<PAGE> 1
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- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
ONE FUND, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ONE FUND, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
One Financial Way
Cincinnati, Ohio 45242
Post Office Box 371
Cincinnati, Ohio 45201-0371
Telephone: 800-578-8078
One Fund(SM)
March 2, 1999
Dear ONE Fund Shareholder:
Enclosed are information and voting instructions from your ONE Fund Board of
Directors regarding important proposals related to the International and Global
Contrarian Portfolios. A special meeting of the two portfolios' shareholders
will be held on April 5 to seek your approval of a new subadvisory agreement and
investment policies.
Your Board of Directors believes that both proposals are in your best interests.
We recommend that you vote FOR each proposal.
Your vote is important! To avoid extra expenses to ONE Fund, please complete,
sign and return the proxy promptly in the envelope provided. No postage is
needed if you mail it in the United States. As always, we thank you for your
confidence and support.
Sincerely,
/s/JOHN J. PALMER
- -----------------
John J. Palmer
President
[OHIO NATIONAL FINANCIAL SERVICES LOGO]
<PAGE> 3
ONE FUND, INC.
One Financial Way
Montgomery, Ohio 45242
------------------------
INTERNATIONAL PORTFOLIO
GLOBAL CONTRARIAN PORTFOLIO
------------------------
NOTICE OF MEETING OF SHAREHOLDERS
April 5, 1999
A special meeting of the shareholders of the International and Global
Contrarian Portfolios of ONE Fund, Inc. will be held in ONE Fund's offices at
One Financial Way in Montgomery, Ohio. The meeting will begin at 10:00 a.m.
eastern time on April 5, 1999. The reason for the meeting is to act on these
proposals:
1. To approve a new subadvisory agreement for the International and
Global Contrarian Portfolios with Federated Global Research Corp.
2. To approve certain changes in the fundamental investment policies
for the International and Global Contrarian Portfolios.
3. To transact any other business that may properly come before the
meeting.
You are entitled to receive this notice and to vote at the special meeting
if you were a shareholder of record of either of these portfolios at the close
of business on December 31, 1998.
FOR THE REASONS GIVEN IN THE ATTACHED PROXY STATEMENT, WE (ONE FUND'S
MANAGEMENT AND BOARD OF DIRECTORS) RECOMMEND THAT YOU VOTE FOR THE PROPOSALS.
/s/RONALD L. BENEDICT
---------------------
Ronald L. Benedict
Secretary
March 2, 1999
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<PAGE> 4
ONE FUND, INC.
One Financial Way
Montgomery, Ohio 45242
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF THE
INTERNATIONAL PORTFOLIO
GLOBAL CONTRARIAN PORTFOLIO
April 5, 1999
We (the management and Board of Directors of ONE Fund, Inc.) are soliciting
proxies for a special meeting of the shareholders of these two portfolios. The
meeting will be held at 10:00 a.m. eastern time on April 5, 1999. We are sending
you this proxy statement and its enclosures if you are a shareholder of either
of the portfolios. We are mailing the statement on or about March 2, 1999. Each
shareholder of record as of the close of business on December 31, 1998 is
entitled to one vote for each share owned at that time.
You may revoke your proxy before the meeting by giving written notice to
the Secretary of ONE Fund or by appearing in person at the meeting and notifying
the Secretary that you intend to revoke your proxy. Your latest proxy revokes
any earlier ones. All proxies that are properly signed and received in time and
not revoked will be voted as marked. If you sign and return a proxy but do not
show how you want to vote, we will vote it in favor of the proposals. We will
vote the interests of any variable contract owners from whom we receive no
voting instructions in proportion with the instructions that we do receive
before the meeting.
ONE Fund will pay the printing, mailing and legal costs for soliciting the
proxies. The investment adviser, Ohio National Investments, Inc. (the "Adviser")
will pay all other costs. The subadviser may reimburse the Fund and the Adviser
for some or all of the proxy solicitation expenses. Employees of ONE Fund and
the Adviser will not get any extra compensation for soliciting proxies.
As of December 31, 1998, the number of issued and outstanding shares of the
two portfolios were 892,767 for the International Portfolio and 424,096 for the
Global Contrarian Portfolio. At that time, The Ohio National Life Insurance
Company ("ONLI") was a controlling person of the Global Contrarian Portfolio
because ONLI owned 267,042 shares (63.0% of the total) of the portfolio.
SUMMARY OF PROPOSALS
The purpose of the special meeting is for you to vote on these proposals
related to your portfolios:
1. We have approved a new Subadvisory Agreement between the Adviser and
Federated Global Investment Management Corp. ("FGIM") and we are now asking you
to approve the agreement.
2. We have approved certain changes in the portfolio's fundamental
investment policies and restrictions and we are now asking you to approve those
changes.
A majority vote of the eligible shareholders of each of the portfolios is
required for that issue to be approved by that portfolio. Under the Investment
Company Act of 1940 (the "1940 Act"), a majority vote requires at least:
- 67% of the shares represented at a meeting (by proxy or in person)
where more than half of the outstanding shares are represented, or
- More than half of all the outstanding shares.
WE RECOMMEND THAT YOU APPROVE THESE PROPOSALS.
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<PAGE> 5
INVESTMENT ADVISORY SERVICES
The Adviser is a wholly-owned subsidiary of ONLI. Under the Investment
Advisory Agreement between the Adviser and ONE Fund, the Adviser regularly
recommends an investment program consistent with ONE Fund's investment policies.
Once the Board of Directors approves an investment program, the Adviser
implements the program by placing orders for the purchase and sale of
securities. The Adviser also provides ONE Fund with office space, necessary
clerical personnel (other than those provided by agreements between the Fund and
Investors Fiduciary Trust Company (Kansas City, Missouri) which serves as
custodian for the two portfolios' assets, and American Data Services, Inc.
(Hauppauge, New York) which serves as transfer agent and servicing agent for the
Fund), and services of executive and administrative personnel.
The Adviser is also the investment adviser to the following additional
portfolios of ONE Fund (assets shown as of December 31, 1998):
<TABLE>
<S> <C>
Money Market.............................................. $18,048,418
Tax-Free Income........................................... 7,398,507
Income.................................................... 6,660,793
Income & Growth........................................... 13,721,726
Growth.................................................... 11,060,819
Core Growth............................................... 4,529,488
Small Cap................................................. 4,203,019
</TABLE>
Under a Service Agreement among ONE Fund, the Adviser and ONLI, ONLI has
agreed to furnish the Adviser, at cost, the research facilities, services and
personnel the Adviser may need to perform its duties under the Investment
Advisory Agreement. The Adviser has agreed to reimburse ONLI for its expenses in
this regard. ONE Fund has not paid to the Adviser, or to any of its affiliates,
any compensation for services other than under the Investment Advisory Agreement
during the last fiscal year. The address of the Adviser, ONLI and ONE Fund is
One Financial Way, Montgomery, Ohio 45242.
The president of the Adviser is Joseph P. Brom. The Adviser's directors are
Mr. Brom, Michael A. Boedeker, Michael D. Stohler and Stephen T. Williams.
Messrs. Brom, Boedeker, Stohler and Williams are principally employed as
investment officers of ONLI. Messrs. Brom, Boedeker and Williams are also vice
presidents of ONE Fund. The Adviser's secretary, Ronald L. Benedict, is also the
secretary and a director of ONE Fund. The business address of each of these
individuals is One Financial Way, Montgomery, Ohio 45242.
The Investment Advisory Agreement and Service Agreement were both entered
into as of May 1, 1996.
As compensation for its services, the Adviser receives from ONE Fund annual
fees on the basis of each portfolio's average daily net assets during the month
for which the fees are paid based on the following schedule:
- for each of the International and Global Contrarian Portfolios, 0.90%
of each Portfolio's daily net assets;
- for each of the Income, Income & Growth, and Growth Portfolios, 0.50%
of the first $100 million, 0.40% of the next $150 million, and 0.30%
of average daily net assets over $250 million;
- for the Money Market Portfolio, 0.30% of the first $100 million, 0.25%
of the next $150 million, and 0.20% of average daily net assets over
$250 million;
- for Tax-Free Income Portfolio, 0.60% of the first $100 million, 0.50%
of the next $150 million, and 0.40% of average daily net assets over
$250 million;
- for the Core Growth Portfolio, 0.95% of the first $150 million, and
0.80% of average daily net assets over $150 million;
3
<PAGE> 6
- for the Small Cap Portfolio, 0.65% of the first $100 million, 0.55% of
the next $150 million and 0.45% of average daily net assets over $250
million;
However, the Adviser is presently waiving 0.15% of its fees from the Money
Market, Tax-Free Income, Income, Income & Growth, Growth and Small Cap
Portfolios.
During 1998, the Adviser received $348,562 in fees from ONE Fund.
Under the Investment Advisory Agreement, ONE Fund authorizes the Adviser to
retain sub-advisers for the International, Global Contrarian and Core Growth
Portfolios, subject to the approval of ONE Fund's Board of Directors. The
Adviser has entered into Sub-Advisory Agreements with sub-advisers, to manage
the investment and reinvestment of those Portfolios' assets, subject to
supervision by the Adviser. As compensation for their sub-advisory services the
Adviser pays:
- Federated Global Investment Management Corp. ("FGIM") fees at the annual
rate of
- 0.45% of the first $200 million, and 0.40% of average daily net assets
in excess of $200 million of the International Portfolio, and
- 0.75% of the first $100 million, and 0.65% of average daily net assets
in excess of $100 million of the Global Contrarian Portfolio; and
- Pilgrim Baxter & Associates, Ltd. a fee at the annual rate of 0.65% of
the first $50 million, 0.60% of the next $100 million, and 0.50% of
average daily net assets in excess of $150 million of the Core Growth
Portfolio.
The Investment Advisory Agreement and the Service Agreement were approved
by ONE Fund's Board of Directors on January 24, 1996 and the shareholders
(except for the Core Growth Portfolio shareholders) on March 28, 1996. The Core
Growth shareholders approved those agreements and their Subadvisory Agreement on
October 31, 1996. The Board approved the Subadvisory Agreement for the Core
Growth Portfolio on August 22, 1996, and the Subadvisory Agreement for the
International and Global Contrarian Portfolios on December 9, 1998.
These agreements will continue in force from year to year if they are
approved at least annually by (a) a majority of ONE Fund's directors who are not
parties to the 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 (b) a majority of the Board of Directors or by a
majority of the outstanding voting securities of each portfolio voting
separately.
The Investment Advisory, Service and Sub-Advisory Agreements may be
terminated at any time, without the payment of any penalty, if we give 60 days'
written notice to the Adviser 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 Adviser or
the sub-adviser on 90 days' written notice to ONE Fund and the other party. An
Agreement will automatically terminate if it is assigned.
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<PAGE> 7
In addition to being the investment adviser to ONE Fund, the Adviser is
also the investment adviser to Ohio National Fund, Inc. and Dow Target Variable
Fund LLC ("Dow Target"). Dow Target did not begin business until January 1999.
Ohio National Fund presently consists of the following portfolios:
<TABLE>
<CAPTION>
OHIO NATIONAL FUND PORTFOLIO NET ASSETS (12/31/98)
- ---------------------------- ---------------------
<S> <C>
Equity............................................... $301,502,088
Money Market......................................... 44,416,893
Bond................................................. 28,496,639
Omni................................................. 216,413,398
International........................................ 143,086,292
Capital Appreciation................................. 76,915,652
Small Cap............................................ 76,419,799
Global Contrarian.................................... 19,881,023
Aggressive Growth.................................... 26,611,506
Core Growth.......................................... 11,923,888
Growth & Income...................................... 54,310,896
S&P 500 Index........................................ 96,393,000
Social Awareness..................................... 6,646,823
Strategic Income..................................... 4,029,750
Stellar.............................................. 3,613,461
Relative Value....................................... 10,021,424
Small Cap Growth..................................... 2,279,536
High Income Bond..................................... 10,491,455
Equity Income........................................ 2,228,912
Blue Chip............................................ 2,941,456
</TABLE>
As compensation for its services, the Adviser receives from Ohio National
Fund annual fees on the basis of each portfolio's average daily net assets
during the month for which the fees are paid based on the following schedule:
- for each of the Equity, Bond, Omni and Social Awareness Portfolios,
0.60% of the first $100 million, 0.50% of the next $150 million, 0.45%
of the next $250 million, 0.40% of the next $500 million, 0.30% of the
next $1 billion, and 0.25% of average daily net assets over $2
billion;
- for the Money Market Portfolio, 0.30% of the first $100 million, 0.25%
of the next $150 million, 0.23% of the next $250 million, 0.20% of the
next $500 million, and 0.15% of average daily net assets over $1
billion;
- for each of the International, Global Contrarian, Relative Value,
Small Cap Growth and Blue Chip Portfolios, 0.90% of each Portfolio's
daily net assets;
- for each of the Capital Appreciation, Small Cap, Aggressive Growth and
Strategic Income Portfolios, 0.80% of each Portfolio's average daily
net assets;
- for the Core Growth Portfolio, 0.95% of the first $150 million, and
0.80% of average daily net assets over $150 million;
- for the Growth & Income Portfolio, 0.85% of the first $200 million,
and 0.80% of average daily net assets over $200 million;
- for the S&P 500 Index Portfolio, 0.40% of the first $100 million,
0.35% of the next $150 million, and 0.33% of average daily net assets
over $250 million;
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<PAGE> 8
- for the Stellar Portfolio, 1.00% of that Portfolio's average daily net
assets, and
- for each of the High Income Bond and Equity Income Portfolios, 0.75%
of each Portfolio's average daily net assets.
However, as to the Money Market Portfolio, the Adviser is presently waiving
any of its fee in excess of 0.25%, and as to the International Portfolio, the
Adviser is presently waiving any of its fee in excess of 0.85%.
During 1998, the Adviser received $6,567,012 in fees from Ohio National
Fund.
As compensation for its services to Dow Target, the Adviser receives from
Dow Target a fee at an annual rate of 0.60% of the average daily net assets of
Dow Target during the month for which the fee is paid. Dow Target first began
business in January, 1999.
As of December 31, 1998, Ronald Benedict, a director of ONE Fund and
secretary of both ONE Fund and the Adviser, owned 442 shares of the
International Portfolio. On that date, William Hilbert, compliance director and
assistant treasurer of both ONE Fund and the Adviser, owned 30 shares of the
International Portfolio. Members of management of ONE Fund and the Adviser, as a
group, did not own more than 1% of the outstanding shares of any portfolio at
that time.
The Adviser is a wholly-owned subsidiary of the Ohio National Life
Insurance Company. Both are located at One Financial Way, Montgomery, Ohio
45242.
The Adviser's directors are Joseph Brom, Michael Boedeker, Stephen Williams
and Michael Stohler. Mr. Brom is the Adviser's president. Each of these
individuals is an investment officer of The Ohio National Life Insurance
Company. Their business address is One Financial Way, Montgomery, Ohio 45242.
Messrs. Brom, Boedeker and Williams are also vice presidents of ONE Fund. Ronald
Benedict, a director of ONE Fund, is secretary of both ONE Fund and the Adviser.
Dennis Taney is treasurer of both and William Hilbert is compliance director and
assistant treasurer of both.
NEW SUBADVISORY AGREEMENT
From the inception of the International Portfolio in 1993 and the Global
Contrarian Portfolio in 1994, until December 31, 1998, Societe Generale Asset
Management Corp. ("SGAM") was their subadviser. However, because of the purchase
of SGAM by a competitor of ONLI, we believe that SGAM should no longer serve as
subadviser. At a special meeting on December 9, 1998, the Board of Directors
voted unanimously to terminate the subadvisory agreement with SGAM as of the
close of business on December 31, 1998. At that same meeting, the Board of
Directors voted unanimously to approve a new subadvisory agreement with FGIM
(the "FGIM Agreement") to take effect on January 1, 1999. By its terms, the FGIM
Agreement will only continue in effect for more than 120 days if it is approved
by your vote.
Before selecting and recommending FGIM, we researched and received
competitive bids from several leading investment advisers specializing in
foreign securities. We selected FGIM because of the strength and experience of
its professional and support staff, the investment performance of international
mutual funds managed by FGIM, and its low subadvisory fees.
The FGIM Agreement provides for substantially lower subadvisory fees for
the International Portfolio than the fees the Adviser paid SGAM. Under the
Investment Advisory Agreement, the Adviser is entitled to receive fees from each
portfolio at the annual rate of 0.90% of the portfolio's average daily net
assets. From this source of income, the Adviser paid SGAM a fee at the annual
rate of 0.65% of the average daily net assets of the portfolio. Under the FGIM
Agreement, the Adviser pays FGIM at the annual rate of 0.45% of the first $200
million, and 0.40% of any average daily net assets in excess of $200 million for
the International Portfolio. The Adviser pays FGIM 0.75% of the first $100
million, and 0.65% of any average daily net assets in excess of $100 million for
the Global Contrarian Portfolio. (Both portfolio's total net assets are
presently less than $100 million.)
Because of the substantial reduction in the subadvisory fee that the
International Portfolio is paying to FGIM, the Adviser is voluntarily reducing
the total of fees paid by that portfolio to 0.85% of average daily net
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<PAGE> 9
assets. By way of comparison, FGIM receives a fee at the annual rate of 1.00%
for managing the assets of its Federated International Equity Funds.
Other than the FGIM Agreement's different rates for the subadvisory fee,
the FGIM Agreement is substantially the same as the SGAM Agreement. A copy of
the FGIM Agreement is attached to this proxy statement as Exhibit A.
FGIM has been managing the portfolios under the terms of the FGIM Agreement
since January 1, 1999. If the FGIM Agreement is approved by your vote, it will
remain in effect until January 1, 2001. It will only continue in effect after
that if it is approved at least annually by (a) the vote, cast in person at a
meeting called for that purpose, of a majority of those directors who are not
"interested persons" of the Fund or the Adviser (these are called the
"independent directors") and also (b) the vote of either a majority of all the
directors or the vote of a majority of each portfolio's shareholders.
FGIM is located at 175 Water Street in New York, NY. It is an indirect
wholly-owned subsidiary of Federated Investors, Inc. located at 1001 Liberty
Avenue, Pittsburgh, PA. Federated Investors, Inc. is one of the leading mutual
fund advisory firms. It formed FGIM in 1995 for the purpose of managing mutual
funds and other pooled investment accounts consisting primarily of foreign
securities. FGIM presently manages more than $1.5 billion of international
assets. Its portfolio managers have an average of 19 years each of investment
experience.
For its fiscal year ended November 30, 1998, the Federated International
Equity Fund paid FGIM aggregate investment advisory fees of $2,137,661. FGIM
does not waive or reduce any of its fees for managing the Federated
International Equity Funds. The Federated International Equity Funds do not use
any affiliated brokers for portfolio transactions.
The portfolio managers of the International and Global Contrarian
Portfolios under the FGIM Agreement are Drew J. Collins and Henry A. Frantzen.
Drew Collins is a senior vice president of FGIM. He has directed portfolio
management and investment research for FGIM since its establishment in 1995. For
one year prior to that he was vice president and international portfolio manager
of Arnhold and S. Bleichroeder, Inc., and for eight years before that he was a
portfolio manager for College Retirement Equities Fund. Mr. Collins is a
chartered financial analyst with a bachelor's degree from Oberlin College and a
master of business administration degree in finance from the Wharton School of
the University of Pennsylvania.
Henry Frantzen is the chief investment officer, international, of FGIM. 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 and director of equities at Oppenheimer
Management Corporation. He is a financial analyst fellow.
We recommend that you vote to approve the FGIM Agreement.
INVESTMENT POLICIES
FGIM intends to manage the International and Global Contrarian Portfolios
in a style similar to that of the Federated International Equity Fund and
Federated International Equity Fund II. These funds, which are also managed by
Drew Collins and Henry Frantzen, have experienced excellent net total returns
over the last one- and three-year periods in comparison with other funds in
Lipper's "international equity" category of mutual funds. Lipper has ranked both
of the Federated funds among the top 10% in their respective categories for
these periods. We cannot be assured that the portfolios will duplicate the
performance of the Federated International Equity Funds. Past performance does
not predict future performance.
In order to increase investment flexibility and more closely align the
portfolios with the investment style of the Federated International Equity
Funds, we have approved certain changes in the portfolios' fundamental
investment policies and restrictions. These changes must also be approved by
your vote.
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<PAGE> 10
The investment objective of the International portfolio is presently
defined as "long-term capital growth by investing primarily in common stocks of
foreign companies." We recommend that this be changed to "total return on assets
by investing primarily in securities of foreign companies."
The investment objective of the Global Contrarian portfolio is presently
defined as "long-term growth of capital by investing in foreign and domestic
securities believed to be undervalued or presently out of favor." We recommend
that this also be changed to "total return on assets by investing primarily in
securities of foreign companies."
The Global Contrarian portfolio is presently classed as "global." This
means that, while at least 25% of its assets will normally be invested in
foreign securities, the rest of its assets can be invested in U.S. domestic
securities. With the change in policy, the portfolio will be invested primarily
in foreign securities; that is, at least 65% (and normally substantially all) of
its assets will be invested in foreign companies.
The Global Contrarian portfolio's investment policy presently calls for the
portfolio manager to seek securities perceived to be undervalued or out of
favor. This "contrarian" or "value" investment style will no longer be required
if the change in investment policy is approved. The portfolio manager will then
have the flexibility to seek growth-type securities as well as those considered
value-type.
The proposal to change the investment objectives of the two portfolios from
"long-term growth of capital" to "total return on assets" could generate more
income to the portfolios instead of capital gains. To that extent, your income
tax liability might be increased. However, we do not expect any increase in
portfolio income to be substantial.
We have also amended the nonfundamental investment restrictions and we are
recommending changes to the fundamental restrictions for these two portfolios.
This will make their restrictions the same as those of other mutual funds
managed by FGIM and their Federated affiliates. While certain of the new
restrictions are less restrictive than their current counterparts, we do not
expect these to result in any additional risk to the portfolios. Management does
not intend to leverage either portfolio's assets.
The fundamental policies can only be changed it approved by your vote. The
Board can change nonfundamental policies without your approval. However, we
still have to notify you before any material change by the Board takes effect.
The fundamental investment restrictions for both of the portfolios are now
as follows:
1. 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 10% of the outstanding voting securities of any
one issuer;
3. invest more than 25% of the value of its total assets in any one
industry; (For purposes of this restrictions, 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 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 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 1933 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
8
<PAGE> 11
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 that 100% by marking to market daily);
and
9. purchase securities of other investment companies, except in
connection with a merger, consolidation or reorganization, or except the
purchase by any 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).
The non-fundamental investment restrictions are now as follows:
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
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. sell securities short or purchase securities on margin except such
short-term credits as are required to clear transactions;
13. invest more than 20% of its assets in securities of issuers
located in any one foreign country, except that up to an additional 5% of
its assets may be invested in securities of issuers located in each of any
three of Australia, Canada, France, Germany, Japan or the United Kingdom,
or
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 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).
We recommend that you approve the following new fundamental investment
policies for both portfolios:
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.
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<PAGE> 12
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.
The following new nonfundamental policies have been approved by the Board
of Directors:
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.
We recommend that you vote to approve the new investment policies.
SHAREHOLDERS PROPOSALS
ONE Fund is incorporated under Maryland law which does not require mutual
funds to hold annual shareholders meetings. We generally intend to hold a
meeting every three years to elect directors. We hold special meetings whenever
necessary. Shareholders may have included in the proxy statement for the next
shareholders meeting certain proposals for shareholder action to be introduced
at the meeting. We must receive notice of any shareholder proposal at least 120
days before the next meeting for the proposal to be included in the proxy
solicitation materials for that meeting.
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EXHIBIT A
SUBADVISORY AGREEMENT
This Subadvisory Agreement (this "Agreement") is entered into as of the
first day of January, 1999, by and between OHIO NATIONAL INVESTMENTS, INC., an
Ohio corporation(the "Adviser") and FEDERATED GLOBAL RESEARCH CORP., a Delaware
corporation ("FGR").
WHEREAS, the Adviser has entered into advisory agreements dated May 1,
1996, (the "Advisory Agreements") with OHIO NATIONAL FUND, INC. and ONE FUND,
INC., Maryland corporations (the "Companies"), pursuant to which the Adviser
provides portfolio management services to the INTERNATIONAL PORTFOLIO, and
INTERNATIONAL SMALL COMPANY PORTFOLIO (presently designated as the Global
Contrarian Portfolio) of Ohio National Fund, Inc. and the INTERNATIONAL
PORTFOLIO and GLOBAL CONTRARIAN PORTFOLIO of ONE Fund, Inc. (said Portfolios
being referred to herein as the "Funds");
WHEREAS, the Advisory Agreements provide that the Adviser may delegate any
or all of its portfolio management responsibilities under the Advisory
Agreements to one or more subadvisers; and
WHEREAS, the Adviser and the Boards of Directors (the "Board") of the
Companies desire to retain FGR to render portfolio management services in the
manner and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Adviser and FGR agree as follows:
1. Appointment of Subadviser. The Adviser hereby appoints FGR as
subadviser for each of the Funds and authorizes FGR, in its discretion and
without prior consultation with the Adviser, to buy, sell, lend and
otherwise trade in any stocks, bonds, instruments, financial contracts and
other investment assets ("Securities") on behalf of the Funds. Subject to
the supervision of the Adviser and the Board, FGR will manage the
investment operations of the Funds and the composition of the Funds'
respective portfolios, including the purchase, retention and disposition
of, and exercise of all rights pertaining to, the Securities comprising the
Funds. FGR may invest the Funds in such proportions of stocks, bonds,
instruments, financial contracts, cash and other investment assets as FGR
shall determine, and may dispose of Securities without regard to the length
of time the Securities have been held, the resulting rate of portfolio
turnover or any tax considerations, provided that all investments shall
conform with:
(a) the Funds' investment objectives, policies, limitations,
procedures and guidelines set forth in the documents listed on Schedule
1 to this Agreement;
(b) any additional objectives, policies or guidelines established
by the Adviser or by the Board that have been furnished in writing to
FGR;
(c) the provisions of Section 851 of the Internal Revenue Code
("IRC") applicable to "regulated investment companies";
(d) the diversification requirements specified in Section 817(h) of
the IRC, and the regulations thereunder; and
(e) the provisions of the Investment Company Act of 1940 (the "1940
Act") and the rules and regulations thereunder applicable to the Funds.
2. Representations and Warranties.
(a) FGR hereby represents and warrants to the Adviser that: (i) it
is a corporation duly formed and validly existing under the laws of
Delaware, (ii) it is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder and has taken all
necessary action to authorize such execution, delivery and performance,
(iii) it is registered with the Securities and Exchange Commission
("SEC") as an investment adviser under the Investment Advisers Act of
1940 (the "Advisers Act") and is registered or licensed as an investment
adviser under the laws of all jurisdictions in which its activities
require it to be so registered or licensed, except where the failure
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to be so licensed would not have a material adverse effect on its
business and (iv) it has furnished to the Adviser true and complete
copies of all the documents listed on Schedule 2 to this Agreement.
(b) The Adviser hereby represents and warrants to FGR that: (i) it
is a corporation duly formed and validly existing under the laws of
Ohio, (ii) it is duly authorized to execute and deliver this Agreement
and to perform its obligations hereunder and has taken all necessary
action to authorize such execution, delivery and performance, (iii) it
is registered with the SEC as an investment adviser under the Advisers
Act and is registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require it to be so
registered or licensed, except where the failure to be so licensed would
not have a material adverse effect on its business and (iv) it has
furnished to FGR true and complete copies of all the documents listed on
Schedule 1 to this Agreement.
3. Information and Reports.
(a) The Adviser will promptly notify FGR of any material change in
any of the documents listed on Schedule 1 to this Agreement and will
provide FGR with copies of any such modified document. The Adviser will
also provide FGR with a list, to the best of the Adviser's knowledge, of
all affiliated persons of Adviser (and any affiliated person of such an
affiliated person) and will promptly update the list whenever the
Adviser becomes aware of any additional affiliated persons.
(b) FGR will maintain books and records relating to its management
of the Funds under its customary procedures and in compliance with
applicable regulations under the 1940 Act and the Advisers Act. All such
records pertaining to the Funds shall be the property of the Companies
and FGR will permit the Adviser, the Companies and the SEC to inspect
such books and records at all reasonable times during normal business
hours, upon reasonable notice. Prior to each Board meeting, FGR will
provide the Adviser and the Board with reports regarding its management
of the Funds during the interim period, in such form as may be mutually
agreed upon by FGR and the Adviser. FGR will also provide the Adviser
with any information regarding its management of the Fund required for
any shareholder report, amended registration statement or prospectus
supplement filed by the Company with the SEC.
4. Conditions to Agreement. FGR's and the Adviser's obligations under
this Agreement are subject to the satisfaction of the following conditions
precedent:
(a) Receipt by FGR of a certificate of an officer of each of the
Companies stating that (i) this Agreement and the Advisory Agreement
have been approved by the vote of a majority of the directors, who are
not interested persons of FGR or the Adviser, cast in person at a
meeting of the Board called for the purpose of voting on such approval,
and (ii) this Agreement and the Advisory Agreement have been approved by
the vote of a majority of the outstanding voting securities of each of
the Funds;
(b) Receipt by FGR of certified copies of instructions from the
Companies to their custodian designating the persons specified by FGR as
"Authorized Persons" under each Company's custody agreement;
(c) The Companies' execution and delivery of limited powers of
attorney in favor of FGR, in a form mutually agreeable to FGR, the
Adviser and the Board;
(d) Receipt by FGR of Board resolutions, certified by an officer of
each Company, adopting all procedures and guidelines required by any
exemptive order listed on Schedule 2 to this Agreement; and
(e) Any other documents, certificates or other instruments that FGR
or the Adviser may reasonable request from either Company.
5. Compensation. For the services provided under this Agreement, the
Adviser will pay to FGR a fee at an annual rate of 0.40% of the first $200
million and 0.35% of each of the International Portfolios'
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<PAGE> 15
average daily net assets in excess of $200 million, and 0.75% of the first
$100 million and 0.65% of the Global Contrarian and International Small
Company Portfolios' average daily net assets in excess of $100 million.
Such fees will accrue daily and will be paid monthly. If this Agreement is
effective for only a portion of a month, the fees will be prorated for the
portion of such month during which this Agreement is in effect.
6. Allocation of Transactions and Brokerage.
(a) To the extent consistent with applicable law, FGR may aggregate
purchase or sell orders for each of the Funds with contemporaneous
purchase or sell orders of the other Funds or of other clients of FGR or
its affiliated persons. In such event, allocation of the Securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by FGR in the manner FGR considers to be the most equitable
and consistent with its and its affiliates' fiduciary obligations to the
Funds and to such other clients. The Adviser hereby acknowledges that
such aggregation of orders may not result in a more favorable price or
lower brokerage commissions in all instances.
(b) FGR will place purchase and sell orders for the Funds with or
through such banks, brokers, dealers, futures commission merchants or
other firms dealing in Securities ("Brokers") as it determines, which
may include Brokers that are affiliated persons of FGR, provided such
orders are exempt from the provisions of Section 17(a), (d) and (e) of
the 1940 Act. FGR will use its best efforts to obtain execution of
transactions for the Funds at prices which are advantageous to the Funds
and at commission rates that are reasonable in relation to the services
received. FGR may, however, select Brokers on the basis that they
provide brokerage or research services or research products to the Funds
and/or other advisory clients of FGR and its affiliated investment
advisers as to which FGR and those affiliated investment advisers
exercise investment discretion. In selecting Brokers, FGR may also
consider the reliability, integrity and financial condition of the
Broker, and the size of and difficulty in executing the order.
(c) To the extent consistent with applicable law, and subject to
review by the Board, FGR may pay a Broker an amount of commission for
effecting a Securities transaction in excess of the amount of commission
or dealer spread another Broker would have charged for effecting that
transaction, if FGR determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research products and/or research services provided by such Broker to
the Funds and/or other clients of FGR and its affiliated investment
advisers as to which FGR and those affiliated investment advisers
exercise investment discretion. This determination, with respect to
brokerage and research services or research products, may be viewed in
terms of either that particular transaction or the overall
responsibilities which FGR and its affiliates have with respect to the
Funds or their other clients as to which FGR and its affiliates exercise
investment discretion, and may include services or products that FGR
does not use in managing the Funds.
7. Nonexclusive Agreement. The investment management services provided
by FGR hereunder are not to be deemed to be exclusive, and FGR shall be
free to render similar services to other advisers, investment companies,
and other types of clients.
8. Limitation of Liability. In the absence of willful misfeasance, bad
faith or gross negligence on the part of FGR, or of reckless disregard by
FGR of its obligations and duties hereunder, FGR, shall not be subject to
any liability to the Adviser, the Funds, the Companies, any shareholder of
the Funds, or to any person, firm or organization. Subject to the
above-stated standard of care, FGR shall be liable for any taxes or tax
penalties incurred by a Fund for any failure of a Fund to qualify as a
regulated investment company under Section 851 of the IRC as a result of
FGR's management of the Funds. The Adviser, the Companies and the Funds are
hereby expressly put on notice of the limitation of liability as set forth
in the Certificate of Incorporation of FGR and each agrees that the
obligations assumed by FGR pursuant to this Agreement will be limited in
any case to FGR and its assets and the Adviser, the Companies and the Funds
shall not seek satisfaction of any such obligations from the shareholders
of FGR, the trustees of FGR, officers, employees or agents of FGR, or any
of them.
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FGR shall have no liability for any investment losses incurred by the Funds
or arising from transactions by the Funds prior to the effective date of this
Agreement.
The Adviser, the Companies and the Funds hereby acknowledge that FGR is not
responsible for foreign custody registration or foreign custody.
9. Pricing. The Adviser, the Companies and the Funds hereby
acknowledge that FGR is not responsible for pricing portfolio Securities,
and that the Adviser, the Companies, the Funds and FGR will rely on the
pricing agent chosen by the Board for prices of Securities, for any
purposes.
10. Limited Power of Attorney. Subject to any other written
instructions of the Adviser or the Companies, FGR is hereby appointed the
Companies' agent and attorney-in-fact for the limited purposes of executing
account documentation, agreements, contracts and other documents as FGR
shall be requested by brokers, dealers, counter parties and other persons
in connection with its management of the Funds' assets. The Adviser and the
Companies hereby ratify and confirm as good and effectual, at law or in
equity, all that FGR and its officers and employees, may do in its capacity
as attorney-in-fact. However, nothing herein shall be construed as imposing
a duty on FGR to act or assume responsibility for any matters in its
capacity as attorney-in-fact for the Companies. Any person, partnership,
corporation or other legal entity dealing with FGR in its capacity as
attorney-in-fact hereunder for the Companies is hereby expressly put on
notice that FGR is acting solely in the capacity as an agent of the
Companies and that any such person, partnership, corporation or other legal
entity must look solely to the Companies for enforcement of any claim
against the Companies as FGR assumes no personal liability whatsoever for
obligations of the Companies entered into by FGR in its capacity as
attorney-in-fact for the Companies. FGR agrees to provide the Adviser and
the Companies with copies of any such agreements executed on behalf of the
Companies.
11. Term. This Agreement shall begin as of the date first above
written and, provided that it shall have been approved by a majority vote
of the voting securities of each of the Funds not more than one hundred and
twenty days after the effective date hereof, this Agreement shall continue
in effect for a period of two years from the date hereof and thereafter for
successive periods of one year, subject to the provisions for termination
and all of the other terms and conditions hereof if such continuance is
specifically approved at least annually in conformity with the requirements
of the 1940 Act; provided, however, that this Agreement may be terminated
by one or more of the Funds at any time, without the payment of any
penalty, by the Board or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of one or more of the Funds, or by
the Adviser or FGR at any time, without the payment of any penalty, on not
more than 60 days' nor less that 30 days' written notice to the other
party. This Agreement will terminate automatically as to any Fund in the
event of its assignment (as defined in the 1940 Act) or upon the
termination of the Adviser's Advisory Agreement as to that Fund.
12. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
13. Governing Law and Construction. This Agreement will be governed by
and construed in accordance with the laws of the Commonwealth of
Pennsylvania. Any terms defined in 1940 Act, and not otherwise defined in
this Agreement, are used with the same meaning in this Agreement.
14. Use of FGR's Name. FGR hereby agrees that the Adviser, the
Companies, their affiliated broker-dealers and affiliated life insurance
companies may use FGR's name and logo in advertising and marketing
materials for the Companies and any variable insurance products through
which one or more of the Funds may be offered as funding vehicles,
provided, that FGR has reviewed and approved any such materials prior to
their use.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their duly authorized officers to be effective as of
the dates written below.
<TABLE>
<S> <C>
FOR OHIO NATIONAL INVESTMENTS, INC.: FOR FEDERATED GLOBAL RESEARCH CORP.:
/s/ JOSEPH P. BROM /s/ HENRY FRANTZEN
- -------------------------------------------- --------------------------------------------
Joseph P. Brom, President Henry Frantzen
Chief Financial Officer, International
Date: Date:
December 29, 1998 December 28, 1998
- -------------------------------------------- --------------------------------------------
Accepted and Agreed by Accepted and Agreed by
OHIO NATIONAL FUND, INC.: ONE FUND, INC.:
/s/ JOHN J. PALMER /s/ JOHN J. PALMER
- -------------------------------------------- --------------------------------------------
John J. Palmer, President John J. Palmer, President
Date: Date:
January 4, 1999 January 4, 1999
- -------------------------------------------- --------------------------------------------
</TABLE>
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<PAGE> 18
PROXY
ONE FUND, INC.
I (we) acknowledge receipt of a copy of the Notice of Shareholders'
Meeting, Proxy Statement and semi-annual report. I (we) appoint each of Ronald
L. Benedict and John J. Palmer to be my (our) proxies and attorneys with full
power of substitution and revocation to vote my (our) ONE Fund, Inc. shares at
the special meeting of shareholders to be held on April 5, 1999 (and at any
adjournments of that meeting) as specified below, and in accordance with their
best judgment on any other business that may properly come before the meeting.
THIS PROXY RELATES TO A SOLICITATION BY THE BOARD OF DIRECTORS.
- --------------------------------------------------------------------------------
You may check ONE of these boxes instead of voting on each of the numbered
items below:
<TABLE>
<S> <C> <C> <C> <C> <C>
For or Against or Abstain on all the Board of Directors Recommendations
[ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------
1. To approve the new Subadvisory Agreement with Federated Global Investment Management Corp.:
a. For or Against or Abstain as to the International Portfolio
[ ] N N
b. For or Against or Abstain as to the Global Contrarian Portfolio
[ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------
2. To approve new fundamental investment policies:
a. For or Against or Abstain as to the International Portfolio
[ ] [ ] [ ]
b. For or Against or Abstain as to the Global Contrarian Portfolio
[ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Dated: --------------- , 1999 -----------------------------------------------------------
Signature of Shareholder(s)
</TABLE>
Please sign your name as it appears on the back of this form. If signing
for an estate, trust or corporation, state your title or capacity. If joint
owners, each should sign. Your shares will be voted in accordance with your
directions. PLEASE RETURN THIS PROXY IN THE ENVELOPE PROVIDED.
