ONE FUND INC, 497, 1999-11-03

ONE FUND INC
497, 1999-11-03

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<PAGE> 1

PROSPECTUS

NOVEMBER 1, 1999

ONE FUND, INC.
One Financial Way
Cincinnati, Ohio 45242
Telephone 1-800-578-8078

ONE Fund, Inc. ("ONE Fund") is a mutual fund with seven diversified portfolios.
Those portfolios have the following investment objectives:

- - MONEY MARKET PORTFOLIO -- current income consistent with preservation of
capital and liquidity.

- - 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.

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.................................... 4
Income Portfolio.......................................... 5
Income & Growth Portfolio................................. 8
Growth Portfolio.......................................... 10
Core Growth Portfolio..................................... 11
Small Cap Portfolio....................................... 13
International Portfolio................................... 14
Additional Risk Factors..................................... 16
ONE Fund Management......................................... 18
Board of Directors, Investment Adviser and Sub-advisers... 18
The Adviser's Investment Style............................ 20
ONE Fund's Portfolio Managers............................. 20
Fund Services............................................. 22
Shareholder Information..................................... 22
Buying Shares............................................. 22
Purchase Price............................................ 22
Sales Charges............................................. 23
12b-1 Fees................................................ 23
Sales Contests............................................ 23
Reducing the Sales Charge................................. 24
Flexibility Features...................................... 26
Redeeming Shares.......................................... 27
Dividends, Distributions and Taxes........................ 29
Financial Highlights Information............................ 30
</TABLE>

STATEMENT OF ADDITIONAL INFORMATION CONTENTS

Investment Policies and Restrictions

Controlling Persons and Principal Shareholders

Brokerage Allocation

Tax Status

Underwriters

Financial Statements

2
<PAGE> 3

ABOUT ONE FUND

ONE Fund has seven 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.

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
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%
</TABLE>

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM ONE FUND
ASSETS):

<TABLE>
<CAPTION>
DISTRIBUTION TOTAL ANNUAL
Management (12B-1) OTHER FUND OPERATING
FEES (2) FEES(3) EXPENSES EXPENSES
---------- ------------ -------- ---------------
<S> <C> <C> <C> <C>
Money Market Portfolio................... 0.30% 0.15% 0.58% 1.03%
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%
---- ---- ---- ----
</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, 0.35% 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, 1.39% 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.

3
<PAGE> 4

EXAMPLE:

The Example is intended to help you compare the cost of investing in ONE Fund
with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the ONE Fund portfolio for the
time periods indicated and then redeem all of your shares at the end of those
periods. 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
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
</TABLE>

- ---------------

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.

- 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. 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. Commercial paper is
unsecured promissory notes issued by corporations
to finance short-term credit needs. The Money
Market Portfolio may invest up to 50% of its
assets in foreign securities, provided they have
values expressed in U.S. dollars and are held in
custody in the United States.

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.
4
<PAGE> 5

Money Market Portfolio risk
factors The Money Market Portfolio offers the least risk
of the eight ONE Fund portfolios, but also offers
the least opportunity for above-average long-term
return compared to the other ONE Fund portfolios.
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 below 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.

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). The year-to-date return as of September 30,
1999 was 3.12%.

AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1998) YEAR YEARS (8/92)
<S> <C> <C> <C> <C>
Money Market Portfolio 4.85 % 4.38 % 4.31 %
</TABLE>

Money Market Portfolio Seven Day Yield Ending
6/30/99: 4.06%

- 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

5
<PAGE> 6

during times of volatile interest rates. Shorter
maturities reduce exposure to interest risk and
correspondingly reduce the risk of loss of
capital. The portfolio may not achieve its
investment objective during times it takes a
temporary defensive position.

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. The
Income Portfolio generally holds short-term to
intermediate term debt securities. 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.

All securities are subject, to some degree, to
credit risk and market risk. Credit risk refers to
the ability of an issuer of a debt security to pay
its principal and interest, and to the earnings
stability and overall financial soundness of an
issuer of an equity security. Market risk refers
to the volatility of a security's price in
response to changes in conditions in securities
markets in general and, particularly in the case
of debt securities, changes in the overall level
of interest rates. 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

6
<PAGE> 7

of all income producing securities tend to
decline. 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.

The bar chart and table shown below 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 bar chart. If they were
reflected, returns would be less than those shown.

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). The year-to-date return as of September 30,
1999 was -0.39%

AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1998) YEAR YEARS (8/92)
<S> <C> <C> <C> <C>
Income Portfolio 3.54 % 5.29 % 5.97 %
Lehman Brothers
Government/Corporate Bond Index
-- Intermediate* 4.18 % 7.04 % 6.22 %
</TABLE>

*The Lehman Brothers Government/Corporate Bond
Index-Intermediate is a widely recognized,
unmanaged intermediate government and corporate
bond index.

7
<PAGE> 8

- 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 or
those securities that pay dividends, or debt
securities with intermediate to short term
maturities. Normally, at least 50% of the assets
will be invested in dividend-paying common stocks
that the portfolio manager determines are suitable
securities based on the company's growth potential
and analysis of the company's fundamental business
practices. 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 bond. Securities are
generally investment grade, although the portfolio
may invest in below investment grade bonds ("junk
bonds").

Income & Growth Portfolio
risk factors The risk factors of the Income and Growth
Portfolio are similar to those of the Income
Portfolio and the Growth Portfolio.

The market value of below investment grade
securities 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. The
Income and Growth Portfolio generally holds
short-term to intermediate term debt securities.
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.

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 the overall view of
economic and financial trends, expectations about
business activity, and anticipation of changes in
corporate earnings. However, market risk factors
for debt securities and stocks may offset each
other.

8
<PAGE> 9

soundness of an issuer of an equity security.
Market risk refers to the volatility of a
security's price in response to changes in
conditions in securities markets in general and,
particularly in the case of debt securities,
changes in the overall level of interest rates.
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. 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.

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. If they were
reflected, returns would be less than those shown.

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 9.64% (quarter ending September
30, 1998). The year-to-date return as of September
30, 1999 was %

9
<PAGE> 10

AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1998) YEAR YEARS (8/92)
<S> <C> <C> <C> <C>
Income & Growth Portfolio (1.49 )% 11.64 % 11.80 %
S&P 500* 28.58 % 24.05 % 20.82 %
Blended Index (Based on
Russell 3000 Index and
Lehman Brothers
Government/Corporate Bond -
Intermediate Index)** 22.30 % 19.89 % 18.01 %
</TABLE>

*The S&P 500 is the Standard & Poor's Composite
Index of 500 Stocks, a widely recognized,
unmanaged index of common stock prices.

**The blended index, a blend based on 70% Russell
3000 Index and 30% Lehman Brothers
Government/Corporate Bond - Intermediate Index,
serves as a more accurate comparison of
performance than the S&P 500 Index because of
the similar composition of the blended index to
the securities held in the portfolio.

- 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 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. The portfolio may
not achieve its investment objective when it takes
temporary defensive positions.

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 the overall view of
economic and financial trends, expectations about
business activity, and anticipation of changes in
corporate earnings.

The bar chart and table shown below 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.

10
<PAGE> 11

Sales loads are not reflected in the chart. If
they were reflected, returns would be less than
those shown.

During the period shown in the bar chart, the
highest return for a quarter was 15.57% (quarter
ending December 31, 1998) and the lowest return
for a quarter was -18.63% (quarter ending
September 30, 1998). The year-to-date return as of
September 30, 1999 was 1.73%.

AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1998) YEAR YEARS (8/92)
<S> <C> <C> <C> <C>
Growth Portfolio (2.52 %) 11.56 % 12.91 %
S&P 500* 28.58 % 24.05 % 20.82 %
</TABLE>

*The S&P 500 is the Standard & Poor's Composite
Index of 500 Stocks, a widely recognized,
unmanaged index of common stock prices.

- 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

11
<PAGE> 12

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 below 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. If they were reflected,
returns would be less than those shown.

During the period shown in the bar chart, the
highest return for a quarter was 24.16% (quarter
ending June 30, 1999) and the lowest return for a
quarter was -22.70% (quarter ending September 30,
1998). The year-to-date return as of September 30,
1999 was 37.86%

12
<PAGE> 13

SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR THE PERIODS ENDING DECEMBER 31, 1998) YEAR (11/96)
<S> <C> <C> <C>
Core Growth Portfolio 1.47% (2.85)%
Russell 3000 Index* 24.13% 28.78%
</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. The portfolio may not achieve its
investment objective when it takes a temporary
defensive position.

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 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. If they were reflected,
returns would be less than those shown.

13
<PAGE> 14

During the period shown in the bar chart, the
highest return for a quarter was 16.21% (quarter
ending June 30, 1999) and the lowest return for a
quarter was -20.87% (quarter ending September 30,
1998). The year-to-date return as of September 30,
1999 was 19.3%.

SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR THE PERIODS ENDING DECEMBER 31, 1998) YEAR (11/94)
<S> <C> <C> <C>
Small Cap Portfolio (17.68)% 7.93%
Russell 2000 Index* (7.55) 14.51%
</TABLE>

*The Russell 2000 Index is a widely recognized,
unmanaged index of small cap common stock prices.

- INTERNATIONAL PORTFOLIO

Total return through foreign
stocks The objective of the International Portfolio is to
provide total return on assets by investing
primarily in equity securities 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.
The portfolio may not achieve its investment
objective when it takes temporary defensive
positions.

The Adviser utilizes a "bottom up" approach (an
analysis of the individual company's business
fundamentals and practices as opposed to an
analysis of the economy in general) to evaluate
companies as opposed to examining general economic
conditions in foreign countries.

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.

14
<PAGE> 15

International Portfolio 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.

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, five 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. If they were reflected,
returns would be less than those shown.

15
<PAGE> 16

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 -15.25% (quarter ending September 30,
1998). The year-to-date return as of September 30,
1999 was 2.79%

AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDING PAST ONE PAST FIVE INCEPTION
DECEMBER 31, 1998) YEAR YEARS (5/93)
<S> <C> <C> <C> <C>
International Portfolio (7.57)% 5.50% 9.67%
MSCI EAFE Index* 18.23% 7.54% 7.65%
</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.

ADDITIONAL STRATEGIES AND RISK FACTORS

- DIVERSIFICATION/CONCENTRATION

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.

- 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 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

16
<PAGE> 17

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. 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 Portfolio, 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.

17
<PAGE> 18

- 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;

- 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.

Each portfolio, except the Money Market Portfolio,
may invest up to 15% of its assets in restricted
or illiquid securities. The Money Market Portfolio
may invest up to 5% of its assets in restricted or
illiquid securities.

ONE FUND MANAGEMENT

- BOARD OF DIRECTORS, INVESTMENT ADVISER AND
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 Portfolio's sub-adviser Federated
Global Investment Management Corp. (FGIM), ONE
Fund's

18
<PAGE> 19

principal underwriter ("ONEQ"), its custodians
(Investors Fiduciary Trust Co. for the
International Portfolio and Firstar 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, which
has its principal place of business at One
Financial Way, Cincinnati, Ohio 45242, 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, 0.65% for
the Small Cap Portfolio, 0.90% for the
International Portfolio 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, 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, 1998 to
June 30, 1999, the aggregate fee received for each
portfolio as a percentage of average net assets
was: 0.15% for the Money Market Portfolio, 0.35%
for the Income, Income & Growth and Growth
Portfolios, 0.50% for the Small Cap Portfolio,
0.90% for the International Portfolio, and 0.95%
for the Core Growth Portfolio. The Adviser and its
predecessor entity have been investment advisers
since 1969. The Adviser currently manages $1.33
billion in assets, including the assets of ONE
Fund.

The Adviser contracts with PBA for the management
of the Core Growth Portfolio and FGIM for the
management of the International Portfolio.

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 0.65% of the average daily net asset value
of the first $50 million of Core Growth Portfolio
assets, 0.60% of the next $100 million and 0.50%
of portfolio assets in excess of $150 million.

Sub-adviser for the
International
Portfolio FGIM manages the assets of the International
Portfolio under the Adviser's supervision. FGIM is
located at 175 Water Street, New York, New York.
FGIM is an indirect wholly-owned subsidiary of
Federated Investors, a leading mutual fund
advisory firm, and has been an investment adviser
since 19 . The Adviser pays FGIM for its
services as sub-adviser, fees at an annual rate of
0.45% of the first $200 million, and .040% of the
average daily assets in excess of $200 million of
the International Portfolio.

19
<PAGE> 20

- 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 and sub-advisers' 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.

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, Stephen Komrska, Alexandre de Bethmann,
Henry Frantzen and Jeffrey Wrona.

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, 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 is executive vice president of ONLI
and has been a senior investment officer of ONLI
since 1975 and previously had 15 years of
experience in securities management.

20
<PAGE> 21

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 Income Portfolio from its
inception. 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 is currently vice president
and senior investment officer of ONLI. He was vice
president of fixed income securities for ONLI from
1989 to 1999, 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.

Stephen Williams, a vice president of the Adviser,
has managed the Small Cap Portfolio since 1999. He
managed the Income & Growth and Growth Portfolios
from 1992 to 1999. 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.

Stephen Komrska, a vice president of the Adviser,
has managed the Income & Growth and Growth
Portfolios since 1999. He is an investment officer
of ONLI and has managed equity securities for ONLI
and the Adviser since 1997. For six years before
that, he was a fixed income analyst and high yield
bond portfolio manager for Ohio Casualty Insurance
Company. Mr. Komrska is a chartered financial
analyst with a bachelor of business administration
degree in finance and marketing from the
University of Michigan.

Jeffrey Wrona has managed the Core Growth
Portfolio since 1999. He is also the portfolio
manager of the PBHG Growth II portfolio,
co-manager of the PBHG Technology & Communications
Fund and has managed other small and mid cap
portfolios for PBA since 1997. Prior to that he
was a senior portfolio manager at Munder Capital
Management for seven years, and before that he was
a securities analyst for Drexel Burnham Lambert
and a design engineer for Ford Motor Company. Mr.
Wrona is a chartered financial analyst. He has a
bachelor's degree in engineering and a master of
business administration from the University of
Michigan.

The portfolio managers of the International
Portfolio are Alexandre de Bethmann and Henry
Frantzen. Alexandre de Bethmann has been the
International Portfolio's co-manager since October
1999. Mr. de Bethmann joined FGIM in 1995 as a
Senior Portfolio Manager and a Vice President. Mr.
de Bethmann served as Assistant Vice
President/Portfolio Manager for Japanese and
Korean equities at the College Retirement Equities
Fund from 1994 to 1995. Mr. de Bethmann received
his M.B.A in Finance from Duke University. Henry
Frantzen, the chief investment officer,
international, of FGIM, co-manages the Interna-

21
<PAGE> 22

tional Portfolio. He joined FGIM as its executive
vice president when it was established in 1995.
For four years prior to that, he served as chief
investment officer of international securities at
Brown Brothers Harriman & Co. and for three years
before that he was the executive vice president of
equities at Oppenheimer Management Corporation. He
is a financial analyst fellow.

- FUND SERVICES
Firstar Bank, 425 Walnut Street, Cincinnati, Ohio
45202, is the custodian for all ONE Fund assets
except those of the International Portfolio. The
assets of the International Portfolio 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.

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.

Because some portfolios may invest in securities
of other countries and the markets in those
countries may not be open on the same days or at
the same times as the U.S. markets, the value of
those portfolios' assets may change on days or at
times when shareholders are unable to redeem
shares.

ONE Fund's shares are offered at the public
offering price. This is the next calculated net
asset value per share plus a sales charge, if
applicable. The sales charge is a variable
percentage of the offering price depending

22
<PAGE> 23

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.

** 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.

- 12b-1 FEES

Qualified dealers are paid a continuing
shareholder service fee of 0.25% annually (0.15%
for the Money Market Portfolio) from the Fund's
12b-1 Distribution Plan 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.

23
<PAGE> 24

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 public
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 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

24
<PAGE> 25

$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 Income Portfolio.)

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 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.

25
<PAGE> 26

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 with no sales
charge. To use this service, the value of your
account in the paying portfolio must be at least
$5,000.

- TRANSFERRING
Among the seven 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 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."

26
<PAGE> 27

- Redeem your shares as provided under "By
Telephone." Initiate, change or discontinue
automatic redemptions of your shares as
provided under "Automatically."

- 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 seven 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.

- 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 Firstar Bank. Firstar Bank will charge $25
for any check that is not honored because of an
insufficient Money Market Portfolio account
balance. Firstar 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

27
<PAGE> 28

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.")

Redemptions of shares of any ONE Fund portfolio by
any shareholder during any 90-day period will be
paid in cash, up to the lesser of (a)$250,000 or
(b)1% of the portfolio's total net asset value.
Larger redemptions may, at ONE Fund's discretion,
be paid wholly or in part by securities or other
assets of the portfolio. A shareholder who
receives securities would likely incur brokerage
expenses in disposing of them.

- 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", 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)
sent 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. Firstar Bank will deduct
a fee (presently $13) from the proceeds of each
wire redemption.

- AUTOMATICALLY
If your account is $5,000 or more, you may
establish an automatic withdrawal plan. More than
one plan may be set up if your account is at least
$10,000. Under each plan, you may make automatic
withdrawals for $50 or more each at specified
intervals. Automatic withdrawals are made on or
about the 10th day of each designated month and,
if withdrawals are to be made semimonthly, also on
or about the 25th day of each month. Additional
purchases (other than to the Money Market
Portfolio) may be inadvisable, when an automatic
withdrawal plan is in effect,

28
<PAGE> 29

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). Distributions, whether received in
cash or reinvested in additional share of ONE
Fund, may be subject to federal income tax.

ONE Fund shareholders are taxed on distributed
income and capital gains. 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.

An exchange of shares from a ONE Fund portfolio to
another ONE Fund portfolio will be treated as a
sale and a purchase, and any gain on the
transaction may be subject to federal income tax.

Money Market and Income
Portfolio dividends are
accrued
daily and paid monthly. For the Money Market 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 two 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, and
International 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.

29
<PAGE> 30

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 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,
----------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<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................... 0.04 0.05 0.05 0.05 0.05
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income.... (0.04) (0.05) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net asset value, end of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return................... 4.44% 4.87% 4.77% 5.18% 5.06%
====== ====== ====== ====== ======
Ratios and supplemental data:
Ratios net of fees waived or reimbursed by
adviser (a):
Expenses................................ 0.88% 0.88% 0.80% 0.57% 0.51%
Net investment income................... 4.36% 4.81% 4.71 5.14% 4.99%
Ratios assuming no fees waived or
reimbursed
by adviser:
Expenses................................ 1.03% 1.03% 1.04 0.87% 0.81%
Net investment income................... 4.21% 4.66% 4.47% 4.84% 4.69%
Portfolio turnover rate................... N/A N/A N/A N/A N/A
Net assets at end of period (millions).... $ 16.8 $ 16.4 $ 14.4 $ 15.8 $ 14.1
</TABLE>

- ---------------

(a) The adviser has elected to waive management fees equal to 0.15% of average
net assets for the Money Market portfolio, but it may cease that waiver, in
whole or in part, without prior notice.

30
<PAGE> 31

(This page intentionally left blank)

31
<PAGE> 32

<TABLE>
<CAPTION>
INCOME PORTFOLIO
------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data
Net asset value, beginning of period............. $ 9.99 9.75 $ 9.59 $ 9.78 $ 9.39
Income from investment operations:
Net investment income.......................... 0.57 .59 0.61 0.63 0.65
Net realized and unrealized gain (loss) on
investments................................. (0.30) 0.24 0.16 (0.19) 0.39
Total income from investment
operations........................... 0.27 0.83 0.77 0.44 1.04
Less distributions:
Dividends from net investment income........... (0.57) (0.59) (0.61) (0.63) (0.65)
Distributions from net realized capital
gains....................................... -- -- -- -- --
Total distributions.................... -- -- -- -- --
------ ------ ------ ------ ------
Net asset value, end of period................... $ 9.69 $ 9.99 $ 9.75 $ 9.59 $ 9.78
====== ====== ====== ====== ======
Total return........................... 2.65% 8.56% 8.26% 4.61% 11.58%
====== ====== ====== ====== ======
Ratios and supplemental data:
Ratios net of fees waived or reimbursed by
advisor (a):
Expenses....................................... 1.40% 1.39% 1.21% 0.97% 0.85%
Net investment income.......................... 5.70% 5.91% 6.29% 6.50% 6.80%
Ratios assuming no fees waived or reimbursed by
adviser:
Expenses....................................... 1.55% 1.54% 1.51% 1.22% 1.10%
Net investment income.......................... 5.55% 5.76% 5.99% 6.25% 6.55%
Portfolio turnover rate.......................... 4% 40% 10% 9% 4%
Net assets at end of period (millions)........... $ 6.4 $ 6.9 $ 6.6 $ 7.0 $ 7.1
</TABLE>

(a) The adviser has elected to waive management fees equal to 0.15% of average
net assets for the Money Market portfolio, but it may cease that waiver, in
whole or in part, without prior notice.

32
<PAGE> 33

<TABLE>
<CAPTION>
INCOME & GROWTH PORTFOLIO GROWTH PORTFOLIO
---------------------------------------------- ----------------------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
---------------------------------------------- ----------------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$15.85 $14.89 $12.78 $11.57 $10.65 $18.68 $17.52 $15.47 $13.03 $11.67
0.35 0.42 0.38 0.38 0.41 (0.02) 0.00 0.07 0.14 0.16
.33 1.73 2.39 1.27 1.54 (.12) 2.41 2.73 2.72 2.17
.68 2.15 2.77 1.65 1.95 (.14) 2.41 2.80 2.86 2.33
(0.35) (0.42) (0.38) (0.37) (0.41) 0.00 (0.06) (0.07) (0.14) (0.16)
(.67) (.77) (.28) (.07) (.62) (1.40) (1.19) (.68) (.28) (.81)
(1.02) (1.19) (.66) (.44) (1.03) (1.40) (1.25) (.75) (.42) (.97)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
$15.51 $15.85 $14.89 $12.78 $11.57 $17.14 $18.68 $17.52 $15.47 $13.03
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
4.73% 14.77% 22.34% 14.50% 19.41% (0.32%) 14.13% 18.68% 22.22% 20.54%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
1.30% 1.20% 1.12% 0.89% 0.81% 1.36% 1.24% 1.13% 0.90% 0.83%
2.33% 2.65% 2.77% 3.10% 3.69% (0.13%) 0.02% 0.43% 0.99% 1.35%
1.45% 1.35% 1.31% 1.14% 1.06% 1.52% 1.39% 1.32% 1.15% 1.08%
2.18% 2.50% 2.58 2.85% 3.44% (0.28%) (0.13%) 0.24% 0.74% 1.10%
49% 39% 14% 7% 25% 53% 40% 27% 22% 24%
$ 13.3 $ 16.1 $ 13.1 $ 10.8 $ 7.7 $ 10.9 $ 14.2 $ 13.3 $ 11.8 $ 7.0
</TABLE>

33
<PAGE> 34

<TABLE>
<CAPTION>
CORE GROWTH SMALL CAP PORTFOLIO
--------------------- ------------------------------------
11-1-96 YEAR ENDED JUNE 30, 11-1-94
TO ------------------------------------ TO
1999 1998 6-30-97 1999 1998 1997 1996 6-30-95
------ ------ ----------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per share data
Net asset value, beginning
of period............... $10.60 $ 9.86 $10.00 $13.32 $13.30 $12.82 $10.63 $10.00
Income from investment
operations:
Net investment income... (0.18) (0.16) (0.08) 0.02 .06 0.11 0.26 0.22
Net realized and
unrealized gain (loss)
on investments........ 1.71 .90 (.06) (2.09) 1.30 1.67 2.26 .67
------ ------ ------ ------ ------ ------ ------ ------
Total income
(loss) from
operations..... 1.53 .74 (.14) 2.07 1.36 1.78 2.52 .89
Less distributions:
Dividends from net
investment income..... -- -- -- (0.02) (0.06) (0.11) (0.25) (0.22)
Distributions in excess of
net investment income... -- -- -- (.03) -- -- -- --
Distributions from net
realized capital
gains................... -- -- -- (.68) (1.28) (1.19) (.08) (.04)
------ ------ ------ ------ ------ ------ ------ ------
Total
Distributions... -- -- -- (.73) (1.34) (1.30) (.33) (.26)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period.................. 12.13 $10.60 $ 9.86 $10.52 $13.32 $13.30 $12.82 $10.63
====== ====== ====== ====== ====== ====== ====== ======
Total return..... 14.43% 7.51% (1.40%)(b) (15.54%) 10.56% 14.82% 24.10% 8.91%(b)
====== ====== ====== ====== ====== ====== ====== ======
Ratios and supplemental
data:
Ratios net of fees waived
or reimbursed by advisor
(a):
Expenses................ 1.98% 2.06% 1.35%(a)(c) 1.74% 1.67% 1.35% 0.94% 1.00%(a)(c)
Net investment income... (1.81%) (1.65%) (0.87%)(a)(c) 0.23% .47% 0.89% 2.21% 3.19%(a)(c)
Ratios assuming no fees
waived or reimbursed by
adviser:
Expenses................ 2.42% 2.12% 1.40%(a)(c) 2.07% 1.82% 1.62% 1.27% 1.31%(a)(c)
Net investment income... (2.25%) (1.70%) (0.92%)(a)(c) (0.10%) .32% 0.62% 1.88% 2.88%(a)(c)
Portfolio turnover rate... 148% 116% 80% 48% 77% 34% 34% 8%
Net assets at end of
period (millions)....... $ 4.6 $ 5.3 $ 5.5 $ 3.8 $ 5.8 $ 5.2 $ 4.5 $ 2.9
</TABLE>

- ---------------

(a) Annualized.

(b) Calculated on an aggregate basis (not annualized).

34
<PAGE> 35

<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
---------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 12.92 $ 15.45 $ 14.47 $ 12.89 $ 13.32
(0.04) 0.12 0.14 0.10 0.14
(1.74) (.63) 1.92 2.24 .63
------- ------- ------- ------- -------
(1.78) (.51) 2.06 2.34 .77
-- (0.12) (0.15) (0.39) (0.14)
-- -- -- -- --
(.32) (1.90) (.93) (.37) (1.06)
------- ------- ------- ------- -------
(.32) (2.02) (1.08) (.76) (1.20)
------- ------- ------- ------- -------
$ 10.82 $ 12.92 $ 15.45 $ 14.47 $ 12.89
======= ======= ======= ======= =======
(13.90%) (4.84%) 14.76% 18.65% 6.44%
======= ======= ======= ======= =======
2.13% 2.10% 1.87% 1.72% 1.50%
(0.32%) 0.85% 0.99% 0.70% 1.11%
2.56% 2.20% 1.98% 1.72% 1.50%
(0.75%) 0.75% 0.88% 0.70% 1.11%
217% 12% 9% 20% 39%
$ 6.9 $ 14.6 $ 19.3 $ 15.1 $ 12.0
</TABLE>

35
<PAGE> 36

PART B

INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

<PAGE> 37
ONE FUND, INC.

One Financial Way
Cincinnati, Ohio 45242
Telephone 1-800-578-8078

STATEMENT OF ADDITIONAL INFORMATION
November 1, 1999

This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the prospectus of ONE Fund, Inc. ("ONE Fund") dated
November 1, 1999.

To obtain a free copy of ONE Fund's prospectus, call or write ONE Fund at the
toll-free telephone number or the address shown above.

<TABLE>
<CAPTION>
Page Contents
- ---- --------
<S> <C>
3 ONE Fund
3 ONE Fund Performance
Current Yield of Money Market Portfolio
Current Yield of Income and Income & Growth Portfolios
Total Return
6 Portfolio Turnover

7 Investment Restrictions
(Fundamental)
(Nonfundamental)

10 Investment Policies
Money Market Instruments
Repurchase Agreements
Reverse Repurchase Agreements
Hedging Transactions
Covered Call Options and Put Options
Risk Factors with Options
Futures Contracts
Options on Futures Contracts and Financial Indexes
Risk Factors with Futures, Options on Futures and Options
on Indexes
Risk Factors with Foreign Investments
Foreign Currency Hedging Transactions
Risk Factors with High-Yield, High-Risk Securities
Convertible Securities
Zero-Coupon and Pay-in-Kind Debt Securities
Securities Lending
Warrants
When-Issued and Delayed Delivery Transactions
Borrowing Money

19 Management of ONE Fund
Directors and Officers of ONE Fund
Compensation of Directors
Shareholders' Meetings
Controlling Persons and Principal Shareholders
Investment Advisory and Other Services

24 Brokerage Allocation
</TABLE>
<PAGE> 38
<TABLE>
<S> <C>
25 Purchase and Redemption of Shares
Reducing the Sales Charge

27 Tax Status

27 Underwriters

27 Experts

28 Legal Counsel

29 Appendix
Debt Security Ratings

32 Financial Statements

</TABLE>

2
<PAGE> 39

ONE FUND

ONE Fund is an open-end diversified management investment company which
presently consists of 7 separate portfolios - Money Market Portfolio, Income
Portfolio, Income & Growth Portfolio, Growth Portfolio, Core Growth, Small Cap
Portfolio, and International Portfolio. The investments held by each portfolio
are maintained separately from those held by the other portfolios. ONE Fund was
incorporated in Maryland on April 24, 1992. The Money Market, Income, Income &
Growth, and Growth Portfolios were first offered in August 1992, the
International Portfolio in May 1993, the Small Cap Portfolio in November 1994,
and the Core Growth Portfolio in November 1996.

The investment and reinvestment of ONE Fund assets other than International and
Core Growth Portfolio assets is directed by ONE Fund's investment adviser, Ohio
National Investments, Inc. (the "Adviser"), a wholly-owned Ohio corporation and
subsidiary of The Ohio National Life Insurance Company ("ONLI") also an Ohio
corporation. The Adviser is also the investment adviser to Ohio National Fund,
Inc. ("ONF"), a mutual fund formed by ONLI to support variable benefits under
variable annuities and variable life insurance policies written by ONLI and its
subsidiary, Ohio National Life Assurance Corporation. The principal business
address of all these Ohio National companies is One Financial Way, Cincinnati,
Ohio 45242. The investment and reinvestment of Core Growth Portfolio assets is
managed by Pilgrim Baxter & Associates, Ltd. ("PBA") as sub-adviser. The
principal business address of PBA is 825 Duportail Road, Wayne, Pennsylvania
19087. The investment and reinvestment of the International Portfolio's assets
is managed by Federated Global Investment Management ("FGIM") as sub-adviser.
The principal business address of FGIM is 175 Water Street, New York, New York
10038.

The shares of each portfolio, when issued, will be fully paid and
non-assessable, have no preemptive, conversion, cumulative dividend or similar
rights, and are freely transferable. ONE Fund shares do not have cumulative
voting rights, which means the holders of more than half of the ONE Fund shares
voting for election of directors can elect all of the directors if they so
choose. In such event, the holders of the remaining shares would not be able to
elect any directors.

ONE FUND PERFORMANCE
ONE Fund may distribute sales literature using graphs, charts, tables
or examples comparing the performance of its portfolios to the Consumer Price
Index or to established market indices including, but not limited to, the Dow
Jones Industrial Average, the Standard & Poor's 500 Index, IBC's Money Fund
Reports, one or more of Lehman Brothers Bond Indices, Value Line Composite
Index, New York Stock Exchange Composite Index, Russell 2000 Index, Russell
3000 Growth Index, Morgan Stanley Europe Australia and Far East Index, Morgan
Stanley World Index, American Stock Exchange Index, National Association of
Securities Dealers Automated Quotations Composite Index, Wilshire 5000 Index,
Investors Business Daily 6000 Index, or other mutual funds having investment
objectives similar to the portfolio being compared. These comparisons may
include graphs, charts, tables or examples. The average total return and
cumulative total returns for each portfolio may also be advertised.

ONE Fund may also advertise the performance rankings assigned to certain
portfolios or their subadvisers by various statistical services, including
Morningstar, Inc. and Lipper Analytical Services, Inc., or as they appear in
various publications including The Wall Street Journal, Investors Business
Daily, The New York Times, Barron's, Forbes, Fortune, Business Week, Financial
Services Week, Financial World, Kiplinger's Personal Finance and Money Magazine.

The prospectus sets forth in tabular form, under the caption "Financial
Highlights" certain information concerning ONE Fund and its individual
portfolios. The following discussion describes

3
<PAGE> 40
the methods of calculating current yields and total return, and states ONE
Fund's policy with respect to each portfolio's turnover rate.

CURRENT YIELD OF MONEY MARKET PORTFOLIO

Current yield quotations for the Money Market Portfolio are based on that
portfolio's net investment income for a seven-day period and exclude any
realized or unrealized gains or losses on portfolio securities. Current yield is
computed by determining the net change (exclusive of realized gains and losses
from the sale of securities and unrealized appreciation and depreciation) in the
value of a hypothetical account having a balance of one share at the beginning
of such seven-day period, dividing such net change in account value by the value
of the account at the beginning of the period, and annualizing this quotient on
a 365-day basis. The net change in account value reflects the value of any
additional shares (or fraction thereof) purchased with dividends from the
original share in the account during the seven-day period, any dividends
declared on such original share and any such additional shares during the
period, and expenses accrued during the period. ONE Fund may also disclose the
effective yield of the Money Market Portfolio for a seven-day period for which
the current annualized yield is computed by expressing the unannualized return
on a compounded, annualized basis.

CURRENT YIELD OF INCOME, AND INCOME & GROWTH PORTFOLIOS

Current yield for these two portfolios is calculated by dividing the net
investment income per share earned during a recent 30-day period by the
portfolio's maximum offering price on the last day of the period, and
annualizing the result (assuming compounding of interest) in order to arrive at
an annual percentage rate. In some instances, it may be necessary to use an
estimate of the expected dividends and expenses. When estimates are used to
calculate yields, actual dividends and expenses for that period may be different
because the composition of the portfolio may change, resulting in a change in
actual yield. When yield is used in sales literature for these portfolios, their
total return will also be shown.

4
<PAGE> 41
TOTAL RETURN

Total returns quoted in advertising reflect all aspects of a portfolio's
investment return, including the effects of reinvesting dividends and capital
gain distributions as well as changes in the portfolio's net asset value per
share over the period shown. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in a portfolio over a stated period, and then calculating the annual
compounded percentage rate that would have produced the same result had the rate
of growth or decline been constant over that period. While average annual
returns are a convenient means of comparing investment alternatives, no
portfolio will experience a constant rate of growth or decline over time.

The average annual compounded rate of return for a portfolio over a given period
is found by equating the initial amount invested to the ending redeemable value
using the following formula:

P(1 + T)n = ERV

where: P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV= the ending redeemable value of a hypothetical $1,000
beginning-of-period payment at the end of the period (or
fractional portion thereof).

The average annual and aggregate total return rates for each of the portfolios
from its inception (assuming payment of the maximum applicable sales charge) and
for the year ended on June 30, 1999, are as follows:

<TABLE>
<CAPTION>
Aggregate
One Avg. Annual From Five Year From Inception
Year Five Year Inception Aggregate Inception Date
---- --------- ----------- --------- ---------- ----------

<S> <C> <C> <C> <C> <C> <C>
Money Market 4.85% 4.59% 4.26% 25.15% 28.49% 8/18/92
Income -0.43% 6.43% 5.45% 33.75% 43.64% 8/18/92
Income & Growth -0.50% 13.91% 11.91% 91.01% 113.54% 8/18/92
Growth -5.30% 13.54% 12.96% 88.97% 135.94% 8/18/92
Core Growth 2.13% N/A 5.63% N/A 16.81% 11/01/96
Small Cap 8.22% N/A 7.08% N/A 41.01% 11/01/94
International -19.46% 2.91% 5.01% 15.43% 69.56% 4/30/93
</TABLE>

5
<PAGE> 42

In addition to total return rates, advertising may reflect cumulative total
returns that simply reflect the change in value of an investment in a portfolio
over a period. This may be expressed as either a percentage change, from the
beginning to the end of the period, or the end-of-period dollar value of an
initial hypothetical investment. The cumulative total returns for each of the
portfolios from its inception and for the year ended on June 30, 1999 (assuming
a hypothetical initial investment of $10,000 and payment of the maximum
applicable sales charge) were as follows:

<TABLE>
<CAPTION>
One Five From Inception
Year Year Inception Date

<S> <C> <C> <C> <C>
Money Market 10,445 12,682 13,419 8/18/92
Income 9,956 13,661 14,659 8/18/92
Income & Growth 9,949 19,113 21,661 8/18/92
Growth 9,470 18,904 22,978 8/18/92
Core Growth 10,871 N/A 11,514 11/01/96
Small Cap 8,024 N/A 13,768 11/01/94
International 8,180 11,278 16,549 4/30/93
</TABLE>

PORTFOLIO TURNOVER

Each portfolio has a different expected rate of portfolio turnover. However, the
rate of portfolio turnover will not be a limiting factor when the management of
ONE Fund deems it appropriate to purchase or sell securities for a portfolio.
ONE Fund's policy with respect to each portfolio is as follows:

Money Market Portfolio - Since the assets of the Money Market Portfolio
consist of short-term instruments, replacement of portfolio securities
will occur frequently. However, since purchases are generally effected
with dealers or issuers on a net basis, it is not expected that the Money
Market Portfolio will incur significant brokerage commissions.

Income Portfolio - The Income Portfolio will engage in transactions when
the Adviser believes that they will help to achieve the overall objectives
of this portfolio. Portfolio securities may or may not be held to
maturity. The rate of portfolio turnover will vary from time to time but
is not expected to exceed 50% annually. It was 49% for the last fiscal
year, and 40% for the fiscal year ended June 30, 1998.

Income & Growth Portfolio - The rate of portfolio turnover will vary from
time to time but is not expected to exceed 50% annually. It was 49% for
the last fiscal year, and 39% for the fiscal year ended June 30, 1998.

<PAGE> 43

Growth Portfolio - Although this portfolio will not normally purchase
securities with the intention of obtaining short-term capital
appreciation, purchases and sales will be made whenever deemed prudent and
consistent with the investment objectives of the portfolio. During periods
of relatively stable market and economic conditions, it is anticipated
that the annual portfolio turnover rate of the Growth Portfolio is not
expected to exceed 75% annually. During periods when changing market or
economic conditions are foreseen, shifts in portfolio emphasis may cause
the rate of portfolio turnover to increase. The rate was 53% for the last
fiscal year, and 40% for the fiscal year ended June 30, 1998.

Core Growth Portfolio - This portfolio will sometimes engage in short-term
trading and its turnover will tend to rise during periods of economic
turbulence. Under normal market conditions, the annual portfolio turnover
rate is expected to be between 100% and 300%. The rate was 14.8% for the
last fiscal year, and 116% for the fiscal year ended June 30, 1998. The
increase in portfolio turnover for fiscal year 1998 was due to a
reallocation of the portfolio's assets.

Small Cap Portfolio - While this portfolio purchases and holds securities
with the goal of meeting its investment objectives, portfolio changes are
made whenever the Adviser believes they are advisable, usually without
reference to the length of time a security has been held. The engagement
in a number of short-term transactions may result in relatively high
portfolio turnover rates, but the rate is not normally expected to exceed
150%. It was 48% for the last fiscal year, and 77% for the fiscal year
ended June 30, 1998.

International Portfolio - Although this portfolio will not normally engage
in short-term trading, purchases and sales of securities will be made
whenever deemed appropriate to achieve the portfolio's objective of total
return. The rate of portfolio turnover will not be a limiting factor when
portfolio changes are deemed appropriate to achieve this portfolio's
stated objective. Under normal circumstances, the portfolio turnover rate
for this portfolio is not expected to exceed 75% annually. It was 217% for
the last fiscal year, and 12% for the fiscal year ended June 30, 1998. The
increase in portfolio turnover was due to a change in subadviser and the
subsequent reallocation of the Portfolio's assets.

INVESTMENT RESTRICTIONS

The prospectus lists the most significant investment restrictions to which ONE
Fund is subject. (See "About ONE Fund" in the prospectus.) A complete list of
ONE Fund's investment restrictions is shown below. The first nine investment
restrictions are fundamental policies that may not be changed without the
affirmative vote of the majority of the outstanding voting securities of ONE
Fund or a particular portfolio, as appropriate. A "majority vote" means the vote
of the lesser of (i) 67% of the shares represented at a meeting at which more
than 50% of the outstanding shares are represented or (ii) more than 50% of the
outstanding voting securities. With respect to the submission of a change in an
investment policy to the holders of outstanding voting securities of a
particular portfolio, such matter shall be deemed to have been effectively acted
upon with respect to that portfolio if a majority of the outstanding voting
securities of the portfolio vote for the approval of such matter,
notwithstanding (1) that the matter has not been approved by the holders of a
majority of the outstanding voting securities of any other portfolio affected by
the matter, and (2) that the matter has not been approved by the vote of a
majority of the outstanding voting securities of ONE Fund. Investment
restrictions 10 and following are nonfundamental. They may be changed by the
Board of Directors without shareholder approval.

<PAGE> 44
ONE Fund may not issue senior securities, except to the extent that the
borrowing of money in accordance with restriction 4. or the purchase of reverse
repurchase agreements may constitute the issuance of a senior security, and each
portfolio of ONE Fund except the International Portfolio will not:

(Fundamental)

l. invest more than 5% of the value of its total assets in the
securities of any one issuer (except U.S. Government securities);

2. purchase more than l0% of the outstanding voting securities of any
one issuer, and the Money Market Portfolio will not acquire the
voting securities of any issuer except in connection with a merger,
consolidation or other reorganization;

3. invest more than 25% of the value of its total assets in any one
industry, except that the Money Market Portfolio may invest more
than 25% of the value of its total assets in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
or in certificates of deposit, bankers' acceptances, bank time
deposits or other obligations of banks. For purposes of this
restriction, ONE Fund considers each foreign government to
constitute an "industry." ONE Fund interprets the word "bank," as
used in this investment restriction, to mean "domestic bank."

4. borrow money, except by means of reverse repurchase agreements or,
for temporary or emergency purposes, from banks, and the aggregate
amount borrowed shall not exceed 5% of the value of the assets of
the portfolio (In the case of such borrowing, each portfolio may
pledge, mortgage or hypothecate up to 5% of its assets);

5. purchase or sell commodities or commodity contracts except that each
portfolio other than the Money Market Portfolio may, for hedging
purposes, purchase and sell financial futures contracts and options
thereon;

6. underwrite securities of other issuers except insofar as ONE Fund
may be considered an underwriter under the Securities Act of l933 in
selling portfolio securities;

7. purchase or sell real estate, including limited partnerships, except
that each portfolio may invest in securities secured by real estate
or interests therein or securities issued by companies which invest
in real estate or interests therein (For purposes of this
restriction, "real estate" does not include investments in readily
marketable notes or other evidence of indebtedness secured by
mortgages or deeds of trust relating to real property);

8. lend money or other assets to other persons, in excess of 5% of a
portfolio's total assets, except by the purchase of obligations in
which the portfolio is authorized to invest and by entering into
repurchase agreements (Portfolio securities may be loaned if
collateral values are continuously maintained at no less than 100%
by marking to market daily);

9. purchase securities of other investment companies, except in
connection with a merger, consolidation or reorganization, or except
the purchase by any portfolio other than the Money Market Portfolio
of the securities of closed-end investment companies if after the
purchase: (i) the portfolio does not own more than 3% of the total
outstanding voting stock of the other investment company or (ii) the
value of the securities of all investment companies held by such
portfolio does not exceed 10% of the value of the total assets of
that portfolio (Purchases of investment company securities will be
made (a) only on the open market or through dealers or underwriters
receiving the customary sales loads, or (b) as part of a merger,
consolidation or plan of reorganization);

8
<PAGE> 45
(Nonfundamental)
10. invest more than 15% of the value of its assets in securities or
other investments, including repurchase agreements maturing in
more than seven days, that are not readily marketable;

11. purchase or sell put or call options, except that each portfolio
other than the Money Market Portfolio may, for hedging purposes,
(a) write call options traded on a registered national securities
exchange if the portfolio owns the underlying securities subject to
such options, and purchase call options for the purpose of closing
out positions in options it has written; (b) purchase put options
on securities owned, and sell such options in order to close its
positions in put options; (c) purchase and sell financial futures
contracts and options thereon; and (d) purchase and sell financial
index options; provided, however, that no option or futures
contract shall be purchased or sold if, as a result, more than
one-third of the total assets of the portfolio would be hedged by
options or futures contracts, and no more than 5% of any
portfolio's total assets, at market value, may be used for premiums
on open options and initial margin deposits on futures contracts;

12. invest in securities of foreign issuers except that (a) each of the
Income, Income & Growth, Growth, Core Growth, Small Cap and S&P 500
Index Portfolios may invest up to 20% of its assets in securities
of foreign issuers (including foreign governments or political
subdivisions, agencies or instrumentalities of foreign governments)
American Depository Receipts, and securities of United States
domestic issuers denominated in foreign currency, and (b) the Money
Market Portfolio may invest up to 50% of its assets in such
securities, provided they are denominated in U.S. dollars and held
in custody in the United States; (For purposes of this restriction,
U.S. dollar denominated depository receipts traded in domestic
markets do not constitute foreign securities.)

13. sell securities short or purchase securities on margin except such
short-term credits as are required to clear transactions;

9
<PAGE> 46
14. invest in foreign currency contracts or options except that, in
order to hedge against changes in the exchange rates of foreign
currencies in relation to the U.S. dollar, each portfolio other
than the Money Market Portfolio may engage in forward foreign
currency contracts, foreign currency options and foreign currency
futures contracts in connection with the purchase, sale or
ownership of specific securities (but not more than 5% of a
portfolio's assets may be invested in such currency hedging
contracts).

The following are the fundamental investment policies related to the
International Portfolio

1. The portfolio will not issue senior securities, except that the
portfolio may borrow money directly or through reverse repurchase
agreements in amounts not in excess of one-third of the value of its total
assets; provided that, while borrowings and reverse repurchase agreements
outstanding exceed 5% of the portfolio's total assets, any such borrowings
will be repaid before additional investments are made.

2. The portfolio will not purchase securities if, as a result of such
purchase, 25% or more of the portfolio's total assets would be invested in
any one industry. However, the portfolio may at any time invest 25% or more
of its total assets in cash or cash items and securities issued and/or
guaranteed by the U.S. government, its agencies or instrumentalities.

3. The portfolio will not purchase or sell real estate, although it
may invest in securities of companies whose business involves the purchase
or sale of real estate or in securities secured by real estate or interests
in real estate.

4. The portfolio will not lend any of its assets, except the
portfolio's securities, up to one-third of its total assets. This shall not
prevent the portfolio from purchasing or holding corporate or U.S.
government bonds, debentures, notes, certificates of indebtedness or other
debt securities of an issuer, entering into repurchase agreements, or
engaging in other transactions which are permitted by the portfolio's
investment objectives and policies.

5. The portfolio will not underwrite any issue of securities, except
as the portfolio may be deemed to be an underwriter under the Securities
Act of 1933 in connection with the sale of securities in accordance with
its investment objectives, policies, and limitations.

6. With respect to 75% of its total assets, the portfolio will not
purchase the securities of any one issuer (other than cash, cash items, or
securities issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities) if, as a result, more than 5% of its total assets would be
invested in the securities of that issuer. Also, the portfolio will not
purchase more than 10% of any class of the outstanding voting securities of
any one issuer. For these purposes, the portfolio considers common stock
and all preferred stock of an issuer each as a single class, regardless of
priorities, series, designations, or other differences.

7. The portfolio will not purchase any securities on margin, but it
may obtain such short-term credits as are necessary for clearance of
transactions. The deposit or payment by the portfolio of initial or
variation margin in connection with financial futures contracts or related
options transactions is not considered the purchase of a security on
margin.

8. The portfolio will not purchase or sell commodities, except that
the portfolio may purchase and sell financial futures contracts and related
options.

9. The portfolio will not pledge, mortgage or hypothecate any assets
except to secure permitted borrowings. In those cases, the portfolio may
pledge, mortgage or hypothecate assets having a market value not exceeding
the lesser of the dollar amounts borrowed or 15% of the value of its total
assets at the time of borrowing.

10. The portfolio will not sell securities short unless during the
time the short position is open, the portfolio owns an equal amount of the
securities sold or securities readily and freely convertible into or
exchangeable, without payment of additional consideration, for securities
of the same issue as, and equal in amount to, the securities sold short;
and not more than 10% of the portfolio's net assets (taken at current
value) is held as collateral for such sales at any one time.

11. The portfolio will not invest more than 15% of its net assets in
illiquid securities, including, among others, repurchase agreements
providing for the settlement more than seven days after notice, and certain
restricted securities not determined by the Board of Directors to be
liquid.

In addition to the above restrictions, in order to comply with Rule 2a-7 under
the Investment Company Act of 1940, no more than 5% of the assets of the Money
Market Portfolio will be invested in "second-tier" short-term debt instruments,
that is those receiving the second highest rating by any two nationally
recognized statistical rating organizations ("NRSRO's") (or by one NRSRO if (a)
that is the only NRSRO having rated the security or (b) one other NRSRO has
given the security its highest rating), or whose issuer has received such a
rating or ratings with respect to a class of short-term debt obligations that is
now comparable in priority and security to those to be purchased. In addition,
not more than $1 million (or 1% of this portfolio's assets, if greater) may be
invested in the second-tier instruments of any one issuer.

Under normal market conditions, at least 65% of the assets of the International
Portfolio will be invested in foreign securities, including securities of
issuers in at least three different foreign countries. As of the date of this
Statement of Additional Information, the Board of Directors has approved
investment by the International Portfolio in 50 countries with developed
securities markets, including the following countries with developed economies:
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Israel, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Spain,
Sweden, Switzerland and the United Kingdom; and the following countries with
developing economies: Argentina, Bangla Desh, Brazil, Chile, China (Hong Kong,
Shanghai and Shenzhen Exchanges), Czech Republic, Egypt, Greece, Hungary,
Indonesia, Jordan, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines,
Poland, Portugal, Singapore, South Africa, South Korea, Sri Lanka, Taiwan,
Thailand, Turkey, Uruguay, Venezuela and Zimbabwe.

INVESTMENT POLICIES

The following descriptions of money market instruments supplement the investment
objectives and policies (see "Money Market Portfolio") set forth in ONE Fund's
prospectus. The Money Market Portfolio will invest extensively in these
instruments. The other portfolios may invest in such instruments to a very
limited extent (to invest otherwise idle cash) or on a temporary basis for
defensive purposes. The debt security ratings referred to in the prospectus in
connection with the investment policies of the portfolios are defined in the
Appendix to this Statement of Additional Information.

MONEY MARKET INSTRUMENTS

U.S. Government Obligations - Bills, notes, bonds and other debt
securities issued or guaranteed as to principal or interest by the United
States or by agencies or authorities controlled or supervised by and
acting as instrumentalities of the U.S. Government established under
authority granted by Congress, including, but not limited to, the
Government National Mortgage Association, the Tennessee Valley Authority,
the Bank for Cooperatives, the Farmers Home Administration, and Federal
Home Loan Banks. Some obligations of U.S. Government agencies, authorities
and other instrumentalities are supported by the full faith and credit of
the U.S. Treasury; others by the right of the issuer to borrow from the
U.S. Treasury; and others only by the credit of the issuer. Certain of the
foregoing may be purchased on a "when issued" basis at which time the rate
of return will not have been set.

Certificates of Deposit - Certificates issued against funds deposited in a
bank for a definite period of time, at a specified rate of return.
Normally they are negotiable.

10
<PAGE> 47
Bankers' Acceptances - Short-term credit instruments issued by
corporations to finance the import, export, transfer or storage of goods.
They are termed "accepted" when a bank guarantees their payment at
maturity and reflect the obligation of both the bank and drawer to pay the
face amount of the instrument at maturity.

Commercial Paper - Promissory notes issued by corporations to finance
their short-term credit needs. Commercial paper obligations may include
variable amount master demand notes. Variable amount master demand notes
are obligations that permit the investment of fluctuating amounts by the
portfolio at varying rates of interest pursuant to direct arrangements
between the portfolio, as lender, and the borrower. These notes permit
daily changes in the amounts borrowed. The portfolio has the right to
increase the amount under the note at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without penalty.
Because variable amount master demand notes are direct lending
arrangements between the lender and the borrower, it is not generally
contemplated that such instruments will be traded, and there is no
secondary market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at face value, plus accrued
interest, at any time. In connection with a master demand note
arrangement, the Adviser will monitor, on an ongoing basis, the earning
power, cash flow, and other liquidity ratios of the issuer and its ability
to pay principal and interest on demand. While master demand notes, as
such, are not typically rated by credit rating agencies, if not so rated
the portfolio may invest in them only if at the time of an investment the
issuer meets the criteria set forth above for all other commercial paper
issuers. Such notes will be considered to have a maturity of the longer of
the demand period or the period of the interest guarantee.

Corporate Obligations - Bonds and notes issued by corporations in order to
finance longer-term credit needs.

REPURCHASE AGREEMENTS

Under a repurchase agreement, the portfolio purchases a security and obtains a
simultaneous commitment from the seller (a member bank of the Federal Reserve
System or a government securities dealer recognized by the Federal Reserve
Board) to repurchase the security at a mutually agreed upon price and date. It
may also be viewed as a loan of money by the portfolio to the seller. The resale
price is normally in excess of the purchase price and reflects an agreed upon
market rate. The rate is effective for the period of time the portfolio is
invested in the agreement and unrelated to the coupon rate on the purchased
security. The period of these repurchase agreements will usually be short, from
overnight to one week, and at no time will the portfolio invest in repurchase
agreements for more than one year. These transactions afford an opportunity for
the portfolio to earn a return on temporarily available cash. Although
repurchase agreements carry certain risks not associated with direct investments
in securities, ONE Fund intends to enter into repurchase agreements only with
financial institutions believed by the Adviser or Sub-adviser to present minimal
credit risks in accordance with criteria established by ONE Fund's Board of
Directors. The Adviser or Sub-adviser will review and monitor the
creditworthiness of such institutions under the Board's general supervision. ONE
Fund will only enter into repurchase agreements pursuant to a master repurchase
agreement that provides that all transactions be fully collateralized and that
the collateral be in the actual or constructive possession of ONE Fund. The
agreement must also provide that ONE Fund will always receive as collateral
securities whose market value, including accrued interest, will be at least
equal to 100% of the dollar amount invested by the portfolio in each agreement,
and the portfolio will make payment for such securities only upon physical
delivery or evidence of book entry transfer to the account of the custodian. If
the seller were to default, the portfolio might incur a loss if the value of the
collateral securing the repurchase agreement declines and may incur disposition
costs in connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization upon the collateral by the portfolio may be delayed or limited and a
loss may be

11
<PAGE> 48
incurred if the collateral securing the repurchase agreement declines in value
during the bankruptcy proceedings.

REVERSE REPURCHASE AGREEMENTS

Under a reverse repurchase agreement, a portfolio sells a debt security and
agrees to repurchase it at an agreed upon time and at an agreed upon price. The
portfolio retains record ownership of the security and the right to receive
interest and principal payments thereon. At an agreed upon future date, the
portfolio repurchases the security by remitting the proceeds previously
received, plus interest. The difference between the amount the portfolio
receives for the security and the amount it pays on repurchase is deemed to be
payment of interest. The portfolio will maintain in a segregated custodial
account cash, Treasury bills or other U.S. Government securities having an
aggregate value equal to the amount of such commitment to repurchase including
accrued interest, until payment is made. In certain types of agreements, there
is no agreed-upon repurchase date and interest payments are calculated daily,
often based on the prevailing overnight repurchase rate. The Securities and
Exchange Commission views these transactions as collateralized borrowings by the
portfolio and the portfolio will abide by the limitations set out in fundamental
investment restriction number 4 with respect to the borrowing of money.

HEDGING TRANSACTIONS

The purpose of hedging transactions using put and call options on individual
securities, financial futures contracts, and options on such contracts and on
financial indexes, all to the extent provided in investment restrictions 5 and
11, is to reduce the risk of fluctuation of portfolio securities values or to
take advantage of expected market fluctuations. However, while such transactions
are defensive in nature and are not speculative, some risks remain.

The use of options and futures contracts may help ONE Fund to gain exposure or
to protect itself from changes in market values. For example, ONE Fund may have
a substantial amount of cash at the beginning of a market rally. Conventional
procedures of purchasing a number of individual issues requires time and may
result in missing a significant market movement. By using futures contracts, ONE
Fund can obtain immediate exposure to the market. The buying program will then
proceed and, once it is completed (or as it proceeds), the futures contracts
will be closed. Conversely, in the early stages of a market decline, market
exposure can be promptly offset by selling futures contracts, and individual
securities can be sold over a longer period under cover of the resulting short
contract position.

COVERED CALL OPTIONS AND PUT OPTIONS

In writing (i.e., selling) "covered" call options on securities owned by a
portfolio, the portfolio gives the purchaser of the call option the right to
purchase the underlying securities owned by the portfolio at a specified
"exercise" price at any time prior to the expiration of the option, normally
within nine months. In purchasing put options on securities owned by a
portfolio, the portfolio pays the seller of the put option a premium for the
right of the portfolio to sell the underlying securities owned by the portfolio
at a specified exercise price prior to the expiration of the option.

Whenever a portfolio has a covered call option outstanding, the underlying
securities will be segregated by ONE Fund's custodian and held in an escrow
account to assure that such securities will be delivered to the option holder if
the option is exercised. While the underlying securities are subject to the
option, the portfolio remains the record owner of the securities, entitling it
to receive dividends and to exercise any voting rights. In order to terminate
its position as the writer of a call option or the purchaser of a put option,
the portfolio may enter into a "closing" transaction, which is the purchase of a
call option or sale of a put option on the same underlying securities and having
the same exercise price and expiration date as the option previously sold or
purchased by the portfolio.

12
<PAGE> 49
RISK FACTORS WITH OPTIONS

The purchaser of an option pays the option writer a "premium" for the option. In
the case of a covered call option written by a portfolio, if the purchaser does
not exercise the call option, the premium will generate additional capital gain
to the portfolio. If the market price of the underlying security declines, the
premium received for the call option will reduce the amount of the loss the
portfolio would otherwise incur. However, if the market price of the underlying
security rises above the exercise price and the call option is exercised, the
portfolio will lose its opportunity to profit from that portion of the rise
which is in excess of the exercise price plus the option premium. Therefore, ONE
Fund will write call options only when the Adviser believes that the option
premium will yield a greater return to the portfolio than any capital
appreciation that might occur on the underlying security during the life of the
option.

In the case of a put option purchased by a portfolio, if the market price of the
underlying security remains or rises above the exercise price of the option, the
portfolio will not exercise the option and the premium paid for such option will
reduce the gain the portfolio would otherwise have earned. Conversely, if the
market price of the underlying security falls below the exercise price less the
premium paid for the option, the portfolio will exercise the option, thereby
reducing the loss the portfolio would have otherwise suffered. Accordingly, a
portfolio will purchase put options only when the Adviser believes that the
market price of the underlying security is more likely to decrease than
increase.

Whenever a portfolio enters into a closing transaction, the portfolio will
realize a gain (or loss) if the premium plus commission it pays for a closing
call option is less (or greater) than the premium it received on the sale of the
original call option. Conversely, the portfolio will realize a gain (or loss) if
the premium it receives, less commission, for a closing put option is greater
(or less) than the premium it paid for the original put option. The portfolio
will realize a gain if a call option it has written lapses unexercised, and a
loss if a put option it has purchased lapses unexercised.

FUTURES CONTRACTS

Each portfolio, other than the Money Market Portfolio, may invest in two kinds
of financial futures contracts: stock index futures contracts and interest rate
futures contracts. Stock index futures contracts are contracts developed by and
traded on national commodity exchanges whereby the buyer will, on a specified
future date, pay or receive a final cash payment equal to the difference between
the actual value of the stock index on the last day of the contract and the
value of the stock index established by the contract multiplied by the specific
dollar amount set by the exchange. Futures contracts may be based on broad-based
stock indexes such as the Standard & Poor's 500 Index or on narrow-based stock
indexes. A particular index will be selected according to the Adviser's
investment strategy for the particular port- folio. An interest rate futures
contract is an agreement whereby one party agrees to sell and another party
agrees to purchase a specified amount of a specified financial instrument (debt
security) at a specified price at a specified date, time and place. Although
interest rate futures contracts typically require actual future delivery of and
payment for financial instruments, the contracts are usually closed out before
the delivery date. A public market exists in interest rate futures contracts
covering primarily the following financial instruments: U.S. Treasury bonds;
U.S. Treasury notes; Government National Mortgage Association (GNMA) modified
pass-through mortgage-backed securities; three-month U.S. Treasury bills; 90-day
commercial paper; bank certificates of deposit; and Eurodollar certificates of
deposit. It is expected that futures contracts trading in additional financial
instruments will be authorized.

At the time a portfolio enters into a contract, it sets aside a small portion of
the contract value in an account with ONE Fund's custodian as a good faith
deposit (initial margin) and each day during the contract period requests and
receives or pays cash equal to the daily change in the contract value

13
<PAGE> 50

(variable margin). ONE Fund, its futures commission merchant and ONE Fund's
custodian retain control of the initial margin until the contract is liquidated.

OPTIONS ON FUTURES CONTRACTS AND FINANCIAL INDEXES

Instead of entering into a financial futures contract, a portfolio may buy an
option giving it the right to enter into such a contract at a future date. The
price paid for such an option is called a premium. A portfolio also may buy
options on financial indexes that are traded on securities exchanges. Options on
financial indexes react to changes in the value of the underlying index in the
same way that options on financial futures contracts do. All settlements for
options on financial indexes also are for cash.

Financial futures contracts, options on such contracts and options on financial
indexes will only be used for hedging purposes and will, therefore, be
incidental to ONE Fund's activities in the securities market. Accordingly,
portfolio securities subject to options, or money market instruments having the
market value of any futures contracts, will be set aside to collateralize the
options or futures contracts.

RISK FACTORS WITH FUTURES, OPTIONS ON FUTURES AND OPTIONS ON INDEXES

One risk of entering into financial futures contracts, buying options on such
contracts and buying options on financial indexes is that there may not be
enough buyers and sellers in the market to permit the portfolio to close a
position when it wants to do so. In such event, besides continuing to be subject
to the margin requirements, the portfolio would experience a gain or loss to the
extent that the price movement of the securities subject to the hedge differed
from the position. To limit the risk, the portfolios will invest only where
there is an established secondary market.

A risk applicable to both futures contracts and related options is that changes
in the value of the contracts or option may not correlate with changes in the
underlying financial index or with changes in the value of the securities
subject to hedge or both. This failure may be due, in part, to temporary
activity of speculators in the futures markets. To the extent there is not a
perfect correlation, changes in the value of a portfolio's assets would not be
offset by changes in the value of the contracts and options it had bought.

When a portfolio buys an option on a futures contract or an option on a
financial index, its risk of loss is limited to the amount of the premium paid.
When a portfolio enters into a futures contract, there is no such limit.
However, the loss on an options contract would exceed that of a futures contract
if the change in the value of the index does not exceed the premium paid for the
option.

The success of a hedge depends upon the Adviser's ability to predict increases
or decreases in the relevant financial index. If this expectation proves
incorrect, a portfolio could suffer a loss, and would be better off if those
futures contracts or options had not been purchased. The skills involved in
determining whether to enter into a futures contract or purchase or sell an
option are different from those involved in determining whether to buy or sell a
security. The Adviser has had only limited experience using financial futures
contracts, options on financial futures and options on financial indexes.

Because of the low margin deposits required, futures trading involves a high
degree of leverage. As a result, a relatively small price movement in a futures
contract may result in immediate and substantial gain or loss. A purchase or
sale of a futures contract may result in losses in excess of the amount invested
in the futures contract.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no more
trades may be

14
<PAGE> 51

made on that day at a price beyond that limit. The daily limit governs only
price movements during a particular trading day and therefore does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures and subjecting some futures traders to
substantial losses.

RISK FACTORS WITH FOREIGN INVESTMENTS

Investments in foreign securities involve considerations not normally associated
with investing in domestic issuers. Such factors include changes in currency
exchange rates, currency exchange control regulations, the possibility of
seizure or nationalization of companies, political or economic instability,
imposition of unforeseen taxes, the possibility of financial information being
difficult to obtain or difficult to interpret under foreign accounting
standards, the necessity of trading in markets that in relation to U.S. markets
may be less efficient and have available less information concerning issuers, or
the imposition of other restraints that might adversely affect investments.

In selecting foreign investments, each portfolio seeks to minimize these
factors. It seeks to invest in securities having investment characteristics and
qualities comparable to the kinds of domestic securities in which it invests.
Each portfolio seeks to limit investments in countries with volatile or unstable
political or economic conditions.

The portfolios may invest in securities of foreign issuers either directly or in
the form of American Depository Receipts (ADRs). ADRs are securities typically
issued by an American bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. ADRs enable foreign
stocks to be traded and cleared on United States markets. They bear the same
investment risks as the underlying foreign stocks. The portfolios may invest in
both sponsored and unsponsored ADRs. There may be less financial and other
information available for unsponsored ADRs than for sponsored ADRs.

Since investments in foreign securities, other than U.S. dollar denominated
securities, involve currencies of foreign countries, the value of a portfolio's
assets, as measured in U.S. dollars may be affected favorably or unfavorably by
changes in currency exchange rates and in currency exchange control regulations.

FOREIGN CURRENCY HEDGING TRANSACTIONS

In order to hedge against changes in the exchange rates of foreign currencies in
relation to the U.S. dollar, each portfolio, other than the Money Market and
Tax-Free Income Portfolios, may engage, to the extent permitted in restriction
22, above, in forward foreign currency contracts, foreign currency options and
foreign currency futures contracts in connection with the purchase, sale or
ownership of a specific security.

The portfolios generally conduct their foreign currency exchange transactions on
a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange
currency market. When a portfolio purchases or sells a security denominated in a
foreign currency, it may enter into a forward foreign currency contract
("forward contract") for the purchase or sale, for a fixed amount of dollars, of
the amount of currency involved in the underlying security transaction. A
forward contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
In this manner, a portfolio may obtain protection against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the foreign currency during the period between the date the security is
purchased or sold and the date upon which payment is made or received. Although
such contracts tend to minimize the risk of loss due to the decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
which might result should the value of such currency increase.

15
<PAGE> 52
Forward contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. Generally
a forward contract has no deposit requirement, and no commissions are charged.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference between the prices at which they buy
and sell various currencies. When the portfolio manager believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, a portfolio may enter into a forward contract to sell,
for a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of that portfolio's securities denominated in such foreign
currency. No portfolio will enter into such forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the portfolio to deliver an amount of foreign currency in excess of the
value of its assets denominated in that currency.

At the consummation of a forward contract for delivery by a portfolio of a
foreign currency, the portfolio may either make delivery of the foreign currency
or terminate its contractual obligation to deliver the foreign currency by
purchasing an offsetting contract obligating it to purchase, at the same
maturity date, the same amount of the foreign currency. If the portfolio chooses
to make delivery of the foreign currency, it may be required to obtain such
currency through the sale of its securities denominated in such currency or
through conversion of other portfolio assets into such currency. It is
impossible to forecast the market value of portfolio securities at the
expiration of the forward contract. Accordingly, it may be necessary for the
portfolio to purchase additional foreign currency on the spot market (and bear
the expense of such purchase) if the market value of the security is less than
the amount of foreign currency the portfolio is obligated to deliver, and if a
decision is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary for the portfolio to sell on the spot market
some of the foreign currency received on the sale of its hedged security if the
security's market value exceeds the amount of foreign currency the portfolio is
obligated to deliver.

If the portfolio retains the hedged security and engages in an offsetting
transaction, it will incur a gain or loss to the extent that there has been
movement in spot or forward contract prices. If a portfolio engages in an
offsetting transaction, it may subsequently enter into a new forward contract to
sell the foreign currency. Should forward prices decline during the period
between the portfolio's entering into a forward contract for the sale of a
foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, the portfolio will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
portfolio will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.

Buyers and sellers of foreign currency options and futures contracts are subject
to the same risks previously described with respect to options and futures
generally (see "Risk Factors with Options" and "Risk Factors with Futures,
Options on Futures and Options on Indexes," above). In addition, settlement of
currency options and futures contracts with respect to most currencies must
occur at a bank located in the issuing nation. The ability to establish and
close out positions on such options is subject to the maintenance of a liquid
market that may not always be available. Currency rates may fluctuate based on
political considerations and governmental actions as opposed to purely economic
factors.

Predicting the movements of foreign currency in relation to the U.S. dollar is
difficult and requires different skills than those necessary to predict
movements in the securities market. There is no assurance that the use of
foreign currency hedging transactions can successfully protect a portfolio
against loss resulting from the movements of foreign currency in relation to the
U.S. dollar. In addition, it must be remembered that these methods of protecting
the value of a portfolio's securities against a decline in the value of a
currency do not eliminate fluctuations in the underlying prices of the
securities. They simply establish rates of exchange which can be achieved at
some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to the decline in the value of the hedged
currency, at the same time they tend to limit any potential gain which might
result should the value of such currency increase.

16
<PAGE> 53
RISK FACTORS WITH HIGH-YIELD, HIGH-RISK SECURITIES

The high-yield, high-risk securities in which the Income Portfolio may invest up
to 15% of its assets present special risks to investors. The market value of
lower-rated securities may be more volatile than that of higher-rated securities
and generally tends to reflect the market's perception of the creditworthiness
of the issuer and short-term market developments to a greater extent than more
highly-rated securities, which primarily reflect fluctuations in prevailing
interest rates. Periods of economic uncertainty and change can be expected to
result in increased volatility in the market value of lower-rated securities.
Further, such securities may be subject to greater risks of loss of income and
principal, particularly in the event of adverse economic changes or increased
interest rates, because their issuers generally are not as financially secure or
as creditworthy as issuers of higher-rated securities. Additionally, to the
extent that there is no national market system for secondary trading of
lower-rated securities, there may be a low volume of trading in such securities
which may make it more difficult to value or sell those securities than
higher-rated securities. Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the values and liquidity of
high-yield, high-risk securities, especially in a thinly traded market.

Investors should recognize that the market for high-yield, high-risk securities
is a relatively recent development that has not been fully tested by a prolonged
economic recession. An economic downturn may severely disrupt the market for
such securities and cause financial stress to the issuers which may adversely
affect the value of such securities held by the Income Portfolio and the ability
of the issuers of such securities to pay principal and interest. A default by an
issuer may result in the Income Portfolio incurring additional expenses to seek
recovery of the amounts due it.

CONVERTIBLE SECURITIES

Convertible securities include a variety of instruments that can be exchanged
for or converted into common stock, including convertible bonds or debentures,
convertible preferred stock, units consisting of usable bonds and warrants, and
securities that cap or otherwise limit returns to the security holder. Examples
of these include dividend enhanced convertible stocks or debt exchangeable for
common stock (DECS), liquid yield option notes (LYONS), preferred equity
redemption cumulative stock (PERCS), preferred redeemable increased dividend
securities (PRIDES) and zero coupon convertible securities.

As with all fixed-income securities, various market forces influence the market
value of convertible securities, including changes in the level of interest
rates. As the level of interest rates increases, the market value of convertible
securities may decline and, conversely, as interest rates decline, the market
value of convertible securities may increase. The unique investment
characteristic of convertible securities, the right to be exchanged for the
issuer's common stock, causes the market value of convertible securities to
increase when the underlying common stock increases. However, since securities
priced fluctuate, there can be no assurance of capital appreciation, and most
convertible securities will not reflect quite as much capital appreciation as
their underlying common stocks. When the underlying common stock is experiencing
a decline, the value of the convertible security tends to decline to a level
approximating the yield-to-maturity basis of straight nonconvertible debt of
similar quality, often call "investment value," and may not experience the same
decline as the underlying common stocks.

Many convertible securities sell at a premium over their conversion values
(i.e., the number of shares of common stock to be received upon conversion
multiplied by the current market price of the stock). This premium represents
the price investors are willing to pay for the privilege of purchasing a
fixed-income security with a possibility of capital appreciation due to the
conversion privilege. If this appreciation potential is not realized, the
premium may not be recovered.

ZERO-COUPON AND PAY-IN-KIND DEBT SECURITIES

Zero-coupon securities (or "step-ups") in which a portfolio may invest are debt
obligations which are generally issued at a discount and payable in full at
maturity, and which do not provide for current payments of interest prior to
maturity. Pay-in-kind securities make periodic interest payments in the form of
additional securities (as opposed to cash). Zero-coupon and pay-in-kind
securities usually trade at a deep discount from their face or par value and are
subject to greater market value fluctuations from changing interest rates than
debt obligations of comparable maturities which make current distributions of
interest. As a result, the net asset value of shares of a portfolio investing in
zero-coupon and pay-in-kind securities may fluctuate over a greater range than
shares of other mutual funds investing in securities making current
distributions of interest and having similar maturities.

SECURITIES LENDING

A portfolio may lend its portfolio securities, provided: (1) the loan is secured
continuously by collateral consisting of U.S. Government securities, cash or
cash equivalents adjusted daily to have market value at least equal to the
current market value of the securities loaned; (2) the portfolio may at any time
call the loan and regain the securities loaned; (3) a portfolio will receive any
interest or dividend paid on the loaned securities; and (4) the aggregate market
value of any portfolio's securities loaned bill not at any time exceed one-third
(or such other limit as the Board of Directors may establish) of the total
assets of the portfolio. In addition, it is anticipated that a portfolio may
share with the borrower some of the income received on the collateral for the
loan or that the portfolio will be paid a premium for the loan.

Before a portfolio enters into a loan, the Adviser or sub-adviser considers all
relevant facts and circumstances, including the creditworthiness of the
borrower. The risks in lending portfolio securities, as with other extensions of
credit, consist of possible delay in recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially. Although
voting rights or rights to consent with respect to the loaned securities pass to
the borrower, a portfolio retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be voted
by a portfolio if the holders of such securities are asked to vote upon or
consent to matters materially affecting the investment.

WARRANTS

Warrants basically are options to purchase common stock at a specific price
(usually at a premium above the market value of the optioned common stock at
issuance) valid for a specified period of time. Warrants may have a life ranging
from less than a year to twenty years or may be perpetual. However, warrants
have expiration dates after which they are worthless. In addition, if the market
price of the common stock does not exceed the warrant's exercise price during
the life of the warrant, the warrant will expire as worthless. Warrants have no
voting rights, pay no dividends, and have no rights with respect to the assets
of the corporation issuing them. The percentage increase or decrease in the
market price of the warrant may tend to be greater than the percentage increase
or decrease in the market price of the optioned common stock.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an advantageous
price or yield for a portfolio. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the portfolio
sufficient to make payment for the securities to be purchased are segregated on
the portfolio's records at the trade date. These assets are marked to market
daily and are maintained until the transaction has been settled. No portfolio
will engage in when-issued and delayed delivery transactions to an extent that
would cause the segregation of more than 20% of the total value of its assets.

BORROWING MONEY

The portfolios will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in excess of 5%
of the value of a portfolio's total assets. In addition, certain portfolios may
enter into reverse repurchase agreements and otherwise borrow up to one-third of
the value of the portfolio's total assets, including the amount borrowed, in
order to meet redemption requests without immediately selling portfolio
securities. This latter practice is not for investment leverage but solely to
facilitate management of a portfolio by enabling it to meet redemption requests
when the liquidation of portfolio instruments would be inconvenient or
disadvantageous.

Interest paid on borrowed funds will not be available for investment and will
reduce net income. A portfolio will liquidate any such borrowings as soon as
possible and may not purchase any portfolio securities while the borrowings are
outstanding. However, during the period any reverse repurchase agreements are
outstanding, but only to the extent necessary to assure completion of the
reverse repurchase agreements, the purchase of portfolio securities will be
limited to money market instruments maturing on or before the expiration date of
the reverse repurchase agreements.

MANAGEMENT OF ONE FUND

DIRECTORS AND OFFICERS OF ONE FUND

The directors and officers of ONE Fund, together with information as to their
principal occupations during the past five years are listed below:
<TABLE>
<CAPTION>

Position with Principal Occupation
Name and address the Fund during past five years
- ---------------- ------------- ----------------------

<S> <C> <C>
Ronald L. Benedict* Secretary and Corporate Vice President, Counsel
One Financial Way Director and Secretary, ONLI; Secretary
Cincinnati, Ohio of the Adviser and Ohio National Equities
Inc.; Secretary and Director of ONF.

George E. Castrucci Director Director of ONF; Retired; Formerly
8355 Old Stable Road President and Chief Operating
Cincinnati, Ohio Officer of Great American
Communications Co. and Chairman and Chief
Executive Officer of Great
American Broadcasting Co.; Director
of Benchmark Savings Bank; Director of
Baldwin Piano & Organ Co.

Ross Love Director President & CEO, Blue Chip Broadcasting,
615 Windings Way Ltd.; Trustee, Health Alliance of Greater
Cincinnati, Ohio Cincinnati; Director, Partnership for a
Drug Free America (Chairman of African-
American Task Force); Advisory Board,
Syracuse University School of Management;
Director of ONF; Director, Association of
National Advertisers; Until 1996 was Vice
President of Advertising, Procter & Gamble Co.

John J. Palmer* President and Senior Vice President,
One Financial Way Director Strategic Initiatives, ONLI;
Cincinnati, Ohio President and Director of ONF;
President and Director of ONLI's
broker-dealers; Prior to March
1997 was Senior Vice President
of Life Insurance Company of
Virginia.
</TABLE>
17
<PAGE> 54

<TABLE>
<S> <C> <C>
George M. Vredeveld Director Professor of Economics, University of
University of Cincinnati Cincinnati; Director of Center for
P.O. Box 210223 Economic Education; Private
Cincinnati, Ohio Consultant; Director of Benchmark
Savings Bank.

Thomas A. Barefield Vice President Sr. Vice President, Institutional
One Financial Way Sales, ONLI; Vice President of ONF;
Cincinnati, Ohio Sr. Vice President of ONEQ.
Prior to December 1997, Senior Vice
President, Life Insurance Company

Michael A. Boedeker Vice President Vice President, Senior Investment
One Financial Way Officer, ONLI; Vice President
Cincinnati, Ohio and Director of the Adviser;
Vice President of ONF.

Joseph P. Brom Vice President Executive Vice President, ONLI;
One Financial Way President and Director of the
Cincinnati, Ohio Adviser; Vice President of ONF.

Stephen T. Williams Vice President Vice President of Equity Securities, ONLI;
One Financial Way Vice President and Director of
Cincinnati, Ohio the Adviser; Vice President of ONF.

Dennis R. Taney Treasurer Mutual Funds Financial Operations
One Financial Way Director, ONLI; Treasurer of
Cincinnati, Ohio the Adviser; Treasurer of ONF

William Hilbert, Jr. Compliance Director From May 1996 until December
One Financial Way & Assistant Treasurer 1997, was an investment
Cincinnati, Ohio administrator for ONLI; worked
as a contractor for Fidelity
Investments (1994-5) and for
Procter & Gamble (1995-6)

Marcus L. Collins Assistant Secretary Senior Attorney, ONLI. Prior
One Financial Way to 1999 was counsel to Countrywide
Cincinnati, Ohio Financial Services, Inc. (1998) and
legal contract employee for the U.S.
Department of Justice (1991-1998)

</TABLE>

* Indicates Directors who are "Interested Persons" as defined by the Investment
Company Act of 1940, as amended.

COMPENSATION OF DIRECTORS
Directors not affiliated with ONLI, the Adviser, PBA or FGIM were compensated as
follows during the fiscal year ended June 30, 1999:

<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
Name of Director from ONE Fund from Fund Complex*
- ---------------- ---------------------- ------------------

<S> <C> <C>
George E. Castrucci $ 4,600 $15,000
Ross Love 4,600 15,000
George M. Vredeveld 4,600 15,000
</TABLE>

18
<PAGE> 55

*The "Fund Complex" consists of ONE Fund and ONF.

Directors and officers of ONE Fund who are affiliated with ONLI or the Adviser
receive no compensation from the Fund Complex. ONE Fund has no pension,
retirement or deferred compensation plan for its directors or officers.

SHAREHOLDERS' MEETINGS

ONE Fund's by-laws provide that shareholders' meetings need only be held every
three years unless matters requiring shareholder approval should occur more
frequently. It is anticipated that shareholders' meetings will generally occur
every three years.

CONTROLLING PERSONS AND PRINCIPAL SHAREHOLDERS

Because of its ownership of ONE Fund shares, ONLI is a controlling person of
each portfolio of ONE Fund other than the International Portfolio. As a result,
ONLI likely will be able to control the outcome of a shareholder vote for any of
those portfolios unless and until the percentage of shares of a portfolio held
by other investors significantly expands. The Adviser is also 100% owned by
ONLI.

As of June 9, 1999, ONLI's ownership of ONE Fund shares was as follows:

<TABLE>
<CAPTION>
Number of Net Asset Percent of
Portfolio Shares Value Portfolio
- --------- ---------- --------- ----------
<S> <C> <C> <C>
Money Market 8,493,694 $ 8,493,694 50.1%
Income 510,744 $ 4,938,894 77.5%
Income & Growth 347,932 $ 5,281,608 40.3%
Growth 240,131 $ 3,923,741 37.3%
Core Growth 250,100 $ 2,863,645 65.6%
Small Cap 211,603 $ 2,204,903 58.6%
International 33,100 $ 1,069 0.0%
</TABLE>

In addition, as of that date, Bradley Warnamurde, c/o ONLI, One Financial Way,
Cincinnati, Ohio 45242 owned 51,495,932 shares of the International Portfolio
having a total net asset value of $550,492 and representing 78% of the
Portfolio. As of that date, no other shareholder owned more than 5% of the
shares of any ONE Fund portfolio. The amount of shares of each portfolio of ONE
Fund held by officers and directors of ONE Fund, as a group, was less than 1%.

INVESTMENT ADVISORY AND OTHER SERVICES

The Adviser is an Ohio corporation organized on January 17, 1996 to provide
investment advice and management services to funds affiliated with ONLI. The
Adviser is a wholly-owned subsidiary of ONLI. The Adviser succeeded O.N.
Investment Management Company ("ONIMCO") as ONE Fund's investment adviser on May
1, 1996. Prior to that date, ONIMCO had been the investment adviser from ONE
Fund's inception. The Adviser, like ONIMCO before it, uses ONLI's investment
personnel and administrative systems.

The Adviser regularly furnishes to ONE Fund's Board of Directors recommendations
with respect to an investment program consistent with the investment policies of
each investment portfolio. Upon approval of an investment program by ONE Fund's
Board of Directors, the Adviser implements the

19
<PAGE> 56

program by placing the orders for the purchase and sale of securities or, in the
case of the International Portfolio, delegates that implementation to FGIM.

The Adviser's services are provided under an Investment Advisory Agreement with
ONE Fund. Under the Investment Advisory Agreement, the Adviser provides
personnel, including executive officers for ONE Fund. The Adviser also
furnishes at its own expense or pays the expenses of ONE Fund for clerical and
related administrative services (other than those provided by the custodian
agreements with Firstar Bank and Investors Fiduciary Trust Company, and the
agency agreement with American Data Services, Inc.), office space, and other
facilities. ONE Fund pays corporate expenses incurred in its operations,
including, among others, local income, franchise, issuance or other taxes;
certain printing costs; brokerage commissions on portfolio transactions;
custodial and transfer agent fees; auditing and legal expenses; and expenses
relating to registration of its shares for sale and shareholders' meetings.

As compensation for its services, the Adviser receives from ONE Fund an annual
investment advisory fee based on the average daily net asset value of each
portfolio's assets during the quarterly period for which the fee is paid based
on the following schedule: (a) for those assets held in the Income, Income &
Growth and Growth Portfolios, the fee is at an annual rate of 0.5% of the first
$l00 million of assets in each portfolio, 0.4% of the next $l50 million and
0.3% of assets over $250 million; (b) as to assets held in the Money Market
Portfolio, the fee is at an annual rate of 0.3% of the first $100 million of
assets, 0.25% of the next $150 million, and 0.2% of assets over $250 million;
(c) for assets held in the Small Cap Portfolio, the fee is at an annual rate of
0.65% of the first $100 million of assets, 0.55% of the next $150 million, and
0.45% of assets over $250 million; (d) for assets held in the International
Portfolio, the fee is at an annual rate of 0.9% of assets in the portfolio, and
(e) for assets held in the Core Growth Portfolio, the fee is at an annual rate
of 0.95% of the first $150 million of assets and 0.8% of assets over $150
million and (f) for the assets held in the S&P 500 Index Portfolio, the fee is
at an annual rate of 0.40% of the first $100 million of assets, 0.35% of the
next $150 million, and 0.33% of net assets over $250 million.

Under the Investment Advisory Agreement, ONE Fund authorizes the Adviser to
retain sub-advisers for the Core Growth and International Portfolios, subject to
the approval of ONE Fund's Board of Directors. The Adviser has entered into a
Sub-Advisory Agreement with PBA to manage the investment and reinvestment of
Core Growth Portfolio assets, subject to the supervision of the Adviser. As
compensation for its services, PBA receives from the Adviser fees at the annual
rate of 0.65% of the first $50 million, 0.60% of the next $100 million, and
0.50% of the average daily net assets of that portfolio in excess of $150
million during the quarter for which the fee is paid. The Adviser has entered
into a Sub-Advisory Agreement with FGIM to manage the investment and
reinvestment of International Portfolio assets, subject to the supervision of
the Adviser. As compensation for its services, FGIM receives from the Adviser
fees at the annual rate of 0.45% of the first $200 million, and 0.40% of the
average daily net assets in excess of $200 million during the quarter for which
the fee is paid.

For each of the fiscal years ended June 30, investment advisory fees from each
of ONE Fund's portfolios were paid to ONIMCO (the Adviser's predecessor) and to
the Adviser as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 Earned Waived Net Fees
-------- --------- ----------
Money Market $ 50,298 ($ 25,149) $ 25,149
Income 33,132 ( 9,973) 23,159
Income & Growth 69,239 ( 20,784) 48,455
Growth 56,667 ( 17,042) 39,625
Core Growth 40,776 0 40,776
Small Cap 27,654 ( 6,482) 21,172
International 88,376 0 88,376
--------- --------- ----------
$ 366,142 ($ 79,430) $ 286,712

1998 Earned Waived Net Fees
-------- --------- ----------
Money Market $ 45,452 ($ 22,726) $ 22,726
Income 33,928 ( 10,178) 23,750
Income & Growth 73,633 ( 22,090) 51,543
Growth 71,522 ( 21,457) 50,065
Core Growth 51,878 0 51,878
Small Cap 38,468 ( 8,886) 29,582
International 152,991 0 152,991
--------- --------- ----------
$ 467,872 ($ 85,342) $ 382,535

1997 Earned Waived Net Fees
-------- --------- ----------
Money Market $ 54,943 ($ 37,694) $ 17,249
Income 33,991 ( 12,594) 21,397
Income & Growth 58,563 ( 21,373) 37,190
Growth 61,743 ( 22,671) 39,072
Core Growth 27,257 0 27,257
Small Cap 30,439 ( 9,644) 20,795
International 151,632 0 151,632
-------- --------- ----------
$ 418,568 ($103,976) ($ 314,592)
</TABLE>

20
<PAGE> 57

The Investment Advisory Agreement also provides that if, and to the extent that,
the total expenses applicable to any portfolio during any calendar quarter
(excluding taxes, brokerage commissions, interest and the investment advisory
fee) exceed 1%, on an annualized basis, of the portfolio's average daily net
asset value, the Adviser will pay such expenses. During the last fiscal year,
the Adviser reimbursed the Core Growth Portfolio $19,055, the International
Portfolio $43,677, and the Small cap Portfolio $7,778 under these terms.

Under a Service Agreement among ONE Fund, the Adviser and ONLI, the latter has
agreed to furnish the Adviser, at cost, such research facilities, services and
personnel as may be needed by the Adviser in connection with its performance
under the Investment Advisory Agreement. The Adviser reimburses ONLI for its
expenses in this regard.

The Investment Advisory Agreement and the Service Agreement were approved by a
vote of ONE Fund's Board of Directors on January 24, 1996, and the shareholders
on March 28, 1996. The Sub-Advisory Agreement for the International Portfolio
was approved by a vote of ONE Fund's Board of Directors on December 7, 1998 and
the shareholders on April 5, 1999. The Investment Advisory Agreement, the
Service Agreement and the Sub-Advisory Agreement for the Core Growth Portfolio
were approved by the Board of Directors on August 22, 1996 and by the
shareholders of the Core Growth Portfolio on October 31, 1996. These agreements
will continue in force from year to year hereafter, if such continuance is
specifically approved at least annually by a majority of ONE Fund's directors
who are not parties to such agreements or interested persons of any such party,
with votes to be cast in person at a meeting called for the purpose of voting on
such continuance, and also by a majority of ONE Fund's Board of Directors or by
a majority of the outstanding voting securities of each portfolio voting
separately. The foregoing agreements were approved by the Board of Directors for
continuance on August 29, 1999.

The Investment Advisory, Sub-Advisory and Service Agreements may be terminated
at any time, without the payment of any penalty, on 60 days' written notice to
the Adviser by ONE Fund's Board of Directors or, as to any portfolio, by a vote
of the majority of the portfolio's outstanding voting securities. The Investment
Advisory Agreement may be terminated by the Adviser on 90 days' written notice
to ONE Fund. The Service Agreement may be terminated, without penalty, by the
Adviser or ONLI on 90 days' written notice to ONE Fund and the other party. The
Sub-advisory Agreements may be terminated, without penalty, by the

21
<PAGE> 58

Adviser or the sub-adviser (PBA or FGIM) on 90 days' written notice to ONE Fund
and the other party. The Agreements will automatically terminate in the event of
their assignment.

ONE Fund's 12b-1 Plan is primarily a compensation plan to compensate
broker-dealers that sell ONE Fund shares (the "Selling Dealers") for shareholder
services and for sales. The basic compensation payment is 0.15% (on an
annualized basis) of the average net assets of the Money Market Portfolio and
0.25% of the average net assets of each other portfolio. The fees may be
increased to the extent necessary to reimburse incentive bonuses paid to
individual registered representatives who service $5 million or more of ONE Fund
shares. Such increases can never increase the fees paid to more than 0.17% and
0.30% respectively. No interested person of ONE Fund other than the Selling
Dealers (and ONLI s a parent of a Selling Dealer) has a direct or indirect
financial interest in ONE Fund's 12b-1 Plan. ONE Fund benefits from the 12b-1
Plan payments to Selling Dealers by having the registered representatives of
those dealers answer shareholder questions and by having those registered
representatives motivated to sell ONE Fund shares to persons likely to remain
shareholders for a period of time.

BROKERAGE ALLOCATION

The Adviser buys and sells the portfolio securities for all the portfolios,
other than the Core Growth, and International Portfolios, and selects the
brokers to handle such transactions. The sub-advisers (PBA and FGIM) select the
brokers and dealers that execute the transactions for the portfolios managed by
them. It is the intention of the Adviser and each of the sub-advisers to place
orders for the purchase and sale of securities with the objective of obtaining
the most favorable price consistent with good brokerage service. The cost of
securities transactions for each portfolio will consist primarily of brokerage
commissions or dealer or underwriter spreads. Bonds and money market securities
are generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the Adviser and
sub-advisers will, where possible, deal directly with dealers that make a
market in the securities unless better prices and execution are available
elsewhere. Such dealers usually act as principals for their own account.

In selecting brokers through which to effect transactions, the Adviser
and sub-advisers consider a number of factors including the quality, efficiency
of execution and value of research, statistical, quotation and valuation
services provided. Research services by brokers include advice, either directly
or through publications or writings, as to the value of securities, the
advisability of purchasing or selling securities, the availability of
securities or purchasers or sellers of securities, and analyses and reports
concerning issuers, industries, securities, economic factors and trends, and
portfolio strategy. In making such determination, the Adviser or sub-adviser
may use a broker whose commission in effecting a securities transaction is in
excess of that of some other broker if the Adviser or sub-adviser determines
in good faith that the amount of such commission is reasonable in relation to
the value of the research and related services provided by such broker. In
effecting a transaction for one portfolio, a broker may also offer services of
benefit to other portfolios managed by the Adviser or sub-adviser, or to the
benefit of its affiliates.

Generally, it is not possible to place a dollar value on research and related
services provided by brokers to the Adviser or a sub-adviser. However, receipt
of such services may tend to reduce the expenses of the Adviser or a
sub-adviser. Research, statistical and similar information furnished by brokers
may be of incidental assistance to ONLI, ONF or other clients or affiliates of
the Adviser or the sub-advisers and conversely, transaction costs paid by ONLI,
ONF or other clients or affiliates of the Adviser or the sub-advisers may
generate information which is beneficial to ONE Fund.

Consistent with these polices, the sub-advisers may, with the Board of
Directors' approval and subject to its review, direct portfolio transactions to
be executed by a broker affiliated with the sub-adviser so long as the
commission paid to the affiliated broker is reasonable and fair compared to the
commission that would be charged by an unaffiliated broker in a comparable
transaction.

22
<PAGE> 59

For each of the fiscal years ended June 30, the following brokerage commission
amounts were paid by each portfolio:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Money Market None None None
Income None None None
Income & Growth $183,841 $ 4,194 $ 6,954
Growth 164,070 6,150 14,710
Core Growth 37,513 7,700 5,362
Small Cap 144,190 6,253 6,888
International 123,546 17,067 23,484
-------- ------- -------
Total $653,166 $41,364 $57,398
</TABLE>

The increase in brokerage commissions paid in 1999 was due to a realignment of
the portfolios' assets.

During the fiscal year ended June 30, 1998, 100% of such commissions were paid
to brokers who furnished statistical data and research information to the
Adviser, PBA or FGIM.

PURCHASE AND REDEMPTION OF SHARES

ONE Fund shares are sold at the public offering price, which is their net asset
value plus a sales charge, as described in the prospectus, if applicable. They
may be redeemed at their net asset value next computed after a purchase or
redemption order is received by ONE Fund.

Depending upon the net asset values at that time, the amount paid upon
redemption may be more or less than the cost of the shares redeemed. Payment for
shares redeemed will be made as soon as possible, but in any event within seven
days after evidence of ownership of the shares is tendered to ONE Fund. However,
ONE Fund may suspend the right of redemption or postpone the date of payment
beyond seven days during any period when (a) trading on the New York Stock
Exchange is restricted, as determined by the Securities and Exchange Commission,
or such Exchange is closed for other than weekends and holidays; (b) an
emergency exists, as determined by the Commission, as a result of which disposal
by ONE Fund of securities owned by it is not reasonably practicable, or it is
not reasonably practicable for ONE Fund fairly to determine the value of its net
assets; or (c) the Commission by order so permits for the protection of security
holders of ONE Fund.

Redemptions of shares of any ONE Fund portfolio by any shareholder during any
90-day period will be paid in cash, up to the lesser of (a) $250,000 or (b) 1%
of the portfolio's total net asset value. Larger redemptions may, at ONE Fund's
discretion, be paid wholly or in part by securities or other assets of the
portfolio. A shareholder who receives securities would likely incur brokerage
expenses in disposing of them.

23
<PAGE> 60
Shares of one portfolio may be exchanged for shares of another portfolio of ONE
Fund on the basis of the relative net asset values next computed after an
exchange order is received by ONE Fund. However, in the case of transfers from
the Money Market Portfolio to another portfolio, the sales charge will be levied
unless such assets had previously been subjected to a sales charge by having
been earlier transferred from another portfolio to the Money Market Portfolio.

The net asset value of ONE Fund's shares is determined at 4 p.m. Eastern time on
each day the New York Stock Exchange is open for unrestricted trading. That is
normally each weekday (Monday through Friday) except for the following holidays:
New Years Day, Presidents Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas. The net asset value of each portfolio
is computed by dividing the value of the securities in that portfolio plus any
cash or other assets less all liabilities of the portfolio, by the number of
shares outstanding for that portfolio.

Securities which are held in a portfolio and listed on a securities exchange are
valued at the last sale price or, if there has been no sale that day, at the
last bid price reported as of 4 p.m. Eastern time. Over-the-counter securities
are valued at the last bid price as of 4 p.m. Eastern time.

Short-term debt securities in all portfolios with remaining maturities of 60
days or less are valued at amortized cost. All other assets (not including those
of the Money Market Portfolio), including restricted debt securities and other
investments for which market quotations are not readily available, are valued at
their fair value as determined in good faith by ONE Fund's Board of Directors.
ONE Fund relies on Rule 2a-7 under the Investment Company Act of 1940 to value
the assets of the Money Market Portfolio on the basis of amortized cost with a
view toward stabilizing the net asset value at $l per share and allowing
dividend payments to reflect net interest income as earned. Accordingly, the
short-term debt assets of the Money Market Portfolio are valued at their cost on
the date of acquisition with a daily adjustment being made to accrued income to
reflect amortization of premium or accretion of discount to the maturity date.

In relying on Rule 2a-7 with respect to short-term debt securities in its Money
Market Portfolio, ONE Fund has agreed to maintain a dollar-weighted average
portfolio maturity of not more than 90 days and to not purchase any such debt
security having a maturity of more than 397 days. The dollar- weighted average
maturity of short-term debt securities is determined by dividing the sum of the
dollar value of each such security times the remaining days to maturity of such
security by the sum of the dollar value of all short-term debt securities.
Should the disposition of a short-term debt security result in a dollar-weighted
average maturity of more than the number of days allowed under the exemptive
order or Rule 2a-7, as the case may be, the Money Market Portfolio will invest
any available cash so as to reduce such average maturity to the required number
of days or less as soon as reasonably practicable. ONE Fund normally holds
short-term debt securities to maturity and realizes par therefor unless an
earlier sale is required to meet redemption requirements.

In addition, the Money Market Portfolio is required to limit its short-term debt
investments, including repurchase agreements, to those United States dollar
denominated instruments which the Board of Directors determines present minimal
credit risks and which are in the top two rating categories of any nationally
recognized statistical rating organizations or, in the case of any instrument
that is not rated, of comparable quality as determined by the Board of
Directors. Although the use of amortized cost provides certainty in valuation,
it may result in periods during which value so determined is higher or lower
than the price the portfolio would receive if it liquidated its securities.

ONE Fund's Board of Directors is obligated, as a particular responsibility
within the overall duty of care owed to the Money Market Portfolio shareholders,
to establish procedures reasonably designed, taking into account current market
conditions and the investment objective of such portfolio, to stabilize the
portfolio's net asset value per share as computed for the purpose of
distribution, redemption and repurchase, at $l per share. The procedures adopted
by the Board of Directors include periodically reviewing, as it deems
appropriate and at such intervals as are reasonable in light of current market
conditions, the extent of deviation, if any, between the net asset value per
share based on available market quotations and such value based on the
portfolio's $l amortized cost price.

24
<PAGE> 61
If such deviation exceeds 1/2 of 1 percent, or if there is any other deviation
which the Board of Directors believes would result in a material dilution to
shareholders or purchasers, the Board of Directors will promptly consider what
action, if any, it should initiate. Such action may include redemption in kind;
selling portfolio instruments prior to maturity to realize capital gains or
losses, or to shorten the average portfolio maturity; withholding dividends;
splitting, combining or otherwise recapitalizing outstanding shares; or using
available market quotations to determine net asset value per share. The Money
Market Portfolio may reduce the number of its outstanding shares by requiring
shareholders to contribute to capital proportionately the number of full and
fractional shares as is necessary to maintain the net asset value per share of
$l.

REDUCING THE SALES CHARGE

The prospectus describes a variety of ways you may qualify for scheduled
reductions in sales load for large purchases. In general, these special purchase
methods permit you to treat your purchase as if it were part of a larger
purchase. Certain ways to reduce sales load are available to you individually,
and other ways in combination with other investors. First, you may make a single
purchase (of shares of one or more ONE Fund portfolios) in an aggregate amount
that qualifies for a reduced sales charge (at least $25,000). Second, you may
add the amount of your existing ONE Fund holdings to the amount being purchased
(with the sum equaling your "accumulated holdings"), and pay only the percentage
sales charge that would apply to your purchase if it were part of a purchase the
size of your accumulated holdings. Third, you may add to your accumulated
holdings the amount of the annual or single premium of any Ohio National annuity
or insurance policy you purchase concurrently with the ONE Fund shares (i.e.,
ONE Fund shares are purchased in the time between application for, and 5 days
after delivery of, an Ohio National annuity or insurance policy) and pay only
the sales charge that would apply to your purchase if it were part of a purchase
the size of your accumulated holdings plus the amount of your concurrent
purchase. Fourth, you may add to your accumulated holdings (and your concurrent
purchases, if any) an amount of ONE Fund shares you state (in a letter of
intent) that you intend to purchase within a 13-month period and pay only the
sales charge that would apply to that total. To the extent that your sales
charge reduction depends on purchases pursuant to a letter of intent, a number
of the shares you purchase will be escrowed to pay the sales charge that would
apply if some or all of the future purchases under the letter of intent are not
made.

In addition, you may be able to aggregate the holdings or purchases of other
persons with the amounts determined in the methods described in the prior
paragraph. First, you are entitled to aggregate your accumulated holdings with
purchases and holdings of ONE Fund shares by your spouse, children and
grandchildren. Second, if you are a member of a "qualified group" (as described
in "Group Purchases" in the prospectus), you may aggregate your holdings and
purchases with those of the entire qualified group. However, you may not
aggregate purchases of your family members with those of a qualified group, to
which such family members do not belong, for purposes of qualifying for a
reduced sales charge. In addition, you may not aggregate the holdings or
purchases of more than one qualified group with your own holdings or purchases.

TAX STATUS

ONE Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code (the "Code"). Under such provisions, ONE Fund is
not subject to federal income tax on such part of its net ordinary income and
net realized capital gains which it distributes to shareholders. Each portfolio
is treated as a separate entity for federal income tax purposes, including
determining whether it qualifies as a regulated investment company and
determining its net ordinary income (or loss) and net realized capital gains (or
losses). To qualify for treatment as a regulated investment company, each
portfolio must, among other things, derive in each taxable year at least 90% of
its gross income from dividends, interest and gains from the sale or other
disposition of securities.

25
<PAGE> 62

The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury Regulations promulgated thereunder. Shareholders should consult their
own tax advisers with regard to the tax status of ONE Fund distributions.

UNDERWRITERS

Ohio National Equities, Inc., One Financial Way, Cincinnati, Ohio 45242, a
wholly-owned subsidiary of ONLI, has served as principal underwriter for ONE
Fund shares since March 26, 1997. ONE Fund shares are offered by the registered
representatives of another wholly-owned subsidiary of ONLI, The O.N. Equity
Sales Company, and other broker-dealers with whom the principal underwriter
enters into distribution agreements. ONE Fund shares are offered on a
best-efforts basis. The offering is continuous. The only compensation the
Underwriter receives is pursuant to the Portfolios' 12b-1 plan.

EXPERTS

The financial statements of ONE Fund as of June 30, 1999 and for the periods
indicated herein included in this Statement of Additional Information and the
Financial Highlights included in the prospectus dated June 30, 1999 have been
included herein and in the prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, appearing in this Statement of
Additional Information, and upon the authority of said firm as experts in
accounting and auditing. KPMG LLP's business address is 201 East Fifth Street,
Cincinnati, Ohio 45202.

TRANSFER AGENT

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.

CUSTODIAN

Firstar Bank, 425 Walnut Street, Cincinnati, Ohio 45202, is the
custodian for all ONE Fund assets except those of the International
Portfolio. The assets of the International Portfolio 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.

LEGAL COUNSEL

Messrs. Jones & Blouch L.L.P., Washington, D.C., have passed on matters
pertaining to the federal securities laws and Ronald L. Benedict, Esq.,
Secretary of ONE Fund and Corporate Vice President, Counsel and Secretary of
ONLI, has passed on all other legal matters relating to the legality of the
shares described in the prospectus and this Statement of Additional Information.

26
<PAGE> 63
APPENDIX

DEBT SECURITY RATINGS

The Securities and Exchange Commission has designated six nationally recognized
statistical rating organizations: Duff and Phelps, Inc. ("D & P"), Fitch
Investors Service, Inc. ("Fitch"), Moody's Investors Service, Inc. (Moody's"),
Standard & Poor's Corp. ("S & P"), and, with respect to bank-supported debt and
debt issued by banks, broker-dealers and their affiliates, IBCA Inc. and its
British affiliate, IBCA Limited ("IBCA") and Thompson Bankwatch, Inc. ("TBW").
ONIMCO may use the ratings of all six such rating organizations as factors to
consider in determining the quality of debt securities, although it will
generally only follow D&P, Fitch, Moody's and S&P. IBCA and TBW will only be
consulted if fewer than two of the other four rating organizations have given
their top rating to a security. Only the ratings of Moody's and S & P will be
considered in determining the eligibility of bonds for acquisition by the ONE
Fund.

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")

COMMERCIAL PAPER:

Moody's short-term debt ratings are opinions of the ability of issuers to
punctually repay senior debt obligations having an original maturity not
exceeding one year.

P-1 The Prime-1 (P-1) rating is the highest commercial paper rating assigned
by Moody's. Issuers (or supporting institutions) rated P-1 have a superior
ability for repayment of senior short-term debt obligations. P-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, high rates of
return on funds employed, conservative capitalization structure with
moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well-established access to a range of financial markets
and assured sources of alternate liquidity.

P-2 Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong
ability for repayment of senior short-term obligations. This will normally
be evidenced by many of the characteristics cited above for P-1, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

BONDS:

Aaa Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure.

While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa Bonds which are rated as Aa by Moody's are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.

28
<PAGE> 64
A Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa Bonds which are rated Baa by Moody's are considered as medium grade
obligations, that is, they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba Bonds which are rated Ba by Moody's are judged to have speculative
elements. Their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during other good and bad times over the
future. Uncertainty of position characterizes bonds in this class.

B Bonds which are rated B by Moody's generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other term of the contract over any long period of time may
be small.

STANDARD & POOR'S CORP. ("S & P")

COMMERCIAL PAPER:

An S & P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than one year.

A-1 This is S & P's highest category and it indicates that the degree of
safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are designated A-1+.

A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated as A-1.

29
<PAGE> 65
Bonds:

AAA Bonds rated AAA by S&P are the highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Market prices
move with interest rates, and hence provide maximum safety on all counts.

AA Bonds rated AA by S&P also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here,
too, prices move with the long-term money market.

A Bonds rated A by S&P are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from the
adverse effects of changes in economic and trade conditions. Interest and
principal are regarded as safe. They predominantly reflect money rates in
their market behavior, but to some extent, also economic conditions.

BBB The BBB or medium grade category is the borderline between definitely
sound obligations and those where the speculative element begins to
predominate. These bonds have adequate asset coverage and normally are
protected by satisfactory earnings. Their susceptibility to changing
conditions, particularly to depressions, necessitates constant watching.
Marketwise, the bonds are more responsive to business and trade conditions
than to interest rates. This is the lowest group which qualifies for
commercial bank investments.

BB Debt rated BB by S&P has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB rating.

B Debt rated B by S&P has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B rating
category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.

DUFF & PHELPS, INC. ("D & P")

COMMERCIAL PAPER:

D & P's short-term ratings have incorporated gradations of "1+" and "1-" in
recognition of quality differences within the first tier.

D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds,
is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.

D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.

D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection.

D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors
are small.

<PAGE> 66
FITCH INVESTORS SERVICE, INC. ("FITCH")

COMMERCIAL PAPER

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and investment notes.
Fitch's short-term ratings emphasize the existence of liquidity necessary to
meet the issuer's obligations in a timely manner.

F-1+ Exceptionally strong credit quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1 Very strong credit quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.

F-2 Good credit quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and F-1 categories.

<PAGE> 67

ONE FUND, INC.
MONEY MARKET PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (10.5%)
$647,000 American Honda Finance 5.030%
07/30/99............................ $ 644,378
622,000 Ford Motor Credit 4.980% 07/21/99.... 620,279
505,000 General Motors Acceptance Corp.
4.970% 08/24/99..................... 501,235
-----------
1,765,892
-----------
CHEMICALS (5.7%)
543,000 Dupont E.I. De Nemours Co. 4.880%
08/16/99............................ 539,614
415,000 Great Lakes Chemicals 4.830%
07/19/99............................ 413,998
-----------
953,612
-----------
COMPUTER & RELATED (3.7%)
624,000 IBM Credit Corp. 4.940% 08/11/99..... 620,489
-----------
CONSUMER PRODUCTS (15.6%)
648,000 American Home Products 4.780%
07/08/99............................ 647,398
549,000 Eastman Kodak 4.880% 08/09/99........ 546,098
420,000 Fortune Brands 4.780% 07/06/99....... 419,721
512,000 Procter & Gamble 4.920% 07/13/99..... 511,160
500,000 Stanley Works 4.900% 07/28/99........ 498,163
-----------
2,622,540
-----------
ELECTRICAL EQUIPMENT (6.5%)
532,000 Avnet Inc. 5.800% 07/01/99........... 532,000
553,000 Eaton Corp. 4.830% 07/16/99.......... 551,887
-----------
1,083,887
-----------
FINANCE (23.7%)
584,000 Allmerica Financial Corp. 5.000%
08/17/99............................ 580,188
444,000 American General Finance Co. 5.170%
08/27/99............................ 440,366
489,000 Associates Corp. 4.900% 07/15/99..... 488,068
727,000 CIT Capital 4.890% 07/22/99.......... 724,926
600,000 G.E. Capital 4.810% 08/02/99......... 597,435
544,000 Household Finance 4.910% 08/05/99.... 541,403
605,000 USAA Capital Corp. 4.780% 07/20/99... 603,474
-----------
3,975,860
-----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FOOD & RELATED (3.1%)
$522,000 Coca Cola Co. 4.800% 07/02/99........ $ 521,931
-----------
INDUSTRIAL (6.4%)
570,000 Fluor Corp. 4.790% 07/16/99.......... 569,393
503,000 Monsanto Co. 4.920% 07/26/99......... 501,281
-----------
1,070,674
-----------
INSURANCE SERVICES (2.3%)
388,000 Prudential Funding 5.040% 08/13/99... 385,664
-----------
MACHINERY & EQUIPMENT (3.6%)
604,000 John Deere Capital Corp. 4.800%
07/12/99............................ 603,114
-----------
OIL, ENERGY & NATURAL GAS (7.1%)
533,000 Consolidated Natural Gas 5.180%
08/30/99............................ 528,399
669,000 Questar Corp. 5.030% 08/03/99........ 665,915
-----------
1,194,314
-----------
UTILITIES (11.7%)
545,000 Cleco Corp. 4.820% 07/07/99.......... 544,562
597,000 Dayton Power & Light 5.140%
07/27/99............................ 594,784
815,000 PP&L Capital Funding 5.250%
07/14/99............................ 813,455
-----------
1,952,801
-----------
TOTAL HOLDINGS (99.9%)
(COST $16,750,778) (A).............. $16,750,778
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (0.1%).................. 14,863
-----------
TOTAL NET ASSETS (100.0%)............ $16,765,641
===========
</TABLE>

- ---------------

(a) Also represents cost for Federal income tax purposes.

The accompanying notes are an integral part of these financial statements.
3
<PAGE> 68

ONE FUND, INC.
MONEY MARKET PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at amortized
cost (note 1)........................... $16,750,778
Cash in bank.............................. 213
Receivable for fund shares sold........... 93,993
Other..................................... 2,897
-----------
Total assets............................ 16,847,881
-----------
Liabilities:
Payable for fund shares redeemed.......... 30,497
Payable for investment management services
(note 3)................................ 2,058
Accrued 12b-1 fees (note 6)............... 5,723
Other accrued expenses.................... 23,648
Dividends payable......................... 20,314
-----------
Total liabilities....................... 82,240
-----------
Net assets.................................. $16,765,641
===========
Net assets consist of:
Par value, $.001 per share................ $ 16,766
Paid-in capital in excess of par value.... 16,748,875
-----------
Net assets.................................. $16,765,641
===========
Shares outstanding.......................... 16,765,641
Net asset value per share................... $ 1.00
===========
Maximum offering price per share............ $ 1.00
===========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 878,465
-----------
Expenses:
Management fees (note 3).................. 50,298
12b-1 fees (note 6)....................... 25,149
Custodian fees (note 3)................... 5,299
Directors' fees (note 3).................. 2,862
Professional fees......................... 9,984
Transfer agent and accounting fees........ 59,539
Filing fees............................... 13,501
Printing, proxy and postage fees.......... 4,848
Other..................................... 1,264
-----------
Total expenses.......................... 172,744
Less expenses voluntarily reduced or
reimbursed (note 3)................... (25,149)
-----------
Net expenses............................ 147,595
-----------
Net investment income................... 730,870
-----------
Net increase in net assets from
operations............................ $ 730,870
===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
4
<PAGE> 69

ONE FUND, INC.
MONEY MARKET PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 730,870 $ 724,318
------------ ------------
Net increase in assets from operations................ 730,870 724,318
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (730,870) (724,318)
------------ ------------
From capital share transactions (note 4):
Received from shares sold................................. 21,575,304 21,996,755
Received from dividends reinvested........................ 485,752 455,744
Paid for shares redeemed.................................. (21,656,382) (20,456,024)
------------ ------------
Increase in net assets derived from capital share
transactions......................................... 404,674 1,996,475
------------ ------------
Increase in net assets............................. 404,674 1,996,475
------------ ------------
Net Assets:
Beginning of period....................................... 16,360,967 14,364,492
------------ ------------
End of period............................................. $ 16,765,641 $ 16,360,967
============ ============
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
--------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<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..................................... 0.04 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income...................... (0.04) (0.05) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return................................................ 4.44% 4.87% 4.77% 5.18% 5.06%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (a):
Expenses.................................................. 0.88% 0.88% 0.80% 0.57% 0.51%
Net investment income..................................... 4.36% 4.81% 4.71% 5.14% 4.99%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.03% 1.03% 1.04% 0.87% 0.81%
Net investment income..................................... 4.21% 4.66% 4.47% 4.84% 4.69%
Net assets at end of period (millions)...................... $ 16.8 $ 16.4 $ 14.4 $ 15.8 $ 14.1
</TABLE>

- ---------------

(a) The advisor has elected to waive management fees equal to 0.15% of average
net assets for the Money Market portfolio, but it may cease that waiver, in
whole or in part, without prior notice.

The accompanying notes are an integral part of these financial statements.
5
<PAGE> 70

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 investment grade municipal securities.

PERFORMANCE AS OF JUNE 30, 1999

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 0.97% (2.06)%
Three-year 4.81% 3.75%
Since inception
(11/1/94) 6.70% 6.00%
</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

ONE FUND TAX-FREE INCOME PORTFOLIO

The Tax-Free Fund has lagged its benchmark, the Lehman Tax Free Intermediate
Bond Index for the six months and twelve months ended June 30, 1999. For six
months we lagged -1.66% to -1.01% and for 12 months .97% to 2.83%. Our
comparisons have suffered previously from the fact that our portfolio has a
somewhat longer maturity profile than the index and increases in interest rate
levels over the past year have impacted our market value more negatively. We do
feel with the economy expected to slow somewhat in the second half of 1999,
interest rates may be more stable and our performance should improve versus the
index.
CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
TAX-FREE INCOME PORTFOLIO (WITH MAX.
SALES CHARGE)|(COMMENCED OPERATIONS LEHMAN BROS. MUNICIPAL BOND INDEX
NOVEMBER 1, 1994) -INTERMEDIATE
------------------------------------ ---------------------------------
<S> <C> <C>
9,700.00 10,000.00
'94 9,860.00 10,264.00
10,690.00 11,248.00
'95 11,480.00 11,834.00
11,400.00 11,810.00
'96 11,930.00 12,314.00
12,290.00 12,662.00
'97 12,950.00 13,398.00
13,003.00 13,758.00
'98 13,352.00 14,267.00
13,130.00 14,139.00
</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.
Neither the portfolio nor the index is open to direct investment.

TOP 10 HOLDINGS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Washington St Pub Pwr Sup Sys
Nuclear 4.54
2. Chicago Illinois Midway Airport 4.37
3. North Carolina Med Care Commn
Healthcare 4.15
4. New York St Med Care Facs Fin Agy
Rev 4.11
5. Metropolitan Atlanta Rapid Tran
Auth 4.10
6. Pennsylvania Intergvt Coop Auth
Spl Tax 4.07
7. Nevada State Gen Oblig 4.01
8. Richland Cnty South Carolina Poll
Ctl 3.91
9. Matagorda Cnty Texas Nav Dist No
1 3.91
10. Clark Cnty Nevada School District 3.89
</TABLE>

TOP 5 CATEGORIES AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Power Revenue 18.41
2. Hospital Revenue 18.29
3. Insured 16.06
4. Pollution Control & Industrial
Revenue 11.27
5. General Obligation 11.18
</TABLE>

The accompanying notes are an integral part of these financial statements.
6
<PAGE> 71

ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT MUNICIPAL BONDS VALUE
- -------------------------------------------------------------
<C> <S> <C>
AIRPORT REVENUE (7.8%)
$300,000 Chicago Illinois Midway Airport 5.500%
01/01/29............................. $ 298,914
250,000 Chicago Illinois O'Hare Intl Airport
5.000% 01/01/13...................... 240,153
----------
539,067
----------
CONVENTION COMPLEX & HOSPITALITY FACILITIES (3.0%)
200,000 Metropolitan Pier & Exp ILL Hosp Facs
6.250% 07/01/17...................... 209,454
----------
GENERAL OBLIGATION BONDS (11.2%)
100,000 Clairborne County Mississippi 7.300%
05/01/25............................. 104,368
150,000 Commonwealth of Puerto Rico 5.500%
07/01/17............................. 152,180
250,000 Nevada State 6.600% 12/01/13.......... 273,860
250,000 State of Washington 5.000% 05/01/17... 239,590
----------
769,998
----------
HOSPITAL REVENUE (18.2%)
250,000 Hawaii Department of Budget 6.000%
07/01/20............................. 258,872
250,000 Maricopa Cnty Arizona Indl Dev 5.250%
11/15/37............................. 241,390
250,000 Massachusetts St Health & Edl Facs
6.200% 10/01/16...................... 264,647
300,000 North Carolina Medical Care Comm
Healthcare Facs 5.250% 05/01/26...... 283,302
200,000 Wisconsin St Health & Edl Facs 6.125%
11/15/15............................. 211,652
----------
1,259,863
----------
HOUSING REVENUE (2.3%)
150,000 Alaska St Housing Fin Corp 5.875%
12/01/24............................. 155,687
----------
INSURED BONDS (16.1%)
250,000 Matagorde Cnty Texas Nav Dist #1
6.700% 03/01/27 (AMBAC).............. 266,965
250,000 Metropolitan Atlanta Rapid Trans
6.800% 07/01/14 (MBIA)............... 280,163
250,000 New York State Med Care Facs 6.750%
08/15/14 (AMBAC)..................... 281,090
250,000 Pennsylvania Intergvt Coop 6.750%
06/15/21 (FGIC)...................... 278,347
----------
1,106,565
----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT MUNICIPAL BONDS VALUE
- -------------------------------------------------------------
<C> <S> <C>
POLLUTION CONTROL & INDUSTRIAL REVENUE (11.3%)
$250,000 Lawrenceburg, Indiana 5.900%
11/01/19............................. $ 251,063
250,000 Richland County, S Carolina 6.550%
11/01/20............................. 266,987
250,000 West Feliciana, Louisiana 8.000%
12/01/24............................. 258,315
----------
776,365
----------
POWER REVENUE (18.4%)
250,000 Jacksonville Florida Electric 5.500%
10/01/14............................. 252,760
250,000 N Carolina Eastern Power System 6.000%
01/01/22............................. 253,248
250,000 Salt River Arizona Project Power
5.000% 01/01/13...................... 246,502
200,000 Southern California Public Power
6.000% 07/01/18...................... 205,274
300,000 Washington St Pub Pwr Sys Nuclear
5.700% 07/01/12...................... 310,173
----------
1,267,957
----------
SCHOOL REVENUE (3.9%)
250,000 Clark Cnty Nevada School District
7.000% 06/01/09...................... 265,972
----------
TRANSPORTATION REVENUE (3.2%)
250,000 Central Pudget Sound RTA Washington
4.750% 02/01/28...................... 221,650
----------
WATER REVENUE (3.7%)
250,000 Metropolitan Water District of S.
California 5.500% 07/01/13........... 253,760
----------
TOTAL MUNICIPAL BONDS (99.1%) (COST
$6,267,256).......................... $6,826,338
----------
TOTAL HOLDINGS (99.1%)
(COST $6,267,256) (A)................ $6,826,338
----------
CASH & RECEIVABLES,
NET OF LIABILITIES (0.9%)............ 61,845
----------
TOTAL NET ASSETS (100.0%)............. $6,888,183
==========
</TABLE>

- ---------------

(a) Also represents cost for Federal income tax purposes.

The accompanying notes are an integral part of these financial statements.
7
<PAGE> 72

ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $6,267,256)............... $6,826,338
Dividends & accrued interest receivable.... 111,035
Deferred organizational expenses (note
1)....................................... 176
Other...................................... 1,654
----------
Total assets............................. 6,939,203
----------
Liabilities:
Payable for investment management services
(note 3)................................. 2,820
Accrued 12b-1 fees (note 6)................ 4,253
Other accrued expenses..................... 19,510
Dividends payable.......................... 24,437
----------
Total liabilities........................ 51,020
----------
Net assets at market value................... $6,888,183
==========
Net assets consist of:
Par value, $.001 per share................. $ 632
Paid-in capital in excess of par value..... 6,439,701
Accumulated undistributed net realized loss
on investments........................... (111,345)
Net unrealized appreciation on
investments.............................. 559,082
Undistributed net investment income........ 113
----------
Net assets at market value................... $6,888,183
==========
Shares outstanding........................... 632,397
Net asset value per share.................... $ 10.89
==========
Maximum offering price per share
($10.89/97%)............................... $ 11.23
==========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest................................... $ 408,845
----------
Expenses:
Management fees (note 3)................... 43,382
12b-1 fees (note 6)........................ 18,120
Custodian fees (note 3).................... 4,906
Directors' fees (note 3)................... 1,275
Professional fees.......................... 4,437
Transfer agent & accounting fees........... 33,918
Filing fees................................ 8,153
Printing, proxy and postage fees........... 2,211
Organizational expense (note 1)............ 573
Other...................................... 185
----------
Total expenses........................... 117,160
Less expenses voluntarily reduced or
reimbursed (note 3).................... (10,766)
----------
Net expenses............................. 106,394
----------
Net investment income.................... 302,451
----------
Unrealized loss on investments:
Net decrease in unrealized appreciation on
investments.............................. (222,407)
----------
Net loss on investments................ (222,407)
----------
Net increase in net assets from
operations.......................... $ 80,044
==========
</TABLE>

The accompanying notes are an integral part of these financial statements.
8
<PAGE> 73

ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 302,451 $ 305,219
Realized loss on investments.............................. 0 (100,005)
Unrealized gain (loss) on investments..................... (222,407) 186,945
---------- ----------
Net increase in assets from operations................ 80,044 392,159
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (302,451) (305,219)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 303,312 457,036
Received from dividends reinvested........................ 36,968 32,007
Paid for shares redeemed.................................. (399,472) (232,821)
---------- ----------
Increase (decrease) in net assets derived from capital
share transactions................................... (59,192) 256,222
---------- ----------
Increase (decrease) in net assets.................. (281,599) 343,162
---------- ----------
Net Assets:
Beginning of period....................................... 7,169,782 6,826,620
---------- ----------
End of period............................................. $6,888,183 $7,169,782
========== ==========
Includes undistributed net investment income of........... $ 113 $ 113
========== ==========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 11-1-94
--------------------------------------- TO
1999 1998 1997 1996 6-30-95
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $11.24 $11.09 $10.79 $10.66 $10.00
Income from investment operations:
Net investment income..................................... 0.47 0.49 0.53 0.56 0.35
Net realized & unrealized gain (loss) on investments...... (0.35) 0.15 0.30 0.13 0.66
------ ------ ------ ------ ------
Total income from investment operations................. 0.12 0.64 0.83 0.69 1.01
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.47) (0.49) (0.53) (0.56) (0.35)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.89 $11.24 $11.09 $10.79 $10.66
====== ====== ====== ====== ======
Total return................................................ 0.97% 5.77% 7.82% 6.59% 10.26%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 1.47% 1.45% 1.24% 0.94% 0.91%(a)
Net investment income..................................... 4.18% 4.30% 4.81% 5.20% 5.04%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.62% 1.60% 1.45% 1.24% 1.21%(a)
Net investment income..................................... 4.03% 4.15% 4.60% 4.90% 4.74%(a)
Portfolio turnover rate..................................... 0% 4% 6% 8% 0%
Net assets at end of period (millions)...................... $ 6.9 $ 7.2 $ 6.8 $ 6.3 $ 5.7
</TABLE>

- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
(c) The advisor has elected to waive management fees equal to 0.15% of average
net assets 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.
9
<PAGE> 74

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, 1999

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 2.65% (0.43)%
Three-year 6.46% 5.38%
Five-year 7.08% 6.43%
Since inception
(8/18/92) 5.92% 5.45%
</TABLE>

COMMENTS

The Income Portfolio was about even with the Lehman Government/Corporate
Intermediate Bond Index for the first six months of 1999 losing -.54% versus
- -.58% for the Index. For the year ended 6-30-99, the fund trailed the Index
2.65% to 4.19%. Corporate bond performance especially in the Baa category was
poor relative to U.S. Treasury Securities in the last half of 1998. So far this
year corporates in that category have done better than U.S. Treasury Securities.
The economy is expected to slow somewhat in the second half of 1999 and interest
rates will likely be more stable than the first half of this year when long U.S.
Treasury Bond yields increased by about 1%.
CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
INCOME PORTFOLIO (WITH MAX. SALES
CHARGE)|(COMMENCED OPERATIONS LEHMAN BROS. GOVT./CORPORATE BOND
AUGUST 18, 1992) INDEX - INTERMEDIATE
--------------------------------- ---------------------------------
<S> <C> <C>
9,700.00 10,000.00
'92 9,757.00 10,100.00
10,827.00 10,721.00
'93 11,051.00 10,981.00
10,409.00 10,691.00
'94 10,449.00 10,767.00
11,621.00 11,799.00
'95 12,202.00 12,414.00
12,150.00 12,388.00
'96 12,771.00 12,917.00
13,158.00 13,282.00
'97 13,810.00 13,933.00
14,282.00 14,411.00
'98 14,739.00 15,101.00
14,659.00 15,014.00
</TABLE>

TOP 10 BONDS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. U.S. Treasury Note 14.51
2. Texas Utilities Electric Co. 4.82
3. Watson Pharmaceuticals, Inc 4.54
4. Mirage Resorts Inc. 4.42
5. ITT Destinations Inc. 4.30
6. Mississippi Chemical Corp. 4.27
7. El Paso Electric Co. 4.24
8. Lyondell Chemicals, Inc. Series
144A 4.08
9. IBM Corp. 4.07
10. Tenneco Inc. 4.07
</TABLE>

TOP 5 INDUSTRIES AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Utilities 20.40
2. U.S. Treasury Notes 14.42
3. Hotel/Lodging 11.72
4. Oil, Energy, and Natural Gas 8.70
5. Chemicals 8.30
</TABLE>

The accompanying notes are an integral part of these financial statements.
10
<PAGE> 75

ONE FUND, INC.
INCOME PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
GOVERNMENT (14.4%)
$900,000 U.S. Treasury Note 6.375% 08/15/02.... $ 917,438
----------
CHEMICALS (8.3%)
250,000 Lyondell Chemicals Inc. (144A) 9.625%
05/01/07............................. 258,125
300,000 Mississippi Chemical Corp. 7.250%
11/15/07............................. 270,015
----------
528,140
----------
COMMUNICATIONS (1.7%)
100,000 Comcast Cable Communications 8.375%
05/01/07............................. 106,918
----------
COMPUTER & RELATED (4.1%)
250,000 IBM Corp. 7.250% 11/01/02............. 257,723
----------
DRUGS (4.5%)
300,000 Watson Pharmaceuticals Inc. 7.125%
05/15/08............................. 287,618
----------
FORESTRY & PAPER PRODUCTS (4.0%)
250,000 ITT Rayonier Inc. 7.500% 10/15/02..... 256,812
----------
HOTEL/LODGING (11.7%)
200,000 Hilton Hotels Corp. 7.200% 12/15/09... 191,733
300,000 ITT Destinations Inc. 6.750%
11/15/05............................. 272,209
300,000 Mirage Resorts Inc. 6.750% 02/01/08... 279,878
----------
743,820
----------
MEDICAL & RELATED (4.0%)
250,000 Bergen Brunswig Corp. 7.375%
01/15/03............................. 251,369
----------
OIL, ENERGY & NATURAL GAS (8.7%)
200,000 PDV America, Inc. 7.875% 08/01/03..... 195,745
100,000 Seagull Energy 7.875% 08/01/03........ 100,410
250,000 Tenneco Inc. 8.075% 10/01/02.......... 257,629
----------
553,784
----------
REAL ESTATE (3.1%)
200,000 Avalon Properties Inc. 7.375%
09/15/02............................. 200,575
----------
TEXTILES & RELATED (3.9%)
250,000 Fruit of the Loom Corp. 7.875%
10/15/99............................. $ 250,086
----------
TRANSPORTATION & EQUIPMENT (6.9%)
200,000 ABC Rail Product Corp. 8.750%
12/01/04............................. 188,000
250,000 Illinois Central Gulf Railroad 6.750%
05/15/03............................. 251,453
----------
439,453
----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
UTILITIES (14.4%)
$250,000 El Paso Electric Co. 8.900%
02/01/06............................. $ 268,301
200,000 Niagara Mohawk Power Corp. 7.750%
10/01/08............................. 206,154
137,426 Puget Power 6.450% 04/11/05........... 136,685
300,000 Texas Utilities Electric 7.480%
01/01/17............................. 304,992
----------
916,132
----------
TOTAL LONG-TERM BONDS & NOTES (89.7%)
(COST $5,716,850).................... $5,709,868
----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UTILITIES (6.0%)
8,000 GTE Delaware 8.750% Series B....... $ 203,000
7,000 Connecticut Light, Power & Capital
9.300% Series A................... 179,375
-----------
382,375
-----------
TOTAL PREFERRED STOCK (6.0%)
(COST $375,000)................... $ 382,375
-----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (3.6%)
$230,000 Household Finance 5.450% 07/01/99..... $ 230,000
----------
TOTAL SHORT-TERM NOTES (3.6%)
(COST $230,000)...................... $ 230,000
----------
TOTAL HOLDINGS (99.3%)
(COST $6,321,850) (A)................ $6,322,243
----------
CASH & RECEIVABLES, NET OF LIABILITIES
(0.7%)............................... 42,191
----------
TOTAL NET ASSETS (100.0%)............. $6,364,434
==========
</TABLE>

- ---------------

(a) Also represents cost for Federal income tax purposes.

(144A) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These Securities may be resold in transactions exempt from
registration, normally to qualified buyers. At the period end, the value
of these securities amounted to $258,125 or 4.1% of net assets.

The accompanying notes are an integral part of these financial statements.
11
<PAGE> 76

ONE FUND, INC.
INCOME PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $6,321,850)............... $6,322,243
Cash in bank............................... 756
Dividends & accrued interest receivable.... 113,375
Other...................................... 1,627
----------
Total assets............................. 6,438,001
----------
Liabilities:
Payable for shares redeemed................ 21,601
Payable for investment management services
(note 3)................................. 2,019
Accrued 12b-1 fees (note 6)................ 3,418
Other accrued expenses..................... 18,860
Dividends payable.......................... 27,669
----------
Total liabilities........................ 73,567
----------
Net assets at market value................... $6,364,434
==========
Net assets consist of:
Par value, $.001 per share................. $ 657
Paid-in capital in excess of par value..... 6,399,072
Accumulated undistributed net realized loss
on investments........................... (35,688)
Net unrealized appreciation on
investments.............................. 393
----------
Net assets at market value................... $6,364,434
==========
Shares outstanding........................... 657,044
Net asset value per share.................... $ 9.69
==========
Maximum offering price per share
($9.69/97%)................................ $ 9.99
==========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 470,680
---------
Expenses:
Management fees (note 3).................... 33,132
12b-1 fees (note 6)......................... 16,542
Custodian fees (note 3)..................... 5,023
Directors' fees (note 3).................... 1,275
Professional fees........................... 4,437
Transfer agent & accounting fees............ 34,276
Filing fees................................. 5,999
Printing, proxy and postage fees............ 2,081
Other....................................... 194
---------
Total expenses............................ 102,959
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (9,973)
---------
Net expenses.............................. 92,986
---------
Net investment income..................... 377,694
---------
Realized and unrealized gain (loss) on
investments:
Net realized gain from investments............ 19,787
Net decrease in unrealized appreciation on
investments............................... (223,951)
---------
Net loss on investments................. (204,164)
---------
Net increase in net assets from
operations........................... $ 173,530
=========
</TABLE>

The accompanying notes are an integral part of these financial statements.
12
<PAGE> 77

ONE FUND, INC.
INCOME PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 377,694 $ 400,680
Realized gain on investments.............................. 19,787 48,077
Unrealized gain (loss) on investments..................... (223,951) 117,144
---------- ----------
Net increase in assets from operations................ 173,530 565,901
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (377,694) (400,680)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 327,145 759,219
Received from dividends reinvested........................ 66,015 79,395
Paid for shares redeemed.................................. (748,947) (702,729)
---------- ----------
Increase (decrease) in net assets derived from capital
share transactions................................... (355,787) 135,885
---------- ----------
Increase (decrease) in net assets.................. (559,951) 301,106
---------- ----------
Net Assets:
Beginning of period....................................... 6,924,385 6,623,279
---------- ----------
End of period............................................. $6,364,434 $6,924,385
========== ==========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $ 9.99 $ 9.75 $ 9.59 $ 9.78 $ 9.39
Income (loss) from investment operations:
Net investment income..................................... 0.57 0.59 0.61 0.63 0.65
Net realized & unrealized gain (loss) on investments...... (0.30) 0.24 0.16 (0.19) 0.39
------ ------ ------ ------ ------
Total income from investment operations................. 0.27 0.83 0.77 0.44 1.04
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.57) (0.59) (0.61) (0.63) (0.65)
Distributions from net realized capital gains............. 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
Total distributions..................................... (0.57) (0.59) (0.61) (0.63) (0.65)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $ 9.69 $ 9.99 $ 9.75 $ 9.59 $ 9.78
====== ====== ====== ====== ======
Total return................................................ 2.65% 8.56% 8.26% 4.61% 11.58%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (a):
Expenses.................................................. 1.40% 1.39% 1.21% 0.97% 0.85%
Net investment income..................................... 5.70% 5.91% 6.29% 6.50% 6.80%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.55% 1.54% 1.51% 1.22% 1.10%
Net investment income..................................... 5.55% 5.76% 5.99% 6.25% 6.55%
Portfolio turnover rate..................................... 4% 40% 10% 9% 4%
Net assets at end of period (millions)...................... $ 6.4 $ 6.9 $ 6.6 $ 7.0 $ 7.1
</TABLE>

- ---------------
(a) The advisor has elected to waive management fees equal to 0.15% of average
net assets for the Income portfolio, but it may cease that waiver, in whole
or in part, without prior notice.

The accompanying notes are an integral part of these financial statements.
13
<PAGE> 78

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, 1999

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 4.73% (0.50)%
Three-year 13.72% 11.79%
Five-year 14.98% 13.81%
Since inception
(8/18/92) 12.75% 11.91%
</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. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.

COMMENTS

The volatility that we expected in the stock and bond markets over the last
twelve months had a profound effect on the fund's performance. During this
period when the S&P 500 Index was up approximately 23%, your fund was up 4.7%.
The portfolio exhibited greater volatility than the overall market due to its
larger weighting in smaller companies. While these companies performed well
fundamentally, the narrowing of the market's breadth over the past year didn't
reward them. Smaller companies didn't offer any support during last year's
market correction, even though their valuations would have suggested otherwise.
Despite having strong performance by the technology and other sectors, the
portfolio suffered relative to the market.

As a result of these occurrences, management of the fund has taken steps to
rectify the situation. The fund is now under new management. We are confident
that the management of the fund will better reflect the fund's objective and its
performance will more closely align with its peer group. Under this new
direction, the fund has a better focus on growth names and larger companies with
excellent prospectus.

The fund will focus on sectors believed to offer the best potential for capital
appreciation. Those sectors currently include: communication services, consumer
staples, financials and technology. As always, the portfolio will only select
companies which have superior earnings potential with strong management terms
combined with a positive outlook.

Due to the recent strength of the stock market, valuation has become an even
greater concern with many securities. Your fund has participated greatly with
the recent market highs, tempered slightly by higher interest rates. We look for
sustained strong performance but we must contend with many issues that we will
continue to monitor over the next year. We are concerned with sustained earnings
growth, year-2000 issues and inflation fears. Regardless of these concerns, your
fund will stay fully invested, as we are not market-timers.

CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
INCOME & GROWTH PORTFOLIO (WITH STANDARD & POORS 500 INDEX
MAX. SALES CHARGE)|(COMMENCED --------------------------
OPERATIONS AUGUST 18, 1992)
-------------------------------
<S> <C> <C>
9,500 10,000
'92 9,488 10,627
10,687 11,139
'93 11,146 11,688
10,766 11,289
'94 11,067 11,842
12,856 14,228
'95 13,796 16,274
14,726 17,934
'96 15,976 20,030
18,016 24,137
'97 19,636 26,690
20,683 31,417
'98 20,360 34,317
'99 21,661 38,565
</TABLE>

TOP 10 STOCKS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Texas Instruments 5.40
2. Schlumberger Ltd 4.20
3. Microsoft Corp 4.03
4. Allied Signal Inc 3.75
5. Hewlett-Packard Co 3.74
6. Intel Corp 3.54
7. CL&P CAPITAL L.P. 2.83
8. General Electric Co. 2.61
9. Williams Cos Inc 2.53
10. United Healthcare 2.33
</TABLE>

TOP 5 INDUSTRIES AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Computer and Related 14.50
2. Oil, Energy, and Natural Gas 14.04
3. Electronics/Semiconductors 9.03
4. Electrical Equipment 7.16
5. Medical & Related 6.78
</TABLE>

The accompanying notes are an integral part of these financial statements.
14
<PAGE> 79

ONE FUND, INC.
INCOME & GROWTH PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (3.8%)
8,000 Allied Signal Inc. .................. $ 504,000
-----------
AUTOMOTIVE & RELATED (1.7%)
2,557 *DaimlerChrysler AG (Foreign)........ 227,253
-----------
BANKING (3.5%)
3,000 Bank One Corp. ...................... 178,687
2,600 Bank of America Corp. ............... 190,612
3,500 Charter One Financial Inc. .......... 97,344
-----------
466,643
-----------
BUSINESS SERVICES (1.9%)
3,000 Manpower Inc. ....................... 67,875
8,000 Reynolds & Reynolds CL A............. 186,500
-----------
254,375
-----------
BROADCAST RADIO & TV (1.3%)
6,000 Infinity Broadcasting Corp. CL A..... 178,500
-----------
CHEMICALS (2.1%)
5,000 Minerals Technologies Inc. .......... 279,063
-----------
COMMUNICATIONS (4.1%)
2,000 *ADC Telecom. Inc. .................. 91,125
1,800 *Associated Group Inc. CL B.......... 117,338
1,900 Bell Atlantic Corp. ................. 124,212
2,500 *MCI Worldcom Inc. .................. 215,625
-----------
548,300
-----------
COMPUTER & RELATED (11.7%)
3,000 Computer Associates Intl. Inc. ...... 165,000
3,000 *EMC Corp. Mass...................... 165,000
5,000 Hewlett Packard Co. ................. 502,500
6,000 *Microsoft Corp. .................... 541,125
1,400 *NCR Corp. .......................... 68,338
2,988 *Unisys Corp. ....................... 116,345
-----------
1,558,308
-----------
CONSUMER PRODUCTS (0.9%)
2,500 Newell Rubbermaid Inc. .............. 116,250
-----------
DRUGS (2.2%)
1,300 Eli Lilly & Co. ..................... 93,113
5,000 Mylan Laboratories Inc. ............. 132,500
2,000 *Watson Pharmaceuticals Inc. ........ 70,125
-----------
295,738
-----------
ELECTRICAL EQUIPMENT (7.2%)
4,000 American Power Conversion............ 80,500
3,100 General Electric Co. ................ 350,300
3,000 Tyco International Ltd............... 284,250
4,000 Xerox Corp. ......................... 236,250
-----------
951,300
-----------
ELECTRONICS/SEMICONDUCTORS (9.0%)
8,000 Intel Corp. ......................... 476,000
5,000 Texas Instruments Inc. .............. 725,000
-----------
1,201,000
-----------
FOOD & RELATED (0.9%)
10,000 Food Lion Inc. CL B.................. 115,625
-----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCE (3.9%)
3,800 Associates First Capital CL A........ $ 168,388
1,500 Equitable Companies Inc. ............ 100,500
8,700 Firstar Corp. ....................... 243,600
-----------
512,488
-----------
HOUSING, FURNITURE & RELATED (0.6%)
7,500 Clayton Homes Inc. .................. 85,781
-----------
INSURANCE SERVICES (1.8%)
2,000 American Intl. Group................. 234,125
-----------
MEDICAL & RELATED (5.5%)
2,500 Baxter International Inc. ........... 151,563
2,300 Cardinal Health Inc. ................ 147,488
5,000 *HCR Manor Care...................... 120,937
5,000 United Healthcare Corp. ............. 313,125
-----------
733,113
-----------
OIL, ENERGY & NATURAL GAS (6.8%)
8,850 Schlumberger Ltd..................... 563,634
8,000 Williams Cos. Inc. .................. 340,500
-----------
904,134
-----------
RETAIL (1.2%)
2,500 Home Depot Inc. ..................... 161,094
-----------
TRANSPORTATION (0.9%)
3,000 CNF Transportation Inc. ............. 115,125
-----------
TOTAL COMMON STOCK (71.0%) (COST
$5,498,004)......................... $ 9,442,215
-----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES REAL ESTATE INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
10,200 Commercial Net Lease Realty Inc. .... $ 131,325
6,000 JDN Realty Corp. .................... 134,250
4,500 National Health Investors Inc. ...... 102,656
-----------
TOTAL REAL ESTATE INV. TRUST (2.8%)
(COST $377,865)..................... $ 368,231
-----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
BANKING (FOREIGN) (0.9%)
4,000 National Australia Bank Ltd.
Conv. .............................. $ 121,500
-----------
BUSINESS SERVICES (0.7%)
4,000 Flagstar Capital 8.50%............... 98,750
-----------
COMPUTER & RELATED (0.9%)
1,710 Unisys Series A $3.75 Conv. ......... 111,364
-----------
OIL, ENERGY & NATURAL GAS (0.6%)
3,000 Consumers Energy II 8.2% Conv. ...... 75,375
-----------
RETAIL (1.1%)
2,500 Kmart Financing 7.75% 06/15/16
Conv. .............................. $ 146,250
-----------
TOTAL PREFERRED STOCK (4.2%) (COST
$513,685)........................... $ 553,239
-----------
</TABLE>

(continued)
15
<PAGE> 80
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO (CONTINUED)

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
CHEMICALS (1.7%)
$250,000 Geon Corp. 7.500% 12/15/15........... $ 219,329
-----------
COMMUNICATIONS (0.8%)
100,000 Comcast Cable Communications 8.375%
05/01/07 (144A)..................... 106,917
-----------
COMPUTER & RELATED (1.9%)
250,000 IBM Corp. 7.250% 11/01/02............ 257,723
-----------
FINANCIAL SERVICES (0.4%)
50,000 ESI Tractebel Acq. Corp. 7.990%
12/30/11 (144A)..................... 47,699
-----------
FOOD & RELATED (0.6%)
75,000 Marsh Supermarkets Inc. Ser. B 8.875%
08/01/07............................ 74,625
-----------
FORESTRY & PAPER PRODUCTS (1.9%)
250,000 ITT Rayonier Inc. NT 7.500%
10/15/02............................ 256,812
-----------
HOUSING, FURNITURE & RELATED (0.8%)
100,000 Owens Corning 7.500% 05/01/05........ 99,086
-----------
OIL, ENERGY & NATURAL GAS (6.7%)
300,000 PDV America Inc. 7.875% 08/01/03..... 293,618
100,000 R&B Falcon Corp. Series B 6.750%
04/15/05............................ 84,500
250,000 Tenneco Inc. 8.075% 10/01/02......... 257,629
250,000 Union Texas Petroleum Hlgs. 8.250%
11/15/99............................ 251,918
-----------
887,665
-----------
RESTAURANTS (0.8%)
$100,000 Tricon Global Restaurants 7.450%
05/15/05............................ $ 99,645
-----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
UTILITIES (0.8%)
$100,000 Niagara Mohawk Power Corp. Ser. G
7.750% 10/01/08..................... $ 103,077
-----------
TOTAL LONG-TERM BONDS & NOTES (16.2%)
(COST $2,172,334)................... $ 2,152,578
-----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
MEDICAL & RELATED (1.2%)
$100,000 Centocor Inc. 4.750% 02/15/05........ $ 168,187
-----------
TOTAL CONVERTIBLE DEBENTURES (1.2%)
(COST $149,899)..................... $ 168,187
-----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (3.2%)
$424,000 Household Finance 5.450% 07/01/99.... $ 424,000
-----------
RETAIL (2.3%)
307,000 Sears Roebuck Acceptance Corp. 5.000%
07/01/99............................ 307,000
-----------
TOTAL SHORT-TERM NOTES (5.5%) (COST
$731,000)........................... $ 731,000
-----------
TOTAL HOLDINGS (100.9%) (COST
$9,442,787) (A)..................... $13,415,450
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (-0.9%)................. (119,755)
-----------
TOTAL NET ASSETS (100.0%)............ $13,295,695
===========
</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.
16
<PAGE> 81

ONE FUND, INC.
INCOME & GROWTH PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $9,442,788).............. $13,415,450
Cash in bank.............................. 177
Receivable for securities sold............ 217,318
Receivable for fund shares sold........... 4,143
Dividends & accrued interest receivable... 49,463
Other..................................... 1,870
-----------
Total assets............................ 13,688,421
-----------
Liabilities:
Payable for securities purchased.......... 253,058
Payable for fund shares redeemed.......... 75,609
Payable for investment management services
(note 3)................................ 4,144
Accrued 12b-1 fees (note 6)............... 7,864
Other accrued expenses.................... 29,066
Dividends payable......................... 22,985
-----------
Total liabilities....................... 392,726
-----------
Net assets at market value.................. $13,295,695
===========
Net assets consist of:
Par value, $.001 per share................ $ 857
Paid-in capital in excess of par value.... 8,933,953
Accumulated undistributed net realized
gain on investments..................... 387,998
Net unrealized appreciation on
investments............................. 3,972,662
Undistributed net investment income....... 225
-----------
Net assets at market value.................. $13,295,695
===========
Shares outstanding.......................... 856,998
Net asset value per share................... $ 15.51
===========
Maximum offering price per share
($15.51/95%).............................. $ 16.33
===========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest..................................... $247,711
Dividends.................................... 254,654
--------
Total investment income.................... 502,365
--------
Expenses:
Management fees (note 3)..................... 69,239
12b-1 fees (note 6).......................... 34,610
Custodian fees (note 3)...................... 5,219
Directors' fees (note 3)..................... 2,868
Professional fees............................ 9,984
Transfer agent & accounting fees............. 59,692
Filing fees.................................. 13,499
Printing, proxy and postage fees............. 4,843
Other........................................ 417
--------
Total expenses............................. 200,371
Less expenses voluntarily reduced or
reimbursed (note 3)...................... (20,784)
--------
Net expenses............................... 179,587
--------
Net investment income...................... 322,778
--------
Realized & unrealized gain (loss) on
investments:
Net realized gain from investments........... 903,416
Net decrease in unrealized appreciation on
investments................................ (662,035)
--------
Net gain on investments.................. 241,381
--------
Net increase in net assets from
operations............................ $564,159
========
</TABLE>

The accompanying notes are an integral part of these financial statements.
17
<PAGE> 82

ONE FUND, INC.
INCOME & GROWTH PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 322,778 $ 387,925
Realized gain on investments.............................. 903,416 664,230
Unrealized gain (loss) on investments..................... (662,035) 887,079
----------- -----------
Net increase in assets from operations................ 564,159 1,939,234
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (323,003) (391,040)
Capital gains distributions............................... (622,486) (676,652)
----------- -----------
Total dividends and distributions..................... (945,489) (1,067,692)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 1,753,433 3,431,737
Received from dividends reinvested........................ 564,557 615,775
Paid for shares redeemed.................................. (4,695,463) (1,979,004)
----------- -----------
Increase (decrease) in net assets derived from capital
share transactions................................... (2,377,473) 2,068,508
----------- -----------
Increase (decrease) in net assets.................. (2,758,803) 2,940,050
----------- -----------
Net Assets:
Beginning of period....................................... 16,054,498 13,114,448
----------- -----------
End of period............................................. $13,295,695 $16,054,498
=========== ===========
Includes undistributed net investment income of........... $ 225 $ 0
=========== ===========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ 15.85 14.89 12.78 11.57 10.65
Income from investment operations:
Net investment income..................................... 0.35 0.42 0.38 0.38 0.41
Net realized & unrealized gain on investments............. 0.33 1.73 2.39 1.27 1.54
------ ------ ------ ------ ------
Total income from investment operations................. 0.68 2.15 2.77 1.65 1.95
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.35) (0.42) (0.38) (0.37) (0.41)
Distributions from net realized capital gains............. (0.67) (0.77) (0.28) (0.07) (0.62)
------ ------ ------ ------ ------
Total distributions..................................... (1.02) (1.19) (0.66) (0.44) (1.03)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $15.51 $15.85 $14.89 $12.78 $11.57
====== ====== ====== ====== ======
Total return................................................ 4.73% 14.77% 22.34% 14.50% 19.41%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (a):
Expenses.................................................. 1.30% 1.20% 1.12% 0.89% 0.81%
Net investment income..................................... 2.33% 2.65% 2.77% 3.10% 3.69%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.45% 1.35% 1.31% 1.14% 1.06%
Net investment income..................................... 2.18% 2.50% 2.58% 2.85% 3.44%
Portfolio turnover rate..................................... 49% 39% 14% 7% 25%
Net assets at end of period (millions)...................... $ 13.3 $ 16.1 $ 13.1 $ 10.8 $ 7.7
</TABLE>

- ---------------

(a) The advisor has elected to waive management fees equal to 0 15% of average
net assets for the Income & Growth portfolio, but it may cease that waiver,
in whole or in part, without prior notice.

The accompanying notes are an integral part of these financial statements.
18
<PAGE> 83

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, 1999

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year (0.32)% (5.30)%
Three-year 10.53% 8.65%
Five-year 14.74% 13.57%
Since inception
(8/18/92) 13.73% 12.96%
</TABLE>

COMMENTS

The volatility that we expected in the stock market over the last twelve months
had a profound effect on the fund's performance. During this period when the S&P
500 Index was up approximately 23%, your fund was virtually flat. The portfolio
exhibited greater volatility than the overall market due to a larger weighting
in smaller companies. While these companies performed well fundamentally, the
narrowing of the market's breadth over the past year didn't reward them. Smaller
companies didn't offer any support during last year's market correction, even
though their valuations would have suggested otherwise. Despite having strong
performance by the technology and other sectors, the portfolio suffered relative
to the market.

Due to the recent strength of the stock market, valuation has become an even
greater concern with many securities. Your fund has participated greatly with
the recent market highs and has outperformed its benchmark. We look for
sustained strong performance, but we must contend with many issues that we will
continue to monitor over the next year. We are concerned with sustained earnings
growth, year-2000 issues and inflation fears. Regardless of these concerns, your
fund will stay fully invested, as we are not market-timers.

CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
GROWTH PORTFOLIO (WITH MAX. SALES STANDARD & POOR'S 500 INDEX
CHARGE)|(COMMENCED OPERATIONS ---------------------------
AUGUST 18, 1992)
---------------------------------
<S> <C> <C>
9,500.00 10,000.00
'92 10,178.00 10,627.00
11,228.00 11,139.00
'93 11,917.00 11,688.00
11,548.00 11,289.00
'94 11,988.00 11,842.00
13,927.00 14,228.00
'95 15,367.00 16,274.00
17,018.00 17,934.00
'96 18,098.00 20,030.00
20,198.00 24,137.00
'97 21,127.00 26,690.00
23,052.00 31,417.00
'98 21,678.00 34,317.00
22,978.00 38,565.00
</TABLE>

TOP 10 STOCKS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Cisco Systems Inc 6.51
2. Texas Instruments Inc 5.99
3. Microsoft Corp 4.55
4. Allied Signal Inc 4.05
5. Hewlett Packard Co 3.69
6. Intel Corp 3.28
7. Infinity 3.00
8. Computer Sciences 2.54
9. Analog Devices Inc 2.30
10. Computer Associates 2.27
</TABLE>

TOP 5 INDUSTRIES AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Computer and Related 16.12
2. Electronics/Semiconductors 9.25
3. Medical and Related 9.12
4. Computer/Applications Software 8.55
5. Electronic Equipment 7.75
</TABLE>

The prices of small company stocks are generally more volatile than the prices
of large company stocks.

The accompanying notes are an integral part of these financial statements.
19
<PAGE> 84

ONE FUND, INC.
GROWTH PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (4.0%)
7,000 Allied Signal Inc. ................ $ 441,000
-----------
AUTOMOTIVE & RELATED (1.9%)
2,370 DaimlerChrysler Corp. (Foreign).... 210,634
-----------
BANKING (5.1%)
1,500 Bank One Corp. .................... 89,344
2,000 Bank of America Corp. ............. 146,625
5,000 Charter One Financial Inc. ........ 139,062
6,420 Firstar Corp. ..................... 179,760
-----------
554,791
-----------
BROADCAST RADIO & TV (3.0%)
11,000 *Infinity Broadcasting Corp. ...... 327,250
-----------
BUSINESS SERVICES (2.9%)
3,500 Manpower Inc. ..................... 79,187
10,000 Reynolds and Reynolds CL A......... 233,125
-----------
312,312
-----------
CHEMICALS (1.8%)
3,500 Minerals Technologies, Inc. ....... 195,344
-----------
COMMUNICATIONS (3.8%)
2,000 *ADC Telecom. Inc. ................ 91,125
1,000 *Associated Group Inc. CL B........ 65,187
1,000 Bell Atlantic Corp. ............... 65,375
2,250 *MCI Worldcom Inc. ................ 194,063
-----------
415,750
-----------
COMPUTER & RELATED (16.1%)
11,000 *Cisco Systems Inc. ............... 709,500
4,000 *Computer Sciences Corp. .......... 276,750
3,000 *EMC Corp. Mass.................... 165,000
4,000 Hewlett Packard Co. ............... 402,000
5,000 *High Speed Access................. 128,125
1,600 *NCR Corp. ........................ 78,100
-----------
1,759,475
-----------
COMPUTER/APPLICATIONS SOFTWARE (8.6%)
4,500 Computer Associates Intl. ......... 247,500
5,500 *Microsoft Corp. .................. 496,031
10,000 *Mapinfo Corp. .................... 190,000
-----------
933,531
-----------
DRUGS (3.0%)
8,000 *Applied Analytical Industries..... 90,000
1,200 Lilly (Eli) & Co. ................. 85,950
3,000 Mylan Laboratories Inc. ........... 79,500
2,000 *Watson Pharmaceuticals Inc. ...... 70,125
-----------
325,575
-----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT (7.8%)
4,000 *American Power Conversion......... $ 80,500
5,000 *Analog Devices Inc. .............. 250,938
2,100 General Electric Co. .............. 237,300
1,500 *Solectron Corp. .................. 100,031
3,000 Xerox Corp. ....................... 177,187
-----------
845,956
-----------
ELECTRONICS/SEMICONDUCTORS (9.2%)
6,000 Intel Corp. ....................... 357,000
4,500 Texas Instruments Inc. ............ 652,500
-----------
1,009,500
-----------
FINANCIAL SERVICES (1.3%)
3,200 Associates First Capital - CL A.... 141,800
-----------
FOOD & RELATED (0.8%)
3,500 Food Lion Inc. CL A................ 41,563
3,500 Food Lion Inc. CL B................ 40,469
-----------
82,032
-----------
HOUSING, FURNITURE & RELATED (0.8%)
8,000 Clayton Homes Inc. ................ 91,500
-----------
INSURANCE SERVICES (2.2%)
1,500 American Intl Group................ 175,594
1,000 Equitable Companies Inc. .......... 67,000
-----------
242,594
-----------
MEDICAL & RELATED (9.1%)
3,500 Baxter International............... 212,187
12,500 *Capital Senior Living Corp. ...... 125,000
3,000 Cardinal Health Inc. .............. 192,375
2,000 *Centocor Inc. .................... 93,250
3,000 *HCR Manor Care.................... 72,562
7,000 *Kendle Intl. Inc. ................ 112,000
3,000 United Healthcare Corp. ........... 187,875
-----------
995,249
-----------
OIL, ENERGY & NATURAL GAS (5.6%)
7,000 *Louis Dreyfus Natural Gas
Corp. ............................ 150,938
2,950 Schlumberger Ltd. ................. 187,878
6,700 *Tesoro Petroleum Corp. ........... 106,781
4,000 Williams Cos. Inc. ................ 170,250
-----------
615,847
-----------
RETAIL (3.4%)
13,500 *Consolidated Products............. 243,000
2,000 Home Depot Inc. ................... 128,875
-----------
371,875
-----------
SECURITY SYSTEMS & SERVICES (2.5%)
2,250 Symbol Technologies Inc. .......... 82,969
2,000 Tyco International Ltd. ........... 189,500
-----------
272,469
-----------
</TABLE>

(continued)
20
<PAGE> 85
ONE FUND, INC.
GROWTH PORTFOLIO (CONTINUED)

SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
TEXTILES & RELATED (1.0%)
4,000 Warnaco Group CL A................. $ 107,000
-----------
TRANSPORTATION (2.4%)
4,500 *Atlas Air Inc. ................... 145,125
3,000 CNF Transportation Inc. ........... 115,125
-----------
260,250
-----------
TOTAL COMMON STOCK (96.3%) (COST
$6,280,554)....................... $10,511,734
-----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (3.4%)
$373,000 Household Finance 5.450% 07/01/99.... $ 373,000
-----------
TOTAL SHORT-TERM NOTES (3.4%) (COST
$373,000)........................... $ 373,000
-----------
TOTAL HOLDINGS (99.7%) (COST
$6,653,554) (A)..................... $10,884,734
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (0.3%).................. 29,019
-----------
TOTAL NET ASSETS (100.0%)............ $10,913,753
===========
</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.

21
<PAGE> 86

ONE FUND, INC
GROWTH PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $6,653,554).............. $10,884,734
Cash in bank.............................. 799
Receivable for securities sold............ 241,259
Receivable for fund shares sold........... 1,007
Dividends & accrued interest receivable... 4,797
Other..................................... 2,055
-----------
Total assets............................ 11,134,651
-----------
Liabilities:
Payable for securities purchased.......... 149,685
Payable for fund shares redeemed.......... 37,447
Payable for investment management services
(note 3)................................ 3,317
Accrued 12b-1 fees (note 6)............... 6,375
Other accrued expenses.................... 24,074
-----------
Total liabilities....................... 220,898
-----------
Net assets at market value.................. $10,913,753
===========
Net assets consist of:
Par value, $001 per share................. $ 637
Paid-in capital in excess of par value.... 6,589,371
Accumulated undistributed net realized
gain on investments..................... 92,565
Net unrealized appreciation on
investments............................. 4,231,180
-----------
Net assets at market value.................. $10,913,753
===========
Shares outstanding.......................... 636,923
Net asset value per share................... $ 17.14
===========
Maximum offering price per share
($17.14/95%).............................. $ 18.04
===========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 45,116
Dividends................................... 95,370
---------
Total investment income................... 140,486
---------
Expenses:
Management fees (note 3).................... 56,667
12b-1 fees (note 6)......................... 28,303
Custodian fees (note 3)..................... 5,141
Directors' fees (note 3).................... 2,390
Professional fees........................... 8,320
Transfer agent & accounting fees............ 55,250
Filing fees................................. 11,250
Printing, proxy and postage fees............ 4,041
Other....................................... 353
---------
Total expenses............................ 171,715
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (17,042)
---------
Net expenses.............................. 154,673
---------
Net investment loss....................... (14,187)
---------
Realized & unrealized gain (loss) on
investments:
Net realized gain from investments.......... 158,409
Net decrease in unrealized appreciation on
investments............................... (382,289)
---------
Net loss on investments................. (223,880)
---------
Net decrease in net assets from
operations........................... $(238,067)
=========
</TABLE>

The accompanying notes are an integral part of these financial statements.
22
<PAGE> 87

ONE FUND, INC
GROWTH PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income (loss).............................. $ (14,187) $ 2,920
Realized gain on investments.............................. 158,409 1,329,264
Unrealized gain (loss) on investments..................... (382,289) 518,363
----------- -----------
Net increase (decrease) in assets from operations..... (238,067) 1,850,547
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. 0 (1,820)
Distributions in excess of net investment income.......... 0 (10,132)
Capital gains distributions............................... (955,237) (889,104)
----------- -----------
Total dividends and capital gains distributions....... (955,237) (901,056)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 1,390,243 1,982,622
Received from dividends reinvested........................ 607,828 608,764
Paid for shares redeemed.................................. (4,100,808) (2,605,972)
----------- -----------
Decrease in net assets derived from capital share
transactions........................................... (2,102,737) (14,586)
----------- -----------
Increase (decrease) in net assets.................. (3,296,041) 934,905
----------- -----------
Net Assets:
Beginning of period....................................... 14,209,794 13,274,889
----------- -----------
End of period............................................. $10,913,753 $14,209,794
=========== ===========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $18.68 $17.52 $15.47 $13.03 $11.67
Income (loss) from investment operations:
Net investment income (loss).............................. (0.02) 0.00 0.07 0.14 0.16
Net realized & unrealized gain (loss) on investments...... (0.12) 2.41 2.73 2.72 2.17
------ ------ ------ ------ ------
Total income (loss) from investment operations.......... (0.14) 2.41 2.80 2.86 2.33
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... 0.00 0.00 (0.07) (0.14) (0.16)
Distributions in excess of net investment income.......... 0.00 (0.06) 0.00 0.00 0.00
Distributions from net realized capital gains............. (1.40) (1.19) (0.68) (0.28) (0.81)
------ ------ ------ ------ ------
Total distributions..................................... (1.40) (1.25) (0.75) (0.42) (0.97)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $17.14 $18.68 $17.52 $15.47 $13.03
====== ====== ====== ====== ======
Total return................................................ (0.32)% 14.13% 18.68% 22.22% 20.54%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (a):
Expenses.................................................. 1.36% 1.24% 1.13% 0.90% 0.83%
Net investment income (loss).............................. (0.13)% 0.02% 0.43% 0.99% 1.35%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.51% 1.39% 1.32% 1.15% 1.08%
Net investment income (loss).............................. (0.28)% (0.13)% 0.24% 0.74% 1.10%
Portfolio turnover rate..................................... 53% 40% 27% 22% 24%
Net assets at end of period (millions)...................... $ 10.9 $ 14.2 $ 13.3 $ 11.8 $ 7.0
</TABLE>

- ---------------
(a) The advisor has elected to waive management fees equal to 0.15% of average
net assets for the Growth portfolio, but it may cease that waiver, in whole
or in part, without prior notice.

The accompanying notes are an integral part of these financial statements.
23
<PAGE> 88

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 least 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, 1999

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year (15.54)% (19.76)%
Three-year 2.35% 0.61%
Since inception
(11/1/94) 8.28% 7.08%
</TABLE>

COMMENTS

The Small Cap portfolio return for the twelve months ending June 30, 1999 was
- -15.54%. Investors witnessed two bear market type return periods during the
fiscal year, July, 1998 to early October, 1998, (actually began May, 1998), and
again starting late January, 1999 through early March, 1999. The Small Cap
portfolio experienced large corrections during this period. The common stocks of
many small capitalization companies lost more than 30% of their market values
during these periods. Many of these companies reported good earnings growth and
were very attractively valued. The market basically ignored the small cap sector
until the second quarter of 1999. Small cap stocks return for the quarter was
approximately 16%. The Small Cap Portfolio return for the quarter was 16.1%.

We expect the overall stock market to continue to perform in a volatile manner.
Concerns over inflation, rising interest rates and lingering Y2K issues outstrip
the continuing positive earnings reported by several companies, and create
corrective periods in the markets. If there is one uptick in inflation and
profitability continues for the strong pace of the last few years, we expect the
small cap sector to at least keep close to the mid and large capitalization
sectors of the market. We will attempt to invest in strongly positioned
companies with the potential to grow earnings in a consistent manner.

CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO (WITH MAX. SALES RUSSELL 2000 INDEX
CHARGE) (COMMENCED OPERATIONS ------------------
NOVEMBER 1, 1994)
------------------------------------
<S> <C> <C>
9,500.00 10,000.00
'94 9,540.00 9,853.00
10,340.00 11,274.00
'95 11,601.00 12,656.00
12,841.00 13,967.00
'96 13,572.00 14,744.00
14,741.00 16,248.00
'97 15,872.00 18,027.00
16,301.00 18,977.00
'98 13,755.00 17,624.00
13,768.00 19,259.00
</TABLE>

TOP 10 STOCKS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Consolidated Product 4.70
2. Louis Dreyfus 4.28
3. Atlas Air Inc. 3.84
4. Tesoro Petroleum 3.79
5. Map Info Corp. 3.77
6. High Speed Access 3.39
7. Bando McGlocklin 3.21
8. Capital Senior 3.04
9. Guest Supply Inc. 2.88
10. Amcast Industrial 2.80
</TABLE>

TOP 5 INDUSTRIES AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Oil, Energy, and Natural Gas 12.63
2. Medical 10.51
3. Computer and Related 9.15
4. Business Services 8.97
5. Transportation and Equipment 5.96
</TABLE>

The accompanying notes are an integral part of these financial statements.
24
<PAGE> 89

ONE FUND, INC.
SMALL CAP PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
BUSINESS SERVICES (9.0%)
11,000 *Lo Jack Corp. ...................... $ 92,125
2,500 *Mapics Inc. ........................ 26,406
2,000 *Maximus Inc. ....................... 57,500
4,000 Reynolds & Reynolds CL A............. 93,250
5,000 *Source Information Management....... 67,500
-----------
336,781
-----------
CHEMICALS (1.8%)
2,000 OM Group Inc. ....................... 69,000
-----------
COMMUNICATIONS (2.8%)
3,687 *Mastec Inc. ........................ 104,158
-----------
COMPUTER & RELATED (9.2%)
7,000 *Electronic Processing Inc. ......... 72,625
5,000 *High Speed Access Corp. ............ 128,125
7,500 *Map Info Corp. ..................... 142,500
-----------
343,250
-----------
DRUGS (1.8%)
6,000 *Applied Analytical Inds. Inc. ...... 67,500
-----------
EDUCATION (2.0%)
2,800 *Sylvan Learning Systems............. 76,125
-----------
ELECTRICAL EQUIPMENT (4.3%)
1,100 CTS Corp. ........................... 77,000
4,000 Federal Signal Corp. ................ 84,750
-----------
161,750
-----------
ENTERTAINMENT & LEISURE (2.0%)
3,000 Cedar Fair........................... 74,812
-----------
FINANCIAL SERVICES (3.2%)
10,000 Bando McGlocklin Capital Corp. ...... 121,250
-----------
FORESTRY & PAPER PRODUCTS (1.6%)
4,500 *Fibermark Inc. ..................... 59,344
-----------
HOTEL/MOTEL (2.9%)
8,500 *Guest Supply........................ 108,906
-----------
INDUSTRIAL SERVICES (4.1%)
4,000 Clarcor Inc. ........................ 76,750
4,500 IMCO Recycling Inc. ................. 77,062
-----------
153,812
-----------
INSURANCE SERVICES (2.2%)
6,000 State Auto Financial Corp. .......... 81,000
-----------
MEDICAL & RELATED (10.5%)
11,500 *Capital Senior Living Corp. ........ 115,000
5,000 *Kendle International Inc. .......... 80,000
1 *Quorum Health Group Inc. ........... 7
7,000 *Stericycle Inc. .................... 94,937
3,000 *Sunrise Assisted Living............. 104,625
-----------
394,569
-----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
METAL & MINING (2.8%)
6,500 Amcast Industrial Corp. ............. $ 106,031
-----------
OIL, ENERGY & NATURAL GAS (12.6%)
7,500 *Louis Dreyfus Natural Gas Corp. .... 161,719
9,000 *Santa Fe Snyder Corp. .............. 68,625
9,000 *Tesoro Petroleum Corp. ............. 143,438
4,000 WD-40 Co. ........................... 100,000
-----------
473,782
-----------
RESTAURANTS (2.8%)
9,000 *Buffets Inc. ....................... 103,500
-----------
RETAIL (4.7%)
9,875 *Consolidated Products Inc. ......... 177,750
-----------
TRANSPORTATION & EQUIPMENT (6.0%)
4,500 *Atlas Air Inc. ..................... 145,125
4,800 *Hearland Express.................... 78,600
-----------
223,725
-----------
TOTAL COMMON STOCK (86.3%) (COST
$2,723,545).......................... $ 3,237,045
-----------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE (14.4%)
$180,000 American Express Credit Corp. 5.200%
01/99................................ $ 180,000
180,000 CIGNA Corp. 5.250% 07/06/99........... 179,869
180,000 G.E. Capital 4.950% 07/02/99.......... 179,975
----------
TOTAL SHORT-TERM NOTES (14.4%)
(COST $539,844)...................... $ 539,844
----------
TOTAL HOLDINGS (100.7%)
(COST $3,263,389) (A)................ $3,776,889
----------
CASH & RECEIVABLES, NET OF LIABILITIES
(-0.7%).............................. (24,219)
----------
TOTAL NET ASSETS (100.0%)............. $3,752,670
==========
</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.
25
<PAGE> 90

ONE FUND, INC
SMALL CAP PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $3,263,389)............... $3,776,889
Cash in bank............................... 15,532
Dividends & accrued interest receivable.... 349
Deferred organizational expenses (note
1)....................................... 172
Other...................................... 1,525
----------
Total assets............................. 3,794,467
----------
Liabilities:
Payable for fund shares redeemed........... 29,999
Payable for investment management services
(note 3)................................. 1,102
Accrued 12b-1 fees (note 6)................ 1,829
Other accrued expenses..................... 8,470
Dividends payable.......................... 397
----------
Total liabilities........................ 41,797
----------
Net assets at market value................... $3,752,670
==========
Net assets consist of:
Par value, $001 per share.................. $ 357
Paid-in capital in excess of par value..... 3,906,828
Accumulated net realized loss on
investments.............................. (668,061)
Net unrealized appreciation on
investments.............................. 513,500
Undistributed net investment income........ 46
----------
Net assets at market value................... $3,752,670
==========
Shares outstanding........................... 356,860
Net asset value per share.................... $ 10.52
==========
Maximum offering price per share
($10.52/95%)............................... $ 11.07
==========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 34,337
Dividends................................... 49,358
---------
Total investment income................... 83,695
---------
Expenses:
Management fees (note 3).................... 27,654
12b-1 fees (note 6)......................... 10,586
Custodian fees (note 3)..................... 5,000
Directors' fees (note 3).................... 956
Professional fees........................... 3,329
Transfer agent & accounting fees............ 33,191
Filing fees................................. 5,107
Printing, proxy and postage fees............ 1,618
Organizational expense (note 1)............. 522
Other....................................... 151
---------
Total expenses............................ 88,114
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (14,260)
---------
Net expenses.............................. 73,854
---------
Net investment income..................... 9,841
---------
Realized & unrealized loss on investments:
Net realized loss from investments.......... (804,516)
Net decrease in unrealized appreciation on
investments............................... (139,644)
---------
Net loss on investments................... (944,160)
---------
Net decrease in net assets from
operations.............................. $(934,319)
=========
</TABLE>

The accompanying notes are an integral part of these financial statements.
26
<PAGE> 91

ONE FUND, INC
SMALL CAP PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 9,841 $27,404.00
Realized gain (loss) on investments....................... (804,516) 726,343
Unrealized loss on investments............................ (139,644) (202,189)
----------- ----------
Net increase (decrease) in assets from operations..... (934,319) 551,558
----------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (9,841) (26,854)
Distributions in excess of net investment income.......... (9,359) 0
Capital gains distributions............................... (272,363) (547,755)
----------- ----------
Total dividends and distributions..................... (291,563) (574,609)
----------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 464,602 1,281,269
Received from dividends reinvested........................ 133,949 274,091
Paid for shares redeemed.................................. (1,446,253) (909,621)
----------- ----------
Increase (decrease) in net assets derived from capital
share transactions................................... (847,702) 645,739
----------- ----------
Increase (decrease) in net assets.................. (2,073,584) 622,688
----------- ----------
Net Assets:
Beginning of period....................................... 5,826,254 5,203,566
----------- ----------
End of period............................................. $ 3,752,670 $5,826,254
=========== ==========
Includes undistributed net investment income of........... $ 46 $ 46
=========== ==========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, 11-1-94
------------------------------------ TO
1999 1998 1997 1996 6-30-95
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $13.32 $13.30 $12.82 $10.63 $10.00
Income (loss) from investment operations:
Net investment income..................................... 0.02 0.06 0.11 0.26 0.22
Net realized & unrealized gain (loss) on investments...... (2.09) 1.30 1.67 2.26 0.67
------ ------ ------ ------ ------
Total income (loss) from investment operations.......... (2.07) 1.36 1.78 2.52 0.89
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.02) (0.06) (0.11) (0.25) (0.22)
Distributions in excess of net investment income.......... (0.03) 0.00 0.00 0.00 0.00
Distributions from net realized capital gains............. (0.68) (1.28) (1.19) (0.08) (0.04)
------ ------ ------ ------ ------
Total distributions..................................... (0.73) (1.34) (1.30) (0.33) (0.26)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.52 $13.32 $13.30 $12.82 $10.63
====== ====== ====== ====== ======
Total return................................................ (15.54)% 10.56% 14.82% 24.10% 8.91%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 1.74% 1.67% 1.35% 0.94% 1.00%(a)
Net investment income..................................... 0.23% 0.47% 0.89% 2.21% 3.19%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 2.07% 1.82% 1.62% 1.27% 1.31%(a)
Net investment income (loss).............................. (0.10)% 0.32% 0.62% 1.88% 2.88%(a)
Portfolio turnover rate..................................... 48% 77% 34% 34% 8%
Net assets at end of period (millions)...................... $ 3.8 $ 5.8 $ 5.2 $ 4.5 $ 2.9
</TABLE>

- ---------------

(a) Annualized

(b) Calculated on an aggregate basis (not annualized).

(c) The advisor has elected to waive management fees equal to 0.15% of average
net assets 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.

The accompanying notes are an integral part of these financial statements.
27
<PAGE> 92

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 DECEMBER 31, 1998

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year (13.90)% (18.20)%
Three-year (1.28)% (2.95)%
Five-year 3.97% 2.91%
Since inception
(5/1/93) 8.91% 8.01%
</TABLE>

COMMENTS

We finally began to see investors focus again on emerging markets and Japan
after a notable period of underperformance. This turnaround was attributable to
investor optimism that the "Asian Crisis" is finally over. This rally however
came at the expense of the markets in Western Europe. Concerns over economic
slowdown, a weak Euro currency, and fund outflows were factors. The year-to-date
performance ending June 30, 1999 for the One Fund International Portfolio stood
at -4.75%. This compared with 3.97% for the Morgan Stanley International Europe,
Australia, and Far East Index. The fund's underperformance was due to the timing
in the first half of 1999 in restructuring the fund. In the second-half of 1999
the fund better matched our investment strategy. Our investment discipline is
driven by security selection where we are looking for well positioned companies
with strong bottom line growth that are trading at reasonable valuations.
Moreover, the fund was well positioned when the Japanese equity market began to
rally. Secondly, positions in the telecom and media sectors in Western Europe
continued to pay dividends. Finally, some of our top holdings include, Softbank,
a leading Japanese based software and media company and Nortel Networks, a
leading provider of global high-capacity data networks for telephone and the
internet.

CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO (WITH MAX.
SALES CHARGE)|(COMMENCED OPERATIONS MORGAN STANLEY CAPTL. INTL. EAFE
MAY 1, 1993) INDEX
----------------------------------- --------------------------------
<S> <C> <C>
9,500.00 10,000.00
9,930.00 10,052.00
'93 12,920.00 10,826.00
13,940.00 11,792.00
'94 14,160.00 11,699.00
14,830.00 12,021.00
'95 15,840.00 13,049.00
17,600.00 13,659.00
'96 18,050.00 13,880.00
20,200.00 15,457.00
'97 18,271.00 14,041.00
19,219.00 16,299.00
'98 17,374.00 16,742.00
16,549.00 17,407.00
</TABLE>

TOP 10 HOLDINGS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Vivendi Ex Gen Des Faux 1.69
2. Sony Corp 1.55
3. British Telecom PLC 1.28
4. Mobilcom AG 1.25
5. Nortel Networks Corp 1.20
6. Global Telesystems Group, Inc 1.19
7. Softbank Corp 1.16
8. M-6 Metropole Television 1.13
9. Bouygues 1.11
10. Mannesmann AG 1.07
</TABLE>

TOP 5 COUNTRIES/REGIONS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Japan 25.52
2. United Kingdom 13.72
3. France 11.88
4. Germany 7.12
5. Canada 6.26
</TABLE>

The accompanying notes are an integral part of these financial statements.
28
<PAGE> 93

ONE FUND, INC.
INTERNATIONAL PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -----------------------------------------------------------
<C> <S> <C>
JAPAN (25.5%)
500 Advantest Corp. (12)................. $ 54,920
1,200 Aiwa Co. Ltd. (11)................... 39,641
1,500 Asatsu Inc. (29)..................... 39,641
3,200 Capcom Co. Ltd. (9).................. 67,787
3,000 Ebara Corp. (21)..................... 35,653
1,100 Enix Corp. (9)....................... 47,966
1,000 Fujitec Co. Ltd. (4)................. 9,473
2,000 Fujitsu Ltd.(9)...................... 40,220
8,900 Furukawa Electric Co. (11)........... 40,794
4,000 Hitachi Ltd. (11).................... 37,494
5,000 Inax Corp. (4)....................... 30,516
1,600 Kao Corp. (10)....................... 44,927
200 Keyence Corp. (12)................... 34,984
1,000 Kyorin Pharmaceutical Co. (24)....... 24,859
1,400 Matsushita-Kotobuki Electronics
(12)................................ 39,542
1,100 Mycal Card Inc. (15)................. 49,965
1,600 Namco Ltd. (14)...................... 42,945
4,000 Nec Corp. (12)....................... 49,717
6,000 Nikko Securities Co. Ltd. (15)....... 38,700
3,000 Nikon Corp. (12)..................... 49,056
3,000 Nippon Conlux Co. Ltd. (11).......... 16,129
1,000 Nippon Broadcasting System (23)...... 49,552
3,000 Olympus Optical Co. Ltd. (12)........ 44,324
800 Paris Miki Inc. (23)................. 43,606
1,300 Paltek Corp. (34).................... 51,105
200 Rohm Co Ltd. (12).................... 31,300
14,000 Sanyo Electric Co. Ltd. (11)......... 56,886
3,500 Sharp Corp. (12)..................... 41,335
800 Shimamura Co. Ltd. (28).............. 67,721
1,600 Shimachu (28)........................ 35,413
3,300 Shinkawa Ltd. (12)................... 71,404
400 Softbank Corp. (34).................. 80,968
1,000 Sony Corp. (12)...................... 107,776
1,700 Square Co. Ltd. (12)................. 61,213
4,000 Sumitomo Forestry Co. Ltd. (4)....... 31,119
1,000 Takeda Chemical Industries (24)...... 46,331
2,000 Taiyo Yuden Co. Ltd. (12)............ 32,803
500 Union Tool (12)...................... 37,164
15,000 *Wako Securities Co. Ltd. (15)....... 33,200
----------
1,758,149
----------
UNITED KINGDOM (13.7%)
3,500 *Allied Domecq plc (16).............. 33,822
1,050 *Arm Holdings plc ADR (12)........... 36,619
2,927 *Baltimore Tech. Zergo Hldgs (29).... 33,222
1,100 Barclays (3)......................... 32,062
2,800 British Telecom plc (8).............. 46,788
9,207 *Cable & Wireless Communications
(8)................................. 88,825
1,487 *Colt Telecom Group plc (8).......... 31,223
950 *Eidos plc (9)....................... 31,225
27,200 Electronics Boutique plc (12)........ 39,555
2,713 *Energis plc (8)..................... 64,451
4,000 *Future Network plc (23)............. 26,641
2,762 *Icon plc ADR (29)................... 54,204
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -----------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM, CONTINUED
1,950 Logica plc (29)...................... $ 20,442
1,912 *National Westminister Bank (3)...... 40,509
4,500 Prudential Corp. plc (20)............ 66,611
5,400 *Reuters Group plc (23).............. 71,122
150 *Sage Group plc (9).................. 5,332
7,000 Securicor plc (29)................... 61,464
2,200 *Sema Group plc (29)................. 21,207
3,400 *Shire Pharmaceuticals Group (24).... 28,272
2,800 Smithkline Beecham plc (24).......... 36,349
10,857 *Telewest Communications plc (8)..... 48,435
2,800 *W.H. Smith Group plc (22)........... 26,903
----------
945,283
----------
FRANCE (11.9%)
275 Alcatel (11)......................... 38,681
292 Bouygues (4)......................... 77,119
3,125 *Bull Sa (9)......................... 26,856
350 *Club Mediterrance (14).............. 37,112
511 Dexia France (3)..................... 68,348
150 Essolor Intl. (24)................... 46,849
48,100 *Eurotunnel Sa Esa Units (32)........ 70,877
487 *Infogrames Entertainment (14)....... 31,364
140 Labinal (11)......................... 37,047
375 M-6 Metropole Television (23)........ 78,791
500 Pernod Ricard (16)................... 33,490
2,000 *Remy Cointreau (16)................. 38,766
270 Societe Du Louvre (14)............... 19,740
175 Television Francaise (23)............ 40,754
1,600 Thomson CSF (1)...................... 55,562
1,450 Vivendi Ex Gen Des Fuax (29)......... 117,365
----------
818,721
----------
GERMANY (7.1%)
750 Bayer AG (7)......................... 31,184
420 *Consors Discount Broker (15)........ 32,026
180 *Intershop Communications AG (29).... 43,217
540 *Kinowelt Medien AG (23)............. 40,342
497 Mannesmann AG (8).................... 74,259
100 *Medion AG (34)...................... 28,646
950 Mobilcom AG (8)...................... 87,125
768 Ser Systeme AG (12).................. 44,713
900 Siemens AG (22)...................... 69,370
1,150 *Telegate AG (8)..................... 39,343
----------
490,225
----------
CANADA (6.3%)
900 *Celestcia Inc. (12)................. 38,981
1,000 Four Seasons Hotels Inc. (19)........ 43,739
9,700 *Intl Forest Producers CL A (17)..... 36,950
200 *JDS Uniphase........................ 33,227
1,800 Molson Cos. Ltd. CL A (16)........... 32,692
5,500 Nexfor Inc. (17)..................... 34,045
970 Nortel Networks Corp. (11)........... 83,137
900 Teleglobe Inc. (8)................... 26,662
</TABLE>

(continued)
29
<PAGE> 94
ONE FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -----------------------------------------------------------
<C> <S> <C>
CANADA, CONTINUED
3,338 *Telesystem Intl. Wireless Inc.
(8)................................. $ 60,738
856 *TLC The Laser Center (24)........... 40,759
----------
430,930
----------
NETHERLANDS (3.1%)
500 *ASM Lithography ADR (12)............ 29,688
1,107 Benckiser NV B Shares (10)........... 59,032
628 *Equant NV Reg Shares (29)........... 59,110
2,750 TNT Post Group NV (32)............... 65,601
63 United Pan-Europe Com-Sp ADR (8)..... 3,481
----------
216,912
----------
SINGAPORE & MALAYSIAN (2.2%)
22,000 Clipsal Inc. Ltd. (12)............... 34,100
9,000 Fraser & Neave Ltd. (16)............. 39,907
29,600 Kim Eng Holding (15)................. 27,641
3,000 Singapore Press Holding (23)......... 51,095
----------
152,743
----------
AUSTRALIA (2.2%)
5,018 Aust & NZ Banking Group Ltd. (3)..... 36,834
31,446 *Cable & Wireless Opus (8)........... 71,476
6,704 Publishing Broadcasting (23)......... 44,164
----------
152,474
----------
SWITZERLAND (2.1%)
45 *Distefora Holding AG (34)........... 4,627
127 Publicigroupe SA (23)................ 69,374
75 The Swath Group AG-Reg (28).......... 10,700
107 Zurich Allied AG (20)................ 60,787
----------
145,488
----------
GREECE (2.1%)
1,100 *Bank of Piraeus (3)................. 31,748
660 Commercial Bank Of Greece (3)........ 47,150
1 EFG Eurobank (3)..................... 24
1,400 Lambrakis Media Group (23)........... 35,455
1,700 Teletypos SA (8)..................... 30,194
----------
144,571
----------
HONG KONG (1.9%)
10,000 *Pacific Century Ins. (20)........... 8,094
8,000 Midland Realty Holdings Ltd. (27).... 1,155
19,300 Smartone Telecommunications (8)...... 68,656
38,000 Wheelock & Co. (27).................. 52,161
----------
130,066
----------
ITALY (1.8%)
7,564 Class Editori Spa (23)............... 60,406
1,650 Luxottica Group Spa Spon ADR (24).... 25,678
1,650 Pininfarina Spa (2).................. 36,895
----------
122,979
----------
SWEDEN (1.7%)
2,897 *Modern Times Group B Shares (23).... 62,954
18,828 Societe Europeene Comm B (8)......... 52,114
----------
115,068
----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -----------------------------------------------------------
<C> <S> <C>
BRAZIL (1.7%)
1,800 Telesp Cellular Part ADR (8)......... $ 48,150
2,100 Tele Norte Leste Participacoes (8)... 38,981
8,800 Usinas Sider Minas Gerais (25)....... 29,864
----------
116,995
----------
THAILAND (1.7%)
6,100 Bec World Public Co. Ltd. (23)....... 37,671
9,700 *Hana Microelectronics (12).......... 28,900
19,400 *Thai Airways Intl Ltd. (32)......... 36,519
4,000 *Total Access Communications (8)..... 12,800
----------
115,890
----------
INDONESIA (1.2%)
17,500 PT Indosat (8)....................... 33,723
21,000 PT Semen Gresik (4).................. 45,985
----------
79,708
----------
FINLAND (0.9%)
6,700 Merita plc (3)....................... 38,041
800 Nokian Renkaat OYJ (2)............... 24,731
----------
62,772
----------
LUXEMBOURG (0.7%)
354 Societe Europeene Satel ADR (23)..... 51,343
----------
MEXICO (0.6%)
1,000 *Groupo Televisa SA Spons GDR (23)... 44,813
----------
DENMARK (0.4%)
300 Falck A/S (29)....................... 24,525
----------
NORWAY (0.1%)
728 Schibsted (23)....................... 8,187
----------
IRELAND (0.0%)
50 *Ryanair Holdings plc SP ADR (32).... 2,650
----------
TOTAL FOREIGN COMMON STOCK (88.9%)
(COST $5,848,616)................... $6,130,492
----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES US COMMON STOCK VALUE
- ----------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS (1.6%)
1,020 *Global Telesystems Group Inc. ...... $ 82,620
383 *NTL Inc. Holdings Co. .............. 33,010
----------
TOTAL US COMMON STOCK (1.6%) (COST
$90,314)............................ 115,630
----------
TOTAL COMMON STOCK (90.5%) (COST
$5,938,930)......................... $6,246,122
----------
</TABLE>

(continued)
30
<PAGE> 95
ONE FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- ----------------------------------------------------------
<C> <S> <C>
AUSTRALIA (1.0%)
48,032 Village Roadshow Ltd. (14)........... $ 71,726
----------
GERMANY (0.6%)
56 Wella AG (10)........................ 39,817
----------
TOTAL FOREIGN PREFERRED STOCK (1.6%)
(COST $112,589)..................... $ 111,543
----------
TOTAL HOLDINGS (92.1%) (COST
$6,051,519)(A)...................... $6,357,665
----------
CASH & RECEIVABLES, NET OF
LIABILITIES (7.9%).................. 530,896
----------
TOTAL NET ASSETS (100.0%)............ $6,888,561
==========
</TABLE>

- ---------------

(a) Also represents cost for Federal income tax purposes.

* Non-income producing securities.

INDUSTRY CLASSIFICATIONS

<TABLE>
<S> <C>
(1) Aerospace (18) Governmental
(2) Automotive (19) Hotels
(3) Banking (20) Insurance
(4) Building/Construction (21) Machinery
(5) Capital Goods (22) Manufacturing
(6) Cement (23) Media & Publishing
(7) Chemicals (24) Medical & Health Care
(8) Communications (25) Metal & Mining
(9) Computer Products (26) Packaging
(10) Consumer Products (27) Real Estate
(11) Electrical Products (28) Retailing
(12) Electronics (29) Services
(13) Energy and Oil (30) Steel
(14) Entertainment & Leisure (31) Textile
(15) Finance (32) Transportation
(16) Food & Beverage (33) Utilities
(17) Forest & Paper Products (34) Wholesale
(35) Miscellaneous
</TABLE>

The accompanying notes are an integral part of these financial statements.

31
<PAGE> 96

ONE FUND, INC
INTERNATIONAL PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30,1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $6,051,519)............... $ 6,357,665
Cash in bank............................... 162,860
Unrealized gain on forward currency
contracts (note 5)....................... 241,472
Receivable for securities sold............. 620,082
Receivable for fund shares sold............ 48
Dividends & accrued interest receivable.... 36,854
Other...................................... 4,623
-----------
Total assets............................. 7,423,604
-----------
Liabilities:
Unrealized loss on forward currency
contracts (note 5)....................... 269,007
Payable for securities purchased........... 175,670
Payable for fund shares redeemed........... 56,896
Accrued 12b-1 fees (note 6)................ 5,049
Other accrued expenses..................... 28,421
-----------
Total liabilities........................ 535,043
-----------
Net assets at market value................... $ 6,888,561
===========
Net assets consist of:
Par value, $.001 per share................. $ 637
Paid-in capital in excess of par value..... 8,446,042
Accumulated undistributed net realized loss
on investments (note 1).................. (1,263,558)
Net unrealized appreciation (depreciation)
on:
Investments (note 1)..................... 306,146
Foreign currency related transactions.... (15,275)
Forward currency contracts (note 5)...... (27,535)
Undistributed net investment loss.......... (557,896)
-----------
Net assets at market value................... $ 6,888,561
===========
Shares outstanding........................... 636,602
Net asset value per share.................... $ 10.82
===========
Maximum offering price per share
($10.82/95%)............................... $ 11.39
===========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest (net of $384 foreign taxes
withheld)................................ $ 57,406
Dividends (net of $11,046 foreign taxes
withheld)................................ 124,859
-----------
Total investment income.................. 182,265
Expenses:
Management fees (note 3)................... 88,376
12b-1 fees (note 6)........................ 25,116
Custodian fees (note 3).................... 67,000
Directors' fees (note 3)................... 2,560
Professional fees.......................... 8,881
Transfer agent & accounting fees........... 49,000
Filing fees................................ 12,001
Printing, proxy and postage fees........... 4,319
Other...................................... 373
-----------
Total expenses........................... 257,626
Less expenses voluntarily reduced or
reimbursed (note 3).................... (43,677)
-----------
Net expenses............................. 213,949
-----------
Net investment loss...................... (31,684)
-----------
Realized & unrealized gain (loss) on
investments & foreign currency:
Net realized loss from:
Investments.............................. (1,442,884)
Forward currency related transactions.... (526,402)
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments............................ 367,709
Foreign currency related
transactions........................ (218,371)
-----------
Net loss on investments................ (1,819,948)
-----------
Net decrease in net assets from
operations.......................... $(1,851,632)
===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
32
<PAGE> 97

ONE FUND, INC
INTERNATIONAL PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income (loss).............................. $ (31,684) $ 142,380
Realized gain (loss) on investments and foreign currency
related transactions.................................... (1,969,286) 1,670,517
Unrealized gain (loss) on investments and foreign currency
related transactions.................................... 149,338 (2,430,256)
----------- -----------
Net decrease in assets from operations................ (1,851,632) (617,359)
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (97) (139,103)
Capital gains and foreign currency related transactions
distributions........................................... (285,520) (2,283,120)
----------- -----------
Total dividends and distributions..................... (285,617) (2,422,223)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 507,008 3,159,453
Received from dividends reinvested........................ 271,907 1,971,077
Paid for shares redeemed.................................. (6,315,910) (6,838,385)
----------- -----------
Decrease in net assets derived from capital share
transactions......................................... (5,536,995) (1,707,855)
----------- -----------
Decrease in net assets............................. (7,674,244) (4,747,437)
----------- -----------
Net Assets:
Beginning of period....................................... 14,562,805 19,310,242
----------- -----------
End of period............................................. $ 6,888,561 $14,562,805
=========== ===========
Includes undistributed net investment income of........... $ 0 $ 288
=========== ===========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------------------------------
1999 1998 1997 1996 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $ 12.92 $15.45 $14.47 $12.89 $13.32
Income (loss) from investment operations:
Net investment income (loss).............................. (0.04) 0.12 0.14 0.10 0.14
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (1.74) (0.63) 1.92 2.24 0.63
------- ------ ------ ------ ------
Total income (loss) from investment operations.......... (1.78) (0.51) 2.06 2.34 0.77
------- ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... 0.00 (0.12) (0.15) (0.39) (0.14)
Distributions from net realized capital gains and foreign
currency transactions................................... (0.32) (1.90) (0.93) (0.37) (1.06)
------- ------ ------ ------ ------
Total distributions..................................... (0.32) (2.02) (1.08) (0.76) (1.20)
------- ------ ------ ------ ------
Net asset value, end of period.............................. $ 10.82 $12.92 $15.45 $14.47 $12.89
======= ====== ====== ====== ======
Total return................................................ (13.90)% (4.84)% 14.76% 18.65% 6.44%
Ratios and supplemental data:
Ratios net of fees reimbursed by advisor (a):
Expenses.................................................. 2.13% 2.10% 1.87% 1.72% 1.50%
Net investment income (loss).............................. (0.32)% 0.85% 0.99% 0.70% 1.11%
Ratios assuming no fees reimbursed by advisor:
Expenses.................................................. 2.56% 2.20% 1.98% 1.72% 1.50%
Net investment income (loss).............................. (0.75)% 0.75% 0.88% 0.70% 1.11%
Portfolio turnover rate..................................... 217% 12% 9% 20% 39%
Net assets at end of period (millions)...................... $ 6.9 $ 14.6 $ 19.3 $ 15.1 $ 12.0
</TABLE>

- ---------------

(a) The advisor has elected to reimburse certain operating expenses of the
International Portfolio, but it may cease that waiver, in whole or in part,
without prior written notice.

The accompanying notes are an integral part of these financial statements.
33
<PAGE> 98

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, 1999

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year (11.88)% (16.29)%
Three-year (1.05)% (2.73)%
Since inception
(11/1/94) 3.53% 2.39%
</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

We finally began to see investors focus again on emerging markets and Japan
after a notable period of underperformance. This turnaround was attributable to
investor optimism that the "Asian Crisis" is finally over. This rally however
came at the expense of the markets in Western Europe. Concerns over economic
slowdown, a weak Euro currency, and fund outflows were factors. The year-to-
date performance ending June 30, 1999 for the Global Contrarian Portfolio stood
at -4.72%. This compared with 3.97% for the Morgan Stanley International Europe,
Australia, and Far East Index. The fund's underperformance was due to the timing
in the first half of 1999 in restructuring the fund. In the second-half of 1999
the fund better matched our investment strategy. Our investment discipline is
driven by security selection where we are looking for well positioned companies
with strong bottom line growth that are trading at reasonable valuations.
Moreover, the fund was well positioned when the Japanese equity market began to
rally. Secondly, positions in the telecom and media sectors in Western Europe
continued to pay dividends. Finally, some of our top holdings include, Softbank,
a leading Japanese based software and media company and Nortel Networks, a
leading provider of global high-capacity data networks for telephone and the
internet.

CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
GLOBAL CONTRARIAN PORTFOLIO (WITH
MAX. SALES CHARGE)|(COMMENCED MORGAN STANLEY CAPTL. INTL. WORLD
OPERATIONS NOVEMBER 1, 1994) INDEX
--------------------------------- ---------------------------------
<S> <C> <C>
9,500.00 10,000.00
'94 9,150.00 9,654.00
9,781.00 10,066.00
'95 10,521.00 11,134.00
11,531.00 11,923.00
'96 11,581.00 12,634.00
12,811.00 14,578.00
'97 12,761.00 14,528.00
12,674.00 16,648.00
'98 11,721.00 17,631.00
11,168.00 19,132.00
</TABLE>

TOP 10 STOCKS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Sony Corp 2.05
2. Mannesmann AG 1.74
3. Bouygues 1.72
4. Nippon Broadcasting System 1.57
5. Prudential Corp PLC 1.45
6. Smartone Telecommunications 1.43
7. Advantest Corp 1.39
8. Cable and Wireless Comms PLC 1.33
9. Class Editori SPA 1.31
10. Mobilcom AG 1.28
</TABLE>

TOP 5 COUNTRIES AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Japan 28.11
2. United Kingdom 13.83
3. France 12.56
4. Germany 7.72
5. Canada 6.38
</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.

The accompanying notes are an integral part of these financial statements.
34
<PAGE> 99

ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
JAPAN (28.1%)
400 Advantest Corp. (12).................. $ 43,936
500 Aiwa Co. Ltd. (11).................... 16,517
600 Asatsu Inc. (29)...................... 15,857
1,300 Capcom Co. Ltd. (9)................... 27,539
1,000 Ebara Corp. (21)...................... 11,884
500 Enix Corp. (9)........................ 21,803
1,100 Fujitec Co. Ltd. (4).................. 10,420
1,000 Fujitsu Ltd. (9)...................... 20,110
4,000 Furukawa Electric Co. (11)............ 18,334
2,000 Hitachi Ltd. (11)..................... 18,747
2,000 Inax Corp. (4)........................ 12,206
700 Kao Corp. (10)........................ 19,656
100 Keyence Corp. (12).................... 17,492
1,000 Kyorin Pharmaceutical Co. (24)........ 24,859
600 Matsushita-Kotobuki Electronics
(12)................................. 16,947
500 Mycal Card Inc. (15).................. 22,711
700 Namco Ltd. (14)....................... 18,788
2,000 Nec Corp. (12)........................ 24,859
3,000 Nikko Securities Co. Ltd. (15)........ 19,350
1,000 Nikon Corp. (12)...................... 16,352
2,000 Nippon Conlux Co. Ltd. (11)........... 10,753
1,000 Nippon Broadcasting System (23)....... 49,552
1,000 Olympus Optical Co. Ltd. (12)......... 14,775
300 Paris Miki Inc. (23).................. 16,352
1,000 Paltek Corp. (34)..................... 39,311
100 Rohm Co Ltd. (12)..................... 15,650
5,000 Sanyo Electric Co. Ltd. (11).......... 20,316
1,500 Sharp Corp. (12)...................... 17,715
300 Shimamura Co. Ltd. (28)............... 25,395
700 Shimachu (28)......................... 15,493
1,500 Shinkawa Ltd. (12).................... 32,457
100 Softbank Corp. (34)................... 20,242
600 Sony Corp. (12)....................... 64,665
800 Square Co. Ltd. (12).................. 28,806
2,000 Sumitomo Forestry Co. Ltd. (4)........ 15,559
500 Takeda Chemical Industries (24)....... 23,166
1,000 Taiyo Yuden Co. Ltd. (12)............. 16,402
300 Union Tool (12)....................... 22,298
7,000 *Wako Securities Co. Ltd. (15)........ 15,493
----------
862,767
----------
UNITED KINGDOM (13.8%)
1,500 *Allied Domecq plc (16)............... 14,495
550 *Arm Holdings plc ADR (29)............ 19,181
1,583 *Baltimore Tech. Zergo Hldgs (9)...... 17,967
500 Barclays (3).......................... 14,574
1,100 British Telecom plc (8)............... 18,381
4,349 *Cable & Wireless Communications
(8).................................. 41,957
610 *Colt Telecom Group plc (8)........... 12,809
450 *Eidos plc (9)........................ 14,791
10,800 Electronics Boutique plc (12)......... 15,706
1,217 *Energis plc (8)...................... 28,911
1,900 *Future Network plc (23).............. 12,655
986 *Icon plc ADR (29).................... 19,350
775 Logica plc (29)....................... 8,124
686 *National Westminister Bank (3)....... 14,534
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM, CONTINUED
3,100 Prudential Corp. plc (20)............. $ 45,887
2,200 *Reuters Group plc (23)............... 28,976
50 *Sage Group plc (9)................... 1,777
3,000 Securicor plc (29).................... 26,342
1,040 *Sema Group plc (29).................. 10,025
1,400 *Shire Pharmaceuticals Group (24)..... 11,642
1,200 Smithkline Beecham plc (24)........... 15,578
3,882 *Telewest Communications plc (8)...... 17,318
1,400 *W.H. Smith Group plc (22)............ 13,451
----------
424,431
----------
FRANCE (12.6%)
125 Alcatel (11).......................... 17,582
205 Bouygues (4).......................... 54,141
1,375 *Bull Sa (9).......................... 11,817
150 *Club Mediterrance (14)............... 15,905
235 Dexia France (3)...................... 31,432
60 Essolor Intl. (24).................... 18,740
19,600 *Eurotunnel Sa Esa Units (32)......... 28,881
216 *Infogrames Entertainment (14)........ 13,911
60 Labinal (11).......................... 15,877
150 M-6 Metropole Television (23)......... 31,516
200 Pernod Ricard (16).................... 13,396
950 *Remy Cointreau (16).................. 18,414
108 Societe Du Louvre (14)................ 7,896
90 Television Francaise (23)............. 20,959
1,050 Thomson CSF (1)....................... 36,462
600 Vivendi Ex Gen Des Fuax (29).......... 48,565
----------
385,494
----------
GERMANY (7.7%)
350 Bayer AG (7).......................... 14,553
190 *Consors Discount Broker (15)......... 14,488
60 *Intershop Communications AG (9)...... 14,406
256 *Kinowelt Medien AG (23).............. 19,125
367 Mannesmann AG (8)..................... 54,835
50 *Medion AG (34)....................... 14,323
440 Mobilcom AG (8)....................... 40,352
288 Ser Systeme AG (12)................... 16,767
400 Siemens AG (22)....................... 30,831
500 *Telegate AG (8)...................... 17,105
----------
236,785
----------
CANADA (6.4%)
400 *Celestcia Inc. (12).................. 17,325
400 Four Seasons Hotels Inc. (19)......... 17,495
4,000 *Intl Forest Producers CL A (17)...... 15,237
92 *JDS Uniphase (8)..................... 15,218
800 Molson Cos. Ltd. CL A (16)............ 14,530
2,400 Nexfor Inc. (17)...................... 14,856
395 Nortel Networks Corp. (11)............ 33,855
400 Teleglobe Inc. (8).................... 11,850
2,069 *Telesystem Intl. Wireless Inc. (8)... 37,648
371 *TLC The Laser Center (24)............ 17,665
----------
195,679
----------
</TABLE>

(continued)
35
<PAGE> 100
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
NETHERLANDS (3.4%)
250 *ASM Lithography ADR (12)............. $ 14,844
439 Benckiser NV B Shares (10)............ 23,410
356 *Equant NV Reg Shares (29)............ 33,509
1,250 TNT Post Group NV (32)................ 29,819
23 United Pan-Europe Com-Sp ADR (8)...... 1,271
----------
102,853
----------
HONG KONG (2.3%)
4,000 *Pacific Century Ins. (20)............ 3,238
4,000 Midland Realty Holdings Ltd. (27)..... 577
12,700 Smartone Telecommunications (8)....... 45,178
16,000 Wheelock & Co. (27)................... 21,962
----------
70,955
----------
AUSTRALIA (2.2%)
2,400 Aust & NZ Banking Group Ltd. (3)...... 17,617
14,555 *Cable & Wireless Opus (8)............ 33,083
2,689 Publishing Broadcasting (23).......... 17,714
----------
68,414
----------
ITALY (2.2%)
5,161 Class Editori Spa (23)................ 41,216
700 Luxottica Group Spa Spon ADR (24)..... 10,894
650 Pininfarina Spa (2)................... 14,534
----------
66,644
----------
GREECE (2.2%)
500 *Bank of Piraeus (3).................. 14,431
315 Commercial Bank Of Greece (3)......... 22,504
1 EFG Eurobank (3)...................... 11
600 Lambrakis Media Group (23)............ 15,195
800 Teletypos SA (8)...................... 14,209
----------
66,350
----------
SWEDEN (2.0%)
1,735 *Modern Times Group B Shares (23)..... 37,703
8,963 Societe Europeene Comm B (8).......... 24,809
----------
62,512
----------
SINGAPORE & MALAYSIAN (2.0%)
10,000 Clipsal Inc. Ltd. (12)................ 15,500
4,000 Fraser & Neave Ltd. (16).............. 17,737
12,500 Kim Eng Holding (15).................. 11,673
1,000 Singapore Press Holding (23).......... 17,032
----------
61,942
----------
SWITZERLAND (1.9%)
61 Publicigroupe SA (23)................. 33,322
40 The Swath Group AG-Reg (28)........... 5,707
35 Zurich Allied AG (20)................. 19,884
----------
58,913
----------
BRAZIL (1.7%)
750 Telesp Cellular Part ADR (8).......... 20,063
1,100 Tele Norte Leste Participacoes (8).... 20,419
3,700 Usinas Sider Minas Gerais (25)........ 12,557
----------
53,039
----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
THAILAND (1.4%)
2,600 Bec World Public Co. Ltd. (23)........ $ 16,056
4,200 *Hana Microelectronics (12)........... 12,514
7,800 *Thai Airways Intl Ltd. (32).......... 14,683
----------
43,253
----------
INDONESIA (1.1%)
7,500 PT Indosat (8)........................ 14,453
9,000 PT Semen Gresik (4)................... 19,708
----------
34,161
----------
LUXEMBOURG (1.1%)
223 Societe Europeene Satel ADR (23)...... 32,343
----------
FINLAND (0.9%)
2,700 Merita plc (3)........................ 15,330
400 Nokian Renkaat OYJ (2)................ 12,365
----------
27,695
----------
MEXICO (0.6%)
400 *Groupo Televisa SA Spons GDR (23).... 17,925
----------
DENMARK (0.3%)
100 Falck A/S (29)........................ 8,175
----------
IRELAND (0.0%)
50 *Ryanair Holdings plc SP ADR (32)..... 2,650
----------
NORWAY (0.0%)
163 Schibsted (23)........................ 1,833
----------
TOTAL FOREIGN COMMON STOCK (93.9%)
(COST $2,731,860).................... $2,884,813
----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS (1.6%)
440 *Global Telesystems Group Inc......... $ 35,640
161 *NTL Inc. Holdings Co................. 13,876
----------
TOTAL U.S. COMMON STOCK (1.6%) (COST
$39,366)............................. $ 49,516
----------
TOTAL COMMON STOCK (95.5%) (COST
$2,771,226).......................... $2,934,329
----------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUSTRALIA (1.1%)
22,079 Village Roadshow Ltd. (14)............ $ 32,970

GERMANY (0.7%)
30 Wella AG (10)......................... 21,330
----------
TOTAL FOREIGN PREFERRED STOCK (1.8%)
(COST $53,970)....................... $ 54,300
----------
</TABLE>

<TABLE>
TOTAL HOLDINGS (97.3%)
(Cost $2,828,086)(a). $2,988,629
<C> <S> <C>
----------
CASH & RECEIVABLES, NET OF LIABILITIES
(2.7%)............................... 80,472
----------
TOTAL NET ASSETS (100.0%)............. $3,069,101
==========
</TABLE>

(continued)
36
<PAGE> 101
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)

SCHEDULE OF INVESTMENTS JUNE 30, 1999

- ---------------

(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
INDUSTRY CLASSIFICATIONS

(1) Aerospace
(2) Automotive
(3) Banking
(4) Building/Construction
(5) Capital Goods
(6) Cement
(7) Chemicals
(8) Communications
(9) Computer Products
(10) Consumer Products
(11) Electrical Products
(12) Electronics
(13) Energy and Oil
(14) Entertainment & Leisure
(15) Finance
(16) Food & Beverage
(17) Forest & Paper Products
(18) Governmental
(19) Hotels
(20) Insurance
(21) Machinery
(22) Manufacturing
(23) Media & Publishing
(24) Medical & Health Care
(25) Metal & Mining
(26) Packaging
(27) Real Estate
(28) Retailing
(29) Services
(30) Steel
(31) Textile
(32) Transportation
(33) Utilities
(34) Wholesale
(35) Miscellaneous

The accompanying notes are an integral part of these financial statements.

37
<PAGE> 102

ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $2,825,016)............... $ 2,988,629
Unrealized gain on forward currency
contracts (note 5)....................... 7,427
Receivable for securities sold............. 218,319
Dividends & accrued interest receivable.... 12,476
Other...................................... 25,075
-----------
Total assets............................. 3,251,926
-----------
Liabilities:
Accounts payable........................... 72,439
Payable for securities purchased........... 64,172
Payable for fund shares redeemed........... 18,480
Unrealized loss on forward currency
contracts (note 5)....................... 11,286
Accrued 12b-1 fees (note 6)................ 2,003
Other accrued expenses..................... 14,445
-----------
Total liabilities........................ 182,825
-----------
Net assets at market value................... $ 3,069,101
===========
Net assets consist of:
Par value, $.001 per share................. $ 390
Paid-in capital in excess of par value..... 3,967,440
Accumulated undistributed net realized loss
on investments (note 1).................. (1,008,433)
Net unrealized appreciation (depreciation)
on:
Investments (note 1)..................... 163,613
Foreign currency related transactions.... (644)
Forward currency contracts (note 5)...... (3,859)
Undistributed net investment loss.......... (49,406)
-----------
Net assets at market value................... $ 3,069,101
===========
Shares outstanding........................... 389,704
Net asset value per share.................... $ 7.88
===========
Maximum offering price per share
($7.88/95%)................................ $ 8.29
===========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 35,901
Dividends
(net of $4,264 foreign taxes withheld).... 83,137
---------
Total investment income................... 119,038
---------
Expenses:
Management fees (note 3).................... 34,827
12b-1 fees (note 6)......................... 9,674
Custodian fees (note 3)..................... 48,400
Directors' fees (note 3).................... 800
Professional fees........................... 2,926
Transfer agent & accounting fees............ 26,001
Filing fees................................. 5,750
Printing, proxy and postage fees............ 1,351
Organizational expense (note 1)............. 522
Other....................................... 120
---------
Total expenses............................ 130,371
---------
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (47,996)
---------
Net expenses.............................. 82,375
---------
Net investment income..................... $ 36,663
---------
Realized & unrealized gain (loss) on
investments & foreign currency:
Net realized loss from:
Investments............................... $(857,799)
Forward currency related transactions..... (62,568)
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments............................. 372,451
Foreign currency related transactions... (32,815)
---------
Net loss on investments................. (580,731)
---------
Net decrease in net assets from
operations........................... $(544,068)
=========
</TABLE>

The accompanying notes are an integral part of these financial statements.
38
<PAGE> 103

ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 36,663 $ 76,677
Realized gain (loss) on investments and foreign currency
related transactions.................................... (920,367) 725,189
Unrealized gain (loss) on investments and foreign currency
related transactions.................................... 339,636 (820,703)
----------- -----------
Net decrease in assets from operations................ (544,068) (18,837)
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (26,610) (70,667)
Capital gains and foreign currency related transactions
distributions........................................... (685,933) (405,742)
----------- -----------
Total dividends and distributions..................... (712,543) (476,409)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 158,234 509,252
Received from dividends reinvested........................ 242,528 211,749
Paid for shares redeemed.................................. (1,137,132) (1,459,507)
----------- -----------
Decrease in net assets derived from capital share
transactions......................................... (736,370) (738,506)
----------- -----------
Decrease in net assets............................. (1,992,981) (1,233,752)
----------- -----------
Net Assets:
Beginning of period....................................... 5,062,082 6,295,834
----------- -----------
End of period............................................. $ 3,069,101 $ 5,062,082
=========== ===========
Includes undistributed net investment income of........... $ 0 $ 3,108
=========== ===========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, 11-1-94
---------------------------------------- TO
1999 1998 1997 1996 6-30-95
------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $ 10.76 $11.79 $11.48 $10.01 $10.00
Income (loss) from investment operations:
Net investment income..................................... 0.09 0.14 0.20 0.16 0.17
Net realized & unrealized gain (loss) on investment and
foreign currency transactions........................... (1.29) (0.26) 0.99 1.61 0.13
------- ------ ------ ------ ------
Total income (loss) from investment operations.......... (1.20) (0.12) 1.19 1.77 0.30
------- ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.06) (0.13) (0.21) (0.16) (0.17)
Distributions from net realized capital gains and foreign
currency transactions................................... (1.62) (0.78) (0.67) (0.14) (0.12)
------- ------ ------ ------ ------
Total distributions..................................... (1.68) (0.91) (0.88) (0.30) (0.29)
------- ------ ------ ------ ------
Net asset value, end of period.............................. $ 7.88 $10.76 $11.79 $11.48 $10.01
======= ====== ====== ====== ======
Total return................................................ (11.88)% (1.05)% 11.11% 17.84% 2.99%(b)
Ratios and supplemental data:
Ratios net of fees reimbursed by advisor (c):
Expenses.................................................. 2.15% 2.13% 2.02% 2.14% 2.05%(a)
Net investment income..................................... 0.96% 1.28% 1.78% 1.49% 2.85%(a)
Ratios assuming no fees reimbursed by advisor:
Expenses.................................................. 3.40% 2.53% 2.21% 2.14% 2.05%(a)
Net investment income (loss).............................. (0.30)% 0.88% 1.59% 1.49% 2.85%(a)
Portfolio turnover rate..................................... 254% 25% 6% 26% 8%
Net assets at end of period (millions)...................... $ 3.1 $ 5.1 $ 6.3 $ 5.7 $ 3.9
</TABLE>

- ---------------

(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, but it may cease that waiver, in whole or in
part, without prior notice.

The accompanying notes are an integral part of these financial statements.

39
<PAGE> 104

CORE GROWTH PORTFOLIO

ONE FUND, INC.

OBJECTIVE

PERFORMANCE AS OF JUNE 30, 1999

AVERAGE ANNUAL TOTAL RETURNS:

<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 14.43% 8.72%
Since inception
(11/1/96) 7.52% 5.63%
</TABLE>

COMMENTS

The One Fund Core Growth Portfolio returned 10.98% for the 2nd quarter, 1999 and
14.43% for the year ending June 30, 1999. This compares with the Russell Mid Cap
Growth Index returns of 10.42% and 20.31% respectively for the same periods.
Although this calendar year has been strong for the Fund, the July through
December period last year was difficult. The market returns of 1998 were very
narrow, led by the largest stocks in each major index and the small
capitalization stocks held by your Fund lagged in this environment.

The Fund's most heavily weighted sector, at nearly 40%, is technology. This
sector has contributed well over half of the Fund's positive performance and
there has been broad strength among the holdings. Semiconductors,
telecommunication equipment, Internet services and contract manufacturing
companies all participated in this rally due to robust expectations for first
and second quarter earnings. The portfolio's representation in software is small
due to concerns over Year 2000 demand imbalances. The consumer cyclical sector,
which comprises mostly retailers, is the next largest contributor to Fund. No
one stock drove the overall performance, but again, strength was broad among
holdings.

The U.S. economic outlook continues to be positive by most measures. The GDP
report for the first quarter of 1999 surprised everyone when it came in at a
healthy 4.5%. At 4.3%, unemployment remains near a 30-year low. Despite the
continued tight labor market, wage inflation does not appear to be a significant
threat, according to the employment cost index. Productivity remains high. After
a scare in May, the CPI number release in June was zero. At its June 30th Open
Market Committee meeting, the Federal Reserve raised interest rates one-quarter
point and adopted "a directive that included no predilection about near-term
policy action".

Although large capitalization stocks have surpassed their smaller brethren for
the first three quarters of your fiscal year ending June 30th, the second
quarter provided an environment where small stocks beat mid-size stocks which
beat large caps. Growth stocks, other than having a tough May, have led the
market higher this year across all capitalizations.

The business outlook for technology firms can change quickly. We believe that
investment managers need to be able to react quickly to, as well as anticipate,
the changing landscape of this sector. At no time is this more likely to be true
than in 1999, when Year 2000 issues will cause more opportunities and more
disappointments than in a typical year. The Fund will continue to be actively
managed and repositioned as the evidence unfolds.

We continue to like the long-term prospects of the all-cap growth companies we
own. Superior technologies, services, balance sheets, business models and
ability to execute are all characteristics commonly found in top quality growth
companies that we believe contribute to sustained, above-average growth rates.
Many investors have been anxiously waiting for the rebound in small/mid
capitalization stocks. We are encouraged with their recent outperformance and
there is much evidence to suggest their relative performance will continue to be
strong.

CHANGE IN VALUE OF $10,000 INVESTMENT

<TABLE>
<CAPTION>
CORE GROWTH PORTFOLIO (WITH MAX. RUSSELL 3000 INDEX
SALES CHARGE)|(COMMENCED OPERATIONS ------------------
NOVEMBER 1, 1995)
-----------------------------------
<S> <C> <C>
9,500.00 10,000.00
'96 9,390.00 10,614.00
9,360.00 12,499.00
'97 8,790.00 13,978.00
10,062.00 16,076.00
'98 9,388.00 17,314.00
11,514.00 19,280.00
</TABLE>

TOP 10 STOCKS AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Xilinx Inc 3.44
2. Outdoor Systems Inc 2.66
3. Cisco Systems Inc. 2.63
4. Premier Parks Inc. 2.60
5. Medquist Inc. 2.34
6. Medimmune Inc 2.32
7. Corning Inc 2.25
8. Veritas Software 2.24
9. MCI Worldcom Inc. 2.22
10. Lamar Advertising Co 2.19
</TABLE>

TOP 5 INDUSTRIES AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Medical and Related 12.67
2. Retail 11.36
3. Semiconductors 10.23
4. Computer & Related 9.83
5. Electronic Equipment 7.83
</TABLE>

40
<PAGE> 105

ONE FUND INC.
CORE GROWTH PORTFOLIO

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<C> <S> <C>
ADVERTISING (5.0%)
2,500 *Lamar Advertising Co. ............. $ 102,344
3,400 *Outdoor Systems Inc. .............. 124,100
-------------
226,444
-------------
AUTOMOTIVE & RELATED (1.0%)
800 Harley Davidson, Inc. .............. 43,500
-------------
BROADCAST RADIO & TV (4.2%)
900 *Citadel Communications............. 32,569
800 Mediaone Group Inc. ................ 59,500
1,500 *Univision.......................... 99,000
-------------
191,069
-------------
COMMUNICATIONS (10.7%)
1,900 *Amdocs Ltd. ....................... 43,225
2,200 *American Tower Corp. .............. 52,800
700 *Aware Inc. Mass.................... 32,288
1,400 *Ciena Corp. ....................... 42,263
600 E-Tek Dynamics Inc. ................ 28,537
1,064 *Global Crossing.................... 45,287
1,300 *L-3 Communications................. 62,806
1,200 *MCI Worldcom Inc. ................. 103,500
1,100 *Metromedia Fiber Network-A......... 39,531
1,100 *Powerwave Technologies Inc. ....... 35,475
-------------
485,712
-------------
COMPUTER & RELATED (9.8%)
1,800 *EMC Corp. ......................... 99,000
1,300 *I2 Technologies.................... 55,900
1,100 *Macromedia Inc. ................... 38,775
900 *New Era of Networks Inc. .......... 39,544
600 *Sun Microsystems Inc. ............. 41,325
800 *Verisign Inc. ..................... 69,000
1,100 *Veritas Software................... 104,431
-------------
447,975
-------------
ELECTRICAL EQUIPMENT (7.8%)
2,300 *Celestica Inc. .................... 99,619
1,300 *Jabil Circuit Inc. ................ 58,662
1,200 *Sandmina Corp. .................... 91,050
1,200 *Terayne Inc. ...................... 86,100
400 *Waters Corp. ...................... 21,250
-------------
356,681
-------------
ELECTRONICS/SEMICONDUCTORS (10.2%)
800 *Conexant Systems Inc. ............. 46,450
1,400 *LSI Logic Corp. ................... 64,575
800 *PMC - Sierra Inc. ................. 47,150
600 *SDL Inc. .......................... 30,637
1,200 *Transwitch Corp. .................. 56,850
500 *Uniphase Corp. .................... 83,000
2,400 *Xilinx Inc. ....................... 137,400
-------------
466,062
-------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT & LEISURE (5.5%)
1,400 Carnival Corp. ..................... $ 67,900
2,500 *Cinar Films Inc. .................. 61,250
3,300 *Premier Parks...................... 121,275
-------------
250,425
-------------
FINANCIAL SERVICES (1.8%)
400 Goldman Sachs Group Inc. ........... 28,900
500 Schwab (Charles) Group.............. 54,937
-------------
83,837
-------------
INTERNET PRODUCTS & SERVICES (3.5%)
1,100 *Infospace.com Inc. ................ 51,700
1,500 *PSINET Inc. ....................... 65,625
600 *Verio Inc. ........................ 41,700
-------------
159,025
-------------
MACHINERY (1.5%)
900 *Applied Material................... 66,488
-------------
MANUFACTURING (3.2%)
1,500 Corning Inc. ....................... 105,188
700 Danaher Corp. ...................... 40,687
-------------
145,875
-------------
MEDIA & PUBLISHING (2.0%)
1,351 *Clear Channel Communications....... 93,183
-------------
MEDICAL & RELATED (12.7%)
700 *Express Scripts Inc. CL A.......... 42,131
1,400 Guidant Corp. ...................... 72,013
1,600 *Medimmune Inc. .................... 108,400
2,500 *Medquist Inc. ..................... 109,375
1,300 *Minimed Inc. ...................... 100,019
1,200 *Quintilies Transnational........... 50,400
1,200 *Visx Inc. ......................... 95,025
-------------
577,363
-------------
NETWORK PRODUCTS & SERVICES (6.9%)
800 *Check Point Software............... 42,900
1,900 *Cisco Systems...................... 122,550
200 *Emulex Corp. ...................... 22,237
2,500 *Newbridge Networks Corp. .......... 71,875
700 *Network Solutions Inc. CL A........ 55,387
-------------
314,949
-------------
OIL, ENERGY & NATURAL GAS (1.7%)
2,300 *BJ Services Co. ................... 67,706
300 *Hanover Compress................... 9,637
-------------
77,343
-------------
RETAIL (11.4%)
1,200 *Duane Reade Inc. .................. 36,750
1,300 Home Depot Inc. .................... 83,769
1,300 *Kohls Corp. ....................... 100,344
1,500 *Linens 'N Things Inc. ............. 65,625
2,550 *Staples Inc. ...................... 78,891
1,600 Tandy Corp. ........................ 78,200
2,500 *United Rentals Inc. ............... 73,750
-------------
517,329
-------------
</TABLE>

(continued)
41
<PAGE> 106
ONE FUND INC.
CORE GROWTH PORTFOLIO (CONTINUED)

SCHEDULE OF INVESTMENTS JUNE 30, 1999

<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION (0.8%)
2,100 *Motivepower Industries Inc. ....... $ 37,275
-------------
TOTAL COMMON STOCK (99.7%)
(COST $3,370,018).................. $ 4,540,535
-------------
</TABLE>

<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (2.0%)
$92,000 Firstar Bank 3.3% due 07/01/1999
repurchase price $92,008
collateralized by GNMA certificates
pool #837 due 02-20-24 (cost
$92,000)........................... $ 92,000
-------------
TOTAL REPURCHASE AGREEMENTS (2.0%)
(COST $92,000)..................... $ 92,000
-------------
TOTAL HOLDINGS (101.7%)
(COST $3,462,018) (A).............. $ 4,632,535
-------------
CASH & RECEIVABLES, NET OF
LIABILITIES (-1.7%)................ (77,255)
-------------
TOTAL NET ASSETS (100.0%)........... $ 4,555,280
=============
</TABLE>

- ---------------

* Non income producing security.
(a) Also represents cost for Federal income tax purposes.

The accompanying notes are an integral part of these financial statements.

42
<PAGE> 107

ONE FUND, INC.
CORE GROWTH PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES

June 30, 1999

<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $3,462,018)............... 4,632,535
Cash in bank............................... 592
Receivable for securities sold............. 22,649
Dividends & accrued interest receivable.... 99
Other...................................... 1,623
-----------
Total assets............................. 4,657,498
-----------
Liabilities:
Payable for securities purchased........... 90,918
Payable for fund share redeemed............ 3,716
Accrued 12b-1 fees (note 6)................ 2,692
Other accrued expenses..................... 4,892
-----------
Total liabilities........................ 102,218
-----------
Net assets at market value................... $ 4,555,280
===========
Net assets consist of:
Par value, $.001 per share................. $ 376
Paid-in capital in excess of par value..... 3,419,586
Accumulated net realized loss on
investments.............................. (35,199)
Net unrealized appreciation on
investments.............................. 1,170,517
-----------
Net assets at market value................... $ 4,555,280
===========
Shares outstanding........................... 375,578
Net asset value per share.................... $ 12.13
===========
Maximum offering price per share
($12.13/95%)............................... $ 12.77
===========
</TABLE>

STATEMENT OF OPERATIONS

For Year Ended June 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 5,108
Dividends................................... 2,317
--------
Total investment income................... 7,425
--------
Expenses:
Management fees (note 3).................... 40,766
12b-1 fees (note 6)......................... 10,728
Custodian fees (note 3)..................... 4,950
Directors' fees (note 3).................... 956
Professional fees........................... 3,328
Transfer agent & accounting fees............ 33,557
Filing fees................................. 8,839
Printing, proxy and postage fees............ 1,615
Other....................................... 141
--------
Total expenses............................ 104,880
--------
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (19,055)
--------
Net expenses.............................. 85,825
--------
Net investment loss....................... (78,400)
--------
Realized & unrealized gain on investments:
Net realized gain from investments.......... 484,943
Net increase in unrealized appreciation on
investments............................... 118,174
--------
Net gain on investments................... 603,117
--------
Net increase in net assets from
operations.............................. $524,717
========
</TABLE>

The accompanying notes are an integral part of these financial statements.

43
<PAGE> 108

ONE FUND, INC.
CORE GROWTH PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
From operations:
Net investment loss....................................... $ (78,400) $ (89,956)
Realized gain (loss) on investments....................... 484,943 (365,825)
Unrealized gain on investments............................ 118,174 836,872
----------- -----------
Net increase in assets from operations................ 524,717 381,091
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 692,176 728,721
Paid for shares redeemed.................................. (1,983,265) (1,271,044)
----------- -----------
Decrease in net assets derived from capital share
transactions......................................... (1,291,089) (542,323)
----------- -----------
Decrease in net assets............................. (766,372) (161,232)
----------- -----------
Net Assets:
Beginning of period....................................... 5,321,652 5,482,884
----------- -----------
End of period............................................. $ 4,555,280 $ 5,321,652
=========== ===========
</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30, 11-1-96
------------------- TO
1999 1998 6-30-97
------ ------ --------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $10.60 $ 9.86 $10.00
Income (loss) from investment operations:
Net investment loss....................................... (0.18) (0.16) (0.08)
Net realized & unrealized gain (loss) on investments...... 1.71 0.90 (0.06)
------ ------ ------
Total income (loss) from investment operations.......... 1.53 0.74 (0.14)
------ ------ ------
Net asset value, end of period.............................. $12.13 $10.60 $ 9.86
====== ====== ======
Total return................................................ 14.43% 7.51% (1.40)%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 1.98% 2.06% 1.35%(a)
Net investment loss....................................... (1.81)% (1.65)* (0.87)*(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 2.42% 2.12% 1.40%(a)
Net investment loss....................................... (2.25)% (1.70)% (0.92)%(a)
Portfolio turnover rate..................................... 148% 116% 80%
Net assets at end of period (millions)...................... $ 4.6 $ 5.3 $ 5.5
</TABLE>

- ---------------

(a) Annualized

(b) Calculated on an aggregate basis (not annualized).

(c) The advisor has elected to reimburse certain operating expenses of the Core
Growth Portfolio, but it may cease that waiver, in whole or in part, without
prior written notice.

The accompanying notes are an integral part of these financial statements.
44
<PAGE> 109

ONE FUND, INC. June 30, 1999
NOTES TO FINANCIAL STATEMENTS

(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.

- Core Growth Portfolio -- long-term capital appreciation.

There are no assurances these objectives will be met.

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 but the Money Market portfolio, 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 at 4:00 p.m. Eastern time. Short-term investments
(investments with remaining maturities of 60 days or less) are valued at
amortized cost and fixed income securities are valued by using market
quotations, or independent pricing services which use prices provided by
market 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
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 contracts). 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

45
<PAGE> 110
ONE FUND, INC. June 30, 1999
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

to settle these currency contracts or the related foreign security trades,
the Fund could be exposed to foreign currency fluctuations.

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.

46
<PAGE> 111
ONE FUND, INC. June 30, 1999
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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 $207,185 resulting in a
reclassification adjustment to decrease Paid-in capital in excess of par
value by $207,185. On the statement of assets and liabilities, as a result of
temporary book-to-tax differences, accumulated undistributed net realized
loss on investments was decreased by $29,490 and $16,294 resulting in a
reclassification adjustment to Paid-in capital in excess of par of $29,409
and $16,294 for the International and Global Contrarian Portfolios,
respectively. These reclassifications had no effect on net assets or net
asset values per share.

For federal income tax purposes, the Small Cap, International and Global
Contrarian Portfolios had net capital losses of $804,516, $1,442,884, and
$857,799 respectively at June 30, 1999. In addition, the Tax-Free Income,
Income and Core Growth Portfolios also had capital loss carryovers at June
30, 1999. If not offset by subsequent capital gains, $7,298 and $35,681 will
expire June 30, 2004 in the Tax-Free Income and Income Portfolios,
respectively, $4,042 will expire June 30, 2005 in the Tax-Free Portfolio,
$100,005 and $35,199 will expire June 30, 2006 in the Tax-Free Income and
Core Growth Portfolios, respectively, $804,516, $1,442,884 and $857,799 will
expire June 30, 2007 in the Small Cap, International, and Global Contrarian
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.

Expenses directly attributable to a portfolio are charged to that portfolio.
Expenses not directly attributable to a portfolio are allocated on the basis
of relative 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, 1999 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>
Gross unrealized:
Appreciation.............. 584,400 109,054 4,171,173 4,488,284 666,546 574,880 270,993 1,222,426
Depreciation.............. (25,318) (108,661) (198,511) (257,104) (153,045) (268,734) (107,380) (51,908)
Net unrealized:
Appreciation.............. 559,082 393 3,972,662 4,231,180 513,500 306,146 163,613 1,170,517
Depreciation.............. 0 0 0 0 0 0 0 0
</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

47
<PAGE> 112
ONE FUND, INC. June 30, 1999
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Growth Portfolios. ONLIC and its affiliates have also purchased additional
shares of each portfolio and as of June 30, 1999 the additional shares owned
were as follows: 8,875,316 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 & Growth Portfolio, 265,163 shares of
the Growth Portfolio, 217,056 shares of the Small Cap Portfolio, 273,068
shares of the Global Contrarian Portfolio, and 258,377 shares of the Core
Growth Portfolio.

(2) INVESTMENT TRANSACTIONS

Purchases and sales of investment securities (excluding short-term
securities) from July 1, 1998 to June 30, 1999 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................ 489,412 250,000 6,292,070 5,752,819 1,848,218 21,225,783 9,120,563 6,229,699
Sales.................... -- 304,242 8,150,841 8,772,679 3,265,044 29,690,582 11,703,676 7,517,755
U.S. Govt. Obligations:
Purchases................ -- -- -- -- -- -- -- --
Sales.................... -- 104,173 -- -- -- -- -- --
</TABLE>

(3) INVESTMENT ADVISORY AGREEMENT, SUB-ADVISORY AGREEMENTS AND TRANSACTIONS WITH
AFFILIATED PERSONS

The Fund has an investment advisory agreement with Ohio National Investments,
Inc. ("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. Prior to May 1, 1996, O.N. Investment Management Company served
as the Fund's investment advisor. As compensation for its services, the Fund
pays ONI a fee based on the average daily net asset value of each portfolio's
assets.

For assets held in the Money Market, Tax-Free Income, Income, Income &
Growth, Growth, and Small Cap Portfolios, the fees are as follows:

<TABLE>
<CAPTION>
PORTFOLIO
------------------------------------------------------
MONEY TAX-FREE INCOME & SMALL
MARKET INCOME INCOME GROWTH GROWTH CAP
------ -------- ------ -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
First $100 mil........................................... 0.30% 0.60% 0.50% 0.50% 0.50% 0.65%
Next $150 mil............................................ 0.25% 0.50% 0.40% 0.40% 0.40% 0.55%
Over $250 mil............................................ 0.20% 0.40% 0.30% 0.30% 0.30% 0.45%
</TABLE>

For the International and Global Contrarian Portfolios, ONI is paid a fee at
an annual rate of 0.90% of each Portfolios' average daily net asset values.
After January 1,1999, the advisor began waiving any fees in excess of 0.85%
in the International Portfolio. ONI pays Federated Investment Counseling
("FIC") fees at an annual rate of (i) 0.40% of the first $200 million and
0.35% of average net assets in excess of $200 million of International
Portfolio and (ii) 0.75% of the first $100 million and 0.65% of the average
daily net assets in excess of $100 million of the Global Contrarian Portfolio
pursuant to a sub-advisory agreement between ONI and FIC dated January 1,
1999. 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 0.65% of the average
daily net asset value of the first $50 million of Portfolio assets, 0.60% 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.

ONI is presently waiving management fees equal to 0.15% of average net assets
for certain portfolios. Management fees waived by ONI for the year ended June
30, 1999 were $25,149, $10,766, $9,973, $20,784, $17,042 and $6,482 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,

48
<PAGE> 113
ONE FUND, INC. June 30, 1999
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

taxes and interest, in excess of 1% of their average daily net assets. For
the year ended June 30, 1999, the reimbursement was $7,778, $19,055, $43,677,
and $47,996 for the Small Cap, Core Growth, International, and Global
Contrarian Portfolios respectively.

Each director who is not an officer of the Fund or an employee of ONI or its
corporate affiliates is paid a quarterly retainer fee of $850 plus $200 for
each meeting attended.

The Fund's transfer agent and dividend paying agent is American Data
Services, Inc., The Hauppauge Corporate Center, 150 Motor Parkway, Suite 109,
Hauppauge, New York. The Fund's custodian for those portfolios other than the
International and Global Contrarian Portfolios is Star Bank, N.A., 425 Walnut
Street, Cincinnati, Ohio. The custodian for the International and Global
Contrarian Portfolios is Investors Fiduciary Trust Company, 801 Pennsylvania,
Kansas City, Missouri. For 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, 1999 and 1998 were as
follows:

<TABLE>
<CAPTION>
MONEY MARKET TAX-FREE INCOME INCOME
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-99 6-30-98 6-30-99 6-30-98 6-30-99 6-30-98
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales....................... 21,575,304 21,996,755 26,786 40,258 32,840 76,483
Capital shares issued on reinvested dividends........ 485,752 455,744 3,288 2,820 6,655 7,995
Capital shares redeemed.............................. 21,656,382 20,456,024 35,646 20,443 75,391 70,795
</TABLE>

<TABLE>
<CAPTION>
INCOME & GROWTH GROWTH SMALL CAP
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-99 6-30-98 6-30-99 6-30-98 6-30-99 6-30-98
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales....................... 118,333 216,315 84,824 106,470 41,741 90,612
Capital shares issued on reinvested dividends........ 38,380 39,848 37,590 35,559 12,745 21,133
Capital shares redeemed.............................. 312,346 123,916 246,309 138,800 135,052 65,628
</TABLE>

<TABLE>
<CAPTION>
INTERNATIONAL GLOBAL CONTRARIAN CORE GROWTH
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6-30-99 6-30-98 6-30-99 6-30-98 6-30-99 6-30-98
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales....................... 47,020 202,687 17,121 43,691 78,273 74,120
Capital shares issued on reinvested dividends........ 23,927 178,279 29,126 19,016 0 0
Capital shares redeemed.............................. 561,187 504,238 127,028 126,384 204,796 127,889
</TABLE>

Sales charges imposed on capital shares sold by Ohio National Equities, Inc.
(ONEQ), the Fund's principal underwriter, a wholly-owned subsidiary of ONLIC,
for the year ended June 30, 1999 were approximately $6,016, $5,203, $36,716,
$33,354, $9,750, $13,487, $3,864 and $11,103 for the Tax-Free Income, Income,
Income & Growth, Growth, Small Cap, International, Global Contrarian and Core
Growth Portfolios, respectively.

The Fund is authorized to issue 10 billion of its capital shares. The Money
Market Portfolio has been allocated 200 million shares and the other 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

49
<PAGE> 114
ONE FUND, INC. June 30, 1999
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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, 1999, 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. $ CURRENCY TO BE RECEIVED U.S. $ UNREALIZED
DATES ---------------------------- VALUE AT --------------------------- VALUE AT --------------------
THROUGH AMOUNT TYPE 06/30/99 AMOUNT TYPE 06/30/99 GAIN LOSS
---------- ------------ ------------- ---------- ----------- ------------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
07/15/99 360,000 Australian $ 237,618 225,475 U.S. Dollar 225,475 -- $ (12,143)
07/15/99 228,780 U.S. Dollar 228,780 360,000 Australian $ 237,618 $ 8,838 --
07/22/99 296,000 Swiss Franc 190,654 222,556 U.S. Dollar 222,556 31,902 --
07/22/99 218,289 U.S. Dollar 218,289 296,000 Swiss Franc 190,654 -- (27,635)
07/01/99 5,646,000 French Franc 886,934 1,023,198 U.S. Dollar 1,023,197 136,263
07/01/99 1,005,530 U.S. Dollar 1,005,530 5,646,000 French Franc 886,934 -- (118,596)
07/29/99 124,916,000 Japanese Yen 1,035,144 1,099,613 U.S. Dollar 1,099,613 64,469 --
07/29/99 1,125,369 U.S. Dollar 1,125,369 124,916,000 Japanese Yen 1,035,144 -- (90,225)
10/05/01 388,000 New Zealand $ 205,077 186,046 U.S. Dollar 186,046 -- (19,031)
10/05/01 206,455 U.S. Dollar 206,455 388,000 New Zealand $ 205,078 -- (1,377)
---------- ---------- -------- ---------
$5,339,850 $5,312,315 $241,472 $(269,007)
========== ========== ======== =========
</TABLE>

GLOBAL CONTRARIAN PORTFOLIO

(6) DISTRIBUTION PLAN

The Fund has a distribution agreement (12b-1 Plan) with ONEQ 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.

50
<PAGE> 115

INDEPENDENT AUDITORS' REPORT

The Shareholders and Board of Directors of
ONE Fund, Inc.:

We have audited the accompanying statements of assets and liabilities of ONE
Fund, Inc. (comprised of Money Market, Tax-Free Income, Income, Income & Growth,
Growth, Small Cap, International, Global Contrarian and Core Growth Portfolios,
collectively the Portfolios) including the schedules of investments, as of June
30, 1999, 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 the financial highlights are the responsibility
of the Portfolios' management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of June
30, 1999, by confirmation with the custodian and brokers and other appropriate
audit procedures. 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 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 aforementioned portfolios comprising the ONE Fund, Inc. at June 30, 1999,
and the results of their operations, the changes in their net assets and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.

KPMG LLP

Columbus, Ohio
July 30, 1999