of the Income Portfolio,
404,431 shares of the Income & Growth Portfolio, 289,013 shares of the
Growth Portfolio, 210,852 shares of the Small Cap Portfolio and 264,296
shares of the Global Contrarian Portfolio.
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities) from July 1, 1995 to June 30, 1996 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO
----------------------------------------------------------------------------------------------------
MONEY TAX-FREE INCOME & SMALL INTER- GLOBAL
MARKET INCOME INCOME GROWTH GROWTH CAP NATIONAL CONTRARIAN
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common and Preferred
Stocks and bonds:
Purchases............ $ -- $938,547 $799,239 $2,173,061 $ 3,938,170 $2,373,624 $ 4,020,828 $2,098,419
----------------------------------------------------------------------------------------------------
Sales................ -- 477,250 185,630 545,122 1,822,326 1,041,545 2,571,099 1,166,746
----------------------------------------------------------------------------------------------------
U. S. Government:
Purchases ........... -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------
Sales................ -- -- 406,969 -- -- -- -- --
====================================================================================================
</TABLE>
(3) INVESTMENT ADVISORY AGREEMENT, SUB-ADVISORY AGREEMENT AND TRANSACTIONS WITH
AFFILIATED PERSONS
The Fund has an investment advisory agreement with ONI, a wholly owned
subsidiary of ONLIC, under the terms of which ONI provides portfolio
management and investment advice to the Fund and administers its other
affairs, subject to the supervision of the Fund's Board of Directors. As
compensation for its services, the Fund pays ONI a fee based on the average
daily net asset value of each portfolio's assets.
For assets held in the Money Market, Tax-Free Income, Income, Income &
Growth, Growth and Small Cap Portfolios, the fees are as follows:
<TABLE>
<CAPTION>
PORTFOLIO
---------------------------------------------------------------
MONEY TAX-FREE INCOME & SMALL
MARKET INCOME INCOME GROWTH GROWTH CAP
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $100 mil ..... 0.30% 0.60% 0.50% 0.50% 0.50% 0.65%
Next $150 mil ...... 0.25% 0.50% 0.40% 0.40% 0.40% 0.55%
Over $250 mil ...... 0.20% 0.40% 0.30% 0.30% 0.30% 0.45%
</TABLE>
For the International and Global Contrarian Portfolios, ONI is paid a fee
at an annual rate of 0.90% of each Portfolios' average daily net asset
values. ONI then pays Societe Generale Asset Management Corporation (SGAM)
fees at an annual rate of 0.75% of the average daily net asset value for
directing the investment and reinvestment of each portfolios' assets
pursuant to a sub-advisory agreement between ONI and SGAM dated May 1,
1996. On May 1,1996, ONI succeeded O.N. Investment Management Company
("ONIMCO") as the Fund's investment adviser. Currently, the entire
management fee for the Money Market portfolio and one-half of the
management fees for the Tax-Free Income, Income, Income & Growth, Growth
and Small Cap Portfolios are being waived by
(continued)
<PAGE> 88
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30,1996
ONI. Management fees waived by ONI and ONIMCO for the year ended June 30,
1996 were $48,270 ($.003 per share), $18,284 ($.033 per share), $18,095
($.024 per share), $22,949 ($.031 per share), $23,795 ($.037 per share),
and $12,132 ($.038 per share) for the Money Market, Tax Free Income,
Income, Income & Growth, Growth and Small Cap Portfolios, respectively.
Under the agreement between the Fund and ONI, ONI has agreed to reimburse
the portfolios for expenses, other than the advisory fees, 12b-1 fees,
taxes and interest, in excess of 1% of their average daily net assets. For
the year ended June 30, 1996 the reimbursement to the Global Contrarian
Portfolio by ONI and ONIMCO was $12,200.
Each director who is not an officer of the Fund or an employee of ONI or
its corporate affiliates is paid a quarterly retainer fee of $850 plus $200
for each meeting attended.
The Fund's transfer agent and dividend paying agent is The Provident Bank,
One East Fourth Street, Cincinnati, Ohio. The Provident Bank is also the
custodian for all Portfolios other than the International and Global
Contrarian Portfolios. The custodian for the International and Global
Contrarian Portfolios is Investors Fiduciary Trust Company, 127 West Tenth
Street, Kansas City, Missouri. International and Global Contrarian
Portfolio assets held outside the United States are held under subcustodial
agreements between the depository and Investors Fiduciary Trust Company,
subject to approval by the Board of Directors of the Fund.
Certain directors and officers of the Fund are also directors and officers
of ONI and ONLIC.
(4) CAPITAL SHARE TRANSACTIONS
Capital share transactions for the years ended June 30,1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
MONEY MARKET TAX-FREE INCOME INCOME
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
---------- ---------- ---------- ---------- ---------- ----------
6-30-96 6-30-95 6-30-96 6-30-95(a) 6-30-96 6-30-95
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales ......... 13,411,231 9,788,975 29,199 516,664 79,707 218,237
Capital shares issued
on reinvested dividends.. 821,475 655,189 28,673 14,929 44,241 39,464
Capital shares
redeemed ................ 12,570,685 8,595,276 6,062 1,120 126,327 17,716
<CAPTION>
INCOME & GROWTH
YEAR ENDED YEAR ENDED
---------- ----------
6-30-96 6-30-95
------- -------
<S> <C> <C>
Capital shares
issued on sales ......... 205,769 67,968
Capital shares issued
on reinvested dividends.. 35,442 57,059
Capital shares
redeemed ................ 65,893 160,244
<CAPTION>
GROWTH SMALL CAP INTERNATIONAL
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
---------- ---------- ---------- ---------- ---------- ----------
6-30-96 6-30-95 6-30-95 6-30-95(a) 6-30-96 6-30-95
------- ------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales ......... 241,707 121,570 98,533 278,900 269,792 469,800
Capital shares issued
on reinvested dividends.. 39,278 19,094 9,214 4,622 45,454 75,358
Capital shares
redeemed ................ 56,076 63,769 34,177 9,130 201,916 397,410
<CAPTION>
GLOBAL CONTRARIAN
YEAR ENDED YEAR ENDED
---------- ----------
6-30-96 6-30-95(a)
------- -------
<S> <C> <C>
Capital shares
issued on sales ......... 116,554 380,856
Capital shares issued
on reinvested dividends.. 8,493 10,626
Capital shares
redeemed ................ 17,222 6,072
</TABLE>
(a)Commenced operations November 1, 1994
Sales charges imposed on capital shares sold by ONESCO, the Fund's
principal underwriter, a wholly owned subsidiary of ONLIC, for the year
ended June 30, 1996 were approximately $7,200, $17,700, $69,100, $61,400,
$27,800, $84,700 and $27,000 for the Tax-Free Income, Income, Income &
Growth, Growth, Small Cap, International and Global Contrarian Portfolios,
respectively.
The Fund is authorized to issue 10 billion of its capital shares. The Money
Market Portfolio has been allocated 200 million shares and the other seven
portfolios have been allocated 100 million shares each. The remaining
shares have not been allocated.
(continued)
<PAGE> 89
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30,1996
(5) COMMITMENTS
The International and Global Contrarian Portfolios enter into foreign
currency exchange contracts as a way of managing foreign exchange rate
risk. The Fund may enter into these contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date as a hedge
against either specific transactions or portfolio positions. The objective
of the Fund's foreign currency hedging transactions is to reduce the risk
that the U.S. dollar value of the Fund's securities denominated in foreign
currency will decline in value due to changes in foreign currency exchange
rates. As of June 30, 1996 the International and Global Contrarian
Portfolios had entered into forward currency contracts, as set forth below
summarized by currency:
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
SETTLEMENT CURRENCY TO BE U.S. $ VALUE CURRENCY TO BE U.S. $ VALUE UNREALIZED
DATES THROUGH DELIVERED AT 6/30/96 RECEIVED AT 6/30/96 GAIN (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/09/96 603,000 Swiss Franc 482,516 508,469 U.S. Dollar 508,469 $ 25,953 --
12/27/96 105,000 Swiss Franc 82,547 84,209 U.S. Dollar 84,209 1,662 --
08/16/96 310,000 Deutsche Mark 203,914 212,587 U.S. Dollar 212,587 8,673 --
10/11/96 213,000 Deutsche Mark 140,599 143,442 U.S. Dollar 143,442 2,843 --
07/11/96 3,000,000 French Franc 582,338 605,241 U.S. Dollar 605,241 22,903 --
08/23/96 3,140,000 French Franc 610,675 622,203 U.S. Dollar 622,203 11,528 --
10/18/96 551,000 French Franc 107,438 106,609 U.S. Dollar 106,609 -- $ (829)
07/18/96 70,000,000 Japenese Yen 640,000 707,071 U.S. Dollar 707,071 67,071
08/30/96 85,200,000 Japanese Yen 783,628 823,932 U.S. Dollar 823,932 40,304 --
10/25/96 45,750,000 Japanese Yen 424,063 439,217 U.S. Dollar 439,217 15,154 --
--------- ------------------------------------
4,057,718 4,252,980 $196,091 $ (829)
========= ====================================
</TABLE>
(6) DISTRIBUTION PLAN
The Fund has a distribution agreement (12b-1 Plan) with ONESCO under the
terms of which the Fund pays a fee for shareholders services and sales of
Fund shares based on the average daily net assets of the portfolios. For
those assets not in the Money Market Portfolio, the fee is at an annual
rate of 0.25% of average net assets and can increase to 0.30% for sales
representatives who service $5 million or more of Fund shares. The fee for
the Money Market Portfolio is 0.15% of average net assets and can increase
to a maximum of 0.17% for the aforementioned servicing level.
GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
SETTLEMENT CURRENCY TO BE U.S. $ VALUE CURRENCY TO BE U.S. $ VALUE UNREALIZED
DATES THROUGH DELIVERED AT 6/30/96 RECEIVED AT 6/30/96 GAIN (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
07/03/96 150,000 Deutsche Mark 98,422 104,969 U.S. Dollar 104,969 $ 6,547 --
10/11/96 28,000 Deutsche Mark 18,482 18,644 U.S. Dollar 18,644 162 --
07/11/96 700,000 French Franc 135,879 141,223 U.S. Dollar 141,223 5,344 --
07/18/96 9,000,000 Japanese Yen 82,286 90,909 U.S. Dollar 90,909 8,623 --
08/30/96 15,000,000 Japanese Yen 137,963 146,499 U.S. Dollar 146,499 8,536 --
10/25/96 14,400,000 Japanese Yen 133,476 137,810 U.S. Dollar 137,810 4,334 --
--------- ------------------------------------
606,508 640,054 $ 33,546 --
========= ====================================
</TABLE>
(7) The Financial Highlights on pages 5 through 8 of the prospectus are a part
of these Financial Statements.
<PAGE> 90
ONE FUND, INC.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
ONE Fund, Inc.:
We have audited the accompanying statements of assets and liabilities and the
schedules of investments of ONE Fund, Inc. (comprising, respectively, the Money
Market, Tax-Free Income, Income, Income & Growth, Growth, Small Cap,
International and Global Contrarian Portfolios) as of June 30, 1996, and the
related statements of operations, statements of changes in net assets and the
financial highlights for each of the periods indicated herein. These financial
statements and financial highlights are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1996, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios comprising ONE Fund, Inc. as of June 30, 1996, and the results
of their operations, the changes in their net assets and their financial
highlights for each of the periods indicated herein, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
July 24, 1996
<PAGE> 91
APPENDIX
DEBT SECURITY RATINGS
The Securities and Exchange Commission has designated six nationally recognized
statistical rating organizations: Duff and Phelps, Inc. ("D & P"), Fitch
Investors Service, Inc. ("Fitch"), Moody's Investors Service, Inc. (Moody's"),
Standard & Poor's Corp. ("S & P"), and, with respect to bank-supported debt and
debt issued by banks, broker-dealers and their affiliates, IBCA Inc. and its
British affiliate, IBCA Limited ("IBCA") and Thompson Bankwatch, Inc. ("TBW").
ONIMCO may use the ratings of all six such rating organizations as factors to
consider in determining the quality of debt securities, although it will
generally only follow D&P, Fitch, Moody's and S&P. IBCA and TBW will only be
consulted if fewer than two of the other four rating organizations have given
their top rating to a security. Only the ratings of Moody's and S & P will be
considered in determining the eligibility of bonds for acquisition by the ONE
Fund.
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
COMMERCIAL PAPER:
Moody's short-term debt ratings are opinions of the ability of issuers to
punctually repay senior debt obligations having an original maturity not
exceeding one year.
P-1 The Prime-1 (P-1) rating is the highest commercial paper rating assigned
by Moody's. Issuers (or supporting institutions) rated P-1 have a superior
ability for repayment of senior short-term debt obligations. P-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, high rates of
return on funds employed, conservative capitalization structure with
moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well-established access to a range of financial markets
and assured sources of alternate liquidity.
P-2 Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong
ability for repayment of senior short-term obligations. This will normally
be evidenced by many of the characteristics cited above for P-1, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
BONDS:
Aaa Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa Bonds which are rated as Aa by Moody's are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
<PAGE> 92
A Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa Bonds which are rated Baa by Moody's are considered as medium grade
obligations, that is, they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba Bonds which are rated Ba by Moody's are judged to have speculative
elements. Their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during other good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B by Moody's generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other term of the contract over any long period of time may
be small.
STANDARD & POOR'S CORP. ("S & P")
COMMERCIAL PAPER:
An S & P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than one year.
A-1 This is S & P's highest category and it indicates that the degree of
safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are designated A-1+.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated as A-1.
Bonds:
AAA Bonds rated AAA by S&P are the highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Market prices
move with interest rates, and hence provide maximum safety on all counts.
AA Bonds rated AA by S&P also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here,
too, prices move with the long-term money market.
A Bonds rated A by S&P are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from the
adverse effects of changes in economic and trade conditions. Interest and
principal are regarded as safe. They predominantly reflect money rates in
their market behavior, but to some extent, also economic conditions.
BBB The BBB or medium grade category is the borderline between definitely
sound obligations and those where the speculative element begins to
predominate. These bonds have adequate asset coverage and normally are
protected by satisfactory earnings. Their susceptibility to changing
conditions, particularly to depressions, necessitates constant watching.
Marketwise, the bonds are more responsive to business and trade conditions
than to interest rates. This is the lowest group which qualifies for
commercial bank investments.
<PAGE> 93
BB Debt rated BB by S&P has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB rating.
B Debt rated B by S&P has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B rating
category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.
DUFF & PHELPS, INC. ("D & P")
COMMERCIAL PAPER:
D & P's short-term ratings have incorporated gradations of "1+" and "1-" in
recognition of quality differences within the first tier.
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds,
is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection.
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors
are small.
FITCH INVESTORS SERVICE, INC. ("FITCH")
COMMERCIAL PAPER
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and investment notes.
Fitch's short-term ratings emphasize the existence of liquidity necessary to
meet the issuer's obligations in a timely manner.
F-1+ Exceptionally strong credit quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 Very strong credit quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2 Good credit quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<PAGE> 94
ONE FUND, INC.
FORM N-1A
PART C
OTHER INFORMATION
<PAGE> 95
FINANCIAL STATEMENTS AND EXHIBITS
The following audited financial statements are included in Part B of this
registration statement:
Statements of Assets and Liabilities as of June 30, 1996
Statements of Operations for the year ended June 30, 1996
Statements of Changes in Net Assets for the Years Ended June 30, 1996 and 1995
Schedule of Investments at June 30, 1996 - - Money Market Portfolio
Schedule of Investments at June 30, 1996 - - Tax-Free Income Portfolio
Schedule of Investments at June 30, 1996 - - Income Portfolio
Schedule of Investments at June 30, 1996 - - Income & Growth Portfolio
Schedule of Investments at June 30, 1996 - - Growth Portfolio
Schedule of Investments at June 30, 1996 - - Small Cap Portfolio
Schedule of Investments at June 30, 1996 - - International Portfolio
Schedule of Investments at June 30, 1996 - - Global Contrarian Portfolio
Notes to Financial Statements as of June 30, 1996
Independent Auditors' Report of KPMG Peat Marwick LLP dated July 24, 1996
The following audited financial information is included in Part A of this
registration statement:
Financial Highlights (for the years ended June 30, 1996)
Written consents of the following persons:
Ronald L. Benedict, Esq. as Legal Counsel to the Registrant
Jones & Blouch L.L.P. as Legal Counsel to the Registrant
KPMG Peat Marwick LLP as Independent Certified Public Accountants for the
Registrant
Exhibits:
(5) Investment Advisory Agreement between the Registrant and Ohio National
Investments, Inc., dated May 1, 1996.
<PAGE> 96
(5)(a) Sub-Advisory Agreement (for the International and Global Contrarian
Portfolios) between Ohio National Investments, Inc. and Societe
Generale Asset Management Corp., dated May 1, 1996.
(5)(b) Proposed form of Sub-Advisory Agreement (for the Core Growth Portfolio)
between Ohio National Investments, Inc. and Pilgrim Baxter &
Associates, Ltd., dated November 1, 1996.
(9)(c) Service Agreement among the Registrant, Ohio National Investments, Inc.
and The Ohio National Life Insurance Company, dated May 1, 1996.
(9)(d) Joint Insured Agreement among the Registrant, Ohio National Fund, Inc.
and Ohio National Investments, Inc., dated May 1, 1996.
(10(c) Opinion and consent of Ronald L. Benedict, Esq., as to the shares of
the Registrant's Core Growth Portfolio.
(16) Computation of Peformance Data for the years ended June 30, 1996.
All other relevant exhibits, which have previously been filed with the
Commission and are incorporated herein by reference, are as follows:
(1) Articles of Incorporation of the Registrant as filed in the Maryland
State Department of Assessments and Taxation on April 24, 1992, were
filed as Exhibit (1) of the Registrant's Form N-1A on May 18, 1992.
(1)(b) Articles of Amendment of the Registrant as filed in the Maryland State
Department of Assessments and Taxation on July 28, 1992, were filed as
Exhibit (1)(b) under Pre-effective Amendment No. 2 to the Registrant's
Form N-1A on July 27, 1992.
(1)(c) Articles Supplementary of the Registrant as filed in the Maryland State
Department of Assessments and Taxation on December 30, 1992 were filed
as Exhibit (1)(c) of the Registrant's Form N-1A, Post-effective
Amendment No. 1, on February 16, 1993.
(1)(d) Articles Supplementary of the Registrant as filed in the Maryland State
Department of Assessments and Taxation on September 29, 1994, were
filed as Exhibit (1)(d) of the Registrant's Form N-1A, Post-effective
Amendment no. 6, on May 4, 1995.
(2) By-laws of the Registrant as amended by the Board of Directors on
December 10, 1992 were filed as Exhibit (2) of the Registrant's Form
N-1A, Post-effective Amendment No. 1, on February 16, 1993.
(4) Specimen copies of certificated securities of the Money Market, Income,
Income & Growth and Growth Portfolios were filed as Exhibit (4) of the
Registrant's Form N-1A on May 18, 1992.
(4)(a) Specimen copy of certificated securities of the International Portfolio
were filed as Exhibit (4)(a) of the Registrant's Form N-1A,
Post-effective Amendment No. 2, on February 26, 1993.
(4)(b) Specimen copies of certificated securities of the Tax-Free Income,
Small Cap and Global Contrarian Portfolios were filed as Exhibit (4)(b)
of the Registrant's Form N-1A, Post-effective Amendment No. 5 on
September 1, 1994.
<PAGE> 97
(6) Principal Underwriting Agreement dated May 12, 1992, between the
Registrant and The O.N. Equity Sales Company was filed as Exhibit (6)
of the Registrant's Form N-1A on May 18, 1992.
(8) Custodian Agreement dated May 12, 1992, between the Registrant and The
Provident Bank was filed as Exhibit (8) of the Registrant's Form N-1A
on May 18, 1992.
(8)(a) Custody Agreement (for the International Portfolio) between the
Registrant and Investors Fiduciary Trust Company was filed as Exhibit
(8)(a) of the Registrant's Form N-1A, Post-effective Amendment No. 3
on April 29, 1993.
(9)(a) Agency Agreement dated May 12, 1992, between the Registrant and The
Provident Bank was filed as Exhibit (9)(a) of the Registrant's Form
N-1A on May 18, 1992.
(9)(b) Repurchase Transactions, Terms and Conditions (master agreement) dated
May 12, 1992, between the Registrant and The Provident Bank was filed
as Exhibit (9)(b) of the Registrant's Form N-1A on May 18, 1992.
(9)(e) Engagement Letter of KPMG Peat Marwick as independent auditors for the
Registrant was filed as Exhibit (9)(e) of the Registrant's Form N-1A on
May 18, 1992.
(9)(f) Services Agreement (for the International Portfolio) between the
Registrant and Interactive Data Corporation was filed as Exhibit
(9)(f) of the Registrant's Form N-1A, Post-effective Amendment No. 4,
on September 2, 1993.
(10) Opinion and Consent of Ronald L. Benedict, Esq. was filed as Exhibit
(10) of the Registrant's Form N-1A on May 18, 1992.
(10)(a) Opinion and Consent of Ronald L. Benedict, Esq., as to the shares of
the Registrant's International Portfolio, was filed as Exhibit (10)(a)
of the Registrant's Form N-1A, Post-effective Amendment No. 2, on
February 26, 1993.
(10)(b) Opinion and consent of Ronald L. Benedict, Esq., as to the shares of
the Registrant's Tax-Free Income, Small Cap and Global Contrarian
Portfolios, was filed as Exhibit (10)(b) of the Registrant's Form
N-1A, Post-effective Amendment no. 6, on May 4, 1995.
(13) Investment Letter, dated May 12, 1992, for initial subscription of
capital stock of the Registrant was filed as Exhibit (13) of the
Registrant's Form N-1A on May 18, 1992.
(13)(b) Supplement to Investment Letter, dated July 27, 1992, regarding initial
subscription of capital stock of the Registrant was filed as Exhibit
(13)(b) under Pre-effective Amendment No. 3 to the Registrant's Form
N-1A on August 14, 1992.
(13)(c) Investment Letter for the initial subscription of capital stock of the
Registrant's International Portfolio was filed as Exhibit (13)(c) of
the Registrant's Form N-1A, Post-effective Amendment No. 3 on April 29,
1993.
(13)(d) Investment letter for the initial subscription of capital stock of the
Registrant's Tax-Free Income, Small Cap and Global Contrarian
Portfolios was filed as Exhibit (13)(d) of the Registrant's Form
N-1A, Post-effective Amendment no. 6, on May 4, 1995.
(15) 12b-1 Distribution Plan of Ohio National Equity Fund, Inc. adopted May
12, 1992, was filed as Exhibit (15) of the Registrant's Form N-1A on
May 18, 1992.
<PAGE> 98
(16) Computation of Performance Data was filed as Exhibits (16) of the
Registrant's Form N-1A, Post-effective Amendment no. 4 on September 2,
1993, Post-effective Amendment no. 5 on September 1, 1994, and
Post-effective Amendment no. 7 on September 1, 1995.
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Registrant is an affiliate of The Ohio National Life Insurance Company
("ONLI"). The diagram on page 4A shows all persons under common control with the
Registrant. ONLI is a mutual life insurer and it owns 100% of the voting
securities of each of its subsidiaries. As of August 2, 1996 ONLI also owned
92.3% of the voting securities of Ohio National Fund, Inc. ("ONF") which are
held of record in the variable annuity separate accounts of ONLI. The remaining
7.7% of the voting securities of ONF are held of record by ONLI's wholly-owned
subsidiary, Ohio National Life Assurance Corporation ("ONLAC") in the latter's
variable life insurance separate account. ONLI owns 100% of the voting
securities of the Registrant's investment adviser, Ohio National Investements,
Inc. (the "Adviser") and 100% of the voting securities of the Registrant's
principal underwriter, The O.N. Equity Sales Company ("ONESCO"). ONLI presently
owns 64.2% of the voting securities of the Registrant.
NUMBER OF HOLDERS OF SECURITIES
As of August 2, 1996, the securities of the Registrant were held as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Money Market Portfolio 499
Tax-Free Income Portfolio 47
Income Portfolio 186
Income & Growth Portfolio 676
Growth Portfolio 1,109
Core Growth Portfolio 0
Small Cap Portfolio 477
International Portfolio 1,939
Global Contrarian Portfolio 482
</TABLE>
INDEMNIFICATION
Under Section 2-418 of the Maryland General Corporation Law, with respect to any
proceedings against a present or former director, officer, agent or employee (a
"corporate representative") of the Registrant (a Maryland corporation), except a
proceeding brought by or on behalf of the Registrant, the Registrant may
indemnify the corporate representative against expenses, including attorneys'
fees, and judgments, fines, penalties, and amounts paid in settlement, if such
expenses were actually and reasonably incurred by the corporate representative
in connection with the proceedings, if: (i) he or she acted in good faith; (ii)
in the case of conduct in his or her official capacity he or she reasonably
believed that his or her conduct was in the best interests of the Registrant,
and in all other cases he or she reasonably believed that his or her conduct was
not opposed to the best interests of the Registrant; and (iii) with respect to
any criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful. The Registrant is also authorized under Section 2-418 of
the Maryland General Corporation Law to indemnify a corporate representative
under certain circumstances against reasonable expenses incurred in connection
with the defense of a suit or action by or in the right of the Registrant except
where the corporate representative has been adjudged liable to the Registrant.
Under Article 11 of the Registrant's By-laws, directors and officers of
Registrant are entitled to indemnification by the Registrant to the fullest
extent permitted under Maryland law and the Investment Company Act of 1940.
Reference is made to Article 11 of Registrant's By-laws and Section 2-418 of the
Maryland General Corporation Law.
<PAGE> 99
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
<TABLE>
<S> <C>
..............................................................................
. .
. .
. .
. .
................................. ...................................
Enterprise Park, Inc. Ohio National Equities, Inc.
A Georgia Corporation
Real Estate Development Company A Broker/Dealer
Capitalized by ONLI @ $50,000 Capitalized by ONLI @ $30,000
................................. ...................................
Pres & Dir. M. Stohler Chmn. & Dir. D. O'Maley
Pres. & Dir. D. Zimmerman
V.P. & Dir. J. Brown V.P./COO/Dr. D. McClure
V.P. & Dir. T. Backous
Secy. & Dir. T. Tews Dir. T. Bowerman
Secy. R. Benedict
Treas. & Dir. P. Bergenson Treas. K. Jaeger
Comp. Officer A. Starkey
................................. ...................................
<C> <C> <C>
..................................................................................................................................
. . . . .
. . . Separate Accounts . .
. . ................................ .
. . A . B . C . D . E . F .
. . ................................ .
. . . .
................................ ................................... . ................................................
.
.
. Ohio National Life
Ohio National Investment, Inc. The O.N. Equity Sales Company . Assurance Corporation
An Ohio Corporation . An Ohio Corporation
An Investment Adviser A Broker/Dealer . A stock life insurance company capitalized by
Capitalized by ONLI @ $10,000 Capitalized by ONLI @ $790,000 . ONLI @ $32,000,000 Incorporated under the
. Laws of Ohio
............................... .................................. . ...............................................
Chm. & Dir. D. O'Maley . Chm./Pres./CEO/Dir. D. O'Maley
Pres. & Dir. J. Brown Pres. & Dir. D. Zimmerman . Sr. V.P./Secy./Dir. D. Zimmerman
V.P. & Dir. M. Boedecker V.P./COO/Dir. D. McClure . Sr. V.P. & Dir. J. Brown
V.P. & Dir. D. McClure V.P. & Dir. J. Miller . Sr. V.P. & Dir. R. Dolan
V.P. & Dir. S. Williams Secy. & Dir. R. Benedict . Sr. V.P. & Dir. S. Summers
Treas. D. Taney Vice Pres. R. DiTommaso . Sr. Vice Pres. D. Cook
Secy. R. Benedict Vice Pres. T. MacDonald . Sr. Vice Pres. G. Smith
Treas. K. Jaeger . Vice Pres. P. Bergmann
Comp. Dir. A. Starkey . Vice Pres. M. Boedeker
.............................. ................................... . Vice Pres. R. DiTommaso
. . . Vice Pres. J. Melbery
. . . Vice Pres. G. Pearson
............ Advisor to . . Vice Pres. D. Pennington
. . . . Vice Pres. M. Stohler
. . . . 2nd Vice Pres. J. Houser
. .............................. ................................... . Asst. Secy. R. Benedict
. One Fund, Inc. . Asst. Secy. T. Tews
. A Maryland Corporation O.N. Investment Management Co. . Asst. Actuary K. ???uchel
. An open end diversified An Ohio Corporation . ...............................................
. management investment company A Financial Advisory Service . Separate Account
. .............................. Capitalized by ONESCO @ $145,000 . ....................
. .................................. . R
. Pres. & Dir. D. Zimmerman . .......
. Vice Pres. M. Boedeker Pres. & Dir. J. Brown . .
. Vice Pres. J. Bromm V.P. & Dir. M. Boedeker . ......................... .
. Vice Pres. D. McClure V.P. & Dir. D. McClure .
. Vice Pres. S. Williams V.P. & Dir. S. Williams .
. Treas. D. Taney Treas. D. Taney .
. Secy. & Dir. R. Benedict Secy. R. Benedict .
. Asst. Secy. A. Starkey .
. Dir. G. Castroud .................................. .
. Dir. M. Kirby .
. Dir. G. Vrederveld .
. .............................. .
. .
............ Advisor to .
. .
. .
.............................. .
Ohio National Fund .
A Maryland Corporation .
an open end diversified .
management investment company .
.............................. .
Pres. & Dir. D. Zimmerman .
Vice Pres. M. Broedeker ....................................... .
Vice Pres. J. Brown
Vice Pres. S. Willimas
Treas. D. Taney
Secy. & Dir. R. Benedict
Dir. G. Cannucci
Dir. M. Kirby
Dr. G. Vredeveld
..............................
</TABLE>
<PAGE> 100
BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The Adviser is engaged in providing investment management services to the
Registrant and to ONF. The Adviser is also authorized to provide such services
to others. The Adviser has not engaged in any other business of a substantial
nature during the past two fiscal years. The Adviser succeeded its predecessor,
O.N. Investment Management Company ("ONIMCO") as investment adviser to the
Registrant and ONF on May 1, 1996. Each director and officer of the Adviser
serves in the same capacity for ONIMCO. The names of each director and officer
of the Adviser and the business of a substantial nature of each during the past
two fiscal years are as follows:
<TABLE>
<CAPTION>
Position with Business of a Substantial
Name the Adviser Nature During Past Two Years
- ---- ------------- ----------------------------
<S> <C> <C>
Joseph P. Brom Director and Senior Vice President and
President Chief Investment Officer of
ONLI; Vice President of Registrant;
Senior Vice President of ONLAC; Vice
President of ONF.
Michael A. Boedeker Director and Vice President, Fixed Income
Vice President Securities of ONLI; Vice President of
ONLAC; Vice President of Registrant;
Vice President of ONF.
Stephen T. Williams Director and Director of Securities of ONLI;
Vice President Vice President of Registrant; Vice
President of ONF.
David G. McClure Director and Vice President, Variable Product
Vice President Sales of ONLI; Vice President of
Registrant; Vice President, Chief
Operating Officer and Director of
ONESCO and Ohio National Equities,
Inc. ("ONE, Inc.").
Ronald L. Benedict Secretary Second Vice President and Counsel of ONLI;
Director and Secretary of Registrant;
Director and Secretary of
ONF; Secretary of ONE, Inc.,
Director and Secretary of ONESCO;
Assistant Secretary of ONLAC.
Dennis R. Taney Treasurer Mutual Fund Financial Operations Director
of ONLI; Treasurer of
Registrant; Treasurer of ONF.
</TABLE>
<PAGE> 101
BUSINESS AND OTHER CONNECTIONS OF SGAM
Societe Generale Asset Management Corp. ("SGAM") provides investment management
services to the International and Global Contrarian Portfolios of the Registrant
and of ONF. SGAM's primary business is managing SoGen International Fund, Inc.
and SoGen Funds, Inc. ("SoGen"), diversified investment companies of the
management type registered under the 1940 Act. The officers and directors of
SGAM and their business of a substantial nature during the past two fiscal years
are as follows:
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with SGAM Nature During Past Two Years
- ---- ------------- ----------------------------
<S> <C> <C>
Philip J. Bafundo Secretary Vice President, Secretary and
and Treasurer Treasurer of SoGen; Certified
Public Accountant (New York)
Francis G. Bijon Director International Director of Societe
Generale Asset Management S.A.
Jean-Marie Eveillard President and President and Director of
Director SoGen
Jean-Pierre Gentil Chairman of the Chairman of the Board and
Board and Director Director of SoGen; Manager of
the Investment and Custody
Department of Societe Generale
Jean Roger Huet Director President of New York Branch
of Societe Generale
Jean-Marie Stein Director Director of French Funds of
Societe Generale
</TABLE>
BUSINESS AND OTHER CONNECTIONS OF PBA
Pilgrim Baxter & Associates, Ltd. ("PBA") provides investment management
services to the Core Growth Portfolios of the Registrant and of ONF. PBA also
serves as investment adviser to the PBHG Funds, Inc., diversified investment
companies of the management type registered under the 1940 Act. PBA also
provides investment advisory services to pension and profit-sharing plans,
charitable institutions, corporations, individual investors, trusts, estates and
other investment companies. The officers and directors of PBA and their business
of a substantial nature during the past two fiscal years are as follows:
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with PBA Nature During Past Two Years
- ---- ------------- ----------------------------
<S> <C> <C>
Harold J. Baxter Diretor, Chairman Director of United Asset Management
and Chief Executive Corp.; Director, Chairman and Chief
Officer Executive Officer of PBHG Funds, Inc.
</TABLE>
<PAGE> 102
<TABLE>
<S> <C> <C>
Gary L. Pilgrim Director, President, President of PBHG Funds, Inc.
Secretary, Treasurer
and Chief Investment
Officer
Brian F. Bereznak Director and Chief Vice President and Assistant Secretary
Operating Officer of PBHG Funds, Inc.
Eric C. Schneider Chief Financial Officer N/A
</TABLE>
PRINCIPAL UNDERWRITERS
The principal underwriter, ONESCO, also acts as the principal underwriter of
variable annuity contracts issued by ONLI pursuant to Ohio National Variable
Accounts A (File No. 811-1978), B (File No. 811-1979) and D (File No. 811-8642).
ONESCO is also the principal underwriter of variable life insurance contracts
issued by ONLAC pursuant to Ohio National Variable Account R (File No.
811-4320).
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
David B. O'Maley Director and Chairman None
Donald J. Zimmerman Director and President Director and President
David G. McClure Director, Vice President Vice President
and Chief Operating Officer
James I. Miller II Director and Vice President None
Ronald L. Benedict Director and Secretary Director and Secretary
Robert M. DiTommaso Vice President None
Timothy S. Halevan Vice President None
Thomas MacDonald Vice President None
Kenneth Jaeger Treasurer None
Amy D. Starkey Compliance Director Assistant Secretary
</TABLE>
* The principal business address of each of the foregoing individuals is One
Financial Way, Cincinnati, Ohio 45242.
No commissions or compensation have been received, directly or indirectly,
during the Registrant's last fiscal year, by any principal underwriter that is
not an affiliated person of the Registrant or an affiliated person of such an
affiliated person.
<PAGE> 103
LOCATION OF ACCOUNTS AND RECORDS
The books and records required under Section 31(a) and Rules thereunder are
maintained and in the possession of the following persons:
(a) Journals and other records of original entry:
For those portfolios other than the International and Global
Contrarian Portfolios:
The Provident Bank ("Provident")
One East Fourth Street
Cincinnati, Ohio 45202
For the International and Global Contrarian Portfolios:
Investors Fiduciary Trust Co. ("IFTC")
127 West Tenth Street
Kansas City, Missouri 64105
(b) General and auxiliary ledgers:
Provident and IFTC
(c) Securities records for portfolio securities:
Provident and IFTC
(d) Corporate charter (Articles of Incorporation), By-Laws and Minute
Books:
Ronald L. Benedict, Secretary
ONE Fund, Inc.
One Financial Way
Cincinnati, Ohio 45242
(e) Records of brokerage orders:
The Adviser
(f) Records of other portfolio transactions:
The Adviser
(g) Records of options:
The Adviser
(h) Records of trial balances:
Provident and IFTC
<PAGE> 104
(i) Quarterly records of allocation of brokerage orders and commissions:
The Adviser
(j) Records identifying persons or group authorizing portfolio
transactions:
The Adviser
(k) Files of advisory materials
The Adviser
MANAGEMENT SERVICES
Not Applicable
UNDERTAKINGS
The undersigned Registrant hereby undertakes to file a post-effective amendment
to this registration statement, using financial statements (which need not be
certified) for the Core Growth Portfolio, within four to six months after the
effective date of this registration statement, or earlier if at least one-half
of the dollar amount of securities registered has been raised from a public
offering and has been substantially invested pursuant to the investment
objectives of the Core Growth Portfolio.
<PAGE> 105
SIGNATURES
Pursuant to the requirements of the Securities Act of l933 and the Investment
Company Act of l940, ONE Fund, Inc. has duly caused this post-effective
amendment to its registration statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of Cincinnati and the State of
Ohio on the 14th day of August, 1996.
ONE Fund, Inc.
By /s/Donald J. Zimmerman
------------------------------
Donald J. Zimmerman, President
Attest /s/Ronald L. Benedict
----------------------------
Ronald L. Benedict, Secretary
Pursuant to the requirements of the Securities Act of l933, this post-effective
amendment to its registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/Donald J. Zimmerman President and Director August 14, 1996
- ------------------------------ (Principal Executive Officer)
Donald J. Zimmerman
/s/Dennis R. Taney Treasurer (Principal Financial August 14, 1996
- ------------------------------ and Accounting Officer)
Dennis R. Taney
/s/Ronald L. Benedict Director August 14, 1996
- ------------------------------
Ronald L. Benedict
/s/George E. Castrucci Director August 14, 1996
- ------------------------------
George E. Castrucci
/s/Maurice H. Kirby, Jr. Director August 14, 1996
- ------------------------------
Maurice H. Kirby, Jr.
/s/George M. Vredeveld Director August 14, 1996
- ------------------------------
George M. Vredeveld
</TABLE>
<PAGE> 106
INDEX OF CONSENTS AND EXHIBITS
<TABLE>
<CAPTION>
Page Number in
Exhibit Sequential Numbering
Number Description System Where Located
- ------- ----------- --------------------
<S> <C> <C>
Consent of Ronald L. Benedict, Esq.
Consent of Jones & Blouch L.L.P.
Consent of KPMG Peat Marwick LLP
(5) Investment Advisory Agreement between
the Registrant and Ohio National Investments,
Inc., dated May 1, 1996.
(5)(a) Sub-Advisory Agreement (for the International
and Global Contrarian Portfolios) between Ohio
National Investments, Inc. and Societe Generale
Asset Management Corp., dated May 1, 1996.
(5)(b) Proposed form of Sub-Advisory Agreement (for the
Core Growth Portfolio) between Ohio National
Investments, Inc. and Pilgrim Baxter & Assocites,
Ltd., dated November 1, 1996.
(9(c) Service Agreement among the Registrant, Ohio
National Investments, Inc. and The Ohio National
Ohio Life Insurance Company, dated May 1, 1996.
(9)(d) Joint Insured Agreement among the Registrant,
Ohio National Fund, Inc. and Ohio National
Investments, Inc., dated May 1, 1996.
(10)(c) Opinion and consent of Ronald L. Benedict, Esq., as to
the shares of the Registrant's Core Growth Portfolio.
(16) Computation of Performance Data for the
years ended June 30, 1996
</TABLE>
<PAGE> 107
CONSENTS
<PAGE> 108
[OHIO NATIONAL FUND, INC. LETTERHEAD]
August 14, 1996
The Board of Directors
ONE Fund, Inc.
237 William Howard Taft Road
Cincinnati, Ohio 45219
Re: ONE Fund, Inc. Registration Statement
File Nos. 33-47811 and 811-6675
Gentlemen:
The undersigned hereby consents to the use of my name under the caption of
"Legal Counsel" in the registration statement on Form N-1A of the above
captioned registrant.
Sincerely,
/s/ Ronald L. Benedict
-------------------------------
Ronald L. Benedict
Secretary and Legal Counsel
RLB/nh
<PAGE> 109
JONES & BLOUCH L.L.P.
SUITE 405 WEST
1035 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
JORDEN BURT BERENSON & JOHNSON LLP TELEPHONE (202) 223-3500
AFFILIATED COUNSEL TELECOPIER (202) 223-4593
August 20, 1996
ONE Fund, Inc.
One Financial Way
Cincinnati, OH 45202
Dear Sirs:
We hereby consent to the reference to this firm under the caption
"Legal Counsel" in the Statement of Additional Information included in
Post-Effective Amendment No. 8 under the Securities Act of 1933 and Amendment
No. 10 under the Investment Company Act of 1940 to the Registration Statement
for ONE Fund, Inc. to be filed with the Securities and Exchange Commission,
File Nos. 33-47811 and 811-6675.
Very truly yours,
/s/ Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
<PAGE> 110
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
ONE Fund, Inc.:
We consent to the inclusion of our report included herein and to the references
to our firm under the headings "Financial Highlights" in the prospectus and
"Experts" in the Statement of Additional Information.
KPMG Peat Marwick LLP
Cincinnati, Ohio
August 15, 1996
<PAGE> 111
EXHIBITS
<PAGE> 1
EXHIBIT (5)
Investment Advisory Agreement between the
Registrant and Ohio National Investements, Inc.
dated May 1, 1996
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this first day of May, 1996, by and between ONE FUND, Inc.,
a Maryland corporation (hereinafter called the "Fund") and OHIO NATIONAL
INVESTMENTS, INC., an Ohio corporation (hereinafter called the "Adviser").
WHEREAS, the Fund and the Adviser wish to enter into an Agreement setting forth
the terms upon which the Adviser will perform certain services for the Fund;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADVISER
The Fund hereby appoints the Adviser to manage the investment and reinvestment
of the assets of the Fund and to perform the other services herein set forth,
subject to the supervision of the Board of Directors of the Fund, for the period
and on the terms herein set forth. The Adviser hereby accepts such appointment
and agrees during such period, to render the services and to assume the
obligations herein set forth for the compensation herein provided. Any
investment program undertaken by the Adviser pursuant to this Agreement and any
other activities undertaken by the Adviser on behalf of the Fund shall at all
times be subject to any directives of the Fund's Board of Directors, any duly
constituted committee thereof or any officer of the Fund acting pursuant to like
authority.
2. DUTIES OF ADVISER
In carrying out its obligations to manage the investment and reinvestment of the
assets of the Fund, the Adviser shall:
(a) obtain and evaluate pertinent economic, statistical and financial data and
other information relevant to the investment policies of the Fund, affecting the
economy generally and individual companies or industries the securities of which
are included in the Fund's portfolios or are under consideration for inclusion
therein;
(b) regularly furnish to the Board of Directors of the Fund for approval,
modification or rejection, recommendations with respect to investment programs
consistent with the fundamental policies and related investment policies for
each portfolio as set forth in the Fund's currently effective prospectus and
statement of additional information;
(c) take such steps as are necessary to implement the investment programs
approved by the Fund's Board of Directors by purchase and sale of securities,
including the placing of orders for such purchase and sale; and
<PAGE> 3
(d) regularly report to the Fund's Board of Directors with respect to
implementation of the approved investment programs and the Adviser's activities
in connection with the administration of the Fund.
3. USE OF SUB-ADVISERS
In providing the services and assuming the obligations set forth herein, in
connection with any investment portfolio of the Fund, the Adviser may at its
expense employ one or more Sub-Advisers, or may enter into such service
agreements as the Adviser deems appropriate in connection with the performance
of its duties and obligations hereunder. Reference herein to the duties and
responsibilities of the Adviser shall include any Sub-Adviser employed by the
Adviser to the extent the Adviser shall delegate such duties and
responsibilities to any such Sub-Adviser. Any agreement between the Adviser and
a Sub-Adviser shall be subject to the approval of the Fund, its Board of
Directors, and shareholders of any portfolio affected thereby, as required by
the Investment Company Act of 1940, as amended (the "1940 Act"), and any such
Sub-Adviser shall at all times be subject to the direction of the Board of
Directors of the Fund or any officer of the Fund acting pursuant to the Board's
authority. Furthermore, the Adviser shall perform ongoing due diligence
oversight of any such Sub-Adviser in order to assure continuing quality of
performance by said Sub-Adviser.
4. TO BE FURNISHED BY THE ADVISER
In addition to performing the obligations set forth in paragraph 2 hereof, the
Adviser shall furnish at its own expense or pay the expenses of the Fund for the
following:
(a) office space in the offices of the Adviser or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment;
(b) necessary executive and other personnel for managing the affairs of the
Fund, including personnel to perform clerical, accounting and other office
functions (exclusive of those related to and to be performed under contract for
custodial, bookkeeping, transfer and dividend disbursing agency services by any
bank or other agents selected to perform such services); and
(c) all information and services, other than services of counsel, required in
connection with the preparation of registration statements, prospectuses and
statements of additional information, including amendments and revisions
thereto; all annual, semi-annual and periodic reports; and notices and proxy
solicitation material furnished to shareholders of the Fund or regulatory
authorities.
5. ITEMS NOT REQUIRED TO BE FURNISHED BY THE ADVISER
Nothing in paragraph 4 hereof shall require the Adviser to bear, or to reimburse
the Fund for:
2
<PAGE> 4
(a) any of the costs of printing and mailing the items referred to in
subparagraph (c) of paragraph 4;
(b) the costs of preparation, printing and mailing disclosure documents required
by regulatory authorities;
(c) compensation of directors of the Fund who are not directors, officers or
employees of the Adviser;
(d) registration, filing and other fees in connection with requirements of
regulatory authorities;
(e) the charges and expenses of any custodian appointed by the Fund for
custodial services;
(f) charges and expenses of independent accountants retained by the Fund;
(g) charges and expenses of any transfer, bookkeeping and dividend disbursing
agent appointed by the Fund;
(h) brokers' commissions and issue and transfer taxes chargeable to the Fund in
connection with securities transactions to which the Fund is a party;
(i) taxes and corporate fees payable by the Fund to federal, state or other
governmental agencies;
(j) the cost of stock certificates, if any, representing shares of the Fund;
(k) legal fees and expenses in connection with the affairs of the Fund,
including registering and qualifying its shares with regulatory authorities; and
(l) expenses of shareholders and directors meetings.
6. RELATED SERVICES
(a) The services of the Adviser to the Fund hereunder are not to be deemed
exclusive and the Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired or interfered with thereby.
(b) To better enable it to fulfill its obligations hereunder, the Adviser has
entered into a service agreement with The Ohio National Life Insurance Company,
to which the Fund is also a party, under which The Ohio National Life Insurance
Company has agreed to furnish certain personnel and facilities to the Adviser on
a cost reimbursement basis.
(c) The Adviser and any persons performing executive, administrative or trading
functions for the Fund, whose services were made available to the Fund by the
Adviser, are specifically authorized to allocate brokerage business to firms
that
3
<PAGE> 5
provide brokerage and research services or facilities and to cause the Fund
to pay a member of a securities exchange, or any other securities broker, an
amount of commission for effecting a securities transaction in excess of the
amount another member of an exchange or broker would have charged for effecting
that transaction, if the Adviser or such person determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services, as such services are defined in Section 28(e)
of the Securities Exchange Act of 1934 (the "1934 Act"), provided by such member
or broker, viewed in terms of either that particular transaction or the overall
responsibilities of the Adviser with respect to any accounts as to which the
Adviser exercises investment discretion, as that term is defined in Section
3(a)(35) of the 1934 Act.
7. COMPENSATION OF ADVISER
(a) Each investment portfolio of the Fund shall pay the Adviser, as full
compensation for all services rendered and all facilities furnished hereunder, a
fee computed separately for each portfolio of the Fund at the annual rates shown
on Schedule A hereof or, as to any portfolios added to the Fund after the date
first above written, on any additional Schedules hereto, which rates shall be
based on the current value of the respective portfolio's average total net
assets.
(b) Fees shall be payable at such intervals, not more frequently than monthly
and not less frequently than quarterly, as the Board of Directors of the Fund
may from time to time determine and specify in writing to the Adviser. The fees
shall be calculated on the basis of the average of all valuations of the net
assets of each respective portfolio, made as of the time each business day that
the Board of Directors has set for valuing the current net assets of the Fund,
during the period for which the fees are paid.
8. REIMBURSEMENT OF EXCESS EXPENSES
If in any calendar quarter the total of all ordinary business expenses
applicable to any investment portfolio (excluding the fee payable under
paragraph 7 above to the Adviser, taxes, portfolio brokerage commissions and
interest) should exceed one percent of the average net assets of such investment
portfolio as computed above in paragraph 7, the Adviser shall pay such excess.
For the purposes of this paragraph the term "calendar quarter" shall include the
portion of any calendar quarter which shall have lapsed at the date of
termination of this agreement and the expense limitation shall be that part of
1% proportional to the portion of a full calendar quarter lapsed.
9. INTERESTED PERSONS OF THE FUND AND THE ADVISER
It is understood that directors, officers, agents and shareholders of the Fund
are or may be interested in the Adviser as directors, officers, shareholders, or
otherwise, that directors, officers, agents and shareholders of the Adviser are
or may be interested in the Fund as directors, officers, shareholders or
otherwise, that the Adviser may be interested in the Fund and that the existence
of any such dual
4
<PAGE> 6
interest shall not affect the validity hereof or of any transactions hereunder
except as otherwise provided in the Articles of Incorporation of the Fund and
the Adviser, respectively, or by specific provision of applicable law.
10. LIABILITIES OF ADVISER
Neither the Adviser nor any of its directors, officers or employees, nor any
person performing executive, administrative or trading functions shall be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except for loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its, his or her duties on behalf of the Fund or from reckless
disregard by the Adviser or any such person of the Adviser's duties under this
Agreement. Without limiting the generality of the foregoing, neither the Adviser
nor any such person shall be deemed to have acted unlawfully or to have breached
any duty to the Fund under state or federal law in effect at the date of the
enactment of Section 28(e) of the 1934 Act solely by reason of having caused the
Fund to pay a member of any securities exchange, or any other securities broker
or dealer, an amount of commission for effecting a securities transaction in
excess of the commission another member of a securities exchange, or another
securities broker or dealer, would have charged for effecting that transaction
if the Adviser or such other person determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such member, broker or dealer, viewed in terms of either
that particular transaction or the overall responsibilities of the Adviser with
respect to any accounts to which the Adviser exercises investment discretion.
11. DURATION, TERMINATION AND AMENDMENT
(a) This Agreement shall become effective as to any portfolio upon its approval
for such portfolio by the Board of Directors of the Fund and the shareholders of
the class of capital stock designated for that portfolio. This Agreement will
continue in effect for a period more than two years from the date of its
effectiveness as to any portfolio only so long as such continuance is
specifically approved at least annually either by the Board of Directors of the
Fund or by the vote of a majority of the outstanding voting securities of the
portfolio, provided that in either event such continuance shall also be approved
by the vote of a majority of the directors of the Fund who are not interested
persons (as defined in the 1940 Act) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval. The
required shareholder approval of this Agreement or of any continuance of this
Agreement shall be effective with respect to a portfolio if a majority of the
outstanding voting securities of the class (as defined in Rule 18f-2(h) under
the 1940 Act) of capital stock of the portfolio votes to approve the Agreement
or its continuance, notwithstanding that this Agreement or its continuance may
not have been approved by a majority of the outstanding voting securities of the
entire Fund.
5
<PAGE> 7
(b) If the shareholders of capital stock of any portfolio fail to approve any
continuance of this Agreement, the Adviser will continue to act as investment
adviser with respect to that portfolio pending the required approval of this
Agreement or its continuance, or of a new contract with the Adviser or a
different investment adviser or other definitive action; provided, that the
compensation received by the Adviser in respect of that portfolio during such
period will be no more than the Adviser's actual costs incurred in furnishing
investment advisory and management services to such portfolio or the amount it
would have received under this Agreement, whichever is less.
(c) This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors of the Fund or, with respect to any
portfolio, by the vote of a majority of the outstanding voting securities of
that portfolio on 60 days' written notice to the Adviser, or by the Adviser, on
90 days' written notice to the Fund. This Agreement will automatically terminate
in the event of its assignment (as defined in the 1940 Act).
(d) This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each affected portfolio and by the vote of a majority of the
directors of the Fund who are not interested persons of any party to this
Agreement cast in person at a meeting called for the purpose of voting on such
approval.
12. NOTICES AND GOVERNING LAW
(a) Any notice under the Agreement shall be in writing, addressed and delivered
or mailed postage prepaid to the other party at such address as the other party
may designate for the receipt of notices. Until further notice to the other
party it is agreed that the address of the Fund and that of the Adviser for this
purpose shall be 237 William Howard Taft Road, Cincinnati, Ohio 45219.
(b) This Agreement shall be governed by the law of Ohio.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed by their duly authorized officers, in Cincinnati, Ohio, as of the date
first above written.
ONE FUND, INC. OHIO NATIONAL INVESTMENTS,
INC.
By /s/ Donald J. Zimmerman By /s/ Joseph P. Brom
------------------------------ -------------------------
Donald J. Zimmerman, President Joseph P. Brom, President
ONEInAdv
6
<PAGE> 8
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
Each portfolio of ONE Fund, Inc. shall pay fees to Ohio National Investments,
Inc. computed at the following rates as provided in paragraph 7 of the
Agreement:
<TABLE>
<CAPTION>
Income; International;
Net Assets Money Tax-Free Income & Growth; Small Global
in Portfolio Market Income Growth Cap Contrarian
- ------------ ------ -------- ---------------- ----- --------------
<S> <C> <C> <C> <C> <C>
First $100,000,000 0.30% 0.60% 0.50% 0.65% 0.90%
Next $150,000,000 0.25% 0.50% 0.40% 0.55% 0.90%
All Portfolio Assets 0.20% 0.40% 0.30% 0.45% 0.90%
Over $250,000,000
</TABLE>
Agreed to and accepted as of May 1, 1996.
ONE Fund, Inc. Ohio National Investments, Inc.
By: /s/ Donald J. Zimmerman By: /s/ Joseph P. Brom
------------------------------ ----------------------------
Donald J. Zimmerman, President Joseph P. Brom, President
SchAONE
<PAGE> 1
EXHIBIT (5)(a)
Sub-Advisory Agreement (for the International
and Global Contrarian Portfolios) between Ohio National
Investments, Inc. and Societe Generale Asset
Management Corp., dated May 1, 1996
<PAGE> 2
SUB-ADVISORY AGREEMENT
This Agreement is made as of the first day of May, 1996 by and between OHIO
NATIONAL INVESTMENTS, INC. , an Ohio corporation (the "Adviser"), and SOCIETE
GENERALE ASSET MANAGEMENT CORP., a Delaware corporation (the "Sub-Adviser").
WHEREAS, ONE FUND, INC. (the "Fund"), is a Maryland corporation that is
registered under the Investment Company Act of 1940, as amended, (together with
the regulations promulgated pursuant thereto, the "1940 Act"); and
WHEREAS, the Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended, (together with the regulations promulgated
pursuant thereto, the "Advisers Act"); and
WHEREAS, the Adviser has been appointed as investment adviser to the Fund in
accordance with the 1940 Act and the Advisers Act; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Advisers Act and engages in the business of providing investment advisory
services; and
WHEREAS, the Fund has authorized the Adviser to appoint the Sub-Adviser, subject
to the requirements of the 1940 Act and the Advisers Act, as a sub-adviser with
respect to those portions of the assets of the Fund designated as the
INTERNATIONAL PORTFOLIO and the GLOBAL CONTRARIAN PORTFOLIO of the Fund on the
terms and conditions set forth below;
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
SECTION 1. Investment Advisory Services
(a) The Adviser hereby retains the Sub-Adviser, and the Sub-Adviser hereby
accepts engagement by the Adviser, to supervise and manage on a
fully-discretionary basis the cash, securities and other assets of the
International Portfolio and the Global Contrarian Portfolio that the Adviser
shall from time to time place under the supervision of the Sub-Adviser (such
cash, securities and other assets initially and as same shall thereafter be
increased or decreased by the investment performance thereof and by additions
thereto and withdrawals therefrom by the Adviser shall hereinafter be referred
to as the "Portfolios").
(b) All activities by the Sub-Adviser on behalf of the Adviser and the
Portfolios shall be in accordance with the investment objectives, policies and
restrictions set forth in the 1940 Act and in the Fund's prospectus and
statement of additional information, as amended from time to time (together, the
"Prospectus") and as interpreted from time to time by the Board of Directors of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Portfolios shall also be subject to the due diligence oversight
and direction of the Adviser.
(c) Subject to the supervision of the Adviser, the Sub-Adviser shall have the
sole and exclusive responsibility to select members of securities exchanges,
brokers, dealers and futures commission merchants for the execution of
transactions of the Portfolios and, when applicable, shall negotiate commissions
in connection therewith. All such selections shall be made in accordance with
the Fund's policies and restrictions regarding brokerage allocation set forth in
the Prospectus.
<PAGE> 3
(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolios, the Sub-Adviser shall: (1) obtain and evaluate
pertinent economic, statistical, financial and other information affecting the
economy generally and individual companies or industries the securities of which
are included in each of the Portfolios or are under consideration for inclusion
therein; (2) formulate and implement continuous investment programs for the
Portfolios consistent with the investment objectives and related investment
policies and restrictions for the Portfolios as set forth in the Prospectus; and
(3) take any steps necessary to implement the aforementioned investment programs
by placing orders for the purchase and sale of securities.
(e) In connection with the purchase and sale of securities of the Portfolios,
the Sub-Adviser shall arrange for the transmission to the Adviser and the
Portfolios' custodian on a daily basis such confirmation, trade tickets and
other documents as may be necessary to enable them to perform their
administrative responsibilities with respect to the Portfolios. With respect to
securities of the Portfolios to be purchased or sold through the Depository
Trust Company, the Sub-Adviser shall arrange for the automatic transmission of
the I.D. confirmation of the trade to the Portfolios' custodian.
(f) In connection with the placement of orders for the execution of the
Portfolios' securities transactions, the Sub-Adviser shall create and maintain
all necessary records of the Portfolios as are required of an investment adviser
of a registered investment company including, but not limited to, records
required by the 1940 Act and the Advisers Act. All such records pertaining to
the Portfolios shall be the property of the Fund and shall be available for
inspection and use by the Securities and Exchange Commission, any other
regulatory authority having jurisdiction, the Fund, the Adviser or any person
retained by the Fund or the Adviser. Where applicable, such records shall be
maintained by the Sub-Adviser for the period and in the place required by Rule
31a-2 under the 1940 Act.
(g) The Sub-Adviser shall render such reports to the Adviser and/or to the Board
of Directors of the Fund concerning the investment activity and composition of
the Portfolios in such form and at such intervals as the Adviser or the Board
may from time to time reasonably require.
(h) In acting under this Agreement, the Sub-Adviser shall be an independent
contractor and not an agent of the Adviser or the Fund.
SECTION 2. Expenses
(a) The Sub-Adviser shall assume and pay all of its own costs and expenses,
including those for furnishing such office space, office equipment, office
personnel and office services as the Sub-Adviser may require in the performance
of its duties under this Agreement.
(b) The Fund shall bear all expenses of organizing and registering the
Portfolios, and the Fund and Adviser shall bear all of their respective expenses
of their operations and businesses not expressly assumed or agreed to be paid by
the Sub-Adviser under this Agreement. In particular, but without limiting the
generality of the foregoing, the Fund shall pay any fees due to the Adviser, all
interest, taxes, governmental charges or duties, fees, brokerage and commissions
of every kind arising hereunder or in connection herewith, expenses of
transactions with shareholders of the Portfolios, expenses of offering interests
in the Portfolios for sale, insurance, association membership dues, all charges
of custodians (including fees as custodian and for keeping books, performing
portfolio valuations and rendering other services to the Fund), independent
auditors and legal counsel, expenses of preparing, printing and distributing all
prospectuses, proxy material, reports and notices to shareholders of the Fund,
and all other costs incident to the existence of the Portfolios.
2
<PAGE> 4
SECTION 3. Use of Services of Others
The Sub-Adviser may (at its expense except as set forth in Section 2 hereof)
employ, retain or otherwise avail itself of the services or facilities of other
persons or organizations for the purpose of providing the Sub-Adviser with such
statistical or factual information, such advice regarding economic factors and
trends or such other information, advice or assistance as the Sub-Adviser may
deem necessary, appropriate or convenient for the discharge of the Sub-Adviser's
obligations hereunder or otherwise helpful to the Fund and the Portfolios.
SECTION 4. Sub-Advisory Fees
In consideration of the Sub-Adviser's services to the Fund hereunder, the
Sub-Adviser shall be entitled to a sub-advisory fee, payable quarterly, equal to
0.1875% of the average daily net assets of each of the Portfolios during the
quarter preceding each payment (equivalent to an annual fee of three-quarters of
one percent (0.75%) of the average daily net assets of each of the Portfolios
during the year) (the "Sub-Advisory Fee"). The Sub-Advisory Fee shall be accrued
for each calendar day and the sum of the daily Sub-Advisory Fee accruals shall
be paid quarterly to the Sub-Adviser on or before the fifth business day of the
next succeeding quarter. The daily fee accruals will be computed by multiplying
the fraction of one over the number of calendar days in the quarter by 0.1875%
and multiplying this product by the net assets of each Portfolio as determined
in accordance with the Prospectus as of the close of business on the previous
business day. The Sub-Advisory Fee shall be payable solely by the Adviser, and
the Fund shall not be liable to the Sub-Adviser for any unpaid Sub-Advisory Fee.
SECTION 5. Limitation of Liability of Sub-Adviser
(a) The Sub-Adviser shall be liable for losses resulting from its own acts or
omissions caused by the Sub-Adviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or its reckless disregard
of its duties under this Agreement, and nothing herein shall protect the
Sub-Adviser against any such liability to the shareholders of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any shareholder
of the Fund or to the Adviser for any claim or loss arising out of any
investment or other act or omission in the performance of the Sub-Adviser's
duties under this Agreement, or for any loss or damage resulting from the
imposition by any government of exchange control restrictions which might affect
the liquidity of the Fund's assets maintained with custodians or securities
depositories in foreign countries, or from any political acts of any foreign
governments to which such assets might be exposed, or for any tax of any kind,
including without limitation any statutory, governmental, state, provincial,
regional, local or municipal imposition, duty, contribution or levy imposed by
any government or governmental agency upon or with respect to such assets or
income earned with respect thereto (collectively "Taxation").
(b) In the event the Sub-Adviser is assessed any Taxation in respect of the
assets, income or activities of either Portfolio, the Adviser and the Fund
jointly will indemnify the Sub-Adviser for all such amounts wherever imposed,
together with all penalties, charges, costs and interest relating thereto and
all expenditures, including reasonable attorney's fees, incurred by the
Sub-Adviser in connection with the defense or settlement of any such assessment.
The Sub-Adviser shall undertake and control the defense or settlement of any
such assessment, including the selection of counsel or other professional
advisers, provided that the selection of such counsel and advisers and the
settlement of any assessment shall be subject to the approval of the Adviser and
the Fund, which approvals shall not be unreasonably withheld. The Adviser and
the Fund shall have the right to retain separate counsel and assume the defense
or settlement on behalf of the Adviser and the Fund, as the case may be, of any
such assessment if representation of the Adviser and the Fund by counsel
selected by the Sub-Adviser would be inappropriate due to actual or potential
conflicts of interest.
3
<PAGE> 5
SECTION 6. Services to Other Clients and the Fund
(a) Subject to compliance with the 1940 Act, nothing contained in this Agreement
shall be deemed to prohibit the Sub-Adviser or any of its affiliated persons
from acting, and being separately compensated for acting, in one or more
capacities on behalf of the Fund. The Adviser and the Fund understand that the
Sub-Adviser may act as investment manager or in other capacities on behalf of
other customers including entities registered under the 1940 Act. While
information, recommendations and actions which the Sub-Adviser supplies to and
does on behalf of the Portfolios shall in the Sub-Adviser's judgment be
appropriate under the circumstances in light of the investment objectives and
policies of the Fund, as set forth in the Prospectus delivered to the
Sub-Adviser from time to time, it is understood and agreed that they may be
different from the information, recommendations and actions the Sub-Adviser or
its affiliated persons supply to or do on behalf of other clients. The
Sub-Adviser and its affiliated persons shall supply information, recommendations
and any other services to the Portfolios and to any other client in an impartial
and fair manner in order to seek good results for all clients involved. As used
herein, the term "affiliated person" shall have the meaning assigned to it in
the 1940 Act.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of a Portfolio as well as other customers, the
Sub-Adviser may, with the consent of the Adviser and to the extent permitted by
applicable law, aggregate the securities to be so sold or purchased in order to
obtain the best execution or lower brokerage commissions, if any. The
Sub-Adviser may also on occasion purchase or sell a particular security for one
or more customers in different amounts. On either occasion, and to the extent
permitted by applicable law and regulations, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by the Sub-Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such other
customers.
(c) The Sub-Adviser agrees to use the same skill and care in providing services
to the Fund as it uses in providing services to fiduciary accounts for which it
has investment responsibility. The Sub-Adviser will conform with all applicable
rules and regulations of the Securities and Exchange Commission.
SECTION 7. Reports to the Sub-Adviser
The Adviser shall furnish to the Sub-Adviser the Prospectus, proxy statements,
reports and other information relating to the business and affairs of the Fund
as the Sub-Adviser may, at any time or from time to time, reasonably require in
order to discharge the Sub-Adviser's duties under this Agreement.
SECTION 8. Term of Agreement
Provided that this Agreement shall have first been approved by the Board of
Directors of the Fund, including a majority of the members thereof who are not
interested persons (as defined in the 1940 Act) of either party, by a vote cast
in person at a meeting called for the purpose of voting such approval, then this
Agreement shall be effective on the date hereof. Unless earlier terminated as
hereinafter provided, this Agreement shall continue in effect until approved by
a majority vote of the voting securities of each of the Portfolios, at a meeting
to take place not more than one year after the effective date of the Fund's
registration statement relating to that Portfolio. Thereafter, this Agreement
shall continue in effect from year to year, subject to approval annually by the
Board of Directors of the Fund or by vote of a majority of the voting securities
of each of the Portfolios and also, in either event, by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such person.
4
<PAGE> 6
SECTION 9. Termination of Agreement; Assignment
(a) This Agreement may be terminated by either party hereto without the payment
of any penalty, upon 90 days' prior notice in writing to the other party and to
the Fund, or upon 60 days' written notice by the Fund to the two parties;
provided, that in the case of termination by the Fund such action shall have
been authorized by resolution of a majority of the Board of Directors of the
Fund or by vote of a majority of the voting securities of either or both of the
Portfolios. In addition, this Agreement shall terminate upon the later of (1)
the termination of the Adviser's agreement to provide investment advisory
services to the Fund or (2) notice to the Sub-Adviser that the Adviser's
agreement to provide investment advisory services to the Fund has terminated.
(b) This Agreement shall automatically terminate in the event of its assignment
(as defined in the 1940 Act).
(c) Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior thereto.
SECTION 10. Notices
(a) The Sub-Adviser agrees to promptly notify the Adviser of the occurrence of
any of the following events: (1) any change in any of the Sub-Adviser's officers
or portfolio managers; (2) the Sub-Adviser fails to be registered as an
investment adviser under the Advisers Act or under the laws of any jurisdiction
in which the Sub-Adviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement; (3) the Sub-Adviser is
the subject of any action, suit, proceeding, inquiry or investigation at law or
in equity, before or by any court, public board or body, involving the affairs
of either Portfolio; or (4) any change in ownership or control of the
Sub-Adviser.
(b) Any notice given hereunder shall be in writing and may be served by being
sent by telex, facsimile or other electronic transmission or sent by registered
mail or by courier to the address set forth below for the party for which it is
intended. A notice served by mail shall be deemed to have been served seven days
after mailing and in the case of telex, facsimile or other electronic
transmission twelve hours after dispatch thereof. Addresses for notice may be
changed by written notice to the other party.
If to the Adviser:
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
Fax No. (513) 559-6589
With a copy to:
Joseph P. Brom, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
<PAGE> 7
If to the Sub-Adviser:
Societe Generale Asset Management Corp.
1221 Avenue of the Americas, Eighth Floor
New York, New York 10020
Fax No. (212) 278-5911
With a copy to:
Jean-Marie Eveillard, President
Societe Generale Asset Management Corp.
1221 Avenue of the Americas, Eighth Floor
New York, New York 10020
SECTION 11. Governing Law
This Agreement shall be governed by and subject to the requirements of the laws
of the State of New York without reference to the choice of law provisions
thereof.
SECTION 12. Applicable Provisions of Law
The Agreement shall be subject to all applicable provisions of law, including,
without limitation, the applicable provisions of the 1940 Act, and to the extent
that any provisions herein contained conflict with any such applicable
provisions of law, the latter shall control.
SECTION 13. Counterparts
This Agreement may be entered into in any number of counterparts, each of which
when so executed and delivered shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the day and year first above written.
OHIO NATIONAL INVESTMENTS, INC.
By: /s/ Joseph P. Brom
-----------------------------------
Joseph P. Brom, President
SOCIETE GENERALE ASSET MANAGEMENT CORP.
By: /s/ Jean-Marie Eveillard
-----------------------------------
Jean-Marie Eveillard, President
Accepted and Agreed:
ONE FUND, INC.
By: /s/ Donald J. Zimmerman
------------------------------
Donald J. Zimmerman, President
6
SbAvSoc2
<PAGE> 1
EXHIBIT (5)(b)
PROPOSED FORM OF SUB-ADVISORY AGREEMENT ( FOR THE
CORE GROWTH PORTFOLIO) BETWEEN OHIO NATIONAL
INVESTMENTS, INC. AND PILGRIM BAXER & ASSOCIATES, LTD.
DATED NOVEMBER 1, 1996
<PAGE> 2
SUB-ADVISORY AGREEMENT
This Agreement is made as of the first day of November, 1996 by and between OHIO
NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"), and PILGRIM
BAXTER & ASSOCIATES, LTD., a Pennsylvania limited liability firm (the
"Sub-Adviser").
WHEREAS, ONE FUND, INC. (the "Fund"), is a Maryland corporation that is
registered under the Investment Company Act of 1940, as amended, (together with
the regulations promulgated pursuant thereto, the "1940 Act"); and
WHEREAS, the Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended, (together with the regulations promulgated
pursuant thereto, the "Advisers Act"); and
WHEREAS, the Adviser has been appointed as investment adviser to the Fund in
accordance with the 1940 Act and the Advisers Act; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Advisers Act and engages in the business of providing investment advisory
services; and
WHEREAS, the Fund has authorized the Adviser to appoint the Sub-Adviser, subject
to the requirements of the 1940 Act and the Advisers Act, as a sub-adviser with
respect to that portion of the assets of the Fund designated as the CORE GROWTH
PORTFOLIO of the Fund on the terms and conditions set forth below;
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
SECTION 1. Investment Advisory Services
(a) The Adviser hereby retains the Sub-Adviser, and the Sub-Adviser hereby
accepts engagement by the Adviser, to supervise and manage on a
fully-discretionary basis the cash, securities and other assets of the Core
Growth Portfolio that the Adviser shall from time to time place under the
supervision of the Sub-Adviser (such cash, securities and other assets initially
and as same shall thereafter be increased or decreased by the investment
performance thereof and by additions thereto and withdrawals therefrom by the
Adviser shall hereinafter be referred to as the "Portfolio").
(b) All activities by the Sub-Adviser on behalf of the Adviser and the Portfolio
shall be in accordance with the investment objectives, policies and restrictions
set forth in the 1940 Act and in the Fund's prospectus and statement of
additional information, as amended from time to time (together, the
"Prospectus") and as interpreted from time to time by the Board of Directors of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Portfolio shall also be subject to the due diligence oversight
and direction of the Adviser.
(c) Subject to the supervision of the Adviser, the Sub-Adviser shall have the
sole and exclusive responsibility to select members of securities exchanges,
brokers, dealers and futures commission merchants for the execution of
transactions of the Portfolio and, when applicable, shall negotiate commissions
in connection therewith. All such selections shall be made in accordance with
the Fund's policies and restrictions regarding brokerage allocation set forth in
the Prospectus.
(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolio, the Sub-Adviser shall:
<PAGE> 3
(1) obtain and evaluate pertinent economic, statistical, financial and other
information affecting the economy generally and individual companies or
industries the securities of which are included in the Portfolio or are under
consideration for inclusion therein; (2) formulate and implement a continuous
investment program for the Portfolio consistent with the investment objectives
and related investment policies and restrictions for such Portfolio as set forth
in the Prospectus; and (3) take such steps as are necessary to implement the
aforementioned investment program by placing orders for the purchase and sale of
securities.
(e) In connection with the purchase and sale of securities of the Portfolio, the
Sub-Adviser shall arrange for the transmission to the Adviser and the
Portfolio's custodian on a daily basis such confirmation, trade tickets and
other documents as may be necessary to enable them to perform their
administrative responsibilities with respect to the Portfolio. With respect to
Portfolio securities to be purchased or sold through the Depository Trust
Company, the Sub-Adviser shall arrange for the automatic transmission of the
I.D. confirmation of the trade to the Portfolio's custodian.
(f) In connection with the placement of orders for the execution of the
Portfolio's securities transactions, the Sub-Adviser shall create and maintain
all necessary records of the Portfolio as are required of an investment adviser
of a registered investment company including, but not limited to, records
required by the 1940 Act and the Advisers Act. All such records pertaining to
the Portfolio shall be the property of the Fund and shall be available for
inspection and use by the Securities and Exchange Commission, any other
regulatory authority having jurisdiction, the Fund, the Adviser or any person
retained by the Fund or the Adviser. Where applicable, such records shall be
maintained by the Sub-Adviser for the period and in the place required by Rule
31a-2 under the 1940 Act.
(g) The Sub-Adviser shall render such reports to the Adviser and/or to the Board
of Directors of the Fund concerning the investment activity and composition of
the Portfolio in such form and at such intervals as the Adviser or the Board may
from time to time reasonably require.
(h) In acting under this Agreement, the Sub-Adviser shall be an independent
contractor and not an agent of the Adviser or the Fund.
SECTION 2. Expenses
(a) The Sub-Adviser shall assume and pay all of its own costs and expenses,
including those for furnishing such office space, office equipment, office
personnel and office services as the Sub-Adviser may require in the performance
of its duties under this Agreement.
(b) The Fund shall bear all expenses of the Portfolio's organization and
registration, and the Fund and Adviser shall bear all of their respective
expenses of their operations and businesses not expressly assumed or agreed to
be paid by the Sub-Adviser under this Agreement. In particular, but without
limiting the generality of the foregoing, the Fund shall pay any fees due to the
Adviser, all interest, taxes, governmental charges or duties, fees, brokerage
and commissions of every kind arising hereunder or in connection herewith,
expenses of transactions with shareholders of the Portfolio, expenses of
offering interests in the Portfolio for sale, insurance, association membership
dues, all charges of custodians (including fees as custodian and for keeping
books, performing portfolio valuations and rendering other services to the
Fund), independent auditors and legal counsel, expenses of preparing, printing
and distributing all prospectuses, proxy material, reports and notices to
shareholders of the Fund, and all other costs incident to the Portfolio's
existence.
2
<PAGE> 4
SECTION 3. Use of Services of Others
The Sub-Adviser may (at its expense except as set forth in Section 2 hereof)
employ, retain or otherwise avail itself of the services or facilities of other
persons or organizations for the purpose of providing the Sub-Adviser with such
statistical or factual information, such advice regarding economic factors and
trends or such other information, advice or assistance as the Sub-Adviser may
deem necessary, appropriate or convenient for the discharge of the Sub-Adviser's
obligations hereunder or otherwise helpful to the Fund and the Portfolio.
SECTION 4. Sub-Advisory Fees
In consideration of the Sub-Adviser's services to the Fund hereunder, the
Sub-Adviser shall be entitled to a sub-advisory fee, payable quarterly, at the
annual rate of 0.75% of the first fifty million dollars ($50,000,000) of the
average daily net assets of the Portfolio during the quarter preceding each
payment, 0.70% of the next one hundred million dollars ($100,000,000) of the
average daily net assets of the Portfolio, and 0.50% of the average daily net
assets of the Portfolio in excess of one hundred and fifty million dollars
($150,000,000) (the "Sub-Advisory Fee"). The Sub-Advisory Fee shall be accrued
for each calendar day and the sum of the daily Sub-Advisory Fee accruals shall
be paid quarterly to the Sub-Adviser on or before the fifth business day of the
next succeeding quarter. The daily fee accruals will be computed on the basis of
the valuations of the total net assets of the Portfolio as of the close of
business each day. The Sub-Advisory Fee shall be payable solely by the Adviser,
and the Fund shall not be liable to the Sub-Adviser for any unpaid Sub-Advisory
Fee.
SECTION 5. Limitation of Liability of Sub-Adviser
(a) The Sub-Adviser shall be liable for losses resulting from its own acts or
omissions caused by the Sub-Adviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or its reckless disregard
of its duties under this Agreement, and nothing herein shall protect the
Sub-Adviser against any such liability to the shareholders of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any shareholder
of the Fund or to the Adviser for any claim or loss arising out of any
investment or other act or omission in the performance of the Sub-Adviser's
duties under this Agreement, or for any loss or damage resulting from the
imposition by any government of exchange control restrictions which might affect
the liquidity of the Fund's assets maintained with custodians or securities
depositories in foreign countries, or from any political acts of any foreign
governments to which such assets might be exposed, or for any tax of any kind,
including without limitation any statutory, governmental, state, provincial,
regional, local or municipal imposition, duty, contribution or levy imposed by
any government or governmental agency upon or with respect to such assets or
income earned with respect thereto (collectively "Taxation"). Notwithstanding
the foregoing sentence, the Sub-Adviser shall be liable for taxes or tax
penalties incurred by the Fund for any failure of the Portfolio to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended, as a result of the Sub-Adviser's management of the Portfolio.
(b) In the event the Sub-Adviser is assessed any Taxation in respect of the
assets, income or activities of the Portfolio, the Adviser and the Fund jointly
will indemnify the Sub-Adviser for all such amounts wherever imposed, together
with all penalties, charges, costs and interest relating thereto and all
expenditures, including reasonable attorney's fees, incurred by the Sub-Adviser
in connection with the defense or settlement of any such assessment. The
Sub-Adviser shall undertake and control the defense or settlement of any such
assessment, including the selection of counsel or other professional advisers,
provided that the selection of such counsel and advisers and the settlement of
any assessment shall be subject to the approval of the Adviser and the Fund,
which approvals shall not be unreasonably withheld. The Adviser and the Fund
shall have the right to retain separate counsel and assume the defense or
settlement on behalf of the Adviser and the Fund, as the case may be, of any
3
<PAGE> 5
such assessment if representation of the Adviser and the Fund by counsel
selected by the Sub-Adviser would be inappropriate due to actual or potential
conflicts of interest.
SECTION 6. Services to Other Clients and the Fund
(a) Subject to compliance with the 1940 Act, nothing contained in this Agreement
shall be deemed to prohibit the Sub-Adviser or any of its affiliated persons
from acting, and being separately compensated for acting, in one or more
capacities on behalf of the Fund. The Adviser and the Fund understand that the
Sub-Adviser may act as investment manager or in other capacities on behalf of
other customers including entities registered under the 1940 Act. While
information, recommendations and actions which the Sub-Adviser supplies to and
does on behalf of the Portfolio shall in the Sub-Adviser's judgment be
appropriate under the circumstances in light of the investment objectives and
policies of the Fund, as set forth in the Prospectus delivered to the
Sub-Adviser from time to time, it is understood and agreed that they may be
different from the information, recommendations and actions the Sub-Adviser or
its affiliated persons supply to or do on behalf of other clients. The
Sub-Adviser and its affiliated persons shall supply information, recommendations
and any other services to the Portfolio and to any other client in an impartial
and fair manner in order to seek good results for all clients involved. As used
herein, the term "affiliated person" shall have the meaning assigned to it in
the 1940 Act.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other customers, the
Sub-Adviser may, to the extent permitted by applicable law, aggregate the
securities to be so sold or purchased in order to obtain the best execution or
lower brokerage commissions, if any. The Sub-Adviser may also on occasion
purchase or sell a particular security for one or more customers in different
amounts. On either occasion, and to the extent permitted by applicable law and
regulations, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other customers.
(c) The Sub-Adviser agrees to use the same skill and care in providing services
to the Fund as it uses in providing services to other similar accounts for which
it has investment responsibility. The Sub-Adviser will conform with all
applicable rules and regulations of the Securities and Exchange Commission.
SECTION 7. Reports to the Sub-Adviser
The Adviser shall furnish to the Sub-Adviser the Prospectus, proxy statements,
reports and other information relating to the business and affairs of the Fund
as the Sub-Adviser may, at any time or from time to time, reasonably require in
order to discharge the Sub-Adviser's duties under this Agreement.
SECTION 8. Term of Agreement
Provided that this Agreement shall have first been approved by the Board of
Directors of the Fund, including a majority of the members thereof who are not
interested persons (as defined in the 1940 Act) of either party, by a vote cast
in person at a meeting called for the purpose of voting such approval, then this
Agreement shall be effective on the date hereof. Unless earlier terminated as
hereinafter provided, this Agreement shall continue in effect until approved by
a majority vote of the voting securities of the Portfolio, at a meeting to take
place not more than one year after the effective date of the Fund's registration
statement relating to the Portfolio. Thereafter, this Agreement shall continue
in effect from year to year, subject to approval annually by the Board of
Directors of the Fund or by vote of a majority of the voting securities of the
Portfolio and also, in either event, by the vote,
4
<PAGE> 6
cast in person at a meeting called for the purpose of voting on such approval,
of a majority of the Directors of the Fund who are not parties to this Agreement
or interested persons (as defined in the 1940 Act) of any such person.
SECTION 9. Termination of Agreement; Assignment
(a) This Agreement may be terminated by either party hereto without the payment
of any penalty, upon 90 days' prior notice in writing to the other party and to
the Fund, or upon 60 days' written notice by the Fund to the two parties;
provided, that in the case of termination by the Fund such action shall have
been authorized by resolution of a majority of the Board of Directors of the
Fund or by vote of a majority of the voting securities of the Portfolio. In
addition, this Agreement shall terminate upon the later of (1) the termination
of the Adviser's agreement to provide investment advisory services to the Fund
or (2) notice to the Sub-Adviser that the Adviser's agreement to provide
investment advisory services to the Fund has terminated.
(b) This Agreement shall automatically terminate in the event of its assignment
(as defined in the 1940 Act).
(c) Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior thereto.
SECTION 10. Notices
(a) The Sub-Adviser agrees to promptly notify the Adviser of the occurrence of
any of the following events: (1) any change in the Portfolio's portfolio
manager; (2) the Sub-Adviser fails to be registered as an investment adviser
under the Advisers Act or under the laws of any jurisdiction in which the
Sub-Adviser is required to be registered as an investment adviser in order to
perform its obligations under this Agreement; (3) the Sub-Adviser is the subject
of any action, suit, proceeding, inquiry or investigation at law or in equity,
before or by any court, public board or body, involving the affairs of the
Portfolio; or (4) any change in control of the Sub-Adviser.
(b) Any notice given hereunder shall be in writing and may be served by being
sent by telex, facsimile or other electronic transmission or sent by registered
mail or by courier to the address set forth below for the party for which it is
intended. A notice served by mail shall be deemed to have been served seven days
after mailing and in the case of telex, facsimile or other electronic
transmission twelve hours after dispatch thereof. Addresses for notice may be
changed by written notice to the other party.
If to the Adviser:
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
Fax No. (513) 794-4506
With a copy to:
Joseph P. Brom, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
5
<PAGE> 7
If to the Sub-Adviser:
Amy Yuter, Chief Compliance Officer
Pilgrim Baxter & Associates, Ltd.
1255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087
Fax No. (610) 989-3850
SECTION 11. Governing Law
This Agreement shall be governed by and subject to the requirements of the laws
of the State of Ohio without reference to the choice of law provisions thereof.
SECTION 12. Applicable Provisions of Law
The Agreement shall be subject to all applicable provisions of law, including,
without limitation, the applicable provisions of the 1940 Act, and to the extent
that any provisions herein contained conflict with any such applicable
provisions of law, the latter shall control.
SECTION 13. Counterparts
This Agreement may be entered into in any number of counterparts, each of which
when so executed and delivered shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the day and year first above written.
OHIO NATIONAL INVESTMENTS, INC.
By:
---------------------------------
Joseph P. Brom, President
PILGRIM BAXTER & ASSOCIATES, LTD.
By:
---------------------------------
Harold J. Baxter,
Chief Executive Officer
Accepted and Agreed:
ONE FUND, INC.
By:
------------------------------
Donald J. Zimmerman, President
SbAvPBx2
6
<PAGE> 1
EXHIBIT (9)(c)
SERVICE AGREEMENT AMONG THE REGISTRANT,
OHIO NATIONAL INVESTMENTS, INC. AND
THE OHIO NATIONAL LIFE INSURANCE COMPANY
DATED MAY 1, 1996
<PAGE> 2
SERVICE AGREEMENT
THIS AGREEMENT, made this first day of May, 1996, by and among ONE
FUND, INC., (the "Fund"), a Maryland corporation, OHIO NATIONAL INVESTMENTS,
INC. ("Adviser"), an Ohio corporation and THE OHIO NATIONAL LIFE INSURANCE
COMPANY ("Ohio National Life"), a mutual life insurance company organized under
the laws of the State of Ohio;
WHEREAS, Ohio National Life has caused the Adviser to be organized to
serve as investment adviser to investment companies and to others; and
WHEREAS, the Adviser and the Fund have entered into an Investment
Advisory Agreement dated May 1, 1996 whereby the Adviser undertakes to furnish
the Fund with investment advisory services and to furnish or pay the expenses of
the Fund for certain other services; and
WHEREAS, Ohio National Life is willing to make available to the Adviser
on a part-time basis certain employees of Ohio National Life for the purpose of
better enabling the Adviser to fulfill its obligations under the Investment
Advisory Agreement, provided that the Adviser bears all costs allocable to the
time spent by them on the affairs of the Adviser, and the Adviser and the Fund
believe that such an arrangement will be for their mutual benefit;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. The Adviser shall have the right to use, on a part-time basis, and
Ohio National Life shall make available on such basis, such employees of Ohio
National Life for such periods as may be agreed upon by the Adviser and Ohio
National Life, as may be reasonably needed by the Adviser in the performance of
its investment advisory functions. It is anticipated that most of such employees
will be persons employed in the investment operations of Ohio National Life in
addition to such clerical, stenographic and administrative services as the
Adviser may reasonably request.
2. The employees of Ohio National Life in performing services for the
Adviser hereunder may, to the full extent that they deem appropriate, have
access to and utilize statistical and economic data, investment research reports
and other materials prepared for or contained in the files of Ohio National Life
which is relevant to making investment decisions within the investment
objectives of the Fund, and may make such materials available to the Adviser;
provided, that any such materials prepared or obtained in connection with a
private placement or other nonpublic transaction need not be made available to
the Adviser if Ohio National Life deems such materials confidential.
3. Employees of Ohio National Life performing services for the Adviser
pursuant hereto shall report and be responsible solely to the officers and
directors of the Adviser or persons designated by them. Ohio National Life shall
have no responsibility for investment recommendations and decisions of the
Adviser based upon information or advice given or obtained by or through such
Ohio National Life employees.
4. Ohio National Life will, to the extent requested by the Adviser,
supply to employees of the Adviser, including part-time employees of Ohio
National Life serving the Adviser, such clerical, stenographic and
administrative services and such office supplies and equipment as may be
reasonably required in order that they may properly perform their respective
functions on behalf of the Adviser in connection with its performance of the
Investment Advisory Agreement.
<PAGE> 3
5. The obligation of performance under the Investment Advisory
Agreement is solely that of the Adviser, and Ohio National Life undertakes no
obligation in respect thereto, except as otherwise expressly provided herein.
6. In consideration of the services to be rendered by Ohio National
Life and its employees pursuant to this Agreement, the Adviser agrees to
reimburse Ohio National Life for such costs, direct and indirect, as may be
fairly attributable to the services performed for the Adviser. Such costs shall
include, but not be limited to, an appropriate portion of salaries, employee
benefits, general overhead expense, supplies and equipment, and a charge in the
nature of rent for the cost of space in Ohio National Life offices fairly
allocable to activities of the Adviser under the Investment Advisory Agreement.
In the event of disagreement between the Adviser and Ohio National Life as to a
fair basis for allocating or apportioning costs, such basis shall be fixed by
the independent public accountants for the Fund.
7. (a) This Agreement shall continue in effect as to any portfolio of
the Fund for a period more than two years from the date of its execution only so
long as such continuation is specifically approved at least annually by either
the Board of Directors of the Fund or by vote of a majority of that portfolio's
outstanding voting securities, provided that in either event such continuation
shall also be approved by the vote of a majority of the directors who are not
interested persons of the Fund, cast by them in person at a meeting called for
purpose of voting on such approval; provided, however, that:
(b) This Agreement may at any time be terminated as to any portfolio
of the Fund without the payment of any penalty on 60 days' notice to the Adviser
and to Ohio National Life either by vote of the Board of Directors of the Fund
or by vote of a majority of the outstanding voting securities of that portfolio.
(c) This Agreement shall immediately terminate in event of its
assignment (as that term is defined in the Investment Company Act of 1940).
(d) This Agreement may be terminated by the Adviser or by Ohio
National Life on 90 days' written notice to the other and to the Fund.
8. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of the Fund, that of the
Adviser and that of Ohio National Life for this purpose shall be 237 William
Howard Taft Road, Cincinnati, Ohio 45219.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers the day and year first above
written.
ONE FUND, INC.
By /s/ Donald J. Zimmerman
------------------------------
Donald J. Zimmerman, President
2
<PAGE> 4
OHIO NATIONAL INVESTMENTS, INC.
By /s/ Joseph P. Brom
-------------------------------------
Joseph P. Brom, President
THE OHIO NATIONAL LIFE INSURANCE COMPANY
By /s/ David B. O'Maley
-------------------------------------
David B. O'Maley, Chairman,
President & Chief Executive Officer
3
<PAGE> 1
EXHIBIT (9)(d)
JOINT INSURED AGREEMENT AMONG THE REGISTRANT,
OHIO NATIONAL FUND, INC. AND OHIO
NATIONAL INVESTMENTS, INC. DATED MAY 1, 1996
<PAGE> 2
JOINT INSURED AGREEMENT
AGREEMENT made this twenty-eighth day of March, 1996, to take effect the first
day of May, 1996, by and among OHIO NATIONAL FUND, INC., ONE FUND, INC. (each
individually referred to herein as a "Fund," and collectively as the "Funds"),
both Maryland corporations, and OHIO NATIONAL INVESTMENTS, INC. (the "Adviser"),
an Ohio corporation.
WHEREAS, the Funds have purchased Financial Institution Bond No. SSB-FR7766
underwritten by Hartford Fire Insurance Company and will, in the future,
purchase similar fidelity bonds in replacement thereof (the "Bond"); and
WHEREAS, the Bond covers the Adviser and the Funds as joint insureds; and
WHEREAS, the Boards of Directors of each of the Funds have determined that the
Bond premiums shall be equitably borne by each portfolio of the Funds; and
WHEREAS, future fidelity bonds issued in replacement of the Bond might include
deductible provisions with respect to certain coverages thereunder; and
WHEREAS, the Division of Investment Management of the Securities and Exchange
Commission has adopted the position that applicable law does not permit an
investment company to maintain a fidelity bond having a deductible clause unless
such investment company's investment adviser agrees to indemnify the investment
company for losses subject to the deductible clause and further provided that
such investment adviser shall maintain an amount equal to the deductible amount
in an escrow or similar account;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Funds and the Adviser agree as follows:
1. In the event of the recovery under the Bond as a result of any
loss sustained by the Adviser and either or both of the Funds,
the recovering Fund or Funds shall receive an equitable and
proportionate share of the recovery, but at least equal to the
amount which each recovering Fund would have received had it
provided and maintained a single insured bond with the minimum
coverage required by paragraph (d)(1) of Rule 17g-1 under the
Investment Company Act of 1940, as amended.
2. In the event of any loss by a Fund which the underwriter of the
Bond determines would otherwise be payable under the Bond but for
the limitations of any deductible clause, the Adviser agrees to
indemnify that Fund and pay it for any such loss not to exceed
the deductible amount.
3. The Adviser agrees that, in the event that the Bond should
contain any deductible clause, the Adviser shall then maintain a
special reserve account in the amount of no less than the
deductible amount which amount shall be specifically reserved for
payment by the Adviser to the Funds in the event of any claim by
either of the Funds under this agreement.
4. In the event that either of the Funds should suffer any loss as a
result of the Adviser's failure to maintain adequate reserves as
provided in section 3 of this agreement, the amount of such loss,
as determined by a majority of those directors of that Fund who
are not defined as "interested persons" of the Fund under Section
2(a)(19) of the
<PAGE> 3
Investment Company Act of 1940, shall be set off and deducted
from any fees then or later owed by that Fund to the Adviser
under the Investment Advisory Agreement, or any supplement
thereto, between the Fund and the Adviser.
5. Each of the Funds shall pay, from the assets of each of their
portfolios, that portion of the Bond's premium which is a
fraction of the total premium which, on the date of payment, each
respective portfolio's total net assets bears to the combined
total net assets of both of the Funds.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
in triplicate in Cincinnati, Ohio on the twenty-eighth day of March, 1996.
OHIO NATIONAL FUND, INC.
By: /s/ Donald J. Zimmerman
---------------------------
Donald J. Zimmerman
President
ONE FUND, INC.
By: /s/ Donald J. Zimmerman
---------------------------
Donald J. Zimmerman
President
OHIO NATIONAL INVESTMENTS, INC.
By: /s/ Joseph P. Brom
---------------------------
Joseph P. Brom
President
2
<PAGE> 1
EXHIBIT (10)(c)
OPINION AND CONSENT OF RONALD L. BENEDICT, ESQ.,
AS TO THE SHARES OF THE REGISTRANT'S CORE GROWTH PORTFOLIO
<PAGE> 2
[OHIO NATIONAL FINANCIAL SERVICES LETTERHEAD]
August 14, 1996
Board of Directors
ONE Fund, Inc.
237 William Howard Taft Road
Cincinnati, Ohio 45219
Re: Registration of ONE Fund, Inc.
Core Growth Portfolio Shares
Opinion of Counsel
Gentlemen:
In my capacity as legal counsel for ONE Fund, Inc. (the "Fund"), I have
supervised the organization and lawful operation of the Fund and the issuance of
the Fund's capital shares, including those for the Fund's Core Growth Portfolio.
In such capacity I have also participated in the preparation of the Fund's
Registration Statement on Form N-1A and the filing of such Registration
Statement under the Securities Act of 1933 and with respect to the capital
shares of the Fund, including those of its Core Growth Portfolio.
Based upon such examination of law and such corporation records and other
documents as in my judgment are necessary or appropriate, I am of the opinion
that all necessary and required corporate proceedings have been taken in
connection with the issuance of the shares of the Core Growth Portfolio being
registered, and all such shares, when sold, will be legally issued, fully paid
and nonassessable.
I hereby consent to the filing of this letter as an exhibit to the Registration
Statement for the Fund.
Sincerely,
/s/ Ronald L. Benedict
---------------------------
Ronald L. Benedict
Secretary and Legal Counsel
RLB/nh
7134L(2)
<PAGE> 1
EXHIBIT (16)
COMPUTATION OF PERFORMANCE DATA
FOR THE YEARS ENDED JUNE 30, 1996
<PAGE> 2
ONE FUND PERFORMANCE DATA
(Base = $1,000)
MONEY MARKET (Inception 8/18/92; Max. Front Load 0%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ---------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1992 - - - - $1,000.00 - - - - - - - - $1,000.00
1993 2.67% 1,026.70 - - - - 2.67% 1,026.70
1994 3.06 1,030.60 3.07% 5.81 1,058.12
1995 5.06 1,050.60 3.76 11.17 1,111.69
1996 5.18 1,051.80 4.13 16.93 1,169.29
</TABLE>
TAX-FREE INCOME (Inception 11/1/94; Max. Front Load 3%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ---------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1994 - - - - $ 970.00 - - - - - - - - $ 970.00
1995 10.26% 1,069.12 - - - - 6.94% 1,069.12
1996 6.59 1,033.92 10.19 13.56 1,135.56
</TABLE>
INCOME (Inception 8/18/92; Max. Front Load 3%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ---------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1992 - - - - $ 970.00 - - - - - - - - $ 970.00
1993 9.56% 1,062.73 - - - - 6.27% 1,062.73
1994 (3.79) 933.24 1.19% 2.25 1,022.45
1995 11.58 1,082.33 4.47 14.07 1,140.74
1996 4.61 1,014.72 5.50 19.33 1,193.29
</TABLE>
<PAGE> 3
INCOME & GROWTH (Inception 8/18/92; Max. Front Load 5%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ---------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1992 - - - - $ 950.00 - - - - - - - - $ 950.00
1993 12.49% 1,068.66 - - - - 6.87% 1,068.66
1994 1.96 968.62 4.07% 8.96 1,089.60
1995 19.41 1,134.40 9.19 28.65 1,286.47
1996 14.50 1,087.75 12.01 47.30 1,473.04
</TABLE>
GROWTH (Inception 8/18/92; Max. Front Load 5%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ---------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1992 - - - - $ 950.00 - - - - - - - - $ 950.00
1993 18.26% 1,123.47 - - - - 12.35% 1,123.47
1994 2.85 977.08 8.05% 15.55 1,155.49
1995 20.54 1,145.13 12.25 39.28 1,392.75
1996 22.22 1,161.09 16.27 70.22 1,702.24
</TABLE>
SMALL CAP (Inception 11/1/94; Max. Front Load 5%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ---------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1994 - - - - $ 950.00 - - - - - - - - $ 950.00
1995 8.91% 1,031.80 - - - - 3.18% 1,031.80
1996 24.10 1,178.95 19.86 28.35 1,280.46
</TABLE>
2
<PAGE> 4
INTERNATIONAL (Inception 4/30/93; Max. Front Load 5%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ----------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1992 - - - - $ 950.00 - - - - - - - - $ 950.00
1993 (0.68%) 943.54 - - - - (5.65%) 943.54
1994 40.65 1,336.18 27.20% 32.71 1,327.09
1995 6.44 1,011.18 17.15 40.86 1,408.55
1996 18.65 1,127.18 19.54 67.13 1,671.30
</TABLE>
GLOBAL CONTRARIAN (Inception 11/1/94; Max. Front Load 5%)
<TABLE>
<CAPTION>
Avg. Annual Aggregate
Year Ended One Year One Year Total Return Total Return Cum. Value
June 30 Total Return Cum. Value From Inception From Inception From Inception
- ---------- ------------ ---------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1994 - - - - $ 950.00 - - - - - - - - $ 950.00
1995 2.99% 978.05 - - - - (2.20%) 978.05
1996 17.84 1,119.48 12.33 15.26 1,152.60
</TABLE>
Methodology: (a) Portfolio value as of the end date / (b) beginning portfolio
value, (c) raised to the power of (365 / date value as of the end date) - (d)
beginning date value.
3
<PAGE> 5
Comparisons of Change in Value of $10,000 Investments
In ONE Fund Portfolios and Various Indexes
<TABLE>
<CAPTION>
Tax Free Income &
Income Income Growth Growth
-------- ------ --------- ------
<C> <C> <C> <C> <C>
8/18/92 ----- $9,700 $9,500 $9,500
12/31/92 ----- 9,758 9,487 10,178
4/30/93 ----- ----- ----- -----
6/30/93 ----- 10,628 10,687 11,234
12/31/93 ----- 10,850 11,048 11,917
6/30/94 ----- 10,224 10,896 11,554
11/1/94 $9,700 ----- ----- -----
12/31/94 9,863 10,263 11,073 11,989
6/30/95 10,694 11,407 12,865 13,928
12/31/95 11,447 11,980 13,798 15,366
6/30/96 11,356 11,933 14,730 17,022
</TABLE>
<TABLE>
<CAPTION>
Small Global
Cap International Contrarian
----- ------------- ----------
<C> <C> <C> <C>
8/18/92 ----- ----- -----
12/31/92 ----- ----- -----
4/30/93 ----- $9,500 -----
6/30/93 ----- 9,435 -----
12/31/93 ----- 12,271 -----
6/30/94 ----- 13,270 -----
11/1/94 $9,500 ----- $9,500
12/31/94 9,537 13,443 9,145
6/30/95 10,343 14,086 9,781
12/31/95 11,979 15,061 10,523
6/30/96 12,835 16,713 11,526
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Lehman Lehman
Municipal Intermediate S&P 500
----------- ----------- -----------
<S> <C> <C> <C>
8/18/92 - - - - - - $ 10,000 $ 10,000
12/31/92 - - - - - - 10,200 10,452
4/30/93 - - - - - - - - - - - - - - - - - -
6/30/93 - - - - - - 10,842 10,966
12/31/93 - - - - - - 11,105 11,353
6/30/94 - - - - - - 10,814 10,814
11/1/94 $ 10,000 - - - - - - - - - - - -
12/31/94 10,035 10,891 11,290
6/30/95 11,003 11,937 13,571
12/31/95 11,787 13,134 16,028
6/30/96 11,734 13,013 17,643
</TABLE>
<TABLE>
<CAPTION>
Russell Morgan Morgan
2,000 EAFE World
----------- ----------- -----------
<S> <C> <C> <C>
8/18/92 - - - - - - - - - - - - - - - - - -
12/31/92 - - - - - - - - - - - - - - - - - -
4/30/93 - - - - - - $ 10,000 - - - - - -
6/30/93 - - - - - - 10,052 - - - - - -
12/31/93 - - - - - - 10,724 - - - - - -
6/30/94 - - - - - - 11,595 - - - - - -
11/1/94 $ 10,000 - - - - - - $ 10,000
12/31/94 9,877 11,481 9,667
6/30/95 11,190 11,683 10,460
12/31/95 12,656 12,957 11,080
6/30/96 13,972 13,543 11,800
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> TAX-FREE INCOME
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.66
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 0.13
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.79
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> INCOME
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.78
<PER-SHARE-NII> 0.63
<PER-SHARE-GAIN-APPREC> (0.19)
<PER-SHARE-DIVIDEND> (0.63)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.59
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> INCOME & GROWTH
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 11.57
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 1.21
<PER-SHARE-DIVIDEND> (0.37)
<PER-SHARE-DISTRIBUTIONS> (0.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.78
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> GROWTH
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 13.03
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 2.44
<PER-SHARE-DIVIDEND> (0.14)
<PER-SHARE-DISTRIBUTIONS> (0.28)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.47
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> SMALL CAP
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.63
<PER-SHARE-NII> 0.26
<PER-SHARE-GAIN-APPREC> 2.19
<PER-SHARE-DIVIDEND> (0.25)
<PER-SHARE-DISTRIBUTIONS> (0.08)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.82
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> INTERNATIONAL
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 12.89
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 1.58
<PER-SHARE-DIVIDEND> (0.39)
<PER-SHARE-DISTRIBUTIONS> (0.37)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.47
<EXPENSE-RATIO> 1.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> GLOBAL CONTRARIAN
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 1.47
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> (0.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.48
<EXPENSE-RATIO> 2.14
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
