<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. 11 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
---------------
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 Thompson, 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)(1)
X
--- on November 1, 1997 pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
---
on (date) pursuant to paragraph (a)(2) 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
Core 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. Not Applicable
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, 1997 Cincinnati, Ohio 45242
ONE FUND, INC. Telephone 1-800-578-8078
CONTENTS
- --------
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.
22 Dividends, Distributions INCOME & GROWTH PORTFOLIO - moderate income with
and Taxes the potential for 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 that you should know
before investing. This prospectus should be
34 Fund Performance 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, 1997, 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.
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 ONE Fund is a series mutual fund offering you a
9 PORTFOLIOS 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 23 and "The Adviser's Compensation" on page
25. 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 26) 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 20, 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 32.
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 22, and
"Flexibility Features" on page 30.
SERVICE ONE Fund's principal underwriter is Ohio
National Equities, Inc. ("ONEQ"). 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 27, 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 qualified dealers. See
"Sales Charges" on page 27.
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
27, 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 0.15% 0.15% 0.50% 0.80%
Tax-Free Income Portfolio 0.45% 0.25% 0.54% 1.24%
Income Portfolio 0.35% 0.25% 0.61% 1.21%
Income & Growth Portfolio 0.35% 0.25% 0.52% 1.12%
Growth Portfolio 0.35% 0.25% 0.53% 1.13%
Core Growth Portfolio 0.95% 0.25% 0.20% 1.40%
Small Cap Portfolio 0.50% 0.25% 0.60% 1.35%
International Portfolio 0.90% 0.25% 0.62% 1.87%
Global Contrarian Portfolio 0.90% 0.25% 0.87% 2.02%
</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 $ 8 $ 26 $ 45 $ 99
Tax-Free Income Portfolio 42 68 96 176
Income Portfolio 42 67 95 173
Income & Growth Portfolio 61 84 109 180
Growth Portfolio 61 84 109 181
Core Growth Portfolio 64 92 123 210
Small Cap Portfolio 63 91 121 205
International Portfolio 68 106 147 260
Global Contrarian Portfolio 70 111 154 275
</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 $10 $31 $ 54 $119
Tax-Free Income Portfolio 44 74 107 198
Income Portfolio 44 74 105 195
Income & Growth Portfolio 63 90 119 202
Growth Portfolio 63 90 120 203
Core Growth Portfolio 64 94 126 216
Small Cap Portfolio 65 97 131 226
International Portfolio 69 108 149 265
Global Contrarian Portfolio 70 112 157 280
</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 Adviser is presently voluntarily waiving 0.15% of its Management Fees
for certain portfolios. 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 0.95% for the Money Market Portfolio, 1.39% for the Tax-Free Income
Portfolio, 1.36% for the Income Portfolio, 1.27% for the Income & Growth
Portfolio, 1.28% for the Growth Portfolio and 1.50% 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
<PAGE> 11
ONE FUND, INC.
FINANCIAL HIGHLIGHTS
The following information is an integral part of ONE Fund's audited financial
statements which have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, and 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
-----------------------------------------------------
8-18-92
YEAR ENDED JUNE 30, TO
1997 1996 1995 1994 6-30-93
------ ------ ------ ------- -------
<S> <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 $ 1.00
Income from investment operations:
Net investment income ..................................... 0.05 0.05 0.05 0.03 0.02
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ........................... 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
Total from investment operations .......................... 0.05 0.05 0.05 0.03 0.02
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ....................................... (0.05) (0.05) (0.05) (0.03) (0.02)
Distributions from net realized
capital gains and foreign
currency transactions ................................... 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ----
Total distributions .......................................... (0.05) (0.05) (0.05) (0.03) (0.02)
------ ------ ------ ------ ------
Net asset value, end of period ............................... $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return (a) ............................................. 4.77% 5.18% 5.06% 3.06% 2.67%(b)
====== ====== ====== ====== ======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived
by adviser (d):
Expenses .................................................. 0.80% 0.57% 0.51% 0.44% 0.43%(c)
Net investment income ..................................... 4.71% 5.14% 4.99% 2.97% 2.70%(c)
Ratios assuming no waiver of management fees by adviser (d):
Expenses ................................................. 1.04% 0.87% 0.81% 0.74% 0.73%(c)
Net investment income .................................... 4.47% 4.84% 4.69% 2.67% 2.40%(c)
Portfolio turnover rate ...................................... N/A N/A N/A N/A N/A
Net assets at end of period (millions) ....................... $ 14.4 $ 15.8 $ 14.1 $ 12.3 $ 21.3
</TABLE>
(a) Total return does not reflect the initial sales charge imposed on
purchases (see page 27).
(b) Calculated on an aggregate basis (not annualized).
(c) Annualized.
(d) Until November 1, 1996, the Adviser elected to waive the entire
management fee for the Money Market Portfolio and one-half of the
management fees for the Tax-Free Income, Income, Income & Growth, and
Small Cap Portfolios. Since that date, the Adviser has elected to waive
0.15% of its management fee for each of these portfolios, but it may
cease those waivers, in whole or in part, without prior notice.
(e) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
5
<PAGE> 12
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------------------------
TAX-FREE INCOME INCOME
----------------------------- -------------------------------------------
YEAR ENDED 11-1-94 6-18-92
JUNE 30, TO YEAR ENDED JUNE 30, TO
1997 1996 6-3-95 1997 1996 1995 1994 6-30-93
---- ---- ------ ---- ---- ---- ------ -------
<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 .............................. $10.79 $10.66 $10.00 $ 9.59 $ 9.78 $ 9.39 $ 10.43 $10.00
Income from investment operations:
Net investment income ............... 0.53 0.56 0.35 0.61 0.63 0.65 0.62 0.45
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ..... 0.30 0.13 0.66 0.16 (0.19) 0.39 (0.98) 0.45
------ ------ ------- ----- ----- ------ ------- ------
Total from investment
operations ...................... 0.83 0.69 1.01 0.77 0.44 1.04 (0.36) 0.90
------ ------ ------- ----- ----- ------ ------- ------
Less distributions:
Dividends from net
investment income ................. (0.53) (0.56) (0.35) (0.61) (0.63) (0.65) (0.62) (0.45)
Distributions from net realized
capital gains and foreign
currency transactions ............. 0.00 0.00 0.00 0.00 0.00 0.00 (0.06) (0.02)
------ ------ ------ ------ ------ ------ ------- ------
Total distributions .................... (0.53 (0.56) (0.35) (0.61) (0.63) (0.65) (0.68) (0.47)
------ ------ ------ ------ ------- ------ ------- ------
Net asset value, end of period ......... $11.09 $10.79 $10.66 $ 9.75 $ 9.59 $ 9.78 $ 9.39 $10.43
====== ====== ====== ====== ====== ====== ======= ======
Total return (a) ....................... 7.82% 6.59% 10.26%(b) 8.26% 4.61% 11.58% ( 3.79%) 9.56%(b)
====== ====== ====== ====== ====== ===== ======= ======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived
by advisor (d):
Expenses ............................. 1.24% 0.94% 0.91%(c) 1.21% 0.97% 0.85% 1.02% 1.11%(c)
Net investment income .................. 4.81% 5.20% 5.04%(c) 6.29% 6.50% 6.80% 6.10% 5.07%(c)
Ratios assuming no waiver of management
fees by adviser (d):
Expenses ............................. 1.45% 1.24% 1.21%(c) 1.51% 1.22% 1.10% 1.27% 1.36%(c)
Net investment income ................ 4.60% 4.90% 4.74%(c) 5.99% 6.25% 6.55% 5.85% 4.82%(c)
Average Commission rate (e)........... N/A N/A N/A N/A N/A N/A N/A N/A
Portfolio turnover rate ................ 6% 8% 0% 10% 9% 4% 6% 6%
Net assets at end of period (millions) . $ 6.8 $ 6.3 $ 5.7 $ 6.6 $ 7.0 $ 7.1 $ 4.6 $ 5.7
</TABLE>
6
<PAGE> 13
<TABLE>
<CAPTION>
PORTFOLIO
-------------------------------------------------------------------------------------------------------
INCOME & GROWTH GROWTH
----------------------------------------------- --------------------------------------------------
8-18-92 8-18-92
YEAR ENDED JUNE 30, TO YEAR ENDED JUNE 30, TO
1997 1996 1995 1994 6-30-93 1997 1996 1995 1994 6-30-93
------ ------ ------ ------- ------- ---- ------ ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$12.78 $11.57 $10.65 $10.96 $10.00 $15.47 $13.03 $11.67 $11.63 $10.00
0.38 0.38 0.41 0.33 0.27 0.07 0.14 0.16 0.12 0.12
2.39 1.27 1.54 (0.11) 0.96 2.73 2.72 2.17 0.22 1.69
- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
2.77 1.65 1.95 0.22 1.23 2.80 2.86 2.33 0.34 1.81
- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(0.38) (0.37) (0.41) (0.33) (0.27) (0.07) (0.14) (0.16) (0.12) (0.12)
(0.28) (0.07) (0.62) (0.20) 0.00 (0.68) (0.28) (0.81) (0.18) (0.06)
- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(0.66) (0.44) (1.03) (0.53) (0.27) (0.75) (0.42) (0.97) (0.30) (0.18)
- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------
$14.89 $12.78 $11.57 $10.65 $10.96 $17.52 $15.47 $13.03 $11.67 $11.63
====== ====== ====== ====== ====== ======= ====== ====== ====== ======
22.34% 14.50% 19.41% 1.96% 12.49%(b 18.68% 22.22% 20.54% 2.85% 18.26%(b
====== ====== ====== ====== ====== ======= ====== ====== ====== ======
1.12% 0.89% 0.81% 0.94% 1.07%(c 1.13% 0.90% 0.83% 1.04% 1.30%(c
2.77% 3.10% 3.69% 3.08% 3.09%(c 0.43% 0.99% 1.35% 1.04% 1.31%(c
1.31% 1.14% 1.06% 1.19% 1.32%(c 1.32% 1.15% 1.08% 1.30% 1.55%(c
2.58% 2.85% 3.44% 2.83% 2.84%(c 0.24% 0.74% 1.10% 0.79% 1.06%(c
$ 0.07 N/A N/A N/A N/A $0.07 N/A N/A N/A N/A
14% 7% 25% 14% 24% 27% 22% 24% 8% 26%
$ 13.1 $10.8 $ 7.7 $ 7.5 $ 6.7 $13.3 $11.8 $ 7.0 $ 5.3 $ 4.3
</TABLE>
7
<PAGE> 14
<TABLE>
<CAPTION>
PORTFOLIO
-------------------------------------------
CORE
GROWTH SMALL CAP
--------- -------------------------------
11-1-96 YEAR ENDED 11-1-94
TO JUNE 30, TO
6-30-97 1997 1996 6-30-95
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period .............................. $10.00 $12.82 $10.63 $10.00
Income from investment operations:
Net investment income ............... (0.08) 0.11 0.26 0.22
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ..... (0.06) 1.67 2.26 0.67
------ ------ ------ ------
Total from investment
operations ...................... (0.14) 1.78 2.52 0.89
------ ------ ------ ------
Less distributions:
Dividends from net
investment income ................. 0.00 (0.11) (0.25) (0.22)
Distributions from net realized
capital gains and foreign
currency transactions ............. 0.00 (1.19) (0.08) (0.04)
------ ------ ------ ------
Total distributions .................... 0.00 (1.30) (0.33) (0.26)
------ ------ ------ ------
Net asset value, end of period ......... $ 9.86 $13.30 $12.82 $10.63
====== ====== ====== ======
Total return (a) ....................... (1.40%)(b) 14.82% 24.10% 8.91%(b)
====== ====== ====== ======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived
by advisor (d):
Expenses ............................. 1.35% (c) 1.35% 0.94% 1.00%(c)
Net investment income ................ (0.87%)(c) 0.89% 2.21% 3.19%(c)
Ratios assuming no waiver of management
fees by advisor (d):
Expenses ............................. 1.40% (c) 1.62% 1.27% 1.31%(c)
Net investment income ................ (0.92%)(c) 0.62% 1.88% 2.88%(c)
Average commission rate (e) .......... $0.05 $0.08 N/A N/A
Portfolio turnover rate ................ 80% 34% 34% 8%
Net assets at end of period (millions) . $ 5.5 $ 5.2 $ 4.5 $ 2.9
</TABLE>
8
<PAGE> 15
<TABLE>
<CAPTION>
PORTFOLIO
-------------------------------------------------------------------------------------------------
INTERNATIONAL GLOBAL CONTRARIAN
--------------------------------------------------------- ----------------------------------
4-30-93 11-1-94
YEAR ENDED JUNE 30, TO YEAR ENDED JUNE 30, TO
1997 1996 1995 1994 6-30-93 1997 1996 6-30-95
--------- --------- --------- --------- --------- --------- --------- ---------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 14.47 $ 12.89 $ 13.32 $ 9.90 $ 10.00 $ 11.48 $ 10.01 $ 10.00
0.14 0.10 0.14 0.05 0.03 0.20 0.16 0.17
1.92 2.24 0.63 4.01 (0.10) 0.99 1.61 0.13
--------- --------- --------- --------- --------- --------- --------- ---------
2.06 2.34 0.77 4.06 (0.07) 1.19 1.77 0.30
--------- --------- --------- --------- --------- --------- --------- ---------
(0.15) (0.39) (0.14) (0.05) (0.03) (0.21) (0.23) (0.17)
(0.93) (0.37) (1.06) (0.59) 0.00 (0.67) (0.07) (0.12)
--------- --------- --------- --------- --------- --------- --------- ---------
(1.08) (0.76) (1.20) (0.64) (0.03) (0.88) (0.30) (0.29)
--------- --------- --------- --------- --------- --------- --------- ---------
$ 15.45 $ 14.47 $ 12.89 $ 13.32 $ 9.90 $ 11.79 $ 11.48 $ 10.01
========= ========= ========= ========= ========= ========= ========= =========
14.76% 18.65% 6.44% 40.65% (0.68%)(b) 11.11% 17.84% 2.99%(b)
========= ========= ========= ========= ========= ========= ========= =========
1.87% 1.72% 1.50% 1.50% 2.32%(c) 2.02% 2.14% 2.05%(c)
0.99% 0.70% 1.11% 0.46% 1.93%(c) 1.78% 1.49% 2.85%(c)
1.98% 1.72% 1.50% 1.50% 2.32%(c) 2.21% 2.14% 2.05%(c)
0.88% 0.70% 1.11% 0.46% 1.93%(c) 1.59% 1.49% 2.85%(c)
$ 0.02 N/A N/A N/A N/A $ 0.01 N/A N/A
9% 20% 39% 27% 0% 6% 26% 8%
$ 19.3 $ 15.1 $ 12.0 $ 10.4 $ 3.2 $ 6.3 $ 5.7 $ 3.9
</TABLE>
9
<PAGE> 16
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 share
participate equally in and are freely transferable, except that only shares
its assets and dividends. 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 investment
own investment objectives objective and pursues that objective through its own
and policies. 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.
10
<PAGE> 17
The investment objectives and the fundamental
investment restrictions (which are described in the
Statement of Additional Information) for 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 assets
and liquidity. 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.
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.
11
<PAGE> 18
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 income taxes. from federal 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.
For this reason, the Portfolio will not invest
more than 5% of its assets in such obligations.
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.
12
<PAGE> 19
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
High current income and provide high current income. Preservation of
preservation of capital. capital is a 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.
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.
13
<PAGE> 20
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 high-yield 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.
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.
14
<PAGE> 21
GROWTH PORTFOLIO The objective of the Growth Portfolio is to
Long-term growth. provide 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 Stocks are selected for this portfolio based on
risk 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.
CORE GROWTH PORTFOLIO The objective of the Core Growth Portfolio is to
Long-term capital provide long-term capital appreciation by
appreciation. investing 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.
15
<PAGE> 22
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 temporarily 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, 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.
16
<PAGE> 23
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 determined custody arrangements are
reasonable.
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 21.
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 that,
Foreign and domestic in the judgment of the portfolio manager, are
undervalued or out-of-favor undervalued or presently out of favor with other
securities. investors, 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 determined custody
arrangements are reasonable.
17
<PAGE> 24
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 21. 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.
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
and 25% in one industry. is 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.
18
<PAGE> 25
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.
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
to limit portfolio call options traded on a registered national
volatility. securities 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
19
<PAGE> 26
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. Hedging transactions and their
associated risks are more fully described in the
Statement of Additional Information.
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
and Income Portfolio is 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.
20
<PAGE> 27
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
overall management. those with the Adviser, the Core Growth
Portfolio's subadviser (PBA), the International
and Global Contrarian Portfolios' subadviser
(SGAM), ONE Fund's principal underwriter (ONEQ),
its custodians (Investors Fiduciary Trust Co. for
the International and Global Contrarian Portfolios
and Star Bank for the other portfolios),
and its transfer agent and fund accounting agent,
American Data Services, Inc. ("ADS"). 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 Management
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, Jed Martin,
Michael Boedeker, Stephen Williams, James McCall,
Ellen McGee, Keith Hanson, 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.
Jed Martin, a vice president of the Adviser, has
managed the Money Market Portfolio since 1996.
He is a chartered financial analyst with a
bachelor's degree in mechanical engineering from
the University of Kentucky and a master of
business administration in finance from Indiana
University. He has been an investment analyst
and portfolio manager for ONLI since 1985.
Michael Boedeker, a vice president of the Adviser,
has managed the Tax-Free Income and Income
Portfolios from the inception of each. He is a
chartered financial analyst with a bachelor's
degree in business and a master of business
administration degree in finance from Indiana
21
<PAGE> 28
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.
Stephen Williams, a vice president of the
Adviser, has managed the Income & Growth and
Growth Portfolios since the inception of each.
He has a bachelor's degree in finance from the
University of Cincinnati. He has been vice
president of equity securities for ONLI since
1997 and was an investment analyst and director
of securities for ONLI for 20 years before
that.
James McCall co-manages the Core Growth
Portfolio, being primarily responsible for
the portfolio's large and mid-cap investments.
He has been a portfolio manager with PBA since
1994. For nine years prior to that he was a
portfolio manager with First National Bank of
Maryland. Mr. McCall is a chartered financial
analyst. He has a bachelor's degree from the
Philadelphia College of Pharmacy & Science and
masters degrees in pharmacy and business
administration from the University of Utah. He
spent ten years as a pharmacist before entering
the investment field.
Ellen McGee co-manages the Core Growth
Portfolio, being primarily responsible for the
portfolio's small and micro-cap investments.
She has been a portfolio manager with PBA since
1997. For three years prior to that, she was a
senior portfolio manager for First Union
National Bank and NationsBank, and she spent
eight years before that managing institutional
portfolios for First National Bank of Maryland.
Ms. McGee is a chartered financial analyst. She
has a bachelor's degree from Rutgers
University.
Keith Hanson, a vice president for the
Adviser, has managed the Small Cap Portfolio
since 1996. He is a chartered financial analyst
with a bachelor's degree in business
administration from Marquette University. He
has been an investment analyst and portfolio
manager for ONLI since 1994. For a year prior
to that, he was a research analyst in the
evaluation of small businesses for Blum &
Colombe, SC, and for seven years before that he
was a securities analyst for Johnson Asset
Management.
Jean-Marie Eveillard, president of SGAM, has
managed the International and Global Contrarian
Portfolios since the inception of each. 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 investing The macroeconomic (top-down) analysis generates
style uses both a top-down and a forecast based on economic, political and
a bottom-up approach. demographic trends. This macro view identifies
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.
22
<PAGE> 29
Stock selection is based Stock selection is determined primarily through
on fundamental research fundamental research. Through both proprietary
and technical indicators. and 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 interest credit analysis. Initially, credit analysis
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
sell disciplines. Adviser 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 0.15% for the Money Market
Portfolio, 0.45% for the Tax-Free Income
Portfolio, 0.35% for the Income, Income &
Growth, and Growth Portfolios, 0.95% for the
Core Growth Portfolio, 0.50% for the Small Cap
Portfolio, and 0.90% for the International and
Global Contrarian Portfolios.
The Adviser is now waiving 0.15% of the fees to
which it is entitled from the Money Market,
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.
23
<PAGE> 30
PBA PBA manages the assets of the Core Growth
Sub-adviser for the Portfolio under the Adviser's supervision. PBA
Core Growth Portfolio. is located at 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
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
Contrarian Portfolios. the 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.
FUND SERVICES Star Bank 425 Walnut 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. ADS, 24 West Carver Street,
Huntington, New York, 11743, 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, ONEQ, and
through other securities dealers that execute
a distribution agreement with ONEQ.
Investments can be The minimum initial investment is $500.
as small as $50. Subsequent 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 ONEQ
reserve the right to refuse any purchase order.
24
<PAGE> 31
PURCHASE PRICE The net asset value of the shares of each
ONE Fund shares are portfolio is determined at 4:00 p.m. Eastern
valued each day the time on each day the New York Stock Exchange is
NYSE is open. open for 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.
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 32.
**ONEQ will pay a dealer concession of 0.50% to securities dealers who
initiate and are responsible for any purchase of $1 million or more.
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.
25
<PAGE> 32
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.
CONCURRENT PURCHASES You may qualify for a reduced sales charge by
... combining your purchases combining concurrent products underwritten by
of ONE Fund and contracts ONEQ 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.
26
<PAGE> 33
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.)
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 ONEQ 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 charge. sales charge and which has investment objectives
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.
No sales charge is imposed on ONE Fund shares
purchased by (a) institutional investors
(including banks, trust companies and thrift
institutions) for their own account or for the
benefit of any trust having at least $1,000,000
in assets, (b) fee-based registered investment
advisers that do not receive any part of a
sales charge for the sale of the shares, or (c)
pension or retirement plans, deferred
compensation plans and employee benefit plans
that have at least $1,000,000 in assets and
trusts used to fund those plans.
27
<PAGE> 34
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 ADS. Any of the following features may be
established through your ON Fund account
application or by contacting your registered
representative or ONE Fund.
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 gains. application, dividends and capital 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
...of income and dividends and capital gains distributions from
capital gains into one portfolio invested in another portfolio. To
other portfolios. use 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.
28
<PAGE> 35
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 33.
-- Change your address on our records.
Telephone transaction requests received after
4:00 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.
29
<PAGE> 36
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 Star Bank. Star Bank will charge
$25 for any check that is not honored because
of an insufficient Money Market Portfolio
account balance. Star Bank also charges $22 to
stop payment of a check. 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.
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 ONEQ'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 27.)
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.
30
<PAGE> 37
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. Star
Bank will deduct a fee (presently $13) from
the proceeds of each wire redemption.
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.
The "tax-equivalent yield" of the Tax-Free
Income Portfolio is the rate that you would
have to earn from a taxable investment, before
federal taxes, to equal the Portfolio's
tax-free yield.
31
<PAGE> 38
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.
32
<PAGE> 39
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 40
ONE FUND, INC.
One Financial Way
Cincinnati, Ohio 45242
Telephone 1-800-578-8078
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1997
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, 1997.
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.
<TABLE>
<CAPTION>
Page Contents
- ---- --------
<S> <C>
3 ONE Fund
3 ONE Fund Performance
Current Yield of Money Market Portfolio
Current Yield of Tax-Free Income, Income and Income & Growth Portfolios
Tax-equivalent Yield of Tax-Free Income Portfolio
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
</TABLE>
<PAGE> 41
<TABLE>
<S> <C>
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>
2
<PAGE> 42
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
reinvestment 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, Russell
3000 Growth 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, Wilshire 5000 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
3
<PAGE> 43
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.
TAX-EQUIVALENT YIELD OF THE TAX-FREE INCOME PORTFOLIO
The Tax-Free Income Portfolio's tax-equivalent yield is the rate that an
investor would have to earn from a taxable investment, before taxes, to equal
the Portfolio's tax-free yield. The tax-equivalent yield is calculated by
dividing the Portfolio's actual yield by the result of one minus the investor's
marginal federal income tax rate. If only a portion of the Portfolio's yield is
tax-exempt, only that portion is adjusted in the calculation.
The following table shows the effect of an investor's federal income tax bracket
on the effective yield, assuming hypothetical yields of 3% to 7% for the
Tax-Free Income Portfolio and assuming that none of the Portfolio's investments
yielded taxable income.
<TABLE>
<CAPTION>
Marginal Portfolio Tax-equivalent
Tax Rate Yield Yield
-------- --------- --------------
<S> <C> <C>
28% 3% 4.17%
28% 4% 5.56%
28% 5% 6.94%
28% 6% 8.33%
28% 7% 9.72%
31% 3% 4.35%
31% 4% 5.80%
31% 5% 7.26%
31% 6% 8.70%
31% 7% 10.14%
</TABLE>
4
<PAGE> 44
<TABLE>
<S> <C> <C>
31% 7% 10.14%
36% 3% 4.69%
36% 4% 6.25%
36% 5% 7.81%
36% 6% 9.38%
36% 7% 10.94%
39.6% 3% 4.97%
39.6% 4% 6.62%
39.6% 5% 8.28%
39.6% 6% 9.93%
39.6% 7% 11.59%
</TABLE>
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).
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, 1997, are as follows:
<TABLE>
<CAPTION>
Avg. Annual Aggregate
One From From Inception
Year Inception Inception Date
---- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Money Market 4.77% 4.26% 22.50% 8/18/92
Tax-Free Income 4.47% 4.26% 22.90% 11/01/94
Income 4.78% 5.34% 29.19% 8/18/92
Income & Growth 16.24% 12.86% 80.20% 8/18/92
Growth 12.78% 15.54% 102.00% 8/18/92
Core Growth N/A % (9.54%) (6.36%) 11/01/96
Small Cap 9.12% 15.66% 47.37% 11/01/94
International 14.76% 18.37% 101.96% 4/30/93
Global Contrarian 5.59% 9.72% 28.06% 11/01/94
</TABLE>
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<PAGE> 45
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, 1997 (assuming
a hypothetical initial investment of $1,000 and payment of the maximum
applicable sales charge) were as follows:
<TABLE>
<CAPTION>
One From Inception
Year Inception Date
<S> <C> <C> <C>
Money Market $1,048 $1,225 8/18/92
Tax-Free Income $1,045 $1,229 11/01/94
Income $1,048 $1,292 8/18/92
Income & Growth $1,162 $1,802 8/18/92
Growth $1,128 $2,020 8/18/92
Core Growth N/A $ 936 11/01/96
Small Cap $1,091 $1,474 11/01/94
International $1,148 $1,918 4/30/93
Global Contrarian $1,056 $1,281 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.
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 6% 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 10% 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 14% for
the last fiscal year.
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<PAGE> 46
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 27% 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%. It was an
annualized rate of 120% for the period from inception of the portfolio to
the end of the last fiscal year.
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 9% 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 6% for the last fiscal
year.
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.
7
<PAGE> 47
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;
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);
8
<PAGE> 48
(Nonfundamental)
10. invest more than 15% 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. 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
9
<PAGE> 49
15. 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.
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.
10
<PAGE> 50
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.
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
11
<PAGE> 51
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.
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.
12
<PAGE> 52
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.
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
13
<PAGE> 53
(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.
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
14
<PAGE> 54
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 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.
15
<PAGE> 55
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.
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.
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<PAGE> 56
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 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 & Counsel
One Financial Way Director and Secretary, ONLI; Secretary
Cincinnati, Ohio 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.
Ross Love Director President & CEO, Blue Chip Broadcasting,
615 Windings Way Ltd.; Trustee, Health Alliance of Greater
Cincinnati, Ohio Cincinnati; Director, Partnership for a
Drug Free America (Chairman of African-
American Task Force); Advisory Board,
Syracuse University School of Management;
Director, Association of National
Advertisers; Until 1996 was Vice President
of Advertising, Procter & Gamble Co.
John J. Palmer* President and Senior Vice President,
One Financial Way Director Strategic Initiatives, ONLI;
Cincinnati, Ohio President and Director of ONF;
President and Director of ONLI's
broker-dealers; Prior to March
1997 was Senior Vice President
of Life Insurance Company of
Virginia.
</TABLE>
17
<PAGE> 57
<TABLE>
<S> <C> <C>
George M. Vredeveld Director Professor of Economics, University of
University of Cincinnati Cincinnati; Director of Center for
P.O. Box 210223 Economic Education; Private
Cincinnati, Ohio Consultant; Director of Benchmark
Savings Bank.
Michael A. Boedeker Vice President Vice President, Fixed Income
One Financial Way Securities, ONLI; Vice President
Cincinnati, Ohio and Director 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 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.
Stephen T. Williams Vice President Vice President of Equity Securities, ONLI;
One Financial Way Vice President and Director of
Cincinnati, Ohio the Adviser; Vice President of ONF.
Dennis R. Taney Treasurer Mutual Funds Financial Operations
One Financial Way Director, ONLI; Treasurer of
Cincinnati, Ohio the Adviser; Treasurer of ONF
Amy D. Starkey Compliance Director Until 1997 was Compliance Director for
One Financial Way & Assistant Treasurer ONLI's broker-dealers. Prior to February
Cincinnati, Ohio 1994 was a full-time graduate student and
from September 1990 to September
1992 was a bank internal auditor.
Theresa M. Brunsman Assistant Secretary Senior Attorney, ONLI
One Financial Way
Cincinnati, Ohio
</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, PBA or SGAM were compensated as
follows during the fiscal year ended June 30, 1997:
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
Name of Director from ONE Fund from Fund Complex*
- ---------------- ---------------------- ------------------
<S> <C> <C>
George E. Castrucci $ 4,600 $15,000
Maurice H. Kirby, Jr. 3,150 10,350
Ross Love 1,450 3,650
George M. Vredeveld 4,600 15,000
</TABLE>
18
<PAGE> 58
*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.
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 14, 1997, 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 5,515,918 $ 5,515,918 39.4%
Tax-Free Income 534,051 $ 5,986,712 86.2%
Income 511,428 $ 5,017,109 74.0%
Income & Growth 348,524 $ 5,558,950 39.0%
Growth 240,532 $ 4,567,703 32.1%
Core Growth 250,100 $ 2,513,505 44.6%
Small Cap 211,609 $ 2,966,753 54.2%
International 123 $ 1,887 0.0%
Global Contrarian 267,149 $ 3,208,460 50.0%
</TABLE>
In addition, as of that date, the KZF 401(k) Investment Plan (Fay Bauer,
trustee) of Cincinnati, Ohio, owned 64,080 shares of the Growth Portfolio having
a total net asset value of $1,215,598 and representing 8.6% of the Portfolio,
and 55,277 shares of the Income & Growth Portfolio having a total net asset
value of $881,689 and representing 6.2% 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
19
<PAGE> 59
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 Fund for clerical and related
administrative services (other than those provided by the custodian agreements
with The Provident Bank, Star Bank and Investors Fiduciary Trust Company, and
the agency agreements with The Provident Bank and American Data Services, Inc.),
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>
1997 Waived Earned Net Fees
------ ------ --------
<S> <C> <C> <C>
Money Market $ 54,943 ($ 37,694) $ 17,249
Tax-Free Income 40,001 ( 13,228) 26,773
Income 33,991 ( 12,594) 21,397
Income & Growth 58,563 ( 21,373) 37,190
Growth 61,743 ( 22,671) 39,072
Core Growth 27,257 0 27,257
Small Cap 30,439 ( 9,644) 20,795
International 151,632 0 151,632
Global Contrarian 52,669 0 52,669
-------- --------- --------
$511,238 ($117,204) $ 394,034
1996 Earned Waived Net Fees
------ ------ --------
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> 60
<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>
* All fees earned prior to May 1, 1996 were paid to ONIMCO. On and
after that date, fees were payable to the Adviser. The Core Growth
Portfolio is not shown for the years ended June 30, 1995 and 1996
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 1%, on an annualized basis, of the portfolio's average daily net
asset value, the Adviser will pay such expenses. During the last fiscal year,
the Adviser reimbursed the Money Market Portfolio $3,587, the Income Portfolio
$7,469, the Core Growth Portfolio $2,322, the Small Cap Portfolio $2,816, the
International Portfolio $19,110, and the Global Contrarian Portfolio $10,899
under these 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. 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 31, 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 27, 1997.
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' 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
21
<PAGE> 61
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 Core Growth, International and Global Contrarian Portfolios,
and selects the brokers to handle such transactions. The sub-advisers (PBA
and SGAM) select the brokers and dealers that execute the transactions for the
portfolios managed by them. It is the intention of the Adviser and each of the
sub-advisers to place orders for the purchase and sale of securities with the
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 and
sub-advisers 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
and sub-advisers consider a number of factors including the quality, efficiency
of execution and value of 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 or sub-adviser
may use a broker whose commission in effecting a securities transaction is in
excess of that of some other broker if the Adviser or sub-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. In
effecting a transaction for one portfolio, a broker may also offer services of
benefit to other portfolios managed by the Adviser or sub-adviser, or to the
benefit of its affiliates.
Generally, it is not possible to place a dollar value on research and related
services provided by brokers to the Adviser or a sub-adviser. However, receipt
of such services may tend to reduce the expenses of the Adviser or a
sub-adviser. Research, statistical and similar information furnished by brokers
may be of incidental assistance to ONLI, ONF or other clients or affiliates of
the Adviser or the sub-advisers and conversely, transaction costs paid by ONLI,
ONF or other clients or affiliates of the Adviser or the sub-advisers may
generate information which is beneficial to ONE Fund.
Consistent with these polices, the sub-advisers may, with the Board of
Directors' approval and subject to its review, direct portfolio transactions to
be executed by a broker affiliated with the sub-adviser 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.
22
<PAGE> 62
For each of the fiscal years ended June 30, the following brokerage commission
amounts were paid by each portfolio:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Money Market None None None
Tax-Free Income None None None
Income None $ 720 None
Income & Growth $ 6,954 4,438 $ 5,101
Growth 14,710 8,034 3,776
Core Growth 5,362 N/A N/A
Small Cap 6,888 4,880 5,074
International 23,484 22,094 26,616
Global Contrarian 6,658 10,126 11,278
------- ------- -------
Total $64,056 $50,291 $51,845
</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), PBA or SGAM. 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 $l 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.
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.
23
<PAGE> 63
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, 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.
24
<PAGE> 64
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
$l.
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 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.
25
<PAGE> 65
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 Ohio
National Equities, Inc. 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, 1997 and for the periods
indicated herein included in this Statement of Additional Information and the
Financial Highlights included in the prospectus dated November 1, 1997 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> 66
ONE FUND, INC.
MONEY MARKET PORTFOLIO
Schedule of Investments June 30, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
-----------------------------------------------------------------
<S> <C>
AUTOMOTIVE AND RELATED (6.7%)
RELATED (4.6%)
$100,000 Ford Motor Credit Corp.
5.560% 07-30-97 $ 99,552
575,000 Ford Motor Credit Corp.
5.620% 07-30-97 572,397
300,000 General Motors Acceptance Corp.
5.560% 08-11-97 298,100
-----------
970,049
-----------
COMPUTER AND RELATED (4.7%)
560,000 IBM Credit Corp.
5.570% 07-15-97 558,787
115,000 IBM Credit Corp.
5.510% 07-15-97 114,754
-----------
673,541
-----------
CONSUMER GOODS (9.8%)
725,000 Allergen Inc.
5.560% 07-22-97 722,649
700,000 Phillip Morris Inc.
5.550% 08-11-97 695,575
-----------
1,418,224
-----------
CHEMICALS (4.5%)
660,000 Englehard Corp.
5.660% 07-17-97 658,340
-----------
ELECTRICAL EQUIPMENT (4.7%)
400,000 G.E. Capital
5.570% 07-21-97 398,762
280,000 G.E. Capital
5.610% 07-21-97 279,127
-----------
677,889
-----------
ENTERTAINMENT AND LEISURE (4.1%)
600,000 Hasbro Inc.
5.590% 08-29-97 594,503
-----------
FINANCE (16.9%)
590,000 Associates Corp. of N.A.
5.550% 08-06-97 586,726
500,000 BHP Finance Corp.
5.600% 07-01-97 500,000
675,000 Heller Financial
5.600% 07-28-97 672,165
680,000 Household Finance Corp.
5.550% 07-14-97 678,637
-----------
2,437,528
-----------
FOOD AND RELATED (6.3%)
218,000 Pepsi Cola
6.000% 07-01-97 218,000
700,000 Winn-Dixie
5.550% 08-19-97 694,712
-----------
912,712
-----------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
-----------------------------------------------------------------
HOUSING, FURNITURE & RELATED (4.6%)
$675,000 Sherwin Williams
5.640% 08-04-97 $ 671,404
-----------
INDUSTRIAL (4.3%)
620,000 BAT Capital Corp.
5.550% 07-23-97 617,897
-----------
INSURANCE (11.5%)
475,000 Prudential Funding
5.520% 08-12-97 471,941
700,000 Reliastar Mortgage
5.570% 07-15-97 698,484
500,000 Safeco Credit Company
5.530% 08-08-97 497,081
-----------
1,667,506
-----------
MACHINERY AND EQUIPMENT (4.6%)
100,000 John Deere Capital Corp.
5.610% 08-18-97 99,252
180,000 John Deere Capital Corp.
5.620% 08-18-97 178,651
395,000 John Deere Capital Corp.
5.600% 08-18-97 392,051
-----------
669,954
-----------
MEDIA AND PUBLISHING (4.7%)
680,000 Cox Enterprises
5.790% 07-09-97 679,125
RETAIL (4.8%)
500,000 Sears Roebuck
5.540% 08-19-97 496,230
195,000 Sears Roebuck
5.550% 08-19-97 193,527
-----------
689,757
-----------
UTILITIES (9.3%)
650,000 Central Louisiana Electric
5.570% 07-08-97 649,296
700,000 PG&E Corp.
5.550% 07-21-97 697,842
-----------
1,347,138
-----------
TOTAL HOLDINGS
(Cost $14,685,567)(a) $14,685,567
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 67
ONE FUND, INC.
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1997
<S> <C>
ASSETS:
Investments in securities at amortized cost
and market value (note 1) .................................... $14,685,567
Cash in bank .................................................. 215
Receivable for fund shares sold ............................... 17,993
Deferred organizational expenses (note 1) ..................... 455
Other ......................................................... 6,538
-----------
Total assets ................................................. 14,710,768
-----------
LIABILITIES:
Payable for fund shares redeemed .............................. 301,044
Payable for investment management
services (note 3) ............................................ 3,565
Accrued 12b-1 fees (note 6) ................................... 5,122
Other accrued expenses ........................................ 14,266
Dividends payable ............................................. 22,279
-----------
Total liabilities ............................................ 346,276
-----------
Net assets at market value ..................................... $14,364,492
===========
Net assets consist of:
Par value, $.001 per share .................................... $ 14,364
Paid-in capital in excess of par value ........................ 14,350,128
-----------
Net assets at market value ..................................... $14,364,492
===========
Shares outstanding ............................................. 14,364,492
Net asset value per share ...................................... $ 1.00
===========
Maximum offering price per share ............................... $ 1.00
===========
Statement of Operations
Year ended June 30, 1997
INVESTMENT INCOME:
Interest ................................................. $ 936,660
EXPENSES:
Management fees (note 3) ................................. 54,943
12b-1 fees (note 6) ...................................... 25,483
Custodian fees (note 3) .................................. 18,720
Directors' fees .......................................... 2,800
Professional fees ........................................ 11,920
Transfer agent fees ...................................... 26,700
Filing fees .............................................. 15,000
Organizational expense (note 1) .......................... 3,471
Other .................................................... 18,000
---------
Total expenses .......................................... 177,037
Less expenses voluntarily reduced
or reimbursed (note 3) ................................. (41,281)
---------
Net expenses ............................................ 135,756
---------
Net investment income ................................... 800,904
---------
Net increase in net
assets from operations ................................. $ 800,904
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 68
ONE FUND, INC.
MONEY MARKET PORTFOLIO
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
<S> <C> <C>
From operations:
Net investment income .......................................................... $800,904 $826,263
----------- -----------
Net increase in assets from operations........................................ 800,904 826,263
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income....................................... (800,904) (826,263)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ...................................................... 17,151,447 13,411,231
Received from dividends reinvested ............................................. 545,914 821,475
Paid for shares redeemed ....................................................... (19,142,752) (12,570,685)
----------- -----------
Increase (decrease) in net assets derived from capital share transactions (1,445,391) 1,662,021
----------- -----------
Increase (decrease) in net assets ........................................... (1,445,391) 1,662,021
----------- -----------
Net Assets:
Beginning of period ............................................................ 15,089,883 14,147,862
----------- -----------
End of period .................................................................. $14,364,492 $15,809,883
=========== ===========
</TABLE>
Financial Highlights
<TABLE>
<CAPTION>
8-18-92
YEARS ENDED JUNE 30, TO
1997 1996 1995 1994 6-30-93
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period ................... 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income ................................. 0.05 0.05 0.05 0.03 0.02
Less distributions:
Dividends from net investment income .................. (0.05) (0.05) (0.05) (0.03) (0.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return ........................................... 4.77% 5.18% 5.06% 3.06% 2.67%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses .............................................. 0.80% 0.57% 0.51% 0.44% 0.43%(a)
Net investment income ................................. 4.71% 5.14% 4.99% 2.97% 2.70%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses .............................................. 1.04% 0.87% 0.81% 0.74% 0.73%(a)
Net investment income ................................. 4.47% 4.84% 4.69% 2.67% 2.40%(a)
Net assets at end of period (millions) ................. 14.4 15.8 14.1 12.3 21.3
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to waive 0.15% of the management fee for the Money
Market portfolio, but it may cease that waiver, in whole or in part,
without prior notice. In addition, the advisor has reimbursed certain
operating expenses.
The accompanying notes are an integral part of these financial statements.
<PAGE> 69
ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO
Schedule of Investments June 30, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- --------------------------------------------------------------
<S> <C> <C>
FINANCIAL (2.0%)
$137,000 Star Bank 5.250% due 07-01-97
repurchase price $137,020
collateralized by GNMA certificates
pool #8359
due 01-20-24 (Cost $140,000) $137,000
----------
TOTAL REPURCHASE AGREEMENTS
(2.0%) (Cost $137,000) $137,000
----------
FACE MARKET
AMOUNT MUNICIPAL BONDS VALUE
- --------------------------------------------------------------
AIRPORT REVENUE (7.7%)
$300,000 Chicago Illinois Midway Airport
5.500% 01-01-29 $289,776
250,000 Chicago Illinois O'Hare Airport
5.000% 01-01-13 234,593
----------
524,369
----------
CONVENTION COMPLEX &
HOSPITALITY FACILITIES (3.0%)
200,000 Metropolitan Pier
6.250% 07-01-17 204,356
----------
GENERAL OBLIGATION BONDS (11.2%)
100,000 Clairborne County Mississippi
7.300% 05-01-25 105,367
150,000 Commonwealth of Puerto Rico
5.500% 07-01-17 147,765
250,000 State of Nevada
6.600% 12-01-13 274,550
250,000 State of Washington
5.000% 05-01-17 236,010
----------
763,692
----------
HOSPITAL REVENUE (14.7%)
250,000 Hawaii Department of Budget
6.000% 07-01-20 256,170
250,000 Massachusetts State Hospital
6.200% 10-01-16 261,313
300,000 North Carolina Medical Care Comm.
5.250% 05-01-26 283,200
200,000 Wisconsin Health and Education
6.125% 11-15-15 207,286
----------
1,007,969
----------
HOUSING REVENUE (2.2%)
150,000 Alaska Housing
5.875% 12-01-24 150,281
----------
FACE MARKET
AMOUNT MUNICIPAL BONDS VALUE
---------------------------------------------------------
INSURED BONDS (16.4%)
$250,000 Atlanta RTA
6.800% 07-01-14 (Insured MBIA) $ 285,842
250,000 Matagorde Texas
6.700% 03-01-27 (Insured AMBAC) 272,273
250,000 New York State Med Care
6.750% 08-15-14 (Insured AMBAC) 274,920
250,000 Pennsylvania Intergovernment Corp.
6.750% 06-15-21 (Insured FGIC) 283,605
----------
1,116,640
----------
POLLUTION CONTROL &
INDUSTRIAL REVENUE
250,000 Lawrenceburg, Indiana
5.900% 11-01-19 249,945
250,000 Richland County, S. Carolina
6.550% 11-01-20 267,612
250,000 West Feliciana, Louisiana
8.000% 12-01-24 267,053
----------
784,610
----------
POWER REVENUE (22.4%)
250,000 Jacksonville Florida Municipal
5.500% 10-01-14 249,288
250,000 Mobile Alabama
6.950% 01-01-20 267,985
250,000 North Carolina Eastern Power
6.000% 01-01-22 250,797
250,000 Salt River Arizona Project
5.000% 01-01-13 242,265
200,000 Southern California Public Power
6.000% 07-01-18 210,373
300,000 Washington Power
5.700% 07-01-12 305,400
----------
1,526,108
----------
SCHOOL REVENUE (4.0%)
250,000 Clark County, Nevada School District
7.000% 06-01-09 275,406
----------
WATER REVENUE (3.7%)
250,000 Metropolitan Water District of
S. California
5.500% 07-01-13 252,820
----------
TOTAL MUNICIPAL BONDS
(Cost $6,011,706) $6,606,250
TOTAL HOLDINGS
(Cost $6,148,706) (a) $6,743,250
==========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 70
ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
JUNE 30, 1997
<S> <C>
ASSETS:
Investments in securities at market
value (note 1) (Cost $6,148,706)............................. $ 6,743,250
Cash in bank ................................................. 666
Receivable for fund shares sold .............................. 24
Dividends and accrued interest receivable .................... 121,505
Deferred organizational expenses (note 1) .................... 1,213
Other ........................................................ 2,502
-----------
Total assets ................................................ 6,869,160
-----------
LIABILITIES:
Payable for investment management
services (note 3) ........................................... 3,105
Accrued 12b-1 fees (note 6) .................................. 4,076
Other accrued expenses ....................................... 11,753
Dividends payable ............................................ 23,606
-----------
Total liabilities ........................................... 42,540
-----------
Net assets at market value .................................... $ 6,826,620
===========
Net assets consist of:
Par value, $.001 per share ................................... $ 615
Paid-in capital in excess of par value ....................... 6,242,688
Accumulated undistributed net realized
loss on investments ......................................... (11,340)
Net unrealized appreciation on investments ................... 594,544
Undistributed net investment income .......................... 113
-----------
Net assets at market value .................................... $ 6,826,620
===========
Shares outstanding ............................................ 615,334
Net asset value per share ..................................... $ 11.09
===========
Maximum offering price per share ($11.09/97%) ................ $ 11.43
===========
Statement of Operations
YEAR ENDED JUNE 30, 1997
Investment income:
Interest ........................................................ $ 402,595
---------
EXPENSES:
Management fees (note 3) ........................................ 40,001
12b-1 fees (note 6) ............................................. 16,667
Custodian fees (note 3) ......................................... 8,713
Directors' fees ................................................. 1,120
Professional fees ............................................... 4,768
Transfer agent fees ............................................. 11,000
Filing fees ..................................................... 6,000
Organizational expense (note 1) ................................. 522
Other ........................................................... 7,692
---------
Total expenses ................................................. 96,483
Less expenses voluntarily reduced
or reimbursed (note 3) ........................................ (14,059)
---------
Net expenses ................................................... 82,424
---------
Net investment income .......................................... 320,171
---------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments............................... (4,042)
Net increase in unrealized
appreciation on investments .................................... 185,075
---------
Net gain on investments ....................................... 181,033
---------
Net increase in net
assets from operations ........................................ $ 501,204
=========
</TABLE>
The accompanying notes are an inetgral part of these financial statements.
<PAGE> 71
ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
<S> <C> <C>
From operations:
Net investment income .......................................................... $ 320,171 $ 315,773
Realized loss on investments ................................................... (4,042) (7,298)
Unrealized gain on investments ................................................. 185,075 71,682
----------- -----------
Net increase in assets from operations ....................................... 501,204 380,157
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................................... (320,058) (315,773)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ...................................................... 436,076 315,892
Received from dividends reinvested ............................................. 153,756 311,840
Paid for shares redeemed ....................................................... (227,986) (65,222)
----------- -----------
Increase in net assets derived from capital share transactions ................ 361,846 562,510
----------- -----------
Increase in net assets ...................................................... 542,992 626,894
----------- -----------
Net Assets:
Beginning of period ............................................................ 6,283,628 5,656,734
----------- -----------
End of period (a) .............................................................. $ 6,826,620 $ 6,283,628
=========== ===========
(a) Includes undistributed net investment income of ............................. $ 113 0
=========== ===========
</TABLE>
Financial Highlights
<TABLE>
<CAPTION>
11-1-94
YEARS ENDED JUNE 30, TO
1997 1996 6-30-95
------ ------ ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period ................... 10.79 10.66 10.00
Income from investment operations:
Net investment income ................................. 0.53 0.56 0.35
Net realized and unrealized gain on investments ....... 0.30 0.13 0.66
------ ------ ------
Total income from investment operations .............. 0.83 0.69 1.01
------ ------ ------
Less distributions:
Dividends from net investment income .................. (0.53) (0.56) (0.35)
------ ------ ------
Net asset value, end of period ......................... $11.09 $10.79 $10.66
====== ====== ======
Total return ........................................... 7.82% 6.59% 10.26%(b)
Ratios and supplemental data:
Ratios net of fees waived or reimbursed by advisor (c):
Expenses .............................................. 1.24% 0.94% 0.91%(a)
Net investment income ................................. 4.81% 5.20% 5.04%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses .............................................. 1.45% 1.24% 1.21%(a)
Net investment income ................................. 4.60% 4.90% 4.74%(a)
Portfolio turnover rate ................................ 6% 8% 0%
Net assets at end of period (millions) ................. 6.8 6.3 5.7
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to waive 0.15% of the management fee for the
Tax-Free Income portfolio, but it may cease that waiver, in whole or in
part, without prior notice. In addition, the advisor has reimbursed certain
operating expenses.
The accompanying notes are an integral part of these financial statements.
<PAGE> 72
ONE FUND, INC.
INCOME PORTFOLIO
Schedule of Investments June 30, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
----------------------------------------------------------
<S> <C> <C>
FINANCIAL (1.5%)
$102,000 Star Bank 5.250% due 07-01-97
repurchase price $102,015
pool # 8359
collateralized by GNMA certificates
due 01-20-24 (Cost $105,000) $ 102,000
-----------
TOTAL REPURCHASE AGREEMENTS
(1.5%) (Cost $102,000) $ 102,000
-----------
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
----------------------------------------------------------
GOVERNMENT (21.2%)
$1,000,000 U.S. Treasury Note
6.375% 08-15-02 $ 999,688
400,000 U.S. Treasury Note
7.375% 11-15-97 402,625
-----------
1,402,313
-----------
COMMUNICATONS (1.6%)
100,000 Comcast Cable Communications
8.375% 05-01-07 106,552
-----------
COMPUTER AND RELATED (3.9%)
250,000 International Business Machines
7.250% 11-01-02 255,988
-----------
CONSUMER GOODS (3.7%)
250,000 RJR Nabisco, Inc.
7.625% 09-15-03 242,228
-----------
FORESTRY AND PAPER PRODUCTS (3.9%)
250,000 ITT Rayonier, Inc.
7.500% 10-15-02 256,048
-----------
HOTEL/LODGING (7.4%)
300,000 ITT Destinations, Inc.
6.750% 11-15-05 285,460
200,000 Marriott International
7.875% 04-15-05 207,620
-----------
493,080
-----------
MEDICAL AND RELATED (7.0%)
250,000 Bergen Brunswig Corp.
7.375% 01-15-03 254,847
200,000 Manor Care, Inc.
9.500% 11-15-02 208,561
-----------
463,408
OIL, ENERGY AND NATURAL GAS (12.5%)
250,000 Maxus Energy
9.875% 10-15-02 263,750
200,000 PDV America, Inc.
7.875% 08-01-03 203,200
100,000 Seagull Energy
7.875% 08-01-03 98,420
250,000 Tenneco Inc.
8.075% 10-01-02 263,118
-----------
828,488
-----------
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
-----------------------------------------------------------
REAL ESTATE (3.0%)
$200,000 Avalon Properties Inc.
7.375% 09-15-02 $ 200,262
-----------
RETAIL (1.6%)
100,000 Genesco, Inc.
10.375% 02-01-03 $ 103,500
-----------
TEXTILES AND RELATED (3.9%)
250,000 Fruit of the Loom Corp.
7.875% 10-15-99 $ 256,492
-----------
TRANSPORTATION (3.7%)
250,000 Illinois Central Gulf Railroad
6.750% 05-15-03 $ 247,956
-----------
UTILITIES (15.6%)
250,000 El Paso Electric Co.
8.900% 02-01-06 $ 267,500
250,000 Mississippi Power and Light
8.800% 04-01-05 $ 253,797
219,467 Puget Power
6.450% 04-11-05 $ 217,865
300,000 Texas Utilities Electric
7.480% 01-01-17 $ 290,255
-----------
$ 1,029,417
-----------
TOTAL LONG-TERM BONDS & NOTES
(89.0) (Cost $5,797,907) $ 5,885,732
-----------
MARKET
SHARES PREFERRED STOCK VALUE
---------------------------------------------------------
OIL, ENERGY AND NATURAL GAS (2.5%)
6,500 Phillips Gas Co., 9.320%, Serie $ 169,000
-----------
UTILITIES (5.9%)
8,000 GTE Delaware, 8.750% Series B $ 212,000
7,000 Connecticut Light, Power & Capital
9.300% Series A $ 175,875
-----------
$ 387,875
-----------
TOTAL PREFERRED STOCK (8.4%)
(Cost $537,500) $ 556,875
-----------
TOTAL HOLDINGS
(Cost $6,437,407) (a) $ 6,544,607
===========
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 73
ONE FUND, INC.
Income Portfolio
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
June 30, 1997
<S> <C>
ASSETS:
Investments in securities at market
value (note 1) (Cost $6,437,407) ......................... $ 6,544,607
Cash in bank .............................................. 801
Receivable for fund shares sold ........................... 746
Dividends and accrued interest receivable ................. 122,482
Deferred organizational expenses (note 1) ................. 455
Other ..................................................... 8,810
-----------
Total assets ............................................. 6,677,901
-----------
LIABILITIES:
Payable for investment management
services (note 3) ........................................ 3,858
Accrued 12b-1 fees (note 6) ............................... 3,918
Other accrued expenses .................................... 19,246
Dividends payable ......................................... 27,600
-----------
Total liabilities ........................................ 54,622
-----------
Net assets at market value ................................. $ 6,623,279
===========
Net assets consist of:
Par value, $.001 per share ................................ $ 679
Paid-in capital in excess of par value .................... 6,618,945
Accumulated undistributed net realized
loss on investments ...................................... (103,545)
Net unrealized appreciation on investments ................ 107,200
-----------
Net assets at market value ................................. $ 6,623,279
===========
Shares outstanding ......................................... 679,257
Net asset value per share .................................. $ 9.75
===========
Maximum offering price per share ($9.75/97%) ............... $ 10.05
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended June 30, 1997
Investment income:
<S> <C>
Interest ................................................. $ 501,524
EXPENSES:
Management fees (note 3) ................................. 33,991
12b-1 fees (note 6) ...................................... 16,672
Custodian fees (note 3) .................................. 12,368
Directors' fees .......................................... 1,260
Professional fees ........................................ 5,364
Transfer agent fees ...................................... 12,900
Filing fees .............................................. 6,750
Organizational expense (note 1) .......................... 3,471
Other .................................................... 7,938
---------
Total expenses .......................................... 100,714
Less expenses voluntarily reduced
or reimbursed (note 3) ................................. (20,063)
---------
Net expenses ............................................ 80,651
---------
Net investment income ................................... 420,873
---------
Realized and unrealized gain on investments:
Net realized gain from investments ....................... 7,352
Net increase in unrealized
appreciation on investments ............................. 98,941
---------
Net gain on investments ................................ 106,293
---------
Net increase in net
assets from operations ................................. $ 527,166
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 74
ONE FUND, INC.
Income Portfolio
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
From operations:
Net investment income ......................................... $ 420,873 $ 468,533
Realized gain (loss) on investments ........................... 7,352 (49,166)
Unrealized gain (loss) on investments ......................... 98,941 (89,116)
----------- -----------
Net increase in assets from operations ...................... 527,166 330,251
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ..................... (420,873) (468,533)
----------- -----------
Total dividends and distributions ........................... (420,873) (468,533)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ..................................... 201,790 779,610
Received from dividends reinvested ............................ 224,885 431,894
Paid for shares redeemed ...................................... (892,262) (1,233,852)
----------- -----------
Decrease in net assets derived from capital share transactions (465,587) (22,348)
----------- -----------
Decrease in net assets ..................................... (359,294) (160,630)
----------- -----------
Net Assets:
Beginning of period ........................................... 6,982,573 7,143,203
----------- -----------
End of period ................................................. $ 6,623,279 $ 6,982,573
=========== ===========
</TABLE>
Financial Highlights
<TABLE>
<CAPTION>
8-18-92
Years Ended June 30, to
1997 1996 1995 1994 6-30-93
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period ................... $ 9.59 $ 9.78 $ 9.39 $10.43 $10.00
Income (loss) from investment operations:
Net investment income ................................. 0.61 0.63 0.65 0.62 0.45
Net realized and unrealized gain (loss) on investments 0.16 (0.19) 0.39 (0.98) 0.45
------ ------ ------ ------ ------
Total income (loss) from investment operations ....... 0.77 0.44 1.04 (0.36) 0.90
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income .................. (0.61) (0.63) (0.65) (0.62) (0.45)
Distributions from net realized capital gains ......... 0.00 0.00 0.00 (0.06) (0.02)
------ ------ ------ ------ ------
Total distributions .................................. (0.61) (0.63) (0.65) (0.68) (0.47)
------ ------ ------ ------ ------
Net asset value, end of period ......................... $ 9.75 $ 9.59 $ 9.78 $ 9.39 $10.43
====== ====== ====== ====== ======
Total return ........................................... 8.26% 4.61% 11.58% (3.79%) 9.56%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses .............................................. 1.21% 0.97% 0.85% 1.02% 1.11%(a)
Net investment income ................................. 6.29% 6.50% 6.80% 6.10% 5.07%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses .............................................. 1.51% 1.22% 1.10% 1.27% 1.36%(a)
Net investment income ................................. 5.99% 6.25% 6.55% 5.85% 4.82%(a)
Portfolio turnover rate ................................ 10% 9% 4% 6% 6%
Net assets at end of period (millions) ................. $ 6.6 $ 7.0 $ 7.1 $ 4.6 $ 5.7
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to waive 0.15% of the management fee for the
Income portfolio, but it may cease that waiver, in whole or in part,
without prior notice. In addition, the advisor has reimbursed certain
operating expenses.
The accompanying notes are an integral part of these financial statements.
<PAGE> 75
ONE FUND, INC.
Income & Growth Portfolio
Schedule of Investments
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
BANKING (0.8%)
$100,000 First State Bancorporation
7.500% 04-30-17 $108,375
---------
COMMUNICATIONS (0.8%)
100,000 Comcast Cable Communications
8.375% 05-01-07 106,552
---------
COMPUTER AND RELATED (1.9%)
250,000 IBM Corp.
7.250% 11-01-02 255,988
---------
ELECTRICAL EQUIPMENT (0.7%)
100,000 Richey Electronics
7.000% 03-01-06 89,625
---------
FINANCE (0.8%)
100,000 Citifed Bancorp
8.250% 09-01-03 99,934
---------
FORESTRY AND PAPER PRODUCTS (1.9%)
250,000 ITT Rayonier, Inc.
7.500% 10-15-02 256,048
---------
OIL, ENERGY AND NATURAL GAS (9.1%)
250,000 Maxus Energy
9.875% 10-15-02 263,750
100,000 Offshore Logistics
6.000% 12-15-06 107,500
300,000 PDV America, Inc.
7.875% 08-01-03 304,800
250,000 Tenneco, Inc.
8.075% 10-01-02 263,118
250,000 Union Texas Petroleum
8.250% 11-15-99 259,210
---------
1,198,378
---------
UTILITIES (1.5%)
200,000 Mississippi Power and Light
8.800% 04-01-05 203,038
---------
TOTAL LONG-TERM BONDS & NOTES
(17.5%) (COST $2,231,782) $2,317,938
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------------------------
<S> <C>
AUTOMOTIVE AND RELATED (2.2%)
$145,000 Ford Motor Credit Corp.
5.520% 07-03-97 $144,956
140,000 General Motors Accptance Corp.
5.580% 07-08-97 139,848
---------
284,804
---------
FINANCE (2.8%)
230,000 Heller Financial, Inc.
5.620% 07-09-97 229,713
145,000 Household Financial Corp.
5.460% 07-01-97 145,000
---------
374,713
---------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------------------------
RETAIL (0.7%)
$100,000 Sears Roebuck
5.500% 07-02-97 $ 99,984
----------
TOTAL SHORT-TERM NOTES (5.7%)
(COST $759,501) $ 759,501
----------
Market
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------------------------
AEROSPACE (3.2%)
5,000 Allied Signal, Inc. $ 420,000
----------
AUTOMOTIVE AND RELATED (3.1%)
3,300 Chrysler Corp. 108,281
2,500 Cooper Tire & Rubber Co. 55,000
4,000 Magna International, Inc. 240,750
----------
404,031
----------
BANKING (1.5%)
3,500 * Flagstar Bancorp Inc. 56,875
1,000 Star Banc Corp. 42,250
2,500 Susquehanna Bancshares 98,125
----------
197,250
----------
BUSINESS SERVICES (3.4%)
5,000 First Data Corp. 219,688
3,000 Manpower Inc. 133,500
6,000 Reynolds and Reynolds 94,500
----------
447,688
----------
CHEMICALS (4.2%)
1,250 Hanson Trust PLC 31,250
5,000 Learonal Inc. 142,500
5,000 Minerals Technologies Inc. 187,500
6,000 OM Group Inc. 198,750
----------
560,000
----------
COMPUTER AND RELATED (13.2%)
1,925 * 3Com Corporation 86,625
2,000 Computer Associates Internationa 111,375
7,500 Hewlett Packard Co. 420,000
3,000 Intel Corp. 425,438
10,000 MacNeal-Schwendler Corp. 108,750
2,000 * Microsoft Corp. 252,750
4,000 Texas Instruments, Inc. 336,250
----------
1,741,188
----------
CONSUMER PRODUCTS (0.5%)
2,000 Stanhome, Inc. 65,750
----------
ELECTRICAL EQUIPMENT (3.9%)
3,000 Varian Associates, Inc. 162,750
12,000 Westinghouse Electric 277,500
1,000 Xerox Corp. 78,875
----------
519,125
----------
ENTERTAINMENT AND LEISURE (1.7%)
5,000 Cedar Fair 218,750
----------
FINANCE (1.5%)
15,000 Bando McGlocklin Capital 198,750
----------
FOOD AND RELATED (2.5%)
3,000 H.J. Heinz Co. 138,375
6,000 Panamerican Beverages Inc. 197,250
----------
335,625
----------
</TABLE>
<PAGE> 76
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO
Schedule of Investments
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------------------------
<S> <C>
FORESTRY AND PAPER PRODUCTS (0.9%)
4,000 Sonoco Products Co. $ 121,750
----------
HOUSING, FURNITURE & RELATED (1.3%)
7,100 Haverty Furniture Co. 88,750
6,200 Shelby Williams Industries Inc. 84,475
----------
173,225
----------
INDUSTRIAL SERVICES (6.1%)
6,000 Clarcor Inc. 148,500
12,000 Regal Beloit Corp. 314,250
7,000 Versa Technologies Inc. 110,250
5,000 York International, Corp. 230,000
----------
803,000
----------
INSURANCE SERVICES (0.8%)
4,000 Blanch EW Holdings Inc. 106,750
----------
MEDICAL AND RELATED (2.4%)
500 Allegiance Corporation 13,625
2,500 Baxter International 130,625
2,150 National Healthcare LP 95,943
1,500 United Healthcare Corporation 78,000
----------
318,193
----------
OIL, ENERGY AND GAS (10.7%)
8,000 Camco International, Inc. 438,000
2,750 * Energy Group PLC ADR 116,531
6,000 Monterey Resources 89,250
4,800 National Propane Partners 97,800
5,000 Pacific Gulf Properties, Inc. 110,000
3,000 WD-40 Co. 180,000
8,000 Westcoast Energy, Inc. 145,500
5,250 Williams Cos., Inc. 229,688
----------
1,406,769
----------
REAL ESTATE (6.2%)
8,000 Commercial Net Lease Realty 122,500
4,000 First Industrial Realty Trust 117,000
7,000 Great Lakes REIT 115,063
6,000 Healthcare Realty Trust 167,250
5,000 Liberty Property Trust 124,375
4,500 National Health Investors 176,625
----------
822,813
----------
TEXTILES AND RELATED (1.0%)
4,500 Oxford Industries, Inc. 127,688
----------
TRANSPORTATION (3.8%)
3,723 Burlington Northern, Inc. 334,604
1,250 * Consolidated Freightways Corp. 20,468
2,500 CNF Transportation 80,625
6,000 Greenbriar Companies, Inc. 67,875
----------
503,572
----------
TOTAL COMMON STOCK (71.9%)
(COST $5,885,767) $9,491,917
==========
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------------------------
<S> <C>
AUTOMOTIVE AND RELATED (0.4%)
2,000 Walbro Capital Trust Pfd. 8.000 $ 57,250
-----------
BANKING (0.9%)
4,000 National Australia Bank Ltd. Pfd 111,750
-----------
FINANCE (0.3%)
1,500 * Money Store
6.500% 40,875
-----------
OIL, ENERGY AND GAS (1.4%)
3,000 Howell Corp.
$3.50 Series A 180,000
-----------
REAL ESTATE (0.5%)
2,500 Oasis Residential, Inc.,
$2.25 Series A 64,688
-----------
UTILITIES (1.2%)
6,300 Phillips Gas Co., 9.320% Series A 163,800
-----------
TOTAL PREFERRED STOCK (4.7%)
(COST $563,051) $618,363
-----------
TOTAL HOLDINGS
(COST $9,440,101) (a) $13,187,719
===========
</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> 77
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
June 30, 1997
ASSETS:
<S> <C>
Investments in securities at market
value (note 1) (Cost $9,440,101) .......................... $13,187,719
Cash in bank ............................................... 49,489
Receivable for fund shares sold ............................ 3,021
Dividends and accrued interest receivable .................. 67,816
Deferred organizational expenses (note 1) .................. 446
Other ...................................................... 1,846
-----------
Total assets .............................................. 13,310,337
-----------
LIABILITIES:
Payable for fund shares redeemed ........................... 136,564
Payable for investment management
services (note 3) ......................................... 3,768
Accrued 12b-1 fees (note 6) ................................ 7,550
Other accrued expenses ..................................... 12,861
Dividends payable .......................................... 35,146
-----------
Total liabilities ......................................... 195,889
-----------
Net assets at market value .................................. $13,114,448
===========
Net assets consist of:
Par value, $.001 per share ................................. $ 880
Paid-in capital in excess of par value ..................... 9,243,345
Accumulated undistributed net realized
gain on investments ....................................... 119,489
Net unrealized appreciation on investment .................. 3,747,618
Undistributed net investment income ........................ 3,116
-----------
Net assets at market value .................................. $13,114,448
===========
Shares outstanding .......................................... 880,384
Net asset value per share ................................... $ 14.89
===========
Maximum offering price per share ($14.89/9 .................. $ 15.67
===========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended
June 30, 1997
<S> <C>
Investment income:
Interest .................................................. $ 218,415
Dividends ................................................. 233,264
Total investment income .................................. 451,679
-----------
Expenses:
Management fees (note 3) .................................. 58,563
12b-1 fees (note 6) ....................................... 28,914
Custodian fees (note 3) ................................... 12,864
Directors' fees ........................................... 1,960
Professional fees ......................................... 8,344
Transfer agent fees ....................................... 15,400
Filing fees ............................................... 10,500
Organizational expense (note 1) ........................... 3,480
Other ..................................................... 11,695
-----------
Total expenses ........................................... 151,720
Less expenses voluntarily reduced
or reimbursed (note 3) .................................. (21,741)
-----------
Net expenses ............................................. 129,979
-----------
Net investment income .................................... 321,700
-----------
Realized and unrealized gain on investments:
Net realized gain from investments ........................ 129,214
Net increase in unrealized
appreciation on investments .............................. 1,933,894
-----------
Net gain on investments ................................. 2,063,108
-----------
Net increase in net
assets from operations................................... $2,384,808
==========
</TABLE>
<PAGE> 78
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1997 June 30, 1996
------------- ------------
<S> <C> <C>
From operations:
Net investment income ......................................... $ 321,700 $ 284,405
Realized gain on investments .................................. 129,214 285,463
Unrealized gain on investments ................................ 1,933,894 627,931
------------ ------------
Net increase in assets from operations ...................... 2,384,808 1,197,799
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ..................... (320,587) (282,680)
Capital gains distributions ................................... (243,651) (51,537)
------------ ------------
Total dividends and distributions ........................... (564,238) (334,217)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ..................................... 2,484,392 2,570,771
Received from dividends reinvested ............................ 427,145 423,830
Paid for shares redeemed ...................................... (2,386,862) (804,922)
------------ ------------
Increase in net assets derived from capital share transactions 524,675 2,189,679
------------ ------------
Increase in net assets ..................................... 2,345,245 3,053,261
------------ ------------
Net Assets:
Beginning of period ........................................... 10,769,203 7,715,942
------------ ------------
End of period (a) ............................................. $ 13,114,448 $ 10,769,203
============ ============
(a) Includes undistributed net investment income of ............ $ 3,116 $ 2,003
============ ============
</TABLE>
Financial Highlights
<TABLE>
<CAPTION>
8-18-92
Years Ended June 30, to
1997 1996 1995 1994 6-30-93
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period...................... $12.78 $11.57 $10.65 $10.96 $10.00
Income from investment operations:
Net investment income.................................... 0.38 0.38 0.41 0.33 0.27
Net realized and unrealized gain (loss) on investments .. 2.39 1.27 1.54 (0.11) 0.96
------ ------ ------ ------ ------
Total income from investment operations................. 2.77 1.65 1.95 0.22 1.23
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income..................... (0.38) (0.37) (0.41) (0.33) (0.27)
Distributions from net realized capital gains............ (0.28) (0.07) (0.62) (0.20) 0.00
------ ------ ------ ------ ------
Total distributions..................................... (0.66) (0.44) (1.03) (0.53) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period............................ $14.89 $12.78 $11.57 $10.65 $10.96
====== ====== ====== ====== ======
Total return.............................................. 22.34% 14.50% 19.41% 1.96% 12.49%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses................................................. 1.12% 0.89% 0.81% 0.94% 1.07%(a)
Net investment income.................................... 2.77% 3.10% 3.69% 3.08% 3.09%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses................................................. 1.31% 1.14% 1.06% 1.19% 1.32%(a)
Net investment income.................................... 2.58% 2.85% 3.44% 2.83% 2.84%(a)
Average commission rate (d) .............................. $0.07 N/A N/A N/A N/A
Portfolio turnover rate................................... 14% 7% 25% 14% 24%
Net assets at end of period (millions).................... $13.1 $10.8 $ 7.7 $ 7.5 $ 6.7
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to waive 0.15% of the management fee for the
Income & Growth portfolio, but it may cease that waiver, in whole or
in part, without prior notice. In addition, the advisor has reimbursed
certain operating expenses.
(d) Represents the total dollar amount of commission paid on equity
security transactions divided by the total number of shares purchased
and sold for which commissions were charged.
The accompanying notes are an integral part of these financial statements.
<PAGE> 79
ONE FUND, INC.
Growth Portfolio
Schedule of Investments June 30, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ---------------------------------------------------------------------------
<S> <C>
AUTOMOTIVE AND RELATED (2.3%)
$175,000 Ford Motor Credit Corp.
5.520% 07-02-97 $174,973
125,000 General Motors Acceptance Corp.
5.560% 07-03-97 124,961
--------
299,934
--------
FINANCIAL SERVICES (2.1%)
117,000 American Express Credit
5.550% 07-08-97 116,874
160,000 Heller Financial Inc.
5.400% 07-01-97 160,000
--------
276,874
--------
TOTAL SHORT-TERM NOTES
(4.4%) (COST $576,808) $ 576,808
--------
MARKET
SHARES COMMON STOCK VALUE
- ---------------------------------------------------------------------------
AEROSPACE (4.8%)
4,500 Allied Signal, Inc. $ 378,000
336 Boeing Co. 17,829
4,000 Rockwell International Corp. 236,000
---------
631,829
---------
AUTOMOTIVE AND RELATED (6.2%)
5,500 Arvin Industries, Inc. 149,875
3,000 Chrysler Corp. 98,438
2,000 Cooper Tire & Rubber 44,000
2,000 * Lear Corporation 88,750
5,000 Magna International, Inc. 300,937
7,000 Walbro Corp. 141,750
---------
823,750
---------
BANKING (2.8%)
3,150 Charter One Financial Inc. 169,706
3,500 * Flagstar Bancorp 56,875
1,000 Star Banc Corp. 42,250
2,500 Susquehanna Bancshares 98,125
---------
366,956
---------
BUSINESS SERVICES (8.7%)
8,500 * Alternative Resources 173,188
6,000 * American Business Info. 130,500
5,000 First Data Corp. 219,687
9,000 * Globe Business Resources 105,750
5,000 Manpower Inc. 222,500
6,000 Reynolds and Reynolds 94,500
4,500 Wackenhut Corp. Class B 89,719
6,500 * Xpedite Systems Inc. 112,125
---------
1,147,969
---------
CHEMICALS (2.4%)
3,500 Minerals Technologies, Inc. 131,250
5,500 OM Group Inc. 182,188
---------
313,438
---------
CONSUMER GOODS (2.1%)
7,000 * Acorn Products 98,000
3,500 * Sola International 117,250
2,000 Stanhome Inc. 65,750
---------
281,000
COMMUNICATIONS (1.1%)
3,187 * Mastec Inc. $ 150,785
---------
COMPUTER AND RELATED (18.4%)
2,625 * 3Com Corp. 118,125
6,500 * Cisco Systems Inc. 436,313
3,000 Computer Associates 167,062
9,000 * Continental Circuits Corp. 124,875
7,500 Hewlett Packard Co. 420,000
2,000 Intel Corp. 283,625
10,000 MacNeal-Schwendler Corp. 108,750
2,000 * Microsoft Corp. 252,750
1,000 * Structural Dynamics 26,250
4,000 Texas Instruments, Inc. 336,250
6,000 * Zebra Tech Corp. Cl. A 167,250
---------
2,441,250
---------
ELECTRICAL EQUIPMENT (7.0%)
6,666 * Analog Devices, Inc. 177,066
6,000 * Anixter International Inc. 103,125
5,000 BMC Industries, Inc. 171,250
4,000 Varian Associates, Inc. 217,000
8,000 Westinghouse Electric 185,000
1,000 Xerox Corp. 78,875
---------
932,316
---------
ENTERTAINMENT AND LEISURE (1.6%)
5,000 Cedar Fair 218,750
---------
FINANCE (1.4%)
7,500 SEI Corp. 180,938
---------
FOOD AND RELATED (2.0%)
10,000 Food Lion Cl. A 71,563
6,000 Panamerican Beverages Inc. 197,250
---------
268,813
---------
FORESTRY AND PAPER PRODUCTS (0.9%)
4,000 Sonoco Products Co. 121,750
---------
HOTEL/ LODGING (1.7%)
6,500 * Guest Supply 61,750
1,000 * ITT Corp. 61,063
4,000 * Mirage Resorts Inc. 101,000
---------
223,813
---------
HOUSING, FURNITURE & RELATED (0.8%)
7,500 Shelby Williams 102,188
---------
INDUSTRIAL SERVICES (3.3%)
10,200 * Canisco Resources 17,850
10,000 * Medar Inc. 51,250
8,000 Regal Beloit Corp. 209,500
3,500 York International Corp. 161,000
---------
439,600
---------
INSURANCE (1.9%)
4,000 Blanch (EW) Holdings 106,750
1,900 St. Paul Cos. 144,875
---------
251,625
---------
</TABLE>
<PAGE> 80
ONE FUND, INC.
GROWTH PORTFOLIO
Schedule of Investments
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------
MACHINERY (1.9%)
<S> <C> <C>
8,500 Hardinge Inc. $248,625
--------
MEDIA AND PUBLISHING (0.2%)
3,000 * Granite Broadcasting Corp. 30,750
--------
MEDICAL AND RELATED (7.5%)
700 Allegiance Corp. 19,075
3,500 Baxter International 182,875
5,500 * Cephalon Inc. 63,250
5,600 Columbia HCA Healthcare 220,150
3,900 * Foundation Health Corp. 118,219
2,000 * Humana Inc. 46,250
2,150 National Healthcare LP 95,943
5,000 * Quorum Health Group Inc. 178,750
1,500 United Healthcare Corp. 78,000
---------
1,002,512
---------
METAL FABRICATING (2.6%)
10,000 Amcast Industrial Corp. 250,000
3,250 * Wolverine Tube, Inc. 90,594
---------
340,594
---------
OIL, ENERGY AND NATURAL GAS (9.2%)
4,500 * Belco Oil & Gas 96,469
5,000 * Cairn Energy USA Inc. 65,625
6,000 Camco International, Inc. 328,500
7,000 * Louis Dreyfus Natural Gas 113,750
5,000 * Offshore Logistics 94,375
8,000 * Santa Fe Energy Resources 117,500
6,700 * Tesoro Petroleum 99,242
4,500 Williams Cos., Inc. 196,875
6,100 Wiser Oil 112,469
---------
1,224,805
---------
RESTAURANTS (0.6%)
10,000 * Buffets Inc. 84,375
---------
RETAIL (0.6%)
10,000 * Ridgeview Inc. 76,250
---------
TEXTILES AND RELATED (0.5%)
2,000 Warnaco Group, Cl. A $ 63,750
-----------
TRANSPORTATION (3.3%)
1,595 Burlington Northern Santa Fe Inc. 143,350
1,250 * Consolidated Freightways Corp. 20,468
2,500 Consolidated Freightways Inc. 80,625
6,000 Greenbrier Companies Inc. 67,875
1,044 * Halter Marine Group Inc. 25,056
3,000 Trinity Industries 95,250
----------
432,624
----------
TOTAL COMMON STOCK (93.5%)
(COST $8,334,281) $12,401,055
-----------
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------------
FINANCE (0.3%)
1,500 Money Store 6.500% $ 40,875
OIL, ENERGY AND NATURAL GAS (1.1%)
-----------
2,500 Howell Corp. Pfd. 150,000
-----------
REAL ESTATE (0.2%)
1,250 Oasis Residential Inc., 9.000%
Series A 32,344
-----------
TOTAL PREFERRED STOCK (1.6%)
(COST $199,075) $ 223,219
-----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------------
BANKING (0.4%)
$50,000 First State Bancorporation
7.500% 04-30-17 $ 54,188
-----------
TOTAL CONVERTIBLE DEBENTURES
(0.4%) (Cost $50,000) $ 54,188
-----------
TOTAL HOLDINGS
(Cost $9,160,164)(a) $13,255,270
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
The accompanying notes are an integral part of these financial statetments.
<PAGE> 81
ONE FUND, INC.
GROWTH PORTFOLIO
STATEMENTS OF ASSETS AND LIABILITIES
- -----------------------------------------------------------------------------
JUNE 30, 1997
<TABLE>
<S> <C>
ASSETS
Invstments in securities at market
value (note 1)(Cost $9,160,,164) ........................... $13,255,270
Cash in bank ................................................. 49,762
Receivable for fund shares sold .............................. 20,843
Dividends and accrued interest receivable .................... 13,461
Deferred organizational expenses (note 1) .................... 440
Other ........................................................ 2,029
-----------
Total assets ............................................... 13,341,905
-----------
LIABILITIES
Payable for fund shares redeemed ............................. 37,126
Payable for investment management
services (note 3) .......................................... 3,837
Accrued 12b-1 fees (note 6) .................................. 7,720
Other accrued expenses ....................................... 17,606
Dividends payable ............................................ 627
-----------
Total liabilities .......................................... 66,918
-----------
Net assets at market value $13,274,889
===========
NET ASSETS CONSIST OF:
Par value, $.001 per share ................................... $ 758
Paid-in capital in excess of per value ....................... 8,730,892
Accumulated undistributed net realized
gain on investments ........................................ 449,233
Net unrealized appreciation on investments ................... 4,095,106
Overdistributed net investment income ........................ (1,100)
-----------
Net assets at market value $13,274,889
===========
Shares outstanding.............................................. 757,589
Net asset value per share ...................................... $ 17.52
===========
Maximum offering price per share ($17.52/95%) .................. $ 18.44
===========
</TABLE>
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest ..................................................... $ 50,444
Dividends .................................................... 139,137
-----------
Total investment income .................................... 189,581
-----------
EXPENSES:
Management fees (note 3) ..................................... 61,743
12b-1 fees (note 6) .......................................... 30,406
Custodian fees (note 3) ...................................... 13,781
Directors' fees .............................................. 2,100
Professional fees ............................................ 8,940
Transfer agent fees .......................................... 16,900
Filing fees .................................................. 11,250
Organizational expense (note 1) .............................. 3,455
Other ........................................................ 11,901
-----------
Total expenses ............................................. 160,476
Less expenses voluntarily reduced
or reimbursed (note 3) ................................... (23,136)
-----------
Net expenses ............................................... 137,340
-----------
Net investment income ...................................... 52,241
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investments............................ 542,097
Net increase in unrealized
appreciation on investments ................................ 1,573,212
-----------
Net gain on investments ...................................... 2,115,309
-----------
Net increase in net
assets from operations ..................................... $ 2,167,550
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 82
ONE FUND, INC.
GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1997 June 30, 1996
-------------- -------------
<S> <C> <C>
From operations:
Net investment income ............................. $ 52,241 $ 93,986
Realized gain on investments ...................... 542,097 586,710
Unrealized gain on investments .................... 1,573,212 1,174,130
------------ ------------
Net increase in assets from operations ........ 2,167,550 1,854,826
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ......... (53,115) (94,036)
Capital gains distributions ....................... (495,835) (185,263)
------------ ------------
Total dividends and distributions ............. (548,950) (279,299)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ......................... 2,494,756 3,491,377
Received from dividends reinvested ................ 400,497 530,826
Paid for shares redeemed .......................... (2,996,818) (811,763)
------------ ------------
Increase in net assets derived from capital
share transactions ............................. (101,565) 3,210,440
------------ ------------
Increase in net assets ...................... 1,517,035 4,785,967
------------ ------------
Net Assets:
Beginning of period ............................... 11,757,854 6,971,887
------------ ------------
End of period (a) ................................. $ 13,274,889 $ 11,757,854
============ ============
(a) Includes overdistributed net investment
income of ....................................... ($ 1,100) ($ 225)
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
8-18-92
Years Ended June 30, to
1997 1996 1995 1994 6-30-93
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period ................. $ 15.47 $ 13.03 $ 11.67 $ 11.63 $ 10.00
Income from investment operations:
Net investment income ............................. 0.07 0.14 0.16 0.12 0.12
Net realized and unrealized gain on investments ... 2.73 2.72 2.17 0.22 1.69
------- ------- ------- ------- -------
Total income from investment operations ......... 2.80 2.86 2.33 0.34 1.81
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income .............. (0.07) (0.14) (0.16) (0.12) (0.12)
Distributions from net realized capital gains ..... (0.68) (0.28) (0.81) (0.18) (0.06)
------- ------- ------- ------- -------
Total distributions ............................. (0.75) (0.42) (0.97) (0.30) (0.18)
------- ------- ------- ------- -------
Net asset value, end of period ....................... $ 17.52 $ 15.47 $ 13.03 $ 11.67 $ 11.63
======= ======= ======= ======= =======
Total return ......................................... 18.68% 22.22% 20.54% 2.85% 18.26%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses .......................................... 1.13% 0.90% 0.83 1.04 1.30%(a)
Net investment income ............................. 0.43% 0.99% 1.35 1.04 1.31%(a)
Ratios assuming no fees waived or reimbursed by
advisor:
Expenses .......................................... 1.32% 1.15% 1.08 1.30 1.55%(a)
Net investment income ............................. 0.24% 0.74% 1.10 0.79 1.06%(a)
Average commission rate (d) .......................... $ 0.07 N/A N/A N/A N/A
Portfolio turnover rate .............................. 27% 22% 24% 8% 26%
Net assets at end of period (millions) ............... $ 13.3 $ 11.8 $ 7.0 $ 5.3 $ 4.3
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to waive 0.15% of the management fee for the Growth
portfolio, but it may cease that waiver, in whole or in part, without prior
notice. In addition, the advisor has reimbursed certain operating
expenses.
(d) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
The accompanying notes are an intergral part of financial statements.
<PAGE> 83
ONE FUND, INC.
Small Cap Portfolio
Schedule of Investments June 30, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- --------------------------------------------------------------
<S> <C>
FINANCIAL (1.5%)
$77,000 Star Bank 5.250% due 07-01-97
repurchase price $77,011
collateralized by GNMA certificates
pool # 8359
due 01-20-24 (Cost $80,000) $ 77,000
--------
Total Repurchase Agreements
(1.5%) (Cost $77,000) $ 77,000
--------
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
AUTOMOTIVE AND RELATED (1.7%)
6,000 Defiance Inc. $ 47,250
2,000 Walbro Corp. 40,500
--------
87,750
--------
BANKING (2.4%)
3,000 * Flagstar Bancorp 48,750
2,000 Susquehanna Bancshares 78,500
--------
127,250
--------
BUSINESS SERVICES (10.1%)
5,500 * Alternative Resources 112,063
4,000 * American Business Info. 87,000
8,000 * Children's Discovery Center 54,000
6,000 * Globe Business Resources 70,500
2,000 Pittston Brink's Group 60,000
2,000 Reynolds & Reynolds 31,500
2,500 Wackenhut Corp. Class B 49,843
3,500 * Xpedite Systems Inc. 60,375
--------
525,281
--------
CHEMICALS (3.4%)
3,000 Learonal Inc. 85,500
2,750 OM Group Inc. 91,094
--------
176,594
--------
COMMUNICATIONS (1.5%)
1,687 Mastec Inc. 79,816
--------
COMPUTER AND RELATED (7.6%)
6,000 * Continental Circuits Corp. 83,250
3,000 * Ikos Systems, Inc. 64,125
5,000 MacNeal-Schwendler Corp. 54,375
1,000 * Structural Dynamics 26,250
2,000 * Whittman-Hart Inc. 56,250
3,900 * Zebra Tech Corp. Cl. A 108,712
--------
392,962
--------
CONSUMER PRODUCTS (4.7%)
4,000 * Acorn Products 56,000
5,000 * Lo Jack 71,875
2,000 * Sola International 67,000
1,500 Stanhome Inc. 49,313
--------
244,188
--------
DURABLE GOODS (1.1%)
3,300 Myers Industries 55,688
ELECTRICAL EQUIPMENT (4.3%)
4,000 * Anixter International Inc. $ 68,750
3,000 BMC Industries Inc. 102,750
2,000 Federal Signal Corp. 50,250
--------
221,750
--------
ENTERTAINMENT AND LEISURE (1.3%)
1,500 Cedar Fair 65,624
--------
FINANCE (4.3%)
6,500 Bando McGlocklin Capital $ 86,125
1,000 National Health Investors 39,250
4,000 SEI Corp. 96,500
--------
221,875
--------
FORESTRY AND PAPER PRODUCTS (1.8%)
4,500 * Fibermark Inc. 93,938
--------
HOTEL/MOTEL (1.0%)
5,500 * Guest Supply 52,250
--------
HOUSING, FURNITURE & RELATED (3.4%)
5,600 Haverty Furniture 70,000
4,800 Shelby Williams 65,400
4,000 * Zaring National Corp. 40,000
--------
175,400
--------
INDUSTRIAL SERVICES (3.3%)
4,000 Clarcor 99,000
2,000 * Medar Inc. 10,250
4,000 Versa Technologies 63,000
--------
172,250
--------
INSURANCE SERVICES (1.5%)
3,000 Blanch (EW) 80,063
--------
MACHINERY (2.2%)
4,000 Hardinge Inc. 117,000
--------
MEDIA AND PUBLISHING (0.4%)
2,000 * Granite Broadcasting Corp. 20,500
--------
MEDICAL AND RELATED (4.4%)
9,000 * Bio Whittaker Inc. 100,124
3,000 * Cephalon Inc. 34,500
2,625 * Quorum Health Group Inc. 93,844
--------
228,468
--------
METAL AND MINING (2.1%)
2,500 Amcast Industrial Corp. 62,500
1,750 * Wolverine Tube, Inc. 48,781
--------
111,281
--------
OIL, ENERGY AND NATURAL GAS (15.8%)
4,200 * Belco Oil & Gas 90,038
5,000 * Cairn Energy USA Inc. 65,625
2,500 Camco International, Inc. 136,875
5,000 * Louis Dreyfus Natural Gas 81,250
6,000 * Offshore Logistics Inc. 113,250
8,000 * Santa Fe Energy Resources 117,500
3,000 * Tesoro Petroleum 44,437
2,000 WD-40 Co. 120,000
3,000 Wiser Oil 55,313
--------
824,288
--------
</TABLE>
<PAGE> 84
ONE FUND, INC.
SMALL CAP PORTFOLIO
Schedule of Investments June 30, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------
REAL ESTATE (8.0%)
<S> <C> <C>
6,000 Commercial Net Lease Realty $ 91,875
3,000 First Industrial Realty Trust 87,750
3,000 Great Lakes REIT, Inc. 49,312
4,000 Healthcare Realty Trust 111,500
3,000 Liberty Property Trust 74,625
-----------
415,062
-----------
RESTAURANTS (1.0%)
6,000 * Buffets Inc. 50,625
-----------
RETAIL (0.7%)
5,000 * Ridgeview Inc. 38,125
-----------
TRANSPORTATION & EQUIPMENT (0.8%)
3,500 Greenbrier Companies Inc. 39,594
-----------
TOTAL COMMON STOCK
(88.8%) (Cost $3,775,608) $ 4,617,622
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------
OIL, ENERGY AND NATURAL GAS (1.2%)
1,000 Howell Corp.
$3.50 Series A $ 60,000
-----------
REAL ESTATE AND LEASING (0.6%)
1,250 Oasis Preferred
9.000% Series A 32,344
-----------
TOTAL PREFERRED STOCK
(1.8%) (Cost $82,350) $ 92,344
-----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ----------------------------------------------------------
BANKING (1.0%)
<C> <C>
$50,000 First State Bancorporation
7.500% 04-30-17 $ 54,188
-----------
ELECTRICAL EQUIPMENT (0.9%)
50,000 Richey Electronics
7.000% 03-01-06 44,812
-----------
TOTAL CONVERTIBLE DEBENTURES
(1.9%) (Cost $95,675) $99,000
-----------
FACE MARKET
AMOUNT COMMERCIAL PAPER VALUE
- ----------------------------------------------------------
AUTOMOTIVE (3.1%)
$160,000 General Motors
5.560% 07-02-97 $ 159,975
-----------
RETAIL (3.1%)
160,000 Sears Roebuck
5.480% 07-01-97 160,000
-----------
TOTAL COMMERCIAL PAPER
(6.2%) (Cost $319,975) $ 319,975
-----------
TOTAL HOLDINGS
(Cost $4,350,608)(a) $ 5,205,941
===========
</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> 85
ONE FUND, INC.
Small Cap Portfolio
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (Cost $4,350,608) ......................... $ 5,205,341
Cash in bank .............................................. 456
Receivable for fund shares sold ........................... 8,579
Dividends and accrued interest receivable ................. 6,981
Deferred organizational expenses (note 1) ................. 1,212
Other ..................................................... 4,385
-----------
Total assets ............................................ 5,227,554
-----------
Liabilities:
Payable for fund shares redeemed .......................... 3,890
Payable for investment management
services (note 3) ........................................ 3,281
Accrued 12b-1 fees (note 6) ............................... 2,643
Other accrued expenses .................................... 10,477
Dividends payable ......................................... 6,397
-----------
Total liabilities ........................................ 23,988
-----------
Net assets at market value ................................. $ 5,203,566
===========
Net assets consist of:
Par value, $.001 per share ................................ $ 391
Paid-in capital in excess of par value .................... 4,118,115
Accumulated undistributed net realized
gain on investments ...................................... 230,231
Net unrealized appreciation on investment ................. 855,333
Overdistributed net investment income ..................... (504)
-----------
Net assets at market value ................................. $5,203,566
==========
Shares outstanding ......................................... 391,309
Net asset value per share .................................. $ 13.30
===========
Maximum offering price per share ($13.30/95%) .............. $ 14.00
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations Year ended
June 30, 1997
<S> <C>
Investment income:
Interest .................................................... $ 22,741
Dividends ................................................... 82,208
---------
Total investment income .................................... 104,949
---------
EXPENSES:
Management fees (note 3) .................................... 30,439
12b-1 fees (note 6) ......................................... 11,708
Custodian fees (note 3) ..................................... 6,830
Directors' fees ............................................. 840
Professional fees ........................................... 3,576
Transfer agent fees ......................................... 12,000
FIling fees ................................................. 4,500
Organizational expense (note 1) ............................. 523
Other ....................................................... 5,473
---------
Total expenses ............................................. 75,889
Less expenses voluntarily reduced
or reimbursed (note 3) .................................... (12,460)
---------
Net expenses ............................................... 63,429
---------
Net investment income ...................................... 41,520
---------
Realized and unrealized gain on investments:
Net realized gain from investments .......................... 298,952
Net increase in unrealized
appreciation on investments ................................ 353,303
---------
Net gain on investments ................................... 652,255
---------
Net increase in net
assets from operations .................................... $ 693,775
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 86
<TABLE>
<CAPTION>
ONE FUND, INC.
SMALL CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
From operations:
Net investment income ..................................................... $41,520 $82,502
Realized gain on investments .............................................. 298,952 385,689
Unrealized gain on investments ............................................ 353,303 338,621
---------- ----------
Net increase in assets from operations................................... 693,775 806,812
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income.................................. (41,809) (82,824)
Capital gains distributions ............................................... (428,367) (26,043)
---------- ----------
Total dividends and distributions ....................................... (470,176) (108,867)
---------- ----------
From capital share transactions (note 4):
Received from shares sold ................................................. 965,667 1,141,411
Received from dividends reinvested ........................................ 204,093 111,230
Paid for shares redeemed .................................................. (652,126) (404,162)
---------- ----------
Increase in net assets derived from capital share transactions 517,634 848,479
---------- ----------
Increase in net assets ............................................... 741,233 1,546,424
---------- ----------
Net Assets:
Beginning of period ....................................................... 4,462,333 2,915,909
---------- ----------
End of period (a) .........................................................$5,203,566 $4,462,333
========== ==========
<FN>
(a) Includes overdistributed net investment income of....................... ($504) ($215)
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
11-1-94
Years Ended June 30, to
1997 1996 6-30-95
-------- -------- ----------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period....................... $12.82 $10.63 $10.00
Income from investment operations:
Net investment income..................................... 0.11 0.26 0.22
Net realized and unrealized gain on investments .......... 1.67 2.26 0.67
-------- -------- ------
Total income from investment operations.................. 1.78 2.52 0.89
-------- -------- ------
Less distributions:
Dividends from net investment income...................... (0.11) (0.25) (0.22)
Distributions from net realized capital gains............. (1.19) (0.08) (0.04)
-------- -------- -------
Total distributions...................................... (1.30) (0.33) (0.26)
-------- -------- -------
Net asset value, end of period............................. $13.30 $12.82 $10.63
======== ======== =======
Total return............................................... 14.82% 24.10% 8.91%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 1.35% 0.94% 1.00%(a)
Net investment income..................................... 0.89% 2.21% 3.19%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.62% 1.27% 1.31%(a)
Net investment income..................................... 0.62% 1.88% 2.88%(a)
Average commission rate (d)................................ $0.08 N/A N/A
Portfolio turnover rate.................................... 34% 34% 8%
Net assets at end of period (millions)..................... $5.2 $4.5 $2.9
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to waive 0.15% of the management fee for the Small Cap portfolio, but it may cease that waiver,
in whole or in part, without prior notice. In addition, the advisor has reimbursed certain operating expenses.
(d) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number of
shares purchased and sold for which commissions were charged.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 87
ONE FUND, INC.
INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30,1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------------
<S> <C> <C>
JAPAN (23.4%)
20,000 Aida Engineering Limited (19) $131,354
10,100 Chofu Seisakusho (9) 173,773
65,000 Dai Tokyo Fire Marine Inc. Co. Ltd.(18) 376,943
55,000 Dowa Fire & Marine (18) 273,319
2,000 Hitachi Ltd. ADR (11) 226,000
12,000 Fuji Photo Film Co. Ltd. (9) 483,144
65,000 * Iino Kaiun Kaisha (5) 199,258
5,000 Ito-Yokado Co. Ltd. (28) 290,393
25,000 Nisshinbo Industries Inc. (8) 227,074
6,000 Secom Co. Ltd. (29) 440,699
15,000 Shimano Inc. (9) 314,410
18,000 Shiseido Co. Ltd. (9) 297,118
25,000 Shoei Co. (27) 296,943
2,000 Toho Co. (20) 330,131
30,000 Tokio Marine & Fire Ins. Co. (18) 393,013
------------
4,453,572
------------
FRANCE (8.8%)
1,000 Compagnie Generale des Eaux (33) 128,155
700 Didot-Bottin (34) 105,196
1,000 Elf Aquitaine (12) 107,902
2,000 Emin Leydier (24) 140,545
375 Eurafrance SA (20) 153,811
1,000 Gaumont SA (20) 73,013
2,000 Legrand ADP (10) 250,864
1,000 Groupe NSC (19) 129,346
1,000 Promodes C.I. (28) 321,494
45 Societe Immobiliere Marseillarse (33) 60,120
700 Taittinger (13) 193,713
------------
1,664,159
------------
SWITZERLAND (8.1%)
55 Bank for Intl. Settements (3) 386,262
700 Edipresse SA (25) 165,468
500 Kuehne & Nagel Intl. AG (32) 308,325
75 Lindt & Sprungli AG PC (9) 138,746
850 Sika Finanz AG Bearer (7) 266,735
750 Societe General d'Affichage DRC (20) 272,354
------------
1,537,890
------------
GERMANY (4.9%)
6,500 Bayer AG (7) 250,581
1,000 Buderus AG (5) 555,316
8,000 Gerresheimer Glas AG (4) 134,240
------------
940,137
------------
LATIN AMERICA (4.7%)
35,000 Antofagasta Holding plc (21) 266,950
5,000 Bladex (3) 215,625
43,750 Cresud S.A. (1) 97,577
151,543 Ledesma S.A. (1) 181,878
50,000 Siderca S.A.I.C. (12) 128,769
------------
890,799
------------
CANADA (4.5%)
10,000 Canadian Pacific Ltd. (34) 284,375
5,000 Franco-Nevada Mining Corp. (21) 250,733
15,000 Noranda, Inc. (21) 323,147
------------
858,255
------------
NEW ZEALAND (4.2%)
50,000 * Apple Fields, Ltd. (14) 17,354
120,549 Carter Holt Harvey Limited (14) 312,571
34,370 Independent Press Comm. Ltd. (20) 195,311
130,000 Shortland Properties, Ltd. (27) 88,471
300,260 Tasman Agriculture Limted (1) 179,821
------------
793,528
------------
HONG KONG (2.8%)
615,790 CDL Hotels Intl. Ltd. (16) 250,386
250,000 Shaw Brothers (Hong Kong) Ltd.(20) 280,754
------------
531,140
------------
NETHERLANDS (2.4%)
7,000 German City Estates NV (27) $95,978
4,500 Apothekers Cooperatie OPG (17) 154,824
1,000 Randstad Holding NV (29) 105,510
1,500 Philips Electronics NV ADR (11) 107,813
------------
464,125
------------
SWEDEN (2.4%)
8,500 AssiDoman AB (14) 242,354
7,000 IRO AB (19) 85,731
2,500 Investors AB 'B' (34) 132,031
------------
460,116
------------
BELGIUM (2.3%)
1,000 Deceuninck Plastics Industries SA (4) 219,108
1,000 Engrais Rosier SA (34) 214,103
------------
433,211
------------
SINGAPORE (1.9%)
35,000 Clipsal Industries Ltd. (10) 123,900
25,000 Singapore Bus Service Ltd. (32) 119,780
50,000 Times Publishing (25) 111,912
------------
355,592
------------
UNITED KINGDOM (1.8%)
25,000 Berisford plc (34) 59,054
45,000 * McBride plc (9) 101,432
45,000 Royal Doulton plc (9) 175,541
------------
336,027
------------
AUSTRIA (1.3%)
2,500 VAE AG (32) 247,279
------------
ITALY (1.0%)
300,000 * Montedison NC Savings SPA (34) 194,461
------------
FINLAND (1.0%)
2,500 Vaisala Oy A (5) 190,299
------------
ISRAEL (0.8%)
35,000 Israel Land Development Co. Ltd. (34) 156,382
------------
NORWAY (0.8%)
7,500 Schibsted AS (20) 148,608
------------
MEXICO (0.6%)
25,000 Industrias Penoles SA de CV (21) 119,528
------------
DENMARK (0.6%)
2,000 Carlsberg International A/S 'B' (9) 110,299
------------
TURKEY (0.1%)
1,863,848 Medya Holdings SA (25) 27,617
------------
</TABLE>
<PAGE> 88
ONE FUND, INC.
INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS (2.9%)
15,000 North European Oil Royalty Tr. (12) $208,125
5,000 Minorco ADR (34) 115,313
100,000 Lonrho plc (34) 212,096
-------------
535,534
-------------
TOTAL COMMON STOCK
(81.3%) (COST $12,797,390) $15,448,558
-------------
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
INDONESIA (2.1%)
6,500 Freeport McMoRan Pfd. 'C' (22) $191,750
10,500 Freeport McMoRan Pfd. 'D' (22) 191,625
-------------
383,375
-------------
SOUTH KOREA (0.3%)
15,000 L.G. Electronics Pfd GDR (11) 87,000
-------------
TOTAL PREFERRED STOCK
(2.4%) (COST $567,404) $470,375
-------------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
DRUGS (1.8%)
$337,000 Abbott Laboratories
5.420% 07-14-97 $336,340
-------------
ENTERTAINMENT (4.0%)
759,000 Walt Disney Corp.
6.100% 07-01-97 759,000
-------------
FINANCE (3.1%)
600,000 Merrill Lynch
6.200% 07-01-97 600,000
-------------
TOTAL SHORT-TERM NOTES (8.9%)
(COST $1,695,340) $1,695,340
-------------
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- ------------------------------------------------------------------
<C> <C> <C>
U.S. DOLLAR (1.9%)
$148,500 Federal Republic of Brazil 6.875%
due 04-15-06 (15) $137,177
250,000 United Mexican States Disc.
6.820% due 12-31-19 (15) 232,500
------------
369,677
------------
TOTAL NON CONVERTIBLE BONDS
(1.9%) (Cost $315,093) $369,677
------------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
U.S. Dollar (1.6%)
$250,000 Cheil Jedang Corp.
3.000% due 12-31-06 (9) $301,250
------------
Non-U.S. Dollar (3.0%)
50,000 GBP BAA plc
5.750% due 03-29-06 (32) 92,948
150,000 GBP Berisford plc
5.000% due 01-31-15 (9) 179,034
333 FF Gaumont SA
3.750% 01-01-03 (20) 33,324
3,000 FF Immobiliere Hoteliere
5.000% 01-01-01 (33) 96,091
170,000 NZ Shortland Properties Inc.
7.500% due 12-31-98 (27) 114,537
7,000,000 JPY Nippon Yusen
2.000% due 09-29-00 (32) 63,886
------------
579,820
------------
Total Convertible Debentures
(4.6%) (COST $1,086,765) $881,070
------------
Total Holdings
(Cost $16,461,992)(a) $18,865,020
============
<FN>
(a) Also represents cost for Federal
income tax purposes.
* Non-income producing securities.
Foreign Currencies
GBP - British Pound
FF - French Franc
NZ - New Zealand Dollar
JPY - Japanese Yen
INDUSTRY CLASSIFICATIONS (18) Insurance
(1) Agriculture (19) Machinery
(2) Automotive (20) Media
(3) Banking (21) Metal (non-ferrous)
(4) Building Products (22) Mining
(5) Capital Goods (23) Packaging
(6) Cement (24) Paper
(7) Chemicals (25) Publishing
(8) Computer Products (26) Rail Equipment
(9) Consumer Products (27) Real Estate
(10) Electrical Products (28) Retailing
(11) Electronics (29) Services
(12) Energy and Oil (30) Steel
(13) Food & Beverage (31) Textile
(14) Forest Products (32) Transportation
(15) Governmental (33) Utilities
(16) Hotels (34) Miscellaneous
(17) Health Care
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 89
ONE FUND, INC.
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (Cost $16,461,992) . ...... $18,865,020
Cash in bank ............................... 11,434
Unrealized gain on forward currency
contracts (note 5) ....................... 148,899
Receivable for fund shares sold ............ 71,168
Receivable for securities sold ............. 200,389
Dividends and accrued interest receivable . 75,466
Deferred organizational expenses (note 1) .. 2,119
Other ...................................... 1,250
-------------
Total assets . ........................... 19,375,745
-------------
Liabilities:
Unrealized loss on forward currency
contracts (note 5) . ..................... 4,888
Payable for securities purchased . ......... 24,827
Payable for investment management
services (note 3) ........................ 22,875
Accrued 12b-1 fees (note 6) ................ 11,500
Other accrued expenses . ................... 413
Payable for fund shares redeemed ........... 1,000
-------------
Total liabilities ........................ 65,503
-------------
Net assets at market value ..................... $ 19,310,242
=============
Net assets consist of: .........................
Par value, $.001 per share ................. $ 1,250
Paid-in capital in excess of par value . ... 15,690,279
Accumulated undistributed net realized
gain on investments . .................... 1,077,449
Net unrealized appreciation (depreciation) on:
Investments (note 1) ..................... 2,403,028
Foreign currency related transactions (2,786)
Forward currency contracts (note 5). ..... 144,011
Overdistributed net investment income . .... (2,989)
-------------
Net assets at market value ..................... $19,310,242
=============
Shares outstanding. ............................ 1,250,114
Net asset value per share ...................... $15.45
=============
Maximum offering price per share ($15.45/95%). . $16.26
=============
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
<S> <C>
Investment income:
Interest ............................... $123,305
Dividends (a). ......................... 359,120
---------------
Total investment income .............. 482,425
Expenses:
Management fees (note 3) ................ 151,632
12b-1 fees (note 6). .................... 42,120
Custodian fees (note 3) ................. 81,695
Directors' fees ......................... 2,860
Professional fees ....................... 11,324
Organizational expense . ................ 2,321
Transfer agent fees . ................... 20,500
Filing fees . ........................... 14,250
Other. .................................. 7,443
---------------
Total expenses ....................... 334,145
---------------
Less expenses voluntarily reduced
or reimbursed (note 3). ............ (19,110)
---------------
Net expenses ......................... 315,035
---------------
Net investment income ................ 167,390
---------------
Realized and unrealized gain (loss) on
investments and foreign currency:
Net realized gain from:
Investments. ......................... 1,315,805
Forward currency related transactions. 620,203
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments ........................ 447,557
Foreign currency related transactions (54,052)
---------------
Net gain on investments ............ 2,329,513
---------------
Net increase in net
assets from operations $2,496,903
===============
<FN>
(a) Net of $28,385 foreign taxes withheld.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 90
ONE FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
From operations:
Net investment income .................................................. $ 167,390 $ 93,053
Realized gain on investments and foreign currency related transactions . 1,936,008 846,138
Unrealized gain on investments and foreign currency related transactions 393,505 1,345,626
------------ ------------
Net increase in assets from operations ........................... 2,496,903 2,284,817
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income .............................. (178,422) (84,854)
Capital gains and foreign currency related transactions distributions .. (1,072,777) (646,095)
------------ ------------
Total dividends and distributions ................................ (1,251,199) (730,949)
------------ ------------
From capital share transactions (note 4):
Received from shares sold .............................................. 4,465,324 3,712,934
Received from dividends reinvested ..................................... 1,281,180 612,162
Paid for shares redeemed ............................................... (2,765,311) (2,767,518)
------------ ------------
Increase in net assets derived from capital share transactions ...... 2,981,193 1,557,578
------------ ------------
Increase in net assets ........................................ 4,226,897 3,111,446
------------ ------------
Net Assets:
Beginning of period .................................................... 15,083,345 11,971,899
------------ ------------
End of period (a) ...................................................... $ 19,310,242 $ 15,083,345
============ ============
(a) Includes undistributed (overdistributed) net investment income of.... ($2,989) $8,188
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
4-30-93
Years Ended June 30, to
1997 1996 1995 1994 6-30-93
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period ...................................... $14.47 $12.89 $13.32 $9.90 $10.00
Income from investment operations:
Net investment income ................................................. 0.14 0.10 0.14 0.05 0.03
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ...................... 1.92 2.24 0.63 4.01 (0.10)
------ ------ ------ ------ ------
Total income (loss) from investment operations ..................... 2.06 2.34 0.77 4.06 (0.07)
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income .................................. (0.15) (0.39) (0.14) (0.05) (0.03)
Distributions from net realized capital gains and
foreign currency transactions ...................................... (0.93) (0.37) (1.06) (0.59) 0.00
------ ------ ------ ------ ------
Total distributions ................................................ (1.08) (0.76) (1.20) (0.64) (0.03)
------ ------ ------ ------ ------
Net asset value, end of period ............................................ $15.45 $14.47 $12.89 $13.32 $9.90
====== ====== ====== ====== ======
Total return .............................................................. 14.76% 18.65% 6.44% 40.65% (0.68%(b)
Ratios and supplemental data:
Ratios net of fees reimbursed by advisor (c):
Expenses .............................................................. 1.87% 1.72% 1.50% 1.50% 2.32%(a)
Net investment income ................................................. 0.99% 0.70% 1.11% 0.46% 1.93%(a)
Ratios assuming no fees reimbursed by advisor:
Expenses .............................................................. 1.98% 1.72% 1.50% 1.50% 2.32%(a)
Net investment income ................................................. 0.88% 0.70% 1.11% 0.46% 1.93%(a)
Average commission rate (d) ............................................... $0.02 N/A N/A N/A N/A
Portfolio turnover rate ................................................... 9% 20% 39% 27% 0%
Net assets at end of period (millions) .................................... $19.3 $15.1 $12.0 $10.4 $3.2
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to reimburse certain operating expenses of the International Portfolio.
(d) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number of shares
purchased and sold for which commissions were charged.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 91
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1997
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------------
<S> <C> <C>
CHEMICALS (1.0%)
5,000 Lawter International Inc. $63,125
-----------
Capital Goods (3.1%)
2,000 Bandag Inc. Class 'A' 97,375
2,000 Franklin Electric Co. Inc. 99,500
-----------
196,875
-----------
Computer and Related (1.0%)
5,000 Sterling Electronics 63,750
-----------
CONSUMER PRODUCTS (3.7%)
2,000 Allen Organ Co. Class 'B' 79,000
1,300 Dole Foods Company, Inc. 55,575
5,000 Furniture Brands Intl., Inc. 96,875
-----------
231,450
-----------
FINANCE (5.4%)
5,000 Classic Bancshares Inc. 70,000
7,000 East Texas Financial Services 126,000
5,000 First Federal Financial Corp. 67,500
5,000 Southern Banc Company, Inc. 76,563
-----------
340,063
-----------
FORESTRY & PAPER PRODUCTS (3.1%)
500 Georgia Pacific Corporation 42,688
2,500 Greif Brothers Corp. Class 'A' 67,500
2,000 Rayonier Inc. 84,125
-----------
194,313
-----------
MEDIA (0.2%)
8,000 Integrity Music, Inc. 'A' 15,000
-----------
METALS AND MINING (1.1%)
1,000 Reynolds Metals Company 71,250
-----------
OIL AND ENERGY (6.8%)
6,500 North European Oil Royalty Trust 90,188
1,300 Rochester & Pittsburgh Coal Co. 56,550
20,000 San Juan Basin Royalty Trust 162,500
2,957 Weatherford Enterra Corporation 113,844
-----------
423,082
-----------
REAL ESTATE (0.6%)
2,000 Alico, Inc. 39,250
-----------
UTILITIES (0.8%)
2,000 Montana Power Co. 46,375
-----------
MISCELLANEOUS (4.8%)
6,000 Kaiser Ventures Inc. 66,375
5,000 UniFirst Corporation 100,000
5,000 Zero Corporation 131,250
-----------
297,625
-----------
TOTAL U.S. COMMON STOCK $1,982,158
-----------
(31.6%) (Cost $1,546,191)
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ------- ------------------------------------------------------
<S> <C> <C>
JAPAN (9.2%)
6,000 Dai Tokyo Fire & Marine Ins. Co., Ltd. (18) $34,795
10,000 Dowa Fire & Marine Ins. Co., Ltd. (18) 49,694
2,500 Fuji Photo Film Co. Ltd. (9) 100,655
7,000 Nittetsu Mining Co., Ltd. (22) 54,716
3,000 Secom Co., Ltd. (29) 220,349
400 Toho Co. (20) 66,026
4,000 Tokio Marine Fire & Ins. Co., Ltd. (18) 52,402
-----------
578,637
-----------
SWITZERLAND (7.8%)
15 Bank for Intl. Settlements (3) 105,344
750 Edipresse SA 'Bearer' (25) 177,287
200 Kuehne & Nagel International AG (3) 123,330
65 Schindler Holding AG PC (5) 81,278
-----------
487,239
-----------
HONG KONG (4.5%)
300,000 China-Hong Kong Photo Products (9) 87,131
203,566 CDL Hotels Intl. Ltd. (16) 82,772
100,000 Shaw Brothers (Hong Kong) Ltd.(20) 112,301
-----------
282,204
-----------
FRANCE (4.2%)
1,500 Emin Leydier (14) 105,409
500 Groupe NSC (19) 64,673
500 Legrand ADP (10) 62,716
600 Rougier SA (14) 31,401
-----------
264,199
-----------
NEW ZEALAND (4.0%)
50,000 Carter Holt Harvey Ltd. (14) 129,645
50,000 Shortland Properties, Ltd. (27) 34,028
50,000 Wrightson Ltd. (1) 31,986
10,000 Independent Press Communications (1) 56,826
-----------
252,485
-----------
LATIN AMERICA (3.5%)
10,000 Antofagasta Holding plc (21) 76,271
500,000 Grupo Fernandez Editores (25) 105,967
30,308 Ledesma SA (1) 36,375
-----------
218,613
-----------
GERMANY (3.2%)
200 Buderus AG (5) 111,062
100 Axel Springer Verlag AG (20) 88,920
-----------
199,982
-----------
UNITED KINGDOM (2.4%)
45,000 ED & F Man (34) 148,218
-----------
SOUTH AFRICA (1.4%)
15,000 Vaal Reefs Exploration Ltd. ADR (21) 72,188
2,500 Western Areas Gold Mining Ltd. (21) 16,815
-----------
89,003
-----------
BELGIUM (1.3%)
376 Engrais Rosier SA (34) 80,503
-----------
CANADA (1.1%)
3,000 Noranda, Inc. (21) 64,629
------------
</TABLE>
<PAGE> 92
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1997
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
SWEDEN (0.8%)
5,000 Bylock & Nordsjofrakt AB 'B' (32) $23,004
5,000 Gorthon Lines (32) 29,225
--------------
52,229
--------------
NETHERLANDS (0.6%)
2,600 German City Estates NV (27) 35,649
--------------
SINGAPORE (0.5%)
6,500 Singapore Bus Service Ltd. (32) 31,143
--------------
MISCELLANEOUS (0.8%)
25,000 Lonrho plc (34) 53,024
--------------
TOTAL FOREIGN COMMON STOCK
(45.3%) (COST $2,736,418) $2,837,757
--------------
TOTAL COMMON STOCK
(76.9%) (COST $4,282,609) $4,819,915
--------------
<CAPTION>
MARKET
SHARES U.S. PREFERRED STOCK VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
MEDIA (1.0%)
2,000 Cowles Media Co. Pfd. $59,000
--------------
TOTAL U.S. PREFERRED STOCK
(1.0%) (COST $46,250) $59,000
--------------
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- ----------------------------------------------------------------------
INDONESIA (3.0%)
2,500 Freeport McMoRan Pfd. 'D' (22) $45,625
4,000 Freeport McMoRan Pfd. 'C' (22) 118,000
--------------
163,625
--------------
TOTAL FOREIGN PREFERRED STOCK
(3.0%) (COST $177,847) $163,625
--------------
TOTAL PREFERRED STOCK
(4.0%) (COST $224,097) $222,625
--------------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
AEROSPACE (2.9%)
$184,000 Raytheon $183,969
6.050% due 07-02-97 -------------
FINANCE (4.1%)
260,000 Merrill Lynch
260,000
6.200% due 07-01-97 -------------
RESTAUTANTS (4.9%)
304,000 McDonalds Corp. 304,000
6.150% due 07-01-97 -------------
TOTAL SHORT-TERM NOTES $747,969
(11.9%) (COST $747,969) -------------
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (6.1%)
$50,000 Cemex SA 10.000%
due 11-05-99 (6) $52,188
148,500 Federal Republic Of Brazil EI FRN
6.875% due 04-15-06 (15) 137,177
145,500 Republic of Argentina FRB
6.750% due 03-31-05 (15) 136,860
50,000 PT Pabrik Kertas Tjiwi Kimia
13.250% due 08-01-01 (14) 57,128
-------------
TOTAL NON-CONVERTIBLE BONDS
(6.1%) (COST $300,579) $383,353
-------------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (1.0%)
$55,000 Inversiones y Representaciones
4.500% 08-02-03 (27) $62,150
-------------
NON U.S. DOLLAR (1.6%)
100,000 NZ Shortland Properties Inc.
7.500% due 12-31-98 (27) 67,374
1,000 FF Immobilier Hoteliere
5.000% due 01-01-01 (16) 32,030
-------------
99,404
TOTAL CONVERTIBLE DEBENTURES
(2.6%) (COST $152,921) $161,554
-------------
TOTAL HOLDINGS
(COST $5,708,175)(a) $6,335,416
=============
<FN>
(a) Also represents cost for Federal income tax purposes.
Foreign Currencies
NZ - New Zealand Dollar
FF - French Franc
Industry Classifications
(1) Agriculture
(2) Automotive
(3) Banking
(4) Building Products
(5) Capital Goods
(6) Cement
(7) Chemicals
(8) Computer Products
(9) Consumer Products
(10) Electrical Products
(11) Electronics
(12) Energy and Oil
(13) Food & Beverage
(14) Forest Products
(15) Governmental
(16) Hotels
(17) Health Care
(18) Insurance
(19) Machinery
(20) Media
(21) Metal (non-ferrous)
(22) Mining
(23) Packaging
(24) Paper
(25) Publishing
(26) Rail Equipment
(27) Real Estate
(28) Retailing
(29) Services
(30) Steel
(31) Textile
(32) Transportation
(33) Utilities
</TABLE>
<PAGE> 93
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (Cost $5,708,175) . ......... $6,335,416
Cash in bank ................................. (24,725)
Unrealized gain on forward currency
contracts (note 5) ......................... 14,507
Receivable for fund shares sold .............. 4,584
Receivable for securities sold ............... 67,998
Dividends and accrued interest receivable . .. 28,685
Deferred organizational expenses (note 1) .... 1,214
Other . ...................................... 1,250
---------------
Total assets . ............................. 6,428,929
---------------
Liabilities:
Unrealized loss on forward currency
contracts (note 5) . ....................... 709
Payable for securities purchased . ........... 105,606
Payable for investment management
services (note 3) .......................... 9,239
Accrued 12b-1 fees (note 6) .................. 3,788
Other accrued expenses . ..................... 11,320
Payable for fund shares redeemed ............. 2,433
---------------
Total liabilities .......................... 133,095
---------------
Net assets at market value ...................... $6,295,834
===============
Net assets consist of:
Par value, $.001 per share . ................. $534
Paid-in capital in excess of par value . ..... 5,458,465
Accumulated undistributed net realized .......
gain on investments . ...................... 199,558
Net unrealized appreciation (depreciation) on:
Investments (note 1) ....................... 627,241
Foreign currency related transactions ...... (860)
Forward currency contracts (note 5). ....... 13,798
Overdistributed net investment income . ...... (2,902)
---------------
Net assets at market value ...................... $6,295,834
===============
Shares outstanding. ............................. 534,162
Net asset value per share ....................... $11.79
===============
Maximum offering price per share ($11.79/95%). .. $12.41
===============
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
<S> <C>
Investment income:
Interest ............................. $76,483
Dividends (a). ....................... 146,235
---------------
Total investment income ............ 222,718
Expenses:
Management fees (note 3) ............. 52,669
12b-1 fees (note 6). ................. 14,630
Custodian fees (note 3) .............. 33,615
Directors' fees ...................... 980
Professional fees .................... 4,172
Transfer agent fees . ................ 15,250
Filing fees . ........................ 5,250
Organizational expense (note 1) . .... 522
Other. ............................... 2,431
---------------
Total expenses ..................... 129,519
---------------
Less expenses voluntarily reduced
or reimbursed (note 3). .......... (10,899)
---------------
Net expenses ....................... 118,620
---------------
Net investment income .............. 104,098
---------------
Realized and unrealized gain on
investments and foreign currency:
Net realized gain from:
Investments. ....................... 296,332
Forward currency related transactions. 92,434
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments ...................... 155,933
Foreign currency related transactions (20,550)
---------------
Net gain on investments .......... 524,149
---------------
Net increase in net
assets from operations ........... $628,247
===============
<FN>
(a) Net of $6,626 foreign taxes withheld.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 94
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
From operations:
Net investment income ........................................................... $ 104,098 $ 70,137
Realized gain on investments and foreign currency related transactions .......... 388,766 217,196
Unrealized gain on investments and foreign currency related transactions ........ 135,383 465,907
----------- -----------
Net increase in assets from operations ...................................... 628,247 753,240
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ....................................... (109,924) (67,258)
Capital gains and foreign currency related transactions distributions ........... (345,450) (61,081)
----------- -----------
Total dividends and distributions ........................................... (455,374) (128,339)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ....................................................... 966,852 1,281,031
Received from dividends reinvested .............................................. 277,521 90,643
Paid for shares redeemed ........................................................ (784,457) (190,480)
----------- -----------
Increase in net assets derived from capital share transactions ................ 459,916 1,181,194
----------- -----------
Increase in net assets .................................................... 632,789 1,806,095
----------- -----------
Net Assets:
Beginning of period ............................................................. 5,663,045 3,856,950
----------- -----------
End of period (a) ............................................................... $6,295,834 $ 5,663,045
=========== ===========
(a) Includes undistributed (overdistributed) net investment income of ............. ($2,902) $ 2,924
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
11-1-94
Years Ended June 30, to
1997 1996 6-30-95
- ---------------------------------------------------------------------------------------------------- --------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period ...................................... $11.48 $10.01 $10.00
Income from investment operations:
Net investment income .................................................. 0.20 0.16 0.17
Net realized and unrealized gain on
investments and foreign currency transactions ........................ 0.99 1.61 0.13
------ ------ ------
Total income from investment operations .............................. 1.19 1.77 0.30
------ ------ ------
Less distributions:
Dividends from net investment income ................................... (0.21) (0.16) (0.17)
Distributions from net realized capital gains and
foreign currency transactions ........................................ (0.67) (0.14) (0.12)
------ ------ ------
Total distributions .................................................. (0.88) (0.30) (0.29)
------ ------ ------
Net asset value, end of period ............................................ $11.79 $11.48 $10.01
====== ====== ======
Total return .............................................................. 11.11% 17.84% 2.99%(b)
Ratios and supplemental data: Ratios net of fees reimbursed by advisor (c):
Expenses ............................................................... 2.02% 2.14% 2.05%(a)
Net investment income .................................................. 1.78% 1.49% 2.85%(a)
Ratios assuming no fees reimbursed by advisor:
Expenses ............................................................... 2.21% 2.14% 2.05%(a)
Net investment income .................................................. 1.59% 1.49% 2.85%(a)
Average commission rate (d) ............................................... $0.01 N/A N/A
Portfolio turnover rate ................................................... 6% 26% 8%
Net assets at end of period (millions) .................................... $ 6.3 $ 5.7 $ 3.9
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has elected to reimburse certain operating expenses of the Global Contrarian portfolio.
(d) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number of shares
purcahsed and sold for which commissions were charged.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 95
ONE FUND, INC.
CORE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ------------------------------------------------------------------
<S> <C> <C>
FINANCIAL (13.5%)
742,000 Star Bank 5.250% due 07-01-97
repurchase price $742,108
collateralized by GNMA certificates,
pool # 5359
due 01-20-24 (cost $740,000) $742,000
-------------
TOTAL REPURCHASE AGREEMENTS
(13.5%) (COST $742,000) $742,000
-------------
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------
AUTOMOTIVE AND RELATED (3.3%)
1,800 Harley Davidson, Inc. $86,288
5,850 * Miller Industries, Inc. 93,600
-------------
179,888
-------------
BUSINESS SERVICES (17.5%)
2,500 * Appolo Group A 88,125
2,500 * Accustaff, Inc. 59,219
3,600 * Cambridge Technology Partners 115,200
2,300 * Corrections Corp. of America 91,425
2,900 * CUC International Inc. 74,856
2,300 * DST Systems, Inc. 76,619
2,800 * Gartner Group 100,625
1,200 * HFS Inc. 69,600
5,500 * Sitel Corp. 113,437
3,800 * Teletech Holdings, Inc. 99,038
2,300 * US Office Products Corp. 70,294
-------------
958,438
-------------
COMMUNICATIONS (8.1%)
2,800 * ADC Telecommunications 93,450
2,100 * Advanced Fibre Communications 126,787
2,300 * LCI International 50,313
3,200 * Pairgain 49,600
1,800 * Tellabs Inc. 100,575
1,800 * Videoserver, Inc. 23,850
-------------
444,575
-------------
COMPUTER AND RELATED (21.4%)
2,600 * Aspen Technology, Inc. 97,825
1,400 * CDW Computer Centers Inc. 74,288
1,100 * Computer Sciences 79,337
200 * Dell Computer 23,487
400 * Electronics for Imaging, Inc. 18,900
1,400 HBO & Co. 96,425
2,300 * HNC Software 87,688
400 * International Network Services 10,400
1,800 * Manugistics 80,100
300 * Microtouch 6,900
1,400 * Parametric Technology Corp. 59,588
900 * RWD Technologies 15,525
2,600 * Rational Software Corp. 43,712
1,500 * Remedy Corp. 60,000
3,500 * Scopus Technology 78,312
2,400 * Security Dynamics Technologies, Inc. 88,500
2,000 * Sterling Commerce 65,750
2,245 * Synopsys, Inc. 82,504
1,500 * Visio Software 105,750
-------------
1,174,991
-------------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------
<S> <C> <C>
CONSUMER GOODS (1.9%)
3,150 * Blyth Industries, Inc. $106,312
-----------
DRUGS (4.9%)
2,070 * Dura Pharmaceuticals, Inc. 82,541
800 Eli Lilly 87,450
3,200 * Parexel International 101,600
-----------
271,591
-----------
ELECTRICAL EQUIPMENT (3.0%)
1,600 * Altera Corp. 80,800
2,750 * Microchip Technology 81,813
-----------
162,613
-----------
ENTERTAINMENT AND LEISURE (1.5%)
2,500 * Regal Cinemas 82,500
-----------
FINANCIAL SERVICES (3.4%)
1,600 Associates First Capital 88,800
3,300 Money Store 94,669
-----------
183,469
-----------
HOTEL/LODGING (1.0%)
900 * Capstar Hotel 28,800
800 * Signature Resorts 27,650
-----------
56,450
-----------
INDUSTRIAL SERVICES (2.6%)
800 * Cognex Corp. 21,200
2,000 * USA Waste Services, Inc. 77,250
1,100 * United Waste Systems 45,100
-----------
143,550
-----------
MEDICAL AND RELATED (11.6%)
1,000 * Gulf Southern Medical Supply 19,500
3,500 * Health Management Assoc., Inc. 99,750
3,300 Omnicare, Inc. 103,537
1,400 * Oxford Health 100,450
2,000 * Pediatrix Medical Group 91,625
2,720 * Phycor Inc. 93,670
3,900 * Physician Sales & Service 74,100
750 * Quintilies Transnational 52,219
-----------
634,851
-----------
OIL, ENERGY AND NATURAL GAS (3.2%)
600 * Hanover Compressor Co. 11,700
1,000 * Seacor Holdings 52,313
3,500 * Varco International 112,875
-----------
176,888
-----------
RETAIL (1.1%)
2,400 * West Marine 61,800
-----------
TEXTILES (2.0%)
500 * Ralph Lauren 13,687
500 St. John Knits 27,000
1,700 * Tommy Hilfiger 68,319
-----------
109,006
-----------
TRANSPORTATION (0.6%)
1,300 * Eagle USA Airfreight 35,262
-----------
TOTAL COMMON STOCK (86.9%)
(COST $4,566,713) $4,782,184
-----------
TOTAL HOLDINGS
(COST $5,308,713)(a) $5,524,184
==========
<FN>
* Non income producing security.
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 96
ONE FUND, INC.
CORE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (Cost $5,308,713) ......... $5,524,184
Cash in bank ............................... 557
Receivable for fund shares sold ............ 4,899
Dividends and accrued interest receivable .. 149
Receivable for securities sold ............. 5,150
Other ...................................... 1,810
-----------
Total assets ............................. 5,536,749
-----------
Liabilities:
Payable for fund shares redeemed ........... 29,475
Payable for securities purchased ........... 11,700
Payable for investment management
services (note 3) ........................ 4,408
Accrued 12b-1 fees (note 6) ................ 2,965
Other accrued expenses ..................... 5,317
-----------
Total liabilities ........................ 53,865
-----------
Net assets at market value .................... $5,482,884
===========
Net assets consist of:
Par value, $.001 per share ................. $ 556
Paid-in capital in excess of par value ..... 5,421,174
Accumulated undistributed net realized
loss on investments ...................... (154,317)
Net unrealized appreciation on investments . 215,471
-----------
Net assets at market value .................... $5,482,884
===========
Shares outstanding. ........................... 555,870
Net asset value per share ..................... $ 9.86
===========
Maximum offering price per share ($9.86/95%) .. $ 10.38
===========
<CAPTION>
STATEMENT OF OPERATIONS
For the period November 1, 1996 to June 30, 1997
<S> <C>
Investment income:
Interest ............................................ $20,482
Dividends. .......................................... 1,167
---------
Total investment income ........................... 21,649
---------
Expenses:
Management fees (note 3) ............................ 27,257
12b-1 fees (note 6) ................................. 7,173
Custodian fees (note 3) ............................. 3,800
Directors' fees ..................................... 330
Professional fees ................................... 1,192
Transfer agent fees ................................. 16,800
Filing fees ......................................... 2,000
Other. .............................................. 4,248
---------
Total expenses .................................... 62,800
---------
Less expenses voluntarily reduced
or reimbursed (note 3) .......................... (2,322)
---------
Net expenses ...................................... 60,478
---------
Net investment loss ............................... (38,829)
---------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments ................. (154,317)
Net increase in unrealized
appreciation on investments ....................... 215,471
---------
Net gain on investments ......................... 61,154
---------
Net increase in net
assets from operations .......................... $22,325
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 97
ONE FUND, INC.
CORE GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
11-1-96
to
6-30-97
------------
<S> <C>
From operations:
Net investment loss ............................................ ($38,829)
Realized loss on investments ................................... (154,317)
Unrealized gain on investments ................................. 215,471
-----------
Net increase in assets from operations ..................... 22,325
-----------
From capital share transactions (note 4):
Received from shares sold ...................................... 5,793,191
Paid for shares redeemed ....................................... (332,632)
-----------
Increase in net assets derived from capital share transactions 5,460,559
-----------
Increase in net assets ................................... 5,482,884
-----------
Net Assets:
Beginning of period ............................................ 0
-----------
End of period (a) .............................................. $5,482,884
===========
(a) Includes undistributed net investment loss of ................ ($38,829)
===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
11-1-96
to
6-30-97
-----------
<S> <C>
Per share data:
Net asset value, beginning of period .............................. $10.00
Income from investment operations:
Net investment loss ............................................ (0.08)
Net realized and unrealized gain on
investments .................................................. (0.06)
-----------
Total income from investment operations ...................... (0.14)
-----------
Net asset value, end of period .................................... $9.86
===========
Total return ...................................................... (1.40%)(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses ....................................................... 1.35% (a)
Net investment loss ............................................ (0.87%)(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses ....................................................... 1.40%(a)
Net investment loss ............................................ (0.82%(a)
Average commission rate (d) ....................................... $0.05
Portfolio turnover rate ........................................... 80%
Net assets at end of period (millions) ............................ $5.5
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has reimbursed certain operating expenses of the Core Growth Portfolio.
(d) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number of shares
purchased and sold for which commissions were charged.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 98
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(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 nine 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 portfolio commenced operations on November 1, 1996: CORE GROWTH
PORTFOLIO - long-term capital appreciation.
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 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 reported as of 4:00 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 the
close of trading on the Exchange. 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 makers or estimates of market value
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 4:00 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.
<PAGE> 99
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1997
Each portfolio other than the Money Market Portfolio may, (a) write call options
traded on a registered national securities exchange if such portfolio owns the
underlying securities subject to such options, and purchase call options for the
purpose of closing out positions 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 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. Options are recorded at market value, and the related realized and
unrealized gains and losses are included in the statement of operations. The
portfolios making use of options bear the market risk of an unfavorable change
in the price of any security underlying the options.
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.'s ("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 fluctuations.
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 using the first-in, first-out
method.
The books and records of all the portfolios are maintained in U.S. dollars.
Foreign currency amounts in the International and Global Contrarian Portfolios
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 transaction.
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.
<PAGE> 100
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1997
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to wash sales and net
operating losses. The character of distributions made during the period from net
investment income or net realized gains, if any, may differ from their ultimate
characterization for federal income tax purposes. On the statement of assets and
liabilities, as a result of permanent book-to-tax differences, the following
reclassification was made in the Core Growth Portfolio: accumulated net
investment loss has been decreased by $38,829, resulting in a reclassification
adjustment to decrease Paid-in capital in excess of par value by $38,829. This
reclassification has no effect on net assets or net asset value per share.
For Federal income tax purposes, the Tax-Free Income, Income and Core Growth
Portfolios had net capital losses of $11,340, $103,545 and $154,317 respectively
at June 30, 1997. If not offset by subsequent capital gains, $54,379 will expire
June 30, 2003 in the Income Portfolio, $7,298 and $49,166 will expire June 30,
2004 in the Tax-Free Income and Income Portfolios, respectively, and $4,042 and
$154,317 will expire June 30, 2005 in the Tax-Free Income and Core Growth
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.
Most expenses of the Fund can be directly attributed to a portfolio. Expenses
which cannot be directly attributed are allocated between the portfolios in the
Fund based on average net assets.
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 on investments in each
portfolio as of June 30, 1997 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------------------------------------------------------------
TAX-FREE INCOME & SMALL INTERNA-TIONAL GLOBAL CORE
INCOME INCOME GROWTH GROWTH CAP CONTRARIAN GROWTH
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation.... 594,544 140,050 3,817,205 4,461,414 1,038,303 3,264,901 963,855 532,287
Depreciation.. 0 (32,850) (69,587) (366,308) (182,970) (861,873) (336,614) (316,816)
Net unrealized:
Appreciation 594,544 107,200 3,747,618 4,095,106 855,333 2,403,028 627,241 215,471
</TABLE>
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. The Core Growth Portfolio was organized on
August 22, 1996 with the commencement of operations on November 1, 1996.
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, 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 initial
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, Global Contrarian and
Core Growth Portfolios. ONLIC and its affiliates have also purchased additional
shares of each portfolio and as of June 30, 1997 the additional shares owned
were as follows: 6,496,306 shares of the Money Market Portfolio, 553,940 shares
of the Tax-Free Income Portfolio, 508,244 shares of the Income Portfolio,
345,432 shares of the Income &
<PAGE> 101
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1997
Growth Portfolio, 237,631 shares of the Growth Portfolio, 211,503 shares of the
Small Cap Portfolio, 267,042 shares of the Global Contrarian Portfolio, and
250,000 shares of the Core Growth Portfolio.
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term securities)
from July 1, 1996 to June 30, 1997 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------------------------------------------------------
TAX-FREE INCOME & SMALL GLOBAL CORE
INCOME INCOME GROWTH GROWTH CAP INTERNATIONAL CONTRARIAN GROWTH
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stocks &
Bonds:
Purchases..... 860,370 338,858 2,409,535 3,180,333 1,495,002 4,898,161 1,349,218 6,694,358
Sales......... 408,000 259,554 1,482,659 3,076,547 1,462,224 1,315,778 296,338 1,975,371
U.S. Govt.......
Obligations:
Purchases..... -- -- -- -- -- -- -- --
Sales......... -- 405,500 -- -- -- -- -- --
</TABLE>
(3) INVESTMENT ADVISORY AGREEMENT, SUB-ADVISORY AGREEMENTS 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 & GROWTH SMALL
MARKET INCOME INCOME 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 values for directing the investment
and reinvestment of each portfolios' assets pursuant to a sub-advisory agreement
between ONI and SGAM dated May 1, 1996. For the Core Growth Portfolio, ONI is
paid a fee at an annual rate of 0.95% of the portfolio's average daily net asset
value. ONI then pays Pilgrim Baxter & Associates (PBA) a fee at an annual rate
of 0.75% of the average daily net asset value of the first $50 million of
Portfolio assets, 0.70% of the next $100 million and 0.50% of portfolio assets
in excess of $150 million for directing the investment and reinvestment of the
portfolio's assets pursuant to a sub-advisory agreement between ONI and PBA
dated November 1, 1996.
The advisor is presently waiving 0.15% of its management fees for certain
portfolios. Management fees waived by ONI for the year ended June 30, 1997 were
$37,694 ($0.002 per share), $13,228 ($0.021 per share), $12,594 ($0.018 per
share), $21,373 ($0.024 per share), $22,671 ($0.029 per share) and $9,644
($0.025 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 advisory fees, 12b-1 fees, taxes and interest, in excess of
1% of their average daily net assets. For the year ended June 30, 1997, the
reimbursement was $3,587, $7,469, $2,816, $19,110 $10,899 and $2,322 for the
Money Market, Income, Small Cap, International, Global Contrarian and Core
Growth Portfolios, respectively.
<PAGE> 102
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1997
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.
Through December 31, 1996, the Fund's transfer agent and dividend paying agent
was The Provident Bank, One East Fourth Street, Cincinnati, Ohio. The Provident
Bank was also the custodian for those portfolios other than the International
and Global Contrarian Portfolios. Effective January 1, 1997, American Data
Services, Inc., 24 West Carver Street, Huntington, New York became the new
transfer agent and dividend paying agent for the fund. Also effective January 1,
1997, Star Bank, 425 Walnut Street, Cincinnati, Ohio became the new custodian
for those 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. For International and Global Contrarian Portfolio assets held outside
the United States, Star Bank and Investors Fiduciary Trust Company enter into
subcustodial agreements, subject to approval by the Board of Directors.
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, 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
MONEY MARKET TAX-FREE INCOME INCOME
----------------------------- -------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-97 6-30-96 6-30-97 6-30-96 6-30-97 6-30-96
----------------------------- -------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales ....... 17,151,447 13,411,231 39,876 29,199 20,785 79,707
Capital shares issued
on reinvested dividends 545,914 821,475 14,155 28,673 23,352 44,241
Capital shares redeemed 19,142,752 12,570,685 20,980 6,062 93,120 126,327
<CAPTION>
INCOME & GROWTH GROWTH SMALL CAP
----------------------------- -------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-97 6-30-96 6-30-97 6-30-96 6-30-97 6-30-96
----------------------------- -------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales ....... 184,505 205,769 160,092 241,707 77,889 98,533
Capital shares issued
on reinvested dividends 32,135 35,442 25,550 39,278 16,545 9,214
Capital shares redeemed 178,596 65,893 187,890 56,076 51,087 34,177
<CAPTION>
INTERNATIONAL GLOBAL CONTRARIAN CORE GROWTH
----------------------------- -------------------------- -------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-97 6-30-96 6-30-97 6-30-96 6-30-97
----------------------------- -------------------------- -------------
<S> <C> <C> <C> <C> <C>
Capital shares
issued on sales ..... 324,624 269,792 88,240 116,554 592,472
Capital shares issued
on reinvested dividends 73,771 45,454 22,545 8,493 0
Capital shares redeemed 190,431 201,916 69,858 17,222 36,602
</TABLE>
Sales charges imposed on capital shares sold by The O.N. Equity Sales Company
(ONESCO), the Fund's principal underwriter, a wholly-owned subsidiary of ONLIC,
for the year ended June 30, 1997 were approximately $4,838, $9,432, $4,721,
$71,902, $60,327, $26,344, $138,607, $26,228, and $68,350 for the Money Market,
Tax-Free Income, Income, Income & Growth, Growth, Small Cap, International,
Global Contrarian and Core Growth Portfolios, respectively.
<PAGE> 103
ONE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1997
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 eight
portfolios have been allocated 100 million shares each. The remaining shares
have not been allocated.
(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, 1997, 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 DELIVERED U.S. $ VALUE CURRENCY TO BE RECEIVED U.S. $ VALUE UNREALIZED
DATES THROUGH AMOUNT TYPE AT 06/30/97 AMOUNT TYPE AT 06/30/97 GAIN LOSS
- ------------- ------ ---- ----------- ------ ---- ----------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
09/10/97 364,000 Swiss Franc $ 251,451 259,040 U.S. Dollar $ 259,040 $ 7,589
01/08/98 911,500 Swiss Franc 638,708 635,103 U.S. Dollar 635,103 $ (3,605)
09/17/97 207,000 Deutsche Mark 119,415 122,028 U.S. Dollar 122,027 2,612
01/15/98 515,000 Deutsche Mark 299,758 308,040 U.S. Dollar 308,040 8,282
08/08/97 6,755,000 French Franc 1,152,317 1,279,966 U.S. Dollar 1,279,965 127,648
08/08/97 54,085 U.S. Dollar 54,085 315,000 French Franc 53,735 (350)
01/22/98 564,500 French Franc 97,401 99,507 U.S. Dollar 99,507 2,106
09/24/97 147,150,000 Japanese Yen 1,300,831 1,301,493 U.S. Dollar 1,301,493 662
01/29/98 23,250,000 Japanese Yen 209,364 208,431 U.S. Dollar 208,431 (933)
---------------- --------------- ----------- ----------
$4,123,330 $4,267,341 $148,899 $(4,888)
========== ======================================
<CAPTION>
GLOBAL CONTRARIAN PORTFOLIO
SETTLEMENT CURRENCY TO BE DELIVERED U.S. $ VALUE CURRENCY TO BE RECEIVED U.S. $ VALUE UNREALIZED
DATES THROUGH AMOUNT TYPE AT 06/30/97 AMOUNT TYPE AT 06/30/97 GAIN LOSS
- ------------- ------ ---- ----------- ------ ---- ----------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/08/97 664,000 French Franc $ 113,270 126,626 U.S. Dollar $ 126,626 $ 13,356
08/08/97 40,285 U.S. Dollar 40,285 232,000 French Franc 39,576 $ (709)
09/24/97 56,391 U.S. Dollar 56,391 6,497,000 Japanese Yen 57,435 1,044
09/24/97 24,000,000 Japanese Yen 212,164 212,272 U.S. Dollar 212,271 107
---------------- --------------- ----------- --------
$ 422,110 $ 435,908 $ 14,507 $ (709)
================ =============== =========== =========
</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 shareholder service and sales of Fund shares
based on the average daily net assets of the portfolio. 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.
<PAGE> 104
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, Global Contrarian and Core Growth Portfolios) as of June 30,
1997, 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 rsponsibility is to express an opinion on these
financial statements and 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
misstatements. 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, 1997, by correspondence with the
custodians 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
audit 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, 1997, 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 29, 1997
<PAGE> 105
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.
28
<PAGE> 106
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.
29
<PAGE> 107
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.
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.
30
<PAGE> 108
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.
31
<PAGE> 109
ONE FUND, INC.
FORM N-1A
PART C
OTHER INFORMATION
<PAGE> 110
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, 1997
Statements of Operations for the year ended June 30, 1997
Statements of Changes in Net Assets for the Years Ended June 30, 1997
and 1996
Schedule of Investments at June 30, 1997 - - Money Market Portfolio
Schedule of Investments at June 30, 1997 - - Tax-Free Income Portfolio
Schedule of Investments at June 30, 1997 - - Income Portfolio
Schedule of Investments at June 30, 1997 - - Income & Growth Portfolio
Schedule of Investments at June 30, 1997 - - Growth Portfolio
Schedule of Investments at June 30, 1997 - - Small Cap Portfolio
Schedule of Investments at June 30, 1997 - - International Portfolio
Schedule of Investments at June 30, 1997 - - Global Contrarian
Portfolio
Schedule of Investments at June 30, 1997 - - Core Growth Portfolio
Notes to Financial Statements as of June 30, 1997
Independent Auditors' Report of KPMG Peat Marwick LLP dated July 29,
1997
The following audited financial information is included in Part A of this
registration statement:
Financial Highlights (for the years ended June 30, 1997)
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:
(16) Computation of Performance Data
<PAGE> 111
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.
(1)(e) Articles Supplementary of the Registrant as filed in the Maryland
State Department of Assessments and Taxation on September 16,
1996 were filed as Exhibit (1)(e) of the Registrant's Form N-1A,
Post-effective Amendment no. 9 on November 12, 1996.
(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.
(4)(c) Specimen copy of certificated securities of the Core Growth Portfolio
was filed as Exhibit (4)(c) of the Registrant's Form N-1A,
Post-effective Amendment no. 9 on November 12, 1996.
(5) Investment Advisory Agreement between the Registrant and Ohio National
Investments, Inc., dated May 1, 1996, was filed as Exhibit (5) of the
Registrant's Form N-1A, Post-effective Amendment No. 8 on August 21,
1996.
<PAGE> 112
(5)(a) Sub-Advisory Agreement (for the International and Global Contrarian
Portfolios) between Ohio National National Investments, Inc. and
Societe Generale Asset Management Corp., dated May 1, 1996, was filed
as Exhibit (5)(a) of the Registrant's Form N-1A, Post-effective
Amendent No. 8 on August 21, 1996.
(5)(b) Sub-Advisory Agreement (for the Core Growth Portfolio) between Ohio
National Investments, Inc. and Pilgrim Baxter & Associates, Ltd.,
dated November 1, 1996, was filed as Exhibit (5)(b) of the
Registrant's Form N-1A, Post-effective Amendment no. 9 on
November 12, 1996.
(5)(b)(1) Schedule A, amended October 31, 1996, to the Investment Advisory
Agreement between the Registrant and Ohio National Investments, Inc.,
dated May 1, 1996, was filed as Exhibit (5)(b)(1) of the Registrant's
form N-1A, Post-effective Amendment no. 9 on November 12, 1996.
(6) Principal Underwriting Agreement between the Registrant and Ohio
National Equities, Inc. was filed as Exhibit (6) of the Registrant's
Form N-1A, Post-effective Amendment No. 10, on April 30, 1997.
(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)(c) Service Agreement among the Registrant, Ohio National Investments,
Inc. and The Ohio National Life Insurance Company, dated May 1, 1996,
was filed as Exhibit (9)(c) of the Registrant's Form N-1A,
Post-effective Amendment No. 8, on August 21, 1996.
(9)(d) Joint Insured Agreement among the Registrant, Ohio National Fund, Inc.
and Ohio National Investments, Inc., dated May 1, 1996, was filed as
Exhibit (9)(d) of the Registrant's Form N-1A, Post-effective Amendment
No. 8, on August 21, 1996..
(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.
(10)(c) Opinion and consent of Ronald L. Benedict, Esq., as to the shares of
the Registrant's Core Growth Portfolio was filed as Exhibit (10)(c) of
the Registrant's Form N-1A, Post-effective Amendment No. 8, on August
21, 1996.
<PAGE> 113
(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.
(13)(e) Investment letter for the initial subscription of capital stock of
the Registrant's Core Growth Portfolio was filed as Exhibit (13)(e)
of the Registrant's Form N-1A, Post-effective Amendment no. 9 on
November 12, 1996.
(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.
(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,
Post-effective Amendment no. 7 on September 1, 1995, and
Post-effective Amendment No. 8 on August 21, 1996.
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 14, 1997 ONLI also owned
92.2% 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
7.8% 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, Ohio National Equities, Inc. ("ONEQ"). ONLI presently
owns 40.5% of the voting securities of the Registrant.
NUMBER OF HOLDERS OF SECURITIES
As of August 14, 1997, the securities of the Registrant were held as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Money Market Portfolio 716
Tax-Free Income Portfolio 52
Income Portfolio 197
Income & Growth Portfolio 852
Growth Portfolio 1,340
Core Growth Portfolio 590
Small Cap Portfolio 673
International Portfolio 2,331
Global Contrarian Portfolio 591
</TABLE>
<PAGE> 114
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- --------------------------------------------------------------------------------
- ------------------------------- -----------------------------
ENTERPRISE PARK, INC. OHIO NATIONAL EQUITIES INC.
A GEORGIA CORPORATION A BROKER/DEALER
REAL ESTATE DEVELOPMENT COMPANY CAPITALIZED BY ONLI @ $30,000
CAPITALIZED BY ONLI $50,000
- ------------------------------- --------------------------------
Pres. & Dir. M. Stohler Chm. & Dir. D. O'Maley
V.P. & Dir. J. Brom Pres. & Dir. J. Palmer
Secy. & Dir. J. Fischer VP & Dir. J. Miller
Treas. & Dir. D. Taney VP & Dir. T. Backus
Secretary & Dir. R. Benedict
Treasurer K. Donaldson
Compliance Officer J. Dunn
- ------------------------------- --------------------------------
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- -------------------------------------------------------------------------------------------------------------------
S E P A R A T E A C C O U N T S
--------------------------------
A B C D E F
--------------------------------
- ------------------------------- ------------------------------ -------------------------------------
OHIO NATIONAL INVESTMENTS, INC. THE O.N. EQUITY SALES COMPANY OHIO NATIONAL LIFE
ASSURANCE CORPORATION
AN INVESTMENT ADVISER AN OHIO CORPORATION AN OHIO CORPORATION
CAPITALIZED BY ONLI @ $10,000 A BROKER/DEALER A STOCK LIFE INSURANCE COMPANY
CAPITALIZED BY ONLI @ $790,000 CAPITALIZED BY 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. Brom Sr. VP & Dir. R. Dolan
Pres. & Dir. J. Palmer Sr. VP & Dir. J. Palmer
VP & Dir. M. Boedeker Sr. VP & Dir. S. Summers
V.P. & Dir. R. DiTommaso Sr. VP & Dir. J. Brom
VP & Dir. M. Stohler Sr. Vice Pres. D. Cook
V.P. & Dir. D. McClure Sr. Vice Pres. G. Smith
VP & Dir. S. Williams Vice President R. Broadwell
Secy. & Dir. M. Haverkamp Vice President M. Boedeker
VP K. Hanson Vice President R. DiTommaso
Treasurer K. Donaldson Vice President J. Houser
VP D. Hundley Vice President G. Pearson
Compliance VP J. Dunn Vice President D. Pennington
VP J. Martin Vice President M. Stohler
Secy. R. Benedict
Treasurer D. Taney Operations VP B. Turner Asst. Secy. J. Fischer
Asst. Secy. M. Haverkamp
Secretary R. Benedict Asst. Actuary K. Flischel
Asst. Secy./Treas. A. Starkey
- ------------------------------- ------------------------------ ------------------------------------
SEPARATE ACCOUNT
-------------------------------------
R
---
<= Advisor to Advisor to =>
--------------------------------------------------------
- ----------------------------- -------------------------------- --------------------------------
ONE FUND, INC. O.N. INVESTMENT MANAGEMENT CO. OHIO NATIONAL FUND
A MARYLAND CORPORATION AN OHIO CORPORATION A MARYLAND CORPORATION
AN OPEN END DIVERSIFIED A FINANCIAL ADVISORY SERVICE AN OPEN END DIVERSIFIED
MANAGEMENT INVESTMENT COMPANY CAPITALIZED BY ONESCO @ $145,000 MANAGEMENT INVESTMENT COMPANY
- ----------------------------- -------------------------------- --------------------------------
Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer
Vice Pres. M. Boedeker ----- Vice President M. Boedeker
Vice Pres. J. Brom VP & Dir. G. Smith Vice President J.Brom
Vice Pres. D. McClure Vice President S. Williams
Vice Pres. S. Williams VP & Dir. D. McClure Treasurer D. Taney
Treasurer D. Taney -------- Secy. & Dir. R. Benedict
Secy. & Dir. R. Benedict Asst. Secy. A. Starkey
Asst. Secy. A. Starkey Director G. Castrucci
Director G. Castrucci Treasurer K. Jaeger Director R. Love
Director R. Love Director G. Vredeveld
Director G. Vredeveld Secretary M. Haverkamp
- --------------------------------- -------------------------------- ---------------------------------
</TABLE>
<PAGE> 115
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.
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. 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; until 1997 was
Director and President of ONIMCO.
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; until 1997 was
Director and Vice president of ONIMCO.
Stephen T. Williams Director and Vice President, Equity Securities of
Vice President ONLI; Vice President of Registrant; Vice
President of ONF; until 1997 was Director
and Vice President of ONIMCO.
Keith O. Hanson Vice President Portfolio Manager of ONLI.
R. Douglas Hundley Vice President Investment Officer of ONLI.
Jed R. Martin Vice President Investment Officer of ONLI
</TABLE>
<PAGE> 116
<TABLE>
<S> <C> <C>
Ronald L. Benedict Secretary Second Vice President & Counsel
and Secretary of ONLI; Director and
Secretary of Registrant; Director and
Secretary of ONF; Director and Secretary
of ONEQ; Secretary of ONLAC; until 1997
was Secretary of ONIMCO.
Dennis R. Taney Treasurer Mutual Fund Financial Operations
Director of ONLI; Treasurer
of Registrant; Treasurer of ONF;
until 1997 was Treasurer of ONIMCO.
</TABLE>
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 SoGen
Director
Jean-Pierre Gentil Chairman of the Chairman of the Board and Director of
Board and Director 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>
<PAGE> 117
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 Director, Chairman Director of United Asset Management
and Chief Executive Corp.; Director, Chairman and Chief
Officer Executive Officer of PBHG Funds, Inc.
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, ONEQ, 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).
ONEQ, 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
John J. Palmer Director, President and Director and President
Chief Executive Officer
James I. Miller II Director and Vice President None
Trudy K. Backus Director and Vice President None
Ronald L. Benedict Director and Secretary Director and Secretary
</TABLE>
<PAGE> 118
<TABLE>
<S> <C> <C>
Kenneth Donaldson Treasurer None
Joni L. Dunn Compliance Officer None
</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.
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:
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
and
American Data Services, Inc. ("ADS")
24 West Carver Street
Huntington, NY 11743
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:
ADS and IFTC
(c) Securities records for portfolio securities:
ADS and IFTC
<PAGE> 119
(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:
ADS and IFTC
(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
Not Applicable
<PAGE> 120
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 ned
thereunto duly authorized in the City of Cincinnati and the State of Ohio on the
27th day of August, 1997.
ONE FUND, INC.
By /s/ John J. Palmer
------------------------------
John J. Palmer, 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.
Signature Title Date
- --------- ----- ----
/s/ John J. Palmer President and Director August 27, 1997
- ----------------------- (Principal Executive Officer)
John J. Palmer
/s/ Dennis R. Taney Treasurer (Principal Financial August 27, 1997
- ----------------------- and Accounting Officer)
Dennis R. Taney
/s/ Ronald L. Benedict Director August 27, 1997
- -----------------------
Ronald L. Benedict
/s/ George E. Castrucci Director August 27, 1997
- -----------------------
George E. Castrucci
/s/ Ross Love Director August 27, 1997
- -----------------------
Ross Love
/s/ George M. Vredeveld Director August 27, 1997
- -----------------------
George M. Vredeveld
<PAGE> 121
INDEX OF CONSENTS AND EXHIBITS
Page Number in
Exhibit Sequential Numbering
Number Description System Where Located
- ------- ----------- --------------------
Consent of Ronald L. Benedict, Esq.
Consent of Jones & Blouch L.L.P.
Consent of KPMG Peat Marwick LLP
(16) Computation of Performance Data
<PAGE> 122
[OHIO NATIONAL FINANCIAL SERVICES LETTERHEAD]
August 27, 1997
The Board of Directors
ONE Fund, Inc.
One Financial Way
Cincinnati, Ohio 45242
Re: ONE Fund, Inc. Registration Statement
File Nos. 33-47811 and 811-6675
Post-effective Amendment No. 11
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> 123
Jones & Blouch L.L.P.
Suite 405-West
1025 Thomas Jefferson St., N.W.
Washington, DC 20007
(202) 223-3500
August 27, 1997
ONE Fund, Inc.
One Financial Way
Cincinnati, OH 45201
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. 11 under the Securities Act of 1933 to the
Registration Statement for ONE Fund, Inc. to be filed with the Securities and
Exchange Commission, File No. 33-47811.
Very truly yours,
/s/ Jones & Blouch L.L.P.
--------------------------
Jones & Blouch L.L.P.
<PAGE> 124
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 27, 1997
<PAGE> 1
EXHIBIT (16)
CALCULATION OF PERFORMANCE DATA
Date S&P Growth Inc & Gr LB C/G Income
8/19/92 10,000 9,500 9,500 10,000 9,700
12/31/92 10,531 10,178 9,487 10,100 9,758
6/30/93 11,044 11,234 10,687 10,727 10,627
12/30/93 11,560 11,917 11,148 10,987 10,849
6/30/94 11,168 11,554 10,774 10,699 10,224
12/30/94 11,712 11,989 11,073 10,774 10,263
6/30/95 14,084 13,928 12,865 11,808 11,407
12/31/95 16,119 15,366 13,798 12,424 11,980
6/30/96 17,609 17,022 14,730 12,398 11,921
12/31/96 19,666 18,103 15,981 12,927 12,512
6/30/97 23,719 20,201 18,020 13,293 12,882
EAFE Int'l LB Muni Tax-Free
5/1/93 10,000 9,500
6/30/93 10,052 9,432
12/31/93 10,811 12,267
6/30/94 11,761 13,234 10,000* 9,700*
12/31/94 11,652 13,443 10,039 9,863
6/30/95 11,955 14,086 10,976 10,694
12/31/95 12,958 15,041 11,767 11,476
6/30/96 13,543 16,713 11,690 11,384
12/31/96 13,742 17,139 12,297 11,907
6/30/97 15,282 19,179 12,742 12,257
* These figures actually begin as of 11/01/94.
MSCI
Rus 2000 Small Cap World Global
11/1/94 10,000 9,500 10,000 9,500
12/31/94 9,853 9,537 9,654 9,145
6/30/95 11,273 10,343 10,537 9,781
12/31/95 12,655 11,597 11,655 10,523
6/30/96 13,970 12,835 12,481 11,526
12/31/96 14,748 13,570 13,226 11,578
6/30/97 16,253 14,737 15,260 12,806
Rus 3000 Core Growth
11/01/96 10,000 9,500
12/31/96 10,597 9,392
6/30/97 11,128 9,364
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<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> 1.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 2
<NAME> TAX-FREE INCOME
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<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> 10.79
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> 0.30
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.09
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 3
<NAME> INCOME
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<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> 9.59
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 0.16
<PER-SHARE-DIVIDEND> (0.61)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.75
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 4
<NAME> INCOME & GROWTH
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
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<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> 12.78
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 2.39
<PER-SHARE-DIVIDEND> (0.38)
<PER-SHARE-DISTRIBUTIONS> (0.28)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.89
<EXPENSE-RATIO> 1.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 5
<NAME> GROWTH
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
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<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
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 15.47
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 2.73
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (0.68)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.52
<EXPENSE-RATIO> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 6
<NAME> SMALL CAP
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
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<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> 12.82
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 1.67
<PER-SHARE-DIVIDEND> (0.11)
<PER-SHARE-DISTRIBUTIONS> (1.19)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.30
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<SERIES>
<NUMBER> 7
<NAME> INTERNATIONAL
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<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
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