<PAGE> 1
President's Message
Dear Shareholders:
We are pleased to provide you with an update of ONE Fund's performance and
investment activity for the annual period ended June 30, 1997. Despite some
short-term volatility in the early months of 1997, stocks in general registered
strong gains and bond performance overall was solid. Large-cap stocks in
particular continued to drive the vigorous bull market to new records, just as
they have for the past several years.
[PICTURE]
At present, corporate earnings, both in terms of their growth and their
reliability, continue to be quite good. Inflation remains benign, at its lowest
levels in some three decades. Credit growth has been slow and stable. Economic
growth appears to be continuing at a moderate, sustainable pace. As we seek to
capitalize on this favorable environment we remain mindful that the future
course of the markets is, as always, uncertain. Therefore, we shall continue to
adhere to our fundamental investment principles of careful selection and
constant management in pursuit of long-term objectives.
OUR NEW LOOK
We believe it is important to clearly and efficiently communicate investment
information to you. To that end, we are pleased to introduce several
enhancements to our ONE Fund Annual Report. Foremost is the addition of a
summary page for each portfolio (excepting the Money Market). There you'll find
information on the portfolio's allocations and top holdings, data on its total
returns, a graph showing the performance of a hypothetical investment in it and
comments from the portfolio's manager. You'll notice several other changes
throughout, all designed to help you better understand your investments. As
always, we welcome your comments.
LOOKING AHEAD
August, 1997 marks ONE Fund's fifth anniversary. Over the five years the ONE
Fund family has grown to nine portfolios approaching $100 million in net assets.
We value the confidence you have demonstrated in us as we have attained this
milestone. Our highest priority as we go forward remains earning your continued
confidence with strong long-term performance.
Information on your investments is contained in the following pages. We are
proud that ONE Fund is able to provide its shareholders with the sound results
documented herein. Please contact your registered representative if you have
questions about ONE Fund or your account. As your needs change over time, he or
she stands ready to serve you.
In closing, I wish to thank ONE Fund's recently retired president, Don
Zimmerman, for his leadership in advancing the best interests of our investors.
It is now my privilege to serve as your president and my responsibility to
continue the Fund's progress. Thank you again for the confidence you have placed
in ONE Fund as you pursue your wealth-building endeavors.
Best regards,
/s/ John J. Palmer
John J. Palmer
This report may be used as sales literature only when accompanied or preceded by
an effective prospectus of ONE Fund, Inc. which contains related sales expense
and other pertinent information.
<PAGE> 2
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> 3
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> 4
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> 5
TAX-FREE INCOME PORTFOLIO ONE Fund, Inc.
OBJECTIVE
To provide high current income exempt from federal income taxes. Preservation
of capital is a secondary objective. Normally, at least 85% of the assets of
this portfolio will be invested in investsment grade municipal securities.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
1 year 7.82% 4.47%
Since inception (11/1/94) 9.61% 7.94%
</TABLE>
The maximum sales charge is 3%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.
COMMENTS
In addition to policies implemented by the Federal Reserve regarding the overall
level of interest rates, supply remains the principal force affecting the
performance of the municipal bond market. In 1997, new supply has been light
especially in conjunction with redemptions in the second quarter which have
reduced $30 billion in municipals from the market. Accordingly, long municipal
funds have outperformed long corporate bond funds so far this year.
Over the past 12 months (for the period ending 6/30/97), the ONE Fund Tax-Free
Income Portfolio has exceeded the performance of the Lehman Brothers Municipal
Bond Index - Intermediate (6.83%) prior to inclusion of any sales charges. Our
fund has maintained a longer average maturity than the index and accordingly, we
have exceeded its return during a period of declining interest rates. We have
not made any significant changes to the portfolio even though bond prices have
reached highs not seen for 18 months or so. We feel there is some risk that
interest rates may have begun to move back up as the economy gains strength in
the third quarter. If this scenario unfolds, our portfolio should continue to
outperform the average fund in this category.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Tax-Free Income Portfolio Lehman Bros.
(with max. sales change) Municipal Bond Index-
(Commenced operations November 1, 1994) Intermediate
<S> <C> <C>
6/30/94 9,700* 10,000*
12/31/94 9,863 10,039
6/30/95 10,694 10,976
12/31/95 11,476 11,767
6/30/96 11,384 11,690
12/31/96 11,907 12,297
6/30/97 12,257 12,742
<FN>
* These figures actually begin as of 11/01/94.
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 BONDS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<C> <C>
1. Washington Power Revenue 5.70% 7/01/12 4.5
2. Chicago Midway Airport 5.5% 01/01/29 4.3
3. Atlanta RTA 6.8% 7/01/14 4.2
4. PA Intergovt Coop Auth 6.75% 6/15/01 4.2
5. North Carolina Med Care Commn Healthcare 4.2
5.25% 5/01/26
6. Clark City NV School District 7.0% 6/01/09 4.0
7. New York State Med Care FACS 6.75% 8/15/14 4.0
8. State of Nevada 6.6% 12/01/13 4.0
9. Matagorde TX 6.7% 3/01/27 4.0
10. Mobile Alabama 6.95% 01/01/20 3.9
</TABLE>
TOP 5 CATEGORIES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Power Revenue 22.4
Insured Bonds 16.4
Hospital Revenue 14.7
Pollution Control/Industrial Revenue 11.5
General Obligation 11.2
</TABLE>
<PAGE> 6
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> 7
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 integral part of these financial statements.
<PAGE> 8
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> 9
INCOME PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide high current income. Preservation of capital is a secondary
objective. Normally, at least 85% of the assets of this portfolio will be
invested in investment-grade fixed-income securities and the equivalent. The
remainder may be invested in below investment-grade corporate bonds.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
1 year 8.26% 4.78%
3 year 8.10% 6.91%
Since inception (8/18/92) 6.06% 5.34%
</TABLE>
The maximum sales charge is 3%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.
COMMENTS
The ONE Fund Income Portfolio has exceeded the performance of the Lehman
Brothers Government/Corporate Intermediate Bond Index (7.22%) over the past 12
months (for the period ending 6/30/97, prior to inclusion of any sales charge).
The outperformance was a result of our having a longer average maturity than the
index during a period when interest rates declined. We have not made any
significant portfolio adjustments even though we've been in the midst of a very
strong bond market rally since April. We are concerned that the economy may
begin a growth spurt in the third quarter and bonds will give back some of their
earlier gains this year.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Income Portfolio
(with max. sales charge) Lehman Bros.
(Commenced operations Gov/Corporate Bond Index-
August 18, 1992) Intermediate
<S> <C> <C>
8/19/92 9,700 10,000
12/31/92 9,758 10,100
6/30/93 10,627 10,727
12/30/93 10,849 10,987
6/30/94 10,224 10,699
12/30/94 10,263 10,774
6/30/95 11,407 11,808
12/31/95 11,980 12,424
6/30/96 11,921 12,398
12/31/96 12,512 12,927
6/30/97 12,882 13,293
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 BONDS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<C> <C>
1. US Treasury 6.375% 8/15/02 15.1
2. US Treasury 7.375% 11/15/97 6.1
3 Texas Utilities 7.48% 1/01/17 4.4
4. ITT Dest 6.75% 11/15/01 4.3
5. El Paso Electric 8.90% 2/01/06 4.0
6. Maxus Energy 9.875% 10/15/02 4.0
7. Tenneco 7.875% 10/01/02 4.0
8. Fruit of the Loom 7.875% 10/15/99 3.9
9. ITT Rayonier 7.50% 10/15/02 3.9
10. IBM 7.25% 11/01/02 3.9
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Government 21.2
Utilities 15.6
Oil, Energy & Natural Gas 12.5
Hotel/Lodging 7.4
Medical & Related 7.0
</TABLE>
<PAGE> 10
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%, Series A $ 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> 11
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> 12
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> 13
INCOME & GROWTH PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide moderate income with the potential for increasing income over time.
Growth of capital is also a primary objective. 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 stock.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
1 year 22.34% 16.24%
3 year 18.69% 16.68%
Since inception (8/18/92) 14.05% 12.86%
</TABLE>
The maximum sales charge is 5%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.
COMMENTS
The financial markets, primarily the equity markets, have experienced tremendous
growth over the past twelve months. This surge is the result of strong corporate
profits, low inflation, moderate interest rates and tremendous cash flows into
the markets. The leaders in this market have been the large capitalization
stocks, fueled by flows of funds into the various mutual fund portfolios that
invest, primarily, in the large cap names (i.e., S&P Index Funds, Large Cap
Growth Funds). Most firms whose holdings consist of a blend of common stocks and
fixed income holdings did not keep pace with the S&P 500 Index over the past
twelve months.
The ONE Fund Income & Growth lagged the S&P 500 Index during this period
because it is invested in common stocks (companies of all market caps),
medium-term corporate bonds, and convertible instruments. It also maintained a
cash position of three to twelve percent during the period, somewhat lowering
returns. Investment decisions are based primarily on a company's growth
prospects, valuation relative to these growth prospects, dividend paying ability
and growth, balance sheet strength, and evidence of capable management,
regardless of size. Medium-term corporate bonds, convertible instruments, and
Real Estate Investment Trusts are utilized to enhance the portfolio yield as
current income is an important objective of the fund.
At this time, we have chosen to stay with our decision process and include
all sizes of companies and income producing instruments in the portfolio. It is
felt that this will best meet the fund's objectives and could at times exceed,
equal, or lag the S&P 500 Index return.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Income & Growth Portfolio
(with max. sales charge)
(Commenced operations
August 18, 1992) S&P 500 Index
<S> <C> <C>
8/19/92 9,500 10,000
12/31/92 9,487 10,531
6/30/93 10,687 11,044
12/30/93 11,148 11,560
6/30/94 10,774 11,168
12/30/94 11,073 11,712
6/30/95 12,865 14,084
12/31/95 13,798 16,119
6/30/96 14,730 17,609
12/31/96 15,981 19,666
6/30/97 18,020 23,719
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Camco International 3.3
2. Intel 3.2
3. Hewlett-Packard 3.2
4. Allied Signal 3.2
5. Texas Instruments 2.6
6. Burlington Northern Santa Fe 2.6
7. Regal Beloit 2.4
8. Westinghouse 2.1
9. Microsoft Corp. 1.9
10. Magna International 1.8
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Computer & Related 13.2
Oil, Energy & Natural Gas 12.1
Real Estate 6.2
Industrial Services 6.1
Chemicals 4.2
</TABLE>
<PAGE> 14
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 International 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> 15
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1997
<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> 16
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 investments.................. 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 ($14.89/95%) .................. $ 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>
The accompanying notes are an integral part of these financial statements.
<PAGE> 17
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> 18
GROWTH PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide long-term capital growth. Current income is incidental. Normally at
least 90% of the assets of this portfolio will be invested in common stocks.
Selection of stocks is not limited with regard to whether stocks are
exchange-listed or dividend-paying or whether they are issued by companies of
any particular size.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
1 year 18.68% 12.78%
3 year 20.45% 18.42%
Since inception (8/18/92) 16.76% 15.54%
</TABLE>
The maximum sales charge is 5%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.
COMMENTS
The financial markets, primarily the equity markets, have experienced tremendous
growth over the past twelve months. This surge is the result of strong corporate
profits, low inflation, moderate interest rates and tremendous cash flows into
the markets. The leaders in this market have been the large capitalization
stocks, fueled by flows of funds into the various mutual fund portfolios that
invest, primarily, in the large cap names (i.e., S&P Index Funds, Large Cap
Growth Funds). Most funds whose holdings consist of a blend of small-, medium-,
and large-capitalization stock investments did not keep pace with the S&P 500
Index over the past twelve months. At least 80% of the Growth funds reported by
Lipper Analytical lagged the S&P 500 Index.
The ONE Fund Growth Portfolio lagged the S&P 500 Index during this period
because it is invested in companies of all sizes (small-, medium-, and
large-capitalization). The Portfolio also contained a three to ten percent cash
position during the period, somewhat lowering returns. Investment decisions are
based primarily on a company's growth prospects, valuation relative to its
growth prospects, balance sheet strength and evidence of capable management,
regardless of its size. Investors seemed to ignore the lower levels of the
equity markets during this period and focused on the perceived safety and
liquidity of the large market capitalization names, despite lofty valuations.
As manager of the Growth Portfolio, we have chosen to stay with our decision
process and include all sizes of companies, as described above, in the
portfolio. We feel that more investors should eventually again focus on earnings
potential and valuation in their choices, and include small- and mid-sized
companies when doing so.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Growth Portfolio
(with max sales charge)
(Commenced operations
August 18, 1992) S&P 500 Index
<S> <C> <C>
8/19/92 9,500 10,000
12/31/92 10,178 10,531
6/30/93 11,234 11,044
12/30/93 11,917 11,560
6/30/94 11,554 11,168
12/30/94 11,989 11,712
6/30/95 13,928 14,084
12/31/95 15,366 16,119
6/30/96 17,022 17,609
12/31/96 18,103 19,666
6/30/97 20,201 23,719
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<C> <C>
1. Cisco Systems 3.3
2. Hewlett Packard 3.2
3. Allied Signal 2.9
4. Texas Instruments 2.5
5. Camco International 2.5
6. Magna International 2.3
7. Intel 2.1
8. Microsoft Corp. 1.9
9. Amcast Industrial 1.9
10. Hardinge 1.9
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Computer & Related 18.4
Oil, Energy & Natural Gas 9.2
Business Services 8.7
Medical & Related 7.5
Electrical Equipment 7.0
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
<PAGE> 19
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> 20
ONE FUND, INC.
GROWTH PORTFOLIO
Schedule of Investments JUNE 30, 1997
<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 statements.
<PAGE> 21
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 ........................................ 449,238
Net unrealized appreciation on investments ................... 4,095,106
Overdistributed net investment income ........................ (1,000)
-----------
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) ..................................... 81,743
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> 22
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 integral part of financial statements.
<PAGE> 23
SMALL CAP PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide maximum capital growth by investing primarily in common stocks of
small and medium sized companies. Under normal conditions, at lest 65% of this
portfolio's assets will be invested in common stocks of companies with market
capitalization of less than $1 billion.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
1 year 14.82% 9.12%
Since inception (11/1/94) 17.94% 15.66%
</TABLE>
The maximum sales charge is 5% . All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.
COMMENTS
The financial markets, primarily the equity markets, have experienced tremendous
growth over the past twelve months. This surge is the result of strong corporate
profits, low inflation, moderate interest rates and tremendous cash flows into
the markets. The leaders in this upward move have been large capitalization
stocks. Small cap equity issues did not keep pace with the large cap issues or
the S&P 500 Index over the past 12 months. The period was a very volatile one
for small cap stocks, especially in their downward moves. The Small Cap
Portfolio (before sales charge) outperformed the Russell 2000 Index over the
last 12 months because it was less volatile than the Index, especially during
the down market times of the period.
Going forward, it looks as though the economy could strengthen somewhat into
the second half of this year. Interest rates could move up some, but probably
not much unless inflation concerns surface. With stock valuations at high
levels, continued positive corporate earnings growth will be necessary for the
market to maintain its current levels or to move up.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO
(WITH MAX. SALES CHARGE)
(COMMENCED OPERATIONS NOVEMBER 1, 1994) Russell 2000 Index
<S> <C> <C>
11/1/94 9,500 10,000
12/31/94 9,537 9,853
6/30/95 10,343 11,273
12/31/95 11,597 12,655
6/30/96 12,835 13,970
12/31/96 13,570 14,748
6/30/97 14,737 16,253
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Camco International 2.6
2. WD-40 Corp. 2.3
3. Santa Fe Energy Resources 2.3
4. Hardinge 2.3
5. Offshore Logistics 2.2
6. Alternative Resources 2.2
7. Healthcare Realty Trust 2.1
8. Zebra Technologies 2.1
9. BMC Industries 2.0
10. BIO Whittaker 1.9
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Oil, Energy & Natural Gas 15.8
Business Services 10.1
Real Estate 8.0
Computer & Related 7.6
Consumer Products 4.7
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
<PAGE> 24
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> 25
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> 26
<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> 27
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> 28
INTERNATIONAL PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide long-term capital growth by investing primarily in common stock (and
securities convertible into common stocks) of foreign companies. When deemed
appropriate for temporary defensive purposes, it may invest in short-term debt
instruments, U.S. Government obligations or in U.S. common stock.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
1 year 14.76% 9.03%
3 year 13.15% 11.24%
Since inception (5/1/93) 18.37% 16.91%
</TABLE>
The maximum sales charge is 5%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
COMMENTS
The International Fund performed very well against the EAFE Index. There are
several reasons for this. First, the index is significantly more weighted to
Japan than the Fund, and Japan was about the only poor performing international
market for the past 12 months. Second, the EAFE is a dollar denominated index
and the strong dollar had a negative impact upon it, whereas the Fund partially
hedges its' investments and that protected some of our gains. Finally, the great
majority of our stocks are not held by the index, and quite simply they did
better than similar country stocks in the EAFE.
Most European markets were strong performers, ending the quarter at all-time
highs. Political issues impacted certain local markets. In June, the endorsement
of a stability pact on budgetary discipline at the Amsterdam Meeting of EU
leaders and the conclusion of the Denver G-8 summit without major surprises
provided additional support for European markets.
The Japanese market weakened at the beginning of the period, however, as the
Yen stabilized and encouraging economic news emerged in June, that market
strengthened. Equities in Hong Kong rose sharply and South Korean shares
recovered to finish the quarter up. Singapore issues were negatively impacted by
turmoil in other Southeast Asian economies. The release of positive economic
data and higher bond prices buoyed the New Zealand and Australian markets.
In Canada, equities rose steadily higher over the period with the election
victory of the incumbent Liberal party and the impact of a strong bond market.
In Latin America, however, as U.S. equities rebounded, Latin American stocks
rallied to new records.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
International Portfolio
(with max. sales change) Morgan Stanley Captl. Inc.
(Commenced operations May 1, 1993) EAFE Index
<S> <C> <C>
5/1/93 9,500 10,000
6/30/93 9,432 10,052
12/31/93 12,267 10,811
6/30/94 13,234 11,761
12/31/94 13,443 11,652
6/30/95 14,086 11,955
12/31/95 15,041 12,958
6/30/96 16,713 13,543
12/31/96 17,139 13,742
6/30/97 19,179 15,282
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Porffolio
<S> <C>
1. Buderus 2.9
2. Fuji Photo Film Co. 2.5
3. Secom 2.3
4. Tokio Marine & Fire 2.0
5. Bank for International Settlements 2.0
6. Dai Tokyo Fire & Marine 2.0
7. Toho 1.7
8. Noranda 1.7
9. Promodes 1.7
10. Shimano 1.6
</TABLE>
TOP 5 COUNTRIES/REGIONS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Japan 23.1
France 8.6
Switzerland 8.0
Germany 4.9
Latin America 4.6
</TABLE>
The risk associated with investing on a worldwide basis include differences in
regulation of financial data and reporting and currency exchanges as well as
economic and political systems which may be different from those in the United
States. The prices of small company stocks are generally more volatile than the
prices of large company stocks.
<PAGE> 29
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> 30
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> 31
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> 32
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> 33
GLOBAL CONTRARIAN PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide long-term capital growth by investing in foreign and domestic
securities that, in the judgment of the portfolio manager, are undervalued or
presently out of favor with other investors but have positive prospects for
eventual recovery. Under normal market conditions, at least 65% of the
portfolio's assets will be invested in conformity with its investment
objectives.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
1 year 11.11% 5.59%
Since inception (11/1/94) 11.87% 9.72%
</TABLE>
The above returns reflect the maximum sales charge of 5% for this portfolio. All
returns represent past performance and neither predict nor guarantee future
investment results. Your investment return and principal value will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
COMMENTS
The Global Contrarian portfolio underperformed versus the MSCI World Index last
year. This was driven by `hard asset' stock performance (mining companies,
forest and paper product companies, etc.) which the Contrarian portfolio is
heavily invested in. Specifically stocks related to gold did poorly as gold
continued to lose ground. Two of our largest holdings, Freeport McMoran (a
mining company) and Bank for International Settlements, are heavily involved in
gold and did not perform up to expectations because of this.
The Global Contrarian Portfolio currently has a significant exposure to
commodity and/or "hard asset" related stocks in the U.S. as well as overseas. It
also owns some small and obscure stocks worldwide which we believe are
neglected. Finally, they holds some emerging market debt instruments, either
corporate or sovereign. With the exception of gold related stocks, most
commodity and commodity related stocks were up modestly in the second quarter.
Both the U.S. and most foreign markets performed well in the second quarter. The
emerging market debt instruments also performed well.
Unlike financial assets which have done very well over the past 15 years,
hard assets such as natural resources, gold or even real estate have performed
poorly. That situation is, in our view, unlikely to last forever.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Global Contrarian Portfolio
(with max. sales change) Morgan Stanely Capt.
(Commenced operations November 1, 1994) World Index
<S> <C> <C>
11/1/94 9,500 10,000
12/31/94 9,145 9,654
6/30/95 9,781 10,537
12/31/95 10,523 11,655
6/30/96 11,526 12,481
12/31/96 11,578 13,226
6/30/97 12,806 15,260
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Secom 3.5
2. Edipresse 2.8
3. San Juan Basin Royalty Trust 2.6
4. ED&F 2.4
5. Zero Corp. 2.1
6. Carter Holt Harvey 2.1
7. East Texas Financial Services 2.0
8. Kuehne & Nagel 2.0
9. Freeport McMoRan Pfd C 1.9
10. Weatherford Enterra 1.8
</TABLE>
TOP 5 COUNTRIES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
United States 32.4
Japan 9.2
Switzerland 7.7
Hong Kong 4.5
France 4.2
</TABLE>
The risk associated with investing on a worldwide basis include differences in
regulation of financial data and reporting and currency exchanges as well as
economic and political systems which may be different from those in the United
States. The prices of small company stocks are generally more volatile than the
prices of large company stocks.
<PAGE> 34
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> 35
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> 36
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> 37
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> 38
CORE GROWTH PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide long-term capital growth. Current income is incidental. Normally at
least 90% of the assets of this portfolio will be invested in common stocks.
Selection of stocks is not limited with regard to whether stocks are
exchange-listed or dividend-paying or whether they are issued by companies of
any particular size.
PERFORMANCE AS OF JUNE 30, 1997
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
Since inception (11/1/96) (1.40%) (6.36)%
</TABLE>
The above returns reflect the maximum sales charge of 5% for this portfolio. All
returns represent past performance and neither predict nor guarantee future
investment results. Your investment return and principal value will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
COMMENTS
The Russell 3000 has outperformed the Core Growth portfolio since its inception
in November of 1996, primarily due to the market's attraction to large-cap
stocks. The Russell 3000 index is comprised of the 3000 largest U.S. companies,
and while the Core Growth Portfolio is an all-cap portfolio, our focus on
high-earning companies leads us to invest also in the small to mid-cap range.
These sectors have lagged the large caps since the inception of the fund. The
strong performance of the big caps is in many ways a positive sign for the
broader market. It suggests that investors still believe strongly in domestic
equities, and as the economy remains stable it can only be a matter of time
before that support spreads to smaller stocks as well. The market's appetite for
growth will inevitably be drawn to the smaller companies achieving some of the
most consistent and impressive gains in earnings and revenues.
If investors are once again willing to look at smaller companies and reward
real growth in earnings - which hasn't been the case for more than a year, then
we believe there will be some very positive days ahead for the types of
companies we focus on. If growth stocks, and the technology sector in
particular, can make it through the summer with only minor see-sawing, it will
bode well for the second half of 1997 and our style of investing. If investors
are once again willing to look at smaller companies and reward real growth in
earnings - which hasn't been the case for more than a year - then we believe
there will be some very positive days ahead for the type of companies in which
we invest.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Core Growth Portfolio
(with max. sale charge)
(Commenced operations November 1, 1996) Russell 3000 Index
<S> <C> <C>
11/01/96 9,500 10,000
12/31/96 9,392 10,597
6/30/97 9,364 11,128
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Advanced Fibre Communications 2.3
2. Cambridge Technology 2.1
3. Sitel 2.1
4. Varco International 2.1
5. Blyth Industries 1.9
6. Visio Software 1.9
7. Omnicare 1.9
8. Parexel 1.9
9. Gartner Group 1.8
10. Tellabs 1.8
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Computer & Related 21.4
Business Services 17.5
Medical & Related 11.6
Communications 8.1
Drugs 4.9
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
<PAGE> 39
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> 40
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> 41
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> 42
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> 43
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> 44
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 INTERNATIONAL 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> 45
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 SMALL
MARKET INCOME INCOME INCOME & GROWTH GROWTH CAP
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $100 mil...... 0.30% 0.60% 0.50% 0.50% 0.50% 0.65%
Next $150 mil...... 0.25% 0.50% 0.40% 0.40% 0.40% 0.55%
Over $250 mil...... 0.20% 0.40% 0.30% 0.30% 0.30% 0.45%
</TABLE>
For the International and Global Contrarian Portfolios, ONI is paid a fee at an
annual rate of 0.90% of each Portfolios' average daily net asset values. ONI
then pays Societe Generale Asset Management Corporation (SGAM) fees at an annual
rate of 0.75% of the average daily net asset 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> 46
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 11-1-96 TO
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> 47
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> 48
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 responsibility 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
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios comprising ONE Fund, Inc. as of June 30, 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
- --------------------------------------------------------------------------------
Directors and Officers of ONE Fund, Inc.
John J. Palmer, President and Director
Ronald L. Benedict, Secretary and Director
George E. Castrucci, Director
Ross Love, Director
George M. Vredeveld, Director
Joseph P. Brom, Vice President
Michael A. Boedeker, Vice President
David G. McClure, Vice President
Stephen T. Williams, Vice President
Dennis R. Taney, Treasurer
Amy D. Starkey, Assistant Secretary
