<PAGE> 1
President's Message
- --------------------------------------------------------------------------------
[John J. Palmer Photo]
Dear Shareholder:
First, I want to thank you for being a shareholder of ONE Fund. All of us here
appreciate your support. In the six years since its founding, ONE Fund has
remained committed to serving its shareholders through adherence to fundamental
investment principles -- careful selection and consistent professional
management. We are pleased, therefore, to provide you with an update of ONE
Fund's performance and investment activity for the six months ending December
31, 1998. By the conclusion of this period, ONE Fund's net assets totaled more
than $79 million.
Looking Back
For some time now we have enjoyed an economic climate of reasonable growth, low
unemployment, modest interest rates, subdued inflation and stable corporate
earnings. Over the past year, however, while the overall direction has continued
to be favorable, the journey has not been an especially smooth one for many
investors. As a recent industry headline indicated, 1998's market "had it all."
Stock prices surged, swooned, and soared once more. As you would expect, ONE
Fund's portfolios followed similar patterns.
For some of our funds, results were not as we hoped. For those funds, we have
made adjustments in investment strategies which are already proving to get the
funds back on track.
Starting January, 1999, we were also pleased to introduce Federated Global
Research Corp. as managers (on an interim basis, pending shareholder approval)
for the International and Global Contrarian portfolios of ONE Fund. Federated
Global Research Corp. is part of Pittsburgh-based Federated Investors, an
investment manager founded in 1955 which now has more than $110 billion in
managed assets.
The Importance of Diversification
After a year like 1998, it's important to continue to value the importance of
diversification. As a company, we certainly do not recommend investing solely in
the "style of the moment" or basing investment decisions strictly on market
timing. We remain dedicated to staying in step with -- and in some cases, even
ahead of -- other financial service providers when it comes to improving our
investment selections. Our focus on investment style choices and strong
professional investment managers means that we're working hard to provide even
better products and services for you.
The Market in General
The past year was one of unusual volatility for the stock market. The first
quarter saw double digit gains in major indices; the second quarter saw the
start of a meltdown in the mid- and small-cap sectors, but large caps managed to
push the S&P 500 Index to record levels. In the third quarter, the market
crumbled, with the month of August seeing declines of 14.5% or more in all
domestic indices, as well as a decline in both developed and emerging overseas
markets. September saw a general upturn in the markets, led by small-cap stocks,
only to see early October bring another wave of sell-offs to drive the indices
back down. The situation was reversed following three reductions in the Fed
Funds rate, easing a potential credit crunch and calming deflation fears. Since
then, the market has generally trended up, but the ground lost by small- and
mid-cap stocks in the second and third quarters has not been regained.
As noted, this market had it all -- and then some. At ONE Fund, you have our
commitment to focus on long-term perspectives and make carefully reasoned
judgments about our investment decisions.
<PAGE> 2
In Closing
Information on your investments is contained in the following pages. Please
contact your registered representative for additional information on the
investment opportunities available to you through ONE Fund. As your needs change
over time, he or she stands ready to serve you.
Thank you again for the confidence you have placed in ONE Fund as you pursue
your wealth-building endeavors. Be assured that we will make every effort to
continue to merit that confidence.
Best regards,
/s/ JOHN J. PALMER
John J. Palmer
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the fund. This report is not
authorized for distribution to prospective investors in the fund unless preceded
or accompanied by an effective prospectus of ONE Fund, Inc. For a prospectus
containing more complete information, including charges and expenses, please
contact Ohio National Equities, Inc. (Member NASD/SIPC) One Financial Way,
Cincinnati, Ohio 45242, telephone 513.794.6100. 2/99
Directors & Officers of ONE Fund, Inc.
- --------------------------------------------------------------------------------
John J. Palmer, President and Director
Ronald L. Benedict, Secretary and Director
George E. Castrucci, Director
Ross Love, Director
George M. Vredeveld, Director
Thomas A. Barefield, Vice President
Joseph P. Brom, Vice President
Michael A. Boedeker, Vice President
Stephen T. Williams, Vice President
Dennis R. Taney, Treasurer
Theresa M. Brunsman, Assistant Secretary
William J. Hilbert, Jr., Compliance Director and Assistant Treasurer
This report may be used as sales literature only when accompanied or preceded by
an effective prospectus of ONE Fund, Inc. which relates sales expense and other
pertinent information.
<PAGE> 3
ONE FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (8.7%)
$ 475,000 American Honda 5.200% 01/28/99..... $ 473,147
450,000 American Honda 5.400% 01/22/99..... 448,583
653,000 General Motors Acceptance Corp.
5.170% 01/05/99................... 652,625
-----------
1,574,355
-----------
CHEMICALS (8.4%)
812,000 Dupont E.I. De Nemours & Co. 5.280%
01/11/99.......................... 810,809
700,000 Great Lakes Chemicals 5.100%
02/12/99.......................... 695,835
-----------
1,506,644
-----------
CONSUMER PRODUCTS (3.9%)
702,000 Fortune Brands 5.300% 01/19/99..... 700,140
-----------
COMMUNICATIONS (3.6%)
655,000 Lucent Technology 5.100%
02/03/99.......................... 651,938
-----------
ELECTRICAL EQUIPMENT (2.8%)
506,000 Avent Inc. 5.250% 01/08/99......... 505,483
-----------
FINANCE (14.1%)
623,000 Allmerica Financial Corp. 5.100%
01/07/99.......................... 622,471
504,000 Block Financial 5.120% 02/16/99.... 500,703
796,000 G.E. Capital 4.700% 01/04/99....... 795,688
634,000 USAA Capital Corp. 5.250%
01/20/99.......................... 632,243
-----------
2,551,105
-----------
FOOD & RELATED (3.3%)
600,000 Coca Cola 5.090% 02/06/99.......... 596,996
-----------
INDUSTRIAL (4.5%)
808,000 BAT Capital 5.850% 01/04/99........ 807,606
-----------
INSURANCE (7.2%)
580,000 Allstate Corp. 5.150% 01/21/99..... 578,341
715,000 St. Paul Companies 5.300%
01/12/99.......................... 713,842
-----------
1,292,183
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
MACHINERY & EQUIPMENT (2.7%)
$ 495,000 John Deere Capital 5.200%
01/25/99.......................... $ 493,284
-----------
MEDICAL & RELATED (4.3%)
775,000 Amgen Inc. 5.380% 01/12/99......... 773,726
-----------
METALS & MINING (3.6%)
642,000 Aluminum Co. of America 5.200%
01/04/99.......................... 641,722
-----------
OIL, ENERGY & NATURAL GAS (13.8%)
620,000 Dixie Pipeline 5.280% 01/29/99..... 617,454
277,000 Dixie Pipeline 5.280% 01/29/99..... 275,862
800,000 Occidental Petroleum 6.000%
01/06/99.......................... 799,333
800,000 Questar Corp. 5.380% 01/15/99...... 798,326
-----------
2,490,975
-----------
RETAIL (6.0%)
694,000 J.C. Penny 5.150% 01/27/99......... 691,419
400,000 Winn-Dixie Stores 5.070%
01/05/99.......................... 399,775
-----------
1,091,194
-----------
UTILITIES (13.4%)
468,000 Carolina Power & Light 5.150%
02/11/99.......................... 465,255
735,000 Cleco Corp. 5.400% 02/09/99........ 730,700
600,000 Mid American Energy 5.400%
01/26/99.......................... 597,750
631,000 S. Carolina Electric & Gas 5.400%
02/01/99.......................... 628,066
-----------
2,421,771
-----------
TOTAL HOLDINGS (100.3%)
(COST $18,099,122) (a)............ $18,099,122
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (-0.3%)............... (50,704)
-----------
TOTAL NET ASSETS (100.0%).......... $18,048,418
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
ONE FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at amortized
cost and market value (note 1).......... $18,099,122
Cash in bank.............................. 693
Receivable for fund shares sold........... 39,734
Other..................................... 4,176
-----------
Total assets............................ 18,143,725
-----------
Liabilities:
Payable for fund shares redeemed.......... 5,583
Payable for investment management services
(note 3)................................ 2,386
Accrued 12b-1 fees (note 6)............... 6,300
Other accrued expenses.................... 10,040
Dividends payable......................... 70,998
-----------
Total liabilities....................... 95,307
-----------
Net assets at market value.................. $18,048,418
===========
Net assets consist of:
Par value, $.001 per share................ $ 18,048
Paid-in capital in excess of par value.... 18,030,370
-----------
Net assets at market value.................. $18,048,418
===========
Shares outstanding.......................... 18,048,418
Net asset value per share................... $ 1.00
===========
Maximum offering price per share............ $ 1.00
===========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 476,453
-----------
Expenses:
Management fees (note 3).................. 26,090
12b-1 fees (note 6)....................... 13,045
Custodian fees (note 3)................... 2,588
Directors' fees (note 3).................. 1,192
Professional fees......................... 5,051
Transfer agent and accounting fees........ 24,387
Filing fees............................... 6,786
Printing, proxy and postage fees.......... 2,477
Other..................................... 786
-----------
Total expenses.......................... 82,402
Less expenses voluntarily reduced or
reimbursed (note 3)................... (13,045)
-----------
Net expenses............................ 69,357
-----------
Net investment income................... 407,096
-----------
Net increase in net assets from
operations............................ $ 407,096
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
ONE FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 407,096 $ 724,318
----------- -----------
Net increase in assets from operations................ 407,096 724,318
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (407,096) (724,318)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 12,643,363 21,996,755
Received from dividends reinvested........................ 223,928 455,744
Paid for shares redeemed.................................. (11,179,840) (20,456,024)
----------- -----------
Increase in net assets derived from capital share
transactions......................................... 1,687,451 1,996,475
----------- -----------
Increase in net assets............................. 1,687,451 1,996,475
----------- -----------
Net Assets:
Beginning of period....................................... 16,360,967 14,364,492
----------- -----------
End of period............................................. $18,048,418 $16,360,967
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
SIX MONTHS ENDED -----------------------------------
DECEMBER 31, 1998 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..................................... 0.02 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income...................... (0.02) (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................................................ 2.39%(b) 4.87% 4.77% 5.18% 5.06%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 0.80%(a) 0.88% 0.80% 0.57% 0.51%
Net investment income..................................... 4.72%(a) 4.81% 4.71% 5.14% 4.99%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 0.96%(a) 1.03% 1.04% 0.87% 0.81%
Net investment income..................................... 4.46%(a) 4.66% 4.47% 4.84% 4.69%
Net assets at end of period (millions)...................... $18.0 $16.4 $14.4 $15.8 $14.1
</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 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> 6
THIS PAGE INTENTIONALLY LEFT BLANK
6
<PAGE> 7
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 DECEMBER 31, 1998
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 3.10% 0.01%
Three-year 5.15% 4.09%
Since inception
(11/1/94) 7.96% 7.17%
</TABLE>
The maximum sales charge is 3%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.
COMMENTS
The Tax-Free Income Portfolio returned 3.10% for the six months ended 1998. In
contrast the Lehman Brothers Intermediate Term Municipal Bond Index returned
3.70% for the period. The portfolio has not been growing and our existing block
of asset holdings has continued to shorten in effective maturity because of call
provisions. Our portfolio has not performed as well as the index because we have
a relative short effective maturity compared to the index and initial rates
declined during the course of the year.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
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 DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Wash State Public Power Supply
System Nuclear 5.70% 07/01/12 4.4
2. Chicago Midway Airport 5.50%
01/01/29 4.3
3. North Carolina Med Care 5/25%
05/01/26 4.1
4. Nevada State G.O. 6.60% 12/01/13 3.9
5. Atlanta Rapid Trans Authority
6.80% 07/01/14 3.9
6. Pennsylvania Intergovernment
6.75% 06/15/21 3.9
7. New York St Med Care Facs 6.75%
08/15/24 3.9
8. Matagorda Cnty 6.70% 03/01/27 3.7
9. Clark Cnty Nevada School District
7.00% 06/01/09 3.7
10. Richland Cnty S Carolina Poll Ctl
5.90% 11/01/20 3.7
</TABLE>
TOP 5 CATEGORIES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Insured Bonds 19.1
Power Revenue 17.9
Hospital Revenue 14.1
General Obligation 10.8
Pollution Control/Industrial
Revenue 10.7
</TABLE>
7
<PAGE> 8
ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT MUNICIPAL BONDS VALUE
- -------------------------------------------------------------
<C> <S> <C>
AIRPORT REVENUE (7.7%)
$ 300,000 Chicago Illinois Midway Airport
5.500% 01/01/29................... $ 314,544
250,000 Chicago Illinois O'Hare Intl
Airport 5.000% 01/01/13........... 252,130
-----------
566,674
-----------
CONVENTION COMPLEX & HOSPITALITY FACILITIES
(2.9%)
200,000 Metropolitan Pier & Exp ILL Hosp
Facs 6.250% 07/01/17.............. 213,884
-----------
GENERAL OBLIGATION BONDS (10.8%)
100,000 Clairborne County Mississippi
7.300% 05/01/25................... 104,579
150,000 Commonwealth of Puerto Rico 5.500%
07/01/17.......................... 157,527
250,000 State of Nevada 6.600% 12/01/13.... 284,738
250,000 State of Washington 5.000%
05/01/17.......................... 250,817
-----------
797,661
-----------
HOSPITAL REVENUE (17.7%)
250,000 Hawaii Department of Budget 6.000%
07/01/20.......................... 271,470
250,000 Maricopa Cnty Arizona Indl Dev
5.250% 11/15/37................... 251,795
250,000 Massachusetts St Health & Edl Facs
6.200% 10/01/16................... 270,758
300,000 North Carolina Medical Care Comm
Healthcare Facs 5.250% 05/01/26... 299,760
200,000 Wisconsin St Health & Edl Facs
6.125% 11/15/15................... 218,786
-----------
1,312,569
-----------
HOUSING REVENUE (2.1%)
150,000 Alaska St Housing Fin Corp 5.875%
12/01/24.......................... 158,459
-----------
INSURED BONDS (15.5%)
250,000 Matagorde Cnty Texas Nav Dist#1
6.700% 03/01/27 (AMBAC)........... 273,670
250,000 Metropolitan Atlanta Rapid Trans
6.800% 07/01/14 (MBIA)............ 290,095
250,000 New York State Med Care Facs 6.750%
08/15/14 (AMBAC).................. 291.555
250,000 Pennsylvania Intergvt Coop 6.750%
08/15/21 (FGIC)................... 289,015
-----------
1,144,335
-----------
POLLUTION CONTROL & INDUSTRIAL REVENUE (10.7%)
250,000 Lawrenceburg, Indiana 5.900%
11/01/19.......................... 256,655
250,000 Richland County, S Carolina 6.560%
11/01/20.......................... 273,988
250,000 West Feliciana, Louisiana 8.000%
12/01/24.......................... 262,185
-----------
792,828
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT MUNICIPAL BONDS VALUE
- -------------------------------------------------------------
<C> <S> <C>
POWER REVENUE (17.9%)
$ 250,000 Jacksonville Florida Electric
5.500% 10/01/14................... $ 262,003
250,000 N Carolina Eastern Power System
6.000% 01/01/22................... 270,140
250,000 Salt River Arizona Project Power
5.000% 01/01/13................... 255,552
200,000 Southern California Public Power
6.000% 07/01/18................... 208,182
300,000 Washington St Pub Pwr Sys Nuclear
5.700% 07/01/12................... 325,998
-----------
1,321,875
-----------
SCHOOL REVENUE (3.7%)
250,000 Clark Cnty Nevada School District
7.000% 06/01/09................... 271,897
-----------
TRANSPORTATION REVENUE (3.2%)
250,000 Central Pudget Sound RTA Washington
5.500% 07/01/13................... 236,980
-----------
WATER REVENUE (3.6%)
250,000 Metropolitan Water District of S
California 5.500% 07/01/13........ 266,997
-----------
TOTAL MUNICIPAL BONDS (95.8%)
(COST $6,262,888)................. $ 7,084,159
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (3.0%)
$ 225,000 General Motors Acceptance Corp.
5.550% 01/04/99................... $ 224,896
-----------
FINANCIAL SERVICES (2.4%)
176,000 American Express Credit Corp.
3.500% 01/05/99................... 175.931
-----------
TOTAL SHORT-TERM NOTES (5.4%)
(COST $400,827)................... $ 400,827
-----------
TOTAL HOLDINGS (101.2%)
(COST $6,663,713) (a)............. $ 7,484,986
-----------
CASH & RECEIVABLES,
NET OF LIABILITIES (-1.2%)........ (86,479)
-----------
TOTAL NET ASSETS (100.0%).......... $ 7,398,507
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $6,663,713)............... $7,484,986
Cash in bank............................... 582
Receivable for fund shares sold............ 76,332
Dividends & accrued interest receivable.... 108,138
Deferred organizational expenses (note
1)....................................... 518
Other...................................... 5,261
----------
Total assets............................. 7,675,817
----------
Liabilities:
Payable for securities purchased........... 239,412
Payable for investment management services
(note 3)................................. 2,817
Accrued 12b-1 fees (note 6)................ 4,465
Other accrued expenses..................... 6,721
Dividends payable.......................... 23,895
----------
Total liabilities........................ 277,310
----------
Net assets at market value................... $7,398,507
==========
Net assets consist of:
Par value, $.001 per share................. $ 655
Paid-in capital in excess of par value..... 6,687,924
Accumulated undistributed net realized
income on investments.................... (111,345)
Net unrealized appreciation on
investments.............................. 821,273
----------
Net assets at market value................... $7,398,507
==========
Shares outstanding........................... 654,578
Net asset value per share.................... $ 11.30
==========
Maximum offering price per share
($11.30/97%)............................... $ 11.65
==========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 204,519
----------
Expenses:
Management fees (note 3)................... 21,989
12b-1 fees (note 6)........................ 9,162
Custodian fees (note 3).................... 1,740
Directors' fees (note 3)................... 433
Professional fees.......................... 2,240
Transfer agent & accounting fees........... 16,361
Filing fees................................ 3,179
Printing, proxy and postage fees........... 904
Organizational expense (note 1)............ 231
Other...................................... 85
----------
Total expenses........................... 56,324
Less expenses voluntarily reduced or
reimbursed (note 3).................... (5,497)
----------
Net expenses............................. 50,827
----------
Net investment income.................... 153,692
----------
Realized & unrealized gain on investments:
Net increase in unrealized appreciation on
investments.............................. 39,784
----------
Net gain on investments................ 39,784
----------
Net increase in net assets from
operations.......................... $ 193,476
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
ONE FUND, INC.
TAX-FREE INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 153,692 $ 305,219
Realized loss on investments.............................. 0 (100,005)
Unrealized gain on investments............................ 39,784 186,945
---------- ----------
Net increase in assets from operations................ 193,476 392,159
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (153,692) (305,219)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 264,251 457,036
Received from dividends reinvested........................ 15,830 32,007
Paid for shares redeemed.................................. (91,140) (232,821)
---------- ----------
Increase in net assets derived from capital share
transactions......................................... 188,941 256,222
---------- ----------
Increase in net assets............................. 228,725 343,162
---------- ----------
Net Assets:
Beginning of period....................................... 7,169,782 6,826,620
---------- ----------
End of period............................................. $7,398,507 $7,169,782
========== ==========
Includes undistributed net investment income of........... $ 0 $ 113
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
SIX MONTHS ENDED ---------------------------- NOVEMBER 1, 1994
DECEMBER 31, 1998 1998 1997 1996 TO JUNE 30, 1995
----------------- ------ ------ ------ ----------------
<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................................ 0.24 0.49 0.53 0.56 0.35
Net realized & unrealized gain on investments........ 0.06 0.15 0.30 0.13 0.66
------ ------ ------ ------ ------
Total income from investment operations............ 0.30 0.64 0.83 0.69 1.01
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income................. (0.24) (0.49) (0.53) (0.56) (0.35)
------ ------ ------ ------ ------
Net asset value, end of period......................... $11.30 $11.24 $11.09 $10.79 $10.66
====== ====== ====== ====== ======
Total return........................................... 2.68%(b) 5.77% 7.82% 6.59% 10.26%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses............................................. 1.40%(a) 1.45% 1.24% 0.94% 0.91%(a)
Net investment income................................ 4.22%(a) 4.30% 4.81% 5.20% 5.04%(a)
Ratios assuming no fees waived or reimbursed by
advisor:
Expenses............................................. 1.54%(a) 1.60% 1.45% 1.24% 1.21%(a)
Net investment income................................ 4.06%(a) 4.15% 4.60% 4.90% 4.74%(a)
Portfolio turnover rate................................ 0% 4% 6% 8% 0%
Net assets at end of period (millions)................. $ 7.4 $ 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.
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
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 DECEMBER 31, 1998
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 6.74% 3.54%
Three-year 6.50% 5.43%
Five-year 5.93% 5.29%
Since inception
(8/18/92) 6.48% 5.97%
</TABLE>
The maximum sales charge is 3%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. The advisor is currently waiving fees of
.15% for this portfolio. Had the fees not been waived, returns would have been
lower.
COMMENTS
The Income Portfolio returned 6.74% in 1998 versus 8.44% for the Lehman Brothers
Government/Corporate Intermediate Bond Index. Our underperformance to the index
was primarily attributable to the large number of "Baa-rated" corporate bonds in
the portfolio. This category suffered poor relative performance during a period
of credit concern and liquidity concern which gripped the bond market primarily
in the second half of the year.
So far in 1999 through January, corporate bonds in the "Baa"-category are
performing better than U.S. Treasury securities of equal duration and we are
optimistic on the outlook for fund performance.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
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 BONDS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. U.S. Treasury 6.375% 08/15/02 15.8
2. Texas Utilities 7.48% 01/01/17 5.1
3. Watson Pharmaceuticals Inc 7.125%
05/15/08 4.7
4. Mississippi Chem Corp 7.25%
11/15/07 4.4
5. Mirage Resorts Inc 6.75% 02/01/08 4.4
6. El Paso Electric 8.90% 02/01/06 4.3
7. ITT Destinations 6.75% 11/15/05 4.2
8. Tenneco 8.075% 10/01/02 4.0
9. IBM Corp 7.25% 11/01/02 4.0
10. ITT Rayonier 7.5% 10/15/02 4.0
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Utilities 20.9
Government 15.8
Hotel/Lodging 11.5
Oil, Energy, and Natural Gas 8.6
Transportation & Equipment 6.7
</TABLE>
11
<PAGE> 12
ONE FUND, INC.
INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
GOVERNMENT (15.8%)
$1,000,000 U.S. Treasury Note 6.375%
08/15/02.......................... $ 1,055,000
-----------
CHEMICALS (4.4%)
300,000 Mississippi Chemical Corp. 7.250%
11/15/07.......................... 294,979
-----------
COMMUNICATIONS (1.7%)
100,000 Comcast Cable Communications 8.375%
05/01/07.......................... 115,920
-----------
COMPUTER & RELATED (4.0%)
250,000 International Business Machines
7.250% 11/01/02................... 267,077
-----------
CONSUMER GOODS (3.7%)
250,000 RJR Nabisco Inc. 7.625% 09/15/03... 244,436
-----------
DRUGS (4.7%)
300,000 Watson Pharmaceuticals Inc. 7.125%
05/15/08.......................... 311,422
-----------
FORESTRY & PAPER PRODUCTS (4.0%)
250,000 ITT Rayonier Inc. 7.500%
10/15/02.......................... 266,371
-----------
HOTEL/LODGING (11.5%)
200,000 Hilton Hotels Corp. 7.200%
12/15/09.......................... 193,826
300,000 ITT Destinations Inc. 6.750%
11/15/05.......................... 277,078
300,000 Mirage Resorts Inc. 6.750%
02/01/08.......................... 292,479
-----------
763,383
-----------
MEDICAL & RELATED (4.0%)
250,000 Bergen Brunswig Corp. 7.375%
01/15/03.......................... 265,986
-----------
OIL, ENERGY & NATURAL GAS (8.6%)
200,000 PDV America, Inc. 7.875%
08/01/03.......................... 202,073
100,000 Seagull Energy 7.875% 08/01/03..... 102,420
250,000 Tenneco Inc. 8.075% 10/01/02....... 267,079
-----------
571,572
-----------
REAL ESTATE (3.0%)
200,000 Avalon Properties Inc. 7.375%
09/15/02.......................... 203,471
-----------
TEXTILES & RELATED (3.8%)
250,000 Fruit of the Loom Corp. 7.875%
10/15/99.......................... 250,845
-----------
TRANSPORTATION & EQUIPMENT (6.7%)
200,000 ABC Rail Product Corp. 8.750%
12/01/04.......................... 187,000
250,000 Illinois Central Gulf Railroad
6.750% 05/15/03................... 261,718
-----------
448,718
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
UTILITIES (15.1%)
$ 250,000 El Paso Electric Co. 8.900%
02/01/06.......................... $ 285,625
200,000 Niagra Mohawk Power Corp. 7.750%
10/01/08.......................... 219,767
157,866 Puget Power 6.450% 04/11/05........ 160,259
300,000 Texas Utilities Electric 7.480%
01/01/17.......................... 336,726
-----------
1,002,377
-----------
TOTAL LONG-TERM BONDS & NOTES
(91.0%) (COST $5,833,105)......... $ 6,061,557
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UTILITIES (5.9%)
8,000 GTE Delaware 8.750% Series B....... $ 208,500
7,000 Connecticut Light, Power & Capital
9.300% Series A................... 181,125
-----------
389,625
-----------
TOTAL PREFERRED STOCK (5.9%)
(COST $375,000)................... $ 389,625
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (2.1%)
$ 139,000 American Express Credit Corp.
3.500% 01/04/99................... $ 138,959
-----------
TOTAL SHORT-TERM NOTES (2.1%)
(COST $138,959)................... $ 138,959
-----------
TOTAL HOLDINGS (98.9%)
(COST $6,347,064) (a)............. $ 6,590,141
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (1.1%)................ 70,652
-----------
TOTAL NET ASSETS (100.0%).......... $ 6,660,793
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 13
ONE FUND, INC.
INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $6,347,064)............... $6,590,141
Cash in bank............................... 885
Receivable for fund shares sold............ 51
Dividends & accrued interest receivable.... 118,645
Other...................................... 1,827
----------
Total assets............................. 6,711,549
----------
Liabilities:
Payable for shares redeemed................ 883
Payable for investment management services
(note 3)................................. 1,982
Accrued 12b-1 fees (note 6)................ 4,004
Other accrued expenses..................... 12,742
Dividends payable.......................... 31,145
----------
Total liabilities........................ 50,756
----------
Net assets at market value................... $6,660,793
==========
Net assets consist of:
Par value, $.001 per share................. $ 665
Paid-in capital in excess of par value..... 6,472,525
Accumulated undistributed net realized
income on investments.................... (55,474)
Net unrealized appreciation on
investments.............................. 243,077
----------
Net assets at market value................... $6,660,793
==========
Shares outstanding........................... 664,590
Net asset value per share.................... $ 10.02
==========
Maximum offering price per share
($10.02/97%)............................... $ 10.33
==========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 236,399
----------
Expenses:
Management fees (note 3)................... 16,880
12b-1 fees (note 6)........................ 8,440
Custodian fees (note 3).................... 2,093
Directors' fees (note 3)................... 453
Professional fees.......................... 2,228
Transfer agent & accounting fees........... 16,165
Filing fees................................ 2,416
Printing, proxy and postage fees........... 1,058
Other...................................... 88
----------
Total expenses........................... 49,821
Less expenses voluntarily reduced or
reimbursed (note 3).................... (5,064)
----------
Net expenses............................. 44,757
----------
Net investment income.................... 191,642
----------
Unrealized gain on investments:
Net increase in unrealized appreciation on
investments.............................. 18,733
----------
Net gain on investments................ 18,733
----------
Net increase in net assets from
operations.......................... $ 210,375
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 14
ONE FUND, INC.
INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 191,642 $ 400,680
Realized gain on investments.............................. 0 48,077
Unrealized gain on investments............................ 18,733 117,144
---------- ----------
Net increase in assets from operations................ 210,375 565,901
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (191,642) (400,680)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 197,613 759,219
Received from dividends reinvested........................ 28,195 79,395
Paid for shares redeemed.................................. (508,133) (702,729)
---------- ----------
Increase (decrease) in net assets derived from capital
share transactions................................... (282,325) 135,885
---------- ----------
Increase (decrease) in net assets.................. (263,592) 301,106
---------- ----------
Net Assets:
Beginning of period....................................... 6,924,385 6,623,279
---------- ----------
End of period............................................. $6,660,793 $6,924,385
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
SIX MONTHS ENDED -----------------------------------
DECEMBER 31, 1998 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..................................... 0.29 0.59 0.61 0.63 0.65
Net realized & unrealized gain (loss) on investments...... 0.03 0.24 0.16 (0.19) 0.39
------ ----- ----- ----- -----
Total income from investment operations................. 0.32 0.83 0.77 0.44 1.04
------ ----- ----- ----- -----
Less distributions:
Dividends from net investment income...................... (0.29) (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..................................... (0.29) (0.59) (0.61) (0.63) (0.65)
------ ----- ----- ----- -----
Net asset value, end of period.............................. $10.02 $9.99 $9.75 $9.59 $9.78
====== ===== ===== ===== =====
Total return................................................ 3.20%(b) 8.56% 8.26% 4.61% 11.58%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 1.34%(a) 1.39% 1.21% 0.97% 0.85%
Net investment income..................................... 5.70%(a) 5.91% 6.29% 6.50% 6.80%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.48%(a) 1.54% 1.51% 1.22% 1.10%
Net investment income..................................... 5.54%(a) 5.76% 5.99% 6.25% 6.55%
Portfolio turnover rate..................................... 0% 40% 10% 9% 4%
Net assets at end of period (millions)...................... $ 6.7 $ 6.9 $ 6.6 $ 7.0 $ 7.1
</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 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.
14
<PAGE> 15
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 DECEMBER 31, 1998
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 3.69% (1.49)%
Three-year 13.83% 11.91%
Five-year 12.79% 11.64%
Since inception
(8/18/92) 12.71% 11.80%
</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 Income & Growth Portfolio return was 3.69% for 1998. Although the large
capitalization stock portion of the portfolio provided returns consistent with
the major indices, the portfolio's exposure to small and mid-capitalization
stocks pulled the overall return down. We were invested in these areas because
the valuations relative to the large capitalization stocks were very attractive.
Unfortunately, these areas corrected far more than the large capitalization
stocks and the major indices during the stock market downturn. The fixed income
portion of the portfolio consists primarily of investment grade corporate bonds.
This portion of the fixed income market did not perform as well as the
Government Security portion of the market. This was caused by investors' concern
with worldwide economic issues and political uncertainties; the result was a
flight to safety.
We expect the stock market to continue in a volatile manner. We expect the U.S.
economy and economic activity around the world to slow somewhat during 1999. We
will focus our efforts on investing more in growth issues and companies growing
their dividends at least two to three times GDP. We expect the corporate bond
sector of the fixed income market to perform more favorably. Asset allocations
will remain near current levels.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Texas Instruments 5.0
2. Microsoft Corp 4.0
3. Intel Corp 3.5
4. Allied Signal 3.2
5. Schlumberger Ltd 3.0
6. Hewlett Packard 2.5
7. Williams Cos Inc 2.4
8. PDV America Inc Nt 7.875%
08/01/03 2.2
9. Regal BeloitCedar Fair 2.0
10. Firstar Corp 2.0
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Oil, Energy, and Natural Gas 18.1
Computer and Related 20.1
Real Estate 8.0
Medical & Related 4.6
Banking 4.5
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 16
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (3.2%)
10,000 Allied Signal Inc.................... $ 443,125
-----------
AUTOMOTIVE & RELATED (1.8%)
4,000 Magna International Inc. CL A........ 248,000
-----------
BANKING (3.7%)
3,500 Charter One Financial................ 97,125
807 First Union Corp..................... 49,076
2,900 Firstar Corp......................... 270,425
3,500 Flagstar Bancorp Inc................. 91,438
-----------
508,064
-----------
BUSINESS SERVICES (2.2%)
4,500 Manpower Inc......................... 113,344
8,000 Reynolds and Reynolds CL A........... 183,500
-----------
296,844
-----------
CHEMICALS (4.0%)
1,250 Hanson Trust PLC..................... 48,750
13,000 Hawkins Chemical Inc................. 130,000
5,000 Minerals Technologies Inc............ 204,688
6,000 OM Group Inc......................... 219,000
-----------
553,688
-----------
COMPUTER & RELATED (16.6%)
2,000 *3Com Corp............................ 89,625
3,000 Computer Assoc. Intl. Inc............ 127,875
5,000 Hewlett Packard Co................... 341,562
4,000 Intel Corp........................... 474,250
4,000 *Microsoft Corp....................... 554,750
8,000 Texas Instruments Inc................ 684,500
-----------
2,272,562
-----------
ELECTRICAL EQUIPMENT (0.9%)
1,000 Xerox Corp........................... 118,000
-----------
ENTERTAINMENT & LEISURE (1.9%)
10,000 Cedar Fair........................... 260,000
-----------
FINANCE (1.9%)
26,500 Bando McGlocklin Capital Corp........ 255,063
-----------
FOOD & RELATED (2.8%)
7,800 Food Lion Inc. CL B.................. 78,487
3,000 H.J. Heinz Co........................ 169,875
6,000 Panamerican Beverages Inc. CL A...... 130,875
-----------
379,237
-----------
HOUSING, FURNITURE & RELATED (2.4%)
7,500 Clayton Homes Inc.................... 103,594
7,100 Haverty Furniture Co................. 149,100
6,200 Shelby Williams Industries Inc....... 74,400
-----------
327,094
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SERVICES (4.2%)
9,000 Clarcor Inc.......................... $ 180,000
5,000 Pall Corporation..................... 126,563
12,000 Regal Beloit Corp.................... 276,000
-----------
582,563
-----------
MEDICAL & RELATED (3.8%)
2,500 Baxter International Inc............. 160,781
4,000 *HCR Manor Care....................... 117,500
2,150 *National Healthcare Corp............. 33,325
5,000 United Healthcare Corp............... 215,312
-----------
526,918
-----------
METALS & MINING (0.5%)
6,000 Worthington Industries Inc........... 75,000
-----------
OIL, ENERGY & NATURAL GAS (8.6%)
3,400 Kerr-McGee Corp...................... 130,050
8,850 Schlumberger Ltd..................... 408,206
10,000 USEC Inc............................. 138,750
6,000 WD-40 Co............................. 171,750
10,500 Williams Cos. Inc.................... 327,469
-----------
1,176,225
-----------
TEXTILES & RELATED (1.3%)
6,200 Oxford Industries Inc................ 175,150
-----------
TRANSPORTATION (1.4%)
3,000 CNF Transportation Inc............... 112,687
4,500 *Wisconsin Central Trans. Corp........ 77,343
-----------
190,030
-----------
UTILITIES (0.3%)
2,000 UGI Corp............................. 47,500
-----------
TOTAL U.S. COMMON STOCK (61.5%)
(COST $4,699,389)................... $ 8,435,063
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
GERMANY (1.4%)
CHEMICALS
2,057 *DaimlerChrysler AG................... $ 197,601
-----------
UNITED KINGDOM (0.4%)
AUTOMOTIVE & RELATED
1,250 Hanson Trust PLC..................... 48,750
TOTAL FOREIGN COMMON STOCK (1.8%)
(COST $110,709)..................... $ 246,351
-----------
TOTAL COMMON STOCK (63.3%)
(COST $4,810,098)................... $ 8,681,414
-----------
</TABLE>
(continued)
16
<PAGE> 17
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES REAL ESTATE INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
3,000 Camden Property Trust................ $ 78,000
8,000 Commercial Net Lease Realty.......... 106,000
10,000 Corporate Office Properties Trust.... 71,250
4,000 First Industrial Realty Trust........ 107,250
7,000 HRPT Properties Trust................ 98,438
6,000 Healthcare Realty Trust Inc.......... 133,875
6,000 JDN Realty Corp...................... 129,375
6,000 Liberty Property Trust............... 147,750
4,500 National Health Investors Inc........ 111,094
5,000 Pacific Gulf Properties, Inc......... 100,312
8,300 Thornburg Mortgage Asset............. 63,287
-----------
TOTAL REAL ESTATE INV. TRUSTS (8.3%)
(COST $1,258,696)................... $ 1,146,631
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (0.2%)
2,000 Walbro Capital Trust Conv. 8%........ $ 26,500
-----------
BANKING (FOREIGN) (0.8%)
4,000 National Australia Bank Ltd. Conv.... 111,500
-----------
BUSINESS SERVICES (0.7%)
4,000 Flagstar Capital 8.50%............... 96,000
-----------
COMPUTER & RELATED (1.5%)
3,500 Unisys Series A Conv................. 205,625
-----------
OIL, ENERGY & NATURAL GAS (0.8%)
3,000 Consumers Energy II 8.2% Conv........ 76,875
2,300 Howell Corp. $3.50 Ser. A Conv....... 34,500
-----------
111,375
-----------
REAL ESTATE (0.4%)
2,400 Camden Property $2.25 Ser. A Conv.... 56,850
-----------
RETAIL (1.1%)
2,500 Kmart Financing 7.75%
06/15/16 Conv....................... 144,844
-----------
TOTAL PREFERRED STOCK (5.5%)
(COST $834,393)..................... $ 752,694
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS (0.9%)
$100,000 Comcast Cable Communications
8.375% 05/01/07 (144A).............. $ 115,920
-----------
COMPUTER & RELATED (2.0%)
250,000 IBM Corp.
7.250% 11/01/02..................... 267,077
-----------
FINANCIAL SERVICES (2.1%)
50,000 ESI Tractebel Acq. Corp.
7.990% 12/30/11 (144A).............. 49,366
250,000 Geon Corp.
7.500% 12/15/15..................... 239,953
-----------
289,319
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FOOD & RELATED (0.6%)
$ 75,000 Marsh Supermarkets Inc. Ser. B
8.875% 08/01/07..................... $ 78,750
-----------
FORESTRY & PAPER PRODUCTS (1.9%)
250,000 ITT Rayonier Inc.
7.500% 10/15/02..................... 266,372
-----------
HOUSING, FURNITURE & RELATED (0.8%)
100,000 Owens Corning
7.500% 05/01/05..................... 102,943
-----------
RESTAURANTS (0.6%)
100,000 Tricon Global Restaurants
7.450% 05/15/05..................... 103,200
-----------
OIL, ENERGY & NATURAL GAS (6.7%)
300,000 PDV America Inc.
7.875% 08/01/03..................... 303,109
100,000 R&B Falcon Corp. Series B
6.750% 04/15/05..................... 91,264
250,000 Tenneco Inc.
8.075% 10/01/02..................... 267,079
250,000 Union Texas Petroleum
8.250% 11/15/99..................... 255,897
-----------
917,349
-----------
UTILITIES (0.7%)
100,000 Niagara Mohawk Power Corp.
7.750% 10/01/08..................... 109,884
-----------
TOTAL LONG-TERM BONDS & NOTES (16.3%)
(COST $2,172,319)................... $ 2,250,814
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
MEDICAL & RELATED (0.8%)
$100,000 Centocor Inc.
4.750% 02/15/05..................... $ 105,875
-----------
OIL, ENERGY & NATURAL GAS (1.3%)
100,000 Offshore Logistics Inc.
6.000% 12/15/06..................... 173,000
-----------
TOTAL CONVERTIBLE DEBENTURES (2.1%)
(COST $304,750)..................... $ 278,875
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (4.7%)
$423,000 American Express Credit Corp.
6.000% 01/05/99..................... $ 422,718
216,000 American General Finance Co.
4.830% 01/04/99..................... 215,913
-----------
638,631
-----------
INSURANCE (2.2%)
306,000 Prudential Funding
5.300% 01/06/99..................... 305,775
-----------
</TABLE>
(continued)
17
<PAGE> 18
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
MACHINERY (1.7%)
$197,000 Deere & Co.
4.750% 01/08/99..................... $ 227,789
-----------
RETAIL (2.5%)
348,000 Sears Roebuck Acceptance Corp.
5.500% 01/07/99..................... 347,681
-----------
TOTAL SHORT-TERM NOTES (11.1%)
(COST $1,519,876)................... $ 1,519,876
-----------
TOTAL HOLDINGS (106.6%)
(COST $10,900,132) (a).............. $14,630,304
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (-6.6%)................. (908,578)
-----------
TOTAL NET ASSETS (100.0%)............ $13,721,726
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
(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 $165,286 or 1.2% of net assets.
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $10,900,132)............. $14,630,304
Cash in bank.............................. 631
Receivable for securities sold............ 70,944
Receivable for fund shares sold........... 11,383
Dividends & accrued interest receivable... 72,239
Other..................................... 2,537
-----------
Total assets............................ 14,788,038
-----------
Liabilities:
Payable for securities purchased.......... 198,022
Payable for fund shares redeemed.......... 94,826
Payable for investment management services
(note 3)................................ 4,261
Accrued 12b-1 fees (note 6)............... 8,471
Other accrued expenses.................... 20,700
Dividends payable......................... 740,032
-----------
Total liabilities....................... 1,066,312
-----------
Net assets at market value.................. $13,721,726
===========
Net assets consist of:
Par value, $.001 per share................ $ 932
Paid-in capital in excess of par value.... 10,060,580
Accumulated undistributed net realized
gain on investments..................... (70,043)
Net unrealized appreciation on
investments............................. 3,730,172
Undistributed net investment income....... 85
-----------
Net assets at market value.................. $13,721,726
===========
Shares outstanding.......................... 931,983
Net asset value per share................... $ 14.72
===========
Maximum offering price per share
($14.72/95%).............................. $ 15.49
===========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 140,303
Dividends................................... 146,786
---------
Total investment income................... 287,089
---------
Expenses:
Management fees (note 3).................... 35,911
12b-1 fees (note 6)......................... 17,955
Custodian fees (note 3)..................... 2,820
Directors' fees (note 3).................... 1,231
Professional fees........................... 5,035
Transfer agent & accounting fees............ 29,600
Filing fees................................. 7,312
Printing, proxy and postage fees............ 2,495
Other....................................... 162
---------
Total expenses............................ 102,521
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (10,773)
---------
Net expenses.............................. 91,748
---------
Net investment income..................... 195,341
---------
Realized & unrealized gain (loss) on
investments:
Net realized gain from investments.......... 445,497
Net increase in unrealized depreciation on
investments............................... (904,525)
---------
Net loss on investments................. (459,028)
---------
Net decrease in net assets from
operations........................... $(263,687)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 20
ONE FUND, INC.
INCOME & GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 195,341 $ 387,925
Realized gain on investments.............................. 445,497 664,230
Unrealized gain (loss) on investments..................... (904,525) 887,079
----------- -----------
Net increase (decrease) in assets from operations..... (263,687) 1,939,234
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (195,256) (391,040)
Capital gains distributions............................... (622,608) (676,652)
----------- -----------
Total dividends and distributions..................... (817,864) (1,067,692)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 981,034 3,431,737
Received from dividends reinvested........................ 46,574 615,775
Paid for shares redeemed.................................. (2,278,829) (1,979,004)
----------- -----------
Increase in net assets derived from capital share
transactions......................................... (1,251,221) 2,068,508
----------- -----------
Increase (decrease) in net assets.................. (2,332,772) 2,940,050
----------- -----------
Net Assets:
Beginning of period....................................... 16,054,498 13,114,448
----------- -----------
End of period............................................. $13,721,726 $16,054,498
=========== ===========
Includes undistributed net investment income of........... $ 85 $ 0
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
SIX MONTHS ENDED ---------------------------------------
DECEMBER 31, 1998 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..................................... 0.20 0.42 0.38 0.38 0.41
Net realized & unrealized gain (loss) on investments...... (0.45) 1.73 2.39 1.27 1.54
------ ------ ------ ------ ------
Total income (loss) from investment operations.......... (0.25) 2.15 2.77 1.65 1.95
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.21) (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..................................... (0.88) (1.19) (0.66) (0.44) (1.03)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $14.72 $15.85 $14.89 $12.78 $11.57
====== ====== ====== ====== ======
Total return................................................ (1.56)%(b) 14.77% 22.34% 14.50% 19.41%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (a):
Expenses.................................................. 1.28%(a) 1.20% 1.12% 0.89% 0.81%
Net investment income..................................... 2.74%(a) 2.65% 2.77% 3.10% 3.69%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.44%(a) 1.35% 1.31% 1.14% 1.06%
Net investment income..................................... 2.58%(a) 2.50% 2.58% 2.85% 3.44%
Portfolio turnover rate..................................... 20% 39% 14% 7% 25%
Net assets at end of period (millions)...................... $ 13.7 $ 16.1 $ 13.1 $ 10.8 $ 7.7
</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 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.
20
<PAGE> 21
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 DECEMBER 31, 1998
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 2.61% (2.52)%
Three-year 12.15% 10.25%
Five-year 12.71% 11.56%
Since inception
(8/18/92) 13.82% 12.91%
</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 Growth Portfolio return was 2.61% for 1998. Although the large
capitalization stock portion of the portfolio returns consistent with the major
indices, the portfolio's exposure to small and mid-capitalization stocks pulled
the overall return down considerably. We were invested in these areas because
the valuations relative to the large capitalization stocks were very attractive.
Unfortunately, these areas corrected far more than the large capitalization
stocks and the major indices during the stock market downturn. Even though the
portfolio's returns were consistent with the major indices from the October 8th
market bottom through the end of the year, the performance during the mid year
market correction caused the portfolio to lag for the 1998 year.
We expect the stock market to continue in a volatile manner. we expect the U.S.
economy and economic activity around the world to slow somewhat during 1999. We
feel that growth will be rewarded and thus we will attempt to increase the
growth aspects of the portfolio.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
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 STOCKS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Cisco Systems 7.6
2. Texas Instruments 5.0
3. Microsoft Corp 5.0
4. Allied Signal Corp 3.6
5. Intel Corp 3.2
6. Magna International CI A 2.8
7. Health South Corp 2.8
8. Hewlett Packard 2.5
9. Kendle International Inc 2.3
10. Reynolds & Reynolds 2.1
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Computer and Related 19.8
Medical and Related 13.4
Computer Application Software 9.0
Automotive & Related 6.5
Oil, Energy, and Natural Gas 6.1
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
21
<PAGE> 22
ONE FUND, INC.
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (5.4%)
9,000 Allied Signal Inc.................. $ 398,813
4,000 Rockwell International Corp........ 194,250
-----------
593,063
-----------
AUTOMOTIVE & RELATED (6.5%)
5,500 Arvin Industries Inc............... 229,281
1,870 DaimlerChrysler Corp. (Foreign).... 179,637
5,000 Magna International Inc. CL A...... 310,000
-----------
718,918
-----------
BANKING (4.8%)
6,944 Charter One Financial Inc.......... 192,696
807 First Union Corp................... 49,076
2,140 Firstar Corp....................... 199,555
3,500 Star Banc Corp..................... 91,437
-----------
532,764
-----------
BROADCAST RADIO & TV (0.7%)
3,000 *Infinity Broadcasting Corp......... 82,125
-----------
BUSINESS SERVICES (5.4%)
8,500 *Alternative Resources Corp......... 90,313
7,500 *Lo Jack Corp....................... 89,062
7,500 Manpower Inc....................... 188,906
10,000 Reynolds and Reynolds CL A......... 229,375
-----------
597,656
-----------
CHEMICALS (3.7%)
12,000 Hawkins Chemicals Inc.............. 120,000
3,500 Minerals Technologies, Inc......... 143,281
4,000 OM Group Inc....................... 146,000
-----------
409,281
-----------
COMMUNICATIONS (0.6%)
3,187 *Mastec Inc......................... 66,927
-----------
COMPUTER & RELATED (19.8%)
2,000 *3Com Corp.......................... 89,625
9,000 *Cisco Systems Inc.................. 835,313
4,000 Hewlett Packard Co................. 273,250
3,000 Intel Corp......................... 355,688
6,500 Texas Instruments Inc.............. 556,156
2,800 *Zebra Tech. Corp. CL A............ 80,500
-----------
2,190,532
-----------
COMPUTER/APPLICATIONS SOFTWARE (9.0%)
4,500 Computer Associates Intl........... 191,812
4,000 *Microsoft Corp..................... 554,750
5,500 *Mapics Inc......................... 90,750
10,000 *Mapinfo Corp....................... 155,000
-----------
992,312
-----------
DRUGS (0.8%)
5,000 *Applied Analytical Industries...... 86,875
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT (4.4%)
6,666 *Analog Devices Inc................. $ 209,146
7,500 *Anixter International Inc.......... 152,344
1,000 Xerox Corp......................... 118,000
-----------
479,490
-----------
ENTERTAINMENT & LEISURE (1.9%)
8,000 Cedar Fair......................... 208,000
-----------
FOOD & RELATED (2.5%)
10,000 Food Lion Inc. CL A................ 106,250
39,000 Food Lion Inc. CL B................ 39,244
6,000 Panamerican Beverages Inc. CL A.... 130,875
-----------
276,369
-----------
HOTEL/LODGING (1.2%)
6,500 *Guest Supply Inc................... 77,594
4,000 *Mirage Resorts Inc................. 59,750
-----------
137,344
-----------
HOUSING, FURNITURE & RELATED (2.1%)
10,500 Clayton Homes Inc.................. 145,031
7,500 Shelby Williams Industries Inc..... 90,000
-----------
235,031
-----------
INDUSTRIAL SERVICES (2.2%)
10,000 *Medar Inc.......................... 11,250
3,100 *Stericycle Inc..................... 49,988
8,000 Regal Beloit Corp.................. 184,000
-----------
245,238
-----------
INSURANCE (1.5%)
13,000 State Auto Financial Corp.......... 160,875
-----------
MACHINERY (0.9%)
5,650 Hardinge Inc....................... 104,172
-----------
MEDICAL & RELATED (13.4%)
3,500 Baxter International............... 225,094
12,500 *Capital Senior Living Corp......... 174,219
5,600 *Foundation Health Corp............. 66,850
1,500 *HCR Manor Care..................... 44,062
20,000 *Health South Corp.................. 308,750
2,000 *Humana Inc......................... 35,625
11,000 *Kendle Intl. Inc................... 257,125
3,000 Mylan Laboratories................. 94,500
3,350 *National Healthcare LP............. 51,925
7,250 *Quorum Health Group Inc............ 93,797
3,000 United Healthcare Corp............. 129,188
-----------
1,481,135
-----------
</TABLE>
(continued)
22
<PAGE> 23
ONE FUND, INC.
GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
METAL & MINING (3.5%)
10,000 Amcast Industrial Corp............. $ 191,250
3,250 *Wolverine Tube, Inc................ 68,250
6,000 Worthington Industries Inc......... 75,000
5,000 *Wyman-Gordon Co.................... 51,250
-----------
385,750
-----------
OIL, ENERGY & NATURAL GAS (5.8%)
7,000 *Louis Dreyfus Natural Gas Corp..... 99,750
2,500 *Offshore Logistics Inc............. 71,250
2,950 Schlumberger Ltd................... 136,069
6,700 *Tesoro Petroleum Corp.............. 81,237
3,800 Transocean Offshore Inc............ 101,887
5,000 Williams Cos. Inc.................. 155,938
-----------
646,131
-----------
RESTAURANTS (3.4%)
10,000 *Buffets Inc........................ 119,375
12,500 *Consolidated Products.............. 257,812
-----------
377,187
-----------
TEXTILES & RELATED (0.9%)
4,000 Warnaco Group CL A................. 101,000
-----------
TRANSPORTATION (4.4%)
4,000 *Atlas Air Inc...................... 195,750
3,000 CNF Transportation Inc............. 112,687
3,000 Trinity Industries................. 115,500
3,500 *Wisconsin Central Trans. Corp...... 60,156
-----------
484,093
-----------
TOTAL COMMON STOCK (104.8%)
(COST $7,509,296)................. $11,592,268
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
OIL, ENERGY & NATURAL GAS (0.4%)
2,500 Howell Corp. $3.50 Series A Conv... $ 37,500
-----------
TOTAL PREFERRED STOCK (0.4%)
(COST $128,075)................... $ 37,500
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (2.8%)
$ 308,000 American Express Credit Corp.
3.500% 01/05/99................... $ 307,880
-----------
INSURANCE SERVICES (1.7%)
194,000 Prudential Funding 5.300%
01/04/99.......................... 193,914
-----------
TOTAL SHORT-TERM NOTES (4.5%)
(COST $501,794)................... $ 501,794
-----------
TOTAL HOLDINGS (109.7%)
(COST$8,139,165)(a)............... $12,131,562
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (-9.7%)............... (1,070,743)
-----------
TOTAL NET ASSETS (100.0%).......... $11,060,819
===========
</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.
23
<PAGE> 24
ONE FUND, INC.
GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $8,139,165).............. $12,131,562
Receivable for securities sold............ 84,530
Receivable for fund shares sold........... 14,825
Dividends & accrued interest receivable... 10,098
Other..................................... 2,519
-----------
Total assets............................ 12,243,534
-----------
Liabilities:
Accounts payable.......................... 107,604
Payable for securities purchased.......... 61,789
Payable for fund shares redeemed.......... 28,194
Payable for investment management services
(note 3)................................ 3,483
Accrued 12b-1 fees (note 6)............... 6,894
Other accrued expenses.................... 19,168
Dividends payable......................... 955,583
-----------
Total liabilities....................... 1,182,715
-----------
Net assets at market value.................. $11,060,819
===========
Net assets consist of:
Par value, $.001 per share................ $ 684
Paid-in capital in excess of par value.... 7,338,664
Accumulated undistributed net realized
gain on investments..................... (270,926)
Net unrealized appreciation on
investments............................. 3,992,397
-----------
Net assets at market value.................. $11,060,819
===========
Shares outstanding.......................... 683,976
Net asset value per share................... $ 16.17
===========
Maximum offering price per share
($16.17/95%).............................. $ 17.02
===========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 17,831
Dividends................................... 54,694
---------
Total investment income................... 72,525
---------
Expenses:
Management fees (note 3).................... 29,647
12b-1 fees (note 6)......................... 14,824
Custodian fees (note 3)..................... 2,564
Directors' fees (note 3).................... 962
Professional fees........................... 4,590
Transfer agent & accounting fees............ 28,772
Filing fees................................. 5,974
Printing, proxy and postage fees............ 1,953
Other....................................... 148
---------
Total expenses............................ 89,434
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (8,894)
---------
Net expenses.............................. 80,540
---------
Net investment income..................... (8,015)
---------
Realized & unrealized loss on investments:
Net realized loss from investments.......... (204,740)
Net increase in unrealized depreciation on
investments............................... (621,072)
---------
Net loss on investments................. (825,812)
---------
Net decrease in net assets from
operations........................... $(833,827)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 25
ONE FUND, INC.
GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment gain (loss)................................ $ (8,015) $ 2,920
Realized gain (loss) on investments....................... (204,740) 1,329,264
Unrealized gain (loss) on investments..................... (621,072) 518,363
----------- -----------
Net increase (decrease) in assets from operations..... (833,827) 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............................... (955,579) (889,104)
----------- -----------
Total dividends and capital gains distributions....... (955,579) (901,056)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 1,002,216 1,982,622
Received from dividends reinvested........................ 0 608,764
Paid for shares redeemed.................................. (2,361,785) (2,605,972)
----------- -----------
Decrease in net assets derived from capital share
transactions........................................... (1,359,569) (14,586)
----------- -----------
Increase (decrease) in net assets.................. (3,148,975) 934,905
----------- -----------
Net Assets:
Beginning of period....................................... 14,209,794 13,274,889
----------- -----------
End of period............................................. $11,060,819 $14,209,794
=========== ===========
Includes underdistributed net investment income of........ $ (18,147) $ 0
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
SIX MONTHS ENDED ---------------------------------------
DECEMBER 31, 1998 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 from investment operations:
Net investment income (loss).............................. (0.01) 0.00 0.07 0.14 0.16
Net realized & unrealized gain (loss) on investments...... (1.10) 2.41 2.73 2.72 2.17
------ ------ ------ ------ ------
Total income (loss) from investment operations.......... (1.11) 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.............................. $16.17 $18.68 $17.52 $15.47 $13.03
====== ====== ====== ====== ======
Total return................................................ (5.96)%(b) 14.13% 18.68% 22.22% 20.54%
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 1.36%(a) 1.24% 1.13% 0.90% 0.83%
Net investment income (loss).............................. (0.14)%(a) 0.02% 0.43% 0.99% 1.35%
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 1.52%(a) 1.39% 1.32% 1.15% 1.08%
Net investment income (loss).............................. (0.28)%(a) (0.13)% 0.24% 0.74% 1.10%
Portfolio turnover rate..................................... 27% 40% 27% 22% 24%
Net assets at end of period (millions)...................... $ 11.1 $ 14.2 $ 13.3 $ 11.8 $ 7.0
</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 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.
25
<PAGE> 26
THIS PAGE INTENTIONALLY LEFT BLANK
26
<PAGE> 27
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 DECEMBER 31, 1998
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year (13.35)% (17.68)%
Three-year 5.83% 4.04%
Since inception
(11/1/94) 9.28% 7.93%
</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
As expected, financial markets have exhibited volatility over the second half of
calendar 1998. Investors, in response to economic turmoil worldwide, sought out
highly liquid, blue chip issues and Treasury securities in a flight quality. As
a result, small capitalization issues have rebounded since then, a wide
valuation disparity remains compared to larger capitalization issues.
The Small Cap Portfolio trailed the Russell 2000 Index's return during the six
months ending December 31. In particular, capital goods and energy holdings
performed poorly. Looking ahead to 1999, we anticipate volatility to continue.
Despite disappointing near term results, we are encouraged by the considerable
discount to both future growth prospects and larger capitalization issues. We
are hopeful smaller capitalization issues will recover to more reasonable
valuation levels.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Source Information Mgmt 4.1
2. Consolidated Products 3.4
3. Atlas Air Inc 3.4
4. Lo Jack Corp 3.1
5. Kendle International Inc 2.8
6. Map Info Corp 2.8
7. Capital Senior Living 2.8
8. WD-40 Company 2.7
9. CTS Corp 2.6
10. Specialty Equipment 2.6
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Oil, Energy, and Natural Gas 14.0
Business Services 10.8
Computer and Related 8.9
Medical & Related 7.7
Electronic/Components/Equipment 7.5
</TABLE>
27
<PAGE> 28
ONE FUND, INC.
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (1.7%)
11,000 Defiance Inc......................... $ 72,875
-----------
BANKING (2.9%)
3,000 Flagstar Bancorp Inc................. 78,375
5,000 *Investors Bancorp Inc................ 44,375
-----------
122,750
-----------
BUSINESS SERVICES (10.8%)
5,500 *Alternative Resources Corp........... 58,437
11,000 *Lo Jack Corp......................... 130,625
4,000 Reynolds & Reynolds CL A............. 91,750
15,000 *Source Information Management........ 174,375
-----------
455,187
-----------
CHEMICALS (2.7%)
4,000 Hawkins Chemical Inc................. 40,000
2,000 OM Group Inc......................... 73,000
-----------
113,000
-----------
COMMUNICATIONS (0.8%)
1,687 *Mastec Inc........................... 35,427
-----------
COMPUTER & RELATED (8.9%)
7,000 *Electronic Processing................ 70,000
7,500 *Map Info Corp........................ 116,250
2,500 *Mapics Inc........................... 41,250
6,000 *Rand A Technology Corp............... 76,228
2,500 *Zebra Tech Corp. CL A................ 71,875
-----------
375,603
-----------
CONSUMER PRODUCTS (0.9%)
2,100 *Sola International Inc............... 36,225
-----------
DRUGS (0.8%)
2,000 *Applied Analytical Inds. Inc......... 34,750
-----------
ELECTRICAL EQUIPMENT (7.5%)
5,000 *Anixter International Inc............ 101,563
2,500 CTS Corp............................. 108,750
2,000 Federal Signal Corp.................. 54,750
15,000 *Rohn Industries Inc.................. 51,562
-----------
316,625
-----------
ENTERTAINMENT & LEISURE (1.9%)
3,000 Cedar Fair........................... 78,000
-----------
FINANCIAL SERVICES (2.3%)
10,000 Bando McGlocklin Capital Corp........ 96,250
-----------
FORESTRY & PAPER PRODUCTS (1.5%)
4,500 *Fibermark Inc........................ 61,312
-----------
HOTEL/MOTEL (1.6%)
5,500 *Guest Supply......................... 65,656
-----------
HOUSING, FURNITURE & RELATED (1.4%)
4,800 Shelby Williams Inds. Inc............ 57,600
-----------
INDUSTRIAL SERVICES (4.7%)
4,000 Clarcor Inc.......................... 80,000
4,500 IMCO Recycling Inc................... 69,469
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
10,000 *Medar Inc............................ $ 11,250
35,000 *Recycling Industries Inc............. 35,000
-----------
195,719
-----------
INSURANCE SERVICES (1.8%)
6,000 State Auto Financial Corp............ 74,250
-----------
MACHINERY (1.1%)
2,600 Hardinge Inc......................... 47,937
-----------
MEDICAL & RELATED (7.7%)
5,000 *Capital Senior Living Corp........... 118,469
5,000 *Kendle International Inc............. 116,875
3,688 *Quorum Health Group Inc.............. 47,707
2,500 *Stericycle Inc....................... 40,312
-----------
323,363
-----------
METAL & MINING (3.0%)
2,500 Amcast Industrial Corp............... 47,813
2,250 *Wolverine Tube Inc................... 47,250
3,000 *Wyman Gordon Co...................... 30,750
-----------
125,813
-----------
OIL, ENERGY & NATURAL GAS (13.2%)
7,500 *Louis Dreyfus Natural Gas Corp....... 106,875
12,500 *Matrix Services...................... 59,375
15,000 *Meridian Resource Corp............... 47,812
60,000 *Newstar Resources Inc. CL A.......... 20,625
2,500 *Offshore Logistics Inc............... 29,688
8,000 *Santa Fe Energy Resources, Inc....... 59,000
6,500 *Seim Industries Inc.................. 51,359
5,500 *Tesoro Petroleum Corp................ 66,688
4,000 WD-40 Co............................. 114,500
-----------
555,922
-----------
RESTAURANTS (1.7%)
6,000 *Buffets Inc.......................... 71,625
-----------
RETAIL (3.4%)
6,875 *Consolidated Products Inc............ 141,797
-----------
TRANSPORTATION & EQUIPMENT (5.9%)
3,000 *Atlas Air Inc........................ 146,813
3,500 *Avondale Industries Inc.............. 101,500
-----------
248,313
-----------
MISCELLANEOUS (2.6%)
4,000 *Specialty Equipment.................. 108,250
-----------
TOTAL COMMON STOCK (90.8%) (COST
$3,807,555).......................... $ 3,814,249
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES REAL ESTATE INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
6,000 Commercial Net Lease Realty.......... $ 79,500
3,000 First Industrial Realty Trust........ 80,438
4,000 Healthcare Realty Trust Inc.......... 89,250
1,000 National Health Investors Inc........ 24,687
-----------
TOTAL REAL ESTATE INV. TRUSTS (6.5%)
(COST $263,572)...................... $ 273,875
-----------
</TABLE>
(continued)
28
<PAGE> 29
ONE FUND, INC.
SMALL CAP PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
OIL, ENERGY & NATURAL GAS (0.3%)
1,000 Howell Corp. $3.50 Ser A Conv........ $ 15,000
-----------
TOTAL PREFERRED STOCK (0.3%)
(COST $51,100)...................... $ 15,000
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE (6.6%)
$124,000 Ford Motor Credit Corp. 5.350%
01/05/99............................ $ 123,926
155,000 General Motors Acceptance Corp.
6.070% 01/04/99..................... 154,922
-----------
278,848
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (3.1%)
$130,000 American Express Credit Corp.
3.500% 01/05/99..................... $ 129,949
-----------
TOTAL SHORT-TERM NOTES (9.7%)
(COST $408,797)..................... $ 408,797
-----------
TOTAL HOLDINGS (107.3%)
(COST $4,531,024)(a)................ $ 4,511,921
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (-7.3%)................. (308,902)
-----------
TOTAL NET ASSETS (100.0%)............ $ 4,203,019
===========
</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.
29
<PAGE> 30
ONE FUND, INC.
SMALL CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $4,531,024)............... $4,511,921
Cash in bank............................... 817
Receivable for securities sold............. 5,400
Receivable for fund shares sold............ 5,568
Dividends & accrued interest receivable.... 4,603
Deferred organizational expenses (note
1)....................................... 436
Other...................................... 2,965
----------
Total assets............................. 4,531,710
----------
Liabilities:
Payable for fund shares redeemed........... 27,313
Payable for investment management services
(note 3)................................. 1,063
Accrued 12b-1 fees (note 6)................ 2,293
Other accrued expenses..................... 6,464
Dividends payable.......................... 291,558
----------
Total liabilities........................ 328,691
----------
Net assets at market value................... $4,203,019
==========
Net assets consist of:
Par value, $.001 per share................. $ 400
Paid-in capital in excess of par value..... 4,326,355
Accumulated net realized income on
investments.............................. (104,776)
Net unrealized depreciation on
investments.............................. (19,103)
Undistributed net investment income........ 143
----------
Net assets at market value................... $4,203,019
==========
Shares outstanding........................... 400,000
Net asset value per share.................... $ 10.51
==========
Maximum offering price per share
($10.51/95%)............................... $ 11.06
==========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 29,589
Dividends................................... 30,842
---------
Total investment income................... 60,431
---------
Expenses:
Management fees (note 3).................... 15,370
12b-1 fees (note 6)......................... 5,912
Custodian fees (note 3)..................... 2,486
Directors' fees (note 3).................... 450
Professional fees........................... 1,787
Transfer agent & accounting fees............ 17,490
Filing fees................................. 2,151
Printing, proxy and postage fees............ 969
Organizational expense (note 1)............. 258
Other....................................... 74
---------
Total expenses............................ 46,947
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (5,813)
---------
Net expenses.............................. 41,134
---------
Net investment income..................... 19,297
---------
Realized & unrealized loss on investments:
Net realized loss from investments.......... (241,232)
Net increase in unrealized depreciation on
investments............................... (672,247)
---------
Net loss on investments................... (913,479)
---------
Net decrease in net assets from
operations.............................. $(894,182)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 31
ONE FUND, INC.
SMALL CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 19,297 $ 27,404
Realized gain (loss) on investments....................... (241,232) 726,343
Unrealized loss on investments............................ (672,247) (202,189)
----------- ----------
Net increase (decrease) in assets from operations..... (894,182) 551,558
----------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (19,200) (26,854)
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................................. 348,646 1,281,269
Received from dividends reinvested........................ 0 274,091
Paid for shares redeemed.................................. (786,136) (909,621)
----------- ----------
Increase (decrease) in net assets derived from capital
share transactions................................... (437,490) 645,739
----------- ----------
Increase (decrease) in net assets.................. (1,623,235) 622,688
----------- ----------
Net Assets:
Beginning of period....................................... 5,826,254 5,203,566
----------- ----------
End of period............................................. $ 4,203,019 $5,826,254
=========== ==========
Includes undistributed net investment income of........... $ 143 $ 46
=========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
SIX MONTHS ENDED -------------------------- NOVEMBER 1, 1994
DECEMBER 31, 1998 1998 1997 1996 TO JUNE 30, 1995
----------------- ------ ------ ------ ----------------
<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 from investment operations:
Net investment income................................... 0.05 0.06 0.11 0.26 0.22
Net realized & unrealized gain (loss) on investments.... (2.13) 1.30 1.67 2.26 0.67
------ ------ ------ ------ ------
Total income (loss) from investment operations........ (2.08) 1.36 1.78 2.52 0.89
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income.................... (0.05) (0.06) (0.11) (0.25) (0.22)
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............................ $10.51 $13.32 $13.30 $12.82 $10.63
====== ====== ====== ====== ======
Total return.............................................. (15.62)%(b) 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%(a) 1.67% 1.35% 0.94% 1.00%(a)
Net investment income................................... 0.82%(a) 0.47% 0.89% 2.21% 3.19%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses................................................ 2.00%(a) 1.82% 1.62% 1.27% 1.31%(a)
Net investment income................................... 0.57%(a) 0.32% 0.62% 1.88% 2.88%(a)
Portfolio turnover rate................................... 33% 77% 34% 34% 8%
Net assets at end of period (millions).................... $ 4.2 $ 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 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.
31
<PAGE> 32
THIS PAGE INTENTIONALLY LEFT BLANK
32
<PAGE> 33
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 (2.71)% (7.57)%
Three-year 3.92% 2.16%
Five-year 6.59% 5.50%
Since inception
(5/1/93) 10.68% 9.67%
</TABLE>
The maximum sales charge is 5%. All returns represent past performance and
neither predict nor guarantee future investment results. Your investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
COMMENTS
Despite continued concerns over the impact of the Asian crisis on global
economies, European indices surged ahead until mid-July. At that time, Russia
devalued its currency and defaulted on its Ruble denominated obligations, the
outlook in Latin American markets worsened as Brazil became an area of increased
worries, and a large U.S. hedge fund collapsed in September. Within a few weeks,
mature markets lost 20 to 30% while emerging markets were once again decimated.
In Asia, Japanese equities weakened farther as additional evidence of
deteriorating economic conditions and slow progress made toward the
implementation of long-awaited banking reforms. Global market developments
placed other Asian markets under pressure. Meanwhile, in Latin America, the
possibility of additional currency devaluations continued to weigh on local
stock markets.
In such an environment, small capitalization stocks fared even worse than large
capitalization stocks and suffered steep losses. Smaller stocks account for the
large majority of the Funds' holdings: while world markets stabilized later in
the year, Blue chips gained and reversed most of their losses, many of the small
issues did not recover. The performance of the Funds was therefore negatively
impacted by those developments.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Societe Immobiliere Marseillaise 4.6
2. Kuehne & Nagel Internat. Settl.
AG Bearer 4.1
3. Taittinger C.I 4.1
4. Fuji Photo Film Co LTD 3.6
5. Buderus AG 3.6
6. Bank for International
Settlements
(US Tranche) 3.5
7. Cheil Ito-Yokado Co LTD 3.4
8. Toho Co 3.0
9. Societe General D'Affichage 2.7
10. Vivendi 2.6
</TABLE>
TOP 5 COUNTRIES/REGIONS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Japan 20.3
France 10.6
Switzerland 9.4
United Kingdom 6.7
Germany 5.1
</TABLE>
33
<PAGE> 34
ONE FUND, INC.
INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------
<C> <S> <C>
JAPAN (24.9%)
40,000 Aida Engineering Ltd (19)............ $ 143,115
12,100 Chofu Seisakusho (9)................. 134,356
35,000 Dai-Tokyo Fire Marine Ins Co Ltd
(18)................................ 123,375
65,000 Dowa Fire & Marine Ins Co Ltd (18)... 240,582
10,000 Fuji Photo Film Co. Ltd (9).......... 370,126
2,000 Hitachi Ltd ADR (11)................. 120,875
30,000 *Iino Kaiun Kaisha (32)............... 50,231
5,000 Ito-Yokado Co. Ltd (28).............. 348,094
45,000 Nisshinbo Industries Inc (31)........ 156,246
2,000 Secom Co. Ltd (29)................... 164,970
8,000 Shimano Inc. (9)..................... 205,508
5,000 Shiseido Company (9)................. 63,979
20,000 Shoei Co. (31)....................... 97,466
2,200 Toho Co. (20)........................ 300,119
-----------
2,519,042
-----------
FRANCE (20.8%)
1,000 Conflandey (30)...................... 37,569
1,000 Elf Aquitaine (12)................... 115,569
2,000 Emin Leydier (24).................... 86,587
1,000 Gaumont SA (20)...................... 67,982
1,000 Didot-Bottin (25).................... 144,908
1,500 Legrand ADP (10)..................... 238,830
1,000 NSC Groupe (19)...................... 123,440
350 Promodes C.I. (28)................... 156,537
200 Societe Immobillere Marseillaise
(35)................................ 463,706
700 Taittinger (13)...................... 415,761
1,000 Vivendi (33)......................... 259,403
-----------
2,110,292
-----------
SWITZERLAND (16.1%)
55 Bank of Intl. Settlements (3)........ 350,255
700 Edipresse SA Bearer (25)............. 201,237
500 Kuehne & Nagel Intl. AG (32)......... 418,486
50 Lindt & Sprungli AG (13)............. 131,004
850 Sika Finanz AG Bearer (7)............ 254,876
750 Societe Generale d'Affichage (20).... 276,201
-----------
1,632,059
-----------
GERMANY (6.0%)
1,500 Bayer AG (7)......................... 63,020
1,000 Buderus AG (5)....................... 369,380
12,000 Gerresheimer Glas AG (9)............. 176,582
-----------
608,982
-----------
NEW ZEALAND (4.2%)
130,549 Carter Holt Harvey Ltd (14).......... 116,781
34,370 Independent Press Comm. (25)......... 135,641
130,000 Shortland Properties Ltd (27)........ 45,832
300,260 Tasman Agriculture Ltd (1)........... 126,397
-----------
424,651
-----------
HONG KONG (3.7%)
924,416 CDL Hotels Intl. Ltd. (16)........... 243,350
300,000 Shaw Brothers (Hong Kong) Ltd (20)... 129,719
-----------
373,069
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------
<C> <S> <C>
LATIN AMERICA (3.3%)
35,000 Antofagasta Holdings plc (34)........ $ 103,019
5,000 Banco Latinoamericano 'Bladex' (3)... 83,125
46,715 Cresud S.A. (1)...................... 56,110
151,543 Ledesma SA (1)....................... 95,561
-----------
337,815
-----------
SINGAPORE (3.1%)
65,000 Clipsal Industries Ltd (10).......... 65,000
100,000 DelGro Corp. (32).................... 129,618
75,000 Times Publishing Ltd (25)............ 117,202
-----------
311,820
-----------
BELGIUM (2.7%)
500 Deceuninck Plastics Ind. SA (4)...... 162,378
1,000 Engrais Rosier SA (1)................ 113,337
-----------
275,715
-----------
NETHERLANDS (2.1%)
4,500 Apothekers Cooperatie OPG (17)....... 129,030
7,000 European City Estates NV (27)........ 87,137
-----------
216,167
-----------
SWEDEN (1.8%)
7,000 IRO AB (34).......................... 70,648
8,000 PLM AB (23).......................... 115,204
-----------
185,852
-----------
UNITED KINGDOM (1.1%)
25,000 *McBride plc (9)...................... 41,456
55,000 Royal Doulton plc (9)................ 72,051
-----------
113,507
-----------
NORWAY (0.9%)
7,500 Schibsted AS (25).................... 94,756
-----------
FINLAND (0.8%)
1,000 Vaisala Oy A (11).................... 82,370
-----------
MEXICO (0.8%)
44,577 Industrias Penoles SA de CV (21)..... 75,719
-----------
MISCELLANEOUS (0.7%)
5,000 North European Oil Royalty Tr.
(12)................................ 68,440
-----------
TOTAL COMMON STOCK (93.0%)
(COST $9,960,455)................... $ 9,430,256
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------
<C> <S> <C> <C>
NON U.S. DOLLAR (2.6%)
$780,000 FF Immobiliere Hoteliere
5.000% due 01/01/01 (33)........ $ 99,262
50,000 GBP BAA plc
5.750% due 03/29/06 (32)........ 108,408
170,000 NZ Shortland Properties Inc.
7.500% due 12/31/98 (27)........ 59,934
-----------
TOTAL CONVERTIBLE DEBENTURES
(2.6%)
(COST $268,229)................. $ 267,604
-----------
</TABLE>
(continued)
34
<PAGE> 35
ONE FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------
<C> <S> <C> <C>
NON-U.S. DOLLAR (3.3%)
$335,000 AUD Queensland Treasury 8.000% due
09/14/07 (15)................... $ 242,384
175,000 NZ Trans Power Finance Ltd. 8.000%
due 02/15/02 (15)............... 97,349
-----------
TOTAL NON-CONVERTIBLE BONDS
(3.3%)
(COST $364,584)................. 339,733
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------
<C> <S> <C> <C>
FINANCIAL SERVICES (3.4%)
$341,000 American Express 3.000%
01/06/99........................ $ 340,858
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------
<C> <S> <C> <C>
INSURANCE SERVICES (2.6%)
$263,000 Prudential Funding Corp. 4.750%
01/04/99........................ $ 262,896
-----------
TOTAL SHORT-TERM NOTES (6.0%)
(COST $603,754)................. $ 603,754
-----------
TOTAL HOLDINGS (104.9%)
(COST $11,197,022) (a).......... $10,641,347
-----------
CASH & RECEIVABLES,
NET OF LIABILITIES (-4.9%)...... (498,963)
-----------
TOTAL NET ASSETS (100.0%)........ $10,142,384
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
FOREIGN CURRENCIES
NZ -- New Zealand Dollar
FF -- French Franc
GBP -- British Pound
AUD -- Australian Dollar
INDUSTRY CLASSIFICATIONS
<TABLE>
<S> <C>
(1) Agriculture (19) Machinery
(2) Automotive (20) Media
(3) Banking (21) Metal (non-ferrous)
(4) Building Products (22) Mining
(5) Capital Goods (23) Packaging
(6) Cement (24) Paper
(7) Chemicals (25) Publishing
(8) Computer Products (26) Rail Equipment
(9) Consumer Products (27) Real Estate
(10) Electrical Products (28) Retailing
(11) Electronics (29) Services
(12) Energy and Oil (30) Steel
(13) Food & Beverage (31) Textile
(14) Forest Products (32) Transportation
(15) Governmental (33) Utilities
(16) Hotels (34) Miscellaneous
(17) Health Care (35) Holding Companies
(18) Insurance
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE> 36
ONE FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $11,197,023)............. $10,641,347
Cash in bank.............................. 23,567
Unrealized gain on forward currency
contracts (note 5)...................... 15,061
Receivable for fund shares sold........... 26
Dividends & accrued interest receivable... 39,439
Other..................................... 1,272
-----------
Total assets............................ 10,720,712
-----------
Liabilities:
Unrealized loss on forward currency
contracts (note 5)...................... 236,743
Payable for investment management services
(note 3)................................ 6,840
Accrued 12b-1 fees (note 6)............... 7,133
Dividends payable......................... 285,520
Other accrued expenses.................... 42,092
-----------
Total liabilities....................... 578,328
-----------
Net assets at market value.................. $10,142,384
===========
Net assets consist of:
Par value, $.001 per share................ $ 893
Paid-in capital in excess of par value.... 11,222,592
Accumulated undistributed net realized
income on investments................... (123,064)
Net unrealized appreciation (depreciation)
on:
Investments (note 1).................... (555,676)
Foreign currency related transactions... 1,517
Forward currency contracts (note 5)..... (221,682)
Undistributed net investment income....... (182,193)
-----------
Net assets at market value.................. $10,142,387
===========
Shares outstanding.......................... 892,767
Net asset value per share................... $ 11.36
===========
Maximum offering price per share
($11.36/95%).............................. $ 11.96
===========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest
(net of $824 foreign taxes withheld)..... $ 34,876
Dividends
(net of $5,086 foreign taxes withheld)... 87,055
-----------
Total investment income.................. 121,931
Expenses:
Management fees (note 3)................... 53,644
12b-1 fees (note 6)........................ 14,901
Custodian fees (note 3).................... 30,955
Directors' fees (note 3)................... 1,287
Professional fees.......................... 5,006
Transfer agent & accounting fees........... 28,992
Filing fees................................ 7,885
Printing, proxy and postage fees........... 2,692
Other...................................... 246
-----------
Total expenses........................... 145,608
Less expenses voluntarily reduced or
reimbursed (note 3).................... (17,467)
-----------
Net expenses............................. 128,141
-----------
Net investment loss...................... (6,210)
-----------
Realized & unrealized loss on investments &
foreign currency:
Net realized gain (loss) from:
Investments.............................. (302,390)
Forward currency related transactions.... (176,174)
Net increase in unrealized depreciation on:
Investments............................ (494,113)
Foreign currency related
transactions........................ (395,724)
-----------
Net loss on investments................ (1,368,401)
-----------
Net decrease in net assets from
operations.......................... $(1,374,611)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE> 37
ONE FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment income (loss).............................. $ (6,210) $ 142,380
Realized gain (loss) on investments and foreign currency
related transactions.................................... (478,564) 1,670,517
Unrealized loss on investments and foreign currency
related transactions.................................... (889,837) (2,430,256)
----------- -----------
Net decrease in assets from operations................ (1,374,611) (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................................. 327,844 3,159,453
Received from dividends reinvested........................ 97 1,971,077
Paid for shares redeemed.................................. (3,088,131) (6,838,385)
----------- -----------
Decrease in net assets derived from capital share
transactions......................................... (2,760,190) (1,707,855)
----------- -----------
Decrease in net assets............................. (4,420,418) (4,747,437)
----------- -----------
Net Assets:
Beginning of period....................................... 14,562,805 19,310,242
----------- -----------
End of period............................................. $10,142,387 $14,562,805
=========== ===========
Includes undistributed net investment income of........... $ (182,193) $ 288
----------- -----------
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
SIX MONTHS ENDED ------------------------------------
DECEMBER 31, 1998 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).............................. (0.01) 0.12 0.14 0.10 0.14
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (1.23) (0.63) 1.92 2.24 0.63
------ ------ ------ ------ ------
Total income (loss) from investment operations.......... (1.24) (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.............................. $11.36 $12.92 $15.45 $14.47 $12.89
====== ====== ====== ====== ======
Total return................................................ (9.60)%(b) (4.84)% 14.76% 18.65% 6.44%
Ratios and supplemental data:
Ratios net of fees reimbursed by advisor (c):
Expenses.................................................. 2.16%(a) 2.10% 1.87% 1.72% 1.50%
Net investment income (loss).............................. (0.10)%(a) 0.85% 0.99% 0.70% 1.11%
Ratios assuming no fees reimbursed by advisor:
Expenses.................................................. 2.45%(a) 2.20% 1.98% 1.72% 1.50%
Net investment income (loss).............................. (0.40)%(a) 0.75% 0.88% 0.70% 1.11%
Portfolio turnover rate..................................... 23% 12% 9% 20% 39%
Net assets at end of period (millions)...................... $ 10.1 $ 14.6 $ 19.3 $ 15.1 $ 12.0
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
(c) The advisor has elected to reimburse certain operating expenses of the
International Portfolio.
The accompanying notes are an integral part of these financial statements.
37
<PAGE> 38
THIS PAGE INTENTIONALLY LEFT BLANK
38
<PAGE> 39
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 DECEMBER 31, 1998
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year (8.15)% (12.74)%
Three-year 3.64% 1.89%
Since inception
(11/1/94) 5.17% 3.88%
</TABLE>
The above returns reflect the maximum sales charge of 5% for this portfolio. All
returns represent past performance and neither predict nor guarantee future
investment results. Your investment return and principal value will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
COMMENTS
The Global Contrarian Portfolio contains mostly small and obscure stocks which
we believe are neglected. They also have exposure to commodity and/or "hard
asset" related stocks in U.S. as well as foreign markets. Finally, they hold
emerging market debt instruments, both corporate and sovereign. Stock markets
fell sharply around the world during the third quarter and then rebounded
sharply during the fourth quarter. Small stocks and commodity related stocks
continued to fare poorly, especially compared to the big growth stocks.
The portfolio has been reducing its exposure to commodities-related securities
over the last eighteen months as weaker global economic growth is anticipated in
the medium-term following the Asian crisis. Exposure to certain Latin American
debt instruments has also been reduced. Simultaneously, the portfolio recently
started buying selected stocks and bonds that appear depresses significantly in
a few Asian countries, as well as Australia, the U.S., and Europe.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. Kuehne & Nagel International AG
Bearer 4.8
2. Edipresse SA Bearer 4.1
3. Freeport McMoRan Copper & Gold
Inc
Preferred Ser 'D' 3.4
4. Lawter International, Inc 3.3
5. Buderus 2.8
6. Bank of International Settlements 2.7
7. CDL Hotels International Limited 2.6
8. Fuji Photo Film 2.6
9. East Texas Financial Services Inc 2.4
10. Kaneb Services Inc 2.3
</TABLE>
TOP 5 COUNTRIES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
United States 32.6
Japan 11.6
Switzerland 9.3
Hong Kong 5.0
Indonesia 4.7
</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.
39
<PAGE> 40
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
CHEMICALS (3.3%)
10,000 Lawter International Inc.............. $ 116,250
----------
CAPITAL GOODS (3.9%)
2,000 Bandag Inc. CL A...................... 69,750
1,000 Franklin Electric Co. Inc............. 67,500
----------
137,250
----------
CONSUMER PRODUCTS (2.2%)
2,000 Allen Organ Co. CL B.................. 76,000
----------
FOOD & RELATED (1.8%)
5,000 Seneca Food Corp CL A................. 61,250
----------
FINANCE (3.9%)
10,500 East Texas Financial Services......... 85,313
4,000 First Federal Financial Corp.......... 50,000
----------
135,313
----------
FORESTRY & PAPER PRODUCTS (3.5%)
500 Georgia Pacific Corp. Timber Group.... 11,906
1,500 Greif Brothers Corp. CL A............. 43,781
1,500 Rayonier Inc.......................... 68,906
----------
124,593
----------
METALS & MINING (1.5%)
1,000 Reynolds Metals Company............... 52,688
----------
OIL AND ENERGY (3.9%)
25,000 San Juan Basin Royalty Trust.......... 135,938
----------
REAL ESTATE (1.0%)
2,000 Alico, Inc............................ 36,000
----------
SERVICES (7.6%)
2,000 Chemed Corp........................... 67,000
20,000 Kaneb Services Inc.................... 81,250
2,000 Manpower Inc.......................... 50,375
3,000 UniFirst Corporation.................. 68,438
----------
267,063
----------
TOTAL U.S. COMMON STOCK (32.6%) (COST
$1,126,982).......................... $1,142,345
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
JAPAN (9.3%)
10,000 DaiTokyo Fire & Marine Ins Ltd (18)... $ 35,250
15,000 Dowa Fire & Marine Ins Co Ltd (18).... 55,519
2,500 Fuji Photo Film Co. Ltd (9)........... 92,531
10,000 Nittetsu Mining Co. Ltd (22).......... 25,821
400 Toho Co. (20)......................... 54,567
10,000 Yomeishu Seizo Co. Ltd (13)........... 63,538
----------
327,226
----------
SWITZERLAND (11.6%)
15 Bank for Intl. Settlements (3)........ 95,524
500 Edipresse SA 'Bearer' (25)............ 143,741
200 Kuehne & Nagel Intl. AG (32).......... 167,394
----------
406,659
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
HONG KONG (5.0%)
350,000 CDL Hotels Intl. Ltd (16)............. $ 89,900
200,000 Shaw Brothers Ltd (20)................ 86,480
----------
176,380
----------
FRANCE (4.5%)
1,500 Emin Leydier (24)..................... 64,940
500 Groupe NSC (19)....................... 61,720
600 Rougier SA (14)....................... 29,754
----------
156,414
----------
NEW ZEALAND (3.5%)
10,000 Independent Press Comm. (25).......... 39,465
20,000 Shortland Properties Ltd (27)......... 70,511
50,000 Wrightson Ltd (1)..................... 11,050
----------
121,026
----------
GERMANY (3.3%)
200 Buderus AG (5)........................ 73,876
100 Axel Springer Verlag AG (20).......... 42,043
----------
115,919
----------
NETHERLANDS (2.7%)
2,000 Bosch & Keuning (20).................. 60,645
2,600 European City Estates NV (27)......... 32,365
----------
93,010
----------
MEXICO (2.6%)
500,000 Grupo Fernandez Editores (25)......... 39,626
17,500 Industrias Penoles S.A. de C.V.
(21)................................. 53,004
----------
92,630
----------
SINGAPORE (1.8%)
50,000 DelGro Corp. Ltd (34)................. 64,809
----------
SOUTH AFRICA (1.7%)
3,000 Anglogold Ltd ADR (22)................ 58,688
----------
LATIN AMERICA (1.4%)
10,000 Antofagasta Holding plc (35).......... 29,434
30,308 Ledesma SA (1)........................ 19,112
----------
48,546
----------
BELGIUM (1.2%)
376 Engrais Rosier SA (34)................ 42,615
----------
TURKEY (0.2%)
500 USAS UCAK Servisi (29)................ 7,134
----------
TOTAL FOREIGN COMMON STOCK (48.8%)
(COST $2,207,041).................... $1,711,056
----------
TOTAL COMMON STOCK (81.4%) (COST
$3,334,023).......................... $2,853,401
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
U.S. (1.2%)
3,000 Price Enterprises Inc. Ser. A (29).... $ 41,438
----------
</TABLE>
(continued)
40
<PAGE> 41
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
INDONESIA (4.7%)
10,000 Freeport McMoRan Pfd. 'D' (22)........ $ 117,500
4,000 Freeport McMoRan Pfd. 'C' (22)........ 49,000
----------
166,500
----------
TOTAL FOREIGN PREFERRED STOCK
(5.9%) (COST $374,971)............... $ 207,938
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- -------------------------------------------------------------
<C> <S> <C>
U.S. DOLLAR (1.0%)
$ 50,000 PT Pabrik Kertas Tjiwi Kimia 13.250%
due 08/01/01 (14).................... $ 33,250
----------
TOTAL NON-CONVERTIBLE BONDS
(1.0%) (COST $50,769)................ $ 33,250
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
U.S. DOLLAR (6.1%)
$ 55,000 IRSA Inversiones y Representaciones
4.500% 08/02/03 (27)................. $ 55,963
100,000 International Container Terminal Svcs
Inc. 1.750% 03/13/04 (32)............ 76,500
100,000 Tipco Asphalt Co. 2.750% 09-16-06
(6).................................. 80,500
----------
212,963
----------
NON U.S. DOLLAR (1.9%)
100,000 NZ Shortland Properties Inc. 7.500%
due12/31/98 (27)..................... 35,255
260,000 FF Immobilier Hoteliere 5.000% due
01/01/01 (16)...................... 33,085
----------
68,340
----------
TOTAL CONVERTIBLE DEBENTURES
(8.0%) (COST $319,328)............... $ 281,303
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (5.8%)
$204,000 Ford Motor Credit Corp. 5.970%
01/06/99............................. $ 203,831
----------
ELECTRICAL EQUIPMENT (5.9%)
206,000 Xerox Capital Europe 5.300%
01/07/99............................. 205,818
----------
FINANCE (5.6%)
196,000 American Express 4.000% 01/08/99...... 195,848
----------
INSURANCE (5.3%)
187,000 Prudential Funding Corp. 4.750%
01/04/99............................. 186,926
----------
TOTAL SHORT-TERM NOTES
(22.6%) (COST $792,493).............. $ 792,423
----------
TOTAL HOLDINGS (118.9%)
(COST $4,871,584)(A)................. $4,168,315
----------
CASH & RECEIVABLES, NET OF LIABILITIES
(-18.9%)............................. (661,625)
----------
TOTAL NET ASSETS (100.0%)............. $3,506,690
==========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
FOREIGN CURRENCIES
NZ -- New Zealand Dollar
FF -- French Franc
Industry Classifications
(1) Agriculture
(2) Automotive
(3) Banking
(4) Building Products
(5) Capital Goods
(6) Cement
(7) Chemicals
(8) Computer Products
(9) Consumer Products
(10) Electrical Products
(11) Electronics
(12) Energy and Oil
(13) Food & Beverage
(14) Forest Products
(15) Governmental
(16) Hotels
(17) Health Care
(18) Insurance
(19) Machinery
(20) Media
(21) Metal (non-ferrous)
(22) Mining
(23) Packaging
(24) Paper
(25) Publishing
(26) Rail Equipment
(27) Real Estate
(28) Retailing
(29) Services
(30) Steel
(31) Textile
(32) Transportation
(33) Utilities
(34) Miscellaneous
(35) Holding Companies
The accompanying notes are an integral part of these financial statements.
41
<PAGE> 42
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $4,871,583)............... $4,168,315
Receivable for securities sold............. 100,830
Dividends & accrued interest receivable.... 15,792
Other...................................... 2,742
----------
Total assets............................. 4,287,679
----------
Liabilities:
Accounts payable........................... 73,860
Unrealized loss on forward currency
contracts (note 5)....................... 4,745
Accrued 12b-1 fees (note 6)................ 2,687
Dividends payable.......................... 685,937
Other accrued expenses..................... 13,760
----------
Total liabilities........................ 780,989
----------
Net assets at market value................... $3,506,690
==========
Net assets consist of:
Par value, $.001 per share................. $ 424
Paid-in capital in excess of par value..... 4,244,314
Accumulated undistributed net realized gain
on investments........................... (29,506)
Net unrealized appreciation (depreciation)
on:
Investments (note 1)..................... (703,268)
Foreign currency related transactions.... 195
Forward currency contracts (note 5)...... (4,745)
Undistributed net investment income........ (724)
----------
Net assets at market value................... $3,506,690
==========
Shares outstanding........................... 424,096
Net asset value per share.................... $ 8.27
==========
Maximum offering price per share
($8.27/95%)................................ $ 8.71
==========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 29,195
Dividends
(net of $2,038 foreign taxes withheld).... 56,474
---------
Total investment income................... 85,669
---------
Expenses:
Management fees (note 3).................... 20,017
12b-1 fees (note 6)......................... 5,560
Custodian fees (note 3)..................... 15,955
Directors' fees (note 3).................... 407
Professional fees........................... 1,586
Transfer agent & accounting fees............ 14,035
Filing fees................................. 1,506
Printing, proxy and postage fees............ 898
Organizational expense (note 1)............. 263
Other....................................... 85
---------
Total expenses............................ 60,312
---------
Less expenses voluntarily reduced or
reimbursed (note 3)..................... (13,316)
---------
Net expenses.............................. 46,996
---------
Net investment income..................... $ 38,673
---------
Realized & unrealized gain (loss) on
investments & foreign currency:
Net realized gain (loss) from:
Investments............................... $ 137,426
Forward currency related transactions..... (15,895)
Net increase in unrealized depreciation on:
Investments............................. (494,431)
Foreign currency related transactions... (32,862)
---------
Net loss on investments................. (405,762)
---------
Net decrease in net assets from
operations........................... $(367,089)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE> 43
ONE FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 38,673 $ 76,677
Realized gain on investments and foreign currency related
transactions............................................ 121,531 725,189
Unrealized loss on investments and foreign currency
related transactions.................................... (527,293) (820,703)
---------- ----------
Net decrease in assets from operations................ (367,089) (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........................................... (685,938) (405,742)
---------- ----------
Total dividends and distributions..................... (712,548) (476,409)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 120,105 509,252
Received from dividends reinvested........................ 9,588 211,749
Paid for shares redeemed.................................. (605,448) (1,459,507)
---------- ----------
Decrease in net assets derived from capital share
transactions......................................... (475,755) (738,506)
---------- ----------
Decrease in net assets............................. (1,555,392) (1,233,752)
---------- ----------
Net Assets:
Beginning of period....................................... 5,062,082 6,295,834
---------- ----------
End of period............................................. $3,506,690 $5,062,082
========== ==========
Includes undistributed net investment income of........... $ (724) $ 3,108
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED JUNE 30, NOVEMBER 1, 1994
ENDED ---------------------------- TO
DECEMBER 31, 1998 1998 1997 1996 JUNE 30, 1995
----------------- ------ ------ ------ ----------------
<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................... (0.90) (0.26) 0.99 1.61 0.13
------ ------ ------ ------ ------
Total income (loss) from investment operations...... (0.81) (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.......................... $ 8.27 $10.76 $11.79 $11.48 $10.01
====== ====== ====== ====== ======
Total return............................................ (7.52)%(b) (1.05)% 11.11% 17.84% 2.99%(b)
Ratios and supplemental data:
Ratios net of fees reimbursed by advisor (c):
Expenses.............................................. 2.17%(a) 2.13% 2.02% 2.14% 2.05%(a)
Net investment income................................. 1.79%(a) 1.28% 1.78% 1.49% 2.85%(a)
Ratios assuming no fees reimbursed by advisor:
Expenses.............................................. 2.79%(a) 2.53% 2.21% 2.14% 2.05%(a)
Net investment income................................. 1.17%(a) 0.88% 1.59% 1.49% 2.85%(a)
Portfolio turnover rate................................. 38% 25% 6% 26% 8%
Net assets at end of period (millions).................. $ 3.5 $ 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.
The accompanying notes are an integral part of these financial statements.
43
<PAGE> 44
THIS PAGE INTENTIONALLY LEFT BLANK
44
<PAGE> 45
CORE GROWTH PORTFOLIO
ONE FUND, INC.
OBJECTIVE
To provide long-term capital growth. Current income is incidental. Normally at
least 90% of the assets of this portfolio will be invested in common stocks.
Selection of stocks is not limited with regard to whether stocks are
exchange-listed or dividend-paying or whether they are issued by companies of
any particular size.
PERFORMANCE AS OF DECEMBER 31, 1998
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<CAPTION>
Without With max.
sales charge sales charge
<S> <C> <C>
One-year 6.80% 1.47%
Since inception
(11/1/96) (0.51)% (2.85)%
</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 can sum up the second half of 1998 in one word -- volatile. The large-cap
indexes hit their summer peak in mid-July, then lost ground through the rest of
July and hit a low for the third quarter on the last day of August. In
September, stocks staged a healthy rebound, but did not recover to their levels
at the end of the second quarter. The market declined significantly in early
October, only to rebound even more dramatically through the end of the year.
Throughout the year, small-cap and mid-cap stocks did not participate fully when
the market was going up, but they certainly participated when the market went
down. We entered the fourth quarter with the S&P 500 Index up 6% and the Russell
2000 Index down 16% for the year -- a remarkable divergence of returns.
We think that smaller stocks will participate more fully in any market increases
this year for several reasons. Earnings growth has slowed drastically for the
larger companies that make up the S&P 500 Index. At the same time earnings
growth in the small and mid-cap universe remains strong and valuations are at or
near all time lows. Finally, while emerging market economies continue to be a
concern, we believe any improvement in these countries should make investors
more willing to hold less liquid stocks.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading. It
is not open to direct investment.
TOP 10 STOCKS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<C> <S> <C>
1. America On Line 3.2
2. Citrix Systems 3.0
3. Guidant Corp 2.7
4. EMC Corp 2.4
5. MCI Worldcom Inc 2.2
6. Cisco Systems 2.2
7. Premier Parks 2.1
8. Jacor Communications 2.0
9. Macromedia 2.0
10. United Rentals Inc 2.0
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Computer and Related 24.8
Business Services 11.9
Oil, Energy, and Natural Gas 9.7
Electrical Equipment 4.7
Medical and Related 4.7
</TABLE>
45
<PAGE> 46
ONE FUND INC.
CORE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<C> <S> <C>
ADVERTISING (1.7%)
300 *Getty Images Inc.................... $ 5,156
2,400 *Outdoor Systems Inc................. 72,000
-------------
77,156
-------------
AEROSPACE (0.6%)
900 *Kellstrom Industries................ 25,875
-------------
AUTOMOTIVE & RELATED (1.7%)
4,000 *Harley Davidson, Inc................ 75,800
-------------
BROADCAST RADIO & TV (4.0%)
900 *Citadel Communications.............. 23,288
2,700 *Fox Entertainment Group............. 68,006
1,400 *Jacor Communications................ 90,125
-------------
181,419
-------------
BUSINESS SERVICES (4.6%)
1,300 *Abacus Direct Corp.................. 59,150
1,600 *Acxiom Corp......................... 49,600
1,000 *Documentum Inc...................... 53,438
2,200 *RWD Technologies, Inc............... 47,575
-------------
209,763
-------------
COMMUNICATIONS (8.5%)
4,200 *Amdocs Ltd.......................... 71,925
1,700 *American Tower Corp................. 50,256
900 *Aware Inc. Mass..................... 24,469
1,000 *Geotel Communication Corp........... 37,250
1,000 *Global Crossing..................... 45,125
1,400 *MCI Worldcom Inc.................... 100,450
1,500 *Univision Communications............ 54,281
-------------
383,756
-------------
COMPUTER & RELATED (14.1%)
1,500 *BMC Software Inc.................... 66,844
1,400 *Citrix Systems...................... 135,888
1,100 *Compuware Corp...................... 85,938
1,100 *Dell Computer Corp.................. 80,506
1,300 *EMC Corp............................ 110,500
2,700 *Macromedia Inc...................... 90,956
400 *Mercury Interactive Corp............ 25,300
300 *Microsoft Corp...................... 41,606
-------------
637,538
-------------
DRUGS (1.8%)
200 *Medimmune Inc....................... 19,888
1,000 *Watson Pharmaceuticals.............. 62,875
-------------
82,763
-------------
ELECTRICAL EQUIPMENT (10.5%)
2,000 *Advanced Micro Devices Inc.......... 57,875
900 *Altera Corp......................... 54,788
1,700 *Applied Micro Circuits Corp......... 57,747
3,000 *Celestica Inc....................... 74,062
700 Linear Technology................... 62,693
800 *Transwitch Corp..................... 31,150
1,200 *Uniphase Corp....................... 83,250
1,200 *Vitesse Semiconductor Corp.......... 54,750
-------------
476,315
-------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT & LEISURE (4.9%)
1,000 *Cinar Films Inc..................... $ 25,375
1,700 Carnival Corp....................... 81,600
3,200 *Premier Parks....................... 96,800
1,500 *Sunterra Corp....................... 22,500
-------------
226,275
-------------
FINANCIAL SERVICES (1.1%)
1,400 Newcourt Credit Group Inc........... 48,912
-------------
FOOD & RELATED (2.0%)
1,400 *Suiza Foods Corp.................... 71,313
400 *Whole Food Market Inc............... 19,350
-------------
90,663
-------------
HOUSING, FURNITURE & RELATED (1.2%)
2,000 *Restoration Hardware................ 53,750
-------------
INDUSTRIAL SERVICES (1.2%)
1,200 Waste Management Inc................ 55,950
-------------
INTERNET SERVICE PROVIDER (4.3%)
1,000 America On Line Inc................. 144,750
200 *Mindspring Enterprises.............. 12,213
1,800 *PSINet Inc.......................... 37,575
-------------
194,538
-------------
MACHINERY (2.6%)
500 Danaher Corp........................ 27,156
2,800 *United Rentals Inc.................. 92,750
-------------
119,906
-------------
MEDICAL & RELATED (14.1%)
900 Cardinal Health Inc................. 68,287
1,100 Guidant Corp........................ 121,275
4,125 *Health Management Assoc. Inc........ 89,203
1,500 *Healthcare Financial Partners....... 59,813
500 *Immunex Corp........................ 62,906
1,400 *Medical Manager Corp................ 43,925
2,000 *Medquist Inc........................ 79,000
500 Pfizer Inc.......................... 62,719
600 *Province Healthcare Co.............. 21,525
1,800 *Theragenics Corp.................... 30,262
-------------
638,915
-------------
NETWORK PRODUCTS & SERVICES (8.3%)
1,300 *Ascend Communications Inc........... 85,475
1,000 *Check Point Software................ 45,812
1,050 *Cisco Systems....................... 97,453
900 *Network Assoc. Inc.................. 59,625
2,000 *New Era of Networks Inc............. 88,000
-------------
376,365
-------------
OIL, ENERGY & NATURAL GAS (1.8%)
2,300 *BJ Services Co...................... 35,938
1,000 *Friede Goldman Intl. Inc............ 11,375
300 *Hanover Compress.................... 7,706
900 *Tuboscope Inc....................... 7,312
2,400 *Varco International Inc............. 18,600
-------------
80,931
-------------
</TABLE>
(continued)
46
<PAGE> 47
ONE FUND, INC.
CORE GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<C> <S> <C>
RETAIL (6.2%)
200 *CDW Computer Centers Inc............ $ 19,187
1,200 *Duane Reade Inc..................... 46,200
1,300 Home Depot Inc...................... 79,544
1,500 *Linens N Things Inc................. 59,438
1,700 *Staples Inc......................... 74,269
-------------
278,638
-------------
TRANSPORTATION (1.4%)
1,900 *Motivepower Industries Inc.......... 61,156
-------------
TOTAL COMMON STOCK (96.6%)
(COST $3,302,948).................. $ 4,376,384
-------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (2.0%)
$89,000 Star Bank 3.5% due 01/04/99,
repurchase price $89,035
collateralized by GNMA
certificates, pool #837, due
02/20/24 (cost $89,000)........... $ 89,000
-------------
TOTAL REPURCHASE AGREEMENTS (2.0%)
(COST $89,000).................... $ 89,000
-------------
TOTAL HOLDINGS (98.6%)
(COST $3,391,948) (a)............. $ 4,465,384
-------------
CASH & RECEIVABLES, NET OF
LIABILITIES (1.4%)................ 64,104
-------------
TOTAL NET ASSETS (100.0%).......... $ 4,529,488
=============
</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.
47
<PAGE> 48
ONE FUND, INC.
CORE GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (Cost $3,391,948)............... $ 4,465,384
Cash in bank............................... 32
Receivable for securities sold............. 80,596
Receivable for fund shares sold............ 804
Dividends & accrued interest receivable.... 51
Other...................................... 14,293
-----------
Total assets............................. 4,561,180
-----------
Liabilities:
Payable for securities purchased........... 20,185
Payable for fund share redeemed............ 1,320
Payable for investment management services
(note 3)................................. 1,776
Accrued 12b-1 fees (note 6)................ 2,424
Other accrued expenses..................... 5,967
-----------
Total liabilities........................ 31,672
-----------
Net assets at market value................... $ 4,529,488
===========
Net assets consist of:
Par value, $.001 per share................. $ 458
Paid-in capital in excess of par value..... 4,323,745
Accumulated net realized income on
investments.............................. (868,151)
Net unrealized appreciation on
investments.............................. 1,073,436
-----------
Net assets at market value................... 4,529,488
===========
Shares outstanding........................... 457,925
Net asset value per share.................... $ 9.89
===========
Maximum offering price per share
($9.89/95%)................................ $ 10.41
===========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 3,560
Dividends.................................. 838
---------
Total investment income.................. 4,398
---------
Expenses:
Management fees (note 3)................... 20,204
12b-1 fees (note 6)........................ 5,317
Custodian fees (note 3).................... 2,462
Directors' fees (note 3)................... 351
Professional fees.......................... 1,512
Transfer agent and accounting fees......... 14,020
Printing, proxy and postage fees........... 831
Other...................................... 87
---------
Total expenses........................... 44,764
---------
Less expenses voluntarily reduced or
reimbursed (note 3).................... (6,557)
---------
Net expenses............................. 38,207
---------
Net investment loss...................... (33,809)
---------
Realized & unrealized gain (loss) on
investments:
Net realized loss from investments......... (348,009)
Net increase in unrealized appreciation on
investments.............................. 21,093
---------
Net loss on investments.................. (326,916)
---------
Net decrease in net assets from
operations............................. $(360,725)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
48
<PAGE> 49
ONE FUND, INC.
CORE GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
<S> <C> <C>
From operations:
Net investment loss....................................... $ (33,809) $ (89,956)
Realized loss on investments.............................. (348,009) (365,825)
Unrealized gain on investments............................ 21,093 836,872
----------- -----------
Net increase (decrease) in assets from operations..... (360,725) 381,091
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 529,934 728,721
Paid for shares redeemed.................................. (961,373) (1,271,044)
----------- -----------
Decrease in net assets derived from capital share
transactions......................................... (431,439) (542,323)
----------- -----------
Decrease in net assets............................. (792,164) (161,232)
----------- -----------
Net Assets:
Beginning of period....................................... 5,321,652 5,482,884
----------- -----------
End of period............................................. $ 4,529,488 $ 5,321,652
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED NOVEMBER 1, 1996
DECEMBER 31, 1998 JUNE 30, 1998 TO JUNE 30, 1997
----------------- ------------- ----------------
<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....................................... (0.07) (0.16) (0.08)
Net realized & unrealized gain (loss) on investments...... (0.64) 0.90 (0.06)
------ ------ ------
Total income (loss) from investment operations.......... (0.71) 0.74 (0.14)
------ ------ ------
Net asset value, end of period.............................. $ 9.89 $10.60 $ 9.86
====== ====== ======
Total return................................................ (6.70)%(b) 7.51% (1.40)%(b)
Ratios and supplemental data:
Ratio net of fees waived or reimbursed by advisor (c):
Expenses.................................................. 1.78% (a) 2.06% 1.35% (a)
Net investment loss....................................... (1.58)%(a) (1.65)% (0.87)%(a)
Ratios assuming no fees waived or reimbursed by advisor:
Expenses.................................................. 2.09% (a) 2.12% 1.40% (a)
Net investment loss....................................... (1.88)%(a) (1.70)% (0.92)%(a)
Portfolio turnover rate..................................... 84% 116% 80%
Net assets at end of period (millions)...................... $ 4.5 $ 5.3 $ 5.5
</TABLE>
- ---------------
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) The advisor has reimbursed certain operating expenses of the Core Growth
Portfolio.
The accompanying notes are an integral part of these financial statements.
49
<PAGE> 50
ONE FUND, INC. December 31, 1998 (Unaudited)
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:
o Money Market Portfolio -- current income consistent with preservation of
capital and liquidity.
o Tax-Free Income Portfolio -- high current income exempt from federal
income taxes.
o Income Portfolio -- high current income. Preservation of capital is a
secondary objective.
o Income & Growth Portfolio -- moderate income with the potential for
increasing income over time. Growth of capital is also a primary
objective.
o Growth Portfolio -- long-term capital growth.
o Small Cap Portfolio -- maximum capital growth by investing primarily in
common stocks of small- and medium-sized companies.
o International Portfolio -- long-term capital growth by investing primarily
in common stocks of foreign companies.
o 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.
o 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 as of the close of trading on the Exchange.
Short-term investments (investments with remaining maturities of 60 days or
less) are valued at amortized cost and fixed income securities are valued by
using market quotations, or independent pricing services which use prices
provided by market makers or estimates of market value obtained from yield
data relating to instruments or securities with similar characteristics. All
investments and cash quoted in foreign currencies are valued daily in U.S.
dollars on the basis of the foreign currency exchange rates prevailing at
the time of 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
50
<PAGE> 51
ONE FUND, INC. December 31, 1998 (Unaudited)
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.
51
<PAGE> 52
ONE FUND, INC. December 31, 1998 (Unaudited)
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 $33,809, resulting in a
reclassification adjustment to decrease Paid-in capital in excess of par
value by $162,594. This reclassification has no effect on net assets or net
asset value per share.
For federal income tax purposes, the Tax-Free Income, Income and Core Growth
Portfolios had net capital losses of $111,345, $55,474, and $520,142
respectively at June 30, 1998. If not offset by subsequent capital gains,
$6,302 will expire June 30, 2003 in the Income Portfolio, $7,298 and $49,166
will expire June 30, 2004 in the Tax-Free Income and Income Portfolios,
respectively, $4,042 and $154,317 will expire June 30, 2005 in the Tax-Free
Income and Core Growth Portfolios, respectively and $80, $100,005, and
$365,825 will expire June 30, 2006 in the Money Market, Tax-Free Income, and
Core Growth Portfolios, respectively. The Board of Directors does not intend
to authorize a distribution of any net realized gain for the portfolios until
the capital loss carryovers have been offset or expire.
It is the policy of the Fund to distribute to its shareholders substantially
all of its taxable income, thus gaining relief from federal income taxes
under provisions of current tax regulations applicable to investment
companies of this type. Accordingly, no provision for federal income taxes
has been made.
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 December 31, 1998 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.......... 822,560 296,697 4,358,357 4,846,914 712,273 1,771,577 266,320 1,147,167
Depreciation.......... (1,287) (53,620) (628,185) (854,517) (731,376) (2,327,253) (969,588) (73,731)
Net unrealized:
Appreciation.......... 821,273 243,077 3,730,172 3,992,397 0 0 0 1,073,436
Depreciation.......... 0 0 0 0 (19,103) (555,676) (703,268) 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 Growth Portfolios.
ONLIC and its affiliates have also purchased additional shares of each
portfolio and as of December 31, 1998 the additional shares owned were as
follows: 8,468,694 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, 237,631 shares of the
52
<PAGE> 53
ONE FUND, INC. December 31, 1998 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Growth Portfolio, 211,503 shares of the Small Cap Portfolio, 267,042 shares
of the Global Contrarian Portfolio, and 250,000 shares of the Core Growth
Portfolio.
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities) from July 1, 1998 to December 31, 1998 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 -- 1,785,543 1,779,362 848,199 4,772 626,106 2,927,040
Sales....................... -- 20,635 2,515,647 -- -- -- -- --
U.S. Govt Obligations:
Purchases................... -- -- -- -- -- -- -- --
Sales....................... -- -- -- -- -- -- -- --
</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............................................... 0.30% 0.60% 0.50% 0.50% 0.50% 0.65%
mil 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 Societe Generale Asset Management
Corporation (SGAM) fees at an annual rate of 0.65% of the average daily net
asset values for directing the investment and reinvestment of each
portfolios' assets pursuant to a sub-advisory agreement between ONI and SGAM
dated May 1, 1996. For the Core Growth Portfolio, ONI is paid a fee at an
annual rate of 0.95% of the portfolio's average daily net asset value. ONI
then pays Pilgrim Baxter & Associates (PBA) a fee at an annual rate of 0.65%
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.
Effective January 1, 1999 Federated Investment Counseling ("FIC") replaced
SGAM as the sub-advisor for the International and Global Contrarian
Portfolios. As compensation for their services FIC will receive from ONI
fees at annual rate of (i) 0.40% of the fist $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.
ONI is presently waiving management fees equal to 0.15% of average net
assets for certain portfolios. Management fees waived by ONI for the six
months ended December 31, 1998 were $13,045, $5,497, $5,064, $10,773, $8,894
and $3,547 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,
53
<PAGE> 54
ONE FUND, INC. December 31, 1998 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12b-1 fees, taxes and interest, in excess of 1% of their average daily net
assets. For the six months ended December 31, 1998, the reimbursement was
$2,266, $6,557, $17,467, and $13,316 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 six months ended December 31 and the year
ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
MONEY MARKET TAX-FREE INCOME INCOME
------------------------- ------------------- -------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12-31-98 6-30-98 12-31-98 6-30-98 12-31-98 6-30-98
----------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales....................... 12,643,363 21,996,755 23,310 40,258 19,724 76,483
Capital shares issued on reinvested dividends........ 223,928 455,744 1,399 2,820 2,813 7,995
Capital shares redeemed.............................. 11,179,840 20,456,024 8,100 20,443 50,887 70,795
</TABLE>
<TABLE>
<CAPTION>
INCOME & GROWTH GROWTH SMALL CAP
------------------------- ------------------- -------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12-31-98 6-30-98 12-31-98 6-30-98 12-31-98 6-30-98
----------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales....................... 66,461 216,315 60,460 106,470 29,990 90,612
Capital shares issued on reinvested dividends........ 3,271 39,848 0 35,559 0 21,133
Capital shares redeemed.............................. 150,380 123,916 137,302 138,800 67,416 65,628
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL GLOBAL CONTRARIAN CORE GROWTH
------------------------- ------------------- -------------------
6 MONTHS 6 MONTHS YEAR 6 MONTHS YEAR
ENDED YEAR ENDED ENDED ENDED ENDED ENDED
12-31-98 6-30-98 12-31-98 6-30-98 12-31-98 6-30-98
----------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales....................... 27,600 202,687 13,395 43,691 62,951 74,120
Capital shares issued on reinvested dividends........ 0 178,279 0 19,016 0 0
Capital shares redeemed.............................. 261,675 504,238 59,784 126,384 107,127 127,889
</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 six months ended December 31, 1998 were approximately $5,015,
$3,814, $19,457, $24,754, $6,625, $8,554, $2,691, and $7,667 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
54
<PAGE> 55
ONE FUND, INC. December 31, 1998 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
fixed price on a future date as a hedge against either specific transactions
or portfolio positions. The objective of the Fund's foreign currency hedging
transactions is to reduce the risk that the U.S. dollar value of the Fund's
securities denominated in foreign currency will decline in value due to
changes in foreign currency exchange rates. As of December 31, 1998, 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 12/31/98 AMOUNT TYPE 12/31/98 GAIN LOSS
---------- ------------ ------------- ---------- --------- ------------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
07/15/99 360,000 Australian $ 219,780 225,475 U.S. Dollar 225,475 $ 5,695 --
04/07/99 911,500 Swiss Franc 669,482 660,005 U.S. Dollar 660,005 -- $ (9,477)
07/22/99 296,000 Swiss Franc 218,903 222,556 U.S. Dollar 222,556 3,654 --
04/14/99 553,000 Deutsche Mark 333,846 331,609 U.S. Dollar 331,609 -- (2,237)
04/14/99 45,657 U.S. Dollar 45,657 76,000 Deutsche Mark 45,881 225
04/21/99 454,000 French Franc 81,666 81,071 U.S. Dollar 81,071 -- (594)
07/01/99 5,646,000 French Franc 1,017,710 1,023,197 U.S. Dollar 1,023,197 5,487 --
04/28/99 125,820,000 Japanese Yen 1,125,453 963,142 U.S. Dollar 963,142 -- (162,312)
07/29/99 124,916,000 Japanese Yen 1,130,513 1,099,613 U.S. Dollar 1,099,613 -- (30,900)
05/14/99 390,000 New Zealand $ 205,100 195,995 U.S. Dollar 195,995 -- (9,107)
10/05/99 388,000 New Zealand $ 208,162 186,046 U.S. Dollar 186,046 -- (22,116)
---------- ---------- ------- ---------
$5,256,272 $5,034,590 $15,061 $(236,743)
========== ========== ======= =========
</TABLE>
GLOBAL CONTRARIAN 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 12/31/98 AMOUNT TYPE 12/31/98 GAIN LOSS
---------- ------------ ------------- ---------- --------- ------------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
04/28/99 17,627,000 Japanese Yen 157,673 156,102 U.S. Dollar 156,102 -- (1,571)
07/29/99 3,684,000 Japanese Yen 33,341 32,430 U.S. Dollar 32,430 -- (911)
11/13/99 11,720,000 Japanese Yen 112,073 109,810 U.S. Dollar 109,810 -- (2,263)
---------- --------- ------ --------
$ 303,087 $ 298,342 -- $ (4,745)
========== ========= ====== ========
</TABLE>
(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.
55
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56
