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ONE FUND, INC.
SUPPLEMENT DATED SEPTEMBER 1, 1999 TO THE
PROSPECTUS DATED NOVEMBER 1, 1998
This prospectus supplement discloses changes to the November 1, 1998
prospectus. These include:
> a plan of merger for certain portfolios
> a new sub-advisory agreement and fees for the International and
Global Contrarian portfolios
> a new portfolio co-manager and sub-advisory fees for the Core Growth
portfolio
> changes to the investment policies of the International and Global
Contrarian Portfolios
PLAN OF MERGER
The Board of Directors has approved a plan of merger and liquidation under
which, if approved by the shareholders of the portfolios to be merged and
liquidated, the Global Contrarian portfolio will be merged into the
International portfolio, and the Tax-Free Income portfolio will be merged into
the Income portfolio.
If the mergers are approved by the owners of a majority of the outstanding
shares of each of the Global Contrarian and Tax-Free Income portfolios (the
"liquidating" portfolios), each shareholder of the Global Contrarian portfolio
shall receive a number of shares, including fractional shares, of the
International portfolio equal in dollar value to the number of whole and
fractional shares the shareholder owns in the Global Contrarian portfolio, and
each shareholder of the Tax-Free Income portfolio shall receive a number of
shares, including fractional shares, of the Income portfolio equal in dollar
value to the number of whole and fractional shares the shareholder owns in the
Tax-Free Income portfolio. The two liquidating portfolios will then be
terminated.
FEDERATED GLOBAL INVESTMENT MANAGEMENT CORP.
The sub-adviser of the International and Global Contrarian portfolios is
Federated Global Investment Management Corp. ("FGIM"). It has replaced Societe
Generale Asset Management Corp. ("SGAM"). The sub-advisory fees paid by the
Adviser to FGIM for the International portfolio are at an annual rate of 0.40%
of the first $200 million of the average daily total net assets and 0.35% of
average daily total net assets in excess of $200 million of that portfolio. The
Adviser is waiving 0.05% of its 0.90% investment advisory fee for the
International portfolio. The sub-advisory fee for the Global Contrarian
portfolio is 0.75% of the first $100 million and 0.65% of average daily total
net assets in excess of $100 million of that portfolio.
All references in the prospectus to SGAM are changed to FGIM.
The lead portfolio manager of the International and Global Contrarian portfolios
is Drew Collins, senior vice president of FGIM. Mr. Collins has directed
portfolio management and investment research of global equity and fixed income
funds for FGIM since 1995. For one year prior to that he was vice president and
international portfolio manager of Arnhold and S. Bleichroeder, Inc., and for
eight years before that he was a portfolio manager for College Retirement
Equities Fund. Mr. Collins is a chartered financial analyst with a bachelor's
degree from Oberlin College and a master of business administration degree in
finance from the Wharton School of the University of Pennsylvania.
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CORE GROWTH PORTFOLIO
The Sub-Advisory Agreement with PBA has been amended to provide for the Adviser
to pay PBA fees accruing at the following rates on and after January 1, 1999:
0.65% of the first $50 million of the average daily net assets of the Core
Growth Portfolio, 0.60% of the next $100 million and 0.50% of all average daily
net assets in excess of $150 million.
Michael Hahn has replaced Ellen McGee as co-manager of the Core Growth Portfolio
primarily responsible for the portfolio's small and micro cap investments. He
has been a portfolio manager for PBA since 1996. For two years prior to that he
was an assistant portfolio manager for First National Bank of Maryland and spent
a year as a financial accountant for International Business Machines. Mr. Hahn
is a chartered financial analyst with a bachelor's degree in finance from
Pennsylvania State University and a master of business administration degree
from the University of Maryland.
FUNDAMENTAL INVESTMENT POLICIES, INTERNATIONAL AND GLOBAL CONTRARIAN PORTFOLIOS
The following are the new fundamental investment policies related to the
International and Global Contrarian Portfolios:
1. The portfolio will not issue senior securities, except that the
portfolio may borrow money directly or through reverse repurchase
agreements in amounts not in excess of one-third of the value of its total
assets; provided that, while borrowings and reverse repurchase agreements
outstanding exceed 5% of the portfolio's total assets, any such borrowings
will be repaid before additional investments are made.
2. The portfolio will not purchase securities if, as a result of such
purchase, 25% or more of the portfolio's total assets would be invested in
any one industry. However, the portfolio may at any time invest 25% or more
of its total assets in cash or cash items and securities issued and/or
guaranteed by the U.S. government, its agencies or instrumentalities.
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3. The portfolio will not purchase or sell real estate, although it
may invest in securities of companies whose business involves the purchase
or sale of real estate or in securities secured by real estate or interests
in real estate.
4. The portfolio will not lend any of its assets, except the
portfolio's securities, up to one-third of its total assets. This shall not
prevent the portfolio from purchasing or holding corporate or U.S.
government bonds, debentures, notes, certificates of indebtedness or other
debt securities of an issuer, entering into repurchase agreements, or
engaging in other transactions which are permitted by the portfolio's
investment objectives and policies.
5. The portfolio will not underwrite any issue of securities, except
as the portfolio may be deemed to be an underwriter under the Securities
Act of 1933 in connection with the sale of securities in accordance with
its investment objectives, policies, and limitations.
6. With respect to 75% of its total assets, the portfolio will not
purchase the securities of any one issuer (other than cash, cash items, or
securities issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities) if, as a result, more than 5% of its total assets would be
invested in the securities of that issuer. Also, the portfolio will not
purchase more than 10% of any class of the outstanding voting securities of
any one issuer. For these purposes, the portfolio considers common stock
and all preferred stock of an issuer each as a single class, regardless of
priorities, series, designations, or other differences.
7. The portfolio will not purchase any securities on margin, but it
may obtain such short-term credits as are necessary for clearance of
transactions. The deposit or payment by the portfolio of initial or
variation margin in connection with financial futures contracts or related
options transactions is not considered the purchase of a security on
margin.
8. The portfolio will not purchase or sell commodities, except that
the portfolio may purchase and sell financial futures contracts and related
options.
The following new nonfundamental policies have been approved by the Board
of Directors:
9. The portfolio will not pledge, mortgage or hypothecate any assets
except to secure permitted borrowings. In those cases, the portfolio may
pledge, mortgage or hypothecate assets having a market value not exceeding
the lesser of the dollar amounts borrowed or 15% of the value of its total
assets at the time of borrowing.
10. The portfolio will not sell securities short unless during the
time the short position is open, the portfolio owns an equal amount of the
securities sold or securities readily and freely convertible into or
exchangeable, without payment of additional consideration, for securities
of the same issue as, and equal in amount to, the securities sold short;
and not more than 10% of the portfolio's net assets (taken at current
value) is held as collateral for such sales at any one time.
11. The portfolio will not invest more than 15% of its net assets in
illiquid securities, including, among others, repurchase agreements
providing for the settlement more than seven days after notice, and certain
restricted securities not determined by the Board of Directors to be
liquid.
