<PAGE> 1
PROSPECTUS ONE Financial Way
NOVEMBER 1, 1996 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, 1996, which is incorporated herein
by reference. The Statement of Additional
Information is available upon request and
without charge by calling or writing ONE Fund at
the toll-free telephone number or the address
shown above.
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> 2
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 The O.N.
Equity Sales Company ("ONESCO"). However, upon
receipt of necessary regulatory approvals, Ohio
National Equities, Inc. ("ONE, Inc.") an
affiliate of ONESCO, will become the principal
underwriter. You may purchase ONE Fund shares at
any time by contacting your registered
representative. The purchase of ONE Fund shares
includes a maximum sales charge of 5% of the
offering price (3% for the Tax-Free Income and
Income Portfolios). A number of methods are
available for reducing or eliminating the sales
charge. There is no sales charge for the Money
Market Portfolio. See "Sales Charges" on page
27, and "Reducing the Sales Charge" on page 28.
2
<PAGE> 3
ONE Fund investors may direct service requests
to their registered representative or directly
to ONE Fund at the toll-free telephone number
and address shown on page 1. A shareholder
service fee, not to exceed an annual rate of
0.30% (0.17% maximum for the Money Market
Portfolio) is paid to ONESCO and other qualified
dealers. See "Sales Charges" on page 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% 0.42% 0.72%
Tax-Free Income Portfolio 0.45% 0.25% 0.39% 1.09%
Income Portfolio 0.35% 0.25% 0.47% 1.07%
Income & Growth Portfolio 0.35% 0.25% 0.39% 0.99%
Growth Portfolio 0.35% 0.25% 0.40% 1.00%
Core Growth Portfolio (4) 0.95% 0.25% 0.65% 1.85%
Small Cap Portfolio 0.50% 0.25% 0.37% 1.12%
International Portfolio 0.90% 0.25% 0.57% 1.72%
Global Contrarian Portfolio 0.90% 0.25% 0.99% 2.14%
</TABLE>
3
<PAGE> 4
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 $ 7 $ 23 $ 40 $ 90
Tax-Free Income Portfolio 41 64 89 159
Income Portfolio 41 63 88 157
Income & Growth Portfolio 60 80 102 166
Growth Portfolio 60 80 103 167
Core Growth Portfolio (4) 68 106 146 258
Small Cap Portfolio 61 84 109 180
International Portfolio 67 102 139 244
Global Contrarian Portfolio 71 114 160 287
</TABLE>
If the maximum management fees and 12b-1 fees were assessed, the expenses in
this hypothetical example would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Portfolio $ 9 29 50 110
Tax-Free Income Portfolio 43 70 99 182
Income Portfolio 43 69 98 180
Income & Growth Portfolio 62 86 112 188
Growth Portfolio 62 86 113 189
Core Growth Portfolio (4) 69 107 148 263
Small Cap Portfolio 63 90 119 202
International Portfolio 67 103 142 249
Global Contrarian Portfolio 71 116 163 292
</TABLE>
(1)The Maximum Sales Charge scales down for purchases of $25,000 or more and
becomes a contingent deferred sales charge of 0.5%, for 2 years following
purchase, for accounts of at least $1 million.
(2)The 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 0.87% for the Money Market Portfolio, 1.24% for the Tax-Free Income
Portfolio, 1.22% for the Income Portfolio, 1.14% for the Income & Growth
Portfolio, 1.15% for the Growth Portfolio and 1.27% for the Small Cap
Portfolio.
(3)The 12b-1 Fees shown are based on an estimate that no individual sales
representative will reach critical production levels this year. In later
years, these fees could be slightly higher, but no higher than 0.17% for the
Money Market Portfolio and 0.30% for the other portfolios.
(4)For the Core Growth Portfolio, the "Other Expenses" (and, accordingly, the
Total Operating Expenses) are based on estimates.
4
<PAGE> 5
ONE FUND, INC.
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP, independent
certified public accountants, and is an integral part of ONE Fund's audited
financial statements which appear in the Statement of Additional Information
(which may be obtained by shareholders), incorporated by reference herein, and
should be read in conjunction with the financial statements.
<TABLE>
<CAPTION>
PORTFOLIO
---------------------------------------------------------------
MONEY MARKET TAX-FREE INCOME
---------------------------------------- -----------------
8-18-92 YEAR 11-1-94
YEAR ENDED JUNE 30, TO ENDED TO
1996 1995 1994 6-30-93 6-30-96 6-30-95
------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period .................................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $10.66 $10.00
Income from investment operations:
Net investment income ..................................... 0.05 0.05 0.03 0.02 0.56 0.35
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ........................... 0.00 0.00 0.00 0.00 0.13 0.66
------ ------ ------ ------ ------ ------
Total from investment operations .......................... 0.05 0.05 0.03 0.02 0.69 1.01
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ....................................... (0.05) (0.05) (0.03) (0.02) (0.56) (0.35)
Distributions from net realized
capital gains and foreign
currency transactions ................................... 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------
Total distributions .......................................... (0.05) (0.05) (0.03) (0.02) (0.56) (0.35)
------ ------ ------ ------ ------ ------
Net asset value, end of period ............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $10.79 $10.66
====== ====== ====== ====== ====== ======
Total return (a) ............................................. 5.18% 5.06% 3.06% 2.67%(b) 6.59% 10.26%(b)
====== ====== ====== ====== ====== ======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived
by adviser (d,e):
Expenses .................................................. 0.57% 0.51% 0.44% 0.43%(c) 0.94% 0.91%(c)
Net investment income ..................................... 5.14% 4.99% 2.97% 2.70%(c) 5.20% 5.04%(c)
Ratios assuming no waiver of management fees by adviser (d,e):
Expenses ................................................. 0.87% 0.81% 0.74% 0.73%(c) 1.24% 1.21%(c)
Net investment income .................................... 4.84% 4.69% 2.67% 2.40%(c) 4.90% 4.74%(c)
Portfolio turnover rate ...................................... N/A N/A N/A N/A 8% 0%
Net assets at end of period (millions) ....................... $ 15.8 $ 14.1 $ 12.3 $ 21.3 $ 6.3 $ 5.7
</TABLE>
(a) Total return does not reflect the initial sales charge imposed on
purchases (see page 27).
(b) Calculated on an aggregate basis (not annualized).
(c) Annualized.
(d) For the periods shown, the investment adviser elected to waive the entire
management fee for the Money Market Portfolio and one-half of the
management fees for the Tax-Free Income, Income, Income & Growth, and
Small Cap Portfolios, but it may cease those waivers, in whole or in part,
without prior notice.
(e) The investment adviser has reimbursed certain operating expenses of the
International and Global Contrarian Portfolios. Had the investment adviser
not reimbursed such expenses, the annualized ratio of expenses to net
assets would have been 1.72%, 1.51%, 2.22% and 4.13% for the International
Portfolio for the periods ended June 30, 1996, 1995, 1994 and 1993
respectively, and 2.40% and 2.59% for the Global Contrarian Portfolio for
the periods ended June 30, 1996 and June 30, 1995, respectively. The
annualized ratio of net investment income to net assets would have been
.70%, (1.10%), (.26%) and .12% for the International Portfolio for the
periods ended June 30, 1996, 1995, 1994 and 1993 respectively, and 1.23%
and (2.31%) for the Global Contrarian Portfolio for the periods ended June
30, 1996 and 1995, respectively.
5
<PAGE> 6
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------------------
INCOME INCOME & GROWTH
----------------------------------- ----------------------------------
8-18-92 8-18-92
YEAR ENDED JUNE 30, TO YEAR ENDED JUNE 30, TO
1996 1995 1994 6-30-93 1996 1995 1994 6-30-95
----------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period .............................. $ 9.78 $ 9.39 $ 10.43 $10.00 $11.57 $10.65 $10.96 $10.00
Income from investment operations:
Net investment income ............... 0.63 0.65 0.62 0.45 0.38 0.41 0.33 0.27
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ..... (0.19) 0.39 (0.98) 0.45 1.27 1.54 (0.11) 0.96
------ ------ ------- ------ ------ ------ ------ ------
Total from investment
operations ...................... 0.44 1.04 (0.36) 0.90 1.65 1.95 0.22 1.23
------ ------ ------- ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ................. (0.63) (0.65) (0.62) (0.45) (0.37) (0.41) (0.33) (0.27)
Distributions from net realized
capital gains and foreign
currency transactions ............. 0.00 0.00 (0.06) (0.02) (0.07) (0.62) (0.20) 0.00
------ ------ ------- ------ ------ ------ ------ ------
Total distributions .................... (0.63) (0.65) (0.68) (0.47) (0.44) (1.03) (0.53) (0.27)
------ ------ ------- ------ ------ ------ ------ ------
Net asset value, end of period ......... $ 9.59 $ 9.78 $ 9.39 $10.43 $12.78 $11.57 $10.65 $10.96
====== ====== ======= ====== ====== ====== ====== ======
Total return (a) ....................... 4.61% 11.58% ( 3.79%) 9.56%(b) 14.50% 19.41% 1.96% 12.49%(b)
====== ====== ======= ====== ====== ====== ====== ======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived
by advisor (d,e):
Expenses ............................. 0.97% 0.85% 1.02% 1.11%(c) 0.89% 0.81% 0.94% 1.07%(c)
Net investment income .................. 6.50% 6.80% 6.10% 5.07%(c) 3.10% 3.69% 3.08% 3.09%(c)
Ratios assuming no waiver of management
fees by adviser (d,e):
Expenses ............................. 1.22% 1.10% 1.27% 1.36%(c) 1.14% 1.06% 1.19% 1.32%(c)
Net investment income ................ 6.25% 6.55% 5.85% 4.82%(c) 2.85% 3.44% 2.83% 2.84%(c)
Portfolio turnover rate ................ 9% 4% 6% 6% 7% 25% 14% 24%
Net assets at end of period (millions) . $ 7.0 $ 7.1 $ 4.6 $ 5.7 $10.8 $ 7.7 $ 7.5 $ 6.7
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
PORTFOLIO
---------------------------------------------------------------
GROWTH SMALL CAP
--------------------------------------- ------------------
8-18-92 YEAR 11-1-94
YEAR ENDED JUNE 30, TO ENDED TO
1996 1995 1994 6-30-93 6-30-96 6-30-95
------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period ................................. $13.03 $11.67 $11.63 $10.00 $10.63 $10.00
Income from investment operations:
Net investment income .................. 0.14 0.16 0.12 0.12 0.26 0.22
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ........ 2.72 2.17 0.22 1.69 2.26 0.67
------ ------ ------ ------ ------ ------
Total from investment
operations ......................... 2.86 2.33 0.34 1.81 2.52 0.89
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income .................... (0.14) (0.16) (0.12) (0.12) (0.25) (0.22)
Distributions from net realized
capital gains and foreign
currency transactions ................ (0.28) (0.81) (0.18) (0.06) (0.08) (0.04)
------ ------ ------ ------ ------ ------
Total distributions ....................... (0.42) (0.97) (0.30) (0.18) (0.33) (0.26)
------ ------ ------ ------ ------ ------
Net asset value, end of period ............ $15.47 $13.03 $11.67 $11.63 $12.82 $10.63
====== ====== ====== ====== ====== ======
Total return (a) .......................... 22.22% 20.54% 2.85% 18.26%(b) 24.10% 8.91%(b)
====== ====== ====== ====== ====== ======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived
by advisor (d,e):
Expenses ................................ 0.90% 0.83% 1.04% 1.30%(c) 0.94% 1.00%(c)
Net investment income ..................... 0.99% 1.35% 1.04% 1.31%(c) 2.21% 3.19%(c)
Ratios assuming no waiver of management
fees by adviser (d,e):
Expenses ................................ 1.15% 1.08% 1.30% 1.55%(c) 1.27% 1.31%(c)
Net investment income ................... 0.74% 1.10% 0.79% 1.06%(c) 1.88% 2.88%(c)
Portfolio turnover rate ................... 22% 24% 8% 26% 34% 8%
Net assets at end of period (millions) .... $11.8 $ 7.0 $ 5.3 $ 4.3 $ 4.5 $ 2.9
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
PORTFOLIO
------------------------------------------------------------------------
INTERNATIONAL GLOBAL CONTRARIAN
--------------------------------------------- ---------------------
4-30-93 YEAR 11-1-94
YEAR ENDED JUNE 30, TO ENDED TO
1996 1995 1994 6-30-93 6-30-96 6-30-95
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period .............................. $ 12.89 $ 13.32 $ 9.90 $ 10.00 $ 10.01 $ 10.00
Income from investment operations:
Net investment income ............... 0.10 0.14 0.05 0.03 0.16 0.17
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ..... 2.24 0.63 4.01 (0.10) 1.61 0.13
--------- --------- --------- --------- --------- ---------
Total from investment
operations ...................... 2.34 0.77 4.06 (0.07) 1.77 0.30
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net
investment income ................. (0.39) (0.14) (0.05) (0.03) (0.23) (0.17)
Distributions from net realized
capital gains and foreign
currency transactions ............. (0.37) (1.06) (0.59) 0.00 (0.07) (0.12)
--------- --------- --------- --------- --------- ---------
Total distributions .................... (0.76) (1.20) (0.64) (0.03) (0.30) (0.29)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 14.47 $ 12.89 $ 13.32 $ 9.90 $ 11.48 $ 10.01
========= ========= ========= ========= ========= =========
Total return (a) ....................... 18.65% 6.44% 40.65% (0.68%)(b) 17.84% 2.99%(b)
========= ========= ========= ========= ========= =========
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived
by advisor (d,e):
Expenses ............................. 1.72% 1.50% 1.50% 2.32%(c) 2.14% 2.05%(c)
Net investment income ................ 0.70% 1.11% 0.46% 1.93%(c) 1.49% 2.85%(c)
Ratios assuming no waiver of management
fees by advisor (d,e):
Expenses ............................. 1.72% 1.50% 1.50% 2.32%(c) 2.14% 2.05%(c)
Net investment income ................ 0.70% 1.11% 0.46% 1.93%(c) 1.49% 2.85%(c)
Portfolio turnover rate ................ 20% 39% 27% 0% 26% 8%
Net assets at end of period (millions) . $ 15.1 $ 12.0 $ 10.4 $ 3.2 $ 5.7 $ 3.9
</TABLE>
8
<PAGE> 9
COMPARISONS OF CHANGE IN VALUE OF $10,000 INVESTMENTS
IN ONE FUND PORTFOLIOS AND VARIOUS INDEXES
<TABLE>
<CAPTION>
TAX FREE INCOME &
INCOME INCOME GROWTH GROWTH
------ ------ ------ ------
<C> <C> <C> <C> <C>
8/18/92 -- $ 9,700 $ 9,500 $ 9,500
12/31/92 -- 9,758 9,487 10,178
4/30/93 -- -- -- --
6/30/93 -- 10,628 10,687 11,234
12/31/93 -- 10,850 11,048 11,917
6/30/94 -- 10,224 10,896 11,554
11/1/94 $ 9,700 -- -- --
12/31/94 9,863 10,263 11,073 11,989
6/30/95 10,694 11,407 12,865 13,928
12/31/95 11,447 11,980 13,798 15,366
6/30/96 11,356 11,933 14,730 17,022
</TABLE>
<TABLE>
<CAPTION>
SMALL GLOBAL
CAP INTERNATIONAL CONTRARIAN
--- ------------- ----------
<C> <C> <C> <C>
8/18/92 -- -- --
12/31/92 -- -- --
4/30/93 -- $ 9,500 --
6/30/93 -- 9,435 --
12/31/93 -- 12,271 --
6/30/94 -- 13,270 --
11/1/94 $ 9,500 -- $ 9,500
12/31/94 9,537 13,443 9,145
6/30/95 10,343 14,086 9,781
12/31/95 11,979 15,061 10,523
6/30/96 12,835 16,713 11,526
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
LEHMAN LEHMAN
MUNICIPAL INTERMEDIATE S&P 500
--------- ------------ -------
<C> <C> <C> <C>
8/18/92 -- $10,000 $10,000
12/31/92 -- 10,200 10,452
4/30/93 -- -- --
6/30/93 -- 10,842 10,966
12/31/93 -- 11,105 11,353
6/30/94 -- 10,814 10,814
11/1/94 $10,000 -- --
12/31/94 10,035 10,891 11,290
6/30/95 11,003 11,937 13,571
12/31/95 11,787 13,134 16,028
6/30/96 11,734 13,013 17,643
</TABLE>
<TABLE>
<CAPTION>
RUSSELL MORGAN MORGAN
2,000 EAFE WORLD
----- ---- -----
<S> <C> <C> <C>
8/18/92 -- -- --
12/31/92 -- -- --
4/30/93 -- $10,000 --
6/30/93 -- 10,052 --
12/31/93 -- 10,724 --
6/30/94 -- 11,595 --
11/1/94 $10,000 -- $10,000
12/31/94 9,877 11,481 9,667
6/30/95 11,190 11,683 10,460
12/31/95 12,656 12,957 11,080
6/30/96 13,972 13,543 11,800
</TABLE>
10
<PAGE> 11
MANAGEMENT'S DISCUSSION OF ONE FUND
PERFORMANCE
(FISCAL YEAR JULY 1995 THROUGH JUNE 1996)
Economic conditions in the U.S. were favorable in the
second half of 1995 with rising sales, strong
corporate earnings, declining interest rates and low
inflation. Stocks and bonds advanced strongly, but,
foreign markets were generally more volatile and did
not share in this rally. As 1995 drew to a close, our
economy was growing at a moderate pace. However,
inflationary pressures began to be felt in 1996 with
growing consumer debt and spending, wage growth,
lower savings, higher interest rates and labor
shortages. Both domestic and foreign stocks generally
finished the fiscal year on a strong note despite
increasing price volatility and growing
uncertainties. Bond prices weakened in the face of
rising interest rates during the first half of 1996.
TAX FREE INCOME PORTFOLIO The emphasis has been on high quality municipal bonds
with intermediate or longer maturities. The average
maturity at the end of the fiscal year was 17 years,
while short-term balances (short-term debt securities
and cash equivalents) were approximately 8% of the
portfolio.
INCOME PORTFOLIO During the fiscal year, purchase activity continued
to focus on corporate bonds with 5 to 10 year
maturities. The average maturity at the end of the
fiscal year was about 7 years. During the fiscal
year, short-term balances were decreased from about
10% to 2%.
INCOME & GROWTH During the fiscal year, most purchases were in
PORTFOLIO dividend-paying common stocks with moderate growth
potential. At the end of the fiscal year, the
portfolio was 71% common and preferred stocks, 16%
bonds and 13% short-term balances.
GROWTH PORTFOLIO During the fiscal year, most purchases were in common
stocks with above-average growth potential. The
portfolio's short-term balances were increased during
the year and, at the end of June 1996, the portfolio
was 89% invested in common and preferred stocks.
SMALL CAP PORTFOLIO The portfolio continued to purchase stocks of small
to medium sized companies with moderate to above
average growth potential. At the end of the fiscal
year, the portfolio was 91% common and preferred
stocks and 9% short-term balances.
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INTERNATIONAL PORTFOLIO During the fiscal year, SGAM remained cautious while
continuing to seek investment opportunities in
specific stocks expected to provide good value and
attractive long-term returns. Foreign stocks remained
at approximately 89% of assets during the fiscal year
while most of the remainder consisted of foreign
short-term investments and convertible debentures.
GLOBAL CONTRARIAN This portfolio has maintained a significant exposure
PORTFOLIO to both U.S. and foreign "hard asset"
commodity-related stocks based on SGAM's belief that
this category, having performed poorly in recent
years, will rebound. In fact, this category did begin
to perform better in the first quarter of 1996, but
remained uncertain as the fiscal year ended. The
portfolio was, at fiscal year-end, invested
approximately 34% in U.S. stocks, 50% in foreign
stocks, 6% in domestic short-term balances and 10% in
foreign bonds.
ABOUT ONE FUND
ONE Fund was incorporated in Maryland on April 24,
1992. It is an open-end management investment
company, commonly called a "mutual fund". ONE Fund
has 9 fully diversified portfolios as described
below. Equity interests in each portfolio are
represented by a separate class of ONE Fund's capital
shares having a par value of one tenth of one cent
per share.
Shares of each portfolio All shares of all portfolios have one vote per 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.
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<PAGE> 13
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.
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<PAGE> 14
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.
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<PAGE> 15
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.
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<PAGE> 16
Income Portfolio The Income Portfolio is primarily invested in
risk factors. securities that the Adviser believes present
relatively low risk. To the extent deemed prudent,
the Adviser will also seek to increase the income
to this portfolio by positioning no more than 15%
of its assets in junk bonds, provided that the
differences in yield appear to be sufficient to
justify the higher risks involved. The market
value of such a security is likely to fluctuate
more than that of an investment grade bond,
especially during periods of economic uncertainty
or when the issuer's ability to pay the interest
or principal might be in doubt. At times when an
issuer's credit-worthiness is not perceived to be
sound, the portfolio's ability to sell the
security or to obtain current pricing information
might also be impaired.
With debt securities, the degree of financial risk
generally increases the lower the security is
rated, and the degree of market risk increases
with the length of time remaining to maturity.
During periods of rising interest rates, the
market prices of all income producing securities
will tend to decline. Conversely, when interest
rates fall, the market prices of such securities
will tend to rise. Thus, there is always a risk of
principal loss or gain associated with this
portfolio. In addition, changes in economic
conditions in general, or changes in an issuer's
financial condition, might impair the ability of
an issuer to timely pay interest and principal,
thus adversely affecting the market price of such
securities.
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.
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<PAGE> 17
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.
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<PAGE> 18
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.
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<PAGE> 19
As a nonfundamental policy, this portfolio will
not invest more than 20% of its assets in
securities of issuers located in any one foreign
country, except that up to an additional 5% of its
assets may be invested in securities of issuers
located in each of any three of Australia, Canada,
France, Germany, Japan or the United Kingdom.
While there is no restriction limiting the
countries in which the portfolio may invest, it
normally will invest only in countries with
developed securities markets and developed or
developing economies, and for which the Board of
Directors has specifically approved custody
arrangements.
International Portfolio This portfolio provides a means for you to
risk factors. diversify your investments by participating in
companies and economies outside the U.S. However,
as described below, investing in foreign
securities may involve a greater degree of risk
than investing in domestic securities. See the
discussion of risk factors under "Foreign
Securities" on page 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, including securities that are presently
trading below their historic prices, but have
positive prospects for eventual recovery. While
this portfolio will primarily invest in common
stocks (and securities convertible into common
stocks), it may also invest in fixed income
securities that appear to be undervalued or out of
favor. Not more than 20% of the Portfolio's assets
may be invested in fixed income securities rated
below investment grade. Under normal market
conditions, at least 65% of the Portfolio's assets
will be invested in conformity with its investment
objectives.
As a nonfundamental policy, this portfolio will
not invest more than 20% of its assets in
securities of issuers located in any one foreign
country, except that up to an additional 5% of its
assets may be invested in securities of issuers
located in each of any three of Australia, Canada,
France, Germany, Japan or the United Kingdom.
There is no other restriction limiting the
countries in which the portfolio may invest, but
it will only invest in countries for which the
Board of Directors has specifically approved
custody arrangements.
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<PAGE> 20
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.
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<PAGE> 21
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
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<PAGE> 22
purchased or sold if, as a result, more than
one-third of the total assets of a portfolio would
be hedged by options or futures contracts, and no
more than 5% of the total assets, at market value,
of a portfolio may be used for premiums on open
options and initial margin deposits on futures
contracts, and not more than 5% of portfolio's
assets may be invested in foreign currency hedging
transactions. Each type of instrument listed above
is commonly known as a "derivative" instrument and
involves risks even when used solely for hedging
purposes. Hedging transactions and their
associated risks are more fully described in the
Statement of Additional Information.
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.
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<PAGE> 23
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 (ONESCO),
its custodians (Investors Fiduciary Trust Co. for
the International and Global Contrarian Portfolios
and The Provident Bank for the other portfolios),
and its transfer agent (The Provident Bank). Board
members are elected by the shareholders for
three-year terms. Shareholder meetings are
normally held every 3 years. As a result of ONLI's
ownership of ONE Fund shares, it is a controlling
person of each portfolio of ONE Fund other than
the International Portfolio.
THE ADVISER The Adviser manages the investment and
reinvestment of ONE Fund assets, subject to the
supervision of the Board of Directors.
The Adviser also serves as the investment adviser
to Ohio National Fund, Inc. It has served in both
advisory capacities since May 1, 1996. The
Adviser's predecessor, O.N. Investment 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, Michael
Boedeker, Stephen Williams, James McCall, and
Jean-Marie Eveillard.
Joseph Brom is president of the Adviser and senior
vice president and chief investment officer of
ONLI. He oversees the management of the Money
Market, Tax-Free Income, Income, Income & Growth,
Growth and Small Cap Portfolios. He is a chartered
financial analyst with a bachelor's degree in
economics and finance and a law degree from the
University of Wisconsin. He has been an investment
officer of ONLI since 1975 and previously had 15
years of experience in securities management.
Michael Boedeker, a vice president of the Adviser,
manages the Money Market, Tax-Free Income, and
Income Portfolios. He is a chartered financial
analyst with a bachelor's degree in business and a
master of business administration degree in
finance from Indiana
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<PAGE> 24
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, manages the Income & Growth, Growth,
and Small Cap Portfolios. He has a bachelor's
degree in finance from the University of
Cincinnati. He has been an investment analyst
and director of securities for ONLI since 1977.
James McCall manages the Core Growth Portfolio.
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.
Jean-Marie Eveillard, president of SGAM, manages
the International and Global Contrarian
Portfolios. He is a graduate of the Ecole des
Hautes Etudes Commerciales in Paris. He has been
president of SoGen International Fund since 1984
and for 21 years prior to that had been a
securities analyst and mutual fund manager of
Societe Generale and SoGen International Fund.
THE ADVISER'S The Adviser's basic mutual fund investment
INVESTMENT STYLE philosophy is to seek value at reasonable
prices. This philosophy is implemented through
both macroeconomic and microeconomic analyses
using both quantitative and qualitative
measurements.
The Adviser's value 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.
24
<PAGE> 25
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.
25
<PAGE> 26
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.
CUSTODY OF ASSETS The Provident Bank, One East Fourth Street,
Cincinnati, Ohio 45202, is the custodian for all
ONE Fund assets except those of the
International and Global Contrarian Portfolios.
The assets of those two portfolios are in the
custody of Investors Fiduciary Trust Company,
127 West Tenth Street, Kansas City, Missouri
64105. For assets held outside the United
States, Investors Fiduciary Trust Company enters
into subcustodial agreements, subject to
approval by the Board of Directors. The
Provident Bank also serves as ONE Fund's
transfer agent and its agent for bookkeeping,
dividend disbursing and certain shareholder
services.
BUYING SHARES
ONE Fund's shares are continuously offered
through its principal underwriter, ONESCO, and
through other securities dealers that execute a
distribution agreement with ONESCO.
Investments can be The minimum initial investment is $500.
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 ONESCO
reserve the right to refuse any purchase order.
26
<PAGE> 27
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.
**ONESCO will pay a dealer concession of 0.50% to securities dealers who
initiate and are responsible for any purchase of $1 million or more.
ONESCO and other qualified dealers are paid a
continuing shareholder service fee not to exceed
0.30% (0.17% for the Money Market Portfolio)
annually to compensate them for providing
certain services to shareholders and to promote
growth of ONE Fund's assets. These services
include submitting purchase and redemption
transactions, establishing shareholder accounts
and providing information and assistance
regarding ONE Fund. The proceeds of ONE Fund's
12b-1 Distribution Plan are used only to pay
these shareholder service fees.
27
<PAGE> 28
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 ONESCO or its affiliates (the Ohio National
issued by its affiliates. companies). A concurrent purchase occurs
whenever ONE Fund shares are purchased at any
time from the day any Ohio National annuity or
insurance policy is applied for until 5 days
after that contract is delivered. The amount of
the annual (or single) premium of the Ohio
National annuity or insurance policy will then
be added to the amount of your concurrent ONE
Fund purchase to determine the percentage of
sales charge to apply to your ONE Fund purchase.
LETTER OF INTENT You may reduce sales charges on all investments
...committing to invest a by meeting the terms of a nonbinding letter of
certain amount over 13 months. your intent to invest a certain amount within a
13-month period. Shares representing up to 5% of
the intended amount will be held in escrow to
cover additional sales charges that may be due
if your total investments, net of redemptions,
over the stated period are insufficient to
qualify for a sales charge reduction. You have
up to 90 days after investing to sign a letter
of intent to reduce the sales charges on your
investments including the investments made in
the 90 days before the letter. Shares you
currently own will apply toward meeting your
letter of intent.
RIGHT OF ACCUMULATION Your sales charge may also be reduced by taking
...adding up all your into account your existing holdings in ONE Fund.
ONE Fund holdings. Holdings will be valued at the greater of their
full offering price at the time a new purchase
is made under a right of accumulation or the sum
of all your purchases (including reinvested
dividends) less any redemptions.
COMBINED PURCHASES Your sales charge may be reduced by aggregating
...with those of your holdings for the account(s) of you, your spouse,
family members. your children and grandchildren. This may
include purchases through employee benefit plans
such as an IRA, an individual-type 403(b) plan
or a single-participant Keogh plan, or by a
business solely controlled by these individuals
(for example, they own the entire business) or
by a trust (or other fiduciary arrangement)
solely for the benefit of these individuals.
28
<PAGE> 29
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 ONESCO to
realize economies of scale in its costs of
distributing shares. A qualified group must have
at least 6 members, must be available to arrange
for group meetings between representatives of
dealers who sell ONE Fund shares and the
members, must agree to include sales literature
and other materials relating to ONE Fund in its
publications and mailings to members at reduced
or no cost to ONE Fund or to dealers that sell
its shares, and must seek to arrange for payroll
deduction or other bulk transmission of ONE Fund
purchases.
GROUP LETTER OF INTENT Qualified groups may reduce sales charges on all
...by qualified groups investments by meeting the terms of a nonbinding
committing to invest a certain letter of the group's intention to invest a
amount over 24 months. certain amount over a 24-month period. Shares
representing 5% of the investments of each group
member during that period will be held in escrow
to cover additional sales charges. The group has
up to 90 days after investing to enter into the
group letter of intent.
PURCHASES WITHOUT Within 60 days preceding their purchase of ONE
A SALES CHARGE Fund shares, investors who have redeemed an
...by redeeming other investment in another mutual fund that imposed a
shares that had a sales 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.
29
<PAGE> 30
FLEXIBILITY FEATURES
OPEN ACCOUNTS Your account is opened in accordance with your
You will receive statements registration instructions. It offers many
every quarter. features allowing you to change your investment
program at any time as circumstances change.
Transactions in your account, such as additional
investments and dividend reinvestments, will be
reflected on regular confirmation statements
from The Provident Bank. Any of the following
features may be established through your ONE
Fund account application or by contacting your
registered representative or ONE Fund.
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.
30
<PAGE> 31
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.
31
<PAGE> 32
CHECK WRITING You may write checks against the balance of your
...for the Money Market Money Market Portfolio account. Checks will be
Portfolio. provided free, upon request. You may not write a
check for less than $100. Checks will be written
through The Provident Bank. Provident will
charge $15 for any check that is not honored
because of an insufficient Money Market
Portfolio account balance. Checks may not be
written against account balances held for less
than 15 days. ONE Fund reserves the right to
amend, suspend or discontinue check-writing
privileges at any time without prior notice.
REDEEMING SHARES
Payment is normally You may redeem your shares at any time by
sent within contacting ONE Fund or the broker-dealer through
3 business days. whom you purchased your shares. If you are no
longer serviced by an authorized registered
representative, you may contact ONESCO's
principal office by calling 1-800-578-8078, or
by writing to P. O. Box 371, Cincinnati, Ohio
45201. The price you receive for redeemed shares
is the next net asset value after your request
is received. Payment is normally sent within 3
business days. However, the proceeds of
redemption will not be sent until after your
check for your investment has cleared (which may
take up to 15 days). (Note also, the contingent
deferred sales charge of 0.5% on certain
redemptions, within 2 years of purchase with no
initial sales charge, of investments of $1
million or more as described under "Sales
Charges" on page 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.
32
<PAGE> 33
BY TELEPHONE As provided under "Telephone Transactions" on
page 31, you or your registered representative
may call ONE Fund to redeem up to $50,000. You
may pre-authorize that the proceeds be (a) in a
check, payable to you and mailed to your address
of record, or (b) by wire to your bank account.
Checks will normally be mailed 3 business days,
and no more than 7 days, after your request.
Wire transfers to your bank account will
normally be made the next business day. Wire
proceeds may not be for less than $1,000. The
Provident Bank will deduct a fee (presently $10)
from the proceeds of each wire redemption.
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.
33
<PAGE> 34
Average annual total return is based on a
hypothetical $1,000 investment, reflecting the
reinvestment of all dividends and distributions
and the impact of the maximum sales charge at
the beginning of each 1-, 5- and 10- year period
shown. Cumulative total return reflects the
aggregate performance of a portfolio, expressed
as a dollar amount change, during the period.
ALL PERFORMANCE QUOTATIONS ARE BASED ON
HISTORICAL INVESTMENT PERFORMANCE AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE.
34
<PAGE> 35
ONE FUND, INC.
SUPPLEMENT DATED JANUARY 31, 1997 TO THE PROSPECTUS DATED NOVEMBER 1, 1996.
Effective January 31, 1997, the prospectus is amended in the following
particulars:
Any reference in the prospectus to the Statement of Additional Information dated
November 1, 1996, refers to the Statement of Additional Information dated
December 17, 1996.
CORE GROWTH PORTFOLIO MANAGER'S PRIOR PERFORMANCE
The following is added to the end of "Fund Performance" on page 34:
Both the Core Growth Portfolio and the PBHG Core Growth Fund (the "PBHG Fund")
have the same investment objectives and policies and both are managed subject
to similar investment restrictions. The primary portfolio manager for both the
Portfolio and the PBHG Fund, from the inception of each, has been James McCall
of Pilgrim Baxter & Associates, Ltd. Mr. McCall uses the same proprietary
investment techniques for both the PBHG Fund and the Portfolio, as described on
page 17 (see "PBA's investment process.")
The performance of the PBHG Fund is not necessarily indicative of the
performance by the Portfolio. The PBHG Fund experienced a total return during
the period from its inception on January 2, 1996, until the end of its
most-recent fiscal quarter on December 31, 1996, of 32.8%. The Annual Operating
Expenses for the PBHG Fund total 1.50% compared to 1.85% for the Core Growth
Portfolio. Had the expenses for the PBHG Fund been the same as those of the
Core Growth Portfolio, the total return of the PBHG Fund for the year ending
December 31, 1996, would have been 32.4%. The total return for the Standard &
Poor's 500 Index for the same period was 23.0%.
TAX-EQUIVALENT YIELD
The following is added to the second paragraph under "Fund Performance" on page
33:
The "tax-equivalent yield" of the Tax-Free Income Portfolio is the rate that you
would have to earn from a taxable investment, before taxes, to equal the
Portfolio's tax-free yield.
PURCHASES WITHOUT A SALES CHARGE
The following is added to "Purchase Without a Sales Charge" on page 29:
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
<PAGE> 36
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 the trusts used to fund those plans.
CUSTODY OF ASSETS
The custodian for the Core Growth Portfolio is Star Bank, N.A. ("Star"), 425
Walnut Street, Cincinnati, Ohio 45202. The transfer agent and the agent for fund
accounting, dividend disbursing and shareholder services for the Core Growth
Portfolio is American Data Services, Inc. ("ADS"), 24 West Carver Street,
Huntington, New York 11743.
On and after January 1, 1997, Star will be the custodian for all portfolios
other than the International and Global Contrarian Portfolios. On and after
January 1, 1997, ADS will serve as the transfer agent and the agent for fund
accounting, divided disbursing and shareholder services for all the portfolios.
References to The Provident Bank under the "Flexibility Features" are changed to
ADS in "Open Accounts," page 30, and to Star in "Check Writing," page 32 and "By
Telephone," page 33.
On and after January 1, 1997, the fee deducted from the proceeds of each wire
redemption, as described in "By Telephone" on page 33, is $13.
ONE FUND'S PORTFOLIO MANAGERS
The following is added to "ONE Fund's Portfolio Managers" beginning at page 23:
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 degree in finance from the University of Indiana. He has
been an investment analyst and portfolio manager for ONLI since 1985.
Keith Hanson, a vice president of 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 valuation of small businesses for Blum
& Colombe, SC, and for seven years prior to that he was a securities analyst for
Johnson Asset Management.
