<PAGE> 1
PROSPECTUS
NOVEMBER 1, 1998
ONE FUND, INC.
One Financial Way
Cincinnati, Ohio 45242
Telephone 1-800-578-8078
ONE Fund Inc. ("ONE Fund") is a mutual fund with nine diversified portfolios.
Those portfolios have 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.
- - CORE GROWTH PORTFOLIO -- long-term capital appreciation.
- - 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 undervalued or presently out of
favor.
This prospectus sets forth concisely the information about ONE Fund that you
should know before investing. This prospectus should be retained for future
reference.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fee Table................................................... 3
Risk/Return Summary......................................... 4
General Investment Objectives............................. 4
Money Market Portfolio.................................... 5
Tax-Free Income Portfolio................................. 6
Income Portfolio.......................................... 7
Income & Growth Portfolio................................. 9
Growth Portfolio.......................................... 10
Core Growth Portfolio..................................... 12
Small Cap Portfolio....................................... 13
International Portfolio................................... 14
Global Contrarian Portfolio............................... 16
Additional Risk Factors..................................... 17
ONE Fund Management......................................... 20
Investment Adviser, Sub-advisers.......................... 20
The Adviser's Investment Style............................ 21
ONE Fund's Portfolio Managers............................. 22
Fund Services............................................. 23
Shareholder Information..................................... 24
Buying Shares............................................. 24
Purchase Price............................................ 24
Sales Charges............................................. 24
12b-1 Fees................................................ 25
Sales Contests............................................ 25
Reducing the Sales Charge................................. 25
Flexibility Features...................................... 27
Redeeming Shares.......................................... 29
Dividends, Distributions and Taxes........................ 30
Financial Highlights Information............................ 31
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION CONTENTS
<TABLE>
<S> <C>
Investment Policies and Restrictions
Controlling Persons and Principal Shareholders
Brokerage Allocation
Tax Status
Underwriters
The Year 2000 Issue
Financial Statements
</TABLE>
2
<PAGE> 3
ABOUT ONE FUND
ONE Fund has nine fully diversified portfolios.
ONE Fund's assets are managed by Ohio National
Investments, Inc. (the "Adviser") which is a
wholly-owned subsidiary of The Ohio National Life
Insurance Company ("ONLI"). The principal
underwriter of ONE Fund is Ohio National Equities,
Inc. ("ONEQ") which is also a wholly-owned
subsidiary of ONLI. Each of these companies is
located at One Financial Way, Cincinnati, Ohio
45242.
FEE TABLE
This table and example describe the fees and expenses that you may pay if you
buy and hold shares of ONE Fund and are provided to help you understand the
expenses of investing in ONE Fund and your share of ONE Fund's operating
expenses. A variety of ways to reduce the sales charge are available. See "Sales
Charges" on page 24, and "Reducing the Sales Charge" on page 25.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT):
Maximum Sales Charge (Load ) Imposed on Purchases (as a percentage of offering
price) (1)
<TABLE>
<S> <C>
Money Market Portfolio...................................... None
Tax-Free Income Portfolio................................... 3.00%
Income Portfolio............................................ 3.00%
Income & Growth Portfolio................................... 5.00%
Growth Portfolio............................................ 5.00%
Core Growth Portfolio....................................... 5.00%
Small Cap Portfolio......................................... 5.00%
International Portfolio..................................... 5.00%
Global Contrarian Portfolio................................. 5.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM ONE FUND
ASSETS):
<TABLE>
<CAPTION>
MANAGEMENT 12b-1 OTHER TOTAL OPERATING
FEES (2) FEES(3) EXPENSES EXPENSES
---------- ------- -------- ---------------
<S> <C> <C> <C> <C>
Money Market Portfolio...................... 0.30% 0.15% 0.58% 1.03%
Tax-Free Income Portfolio................... 0.60% 0.25% 0.75% 1.60%
Income Portfolio............................ 0.50% 0.25% 0.79% 1.54%
Income & Growth Portfolio................... 0.50% 0.25% 0.60% 1.35%
Growth Portfolio............................ 0.50% 0.25% 0.64% 1.39%
Core Growth Portfolio....................... 0.95% 0.25% 0.92% 2.12%
Small Cap Portfolio......................... 0.65% 0.25% 0.92% 1.82%
International Portfolio..................... 0.90% 0.25% 1.05% 2.20%
Global Contrarian Portfolio................. 0.90% 0.25% 1.38% 2.53%
</TABLE>
3
<PAGE> 4
EXAMPLE:
The Example enables you to compare the long-term cost of owning ONE Fund versus
other funds. Funds with higher recurring operating expenses might, over time, be
more expensive than a fund with a higher sales charge but lower recurring
operating expenses.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The Example assumes that you invest $10,000 in the ONE Fund portfolio for the
time periods indicated. The Example also assumes that your investment has a 5%
return each year and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Portfolio............................... $106 $ 329 $ 571 $1,264
Tax-Free Income Portfolio............................ 459 794 1,151 2,154
Income Portfolio..................................... 453 775 1,120 2,090
Income & Growth Portfolio............................ 632 909 1,207 2,051
Growth Portfolio..................................... 635 921 1,227 2,093
Core Growth Portfolio................................ 706 1,137 1,592 2,848
Small Cap Portfolio.................................. 677 1,049 1,443 2,544
International Portfolio.............................. 714 1,161 1,632 2,927
Global Contrarian Portfolio.......................... 746 1,257 1,793 3,248
</TABLE>
- ---------------
(1) The Maximum Sales Charge scales down for purchases of $25,000 or more and
becomes a contingent deferred sales charge of 0.5%, for 2 years following
purchase, for accounts of at least $1 million. If you transfer funds from
lower load portfolios, you pay the additional load at the time of transfer.
(2) The Adviser is presently voluntarily waiving 0.15% of its Management Fees
for certain portfolios. With those waivers, the Management Fees are 0.15%
for the Money Market Portfolio, 0.45% for the Tax-Free Income Portfolio,
0.35% for the Income, Income & Growth and Growth Portfolios, and 0.50% for
the Small Cap Portfolio. Current Operating Expenses are 0.88% for the Money
Market Portfolio, 1.45% for the Tax-Free Income Portfolio, 1.39% for the
Income Portfolio, 1.20% for the Income & Growth Portfolio, 1.24% for the
Growth Portfolio and 1.67% for the Small Cap Portfolio.
(3) The 12b-1 Fees shown are based on an estimate that no individual sales
representative will reach critical production levels this year. In later
years, these fees could be slightly higher, but no higher than 0.17% for the
Money Market Portfolio and 0.30% for the other portfolios.
RISK/RETURN SUMMARY
- GENERAL INVESTMENT OBJECTIVES
Each portfolio has its own
investment objectives and
policies. Each portfolio of ONE Fund has a different
investment objective and pursues that objective
through its own investment policies. These
differences mean that the total returns and risks
for each portfolio will be different. Of course,
the achievement of investment objectives cannot be
assured because of the risks of fluctuating prices
of the underlying securities. Risks associated
with particular portfolios are discussed as part
of the description of those portfolios. Following
the portfolio descriptions, there is a general
discussion of risks that affect all of the
portfolios.
4
<PAGE> 5
- MONEY MARKET PORTFOLIO
Current income, preservation
of
capital and liquidity
The objective of the Money Market Portfolio is to
provide current income consistent with
preservation of capital and liquidity. Essentially
all the assets of this portfolio will be invested
in high quality cash equivalent securities
maturing in 13 months or less, including
securities issued by (or guaranteed by) the U.S.
Government or its agencies or instrumentalities,
commercial paper, corporate bonds and notes,
certificates of deposit, bankers' acceptances and
repurchase agreements. Commercial paper is
unsecured promissory notes issued by corporations
to finance short-term credit needs.
The dollar-weighted average maturity of all
securities in this portfolio will never be more
than 90 days. The Statement of Additional
Information provides a more complete description
of the types of financial instruments in which
this portfolio may invest.
Money Market Portfolio risk
factors The Money Market Portfolio offers the least risk
of the nine ONE Fund portfolios, but also the
least opportunity for above-average long-term
return. Income will fluctuate with changes in the
level of short-term interest rates.
An investment in the Money Market Portfolio is not
a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Although the Money Market Portfolio seeks to
preserve the value of investments at $1 per share,
it is possible to lose money by investing in this
portfolio.
The bar chart shown on the next page provides an
indication of the risks of investing in the Money
Market Portfolio by showing changes in the
portfolio's performance for full calendar years
since its inception on August 18, 1992. How the
portfolio has performed in the past is not
necessarily an indication of how the portfolio
will perform in the future. Sales loads are not
reflected in the chart because this portfolio's
shares are sold without any sales charge.
5
<PAGE> 6
MONEY MARKET PORTFOLIO
<TABLE>
Annual Total
Return (%)
------------
<S> <C>
1993 2.82
1994 3.97
1995 5.42
1996 4.99
1997 4.70
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 1.36% (quarter
ending March 31, 1995) and the lowest return for a
quarter was .70% (quarter ending September 30,
1993).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1997) YEAR YEARS (8/92)
<S> <C> <C> <C>
Money Market Portfolio 4.70% 4.38% 4.31%
</TABLE>
Money Market Portfolio Seven Day Yield Ending
6/30/98: 4.97%
- TAX-FREE INCOME PORTFOLIO
High current income exempt
from federal income taxes
The objective of the Tax-Free Income Portfolio is
to provide high current income exempt from federal
income taxes. Preservation of capital is a
secondary objective.
Normally, substantially all (at least 85%) of the
assets of this portfolio will be invested in
investment grade municipal securities. As a
temporary defensive measure, during times of
adverse market conditions, up to 50% of the
portfolio's assets may be invested in short-term
securities, including those which are not
municipal securities. Interest income from
investments other than municipal securities will
be taxable to you as ordinary income.
Investment grade Municipal
securities
This portfolio will only purchase investment grade
securities. Generally, bonds rated in one of the
top four rating categories are considered
investment grade. No more than 25% of its assets
may be invested in securities having, at the time
of purchase, the fourth highest rating (Baa by
Moody's and BBB by Standard & Poor's).
Tax-Free Income Portfolio
risk factors
The financial risk for this portfolio is kept
fairly low by restricting purchases to investment
grade securities and further restricting the
purchase of securities in the fourth highest
rating category to a maximum of 25% of assets.
Securities in the fourth highest category, while
considered investment grade, may have some
speculative characteristics
6
<PAGE> 7
and the issuer's ability to pay interest or repay
principal may be weaker under adverse economic
conditions or changing circumstances.
The bar chart and table shown below provide an
indication of the risks of investing in the
Tax-Free Income Portfolio by showing changes in
the portfolio's performance for full calendar
years since its inception on November 1, 1994 and
by showing how the portfolio's average annual
returns for one year and since inception compare
to those of a broad-based securities market index.
How the portfolio has performed in the past is not
necessarily an indication of how the portfolio
will perform in the future. Sales loads are not
reflected in the chart or table. If they were
reflected, returns would be less than those shown.
TAX-FREE INCOME PORTFOLIO
<TABLE>
Annual
Total Return (%)
----------------
<S> <C>
1995 16.40
1996 3.93
1997 8.50
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 6.53% (quarter
ending March 31, 1995) and the lowest return for a
quarter was -1.71% (quarter ending March 31,
1996).
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR THE PERIODS ENDING DECEMBER 31, 1997) YEAR (11/94)
<S> <C> <C> <C>
Tax-Free Income Portfolio 8.50% 9.54%
Lehman Brothers
Municipal Bond Index* 9.19% 9.79%
</TABLE>
*The Lehman Brothers Municipal Bond Index is a
widely recognized, unmanaged municipal bond
index.
- INCOME PORTFOLIO
High current income and
preservation of capital
The objective of the Income Portfolio is to
provide high current income. Preservation of
capital is a secondary objective. The Adviser will
seek to preserve capital by shortening the average
maturity of this portfolio during times of
volatile interest rates. Shorter maturities reduce
exposure to interest risk and correspondingly
reduce the risk of loss of capital.
7
<PAGE> 8
Normally, at least 85% of the assets of this
portfolio will be invested in investment-grade
fixed income securities and the equivalent,
including corporate bonds, securities issued by
(or guaranteed by) the U.S. Government or its
agencies or instrumentalities, mortgage-backed
securities, and cash equivalents. The remainder
may be invested in below-investment-grade
corporate bonds ("junk bonds").
While this portfolio may invest in high-yield, or
"junk" bonds, at no time will any such bond be
purchased if it would result in more than 15% of
the assets of this portfolio being represented by
such securities. Bonds rated below the second
highest below-investment-grade category (B) by
Moody's or Standard & Poor's will not be
purchased.
Income Portfolio risk
factors The Income Portfolio is primarily invested in
securities that the Adviser believes present
relatively low risk. To the extent deemed prudent,
the Adviser will also seek to increase the income
to this portfolio by positioning no more than 15%
of its assets in high yield bonds, provided that
the differences in yield appear to be sufficient
to justify the higher risks involved. The market
value of such a security is likely to fluctuate
more than that of an investment grade bond,
especially during periods of economic uncertainty
or when the issuer's ability to pay the interest
or principal might be in doubt. The portfolio's
ability to sell a security or to obtain current
pricing information might be impaired at times
when an issuer's creditworthiness is not perceived
to be sound.
With debt securities, the degree of financial risk
generally increases the lower the security is
rated, and the degree of market risk increases
with the length of time remaining to maturity.
During periods of rising interest rates, the
market prices of all income producing securities
will tend to decline. When interest rates fall,
the market prices of such securities will tend to
rise. Thus, there is always a risk of principal
loss or gain associated with this portfolio. In
addition, changes in economic conditions in
general, or changes in an issuer's financial
condition, might impair the ability of an issuer
to timely pay interest and principal, thus
adversely affecting the market price of such
securities.
The bar chart and table shown on the next page
provide an indication of the risks of investing in
the Income Portfolio by showing changes in the
portfolio's performance for full calendar years
since its inception on August 18, 1992 and by
showing how the portfolio's average annual returns
for one year, five years and since inception
compare to those of a broad-based securities
market index. How the portfolio has performed in
the past is not necessarily an indication of how
the portfolio will perform in the future. Sales
loads are not reflected in the chart or table. If
they were reflected, returns would be less than
those shown.
8
<PAGE> 9
INCOME PORTFOLIO
<TABLE>
Annual Total
Return (%)
------------
<S> <C>
1993 17.85
1994 -10.75
1995 16.73
1996 4.85
1997 8.17
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 5.94% (quarter
ending March 31, 1993) and the lowest return for a
quarter was -3.77% (quarter ending March 31,
1994).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1997) YEAR YEARS (8/92)
<S> <C> <C> <C>
Income Portfolio 8.17% 6.80% 6.44%
Lehman Brothers
Government/Corporate Bond
Index
-- Intermediate* 7.86% 6.67% 6.44%
</TABLE>
*The Lehman Brothers Government/Corporate Bond
Index-Intermediate is a widely recognized,
unmanaged intermediate government and corporate
bond index.
- INCOME & GROWTH PORTFOLIO
Moderate income with the
potential for increasing
income and growing
capital
The objective of the Income & Growth Portfolio is
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 common stocks. The
remaining assets will be invested in preferred
stocks, corporate bonds, convertible bonds,
securities issued by (or guaranteed by) the U.S.
Government or its agencies or instrumentalities,
mortgage-backed securities, or cash and cash
equivalents.
Income & Growth Portfolio
risk factors
The risk factors related to the Income Portfolio
will also apply to the debt security portion of
this portfolio, and the risk factors related to
the Growth Portfolio will apply to the stock
portion of this portfolio. However, market risk
factors for debt securities and stocks often (but
not always) tend to offset each other.
9
<PAGE> 10
The bar chart and table shown below provide an
indication of the risks of investing in the Income
& Growth Portfolio by showing changes in the
portfolio's performance for full calendar years
since its inception on August 18, 1992 and by
showing how the portfolio's average annual returns
for one year, five years and since inception
compare to those of a broad-based securities
market index. How the portfolio has performed in
the past is not necessarily an indication of how
the portfolio will perform in the future. Sales
loads are not reflected in the chart or table. If
they were reflected, returns would be less than
those shown.
INCOME & GROWTH PORTFOLIO
<TABLE>
Annual
Total Return (%)
<S> <C>
1993 17.51
1994 -0.67
1995 24.61
1996 15.82
1997 22.87
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 11.82% (quarter
ending September 30, 1997) and the lowest return
for a quarter was -2.55% (quarter ending December
31, 1997).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1997) YEAR YEARS (8/92)
<S> <C> <C> <C>
Income & Growth Portfolio 22.87% 15.74% 14.47%
S&P 500* 33.36% 20.27% 20.25%
</TABLE>
*The S&P 500 is the Standard & Poor's Composite
Index of 500 Stocks, a widely recognized,
unmanaged index of common stock prices.
- GROWTH PORTFOLIO
Long-term growth
The objective of the Growth Portfolio is to
provide long-term capital growth. Current income
is incidental to the objective of capital growth.
Normally, at least 90% of the assets of this
portfolio will be invested in common stocks and
securities convertible into common stocks.
Selection of stocks is not limited with regard to
whether the stocks are exchange-listed or
dividend-paying or whether they are issued by
companies of any particular size. The remaining
assets will be held in preferred stocks,
investment grade corporate bonds, U.S. Government
securities, or short
10
<PAGE> 11
term obligations and cash equivalents. The Adviser
may temporarily invest a larger portion of the
assets in cash or cash equivalents for defensive
purposes or to meet anticipated redemption
requests.
Growth Portfolio risk
factors Securities ratings are generally not a factor in
stock selection. While common stocks offer greater
opportunities than other securities for long-term
total return, their prices are subject to
substantial fluctuation. Among factors affecting
stock prices in general are economic and financial
trends, expectations about business activity, and
anticipation of changes in corporate earnings.
The bar chart and table shown below and on the
next page provide an indication of the risks of
investing in the Growth Portfolio by showing
changes in the portfolio's performance for full
calendar years since its inception on August 18,
1992 and by showing how the portfolio's average
annual returns for one year, five years and since
inception compare to those of a broad-based
securities market index. How the portfolio has
performed in the past is not necessarily an
indication of how the portfolio will perform in
the future. Sales loads are not reflected in the
chart or table. If they were reflected, returns
would be less than those shown.
GROWTH PORTFOLIO
<TABLE>
Annual
Total Return (%)
<S> <C>
1993 17.08
1994 0.61
1995 28.16
1996 17.81
1997 16.72
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 14.36% (quarter
ending June 30, 1997) and the lowest return for a
quarter was -8.14% (quarter ending December 31,
1997).
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1997) YEAR YEARS (8/92)
<S> <C> <C> <C>
Growth Portfolio 16.72% 15.96% 16.04%
S&P 500* 33.36% 20.27% 20.25%
</TABLE>
*The S&P 500 is the Standard & Poor's Composite
Index of 500 Stocks, a widely recognized,
unmanaged index of common stock prices.
11
<PAGE> 12
- CORE GROWTH PORTFOLIO
Long-term capital
appreciation The objective of the Core Growth Portfolio is to
provide long-term capital appreciation by
investing primarily in equity securities of large,
medium and small companies that Pilgrim Baxter &
Associates, Ltd. ("PBA") believes have strong
earnings growth and long-term capital appreciation
prospects. PBA seeks companies poised for rapid
growth that have a history of above-average
earnings growth, demonstrate the ability to
sustain that growth, and operate in industries or
markets experiencing increased demand for their
products or services.
PBA's investment process
PBA seeks to construct an investment portfolio
having strong growth characteristics. PBA begins
by creating a universe of rapidly growing
companies having desired quality characteristics.
Using proprietary software and research models
that incorporate attributes of successful growth
(such as positive earnings surprises, upward
earnings estimate revisions, and accelerating
sales and earnings growth), PBA creates a universe
of growing companies. Then, using fundamental
research, PBA evaluates each company's earnings
quality and assesses the sustainability of the
company's current growth trends.
Core Growth Portfolio risk
factors This portfolio's investments in small and medium
capitalization companies may experience greater
price volatility than portfolios investing
primarily in larger, more established companies.
Because the universe of companies in which this
portfolio invests will experience stock price
volatility, it is important that investors
maintain a long-term investment perspective.
The bar chart and table shown on the next page
provide an indication of the risks of investing in
the Core Growth Portfolio by showing changes in
the portfolio's performance for full calendar
years since its inception on November 1, 1996 and
by showing how the portfolio's average annual
returns for one year and since inception compare
to those of a broad-based securities market index.
How the portfolio has performed in the past is not
necessarily an indication of how the portfolio
will perform in the future. Sales loads are not
reflected in the chart or table. If they were
reflected, returns would be less than those shown.
12
<PAGE> 13
CORE GROWTH PORTFOLIO
<TABLE>
Annual Total
Return (%)
<S> <C>
1997 -6.37
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 20.54% (quarter
ending June 30, 1997) and the lowest return for a
quarter was -17.29% (quarter ending March 31,
1997).
<TABLE>
SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR THE PERIODS ENDING DECEMBER 31, 1997) YEAR (11/96)
<S> <C> <C>
Core Growth Portfolio - 6.37% - 6.37%
Russell 3000 Index* 31.79% 32.92%
</TABLE>
*The Russell 3000 Index is a widely recognized,
unmanaged index of growth stock prices.
- SMALL CAP PORTFOLIO
Capital growth through
stocks of small and medium
sized companies The objective of the Small Cap Portfolio is to
provide maximum capital growth by investing
primarily in common stocks of small and medium
sized companies. Ordinarily, these companies are
not listed on a national securities exchange but
will be traded over the counter.
Under normal market conditions, at least 65% of
this portfolio's assets will be invested in common
stocks of companies with market capitalizations of
less than $1 billion. However, under unusual
market conditions, it may temporarily invest more
than 35% of its assets in larger companies if they
appear to present better prospects for capital
appreciation.
Small Cap Portfolio risk
factors Investments in this portfolio generally involve a
high degree of market and financial risk. Small
and medium sized companies selected for this
portfolio are generally those that are still in
the developing stages of their life cycles and are
able to achieve rapid growth in sales, earnings
and share prices. Investments in these companies
involve greater risk than is customarily
associated with more established companies because
smaller or newer companies often (a) are dependent
on one-person management, (b) have limited product
lines, markets or financial resources, (c) their
securities may have limited marketability, and (d)
the price of their
13
<PAGE> 14
common stock may be subject to more abrupt or
erratic movements than securities of larger, more
established companies or the market averages.
The bar chart and table shown below provide an
indication of the risks of investing in the Small
Cap Portfolio by showing changes in the
portfolio's performance for full calendar years
since its inception on November 1, 1994 and by
showing how the portfolio's average annual returns
for one year and since inception compare to those
of a broad-based securities market index. How the
portfolio has performed in the past is not
necessarily an indication of how the portfolio
will perform in the future. Sales loads are not
reflected in the chart or table. If they were
reflected, returns would be less than those shown.
SMALL CAP PORTFOLIO
<TABLE>
<S> <C>
1995 21.60
1996 17.01
1997 16.92
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 13.08% (quarter
ending September 30, 1997) and the lowest return
for a quarter was -4.80% (quarter ending December
31, 1997).
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR THE PERIODS ENDING DECEMBER 31, 1997) YEAR (11/94)
<S> <C> <C> <C>
Small Cap Portfolio 16.92% 17.59%
Russell 2000 Index* 22.36% 20.48%
</TABLE>
*The Russell 2000 Index is a widely recognized,
unmanaged index of small cap common stock prices.
- INTERNATIONAL PORTFOLIO
Long-term growth through The objective of the International Portfolio is to
foreign stocks provide long-term capital growth by investing
primarily in common stocks (and securities
convertible into common stocks) of foreign
companies. This portfolio may also invest in
fixed-income securities of foreign issuers. When
deemed appropriate for temporary defensive
purposes, it may invest in short-term debt
instruments of U.S. or foreign issuers, in U.S.
Government obligations, or in U.S. common stocks.
14
<PAGE> 15
As a nonfundamental policy, this portfolio will
not invest more than 20% of its assets in
securities of issuers located in any one foreign
country, except that up to an additional 5% of its
assets may be invested in securities of issuers
located in each of any three of Australia, Canada,
France, Germany, Japan or the United Kingdom.
While there is no restriction limiting the
countries in which the portfolio may invest, it
normally will invest only in countries with
developed securities markets and developed or
developing economies, and for which the Board of
Directors has determined custody arrangements are
reasonable.
International Portfolio risk
factors Investing in foreign securities may involve a
greater degree of risk than investing in domestic
securities. See the discussion of risk factors
under "Foreign Securities" on pages 18-19.
The bar chart and table shown below provide an
indication of the risks of investing in the
International Portfolio by showing changes in the
portfolio's performance for full calendar years
since its inception on May 1, 1993 and by showing
how the portfolio's average annual returns for one
year and since inception compare to those of a
broad-based securities market index. How the
portfolio has performed in the past is not
necessarily an indication of how the portfolio
will perform in the future. Sales loads are not
reflected in the chart or table. If they were
reflected, returns would be less than those shown.
INTERNATIONAL PORTFOLIO
<TABLE>
<S> <C>
1994 9.59
1995 11.89
1996 13.95
1997 1.24
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 8.85% (quarter
ending March 31, 1994) and the lowest return for a
quarter was -8.17% (quarter ending December 31,
1997).
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR THE PERIODS ENDING DECEMBER 31, 1997) YEAR (5/93)
<S> <C> <C> <C>
International Portfolio 1.24% 13.77%
MSCI EAFE Index* 2.06% 7.76%
</TABLE>
*The MSCI EAFE Index is the Morgan Stanley Capital
International Europe, Asia, Far East Index, a
widely recognized, unmanaged index of
international stock prices.
15
<PAGE> 16
- GLOBAL CONTRARIAN PORTFOLIO
Long-term growth through
investment in foreign and
domestic undervalued or
out-of-favor securities The objective of the Global Contrarian Portfolio
is to provide long-term growth of capital 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. While this portfolio will
primarily invest in common stocks (and securities
convertible into common stocks), it may also
invest in fixed income securities that appear to
be undervalued or out of favor. Not more than 20%
of the portfolio's assets may be invested in fixed
income securities rated below investment grade.
Under normal market conditions, at least 65% of
the portfolio's assets will be invested in
conformity with its investment objectives.
As a nonfundamental policy, this portfolio will
not invest more than 20% of its assets in
securities of issuers located in any one foreign
country, except that up to an additional 5% of its
assets may be invested in securities of issuers
located in each of any three of Australia, Canada,
France, Germany, Japan or the United Kingdom.
There is no other restriction limiting the
countries in which the portfolio may invest.
Global Contrarian Portfolio
risk factors A substantial portion of this portfolio (not less
than 25%) will be invested in foreign securities,
in at least three countries, under normal market
conditions. To that extent, the risk factors
described under "Foreign Securities" will apply.
See pages 18 and 19. Fixed income securities rated
below investment grade present the higher risk
characteristics described under "Income Portfolio
risk factors" on page 8. In addition, "contrarian"
investing generally involves substantial risks,
particularly in the short term. Companies or
market segments that appear to be undervalued or
are out of favor with investors may remain so for
an extended period of time or may never recover.
Investors should only consider this portfolio for
long-term investments and to the extent that they
are willing to be exposed to a higher degree of
risk than is present with the other portfolios.
The bar chart and table shown on the next page
provide an indication of the risks of investing in
the Global Contrarian Portfolio by showing changes
in the portfolio's performance for full calendar
years since its inception on November 1, 1994 and
by showing how the portfolio's average annual
returns for one year and since inception compare
to those of a broad-based securities market index.
How the portfolio has performed in the past is not
necessarily an indication of how the portfolio
will perform in the future. Sales loads are not
reflected in the chart or table. If they were
reflected, returns would be less than those shown.
16
<PAGE> 17
- GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
ANNUAL TOTAL
RETURN (%)
------------
<S> <C>
1995 15.08
1996 10.02
1997 10.20
</TABLE>
During the period shown in the bar chart, the
highest return for a quarter was 7.54% (quarter
ending June 30, 1997) and the lowest return for a
quarter was -5.97% (quarter ending December 31,
1997).
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR THE PERIODS ENDING DECEMBER 31, 1997) YEAR (11/94)
<S> <C> <C> <C>
Global Contrarian Portfolio 10.20% 9.76%
MSCI World Index* 16.23% 14.92%
</TABLE>
*The MSCI World Index is the Morgan Stanley
Capital International World Index, a widely
recognized, unmanaged index of world stock
prices.
ADDITIONAL RISK FACTORS
- DIVERSIFICATION
No more than 5% will be
invested in one company
and 25% in one industry. Each portfolio is fully diversified. No more than
5% of the value of the total assets of each
portfolio, as of the time any portfolio security
is purchased, will be invested in the securities
of any one issuer. No more than 25% of the value
of the total assets of each portfolio, as of the
time any portfolio security is purchased, will be
invested in any one industry. For the Money Market
Portfolio, these restrictions do not apply to U.S.
Government securities, and the "industry"
restriction does not apply to domestic banks or,
with respect to the Tax-Free Income Portfolio, to
municipal securities (other than industrial
revenue bonds).
- CREDIT AND MARKET RISKS
"Credit Risk" is the ability
of an issuer to pay its debts.
"Market Risk" measures the
volatility of a security's
price in a fluctuating
market. All securities are subject, to some degree, to
credit risk and market risk. Credit risk refers to
the ability of an issuer of a debt security to pay
its principal and interest, and to the earnings
stability and overall financial soundness of an
issuer of an equity security. Market risk refers
to the volatility of a security's price in
response to changes in conditions in securities
markets in general and, particularly in the case
of debt
17
<PAGE> 18
securities, changes in the overall level of
interest rates. Higher risk levels are usually
equated to higher potential total return, but
higher risk investments have a greater potential
for loss as well. Generally, bonds rated in one of
the top four rating categories are considered
investment grade. However, those in the fourth
highest category (Moody's Baa or Standard & Poor's
BBB) may have speculative characteristics and the
issuer's ability to pay interest or repay
principal under adverse economic conditions or
changing circumstances may be weaker.
The degree of market risk for debt securities
increases with the length of time remaining to
their maturity. During periods of rising interest
rates, the market prices of all income producing
securities tend to decline. When interest rates
fall, the market prices of such securities tend to
rise. The values of such securities will also vary
as a result of changing economic conditions or
changing evaluations by investors and rating
organizations of the ability of the issuers to
meet interest and principal payments. Thus, there
is always a risk of principal loss or gain
associated with the portfolio. However, changes in
the values of debt securities held by a portfolio
will not affect income derived from those
securities unless the issuer defaults on its
interest payments.
Generally, the greatest degree of market and
credit risk can be expected with the International
Portfolio, and the lowest degree of such risks can
be expected with the Money Market Portfolio. A
more detailed summary of risk factors is contained
in the Statement of Additional Information.
- QUALITY OF MONEY MARKET PORTFOLIO INVESTMENTS
At least 95% of the assets of the Money Market
Portfolio will be invested in "first-tier"
short-term debt instruments. Purchases of other
short-term debt instruments of a single issuer
will be limited to the greater of 1% of its total
assets or $1 million. In addition to U.S.
Government securities, the first tier includes
commercial paper, certificates of deposit and
bankers' acceptances that have received the
highest rating by any two nationally recognized
statistical rating organizations ("NRSROs"), or
the highest rating by one NRSRO if that is the
only NRSRO having rated the security, or whose
issuer has received such a rating or ratings with
respect to a class of short term debt obligations
that is now comparable in priority and security to
those to be purchased.
- FOREIGN SECURITIES
Up to 20% may be invested in
other countries.
The Income, Income & Growth, Growth, Core Growth
and Small Cap Portfolios may each invest up to 20%
of its assets in the securities of foreign issuers
(including private issuers and foreign governments
or political subdivisions, agencies or
instrumentalities of foreign governments),
American Depository Receipts, and the securities
of United States domiciled issuers with values
expressed in foreign currency. The Money Market
Portfolio may invest up to 50% of its assets in
such securities, provided they have values
expressed in U.S. dollars and are held in custody
in the United States. The Tax-Free Income
Portfolio will not invest in foreign securities.
At least 25% of Global Contrarian Portfolio
18
<PAGE> 19
assets, and normally all of International
Portfolio assets, will be invested in foreign
securities at all times.
Foreign Securities risk
factors Investments in foreign securities involve added
risk factors. These factors include changes in
currency exchange rates, currency exchange control
regulations, the possibility of seizure or
nationalization of companies, political or
economic instability, imposition of unforeseen
taxes, the possibility of financial information
being difficult to obtain or difficult to
interpret under foreign accounting standards, the
necessity of trading in markets that in relation
to U.S. markets may be more volatile or less
efficient and have available less information
concerning issuers, or the imposition of other
restraints that might adversely affect
investments.
Except for the International and Global Contrarian
Portfolios, foreign investments will not normally
constitute a substantial portion of ONE Fund
assets. However, the Adviser may invest in foreign
securities whenever deemed prudent, particularly
when deemed advantageous to offset market or
economic factors prevailing in the U.S. In
addition, a number of large, multi-national
foreign corporations have a substantial business
presence in the U.S. and their securities are
widely traded in this country.
- HEDGING TRANSACTIONS
Hedging transactions seek to
limit portfolio volatility. Each portfolio, other than the Money Market
Portfolio, for hedging purposes, may (a) write
call options traded on a registered national
securities exchange, if the portfolio owns the
underlying securities, and purchase call options
for the purpose of closing out options it has
written, (b) purchase put options on securities
owned, and sell such options in order to close its
positions in put options, (c) purchase and sell
financial futures contracts and options thereon,
(d) purchase and sell financial index options, and
(e) engage in forward foreign currency contracts,
foreign currency options and foreign currency
futures contracts in connection with the purchase,
sale or ownership of specific securities. However,
no option or futures contract shall be purchased
or sold if, as a result, more than one-third of
the total assets of a portfolio would be hedged by
options or futures contracts, and no more than 5%
of the total assets, at market value, of a
portfolio may be used for premiums on open options
and initial margin deposits on futures contracts,
and not more than 5% of any portfolio's assets may
be invested in foreign currency hedging
transactions. Hedging transactions and their
associated risks are more fully described in the
Statement of Additional Information.
- RESTRICTED AND ILLIQUID SECURITIES
Restricted securities are securities in which a
portfolio may otherwise invest pursuant to its
investment objective and policies, but which are
subject to restrictions on resale under federal
securities law. Under criteria established by the
Board of Directors, certain restricted securities
are deemed to be liquid. The Directors consider
the following criteria in determining the
liquidity of restricted securities:
- the frequency of trades and quotes for the
security;
19
<PAGE> 20
- the number of dealers willing to purchase or
sell the security, and the number of other
potential buyers;
- dealer undertakings to make a market in the
security; and the nature of the security; and
- the nature of the marketplace trades.
- MUNICIPAL SECURITIES
Municipal securities are debt obligations issued
by or on behalf of states, cities, municipalities
and other public authorities. The portfolio
primarily will hold "general obligation"
securities and "revenue" securities. General
obligation securities are secured by the issuer's
pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue
securities are payable only from the revenues
derived from a particular facility or class of
facilities or, in some cases, from the proceeds of
a special excise tax or other specific revenue
source such as the user of a facility being
financed. Revenue securities may include private
activity bonds. Such bonds may be issued by or on
behalf of public authorities to finance various
privately operated facilities and are not payable
from the unrestricted revenues of the issuer. As a
result, the credit quality of private activity
bonds is frequently related directly to the credit
standing of private corporations or other
entities. In addition, the interest on private
activity bonds issued after August 7, 1986 is
subject to the federal alternative minimum tax.
For this reason, the portfolio will not invest
more than 5% of its assets in such obligations.
ONE FUND MANAGEMENT
- INVESTMENT ADVISER, SUB-ADVISERS
The Directors are elected by
the shareholders and are
responsible for
overall management. The Adviser manages the investment and
reinvestment of ONE Fund assets, subject to the
supervision of The Board of Directors. The Board
of Directors is responsible for ONE Fund's overall
management and direction. The Board approves all
significant agreements including those with the
Adviser, the Core Growth Portfolio's subadviser
Pilgrim Baxter & Associates, Ltd.("PBA"), the
International and Global Contrarian Portfolios'
sub-adviser Societe Generale Asset Management
("SGAM"), ONE Fund's principal underwriter
("ONEQ"), its custodians (Investors Fiduciary
Trust Co. for the International and Global
Contrarian Portfolios and Star Bank for the other
portfolios), and its transfer agent and fund
accounting agent, American Data Services, Inc.
("ADS"). Board members are elected by the
shareholders for three-year terms. Shareholder
meetings are normally held every 3 years. As a
result of ONLI's ownership of ONE Fund shares, it
is a controlling person of each portfolio of ONE
Fund other than the International Portfolio.
For managing ONE Fund's assets, the Adviser
receives a quarterly management fee based on each
portfolio's net assets, at maximum rates of 0.30%
for the Money Market Portfolio, 0.50% for the
Income, Income & Growth and Growth Portfolios,
0.60% for the Tax-Free Income Portfolio, 0.65% for
the Small Cap Portfolio, 0.90% for the
International
20
<PAGE> 21
and Global Contrarian Portfolios and 0.95% for the
Core Growth Portfolio. The Adviser is now waiving
0.15% of the fees to which it is entitled from the
Money Market, Tax-Free Income, Income, Income &
Growth, Growth and Small Cap Portfolios, but it
may cease those waivers, in whole or in part,
without prior notice. During ONE Fund's most
recent fiscal year, July 1, 1997 to June 30, 1998,
the aggregate fee received for each portfolio as a
percentage of average net assets was: 0.15% for
the Money Market Portfolio, 0.45% for the Tax-Free
Income Portfolio, 0.35% for the Income, Income &
Growth and Growth Portfolios, 0.50% for the Small
Cap Portfolio, 0.90% for the International and
Global Contrarian Portfolios, and 0.95% for the
Core Growth Portfolio.
The Adviser contracts with PBA for the management
of the Core Growth Portfolio and SGAM for the
management of the International and Global
Contrarian Portfolios.
Sub-adviser for the Core
Growth Portfolio
PBA manages the assets of the Core Growth
Portfolio under the Adviser's supervision. PBA is
located at 824 Duportail Road in Wayne,
Pennsylvania. Its controlling shareholder is
United Asset Management Corp. located in Boston,
Massachusetts. With its predecessors, PBA has been
an investment adviser since 1982 and it manages
the PBHG mutual funds. The Adviser pays PBA, for
its services as sub-adviser, a fee at an annual
rate of 0.75% of the average daily net asset value
of the first $50 million of Core Growth Portfolio
assets, 0.70% of the next $100 million and 0.50%
of portfolio assets in excess of $150 million.
Sub-adviser for the
International and Global
Contrarian Portfolios SGAM manages the assets of the International and
Global Contrarian Portfolios under the Adviser's
supervision. SGAM is located at 1221 Avenue of the
Americas in New York City and is owned by Societe
Generale, one of the largest banks in Europe. SGAM
and its predecessors have been investment advisers
to international mutual funds since 1970. The
Adviser pays SGAM, for its services as
sub-adviser, fees at an annual rate of 0.65% of
the average daily net asset value of the
International and Global Contrarian Portfolios.
- THE ADVISER'S INVESTMENT STYLE
The Adviser's basic mutual fund investment
philosophy is to seek value at reasonable prices.
This philosophy is implemented through both
macroeconomic and microeconomic analyses using
both quantitative and qualitative measurements.
The Adviser's value
investing style uses both
a top-down and a bottom-up
approach.
The macroeconomic (top-down) analysis generates a
forecast based on economic, political and
demographic trends. This macro view identifies
those business sectors and industries most likely
to benefit from expected conditions or events.
Once these sectors and industries are determined,
a universe of potential investments is selected.
The macroeconomic analysis also tests the
reasonableness of current securities valuations in
anticipation of short-term and intermediate-term
capital market movements.
21
<PAGE> 22
The microeconomic (bottom-up) analysis of the
selected universe of securities is carried out
jointly by the Adviser's securities analysts and
portfolio managers.
Stock selection is based on
fundamental research and
technical indicators.
Stock selection is determined primarily through
fundamental research. Through both proprietary and
nonproprietary research capabilities, the Adviser
anticipates a company's future earnings potential.
Then, certain quantitative factors are reviewed to
assure that the stock's current price is
consistent with its historical range and earnings
potential. These and other technical indicators
are reviewed to gain an understanding of how
investors perceive the stock relative to its
industry and the overall market.
Bond selection is based on
credit analysis and interest
rate forecasts. Bond selection is determined primarily through
credit analysis. Initially, credit analysis
evaluates the probability that the issuer will
meet its scheduled interest and principal
payments. This requires the Adviser to conduct
industry-, company- and indenture-specific
analyses. A second dimension of bond selection is
to anticipate bond price movements which are
caused by changes in prevailing interest rates.
The Adviser uses sell
disciplines. The value investing approach is used by the
Adviser both to determine securities to be
acquired and those to be sold.
- ONE FUND'S PORTFOLIO MANAGERS
The individuals primarily responsible for the
day-to-day management of ONE Fund's portfolios are
Joseph Brom, Jed Martin, Michael Boedeker, Stephen
Williams, James McCall, Ellen McGee, Keith Hanson,
and Jean-Marie Eveillard.
Joseph Brom is president of the Adviser and senior
vice president and chief investment officer of
ONLI. He oversees the management of the Money
Market, Tax-Free Income, Income, Income & Growth,
Growth and Small Cap Portfolios. He is a chartered
financial analyst with a bachelor's degree in
economics and finance and a law degree from the
University of Wisconsin. He has been an investment
officer of ONLI since 1975 and previously had 15
years of experience in securities management.
Jed Martin, a vice president of the Adviser, has
managed the Money Market Portfolio since 1996. He
is a chartered financial analyst with a bachelor's
degree in mechanical engineering from the
University of Kentucky and a master of business
administration degree in finance from Indiana
University. He has been an investment analyst and
portfolio manager for ONLI since 1985.
Michael Boedeker, a vice president of the Adviser,
has managed the Tax-Free Income and Income
Portfolios from the inception of each. He is a
chartered financial analyst with a bachelor's
degree in business and a master of business
administration degree in finance from Indiana
University. He has been vice president of fixed
income securities for ONLI since 1989 and
previously had over 20 years of experience in
fixed income securities and mutual fund
management, most recently as senior vice president
and chief investment office of Mutual Security
Life Insurance Co. for more than five years.
22
<PAGE> 23
Stephen Williams, a vice president of the Adviser,
has managed the Income & Growth and Growth
Portfolios since the inception of each. He has a
bachelor's degree in finance from the University
of Cincinnati. He has been vice president of
equity securities for ONLI since 1997 and was an
investment analyst and director of securities for
ONLI for 20 years before that.
James McCall co-manages the Core Growth Portfolio,
being primarily responsible for the portfolio's
large and mid-cap investments. He has been a
portfolio manager with PBA since 1994. For nine
years prior to that he was a portfolio manager
with First National Bank of Maryland. Mr. McCall
is a chartered financial analyst. He has a
bachelor's degree from the Philadelphia College of
Pharmacy & Science and masters degrees in pharmacy
and business administration from the University of
Utah. He spent ten years as a pharmacist before
entering the investment field.
Ellen McGee co-manages the Core Growth Portfolio,
being primarily responsible for the portfolio's
small and micro-cap investments. She is a
chartered financial analyst and has been a
portfolio manager with PBA since 1997. For three
years prior to that, she was a senior portfolio
manager for First Union National Bank and
NationsBank, and she spent eight years before that
managing institutional portfolios for First
National Bank of Maryland. Ms. McGee has a
bachelor's degree from Rutgers University.
Keith Hanson, a vice president of the Adviser, has
managed the Small Cap Portfolio since 1996. He is
a chartered financial analyst with a bachelor's
degree from Marquette University. He has been an
investment analyst and portfolio manager for ONLI
since 1994. For a year prior to that, he was a
research analyst in the valuation of small
businesses for Blum & Colombe, SC and for seven
years prior to that he was a securities analyst
for Johnson Asset Management.
Jean-Marie Eveillard, president of SGAM, manages
the International and Global Contrarian
Portfolios. He is a graduate of the Ecole des
Hautes Etudes Commerciales in Paris. He has been
president of SoGen International Fund since 1984
and for 21 years prior to that had been a
securities analyst and mutual fund manager of
Societe Generale and SoGen International Fund.
- FUND SERVICES
Star Bank, 425 Walnut Street, Cincinnati, Ohio
45202, is the custodian for all ONE Fund assets
except those of the International and Global
Contrarian Portfolios. The assets of those two
portfolios are in the custody of Investors
Fiduciary Trust Company, 801 Pennsylvania Street,
Kansas City, Missouri 64105. For assets held
outside the United States, Investors Fiduciary
Trust Company enters into subcustodial agreements,
subject to approval by the Board of Directors.
ADS, 150 Motor Parkway, Suite 109, Hauppauge, New
York 11788, serves as ONE Fund's transfer agent
and its agent for bookkeeping, dividend disbursing
and certain shareholder services.
23
<PAGE> 24
SHAREHOLDER INFORMATION
- BUYING SHARES
ONE Fund's shares are continuously offered through
its principal underwriter, ONEQ, and through other
securities dealers that execute a distribution
agreement with ONEQ.
Investments can be as small
as $50. The minimum initial investment is $500. Subsequent
investments must be at least $50. These minimums
may be waived when the shares are purchased
through plans providing for regular periodic
investments. ONE Fund and ONEQ reserve the right
to refuse any purchase order.
- PURCHASE PRICE
ONE Fund shares are valued
each day the NYSE is open.
The net asset value of the shares of each
portfolio is determined at 4:00 p.m. Eastern time
on each day the New York Stock Exchange is open
for unrestricted trading. The net asset value of
each portfolio is computed by dividing the value
of the securities in that portfolio plus any cash
or other assets less all liabilities of the
portfolio, by the number of capital shares
outstanding for that portfolio. Securities held by
the Money Market Portfolio are valued at amortized
cost. Securities held by the other portfolios are
valued at current market value.
ONE Fund's shares are offered at the public
offering price. This is the net asset value per
share plus a sales charge, if applicable. The
sales charge is a variable percentage of the
offering price depending upon the amount of the
sale. The Money Market Portfolio seeks to maintain
a constant price of $1 per share.
- SALES CHARGES
THE SALES CHARGE DOES NOT APPLY TO THE MONEY
MARKET PORTFOLIO.
<TABLE>
<CAPTION>
TAX-FREE INCOME AND
INCOME PORTFOLIOS OTHER PORTFOLIOS
------------------------------------ ------------------------------------
SALES CHARGE AS A % OF: SALES CHARGE AS A % OF:
OFFERING NET AMOUNT DEALER OFFERING NET AMOUNT DEALER
AMOUNT OF PURCHASE PRICE INVESTED CONCESSION PRICE INVESTED CONCESSION
------------------ -------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Less than $25,000....... 3.00% 3.09% 2.80% 5.00% 5.26% 4.70%
$25,000 -- $49,999...... 3.00% 3.09% 2.80% 4.50% 4.71% 4.25%
$50,000 -- $99,999...... 2.50% 2.56% 2.35% 4.00% 4.17% 3.80%
$100,000 -- $249,999.... 2.50% 2.56% 2.35% 3.50% 3.63% 3.35%
$250,000 -- $499,999.... 2.00% 2.04% 1.90% 2.50% 2.56% 2.40%
$500,000 -- $999,999.... 1.50% 1.52% 1.45% 2.00% 2.04% 1.95%
$1,000,000 and over..... None* None* None** None* None* None**
</TABLE>
- ---------------
* While no initial sales charge is imposed on investments of $1 million or
more, a contingent deferred sales charge of 0.5% of the amount redeemed (up
to 0.5% of the amount invested with no initial sales charge) is imposed
within 2 years of such a purchase. This charge does not apply to amounts held
continuously in the Money Market Portfolio. See "Redeeming Shares" on pages
29-30.
** ONEQ will pay a dealer concession of 0.50% to securities dealers who initiate
and are responsible for any purchase of $1 million or more.
24
<PAGE> 25
- 12b-1 FEES
Qualified dealers are paid a continuing
shareholder service fee of 0.25% annually (0.15%
for the Money Market Portfolio) to compensate them
for providing certain services to shareholders and
to promote growth of ONE Fund's assets. These
services include submitting purchase and
redemption transactions, establishing shareholder
accounts and providing information and assistance
regarding ONE Fund. The proceeds of ONE Fund's
12b-1 Distribution Plan are used only to pay these
shareholder service fees. Because these fees are
paid out of ONE Fund's assets on an on-going
basis, over time these fees will increase the cost
of your investment and may cost you more than
paying other types of sales charges.
- SALES CONTESTS
Periodically, ONE Fund may conduct sales contests
to encourage higher production among the
registered representatives of broker-dealers that
have the authority to sell ONE Fund shares. These
contests may be restricted to registered
representatives of certain broker-dealers, or open
to all eligible firms, in the discretion of ONE
Fund management. Such contests will only be
conducted in accordance with the laws, rules and
regulations of applicable federal, state and other
regulators.
REDUCING THE SALES CHARGE
For purposes of Right of Accumulation, Combined
Purchases and Group Purchases, "holdings" means
the current value of your shares at the full
offering price. Your registered representative can
help you to take advantage of any of the following
methods of reducing the sales charge if you
qualify. These rights may be requested on your ONE
Fund account application.
- CONCURRENT PURCHASES
Combining your purchases of
ONE Fund and contracts issued
by its affiliates You may qualify for a reduced sales charge by
combining concurrent products underwritten by ONEQ
or its affiliates (the Ohio National companies). A
concurrent purchase occurs whenever ONE Fund
shares are purchased at any time from the day any
Ohio National annuity or insurance policy is
applied for until 5 days after that contract is
delivered. The amount of the annual (or single)
premium of the Ohio National annuity or insurance
policy will then be added to the amount of your
concurrent ONE Fund purchase to determine the
percentage of sales charge to apply to your ONE
Fund purchase.
- LETTER OF INTENT
Committing to invest a
certain amount over 13
months You may reduce sales charges on all investments by
meeting the terms of a nonbinding letter of your
intent to invest a certain amount within a 13-
month period. Shares representing up to 5% of the
intended amount will be held in escrow to cover
additional sales charges that may be due if your
total investments, net of redemptions, over the
stated period are insufficient to qualify for a
sales charge reduction. You have up to 90 days
after investing to sign a letter of intent to
reduce the sales charges on
25
<PAGE> 26
your investments including the investments made in
the 90 days before the letter. Shares you
currently own will apply toward meeting your
letter of intent.
- RIGHT OF ACCUMULATION
Adding up all your ONE Fund
holdings
Your sales charge may also be reduced by taking
into account your existing holdings in ONE Fund.
Holdings will be valued at the greater of their
full offering price at the time a new purchase is
made under a right of accumulation or the sum of
all your purchases (including reinvested
dividends) less any redemptions.
- COMBINED PURCHASES
Combining your purchases
with those of your family
members
Your sales charge may be reduced by aggregating
holdings for the account(s) of you, your spouse,
your children and grandchildren. This may include
purchases through employee benefit plans such as
an IRA, an individual-type 403(b) plan or a
single-participant Keogh plan, or by a business
solely controlled by these individuals (for
example, they own the entire business) or by a
trust (or other fiduciary arrangement) solely for
the benefit of these individuals.
- GROUP PURCHASES
Available to members of a
qualified group
A member of a qualified group may purchase ONE
Fund shares at the reduced sales charge applicable
to the aggregate holdings of the group as a whole.
(For example, if members of the group had
previously purchased $100,000 of ONE Fund shares
and still held those shares, and now were
purchasing an additional $25,000, the sales charge
would be 3.50%, or 2.50% for the Tax-Free Income
and Income Portfolios.)
A "qualified group" is one that (a) has been in
existence more than six months (unless it is a
tax-qualified plan), (b) has a purpose other than
acquiring mutual fund shares, and (c) satisfies
uniform criteria enabling ONEQ to realize
economies of scale in its costs of distributing
shares. A qualified group must have at least six
members, must be available to arrange for group
meetings between representatives of dealers who
sell ONE Fund shares and the members, must agree
to include sales literature and other materials
relating to ONE Fund in its publications and
mailings to members at reduced or no cost to ONE
Fund or to dealers that sell its shares, and must
seek to arrange for payroll deduction or other
bulk transmission of ONE Fund purchases.
- GROUP LETTER OF INTENT
Qualified groups committing
to invest a certain amount
over 24 months
Qualified groups may reduce sales charges on all
investments by meeting the terms of a nonbinding
letter of the group's intention to invest a
certain amount over a 24-month period. Shares
representing 5% of the investments of each group
member during that period will be held in escrow
to cover additional sales charges. The group has
up to 90 days after investing to enter into the
group letter of intent.
- PURCHASES WITHOUT A SALES CHARGE
Redeeming other shares that
had a sales charge
Within 60 days preceding their purchase of ONE
Fund shares, investors who have redeemed an
investment in another mutual fund that imposed a
sales charge and which has investment objectives
similar to any
26
<PAGE> 27
portfolio(s) of ONE Fund, may purchase ONE Fund
shares, up to the amount redeemed, without paying
any sales charge.
Officers, directors, employees, retirees, agents
and registered representatives of the Ohio
National companies, any employee benefit plan with
respect to them, and their spouses, children and
grandchildren, may purchase ONE Fund shares
without a sales charge.
No sales charge is imposed on ONE Fund shares
purchased by:
- institutional investors (including banks,
trust companies and thrift institutions) for
their own account or for the benefit of any
trust having at least $1,000,000 in assets;
- fee-based registered investment advisers that
do not receive any part of a sales charge for
the sale of the shares; or
- pension or retirement plans, deferred
compensation plans and employee benefit plans
that have at least $1,000,000 in assets and
the trusts used to fund those plans.
FLEXIBILITY FEATURES
- OPEN ACCOUNTS
You will receive statements
every quarter.
Your account is opened in accordance with your
registration instructions. It offers many features
allowing you to change your investment program at
any time as circumstances change. Transactions in
your account, such as additional investments and
dividend reinvestments, will be reflected on
regular confirmation statements from ADS. Any of
the following features may be established through
your ONE Fund account application or by contacting
your registered representative or ONE Fund.
- AUTOMATIC INVESTING
From your bank account or
pay check
You may make regular monthly or quarterly
investments through automatic charges to your bank
account or, if your employer approves, from your
pay check. Once a plan is established, your
account will normally be charged on the 1st or
15th day of the month, as you choose.
- AUTOMATIC REINVESTING
Income and capital gains
Unless you indicate otherwise in your account
application, dividends and capital gains
distributions are reinvested in additional shares
at no sales charge. You may elect to have
dividends and/or capital gains distributions paid
to you by check.
- CROSS INVESTING
Investing income and capital
gains into other portfolios
You may elect to have your dividends or dividends
and capital gains distributions from one portfolio
invested in another portfolio. To use this
service, the value of your account in the paying
portfolio must be at least $5,000.
- TRANSFERRING
Among the nine portfolios.
You may transfer your account balances among the
various portfolios in amounts of at least $50.
There is currently no charge for transfers. ONE
Fund reserves the right to limit the number,
frequency, method or
27
<PAGE> 28
amount of transfers or to impose charges on
transfers. Transfers from any portfolio on any one
day may be limited to 1% of the previous day's
total net assets of that portfolio if ONE Fund or
the Adviser, in its or their discretion, believes
that the portfolio might otherwise be damaged.
- TELEPHONE TRANSACTIONS
You must preauthorize in
writing. If you have previously authorized it in writing,
you or your registered representative may do the
following transactions by telephoning ONE Fund at
1-800-578-8078:
- Make transfers among the portfolios as
provided above under "Transferring."
- Change the amount of automatic investments, or
discontinue them as provided above under
"Automatic Investing."
- Change your election for payment of dividends
and capital gains as provided above under
"Automatic Reinvesting" and "Cross Investing."
- Redeem your shares as provided under "By
Telephone" on page 29. Initiate, change or
discontinue automatic redemptions of your
shares as provided under "Automatically" on
page 30.
- Change your address on our records.
Telephone transaction requests received after 4:00
p.m. Eastern time will be made at the net asset
values computed at the close of the following
business day. ONE Fund and its transfer agent will
honor telephone transaction instructions from
anyone giving such instructions who is able to
provide the personal identifying information
requested, but we reserve the right to refuse to
honor any such request if that seems prudent. ONE
Fund will use reasonable procedures to confirm
that telephone instructions are genuine. If we do
not, ONE Fund may be liable for any losses due to
unauthorized or fraudulent instructions. ONE Fund
will send you a written confirmation of each
telephone transaction. During periods of drastic
market fluctuations or technical difficulties, it
might be difficult to execute telephone
transactions. In such situations, you may need to
send written instructions to ONE Fund. Telephone
transaction privileges may be modified or
discontinued at any time.
- AUTOMATIC TRANSFERS
Among the nine portfolios
You may automatically transfer shares (in
increments of $50 or more) among any of the
portfolios. This will occur on or about the 10th
day of each month. Automatic transfers may be
used, for example, to implement a
"dollar-cost-averaging" investment strategy.
- SALES CHARGE ON CERTAIN TRANSFERS
No sales charge applies for transfers to a
portfolio having a sales charge equal to or less
than that of the portfolio from which the transfer
is made. For transfers from a portfolio with a
lower sales charge to one with a higher sales
charge, an additional charge is made equal to the
difference between the sales charge for the
portfolio being purchased and any sales charges
that previously applied to the account balance
being transferred.
28
<PAGE> 29
- CHECK WRITING
Money Market Portfolio
You may write checks against the balance of your
Money Market Portfolio account. Checks will be
provided free, upon request. You may not write a
check for less than $100. Checks will be written
through Star Bank. Star Bank will charge $25 for
any check that is not honored because of an
insufficient Money Market Portfolio account
balance. Star Bank also charges $22 to stop
payment of a check. Checks may not be written
against account balances held for less than 15
days. ONE Fund reserves the right to amend,
suspend or discontinue check-writing privileges at
any time without prior notice.
REDEEMING SHARES
Payment is normally sent
within three business days.
You may redeem your shares at any time by
contacting ONE Fund or the broker-dealer through
whom you purchased your shares. If you are no
longer serviced by an authorized registered
representative, you may contact ONEQ's principal
office by calling 1-800-578-8078, or by writing to
P. O. Box 371, Cincinnati, Ohio 45201. The price
you receive for redeemed shares is the next net
asset value after your request is received.
Payment is normally sent within three business
days. However, the proceeds of redemption will not
be sent until after your check for your investment
has cleared (which may take up to 15 days). (Note
also, the contingent deferred sales charge of 0.5%
on certain redemptions, within two years of
purchase with no initial sales charge, of
investments of $1 million or more as described
under "Sales Charges" on page 24.)
- REQUEST IN WRITING
When making a written request for redemption,
specify the name of the portfolio, the number of
shares or dollar amount to be redeemed (if less
than your entire account), your name and address,
account number and your signature. In addition,
(a) for any redemption over $50,000, or (b) for
redemptions of $50,000 or less where the check is
to be paid or mailed to someone other than you at
your address of record, a signature guarantee is
required. You may obtain a signature guarantee
from a bank or savings & loan that is federally
insured or from a member firm of the National
Association of Securities Dealers, Inc., or any
other eligible guarantor institution. Additional
documentation may be required for redemption of
shares held in corporate, partnership or fiduciary
accounts.
- BY TELEPHONE
As provided under "Telephone Transactions" on page
28, you or your registered representative may call
ONE Fund to redeem up to $50,000. You may
pre-authorize that the proceeds be (a) in a check,
payable to you and mailed to your address of
record, or (b) by wire to your bank account.
Checks will normally be mailed three business
days, and no more than seven days, after your
request. Wire transfers to your bank account will
normally be made the next business day. Wire
proceeds may not be for less than $1,000. Star
Bank will deduct a fee (presently $13) from the
proceeds of each wire redemption.
29
<PAGE> 30
- AUTOMATICALLY
If your account is $5,000 or more, you may
establish an automatic withdrawal plan. More than
one plan may be set up if your account is at least
$10,000. Under each plan, you may make automatic
withdrawals for $50 or more each at specified
intervals. Automatic withdrawals are made on or
about the 10th day of each designated month and,
if withdrawals are to be made semimonthly, also on
or about the 25th day of each month. Additional
purchases (other than to the Money Market
Portfolio) may be inadvisable, when an automatic
withdrawal plan is in effect, because of sales
charges and possible tax liabilities. If, due to
your redemptions, your account balance is less
than $300 (or a larger amount specified by the
Board of Directors), ONE Fund may choose to close
your account by redeeming your shares and sending
you the proceeds. ONE Fund will give you at least
30 days' written notice before closing your
account, and you may purchase additional ONE Fund
shares to avoid the closing.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each portfolio intends to qualify as a regulated
investment company under Subchapter M of the
Internal Revenue Code. It is ONE Fund's policy to
comply with the provisions of the Code regarding
distributions of net investment income and net
realized capital gains so that ONE Fund will not
be subject to federal income tax on amounts
distributed. Consequently, ONE Fund distributes to
its shareholders each year substantially all of
its net investment income and net realized capital
gains (if any).
ONE Fund shareholders are taxed on distributed
income and capital gains. To the extent that
Tax-Free Income Portfolio dividends are derived
from tax-exempt interest, they are exempt from
federal income tax, but you are still required to
report them as tax-exempt interest income on your
tax return. Shareholders who are not subject to
income tax would not be required to pay tax on
amounts distributed to them. ONE Fund will inform
shareholders of the amount and federal income tax
status of distributed income and capital gains.
Money Market, Tax-Free
Income, and Income
Portfolio dividends are
accrued daily and paid
monthly. For the Money Market, Tax-Free Income, and 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 shareholders of those three
portfolios.
Dividends for the other
portfolios are paid at the
end of each quarter. Dividends will normally be paid at the end of
March, June, September and December to Income &
Growth, Growth, Core Growth, Small Cap,
International, and Global Contrarian Portfolio
shareholders. Any net realized capital gains for
all portfolios will be distributed annually.
However, ONE Fund's Board of Directors may declare
such dividends at other intervals.
30
<PAGE> 31
ONE FUND, INC.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the ONE Fund's
portfolios' financial performance for the past five years (or any shorter period
of existence for particular portfolios). Certain information reflects financial
results for a single share. The total returns in the table represent the rate
that an investor would have earned or lost on an investment in the portfolio
(assuming reinvestment of all dividends and distributions). This information has
been audited by KPMG Peat Marwick LLP, whose report, along with the ONE Fund's
financial statements, are included in the SAI, which is available upon request.
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
Net asset value, beginning of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income................... 0.05 0.05 0.05 0.05 0.03
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
Total from investment
operations................... 0.05 0.05 0.05 0.05 0.03
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income.... (0.05) (0.05) (0.05) (0.05) (0.03)
Distributions from net realized capital
gains and foreign currency
transactions......................... 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
Total distributions............ (0.05) (0.05) (0.05) (0.05) (0.03)
------ ------ ------ ------ ------
Net asset value, end of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return (a)............... 4.87% 4.77% 5.18% 5.06% 3.06%
====== ====== ====== ====== ======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived by adviser (d):
Expenses................................ 0.88% 0.80% 0.57% 0.51% 0.44%
Net investment income................... 4.81% 4.71 5.14% 4.99% 2.97%
Ratios assuming no waiver of management
fees by adviser (d):
Expenses................................ 1.03% 1.04 0.87% 0.81% 0.74%
Net investment income................... 4.66% 4.47% 4.84% 2.69% 2.67%
Portfolio turnover rate................... N/A N/A N/A N/A N/A
Net assets at end of period (millions).... $ 16.4 $ 14.4 $ 15.8 $ 14.1 $ 12.3
</TABLE>
- ---------------
(a) Total return does not reflect the initial sales charge imposed on purchases
(see page 24).
(b) Calculated on an aggregate basis (not annualized).
(c) Annualized.
(d) Until November 1, 1996, the Adviser elected to waive the entire management
fee for the Money Market Portfolio and one-half of the management fees for
the Tax-Free Income, Income, Income & Growth, and Small Cap Portfolios;
since that date, the Adviser has elected to waive 0.15% of its management
fee for each of those portfolios, but it may cease those waivers, in whole
or in part, without prior notice.
(e) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
31
<PAGE> 32
<TABLE>
<CAPTION>
TAX FREE INCOME PORTFOLIO INCOME PORTFOLIO
---------------------------------- ------------------------------------------
YEAR ENDED JUNE 30, 11/1/94 YEAR ENDED JUNE 30,
------------------------ TO ------------------------------------------
1998 1997 1996 6/30/95 1998 1997 1996 1995 1994
------ ------ ------ ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout
each period):
Net asset value, beginning
of period................. $11.09 $10.79 $10.66 $10.00 9.75 $ 9.59 $ 9.78 $ 9.39 $10.43
Income from investment
operations:
Net investment income..... .49 0.53 0.56 0.35 .59 0.61 0.63 0.65 0.62
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions............ .15 0.30 0.13 0.66 0.24 0.16 (0.19) 0.39 (0.98)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations....... .64 0.83 0.69 1.01 0.83 0.77 0.44 1.04 (0.36)
------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income....... (0.49) (0.53) (0.56) (0.35) (0.59) (0.61) (0.63) (0.65) (0.62)
Distributions from net
realized capital gains
and foreign currency
transactions............ 0.00 0.00 0.00 0.00 (0.00) (0.00) 0.00 (0.00) (0.06)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total
distributions.... (0.49) (0.53) (0.56) (0.35) (.59) (0.61) (0.63) (0.65) (0.68)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period.................... $11.24 $11.09.. $10.79 $10.66 $ 9.99 $ 9.75 $ 9.59 $ 9.78 $ 9.39
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (a)... 5.77% 7.82% 6.59% 10.26%(b) 8.56% 8.26% 4.61% 11.58% (3.79)%
====== ====== ====== ====== ====== ====== ====== ====== ======
Ratio (to average net
assets)/supplemental data:
Ratios net of fees waived by
advisor (d):
Expenses.................. 1.45% 1.24% 0.94% 0.91%(c) 1.39% 1.21% 0.97% 0.85% 1.02%
Net investment income..... 4.30% 4.81% 5.20% 5.04%(c) 5.91% 6.29% 6.50% 6.80% 6.10%
Ratios assuming no waiver of
management fees by adviser
(d):
Expenses.................. 1.60% 1.45% 1.24% 1.21%(c) 1.54% 1.51% 1.22% 1.10% 1.27%
Net investment income..... 4.15% 4.60% 4.90% 4.74%(c) 5.76% 5.99% 6.25% 6.55% 5.85%
Average commission rate
(e)....................... N/A N/A N/A N/A N/A N/A N/A N/A N/A
Portfolio turnover rate..... 4% 6% 8% 0% 40% 10% 9% 4% 6%
Net assets at end of period
(millions)................ $ 7.2 $ 6.8 $ 6.3 $ 5.7 $ 6.9 $ 6.6 $ 7.0 $ 7.1 $ 4.6
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
INCOME & GROWTH PORTFOLIO GROWTH PORTFOLIO
---------------------------------------------- ----------------------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
---------------------------------------------- ----------------------------------------------
1998 1997 1996 1995 1994 1998 1997 1996 1995 1995
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$14.89 $12.78 $11.57 $10.65 $10.96 $17.52 $15.47 $13.03 $11.67 $11.63
0.42 0.38 0.38 0.41 0.33 0.00 0.07 0.14 0.16 0.12
1.73 2.39 1.27 1.54 (0.11) 2.41 2.73 2.72 2.17 0.22
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
2.15 2.77 1.65 1.95 0.22 2.41 2.80 2.86 2.33 0.34
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(0.42) (0.38) (0.37) (0.41) (0.33) (0.06) (0.07) (0.14) (0.16) (0.12)
(0.77) (0.28) (0.07) (0.62) (0.20) (1.19) (0.68) (0.28) (0.81) (0.18)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(1.19) (0.66) (0.44) (1.03) (0.53) (1.25) (0.75) (0.42) (0.97) (0.30)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
$15.85 $14.89 $12.78 $11.57 $10.65 $18.68 $17.52 $15.47 $13.03 $11.67
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
14.77% 22.34% 14.50% 19.41% 1.96% 14.13% 18.68% 22.22% 20.54% 2.85%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
1.20% 1.12% 0.89% 0.81% 0.94% 1.24% 1.13% 0.90% 0.83% 1.04%
2.65% 2.77% 3.10% 3.69% 3.08% 0.02% 0.43% 0.99% 1.35% 1.04%
1.35% 1.31% 1.14% 1.06% 1.19% 1.39% 1.32% 1.15% 1.08% 1.30%
2.50% 2.58 2.85% 3.44% 2.83 0.13% 0.24% 0.74% 1.10% 0.79%
$ 0.07 $ 0.07 N/A N/A N/A $ 0.07 $ 0.07 N/A N/A N/A
39% 14% 7% 25% 14% 40% 27% 22% 24% 8%
$ 16.1 $ 13.1 $ 10.8 $ 7.7 $ 7.5 $ 14.2 $ 13.3 $ 11.8 $ 7.0 $ 5.3
</TABLE>
33
<PAGE> 34
<TABLE>
<CAPTION>
CORE GROWTH SMALL CAP PORTFOLIO
----------------------- -------------------------------------------
11-1-96 YEAR ENDED JUNE 30, 11-1-94
TO ------------------------------- TO
1998 6-30-97 1998 1997 1996 6-30-95
------- ----------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share
outstanding throughout each
period):
Net asset value, beginning of
period............................ $ 9.86 $ 10.00 $ 13.30 $ 12.82 $ 10.63 $ 10.00
Income from investment operations:
Net investment income............. (0.16) (0.08) .06 0.11 0.26 0.22
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions... .90 (0.06) 1.30 1.67 2.26 0.67
------- ------- ------- ------- ------- -------
Total from investment
operations............... .74 (0.14) 1.36 1.78 2.52 0.89
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment
income.......................... 0.00 0.00 (0.06) (0.11) (0.25) (0.22)
Distributions from net realized
capital gains and foreign
currency transactions........... 0.00 0.00 (1.28) (1.19) (0.08) (0.04)
------- ------- ------- ------- ------- -------
Total distributions........ 0.00 0.00 (1.34) (1.30) (0.33) (0.26)
------- ------- ------- ------- ------- -------
Net asset value, end of period...... $ 10.60 $ 9.86 $ 13.32 $ 13.30 $ 12.82 $ 10.63
======= ======= ======= ======= ======= =======
Total return (a)........... 7.51% (1.40%)(b) 10.56% 14.82% 24.10% 8.91%(b)
======= ======= ======= ======= ======= =======
Ratio (to average net assets)/
supplemental data:
Ratios net of fees waived by advisor
(d):
Expenses.......................... 2.06% 1.35%(c) 1.67% 1.35% 0.94% 1.00%(c)
Net investment income............. (1.65%) (0.87%)(c) .47% 0.89% 2.21% 3.19%(c)
Ratios assuming no waiver of
management fees by adviser (d):
Expenses.......................... 2.12% 1.40%(c) 1.82% 1.62% 1.27% 1.31%(c)
Net investment income............. (1.70%) (0.92%)(c) .32% 0.62% 1.88% 2.88%(c)
Average commission rate(e).......... $ 0.05 $ 0.05 $ 0.07 $ 0.08 N/A N/A
Portfolio turnover rate............. 116% 80% 77% 34% 34% 8%
Net assets at end of period
(millions)........................ $ 5.3 $ 5.5 $ 5.8 $ 5.2 $ 4.5 $ 2.9
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO GLOBAL CONTRARIAN PORTFOLIO
--------------------------------------------------- ----------------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, 11-1-94
--------------------------------------------------- ----------------------------- TO
1998 1997 1996 1995 1994 1998 1997 1996 6-30-95
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 15.45 $ 14.47 $ 12.89 $ 13.32 $ 9.90 $ 11.79 $ 11.48 $ 10.01 10.00
.12 0.14 0.10 0.14 0.05 0.14 0.20 0.16 0.17
)
(0.63 1.92 2.24 0.63 4.01 (0.26) 0.99 1.61 0.13
------- ------- ------- ------- ------- ------- ------- ------- -------
(0.51) 2.06 2.34 0.77 4.06 (0.12) 1.19 1.77 0.30
------- ------- ------- ------- ------- ------- ------- ------- -------
(0.12) (0.15) (0.39) (0.14) (0.05) (0.13) (0.21) (0.16) (0.17)
)
(1.90 (0.93) (0.37) (1.06) (0.59) (0.78) (0.67) (0.14) (0.12)
------- ------- ------- ------- ------- ------- ------- ------- -------
(2.02) (1.08) (0.76) (1.20) (0.64) (0.91) (0.88) (0.30) (0.29)
------- ------- ------- ------- ------- ------- ------- ------- -------
$ 12.92 $ 15.45 $ 14.47 $ 12.89 $ 13.32 $ 10.76 $ 11.79 $ 11.48 $ 10.01
======= ======= ======= ======= ======= ======= ======= ======= =======
(4.84%) 14.76% 18.65% 6.44% 40.65% (1.05%) 11.11% 17.84% 2.99%(b)
======= ======= ======= ======= ======= ======= ======= ======= =======
2.10% 1.87% 1.72% 1.50% 1.50% 2.13% 2.02% 2.14% 2.05%(c)
.85% 0.99% 0.70% 1.11% 0.46% 1.28% 1.78% 1.49% 2.85%(c)
2.20% 1.98% 1.72% 1.50% 1.50% 2.53% 2.21% 2.14% 2.05%(c)
.75% 0.88% 0.70% 1.11% 0.46% .88% 1.59% 1.49% 2.85%(c)
$ 0.01 $ 0.02 N/A N/A N/A $ 0.01 $ 0.01 N/A $ 0.01
12% 9% 20% 39% 27% 25% 6% 26% 8%
$ 14.6 $ 19.3 $ 15.1 $ 12.0 $ 10.4 $ 5.1 $ 6.3 $ 5.7 $ 3.9
</TABLE>
35
