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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1998
Securities Act Registration No. 33--66080
Investment Company Act Registration No. 811-7874
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-lA
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
POST-EFFECTIVE AMENDMENT NO. 8 [ X ]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [ X ]
OF 1940
AMENDMENT NO. 10 [ X ]
THE ONE GROUP(R) INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
THREE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(Address of Principal Executive Offices)
(614) 249-7111
(Registrant's Telephone Number)
CHRISTOPHER A. CRAY
THREE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
Copies To:
Alan G. Priest, Esquire Elizabeth Davin, Esquire
Ropes & Gray Druen, Dietrich, Reynolds & Koogler
One Franklin Square One Nationwide Plaza
1301 K Street, N.W., Suite 800E Columbus, Ohio 43216
Washington, D.C. 20005
Approximate Date of Proposed Public Offering: Immediately upon effectiveness
It is proposed that this filing will become effective (check appropriate box)
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Immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(1)
----
on (DATE) pursuant to paragraph (a)(1)
----
X 75 days after filing pursuant to paragraph (a)(2)
----
on (DATE) pursuant to paragraph (a)(2) of Rule 485.
----
If appropriate, check the following box:
post-effective amendment designates a new effective date for a
---- previously filed post-effective amendment.
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THE ONE GROUP(R) INVESTMENT TRUST
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
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1. Cover Page .................................. Cover Page
2. Synopsis .................................... About the Funds
3. Financial Highlights ........................ Not Applicable; New Funds
4. General Description About the Funds, More About the
of Registrant ............................. Funds, Details About the Funds' Investment Practices and Policies
5. Management of the Fund ...................... About the Funds; More About the Funds; Organization & Management of the Funds;
6. Capital Stock and Other ..................... More About the Funds
Securities
7. Purchase of Securities ...................... More About the Funds
Being Offered
8. Redemption or Repurchase .................... More About the Funds
9. Pending Legal Proceedings ................... Inapplicable
<CAPTION>
STATEMENT OF
ADDITIONAL INFORMATION
FORM N-1A PART B ITEM CAPTION
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<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Trust; Additional Information -
Description of Shares
13. Investment Objective and Policies Investment Objectives and Policies
14. Management of the Funds Management of the Trust
15. Control Persons and Principal Additional Information -
</TABLE>
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<TABLE>
<S> <C> <C>
Holders of Securities Miscellaneous
16. Investment Advisory and Other
Services Management of the Trust
17. Brokerage Allocation Management of the Trust - Portfolio
Transactions
18. Capital Stock and Other Securities Valuation; Additional
Information Regarding the
Calculation of Per Share Net Asset Value;
Additional Purchase and
Redemption Information;
Additional Information
19. Purchase, Redemption and Pricing of Valuation; Additional
Securities Being Offered Information Regarding the
Calculation Per Share Net Asset Value;
Additional Purchase and Redemption
Information; Management of the
Trust
20. Tax Status Investment Objectives and Policies -
Additional Tax Information Concerning
All Funds
21. Underwriters Not applicable
22. Calculation of Performance Data Additional Information - Calculation of
Performance Data
23. Financial Statements New Funds -- None Available
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of the Registration Statement.
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Part A
Part A of Post Effective Amendment No. 7 (filed April 13, 1998) to The One Group
Investment Trust=s Registration Statement on Form N-1A for The One Group
Investment Trust Government Bond Fund, The One Group Investment Trust Asset
Allocation Fund, The One Group Investment Trust Growth Opportunities Fund,
The One Group Investment Trust Large Company Growth Fund, and The One Group
Investment Trust Equity Index Fund is incorporated herein by reference.
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THE ONE GROUP(R) INVESTMENT TRUST
Bond Fund
Value Growth Fund
Mid Cap Opportunities Fund
Mid Cap Value Fund
Prospectus
December 21, 1998
This prospectus describes four mutual funds (the "Funds") with a
variety of investment objectives, including capital appreciation, current
income, long-term capital growth and growth of income, and total return. The
shares of the Funds are sold to: (i) certain separate accounts to fund variable
annuity and variable life contracts issued by life insurance companies; and (ii)
qualified pension and retirement plans. The information in this prospectus is
important. Please read it carefully before you invest, and save it for future
reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: O ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED BY BANK ONE CORPORATION OR ITS AFFILIATES; O ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY FEDERAL OR
STATE GOVERNMENTAL AGENCY; O INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
A BRIEF PREVIEW OF THE FUNDS
ABOUT THE FUNDS
Bond Fund
Value Growth Fund
Mid Cap Opportunities Fund
Mid Cap Value Fund
MORE ABOUT THE FUNDS
Portfolio Quality
Illiquid Investments
Special Risk Considerations
Shareholder Rights
Questions
Share Redemption
Net Asset Value
Dividends
Tax Status
ORGANIZATION AND MANAGEMENT OF THE FUNDS The Funds The Board of Trustees The
Advisor The Distributor The Administrator The Transfer Agent and Dividend
Paying Agent The Custodian and the Sub-Custodian Expenses of the Funds Year
2000
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES
Investment Practices
Investment Risks
Investment Policies
Temporary Defensive Position
ADDITIONAL INFORMATION
Performance
APPENDIX: DESCRIPTION OF RATINGS
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE STATEMENT
OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ONE
GROUP INVESTMENT TRUST.
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A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP INVESTMENT TRUST FUNDS?
The Funds are designed for a variety of investment objectives, including capital
appreciation, current income, long-term capital growth and growth of income, and
total return. Each Fund pursues a different objective and involves different
risks. Please read about each Fund before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Bond Fund (the "Bond Fund") will invest in intermediate and long-term debt
securities including U.S. Government obligations, corporate obligations, foreign
debt obligations, and mortgage-backed securities. The Value Growth Fund, the
Mid Cap Opportunities Fund, and the Mid Cap Value Fund (collectively, the
"Equity Funds") will invest in a variety of equity securities, including common
stocks. The Equity Funds also may invest in debt securities and preferred stocks
which are convertible into common stock. The Funds may invest in securities of
foreign issuers and lend their securities.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The Bond Fund invests in fixed-income investments that are subject to market
fluctuations as a result of changes in interest rates. As a result, the value of
investments in the Bond Fund may decrease during periods of rising interest
rates and increase during periods of declining interest rates. In addition, the
Bond Fund invests in mortgage-related securities which may have significantly
greater price and yield volatility than traditional fixed-income securities.
Fixed income investments are also subject to credit risk -- the risk that the
issuer will be unable to meet its repayment obligation. The Equity Funds invest
in equity securities that are more volatile and carry more risk than some other
forms of investments. These risks include "stock market risk" meaning that stock
prices in general may decline over short or extended periods of time. All of the
Funds may invest in derivative securities and foreign securities. These
securities may expose the Funds to risks that are different from investments in
traditional securities or U.S. securities, respectively. Please note that an
investment in the Funds is not a deposit of BANK ONE CORPORATION or its
affiliates and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. For more information about risks,
please read "More About the Funds" and "Investment Risks."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment Advisors"), an
indirect subsidiary of BANK ONE CORPORATION, serves as the advisor of the Funds.
Banc One Investment Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its services and compensation
can be found in the Prospectus under the headings "The Advisor."
HOW WILL SHARES BE PURCHASED AND REDEEMED?
Shares of the Funds will be purchased by separate accounts of insurance
companies to fund variable annuity and variable life contracts ("Insurance
Contracts") owned by you and other policy holders. In addition, shares of the
Funds may be made available for purchase by qualified pension and retirement
plans ("Qualified Plans"). For information concerning the purchase and
redemption of shares through Insurance Contracts or Qualified Plans, refer to
the literature that you received from your insurance agent or plan
administrator.
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THE ONE GROUP(R) Investment Trust Bond Fund
INVESTMENT OBJECTIVE
The Fund seeks to earn a high level of current income and total return by
investing primarily in a diversified portfolio of short, intermediate and
long-term debt securities.
INVESTMENT STRATEGY
The Fund invests in all types of debt securities rated as investment grade, as
well as convertible securities, preferred stock, and loan participations. The
Fund's weighted average maturity will normally range between six and twelve
years, although the Fund may shorten its weighted average maturity for temporary
defensive purposes.
PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in debt securities of all
types. As a matter of fundamental policy, at least 65% of the Fund's total
assets will consist of bonds. Up to 15% of the Fund's total assets may be
invested in dollar denominated debt securities (including cash equivalents) of
foreign issuers. The Fund also may purchase taxable or tax-exempt municipal
securities. The Fund may invest up to 5% of its net assets in lower rated
convertible securities and securities having common stock characteristics such
as rights and warrants. For a list of the types of securities in which the Fund
may invest, please read "Investment Practices."
RISK CONSIDERATIONS
The Fund invests in fixed-income securities. The value of these securities will
change in response to interest rate changes, economic conditions and other
factors. This is especially true to the extent the Fund invests in debt
securities in the lowest investment grade category. The Fund also invests in
mortgage-related securities which may have greater price and yield volatility
than traditional fixed income securities. Before you invest, please read "More
About the Funds" and "Investment Risks."
FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts and fixed
income traders. The team works together to establish general duration and sector
strategies for the Fund. Each team member makes recommendations about securities
in the Fund. The research analysts and trading personnel provide individual
security and sector recommendations, while the portfolio managers select and
allocate individual securities in a manner designed to meet the investment
objectives of the Fund.
This section would normally include Financial Highlights for the Fund. Because
the Fund will not commence operations until after December 31, 1998, there are
no Financial Highlights for the Fund.
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THE ONE GROUP(R) Investment Trust Value Growth Fund
INVESTMENT OBJECTIVE
The Fund seeks long term capital growth and growth of income with a secondary
objective of providing a moderate level of current income.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks of overlooked or undervalued
companies that have the potential for earnings growth over time. The Fund uses a
multi-style approach, meaning that it may invest across varied capitalization
levels targeting both value and growth oriented companies. Because the Fund
seeks return over the long term, Banc One Investment Advisors will not attempt
to time the market.
PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in equity securities
described above. Up to 35% of its total assets may be invested in U.S.
Government Securities, other investment grade fixed income securities, cash, and
cash equivalents. For a list of the types of securities in which the Fund may
invest, please read "Investment Practices."
RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
As a result, your investment in the Fund may increase or decrease in value. The
Fund also may invest in fixed income securities. The value of these securities
will change in response to interest rate changes and other factors. This is
especially true to the extent that the Fund invests in debt securities with
speculative characteristics. Before you invest, please read "More About the
Funds" and "Investment Risks."
FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
This section would normally include Financial Highlights for the Fund. Because
the Fund will not commence operations until after December 31, 1998, there are
no Financial Highlights for the Fund.
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THE ONE GROUP(R) Investment Trust Mid Cap Opportunities Fund
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth by investing primarily in equity
securities of companies with intermediate capitalizations.
INVESTMENT STRATEGY
The Fund invests primarily in equity securities of companies with market
capitalizations of $500 million to $5 billion. The Fund intends to invest in
companies of this size with strong growth potential, stable market share, and an
ability to quickly respond to new business opportunities.
PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in common and
preferred stock, rights, warrants, convertible securities, and other equity
securities. While the Fund invests primarily in securities of U.S. companies, up
to 25% of its total assets may be invested in equity securities of foreign
issuers. Up to 20% of the Fund's total assets may be invested in U.S. Government
Securities, other investment grade fixed income securities, cash and cash
equivalents. The Fund may invest up to 5% of its net assets in lower rated
convertible securities and securities having common stock characteristics such
as rights and warrants. For a list of the types of securities in which the Fund
may invest, please read "Investment Practices."
RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
As a result, your investment in the Fund may increase or decrease in value. The
Fund also may invest in fixed income securities. The value of these securities
will change in response to interest rate changes and other factors. This is
especially true to the extent that the Fund invests in debt securities with
speculative characteristics. Before you invest, please read "More About the
Funds" and "Investment Risks."
FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
This section would normally include Financial Highlights for the Fund. Because
the Fund will not commence operations until after December 31, 1998, there are
no Financial Highlights for the Fund.
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THE ONE GROUP(R) Investment Trust Mid Cap Value Fund
INVESTMENT OBJECTIVE
The Fund seeks capital appreciation with the secondary goal of achieving current
income by investing primarily in equity securities.
INVESTMENT STRATEGY
The Fund primarily invests in the equity securities of companies with
below-market average price-to-earnings and price-to-book value ratios and with
market capitalizations of $500 million to $5 billion. In choosing investments,
the Fund considers the issuer's soundness and earnings prospects. If Banc One
Investment Advisors determines that a company's fundamentals are declining or
that the company's ability to pay dividends has been impaired, it likely will
eliminate the Fund's holding of the company's stock.
PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in equity securities,
including common stocks, debt securities, and preferred stocks that are
convertible into common stocks. A portion of the Fund's assets will be held in
cash equivalents. For a list of the types of securities in which the Fund may
invest, please read "Investment Practices."
RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Before you invest, please read "More About the Funds" and "Investment
Practices."
FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
This section would normally include Financial Highlights for the Fund. Because
the Fund will not commence operations until after December 31, 1998, there are
no Financial Highlights for the Fund.
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MORE ABOUT THE FUNDS
WHEN THE PROSPECTUS REFERS TO "BONDS," WHAT TYPES OF INVESTMENTS ARE INCLUDED?
"Bonds" include debt instruments with a remaining maturity of one year or more
issued by the U.S. Treasury, U.S. Government and its agencies and
instrumentalities, corporations, municipalities, securities issued or guaranteed
by foreign governments, their agencies or instrumentalities, securities issued
by domestic and supranational banks, mortgage-related securities, asset-backed
securities, stripped government securities and zero coupon obligations.
PORTFOLIO QUALITY
The Funds only purchase securities that meet certain rating criteria.
Bond Fund. The Bond Fund may purchase corporate and municipal bonds that are
rated in ANY category. The Bond Fund will invest now more than 5% of its net
assets in securities rated below investment grade. Bonds in the lowest
investment grade category may be riskier than higher rated bonds. Short-term
corporate obligations such as commercial paper notes and variable demand
obligations must be rated in one of the two highest investment grade categories
at the time of investment.
Equity Funds.
- - Municipal securities and short-term corporate obligations, such as
commercial paper, notes and variable rate demand obligations, must be
rated in one of the two highest investment grade categories at the time
of investment.
- - Corporate bonds generally will be rated in one of the three highest
investment grade categories. Banc One Investment Advisors reserves the
right to invest in corporate bonds which present attractive
opportunities and are rated in the lowest investment grade category.
These corporate bonds may be riskier than higher rated bonds.
- - The Mid Cap Opportunities Fund may invest up to 5% of its net assets in
lower rated convertible securities.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Investment Trust Board of Trustees in
determining whether an investment is illiquid.
SPECIAL RISK CONSIDERATIONS
Derivatives: Some of the Funds invest in securities that are considered to be
"derivatives." Derivatives are securities that derive their value from the
performance of underlying assets or securities. These include:
- - options, futures contracts, and options on futures contracts
- - warrants
- - mortgage-backed securities, including collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and
REMICs) and stripped mortgage-backed securities (IOs and POs)
- - asset-backed securities
- - swap, cap and floor transactions
- - new financial products
- - currency forwards
- - structured instruments
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These securities may be more volatile than other investments. Derivatives
present, to varying degrees, market, credit, leverage, liquidity, and management
risks. For a more detailed discussion of these risks, please read "Investment
Risks." A Fund's use of derivatives may cause the Fund to recognize higher
amounts of short-term capital gains (generally taxed at ordinary income tax
rates) than it would if the Fund did not use such instruments.
Fixed Income Securities: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
Lower Rated Securities: Securities in the lowest investment grade category are
considered to have speculative characteristics. Changes in economic conditions
or other circumstances may have a greater effect on the ability of issuers of
these securities to make principal and interest payments than they do on issuers
of higher grade securities. The Bond Fund and the Mid Cap Opportunities Fund may
invest up to 5% of its net assets in lower rated convertible securities. Such
securities are speculative and may be classified as "junk bonds." A more
detailed description of the risks associated with these securities is contained
in the Statement of Additional Information.
Small Capitalization Companies: Investments in smaller, newer companies may be
riskier than investments in larger, more established companies. These companies
may be more vulnerable to changes in economic conditions, specific industry
conditions, market fluctuations, and other factors effecting the profitability
of other companies. Because economic events may have a greater impact on smaller
companies, there may be a greater and more frequent fluctuation in their stock
price. This may cause frequent and unexpected increases or decreases in the
value of your investment.
Foreign Securities: Investments in foreign securities involve risks different
from investments in U.S. securities. For more details, see "Investment
Practices" and "Investment Risks."
SHAREHOLDER RIGHTS
Shares of the Funds are sold at net asset value to separate accounts of
insurance companies to fund variable annuity and variable life contracts
("Insurance Contracts"). You and other policy holders will not own shares of the
Fund directly. Rather, all shares will be held by Insurance Company Separate
Accounts for your benefit and the benefit of other Insurance Contracts. In the
future, shares of the Funds may also be sold to qualified pension and retirement
plans ("Qualified Plans") for the benefit of plan participants. The interests of
different Separate Accounts and/or Qualified Plans are not always the same and
material, irreconcilable conflicts may arise. The Board of Trustees will monitor
events for such conflicts and, should they arise, will determine what action, if
any, should be taken. All investments in the Funds are credited to the
shareholder's account in the form of full or fractional shares of the designated
Fund. The Funds do not issue share certificates. Initial and subsequent purchase
payments allocated to a specific Fund are subject to any limits set by your
Insurance Contract or Qualified Plan.
Under current practices, the Insurance Contracts will solicit voting
instructions from policy holders with respect to any matters that are presented
to a vote of shareholders. Each Fund votes separately on matters relating solely
to that Fund or which affect that Fund differently. However, all shareholders
will have equal voting rights on matters that affect all shareholders equally.
The holders of each share shall be entitled to one vote for each share held.
The One Group Investment Trust does not hold Annual Meetings of shareholders but
may hold Special Meetings. Special meetings are held, for example, to elect or
remove Trustees, change a Fund's fundamental investment objectives, or approve
an investment advisory contract.
QUESTIONS
- - Any questions regarding the Funds should be directed to The One Group
Investment Trust, Three Nationwide Plaza, Columbus, Ohio 43215
1-800-860-3946.
- - All questions regarding variable annuities or Qualified Plans should
contact the address indicated in the prospectuses and plan documents
that you received from your insurance agent or plan administrator.
SHARE REDEMPTION
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- - Separate Accounts may redeem shares to make benefit or surrender
payments to you and other policyholders. Redemptions are processed on
any day on which the Funds are open for business and are effected at
net asset value next determined after the redemption order, in proper
form, is received by the Trust's transfer agent, Nationwide Investors
Services, Inc.
- - The Funds are open for business (each, a "Business Day") other than
weekends and the following holidays: New Years Day, Martin Luther King,
Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving, and Christmas.
NET ASSET VALUE
- - The net asset value ("NAV") per share for each Fund is determined as of
the close of regular trading on the New York Stock Exchange (usually 4
P.M. Eastern Time), on each Business Day.
- - The NAV per share is calculated by adding the value of all securities
and other assets of a Fund, deducting its liabilities, and dividing by
the number of shares of the Fund that are outstanding.
DIVIDENDS
- - All dividends are distributed to the Separate Accounts and Qualified
Plans on a quarterly basis and will be automatically reinvested in Fund
shares.
- - Dividends are not taxable as current income to Insurance Contract
holders or Qualified Plan participants.
TAX STATUS
Each Fund is treated as a separate entity for Federal income tax purposes and is
not combined with the other Funds. Each Fund intends to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and meet all other requirements necessary for it to be
relieved of Federal taxes on that part of its net investment income and net
capital gains distributed to its shareholders. Each Fund intends to distribute
all of its net investment income and net capital gains to its shareholders on a
current basis.
For a discussion of the tax consequences of variable annuity contracts or
Qualified Plans, refer to the prospectus of the Separate Accounts that fund
variable annuity and variable life contracts, or Qualified Plan documents, as
such documents may be appropriate. Variable annuity contracts purchased through
insurance company separate accounts provide for the accumulation of all earnings
from interest, dividends, and capital appreciation without current federal
income tax liability for the owner. Depending on the variable annuity contract,
distributions from the contract may be subject to ordinary income tax and, in
addition, on distributions before age 59 1/2, a 10% penalty tax. Only the
portion of a distribution attributable to income on the investment in the
contract is subject to Federal income tax. Investors should consult with
competent tax advisors for a more complete discussion of possible tax
consequences in a particular situation.
Section 817(h) of the Code provides that investments of a separate account
underlying a variable annuity contract (or the investments of a mutual fund, the
shares of which are owned by the variable annuity separate account) must be
"adequately diversified" in order for the annuity contract to be treated as an
annuity for tax purposes. The Treasury Department has issued regulations
prescribing these diversification requirements. Each Fund intends to comply with
these requirements. If a Separate Account underlying a variable annuity contract
were not adequately diversified, the owner of such variable annuity contract
would be immediately subject to tax on the earnings allocable to the contract.
Additional information about the tax status of the Funds is provided in the
Statement of Additional Information.
ORGANIZATION AND MANAGEMENT OF THE FUNDS
THE FUNDS
Each Fund is a series of The One Group Investment Trust, an open-end management
investment company. The One Group Investment Trust consists of nine separate
Funds. Four of the Funds are described in this prospectus; the other Funds are
described in a separate prospectus. Each Fund described in this prospectus is
diversified. Each Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
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The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of the Trust.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers each Fund's
investment program. Banc One Investment Advisors discharges its responsibilities
subject to the supervision of, and policies established by, the Trustees of The
One Group Investment Trust.
As of June 30, 1998, Banc One Investment Advisors, an indirect wholly-owned
subsidiary of BANK ONE CORPORATION, managed over $59 billion in assets.
Banc One Investment Advisors is entitled to a fee, which is calculated daily and
paid monthly, at the following annual percentages of the average daily net
assets of each Fund: 0.60% for the Bond Fund, 0.74% for the Value Growth Fund,
0.74% for the Mid Cap Opportunities Fund, and 0.74% for the Mid Cap Value Fund.
Banc One Investment Advisors has voluntarily agreed to waive all or part of its
fees in order to limit the Funds' total operating expenses on an annual basis to
not more than 0.75% of the average daily net assets of the Bond Fund, not more
than 0.95% of the average daily net assets of the Value Growth Fund, not more
than 0.95% of the average daily net assets of the Mid Cap Opportunities Fund,
and not more than 0.95% of the average daily net assets of each of the Mid Cap
Value Fund.
THE ADMINISTRATOR
Nationwide Advisory Services, Inc. (the "Administrator"), a wholly owned
subsidiary of Nationwide Life Insurance Company, which in turn is a wholly owned
subsidiary of Nationwide Financial Services, Inc., a holding company of the
Nationwide Insurance Enterprise, serves as the Funds' administrator. The
Administrator is responsible for providing administrative services including
regulatory reporting, all necessary office space, equipment, facilities and the
services of executive and clerical personnel for administering the affairs of
the Funds.
For these services, the Administrator receives a fee based on average net
assets. For all the Funds of the Trust (except the Equity Index which is
described in a separate Prospectus), the fee is computed on a daily basis at
annual rates equal to the following percentages of the average net assets of the
Trust (less the assets of the Equity Index Fund): 0.24% of the Trust's average
net assets up to $250 million and 0.14% of the Trust's average net assets that
are greater than $250 million. The Administrator's fees are calculated daily and
paid monthly.
THE TRANSFER AND DIVIDEND PAYING AGENT
Nationwide Investors Services, Inc., a wholly owned subsidiary of the
Administrator, acts as the transfer agent and dividend paying agent for the
Trust and in doing so performs certain bookkeeping, data processing and
administrative services.
THE CUSTODIAN AND THE SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8528, Boston, MA 02266-8528 acts
as Custodian. As the Funds' custodian, State Street holds the Funds' assets,
settles all portfolio trades and assists in calculating the Funds' NAV. Bank One
Trust Company, N.A. serves as sub-custodian in connection with the Funds'
securities lending activities under an agreement with State Street Bank and
Trust Company. Bank One Trust Company, N.A. is paid a fee by the Funds for this
service.
EXPENSES OF THE FUNDS
Each Fund bears all expenses of its operations other than those incurred by Banc
One Investment Advisors and the Administrator under their respective Advisory
Agreement and Administration Agreement with the Funds. In particular, the Funds
pay: investment advisory fees, custodian fees and expenses, legal, accounting
and auditing fees, brokerage fees, interest and taxes, registration fees and
expenses, expenses of the Transfer and Dividend Paying Agent, the compensation
and expenses of Trustees who are not otherwise affiliated with the Trust, Banc
One Investment Advisors or any of its affiliates, expenses of printing and
mailing reports and notices and proxy material to beneficial shareholders of the
Trust, and any extraordinary expenses. The Equity Index Fund also pays all
expenses incurred in valuing portfolio securities. Expenses incurred jointly by
the Funds are allocated among the Funds in a manner determined by the Trustees
to be fair and equitable. The organizational expenses of each of the Funds
listed in this Prospectus will be paid by the Funds.
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<PAGE> 17
YEAR 2000
Preparing for the Year 2000 is a high priority for the Funds. Both the
Administrator and Banc One Investment Advisors have formed dedicated teams to
help them successfully achieve Year 2000 compliance. In addition, these teams
are responsible for assessing the readiness of all other service providers to
the Funds. Year 2000 remediation efforts are directed toward both information
technology and non-information technology systems. Non-information technology
systems include elevators, photocopy machines, and facsimile machines, and
should have no significant impact on the delivery of services to Funds.
Banc One Investment Advisors has identified information technology systems and
interfaces that provide service and support to the Funds. Many, if not all, of
the systems are owned or operated by third party servicers (for example, The One
Group Investment Trust's Custodian). Consequently, remediation efforts must be
made by those servicers. Banc One Investment Advisors and the Administrator
have, and will continue to, monitor the remediation progress of the service
providers. This process involves documentation, on-site visits, and review of
remediation plans and test results. Neither the Funds nor their shareholders
will bear any of the direct remediation expenses.
Neither the Administrator nor Banc One Investment Advisors currently anticipate
that the move to Year 2000 will have a material impact on their ability to
continue to provide the Funds with service at current levels. Likewise, The One
Group Investment Trust currently anticipates that the move to Year 2000 will not
have a material impact on its operations.
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Equity securities are subject mainly to market
risk. Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. For a more complete discussion, see the Statement of Additional
Information. Following the table is a more complete discussion of risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
--------- ---------
<S> <C>
The One Group Investment Trust Bond Fund 1
The One Group Investment Trust Value Growth Fund 2
The One Group Investment Trust Mid Cap Opportunities Fund 3
The One Group Investment Trust Mid Cap Value Fund 4
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
- ---------- --------- ---------
<S> <C> <C>
U.S. Treasury Obligations: Bills, notes, 1-4 Market
bonds, STRIPS, and CUBES.
Treasury Receipts: TRS, TIGRs, and CATS. 1-4 Market
U.S. Government Agency Securities: Securities 1-4 Market
issued by agencies and instrumentalities of Credit
the U.S. Government. These include Ginnie Mae,
Fannie Mae, and Freddie Mac.
Certificates of Deposit: Negotiable instruments with a stated 1-4 Market
maturity. Credit
Liquidity
Time Deposits: Non-negotiable receipts issued by a bank in 1-4 Liquidity
exchange for the deposit of funds. Credit
Market
Common Stock: Shares of ownership of a company. 2-4 Market
Repurchase Agreements: The purchase of a security and the 1-4 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
</TABLE>
10
<PAGE> 18
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
- ---------- --------- ---------
<S> <C> <C>
Reverse Repurchase Agreement: The sale of a security and the 1-4 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
Securities Lending: The lending of up to 33-1/3% of the Fund's 1-4 Credit
total assets. In return the Fund will receive cash, Market
other securities, and/or letters of credit. Leverage
When-Issued Securities and Forward Commitments: Purchase or 1-4 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
Credit
Investment Company Securities: Shares of other mutual funds, 1-4 Market
including money market funds of The One Group(R) and shares of
other investment companies for which Banc One Investment Advisors
serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
Convertible Securities: Bonds or preferred stock that convert to 1-4 Market
common stock. Credit
Call and Put Options: A call option gives the buyer the right to 1-4 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell only covered call and Leverage
secured put options.
Futures and Related Options: A contract providing for the future 1-4 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
Real Estate Investment Trusts ("REITs"): Pooled investment 1-4 Liquidity
vehicles which invest primarily in income producing real estate Management
or real estate related loans or interest. Market
Regulatory
Tax
Pre-payment
Bankers' Acceptances: Bills of exchange or time drafts drawn on 1-4 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
Commercial Paper: Secured and unsecured short-term promissory 1-4 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
Foreign Securities: Stocks issued by foreign companies, as well 1-4 Market
as commercial paper of foreign issuers and obligations of Political
foreign banks, overseas branches of U.S. banks and supranational Liquidity
entities. The Equity Funds may also invest in American Depository Foreign Investment
Receipts.
Restricted Securities: Securities not registered under the 1-4 Liquidity
Securities Act of 1933, such as privately placed commercial Market
paper and Rule 144A securities. Credit
Variable and Floating Rate Instruments: Obligations with 1-4 Credit
interest rates which are reset daily, weekly, quarterly or some Liquidity
other period and which may be payable to the Fund on demand. Market
Warrants: Securities, typically issued with preferred stock or 2, 3 Market
bonds, that give the holder the right to buy a proportionate Credit
amount of common stock at a specified price.
Preferred Stock: A class of stock that generally pays a dividend 1-4 Market
at a specified rate and has preference over common stock
in the payment of dividends and in liquidation.
</TABLE>
11
<PAGE> 19
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
- ---------- --------- ---------
<S> <C> <C>
Mortgage-Backed Securities: Debt obligations secured by real 1 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs") and Real Estate Mortgage Investment Credit
Conduits ("REMICs").
Corporate Debt Securities: Corporate bonds and non-convertible 1 Market
debt securities. Credit
Demand Features: Securities that are subject to puts and standby Market
commitments to purchase the securities at a fixed price (usually 1 Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
Asset-Backed Securities: Securities secured by company 1, 3 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets. Regulatory
Mortgage Dollar Rolls: A transaction in which a Fund sells 1, 3 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
Adjustable Rate Mortgage Loans ("ARMs"): Loans in a mortgage 1 Pre-payment
pool which provide for a fixed initial mortgage interest rate Market
for a specified period of time, after which the rate may be Credit
subject to periodic adjustments. Regulatory
Swaps, Caps and Floors: A Fund may enter into these transactions 1-3 Management
to manage its exposure to changing interest rates and other Credit
factors. Swaps involve an exchange of obligations by two Liquidity
parties. Caps and floors entitle a purchaser to a principal Market
amount from the seller of the cap or floor to the extent
that a specified index exceeds or falls below a predetermined
interest rate or amount.
New Financial Products: New options and futures contracts and 1-3 Management
other financial products continue to be developed and the Funds Credit
may invest in such options, contracts and products. Market
Liquidity
Structured Instruments: Debt securities issued by agencies and 1 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other referenced indices. Foreign Investment
Municipal Securities: Securities issued by a state or political 1 Market
subdivision to obtain funds for various public purposes. Credit
Municipal securities include private activity bonds and Political
industrial development bonds, as well as General Obligation Tax
Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue Regulatory
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
Obligations of Supranational Agencies: Obligations of 1, 3 Credit
supranational agencies who are chartered to promote economic Foreign Investment
development and are supported by various governments Market
and governmental agencies.
Currency Futures and Related Options: The Funds may engage in Management
transactions in financial futures and related options, which are 1, 3 Liquidity
generally described above. The Funds will enter into these Credit
transactions in foreign currencies for hedging purposes Market
only. Political
Leverage
Foreign Investment
</TABLE>
12
<PAGE> 20
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
- ---------- --------- ---------
<S> <C> <C>
Forward Foreign Exchange Transactions: Contractual agreement to 1, 3 Management
purchase or sell one specified currency for another currency at Liquidity
a specified future date and price. The Funds will enter into Credit
forward foreign exchange transactions for hedging purposes only. Market
Political
Leverage
Foreign Investment
Zero-Coupon Debt Securities: Bonds and other debt that pay no 1, 3 Credit
interest, but are issued at a discount from their value at Market
maturity. When held to maturity, their entire return equals the
Zero Coupon difference between their issue price and their
maturity value.
Standard & Poor's Depository Receipts ("SPDRs"): SPDRs represent 2-4 Market
ownership in a long-term unit investment trust that holds a
portfolio of common stocks designed to track the price performance
and dividend yield of the S&P 500 Index. A SPDR entitles a holder
to receive proportionate quarterly cash distributions
corresponding to the dividends that accrue to the S&P 500 Index
stocks in the underlying portfolio, less trust expenses.
Zero-Fixed-Coupon Debt Securities: Zero coupon debt securities 1, 3 Credit
which convert on a specified date to interest bearing debt Market
securities. Zero Coupon
Stripped Mortgage-Backed Securities: Derivative multi-class 1 Pre-payment
mortgage securities which are usually structured with two Market
classes of shares that receive different proportions of the Credit
interest and principal from a pool of mortgage assets. These Regulatory
include IOs and POs.
Inverse Floating Rate Instruments: Floating rate debt 1 Market
instruments with interest rates that reset in the opposite Leverage
direction from the market rate of interest to which the inverse Credit
floater is indexed.
Loan Participations and Assignments: Participations in, or 1, 3 Credit
assignments of all or a portion of loans to corporations or to Political
governments, including governments of the less developed Liquidity
countries ("LDC's"). Foreign Investment
Market
Fixed Rate Mortgage Loans: Investments in fixed rate mortgage 1 Credit
loans or mortgage pools which bear simple interest at fixed Pre-payment
annual rates and have original terms ranging from 5 to 40 years. Regulatory
Market
Short-Term Funding Agreements: Investments in short-term funding 1 Credit
agreements issued by banks and highly rated U.S. insurance Liquidity
companies such as Guaranteed Investment Contracts ("GIC's") and Market
Bank Investment Contracts ("BIC's").
</TABLE>
13
<PAGE> 21
INVESTMENT RISKS
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risks than others.
- - Credit Risk. The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to
honor a financial obligation. Credit risk is generally higher for
non-investment grade securities. The price of a security can be
adversely affected prior to actual default as its credit status
deteriorates and the probability of default rises.
- - Leverage Risk. The risk associated with securities or practices that
multiply small index or market movements into large changes in value.
Leverage is often associated with investments in derivatives, but also
may be embedded directly in the characteristics of other securities.
- Hedged. When a derivative (a security whose value is based on
another security or index) is used as a hedge against an
opposite position that the fund also holds, any loss generated
by the derivative should be substantially offset by gains on
the hedged investment, and vice versa. While hedging can
reduce or eliminate losses, it can also reduce or eliminate
gains. Hedges are sometimes subject to imperfect matching
between the derivative and underlying security, and there can
be no assurance that a Fund's hedging transactions will be
effective.
- Speculative. To the extent that a derivative is not used as a
hedge, the Fund is directly exposed to the risks of that
derivative. Gains or losses from speculative positions in a
derivative may be substantially greater than the derivative's
original cost.
- - Liquidity Risk. The risk that certain securities may be difficult or
impossible to sell at the time and the price that would normally
prevail in the market. The seller may have to lower the price, sell
other securities instead or forego an investment opportunity, any of
which could have a negative effect on fund management or performance.
This includes the risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in
less advantageous investments.
- - Management Risk. The risk that a strategy used by a fund's management
may fail to produce the intended result. This includes the risk that
changes in the value of a hedging instrument will not match those of
the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - Market Risk. The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably. These fluctuations may
cause a security to be worth less than the price originally paid for
it, or less than it was worth at an earlier time. Market risk may
affect a single issuer, industry, sector of the economy or the market
as a whole. There is also the risk that the current interest rate may
not accurately reflect existing market rates. For fixed income
securities, market risk is largely, but not exclusively, influenced by
changes in interest rates. A rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in
values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments
in foreign securities.
- - Political Risk. The risk of losses attributable to unfavorable
governmental or political actions, seizure of foreign deposits, changes
in tax or trade statutes, and governmental collapse and war.
- - Foreign Investment Risk. The risk associated with higher transaction
costs, delayed settlements, currency controls and adverse economic
developments. This also includes the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign currencies may
negatively affect an investment. Adverse changes in exchange rates may
erode or reverse any gains produced by foreign currency denominated
investments and may widen any losses. Exchange rate volatility also my
affect the ability of an issuer to repay U.S. dollar denominated debt,
thereby increasing credit risk.
- - Pre-Payment Risk. The risk that the principal repayment of a security
will occur at an unexpected time, especially that the repayment of a
mortgage or asset-backed security occurs either significantly sooner or
later than expected. Changes in pre-payment rates can result in greater
price and yield volatility. Pre-payments generally accelerate when
interest rates decline. When mortgage and other obligations are
pre-paid, a Fund may have to reinvest in securities with a lower yield.
Further, with early prepayment, a Fund may fail to recover any premium
paid, resulting in an unexpected capital loss.
- - Tax Risk. The risk that the issuer of the securities will fail to
comply with certain requirements of the Internal Revenue Code, which
would cause adverse tax consequences.
14
<PAGE> 22
- - Regulatory Risk. The risk associated with Federal and state laws which
may restrict the remedies that a lender has when a borrower defaults on
loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor
relief laws, restrictions on "due on sale" clauses, and state usury
laws.
- - Zero Coupon Risk. The market prices of securities structured as zero
coupon or pay-in-kind securities are generally affected to a greater
extent by interest rate changes. These securities tend to be more
volatile than securities which pay interest periodically.
INVESTMENT POLICIES
Each Fund's investment objective and the investment policies summarized below
are fundamental. This means that they cannot be changed without the consent of a
majority of the outstanding shares of the Funds. The full text of the
fundamental policies can be found in the Statement of Additional Information.
Each Fund may not:
1. Purchase an issuer's securities if as a result more than 5% of its
total assets would be invested in the securities of that issuer or the
Fund would own more than 10% of the outstanding voting securities of
that issuer. This does not include securities issued or guaranteed by
the United States, its agencies or instrumentalities, and repurchase
agreements involving these securities. This restriction applies with
respect to 75% of a Fund's total assets.
2. Concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group
of industries. This does not include obligations issued or guaranteed
by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) engage in securities
lending.
Additional investment policies can be found in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
Bond Fund. For temporary defensive purposes as determined by Banc One Investment
Advisors, the Bond Fund may invest up to 100% of its assets in money market
instruments, and may hold a portion of its assets in cash for liquidity
purposes.
Equity Funds. For temporary defensive purposes as determined by Banc One
Investment Advisors, the Mid Cap Value Fund and the Value Growth Fund may
temporarily invest up to 100% of their total assets in cash and cash
equivalents. The Mid Cap Opportunities Fund invest up to 20% of its total assets
in cash and cash equivalents. Cash equivalents include:
- - Securities issued by the U.S. Government, its agencies and
instrumentalities
- - Repurchase Agreements (other than equity repurchase agreements)
- - Certificates of Deposit
- - Bankers' Acceptances
- - Commercial Paper (rated in one of the two highest rating categories)
- - Variable Rate Master Demand Notes
- - Bank Money Market Deposit Accounts
While the Funds are engaged in a temporary defensive position, they will not be
pursuing their investment objectives. Therefore, the Funds will pursue a
temporary defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year. Higher portfolio turnover rates will likely result in higher
transaction costs to the Funds. It is estimated that portfolio turnover rate for
the Bond Fund will not exceed
15
<PAGE> 23
50% and portfolio turnover for each of the Equity Funds will not exceed 100%.
Each Equity Fund may engage in short-term trading, which involves selling
securities for a short time in order to increase the potential for capital
appreciation and/or income of an Equity Fund or to take advantage of a temporary
disparity in the normal price or yield relationship between two securities or
changes in market industry or company conditions or outlook. Any such trading
would increase a Fund's turnover rate and its transaction costs.
ADDITIONAL INFORMATION
PERFORMANCE
From time to time, each Fund may advertise yield and total return. These figures
will be based on historical earnings and are not intended to indicate future
performance. The yield of the Fund refers to the annualized income generated by
an investment in the Fund over a specified 30 day period. The yield is
calculated by assuming that the income generated by the investment during that
period is generated over one year and is shown as a percentage of the
investment.
The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment, for designated time periods (including but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital gain distributions.
Yields and total returns contained in advertisements include the effect of
deducting a Fund's expenses, but may not include charges and expenses
attributable to Separate Accounts and Qualified Plans. Since shares may only be
purchased by Separate Accounts and Qualified Plans, contract owners should
carefully review the Separate Account and Qualified Plan documents for
information on fees and expenses. Excluding such fees and expenses from a Fund's
total return quotations has the effect of increasing the performance quoted.
Each Fund's performance may from time to time be compared to other mutual funds
tracked by mutual fund rating services, to broad groups of comparable mutual
funds or to unmanaged indices which may assume investment of dividends but
generally do not reflect deductions for administrative and management costs.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE FUNDS IS
HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE FUTURE
RESULTS. THE SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
Additional information concerning each Fund's performance appears in the
Statement of Additional Information.
16
<PAGE> 24
APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
---------------------------------------
Duff & Phelps Credit Rating Co. ("Duff")
- ----------------------------------------
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to
alternative sources of funds, is outstanding and safety is
just below risk-free U.S. Treasury obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection
factors. Risk factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
D-2 Good certainty of timely payment. Liquidity facts and company
fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital
markets is good. Risk factors are small.
D-3 Satisfactory liquidity and other protection factors qualify
issues as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is
expected.
D-4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high
degree of variation.
D-5 Issuer failed to meet scheduled principal and/interest
payments.
Standard & Poor's Corporation ("S&P")
- -------------------------------------
A-1 Highest category of commercial paper. Capacity to meet
financial commitment is strong. Obligations designated with a
plus sign (+) indicate that capacity to meet financial
commitment is extremely strong.
A-2 Issues somewhat more susceptible to adverse effects of changes
in circumstances and economic conditions than obligations in
higher rating categories. However, the capacity to meet
financial commitments is satisfactory.
A-3 Exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
B Regarded as having significant speculative characteristics.
The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
C Currently vulnerable to nonpayment and is dependent upon
favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D In payment default. The D rating category is used when
payments on an obligation are not made on the date due even if
the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such
grace period. The D rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
17
<PAGE> 25
Fitch's IBCA Limited ("Fitch")
- ------------------------------
A1 Highest capacity for timely repayment. Those issues rated A1+
possess a particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such
capacity may be susceptible to adverse changes in business,
economic or financial conditions.
A3 Adequate capacity for timely repayment, but more susceptible
to adverse changes business, economic or financial conditions
than for obligations in higher categories.
B Capacity for timely repayment is susceptible to adverse
changes in business, economic or financial conditions.
C High risk of default or which are currently in default.
Moody's Investors Service ("Moody's")
- -------------------------------------
Prime-1 Superior ability for repayment.
Prime-2 Strong ability for repayment.
Prime-3 Acceptable ability for repayment. The effect of industry
characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection measurements
and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime Does not fall within any of the Prime rating categories.
DESCRIPTION OF BANK RATINGS
---------------------------
Moody's
- -------
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
D These banks possess adequate financial strength, but may be limited by
one or more of the following factors: a vulnerable or developing
business franchise; weak financial fundamentals; or an unstable
operating environment.
E These banks possess very weak intrinsic financial strength, require
periodic outside support or suggest an eventual need for outside
assistance. Such institutions may be limited by one or more of the
following factors: a business franchise of questionable value;
financial fundamentals that are seriously deficient in one or more
respects; or a highly unstable operating environment.
DESCRIPTION OF TAXABLE BOND RATINGS
-----------------------------------
S&P
- ---
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
18
<PAGE> 26
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on
the obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB Less vulnerable to nonpayment than other speculative issues. However,
such issues face major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B More vulnerable to nonpayment than obligations rated BB, but the
obligor currently has the capacity to meet its financial commitment on
the obligation. Adverse business, financial, or economic conditions
will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC Currently vulnerable to nonpayment, and dependent upon favorable
business, financial, and economic conditions for the obligor to meet
its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the
obligation.
CC Currently highly vulnerable to nonpayment.
C Used to cover a situation where a bankruptcy petition has been filed or
similar action has been taken, but payments on this obligation are
being continued.
D In payment default. Used when payments on an obligation are not made on
the date due even if the applicable grace period has not expired,
unless Standard & Poor's believes that such payments will be made
during such grace period. Also used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation
are jeopardized.
Moody's
- -------
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
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<PAGE> 27
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. C is the lowest rating.
Fitch
- -----
Investment Grade
AAA Highest rating category. The obligor's capacity for timely repayment of
principal and interest is extremely strong.
AA The obligor's capacity for timely repayment is very strong.
A Bonds and preferred stock considered to be investment grade and of high
credit quality. The obligor's ability for timely repayment is strong.
However, adverse changes in business, economic, or financial conditions
are more likely to affect the capacity for timely repayment than
obligations in higher rated categories.
BBB The obligor's capacity for timely repayment of principal and interest
is adequate. However, adverse changes in business, economic or
financial conditions and circumstances, are more likely to affect the
capacity for timely repayment than for obligations in higher rated
categories.
B The Obligor's capacity for timely repayment of principal and interest
is uncertain. Timely repayment of principal and interest is not
sufficiently protected against adverse changes in business, economic or
financial conditions and these obligations are far more speculative
than those in higher rated categories.
CCC Obligations for which there is a current perceived possibility of
default. Timely repayment of principal and interest is dependent on
favorable business, economic, or financial conditions and these
obligations are far more speculative than those in higher rated
categories.
CC Obligations which are highly speculative or which have a high risk of
default.
C Obligations which are currently in default.
DESCRIPTION OF INSURANCE RATINGS
--------------------------------
Moody's
- -------
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa Insurance companies rated in this category offer adequate financial
security. However, certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
BA Insurance companies rated in this category offer questionable financial
security. Often the ability of these companies to meet policyholder
obligations may be very moderate and thereby not well safeguarded int
he future.
B Insurance companies rated in this company offer poor financial
security. Assurance of punctual payment of policyholder obligations
over any long period of time is small.
20
<PAGE> 28
Caa Insurance companies rated in this category offer very poor financial
security. They may be in default on their policyholder obligations or
there may be present elements of danger with respect to punctual
payment of policyholder obligations and claims.
Ca Insurance companies rated in this category offer extremely poor
financial security. Such companies are often in default on their
policyholder obligations or have other marked shortcomings.
C Insurance companies rated in this category are the lowest rated class
of insurance company and can be regarded as having extremely poor
prospects of ever offering financial security.
S & P
- -----
An insurer rated 'BBB' or higher is regarded as having financial security
characteristics that outweigh any vulnerabilities, and is highly likely to have
the ability to meet financial commitments.
AAA EXTREMELY STRONG financial security characteristics. 'AAA' is the
highest Insurer Financial Strength Rating assigned by Standard &
Poor's.
AA VERY STRONG financial security characteristics, differing only slightly
from those rated higher.
A STRONG financial security characteristics, but Is somewhat more likely
to be affected by adverse business conditions than are insurers with
higher ratings.
BBB GOOD financial security characteristics, but is more likely to be
affected by adverse business conditions than are higher rated insurers.
An insurer rated 'BB' or lower is regarded as having vulnerable characteristics
that may outweigh its strength. 'BB' indicates the least degree of vulnerability
within the range; 'CC' the highest.
BB MARGINAL financial security characteristics. Positive attributes exist,
but adverse business conditions could lead to insufficient ability to
meet financial commitments.
B WEAK financial security characteristics. Adverse business conditions
will likely impair its ability to meet financial commitments.
CCC VERY WEAK financial security characteristics, and is dependent on
favorable business conditions to meet financial commitments.
CC EXTREMELY WEAK financial security characteristics and is likely not to
meet some of its financial commitments.
R An insurer rated 'R' has experienced a REGULATORY ACTION regarding
solvency. The rating does not apply to insurers subject only to
nonfinancial actions such as market conduct violations.
NR NOT RATED, which implies no opinion about the insurer's financial
security.
Plus (+) or minus (-)
Following ratings from 'AA' to 'CCC' show relative standing within the major
rating categories.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
-------------------------------------
Moody's
- -------
MIG1 & VMIG1 Short-term municipal securities rated MIG1 or VMIG1 are of
the best quality. They have strong protection from established cash
flows, superior liquidity support or demonstrated broad-based
access to the market for refinancing.
MIG2 & VMIG2 These Short-term municipal securities rated are of high
quality. Margins of protection are ample although not so large as
in the preceding group.
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<PAGE> 29
MIG3 Favorable quality. All security elements are accounted for,
& VMIG3 but the undeniable strength of the preceding grades is lacking.
Liquidity and cash flow protection may be narrow and marketing
access for refinancing is likely to be less well established.
MIG4 This denotes adequate quality protection commonly regarded
& VMIG4 as required of an investment security is present and although not
distinctly or predominantly speculative, there is a specific risk.
SG This denotes speculative quality. Our instruments in this category
each margins of protection.
S&P
- ---
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
DESCRIPTION OF PREFERRED STOCK RATINGS
--------------------------------------
Moody's
- -------
aaa Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
ba Considered to have speculative elements and its future cannot be
considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty
of position characterizes preferred stocks in this class.
b Lacks the characteristics of a desirable investment. Assurance of
dividend payments and maintenance of other terms of the issue over any
long period of time may be small.
caa Likely to be in arrears on dividend payments. This rating designation
does not purport to indicate the future status of payments.
ca Speculative in a high degree and is likely to be in arrears on
dividends with little likelihood of eventual payments.
c Lowest rated class of preferred or preference stock. Issues so rated
can thus be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each rating
classification; the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range ranking
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
22
<PAGE> 30
S&P
- ---
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred
stock obligations is very strong, although not as overwhelming as for
issues rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity to make payments for a preferred stock
in this category than for issues in the "A" category.
BB, B
CCC Regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. BB indicates the
lowest degree of speculation and CCC the highest. While such issues
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
CC In arrears on dividends or sinking fund payments, but that is currently
paying.
C Nonpaying issue.
D Nonpaying issue with the issuer in default on debt instruments.
N.R. No rating has been requested, insufficient information on which to base
a rating, or Standard & Poor's does not rate a particular type of
obligation as a matter of policy.
Plus (+) or minus (-)
To provide more detailed indications of preferred stock quality, ratings from AA
to CCC may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
DESCRIPTION OF MUNICIPAL BOND RATINGS
-------------------------------------
(INCLUDING FOREIGN, MORTGAGE AND ASSET-BACKED SECURITIES)
S&P
INVESTMENT GRADE
AAA The highest rating. The rating indicates an extremely strong
capacity to meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's
capacity to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions
than debt in higher rated categories. However, capacity to
meet its financial commitment on the obligation is still
strong.
BBB Exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to meet its financial
commitment on the obligations.
23
<PAGE> 31
SPECULATIVE GRADE
BB Less vulnerable to non-payment than other speculative issues.
However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet financial
commitment on the obligations.
B More vulnerable to non-payment than obligations rated BB, but
currently has the capacity to meet its financial commitment on
the obligation. Adverse business, financial or economic
conditions will likely impair capacity or willingness to meet
its financial commitment on the obligation.
CCC Currently vulnerable to non-payment, and is dependent upon
favorable business, financial, and economic conditions to meet
its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, they are
not likely to have the capacity to meet its financial
commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a
bankruptcy petition has been filed, or similar action has been
taken, but payments on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
INVESTMENT GRADE
Aaa Best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest
payments are protected by a large, or an exceptionally stable,
margin and principal is secure.
Aa High quality by all standards. Margins of protection may not
be as large as in Aaa securities, fluctuation of protective
elements may be greater, or there may be other elements
present that make the long-term risks appear somewhat larger
than in Aaa securities.
A These bonds possess many favorable investment attributes and
are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa These bonds are considered medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
NON-INVESTMENT GRADE
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and
principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future.
B These bonds lack the characteristics of a desirable investment
(i.e., potentially low assurance of timely interest and
principal payments or maintenance of other contract terms over
any long period of time may be small).
Caa Bonds in this category have poor standing and may be in
default. These bonds carry an element of danger with respect
to principal and interest payments.
Ca Speculative to a high degree and could be in default or have
other marked shortcomings. Ca is the lowest rating.
24
<PAGE> 32
DESCRIPTION OF SHORT-TERM DEBT RATINGS
--------------------------------------
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest
will be paid on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal
and interest is strong, the relative degree is not as high as
for issues rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to
adverse developments than obligations with higher ratings,
capacity to service principal and interest in a timely fashion
is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
25
<PAGE> 33
INVESTMENT ADVISOR
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
ADMINISTRATOR
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, OH 43215
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Nationwide Investors Services, Inc.
Box 1492
Three Nationwide Plaza
Columbus, OH 43216
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8528
Boston, MA 02266-8528
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-860-3946 OR BY WRITING TO THE THE ONE GROUP(R) Investment Trust at
One Nationwide Plaza, Columbus, OHIO 43216. THE STATEMENT OF ADDITIONAL
INFORMATION IS INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS
A WEB SITE (WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION,
MATERIALS INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE
GROUP INVESTMENT TRUST.
26
<PAGE> 34
PART B
Part B of Post Effective Amendment 7 (filed ) to The One Group Investment
Trust's Registration Statement on Form N-1A is incorporated herein by reference.
<PAGE> 35
STATEMENT OF ADDITIONAL INFORMATION
THE ONE GROUP(R) INVESTMENT TRUST
BOND FUND (THE "BOND FUND")
VALUE GROWTH FUND
(THE "VALUE GROWTH FUND")
MID CAP OPPORTUNITIES FUND
(THE "MID CAP OPPORTUNITIES FUND")
MID CAP VALUE FUND
(THE "MID CAP VALUE FUND")
(EACH A "FUND," AND COLLECTIVELY THE "FUNDS")
DECEMBER 21, 1998
This Statement of Additional Information is not a Prospectus, but supplements
and should be read in conjunction with the Prospectus dated December 21, 1998
relating to the Bond Fund, the Value Growth Fund, the Mid Cap Opportunities
Fund, and the Mid Cap Value Fund (the "PROSPECTUS"). This Statement of
Additional Information is incorporated in its entirety into the Prospectus for
the Bond Fund, the Value Growth Fund, the Mid Cap Opportunities Fund, and the
Mid Cap Value Fund. A copy of the Prospectus may be obtained by writing to The
One Group Investment Trust (the "TRUST") at One Nationwide Plaza, Columbus, Ohio
43215 or by calling toll free at 1-800-860-3946.
<PAGE> 36
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE TRUST................................................................................................................1
INVESTMENT OBJECTIVES AND POLICIES.......................................................................................2
Additional Information on Fund Instruments............................................................................2
Asset-Backed Securities...........................................................................................2
Bank Obligations..................................................................................................2
Commercial Paper..................................................................................................2
Common Stock......................................................................................................3
Convertible Securities............................................................................................3
Demand Features...................................................................................................3
Foreign Investments...............................................................................................3
Limitations on the Use of Foreign Investments...................................................................4
Foreign Currency Transactions.....................................................................................4
Forward Foreign Currency Exchange Contracts.....................................................................5
Foreign Currency Futures Contracts..............................................................................6
Foreign Currency Options........................................................................................7
Foreign Currency Conversion.....................................................................................7
Risk Factors in Hedging Transactions............................................................................8
Futures and Options Trading.......................................................................................8
Futures Contracts...............................................................................................8
Limitations on the Use of Futures Contracts.....................................................................9
Risk Factors in Futures Transactions...........................................................................10
Options Contracts..............................................................................................11
Writing (Selling) Covered Calls................................................................................12
Purchasing Call Options........................................................................................13
Purchasing Put Options.........................................................................................13
Secured Puts...................................................................................................13
Straddles and Spreads..........................................................................................13
Risk Factors in Options Transactions...........................................................................13
Limitations on the Use of Options..............................................................................14
Government Securities............................................................................................14
High Yield/High Risk Securities/Junk Bonds.......................................................................15
Investment Company Securities....................................................................................15
Loan Participations and Assignments..............................................................................15
Mortgage-Related Securities......................................................................................16
Mortgage-Backed Securities (CMOs and REMICs)...................................................................16
Mortgage Dollar Rolls..........................................................................................18
Stripped Mortgage Backed Securities............................................................................18
Adjustable Rate Mortgage Loans.................................................................................18
Risk Factors of Mortgage-Related Securities....................................................................19
Municipal Securities.............................................................................................21
Risk Factors in Municipal Securities...........................................................................22
New Finacial Products..........................................................................................23
PERCs............................................................................................................23
Preferred Stock..................................................................................................23
Real Estate Investment Trusts ("REITs")..........................................................................23
Repurchase Agreements............................................................................................24
Reverse Repurchase Agreements....................................................................................24
Restricted Securities............................................................................................25
Securities Lending...............................................................................................26
Short-term Funding Agreements....................................................................................26
SPDRs............................................................................................................26
Structured Instruments...........................................................................................27
Swaps, Caps and Floors...........................................................................................27
Treasury Receipts................................................................................................29
U.S. Treasury Obligations........................................................................................29
Variable and Floating Rate Instruments...........................................................................29
Limitations on the Use of Variable and Floating Rate Notes.......................................................30
Warrants.........................................................................................................30
</TABLE>
ii
<PAGE> 37
<TABLE>
<S> <C>
When-Issued Securities and Forward Commitments.................................................................. 30
Investment Restrictions.............................................................................................31
Portfolio Turnover..................................................................................................32
Additional Tax Information Concerning All Funds.....................................................................32
VALUATION...............................................................................................................33
Valuation of the Funds...........................................................................................33
ADDITIONAL INFORMATION REGARDING THE
CALCULATION OF PER SHARE NET ASSET VALUE............................................................................34
Additional Purchase and Redemption Information..........................................................................34
MANAGEMENT OF THE TRUST.................................................................................................34
Trustees & Officers..............................................................................................34
Investment Advisor...............................................................................................37
Glass-Steagall Act...............................................................................................38
Portfolio Transactions...........................................................................................39
Administrator....................................................................................................40
Custodian and Transfer Agent.....................................................................................40
Experts .........................................................................................................41
ADDITIONAL INFORMATION..................................................................................................41
Description of Shares............................................................................................41
Shareholder and Trustee Liability................................................................................42
Shareholders.....................................................................................................42
Calculation of Performance Data..................................................................................42
Miscellaneous....................................................................................................44
</TABLE>
iii
<PAGE> 38
THE TRUST
The One Group Investment Trust (the "TRUST") is an open-end management
investment company. The Trust consists of nine series of units of beneficial
interest ("SHARES") each representing interests in one of nine separate
investment portfolios. This Statement of Additional Information contains
information relating to the Bond Fund, the Value Growth Fund, the Mid Cap
Opportunities Fund, and the Mid Cap Value Fund. (The Value Growth Fund, the Mid
Cap Opportunities Fund, and the Mid Cap Value Fund are referred to collectively
as the "EQUITY FUNDS"). The Funds are diversified, as defined under the
Investment Company Act of 1940, as amended, (the "1940 ACT").
Information regarding the Government Bond Fund, the Asset Allocation
Fund, the Growth Opportunities Fund, the Large Company Growth Fund, and the
Equity Index Fund is contained in a separate prospectus and a separate Statement
of Additional Information dated May 1, 1998 and which may be obtained by writing
to the Trust at One Nationwide Plaza, Columbus, Ohio 43215 or by calling toll
free at 1-800-860-3946.
Much of the information contained herein expands upon subjects discussed
in the Prospectuses for the respective Funds. No investment in a Fund should be
made without first reading that Fund's Prospectus.
1
<PAGE> 39
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement each Fund's investment objective and
policies as set forth in the Prospectus.
ADDITIONAL INFORMATION ON FUND INSTRUMENTS
ASSET-BACKED SECURITIES
Asset-backed securities consist of securities secured by company
receivables, home equity loans, truck and auto loans, leases, credit card
receivables and other securities backed by other types of receivables or other
assets. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying debt may be
refinanced or paid off prior to their maturities during periods of declining
interest rates. In that case, a Fund manager may have to reinvest the proceeds
from the securities at a lower rate. Potential market gains on a security
subject to prepayment risk may be more limited than potential market gains on a
comparable security that is not subject to prepayment risk. Under certain
prepayment rate scenarios, a Fund may fail to recoup any premium paid on
asset-backed securities.
BANK OBLIGATIONS
Bank obligations consist of bankers' acceptances, certificates of
deposit, and demand and time deposits.
BANKERS' ACCEPTANCES are negotiable drafts or bills of exchange typically
drawn by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument on maturity. Bankers' acceptances
invested in by the Funds will be those guaranteed by domestic and foreign banks
and savings and loan associations having, at the time of investment, total
assets in excess of $1 billion (as of the date of their most recently published
financial statements).
CERTIFICATES OF DEPOSIT are negotiable certificates issued against funds
deposited in a commercial bank or a savings and loan association for a definite
period of time and earning a specified return. Certificates of deposit will be
those of domestic and foreign branches of U.S. commercial banks which are
members of the Federal Reserve System or the deposits of which are insured by
the Federal Deposit Insurance Corporation, and in certificates of deposit of
domestic savings and loan associations the deposits of which are insured by the
Federal Deposit Insurance Corporation if, at the time of purchase, such
institutions have total assets in excess of $1 billion (as of the date of their
most recently published financial statements). Certificates of deposit may also
include those issued by foreign banks outside the United States with total
assets at the time of purchase in excess of the equivalent of $1 billion. The
Funds may also invest in Eurodollar certificates of deposit, which are U.S.
dollar-denominated certificates of deposit issued by branches of foreign and
domestic banks located outside the United States, and Yankee certificates of
deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States. The Funds may
also invest in obligations (including banker's acceptances and certificates of
deposit) denominated in foreign currencies (see "Foreign Investments" herein).
DEMAND DEPOSITS are funds deposited in a commercial bank or a savings and
loan association which, without prior notice to the bank, may be withdrawn
generally by negotiable draft. Time and demand deposits will be maintained only
at banks or savings and loan associations from which a Fund could purchase
certificates of deposit. TIME DEPOSITS are interest-bearing non-negotiable
deposits at a bank or a savings and loan association that have a specific
maturity date. A time deposit earns a specific rate of interest over a definite
period of time. Time deposits cannot be traded on the secondary market and those
exceeding seven days and with a withdrawal penalty are considered to be
illiquid.
COMMERCIAL PAPER
Commercial paper consists of promissory notes issued by corporations.
Although such notes are generally unsecured, the Funds may also purchase secured
commercial paper. Except as noted below with respect to variable amount master
demand notes, issues of commercial paper normally have maturities of less than
nine months and fixed rates of return. The Funds only purchase commercial paper
that meet the following criteria.
2
<PAGE> 40
Bond Fund. The Bond Fund may purchase commercial paper consisting of
issues rated at the time of purchase in the highest or second highest
rating category by at least one Nationally Recognized Statistical Rating
Organization ("NRSRO") (such as A-2 or better by Standard & Poor's
Corporation ("S&P"), Aa or better by Moody's Investors Service, Inc.
("MOODY'S") or A2 or better by Fitch IBCA ("FITCH")) or if unrated,
determined by Banc One Investment Advisors Corporation ("BANC ONE
INVESTMENT ADVISORS") to be of comparable quality.
Equity Funds. The Equity Funds may purchase commercial paper consisting
of issues rated at the time of purchase in the highest or second highest
rating category by at least one NRSRO (such as A-2 or better by S&P, P-2
or better by Moody's or F-2 or better by Fitch) or if unrated, determined
by Banc One Investment Advisors to be of comparable quality.
COMMON STOCK
Common stock represents a share of ownership in a company and usually
carries voting rights and earns dividends. Unlike preferred stock, dividends on
common stock are not fixed, but are declared at the discretion of the issuer's
board of directors.
CONVERTIBLE SECURITIES
Convertible securities have characteristics similar to both fixed income
and equity securities. Convertible securities may be issued as bonds or
preferred stock. Because of the conversion feature, the market value of
convertible securities tends to move together with the market value of the
underlying stock. As a result, the Funds' selection of convertible securities is
based, to a great extent, on the potential for capital appreciation that may
exist in the underlying stock. The value of convertible securities is also
affected by prevailing interest rates, the credit quality of the issuer, and any
call provisions.
DEMAND FEATURES
The Bond Fund may acquire securities that are subject to puts and standby
commitments ("DEMAND FEATURES") to purchase the securities at their principal
amount (usually with accrued interest) within a fixed period (usually seven
days) following a demand by the Fund. The demand feature may be issued by the
issuer of the underlying securities, a dealer in the securities or by another
third party, and may not be transferred separately from the underlying security.
The underlying securities subject to a put may be sold at any time at market
rates. The Fund expects that it will acquire puts only where the puts are
available without the payment of any direct or indirect consideration. However,
if advisable or necessary, a premium may be paid for put features. A premium
paid will have the effect of reducing the yield otherwise payable on the
underlying security.
Under a "STAND-BY COMMITMENT," a dealer would agree to purchase, at the
Fund's option, specified municipal securities at a specified price. The Fund
will acquire these commitments solely to facilitate portfolio liquidity and does
not intend to exercise its rights thereunder for trading purposes. Stand-by
commitments may also be referred to as put options. The Fund will generally
limit its investments in stand-by commitments to 25% of its total assets.
The purpose of engaging in transactions involving puts is to maintain
flexibility and liquidity to permit the Fund to meet redemption requests and
remain as fully invested as possible.
FOREIGN INVESTMENTS
The Funds may invest in certain obligations or securities of foreign
issuers. Possible investments include equity securities of foreign entities,
obligations of foreign branches of U.S. banks and of foreign banks, including,
without limitation, Eurodollar Certificates of Deposit, Eurodollar Time
Deposits, Eurodollar Banker's Acceptances, Canadian Time Deposits and Yankee
Certificates of Deposits, and investments in Canadian Commercial Paper, foreign
securities and Europaper (as those terms are defined in the relevant
Prospectuses of the Trust). The Equity Funds may purchase sponsored and
unsponsored American Depository Receipts ("ADRS"). Sponsored ADRs are listed on
the New York Stock Exchange; unsponsored ADRs are not. Therefore, there may be
less information available about the issuers of unsponsored ADRs than the
issuers of sponsored ADRs. Unsponsored ADRs are restricted securities.
Foreign investments may subject a Fund to investment risks that differ in
some respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and
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economic developments, the possible imposition of withholding taxes on interest
or other income, possible seizure, nationalization or expropriation of foreign
deposits, the possible establishment of exchange controls or taxation at the
source, greater fluctuations in value due to changes in exchange rates, or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on such obligations. Such investments may
also entail higher custodial fees and sales commissions than domestic
investments. Foreign issuers of securities or obligations are often subject to
accounting treatment and engage in business practices different from those
respecting domestic issuers of similar securities or obligations. Foreign
branches of U.S. banks and foreign banks are not regulated by U.S. banking
authorities and may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks. In addition, foreign banks
generally are not bound by the accounting, auditing, and financial reporting
standards comparable to those applicable to U.S. banks.
LIMITATIONS ON THE USE OF FOREIGN INVESTMENTS. Investments in all types
of foreign obligations or securities will not exceed 25% of the net assets of a
Fund.
FOREIGN CURRENCY TRANSACTIONS
Some of the Funds may engage in various strategies to hedge against
interest rate and currency risks. These strategies may consist of use of any of
the following, some of which also have been described above: options on Fund
positions or currencies, financial and currency futures, options on such
futures, forward foreign currency transactions, forward rate agreements and
interest rate and currency swaps, caps and floors. To the extent a Fund enters
into such transactions in markets other than in the United States, the Fund may
be subject to certain currency, settlement, liquidity, trading and other risks
similar to those described above with respect to a Fund's investments in foreign
securities. A Fund may enter into such transactions only in connection with
hedging strategies. While a Fund's use of hedging strategies is intended to
reduce the volatility of the net asset value of Fund shares, the net asset value
of the Fund will fluctuate. There can be no assurance that a Fund's hedging
transactions will be effective. Furthermore, a Fund may only engage in hedging
activities from time to time and may not necessarily be engaging in hedging
activities when movements in interest rates or currency exchange rates occur.
Some of the Funds are authorized to deal in forward foreign exchange
between currencies of the different countries in which the Fund will invest and
multi-national currency units as a hedge against possible variations in the
foreign exchange rate between these currencies. This is accomplished through
contractual agreements entered into in the interbank market to purchase or sell
one specified currency for another currency at a specified future date (up to
one year) and price at the time of the contract. The Funds' dealings in forward
foreign exchange will be limited to hedging involving either specific
transactions or portfolio positions.
Transaction Hedging. When a Fund engages in transaction hedging, it
enters into foreign currency transactions with respect to specific receivables
or payables of the Fund generally arising in connection with the purchase or
sale of its portfolio securities. A Fund will engage in transaction hedging when
it desires to "lock in" the U.S. dollar price of a security it has agreed to
purchase or sell, or the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. By transaction hedging, a Fund will attempt to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the applicable foreign currency during
the period between the date on which the security is purchased or sold, or on
which the dividend or interest payment is declared, and the date on which such
payments are made or received.
Some of the Funds may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign currency. Some
of the Funds may also enter into contracts to purchase or sell foreign
currencies at a future date ("FORWARD CONTRACTS"). Although there is no current
intention to do so, the Funds reserve the right to purchase and sell foreign
currency futures contracts traded in the United States and subject to regulation
by the CFTC.
For transaction hedging purposes, some of the Funds may also purchase
U.S. exchange-listed call and put options on foreign currency futures contracts
and on foreign currencies. A put option on a futures contract gives a Fund the
right to assume a short position in the futures contract until expiration of the
option. A put option on currency gives a Fund the right to sell a currency at an
exercise price until the expiration of the option. A call option on a futures
contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option. A call option on currency gives a
Fund the right to purchase a currency at the exercise price until the expiration
of the option.
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Position Hedging. When engaging in position hedging, a Fund will enter
into foreign currency exchange transactions to protect against a decline in the
values of the foreign currencies in which its portfolio securities are
denominated (or an increase in the value of currency for securities which Banc
One Investment Advisors expects to purchase, when a Fund holds cash or
short-term investments). In connection with the position hedging, a Fund may
purchase or sell foreign currency forward contracts or foreign currency on a
spot basis. Some of the Funds may purchase U.S. exchange-listed put or call
options on foreign currency and foreign currency futures contracts and buy or
sell foreign currency futures contracts traded in the United States and subject
to regulation by the CFTC, although the Funds have no current intention to do
so.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward contract or futures
contract. Accordingly, a Fund may have to purchase additional foreign currency
on the spot market (and bear the expense of such purchase) if the market value
of the security or securities being hedged is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is made to sell the
security or securities and make delivery of the foreign currency. Conversely, it
may be necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if the market
value of such security or securities exceeds the amount of foreign currency the
Fund is obligated to deliver.
Although the Fund has no current intention to do so, a Fund may write
covered call options on up to 100% of the currencies in its portfolio to offset
some of the costs of hedging against fluctuations in currency exchange rates.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or expects to purchase or
sell. They simply seek to maintain an investment portfolio that is relatively
neutral to fluctuations in the value of the U.S. dollar relative to major
foreign currencies and establish a rate of exchange which one can achieve at
some future point in time. Additionally, although these techniques tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the increase in
the value of such currency. Moreover, it may not be possible for a Fund to hedge
against a devaluation that is so generally anticipated that a Fund is not able
to contract to sell the currency at a price above the anticipated devaluation
level.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Some of the Funds, for
hedging purposes only, may purchase forward foreign currency exchange contracts,
which involve an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract as
agreed by the parties, at a price set at the time of the contract. In the case
of a cancellable forward contract, the holder has the unilateral right to cancel
the contract at maturity by paying a specified fee. The contracts are traded in
the interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
margin or other deposit requirement, and no commissions are charged at any stage
for trades.
The maturity date of a forward contract may be any fixed number of days
from the date of the contract agreed upon by the parties, rather than a
predetermined date in a given month. Forward contracts may be in any amounts
agreed upon by the parties rather than predetermined amounts. Also, forward
foreign exchange contracts are entered into directly between currency traders so
that no intermediary is required.
At the maturity of a forward contract, a Fund may either accept or make
delivery of the currency specified in the contract, or at or prior to maturity,
enter into a closing transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts are usually
effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
FOREIGN CURRENCY FUTURES CONTRACTS. Some of the Funds may purchase
foreign currency futures contracts. Foreign currency futures contracts traded in
the United States are designed by and traded on, exchanges regulated by the
CFTC, such as the New York Mercantile Exchange. A Fund will enter into
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foreign currency futures contracts solely for bona fide hedging or other
appropriate risk managment purposes as defined in CFTC regulations. A Fund's
investment in foreign currency futures is subject to limits detailed below with
respect to investments in futures generally.
When a Fund purchases or sells a futures contract, it is required to
deposit with its custodian an amount of cash or U.S. Treasury bills known as
"initial margin." The nature of initial margin is different from that of margin
in security transactions in that it does not involve borrowing money to finance
transactions. Rather, initial margin is similar to a performance bond or good
faith deposit that is returned to the Fund upon termination of the contract,
assuming the Fund satisfies its contractual obligation.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market." These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying currency rises above the delivery price, the Fund's position declines
in value. The Fund then pays a broker a variation margin payment equal to the
difference between the delivery price of the futures contract and the market
price of the currency underlying the futures contract. Conversely, if the price
of the underlying currency falls below the delivery price of the contract, the
Fund's futures position increases in value. The broker then must make a
variation margin payment equal to the difference between the delivery price of
the futures contract and the market price of the currency underlying the futures
contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or gain. Such closing transactions involve
additional commission costs.
In addition to the margin requirements discussed above, transactions in
currency futures contracts may involve the segregation of funds pursuant to
requirements imposed by the Securities and Exchange Commission (the "SEC").
Under those requirements, where a Fund has a long position in a futures or
forward contract, it may be required to establish a segregated account (not with
a futures commission merchant or broker) containing cash or certain liquid
assets equal to the purchase price of the contract (less any margin on deposit).
For a short position in futures or forward contracts held by a Fund, those
requirements may mandate the establishment of a segregated account (not with a
futures commission merchant or broker) with cash or certain liquid assets that,
when added to the amounts deposited as margin, equal the market value of the
instruments or currency underlying the futures or forward contracts (but are not
less than the price at which the short positions were established). However,
segregation of assets is not required if the Fund "covers" a long position. For
example, instead of segregating assets, a Fund, when holding a long position in
a futures or forward contract, could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the price of the
contract held by the Fund. In addition, where a Fund takes short positions, or
engages in sales of call options, it need not segregate assets if it "covers"
these positions. For example, where a Fund holds a short position in a futures
or forward contract, it may cover by owning the instruments or currency
underlying the contract. A Fund may also cover such a position by holding a call
option permitting it to purchase the same futures or forward contract at a price
no higher than the price at which the short position was established. Where a
Fund sells a call option on a futures or forward contract, it may cover either
by entering into a long position in the same contract at a price no higher than
the strike price of the call option or by owning the instruments or currency
underlying the futures or forward contract. The Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures or forward contract at a price no higher than the strike price of the
call option sold by the Fund.
At the maturity of a futures contract, the Fund may either accept or make
delivery of the currency specified in the contract, or at or prior to maturity
enter into a closing transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts are usually
affected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are affected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed out
only on an exchange or board of trade which provides a secondary market in such
contracts. Although the Funds intend to purchase or sell foreign currency
futures contracts only on exchanges or boards of trade where there appears to be
an active secondary market, there is no assurance that a secondary market on an
exchange or board of trade will exist for any particular contract or at any
particular time. In such event, it may not be possible to close a futures
position and, in the event of adverse price movements, the Fund would continue
to be required to make daily cash payments of variation margin.
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FOREIGN CURRENCY OPTIONS. Some of the Funds may purchase U.S.
exchange-listed call and put options on foreign currencies. Such options on
foreign currencies operate similarly to options on securities. Options on
foreign currencies are affected by all of those factors which influence foreign
exchange rates and investments generally.
A Fund is authorized to purchase or sell listed foreign currency options,
and currency swap contracts as a short or long hedge against possible variations
in foreign exchange rates. Such transactions may be effected with respect to
hedges on non-U.S. dollar denominated securities (including securities
denominated in the ECU) owned by the Fund, sold by the Fund but not yet
delivered, committed or anticipated to be purchased by the Fund, or in
transaction or cross-hedging strategies. As an illustration, a Fund may use such
techniques to hedge the stated value in U.S. dollars of an investment in a
Japanese yen-dominated security. In such circumstances, for example, the Fund
may purchase a foreign currency put option enabling it to sell a specified
amount of yen for dollars at a specified price by a future date. To the extent
the hedge is successful, a loss in the value of the dollar relative to the yen
will tend to be offset by an increase in the value of the put option. To offset,
in whole or in part, the cost of acquiring such a put option, the Fund also may
sell a call option which, if exercised, requires it to sell a specified amount
of yen for dollars at a specified price by a future date (a technique called a
"straddle"). By selling such call option in this illustration, the Fund gives up
on the opportunity to profit without limit from increases in the relative value
of the yen to the dollar.
Certain differences exist between these foreign currency hedging
instruments. Foreign currency options provide the holder thereof the right to
buy or to sell a currency at a fixed price on a future date. Listed options are
third-party contracts (i.e., performance of the parties' obligations is
guaranteed by an exchange or clearing corporation) which are issued by a
clearing corporation, traded on an exchange and have standardized strike prices
and expiration dates. OTC options are two-party contracts and have negotiated
strike prices and expiration dates. Options on futures contracts are traded on
boards of trade or futures exchanges. Currency swap contacts are negotiated two
party agreements entered into in the interbank market whereby the parties
exchange two foreign currencies at the inception of the contract and agree to
reverse the exchange at a specified future time and at a specified exchange
rate. The Funds will not speculate in foreign currency options, futures or
related options or currency swap contracts. Accordingly, the Funds will not
hedge a currency substantially in excess (as determined by Banc One Investment
Advisors) of the market value of the securities denominated in such currency
which it owns, the expected acquisition price of securities which it has
committed or anticipates to purchase which are denominated in such currency,
and, in the cases of securities which have been sold by the Fund but not yet
delivered, the proceeds thereof in its denominated currency. Further, a Fund
will segregate, at its Custodians, U.S. government or other high quality
securities having a market value representing any subsequent net decrease in the
market value of such hedged positions including net positions with respect to
cross-currency hedges. A Fund may not incur potential net liabilities with
respect to currency and securities positions, including net liabilities with
respect to cross-currency hedges, of more than 33-1/3% of its total assets from
foreign currency options, futures, related options and forward currency
transactions.
The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealer or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options market.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
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RISK FACTORS IN HEDGING TRANSACTIONS
Correlation. Foreign currency hedging transactions present certain risks.
In particular, the variable degree of correlation between price movements
of the instruments used in hedging strategies and price movements in the
security being hedged creates the possibility that losses on the hedge
may be greater than gains in the value of the Fund's securities.
Liquidity. In addition, these instruments may not be liquid in all
circumstances. As a result, in volatile markets, a Fund may not be able
to dispose of or offset a transaction without incurring losses. Although
the contemplated use of hedging instruments should tend to reduce the
risk of loss due to a decline in the value of the hedged security, at the
same time the use of these instruments could tend to limit any potential
gain which might result from an increase in the value of such security.
Judgement of the Advisor. Successful use of hedging instruments is
subject to the ability of the Banc One Investment Advisors to predict
correctly movements in the direction of interest and currency rates and
other factors affecting markets for securities. If the expectations of
Banc One Investment Advisors are not met, the Fund would be in a worse
position than if a hedging strategy had not been pursued. For example, if
the Fund has hedged against the possibility of an increase in interest
rates which would adversely affect the price of securities in its
portfolio and the price of such securities increases instead, the Fund
will lose part or all of the benefit of the increased value of its
securities because it will have offsetting losses in its hedging
positions. In addition, when hedging with instruments that require
variation margin payments, if the Fund has insufficient cash to meet
daily variation margin requirements, it may have to sell securities to
meet such requirements. Such sales of securities may, but will not
necessarily, be at increased prices which reflect the rising market.
Thus, the Fund may have to sell securities at a time when it is
disadvantageous to do so.
FUTURES AND OPTIONS TRADING
The Funds may enter into futures contracts, options, options on futures
contracts and stock index futures contracts and options thereon for the purposes
of remaining fully invested, reducing transaction costs, or managing interest
rate risk.
FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase
by another party of a specified amount of a specific security, class of
securities, or an index at a specified future time and at a specified price. A
stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contracts and the price at which the futures contract is
originally struck. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. government agency.
Although most futures contracts by their terms call for actual delivery
and acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery.
Closing out an open futures position is done by taking an opposite position
("buying" a contract which has previously been "sold," or "selling" a contract
previously "purchased") in an identical contract to terminate the position. The
acquisition of put and call options on futures contracts will, respectively,
give a Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period. Brokerage commissions are incurred when a
futures contract is bought or sold.
When making futures trades, the Funds are required to make a good faith
margin deposit in cash or government securities with a broker or custodian to
initiate and maintain open positions in futures contracts. A margin deposit is
intended to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified delivery
date. Minimal initial margin requirements are established by the futures
exchange and may be changed. Brokers may establish deposit requirements which
are higher than the exchange minimums. Initial margin deposits on futures
contracts are customarily set at levels much lower than the prices at which the
underlying securities are purchased and sold, typically ranging upward from less
than 5% of the value of the contract being traded.
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After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes to the extent that
the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Funds
expect to earn interest income on their margin deposits.
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Funds intend to enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the CFTC if, to the extent that such
futures and options are not for "bona fide hedging purposes" (as defined by the
CFTC), the aggregate initial margin and premiums on such positions (excluding
the amount by which options are in the money) do not exceed 5% of the Fund's
total assets at current value. A Fund, however, may invest more than such amount
for bona fide hedging purposes, and also may invest more than such amount if it
obtains authority to do so from the CFTC without rendering the fund a commodity
pool operator or adversely affecting its status as an investment company for
federal securities laws or income tax purposes.
A Fund may buy and sell futures contracts and related options to manage
its exposure to changing interest rates and security prices. When interest rates
are expected to rise or market values of portfolio securities are expected to
fall, a Fund can seek through the sale of futures contracts to offset a decline
in the value of its portfolio securities. When interest rates are expected to
fall or market values are expected to rise, a Fund, through the purchase of such
contracts, can attempt to secure better rates or prices for the Fund than might
later be available in the market when it effects anticipated purchases.
Although techniques other than the sale and purchase of futures contracts
could be used to control the Funds' exposure to market fluctuations, the use of
futures contracts may be a more effective means of managing this exposure. While
the Funds will incur commission expenses in both opening and closing out futures
positions, these costs may be lower than transaction costs that would be
incurred in the purchase and sale of the underlying securities.
A Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying reference
security or index. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market, resulting in an inability to
close a futures position prior to its maturity date. Third, the purchase of a
futures contract involves the risk that a Fund could lose more than the original
margin deposit required to initiate a futures transaction.
LIMITATIONS ON THE USE OF FUTURES CONTRACTS
None of the Funds will enter into futures contract transactions for
purposes other than bona fide hedging purposes to the extent that, immediately
thereafter, the sum of its initial margin deposits and premiums on open
contracts exceeds 5% of the market value of the respective Fund's total assets.
None of the Funds will enter into futures contracts to the extent that the value
of the futures contracts held would exceed 25% of the respective Fund's total
assets.
The Funds have undertaken to restrict their futures contract trading as
follows: first, the Funds will not engage in transactions in futures contracts
for speculative purposes; second, the Funds will not market themselves to the
public as commodity pools or otherwise as vehicles for trading in the
commodities futures or commodity options markets; third, the Funds will disclose
to all prospective Shareholders the purpose of and limitations on their
commodity futures trading; fourth, the Funds will submit to the CFTC special
calls for information. Accordingly, registration as a commodities pool operator
with the CFTC is not required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the SEC. Under those requirements, where a Fund has a long position
in a futures contract, it may be required to establish a segregated account (not
with a futures commission merchant or broker) containing cash or certain liquid
assets equal to the purchase price of the contract (less any margin on deposit).
For a short position in futures or forward contracts held
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by a Fund, those requirements may mandate the establishment of a segregated
account (not with a futures commission merchant or broker) with cash or certain
liquid assets that, when added to the amounts deposited as margin, equal the
market value of the instruments underlying the futures contracts (but are not
less than the price at which the short positions were established). However,
segregation of assets is not required if a Fund "covers" a long position. For
example, instead of segregating assets, a Fund, when holding a long position in
a futures contract, could purchase a put option on the same futures contract
with a strike price as high or higher than the price of the contract held by the
Fund. In addition, where a Fund takes short positions, or engages in sales of
call options, it need not segregate assets if it "covers" these positions. For
example, where a Fund holds a short position in a futures contract, it may cover
by owning the instruments underlying the contract. The Funds may also cover such
a position by holding a call option permitting it to purchase the same futures
contract at a price no higher than the price at which the short position was
established. Where a Fund sells a call option on a futures contract, it may
cover either by entering into a long position in the same contract at a price no
higher than the strike price of the call option or by owning the instruments
underlying the futures contract. A Fund could also cover this position by
holding a separate call option permitting it to purchase the same futures
contract at a price no higher than the strike price of the call option sold by
the Fund. In certain circumstances, entry into a futures contract that
substantially eliminates risk of loss and the opportunity for gain in an
"appreciated financial position" will also accelerate gain to the Funds.
RISK FACTORS IN FUTURES TRANSACTIONS
LIQUIDITY. Positions in futures contracts may be closed out only on an
exchange which provides a secondary market for such futures. However, there can
be no assurance that a liquid secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close a
futures position. In the event of adverse price movements, a Fund would continue
to be required to make daily cash payments to maintain the required margin. In
such situations, if a Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, a Fund may be required to make delivery
of the instruments underlying futures contracts it holds. The inability to close
options and futures positions also could have an adverse impact on the ability
to effectively hedge such positions. The Funds will minimize the risk that they
will be unable to close out a futures contract by only entering into futures
contracts which are traded on national futures exchanges and for which there
appears to be a liquid secondary market.
RISK OF LOSS. The risk of loss in trading futures contracts in some
strategies can be substantial, due both to the low margin deposits required, and
the extremely high degree of leverage involved in futures pricing. Because the
deposit requirements in the futures markets are less onerous than margin
requirements in the securities market, there may be increased participation by
speculators in the futures market which may also cause temporary price
distortions. A relatively small price movement in a futures contract may result
in immediate and substantial loss (as well as gain) to the investor. For
example, if at the time of purchase, 10% of the value of the futures contract is
deposited as margin, a subsequent 10% decrease in the value of the futures
contract would result in a total loss of the margin deposit, before any
deduction for the transaction costs, if the account were then closed out. Thus,
a purchase or sale of a futures contract may result in losses in excess of the
amount invested in the contract. However, because the futures strategies engaged
in by the Funds typically are for risk management purposes, Banc One Investment
Advisors do not believe that the Funds are subject to the risks of loss
frequently associated with futures transactions. Each Fund would presumably have
sustained comparable losses if, instead of the futures contract, it had invested
in the underlying financial instrument and sold it after the decline.
CORRELATION RISK. Utilization of futures transactions by a Fund involves
the risk of imperfect or no correlation where the securities underlying futures
contracts have different maturities than the portfolio securities being hedged.
It is also possible that a Fund could lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or related option.
PRICE FLUCTUATIONS. Most futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
The daily limit establishes the maximum amount that the price of a futures
contract may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of contract, no trades may be made on that day at a price beyond
that limit. The daily limit governs only price movement during a particular
trading day and therefore does not limit potential losses, because the limit may
prevent the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several
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consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures traders to
substantial losses.
Some futures strategies, including selling futures, buying puts and
writing covered calls, may reduce a Fund's exposure to price fluctuations. Other
strategies, including buying futures, and buying calls, tend to increase market
exposure. Futures and options may be combined with each other in order to adjust
the risk and return characteristics of the overall portfolio. A Fund expects to
enter into these transactions to manage a return or spread on a particular
investment or portion of its assets, to protect against any increase in the
price of securities a Fund anticipates purchasing at a later date, or for other
risk management strategies.
OPTIONS CONTRACTS
The Funds may use options on securities or futures contracts as a hedging
device. An option gives the buyer of the option the right (but not the
obligation) to purchase a futures contract or security at a specified price
(also called the STRIKE price). A CALL OPTION gives the buyer the "right to
purchase" a security at a specified price (the exercise price) at any time until
a certain date (the expiration date). So long as the obligation of the writer of
a call option continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring the writer to deliver
the underlying security against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by repurchasing an option
identical to that previously sold. To secure the writer's obligation to deliver
the underlying security in the case of a call option, subject to the rules of
the Options Clearing Corporation, a writer is required to deposit in escrow the
underlying security or other assets in accordance with such rules.
A PUT OPTION gives the buyer the right to sell the underlying futures
contract or security. The purchase price of an option is referred to as its
"premium." The seller (or "writer") of a put option must purchase futures
contracts or securities at a strike price if the option is exercised. In the
case of a call option, the seller must sell the futures contract or security in
the underlying futures contract or security at the strike price if the option is
exercised.
A NAKED OPTION is an option written by a party who does not own the
underlying futures contract or security. A COVERED OPTION is an option written
by a party who does own the underlying position. The initial purchase (sale) of
an option is an "opening transaction." In order to close out an option position,
the Fund may enter into a "closing transaction". This involves the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened.
A call option on a futures contract or security is said to be
"in-the-money" if the strike price is below current market levels and
"out-of-the-money" if the strike price is above current market levels. A put
option is "in-the-money" if the strike price is above current market levels, and
"out-of-the-money" if the strike price is below current market levels.
Options have limited life spans, usually tied to the delivery or
settlement date of the underlying futures contract or security. Some options,
however, expire significantly in advance of such dates. An option that is
"out-of-the-money" and not offset by the time it expires becomes worthless. On
certain exchanges "in-the-money" options are automatically exercised on their
expiration date, but on others unexercised options simply become worthless after
their expiration date. Options usually trade at a premium (referred to as the
"time value" of the option) above their intrinsic value (the difference between
the market price for the underlying futures contract or equity security and the
strike price). As an option nears its expiration date, the market value and the
intrinsic value move into parity as the time value diminishes.
Increased market volatility generally increases the value of options by
increasing the probability of favorable market swings, putting outstanding
options "in-the-money." Although purchasing options is a limited risk trading
approach, significant losses can be incurred by doing so.
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WRITING (SELLING) COVERED CALLS
The Funds may write (sell) covered call options and purchase options to
close out options previously written by the Fund. The Funds' purpose in writing
covered call options is to generate additional premium income. This premium
income will serve to enhance a Fund's total return and will reduce the effect of
any price decline of the security involved in the option. Generally, the Funds
will write covered call options on securities which, in the opinion of Banc One
Investment Advisors are not expected to make any major price moves in the near
future but which, over the long term, are deemed to be attractive investments
for the Fund. The Funds will write only covered call options. This means that a
Fund will only write a call option on a security which a Fund already owns.
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each Fund's
investment objectives. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked options, which a Fund will not do), but capable of
enhancing the Fund's total return. When writing a covered call option, a Fund,
in return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, but conversely
retains the risk of loss should the price of the security decline. Unlike one
who owns securities not subject to an option, a Fund has no control over when it
may be required to sell the underlying securities, since it may be assigned an
exercise notice at any time prior to the expiration of its obligation as a
writer. Thus, the security could be "called away" at a price substantially below
the fair market value of the security. If a call option which a Fund has written
expires, a Fund will realize a gain in the amount of the premium; however, such
gain may be offset by a decline in the market value of the underlying security
during the option period. If the call option is exercised, a Fund will realize a
gain or loss from the sale of the underlying security. The security covering the
call will be maintained in a segregated account of the Fund's custodian. The
Funds do not consider a security covered by a call to be "pledged" as that term
is used in each Fund's policy which limits the pledging or mortgaging of its
assets.
The premium received is the market value of an option. The premium each
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, Banc One Investment Advisors', in determining
whether a particular call option should be written on a particular security,
will consider the reasonableness of the anticipated premium and the likelihood
that a liquid secondary market will exist for those options. The premium
received by a Fund for writing covered call options will be recorded as a
liability in the Fund's statement of assets and liabilities. This liability will
be adjusted daily to the option's current market value, which will be the latest
sale price at the time at which the net asset value per Share of the Fund is
computed (close of the New York Stock Exchange), or, in the absence of such
sale, the latest asked price. The liability will be extinguished upon expiration
of the option, the purchase of an identical option in the closing transaction,
or delivery of the underlying security upon the exercise of the option.
Generally, a Fund, in order to avoid the exercise of an option sold by
it, will be able to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in a Fund's best interest. A closing purchase
transaction consists of a Fund purchasing an option having the same terms as the
option sold by a Fund, and has the effect of cancelling a Fund's position as a
seller. The premium which a Fund will pay in executing a closing purchase
transaction may be higher (or lower) than the premium received when the option
was sold, depending in large part upon the relative price of the underlying
security at the time of each transaction. To the extent options sold by a Fund
are exercised and a Fund delivers securities to the holder of a call option, a
Fund's turnover rate will increase, which would cause a Fund to incur additional
brokerage expenses.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security from being called, or
to permit the sale of the underlying security. Furthermore, effecting a closing
transaction will permit a Fund to write another call option on the underlying
security with either a different exercise price or expiration date or both. If a
Fund desires to sell a particular security from its portfolio on which it has
written a call options it will seek to effect a closing transaction prior to, or
concurrently with, the sale of the security. There is, of course, no assurance
that a Fund will be able to effect such closing transactions at a favorable
price. If a Fund cannot enter into such a transaction, it may be required to
hold a security that it might otherwise have sold, in which case it would
continue to be at market risk on the security. This could result in higher
transaction costs. A Fund will pay transaction
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costs in connection with the writing of options to close out previously written
options. Such transaction costs are normally higher than those applicable to
purchases and sales of portfolio securities.
Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities at the time the options are written. From time to time, a Fund may
purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such security
from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction
if the cost of the transaction is less or more than the premium received from
the writing of the option. Because increases in the market price of a call
option will generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying security owned
by the Fund.
PURCHASING CALL OPTIONS
The Funds may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option. In the event that paying a premium for a call option, together with a
price movement in the underlying security, is such that exercise of the option
would not be profitable to the Fund, loss of the premium may be offset by a
decrease in the acquisition cost of securities by the Fund.
PURCHASING PUT OPTIONS
The Funds may also purchase put options to protect their portfolio
holdings in an underlying security against a decline in market value. Such hedge
protection is provided during the life of the put option since the Fund, as
holder of the put option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying security's market
price. For a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, the Fund will reduce
any profit it might otherwise have realized from appreciation of the underlying
security by the premium paid for the put option and by transaction cost.
However, any loss of premium may be offset by an increase in the value of the
Fund's securities.
SECURED PUTS
The Funds may write secured puts. For the secured put writer, substantial
depreciation in the value of the underlying security would result in the
security being "put to" the writer at the strike price of the option which may
be substantially in excess of the fair market value of the security. If a
secured put option expires unexercised, the writer realizes a gain in the amount
of the premium.
STRADDLES AND SPREADS
The Funds also may engage in straddles and spreads. In a straddle
transaction, a Fund either buys a call and a put or sells a call and a put on
the same security. In a spread, the Fund purchases and sells a call or a put.
The Fund will sell a straddle when Banc One Investment Advisors believes the
price of a security will be stable. The Fund will receive a premium on the sale
of the put and the call. A spread permits the Fund to make a hedged investment
that the price of a security will increase or decline
RISK FACTORS IN OPTIONS TRANSACTIONS
Risk of Loss. When it purchases an option, a Fund runs the risk that it
will lose its entire investment in the option in a relatively short period of
time, unless the Fund exercises the option or enters into a closing sale
transaction with respect to the option during the life of the option. If the
price of the underlying security does not rise (in the case of a call) or fall
(in the case of a put) to an extent sufficient to cover the option premium and
transaction costs, a Fund will lose part or all of its investment in the option.
This contrasts with
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an investment by a Fund in the underlying securities, since the Fund may
continue to hold its investment in those securities notwithstanding the lack of
a change in price of those securities. In addition, there may be imperfect or no
correlation between the changes in market value of the securities held by the
Funds and the prices of the options.
Judgement of Advisor. The successful use of the options strategies
depends on the ability of Banc One Investment Advisors to assess interest rate
and market movements correctly and to accurately calculate the fair price of the
option. The effective use of options also depends on a Fund's ability to
terminate option positions at times when Banc One Investment Advisors deems it
desirable to do so. A Fund will take an option position only if Banc One
Investment Advisors believes there is a liquid secondary market for the option,
however, there is no assurance that a Fund will be able to effect closing
transactions at any particular time or at an acceptable price.
Liquidity. If a secondary trading market in options were to become
unavailable, a Fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the market for
particular options or series of options. A marketplace may discontinue trading
of a particular option or options generally. In addition, a market could become
temporarily unavailable if unusual events, such as volume in excess of trading
or clearing capability, were to interrupt normal market operations. A
marketplace may at times find it necessary to impose restrictions on particular
types of options transactions, which may limit a Fund's ability to realize its
profits or limit its losses.
Market Restrictions. Disruptions in the markets for the securities
underlying options purchased or sold by a Fund could result in losses on the
options. If trading is interrupted in an underlying security, the trading of
options on that security is normally halted as well. As a result, a Fund as
purchaser or writer of an option will be unable to close out its positions until
option trading resumes, and it may be faced with losses if trading in the
security reopens at a substantially different price. In addition, the Options
Clearing Corporation ("OCC") or other options markets may impose exercise
restrictions. If a prohibition on exercise is imposed at the time when trading
in the option has also been halted, a Fund as purchaser or writer of an option
will be locked into its position until one of the two restrictions has been
lifted. If a prohibition on exercise remains in effect until an option owned by
a Fund has expired, the Fund could lose the entire value of its option.
Foreign Investment Risks. Special risks are presented by
internationally-traded options. Because of time differences between the United
States and the various foreign countries, and because different holidays are
observed in different countries, foreign option markets may be open for trading
during hours or on days when U.S. markets are closed. As a result, option
premiums may not reflect the current prices of the underlying interest in the
United States.
LIMITATIONS ON THE USE OF OPTIONS.
Each Fund will limit the writing of put and call options to 25% of its
net assets. Some Funds may enter into over-the-counter option transactions.
There will be an active over-the-counter market for such options which will
establish their pricing and liquidity. Broker/Dealers with whom the Trust will
enter into such option transactions shall have a minimum net worth of
$20,000,000.
GOVERNMENT SECURITIES
Obligations of certain agencies and instrumentalities of the U.S.
government, such as the Government National Mortgage Association ("GINNIE MAE")
and the Export-Import Bank, are supported by the full faith and credit of the
U.S. Treasury; others, such as the Federal National Mortgage Association
("FANNIE MAE"), are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations; and still others, such as the
Federal Farm Credit Banks and the Federal Home Loan Mortgage Corporation
("FREDDIE MAC") are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial support
to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. A Fund will invest in the obligations of such
agencies or instrumentalities only when Banc One Investment Advisors believes
that the credit risk with respect thereto is minimal. For information on
mortgage-related securities issued by certain agencies or instrumentalities of
the U.S. government, see "Investment Objectives and Policies--Mortgage-Related
Securities" in this Statement of Additional Information.
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HIGH YIELD/ HIGH RISK SECURITIES/JUNK BONDS
The Mid Cap Opportunities Fund may invest in convertible securities that
are rated below investment grade by the primary rating agencies (BB or lower by
S&P and BA or lower by Moody's). Such convertible securities may be structured
as bonds or preferred stock that convert to common stock. Terms used to describe
such convertible securities include "high yield securities," "lower rated
bonds," "non-investment grade bonds," "below investment grade bonds," and "junk
bonds." Generally, lower rated debt securities provide a higher yield than
higher rated debt securities of similar maturity, but are subject to a greater
degree of risk with respect to the ability of the issuer to meet its principal
and interest obligations. Issuers of high yield, high risk securities may not be
as strong financially as those issuing higher rated securities. These securities
are regarded as predominately speculative. The market value of high yield
securities may fluctuate more than the market value of higher rated securities,
since high yield securities tend to reflect short-term corporate and market
developments to a greater extent than higher rated securities, which fluctuate
primarily in response to the general level of interest rates, assuming that
there has been no change in the fundamental quality of such securities. The
market prices of fixed income securities generally fall when interest rates
rise. Conversely, the market prices of fixed-income securities generally rise
when interest rates fall.
Additional risks of high yield securities include limited liquidity and
secondary market support. As a result, the prices of high yield securities may
decline rapidly in the event that a significant number of holders decide to
sell. Changes in expectations regarding an individual issuer, an industry or
high yield securities generally could reduce market liquidity for such
securities and make their sale by the Fund more difficult, at least in the
absence of price concessions. Reduced liquidity also could adversely affect the
Fund's ability to accurately value high yield securities. Issuers of high yield
securities also are more vulnerable to real or perceived economic changes (for
instance, an economic downturn or prolonged period of rising interest rates),
political changes or adverse developments specific to the issuer. Adverse
economic, political or other developments may impair the issuer's ability to
service principal and interest obligations, to meet projected business goals and
to obtain additional financing, particularly if the issuer is highly leveraged.
In the event of a default, the Fund would experience a reduction of its income
and could expect a decline in the market value of the defaulted securities.
Finally, proposed or yet to be proposed new laws may have a possible
negative impact on the market for high yield, high risk bonds. As an example, in
the late 1980's, legislation required federally-insured savings and loan
associations to divest their investments in high yield, high risk bonds. New
legislation, if enacted, could have a material negative effect on a Fund's net
asset value and investment practices.
INVESTMENT COMPANY SECURITIES
The Funds may invest up to 5% of their total assets in the securities of
any one investment company (another mutual fund), but may not own more than 3%
of the outstanding securities of any one investment company or invest more than
10% of their total assets in the securities of other investment companies. Other
investment company securities may include securities of a money market fund of
The One Group(R), and securities of other investment companies for which Banc
One Investment Advisors serves as investment advisor or administrator. Because
other investment companies employ an investment advisor, such investments by the
Funds may cause Shareholders to bear duplicate fees. Banc One Investment
Advisors will waive its fee attributable to the assets of the investing fund
invested in funds advised by Banc One Investment Advisors; and, to the extent
required by the laws of any state in which shares of the Trust are sold, Banc
One Investment Advisors will waive its fees attributable to the assets of any
Fund invested in any investment company.
LOAN PARTICIPATIONS AND ASSIGNMENTS
Some of the Funds may invest in fixed and floating rate loans ("LOANS")
arranged through private negotiations between issuers (which may be corporate
issuers or issuers of sovereign debt obligations) and one or more financial
institutions ("LENDERS"). Investments in loans are expected in most instances to
be in the form of participations in Loans ("PARTICIPATIONS") and assignments of
all or a portion of Loans ("ASSIGNMENTS") from third parties. Because loan
participants and assignments may be illiquid, a Fund will invest no more than
15% of its net assets in loan participations and other illiquid assets. The
government that is the borrower on the Loan will be considered by the Fund to be
the issuer of a Participations or Assignment for purposes of the Fund's
fundamental investment policy that it will not invest 25% or more of its total
assets in securities of issuers conducting their principal business activities
in the same industry (i.e., foreign government). The Funds investment in
Participations typically will result in the Fund having a contractual
relationship only with the Lender and not with the borrower.
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When a Fund purchases Assignments from Lenders it will acquire direct
rights against the borrower on the Loan. Because Assignments are arranged
through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by a Fund as the
purchaser of an Assignment may differ from, and be more limited than, those held
by the assigning Lender. The assignability of certain sovereign debt obligations
is restricted by the governing documentation as to the nature of the assignee
such that the only way in which a Fund may acquire an interest in a Loan is
through a Participation and not an Assignment. A Fund may have difficulty
disposing of Assignments and Participations because to do so it will have to
assign such securities to a third party. Because there is no liquid market for
such securities, the Funds anticipate that such securities could be sold only to
a limited number of institutional investors. The lack of a liquid secondary
market may have an adverse impact on the value of such securities and a Fund's
ability to dispose of particular Assignments or Participations when necessary to
meet a Fund's liquidity needs in response to a specific economic event such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for a Fund to assign a value to those securities for purposes of
valuing a Fund's portfolio and calculating its net asset value.
MORTGAGE-RELATED SECURITIES
MORTGAGE-BACKED SECURITIES (CMOS AND REMICS). Mortgage-backed securities
include collateralized mortgage obligations ("CMOS") and Real Estate Mortgage
Investment Conduits ("REMICS"). Mortgage-backed securities represent pools of
mortgage loans assembled for sale to investors by various governmental agencies
such as Ginnie Mae and government-related organizations such as Fannie Mae and
Freddie Mac, as well as by non-governmental issuers such as commercial banks,
savings and loan institutions, mortgage bankers, and private mortgage insurance
companies. Such non-governmental mortgage securities cannot be treated as U.S.
government securities for purposes of investment policies. A REMIC is a CMO that
qualifies for special tax treatment under the Code and invests in certain
mortgages principally secured by interests in real property and other permitted
investments.
There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue.
Ginnie Mae Securities. Mortgage-related securities issued by Ginnie Mae
include Ginnie Mae Mortgage Pass-Through Certificates which are
guaranteed as to the timely payment of principal and interest by Ginnie
Mae and such guarantee is backed by the full faith and credit of the
United States. Ginnie Mae is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. Ginnie Mae
certificates also are supported by the authority of Ginnie Mae to borrow
funds from the U.S. Treasury to make payments under its guarantee.
Fannie Mae Securities Mortgage-related securities issued by Fannie Mae
include Fannie Mae Guaranteed Mortgage Pass-Through Certificates which
are solely the obligations of Fannie Mae and are not backed by or
entitled to the full faith and credit of the United States. Fannie Mae is
a government-sponsored organization owned entirely by private
stock-holders. Fannie Mae Certificates are guaranteed as to timely
payment of the principal and interest by Fannie Mae.
Freddie Mac Securities. Mortgage-related securities issued by Freddie Mac
include Freddie Mac Mortgage Participation Certificates. Freddie Mac is a
corporate instrumentality of the United States, created pursuant to an
Act of Congress, which is owned entirely by Federal Home Loan Banks.
Freddie Mac Certificates are not guaranteed by the United States or by
any Federal Home Loan Banks and do not constitute a debt or obligation of
the United States or of any Federal Home Loan Bank. Freddie Mac
Certificates entitle the holder to timely payment of interest, which is
guaranteed by Freddie Mac. Freddie Mac guarantees either ultimate
collection or timely payment of all principal payments on the underlying
mortgage loans. When Freddie Mac does not guarantee timely payment of
principal, Freddie Mac may remit the amount due on account of its
guarantee of ultimate payment of principal at any time after default on
an underlying mortgage, but in no event later than one year after it
becomes payable.
CMOs and guaranteed REMIC pass-through certificates ("REMIC
CERTIFICATES") issued by Fannie Mae, Freddie Mac, Ginnie Mae and private issuers
are types of multiple class pass-through securities. Investors may purchase
beneficial interests in REMICs, which are known as "regular" interests or
"residual" interests. The Bond Fund does not currently intend to purchase
residual interests in REMICs. The REMIC Certificates represent beneficial
ownership interests in a REMIC Trust, generally consisting of mortgage loans or
Fannie Mae, Freddie Mac or Ginnie Mae guaranteed mortgage pass-through
certificates (the
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"MORTGAGE ASSETS"). The obligations of Fannie Mae, Freddie Mac or Ginnie Mae
under their respective guaranty of the REMIC Certificates are obligations solely
of Fannie Mae, Freddie Mac or Ginnie Mae, respectively.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient funds are otherwise available.
For Freddie Mac REMIC Certificates, Freddie Mac guarantees the timely
payment of interest, and also guarantees the payment of principal as payments
are required to be made on the underlying mortgage participation certificates
("PCS"). PCs represent undivided interests in specified residential mortgages or
participation therein purchased by Freddie Mac and placed in a PC pool. With
respect to principal payments on PCs, Freddie Mac generally guarantees ultimate
collection of all principal of the related mortgage loans without offset or
deduction. Freddie Mac also guarantees timely payment of principal on certain
PCS referred to as "Gold PCs."
Ginnie Mae REMIC Certificates guarantee the full and timely payment of
interest and principal on each class of securities (in accordance with the terms
of those classes as specified in the related offering circular supplement). The
Ginnie Mae guarantee is backed by the full faith and credit of the United States
of America.
REMIC Certificates issued by Fannie Mae, Freddie Mac and Ginnie Mae are
treated as U.S. government securities for purposes of investment policies. CMOs
and REMIC Certificates provide for the redistribution of cash flow to multiple
classes. Each class of CMOs or REMIC Certificates, often referred to as a
"tranche," is issued at a specific adjustable or fixed interest rate and must be
fully retired no later than its final distribution date. This reallocation of
interest and principal results in the redistribution of prepayment risk across
to different classes. This allows for the creation of bonds with more or less
risk than the underlying collateral exhibits. Principal prepayments on the
mortgage loans or the Mortgage Assets underlying the CMOs or REMIC Certificates
may cause some or all of the classes of CMOs or REMIC Certificates to be retired
substantially earlier than their final distribution dates. Generally, interest
is paid or accrues on all classes of CMOs or REMIC Certificates on a monthly
basis.
The principal of and interest on the Mortgage Assets may be allocated
among the several classes of CMOs or REMIC Certificates in various ways. In
certain structures (known as "sequential pay" CMOs or REMIC Certificates),
payments of principal, including any principal prepayments, on the Mortgage
Assets generally are applied to the classes of CMOs or REMIC Certificates in the
order of their respective final distribution dates. Thus, no payment of
principal will be made on any class of sequential pay CMOs or REMIC Certificates
until all other classes having an earlier final distribution date have been paid
in full.
Additional structures of CMOs and REMIC Certificates include, among
others, "parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC
Certificates are those which are structured to apply principal payments and
prepayments of the Mortgage Assets to two or more classes concurrently on a
proportionate or disproportionate basis. These simultaneous payments are taken
into account in calculating the final distribution date of each class.
A wide variety of REMIC Certificates may be issued in the parallel pay or
sequential pay structures. These securities include accrual certificates (also
known as "Z-BONDS"), which only accrue interest at a specified rate until all
other certificates having an earlier final distribution date have been retired
and are converted thereafter to an interest-paying security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
Certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC Certificates (the
"PAC CERTIFICATES"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount of principal payable on the next payment date. The
PAC Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying Mortgage Assets. These tranches tend to have market prices and
yields that are much more volatile than the PAC classes. The Z-Bonds in which
the Funds may invest may bear the same non-credit- related risks as do other
types of Z-Bonds. Z-Bonds in which the Fund may invest will not include residual
interest.
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MORTGAGE DOLLAR ROLLS. Some of the Funds may enter into Mortgage Dollar
Rolls in which the Funds sell securities for delivery in the current month and
simultaneously contract with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. When a Fund enters into mortgage dollar rolls, the Fund will hold and
maintain a segregated account until the settlement date, cash or liquid, high
grade debt securities in an amount equal to the forward purchase price. The
Funds benefit to the extent of any difference between the price received for the
securities sold and the lower forward price for the future purchase (often
referred to as the "drop") or fee income plus the interest earned on the cash
proceeds of the securities sold until the settlement date of the forward
purchase. Unless such benefits exceed the income, capital appreciation and gain
or loss due to mortgage prepayments that would have been realized on the
securities sold as part of the mortgage dollar roll, the use of this technique
will diminish the investment performance of the Funds compared with what such
performance would have been without the use of mortgage dollar rolls. The
benefits derived from the use of mortgage dollar rolls may depend upon Banc One
Investment Advisors' ability to predict correctly mortgage prepayments and
interest rates. There is no assurance that mortgage dollar rolls can be
successfully employed. The Funds currently intend to enter into mortgage dollar
rolls that are accounted for as a financing transaction. For purposes of
diversification and investment limitations, mortgage dollar rolls are considered
to be mortgage-backed securities.
STRIPPED MORTGAGE BACKED SECURITIES. Stripped Mortgage Backed Securities
("SMBS") are derivative multi-class mortgage securities. SMBS are usually
structured with two classes that receive different proportions of the interest
and principal distributions from a pool of mortgage assets. A common type of
SMBS will have one class receiving all of the interest from the mortgage assets
("IOS"), while the other class will receive all of the principal ("POS").
Mortgage IOs receive monthly interest payments based upon a notional amount that
declines over time as a result of the normal monthly amortization and
unscheduled prepayments of principal on the associated mortgage POs.
In addition to the risks applicable to Mortgage-Related Securities in
general, SMBS are extremely sensitive to changes in prepayments and interest
rates. Even though such securities have been guaranteed by an agency or
instrumentality of the U.S. government, under certain interest rate or
prepayment rate scenarios, the Funds may fail to fully recover their investment
in such securities. Changes in prepayment rates can cause the return on
investment in IOs to be highly volatile, and under extremely high prepayment
conditions IOs can incur significant losses. POs are bought at a discount to the
ultimate principal repayment value. The rate of return on a PO will vary with
prepayments, rising as prepayment increase and falling as prepayments decrease.
The market value of the class consisting entirely of principal payments
generally is unusually volatile in response to changes in interest rates. The
yields on a class of SMBS that receives all or most of the interest from
mortgage assets are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more volatile
and there is a greater risk that any premium paid will not be fully recouped.
Banc One Investment Advisors will seek to manage these risks (and potential
benefits) by investing in a variety of such securities and by using certain
analytical and hedging.
A Fund may only invest in SMBS issued or guaranteed by the U.S.
government, its agencies or instrumentalities. Although the market for SMBS is
increasingly liquid, certain SMBS may not be readily marketable and will be
considered illiquid for purposes of the Funds' limitations on investments in
illiquid securities.
ADJUSTABLE RATE MORTGAGE LOANS. The Bond Fund may invest in adjustable
rate mortgage loans ("ARMS"). ARMs eligible for inclusion in a mortgage pool
will generally provide for a fixed initial mortgage interest rate for a
specified period of time. Thereafter, the interest rates (the "MORTGAGE INTEREST
RATES") may be subject to periodic adjustment based on changes in the applicable
index rate (the "INDEX RATE"). The adjusted rate would be equal to the Index
Rate plus a gross margin, which is a fixed percentage spread over the Index Rate
established for each ARM at the time of its origination.
Adjustable interest rates can cause payment increases that some borrowers
may find difficult to make. However, certain ARMs may provide that the Mortgage
Interest Rate may not be adjusted to a rate above an applicable lifetime maximum
rate or below an applicable lifetime minimum rate for such ARM. Certain ARMs may
also be subject to limitations on the maximum amount by which the Mortgage
Interest Rate may adjust for any single adjustment period (the "Maximum
Adjustment"). Other ARMs ("Negatively Amortizing ARMs") may provide instead or
as well for limitations on changes in the monthly payment on such ARMs.
Limitations on monthly payments can result in monthly payments which are greater
or less than the amount necessary to amortize a Negatively Amortizing ARM by its
maturity at the Mortgage Interest Rate in effect in any particular month. In the
event that a monthly payment is not sufficient to pay the
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interest accruing on a Negatively Amortizing ARM, any such excess interest is
added to the principal balance of the loan, causing negative amortization and
will be repaid through future monthly payments. It may take borrowers under
Negatively Amortizing ARMs longer periods of time to achieve equity and may
increase the likelihood of default by such borrowers. In the event that a
monthly payment exceeds the sum of the interest accrued at the applicable
Mortgage Interest Rate and the principal payment which would have been necessary
to amortize the outstanding principal balance over the remaining term of the
loan, the excess (or "accelerated amortization") further reduces the principal
balance of the ARM. Negatively Amortizing ARMs do not provide for the extension
of their original maturity to accommodate changes in their Mortgage Interest
Rate. As a result, unless there is a periodic recalculation of the payment
amount (which there generally is), the final payment may be substantially larger
than the other payments. These limitations on periodic increases in interest
rates and on changes in monthly payment protect borrowers from unlimited
interest rate and payment increases.
Certain adjustable rate mortgage loans may provide for periodic
adjustments of scheduled payments in order to amortize fully the mortgage loan
by its stated maturity. Other adjustable rate mortgage loans may permit their
stated maturity to be extended or shortened in accordance with the portion of
each payment that is applied to interest as affected by the periodic interest
rate adjustments.
There are two main categories of indices which provide the basis for rate
adjustments on ARMs: those based on U.S. Treasury securities and those derived
from a calculated measure such as a cost of funds index or a moving average of
mortgage rates. Commonly utilized indices include the one-year, three-year and
five-year constant maturity Treasury bill rates, the three-month Treasury bill
rate, the 180-day Treasury bill rate, rates on longer-term Treasury securities,
the 11th District Federal Home Loan Bank Cost of Funds, the National Median Cost
of Funds, the one-month, three-month, six-month or one-year London Interbank
Offered Rate ("LIBOR"), the prime rate of a specific bank, or commercial paper
rates. Some indices, such as the one-year constant maturity Treasury rate,
closely mirror changes in market interest rate levels. Others, such as the 11th
District Federal Home Loan Bank Cost of Funds index, tend to lag behind changes
in market rate levels and tend to be somewhat less volatile. The degree of
volatility in the market value of the Fund's portfolio and therefore in the net
asset value of the Fund's shares will be a function of the length of the
interest rate reset periods and the degree of volatility in the applicable
indices.
In general, changes in both prepayment rates and interest rates will
change the yield on Mortgage-Backed Securities. The rate of principal
prepayments with respect to ARMs has fluctuated in recent years. As is the case
with fixed mortgage loans, ARMs may be subject to a greater rate of principal
prepayments in a declining interest rate environment. For example, if prevailing
interest rates fall significantly, ARMs could be subject to higher prepayment
rates than if prevailing interest rates remain constant because the availability
of fixed rate mortgage loans at competitive interest rates may encourage
mortgagors to refinance their ARMs to "lock-in" a lower fixed interest rate.
Conversely, if prevailing interest rates rise significantly, ARMs may prepay at
lower rates than if prevailing rates remain at or below those in effect at the
time such ARMs were originated. As with fixed rate mortgages, there can be no
certainty as to the rate of prepayments on the ARMs in either stable or changing
interest rate environments. In addition, there can be no certainty as to whether
increases in the principal balances of the ARMs due to the addition of deferred
interest may result in a default rate higher than that on ARMs that do not
provide for negative amortization. Other factors affecting prepayment of ARMs
include changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgage properties and servicing decisions.
RISKS FACTORS OF MORTGAGE-RELATED SECURITIES.
Guarantor Risk. There can be no assurance that the U.S. government would
provide financial support to Fannie Mae, Freddie Mac or Ginnie Mae if necessary
in the future. Although certain mortgage-related securities are guaranteed by a
third party or otherwise similarly secured, the market value of the security,
which may fluctuate, is not so secured.
Interest Rate Sensitivity. If a Fund purchases a mortgage-related
security at a premium, that portion may be lost if there is a decline in the
market value of the security whether resulting from changes in interest rates or
prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages and, therefore, it is not possible to
predict accurately the security's return to the Funds. In addition, regular
payments received in respect of mortgage-related securities include
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both interest and principal. No assurance can be given as to the return the
Funds of the Trust will receive when these amounts are reinvested.
Market Value. The market value of the Fund's adjustable rate
Mortgage-Backed Securities may be adversely affected if interest rates increase
faster than the rates of interest payable on such securities or by the
adjustable rate mortgage loans underlying such securities. Furthermore,
adjustable rate Mortgage-Backed Securities or the mortgage loans underlying such
securities may contain provisions limiting the amount by which rates may be
adjusted upward and downward and may limit the amount by which monthly payments
may be increased or decreased to accommodate upward and downward adjustments in
interest rates.
Prepayments. Although having less risk of decline during periods of
rising interest rates, adjustable rate Mortgage-Backed Securities have less
potential for capital appreciation than fixed rate Mortgage-Backed Securities
because their coupon rates will decline in response to market interest rate
declines. The market value of fixed rate Mortgage-Backed Securities may be
adversely affected as a result of increases in interest rates and, because of
the risk of unscheduled principal prepayments, may benefit less than other fixed
rate securities of similar maturity from declining interest rates. Finally, to
the extent Mortgage-Backed Securities are purchased at a premium, mortgage
foreclosures and unscheduled principal prepayments may result in some loss of
the Fund's principal investment to the extent of the premium paid. On the other
hand, if such securities are purchased at a discount, both a scheduled payment
of principal and an unscheduled prepayment of principal will increase current
and total returns and will accelerate the recognition of income.
Yield Characteristics. The yield characteristics of Mortgage-Backed
Securities differ from those of traditional fixed income securities. The major
differences typically include more frequent interest and principal payments,
usually monthly, and the possibility that prepayments of principal may be made
at any time. Prepayment rates are influenced by changes in current interest
rates and a variety of economic, geographic, social and other factors and cannot
be predicted with certainty. As with fixed rate mortgage loans, adjustable rate
mortgage loans may be subject to a greater prepayment rate in a declining
interest rate environment. The yields to maturity of the Mortgage-Backed
Securities in which the Funds invest will be affected by the actual rate of
payment (including prepayments) of principal of the underlying mortgage loans.
The mortgage loans underlying such securities generally may be prepaid at any
time without penalty. In a fluctuating interest rate environment, a predominant
factor affecting the prepayment rate on a pool of mortgage loans is the
difference between the interest rates on the mortgage loans and prevailing
mortgage loan interest rates (giving consideration to the cost of any
refinancing). In general, if mortgage loan interest rates fall sufficiently
below the interest rates on fixed rate mortgage loans underlying mortgage
pass-through securities, the rate of prepayment would be expected to increase.
Conversely, if mortgage loan interest rates rise above the interest rates on the
fixed rate mortgage loans underlying the mortgage pass-through securities, the
rate of prepayment may be expected to decrease.
MUNICIPAL SECURITIES
Municipal Securities are issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as bridges, highways, roads, schools, water and sewer works, and other
utilities. Other public purposes for which Municipal Securities may be issued
include refunding outstanding obligations, obtaining funds for general operating
expenses and obtaining funds to lend to other public institutions and
facilities. In addition, certain debt obligations known as "PRIVATE ACTIVITY
BONDS" may be issued by or on behalf of municipalities and public authorities to
obtain funds to provide certain water, sewage and solid waste facilities,
qualified residential rental projects, certain local electric, gas and other
heating or cooling facilities, qualified hazardous waste facilities, high-speed
intercity rail facilities, governmentally-owned airports, docks and wharves and
mass commuting facilities, certain qualified mortgages, student loan and
redevelopment bonds and bonds used for certain organizations exempt from federal
income taxation.
Certain debt obligations known as "INDUSTRIAL DEVELOPMENT BONDS" under
prior federal tax law may have been issued by or on behalf of public authorities
to obtain funds to provide certain privately operated housing facilities, sports
facilities, industrial parks, convention or trade show facilities, airport, mass
transit, port or parking facilities, air or water pollution control facilities,
sewage or solid waste disposal facilities, and certain facilities for water
supply. Other private activity bonds and industrial development bonds issued to
fund the construction, improvement, equipment or repair of privately-operated
industrial, distribution, research, or commercial facilities may also be
Municipal Securities, but the size of such issues is limited under current and
prior federal tax law. The aggregate amount of most private activity bonds and
industrial development bonds is limited (except in the case of certain types of
facilities) under federal tax law by an
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annual "volume cap." The volume cap limits the annual aggregate principal amount
of such obligations issued by or on behalf of all governmental instrumentalities
in the state.
The two principal classifications of Municipal Securities consist of
"general obligation" and "limited" (or revenue) issues. General obligation bonds
are obligations involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues and not from any
particular fund or source. The characteristics and method of enforcement of
general obligation bonds vary according to the law applicable to the particular
issuer, and payment may be dependent upon appropriation by the issuer's
legislative body. Limited obligation bonds are payable only from the revenues
derived from a particular facility or class of facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source. Private
activity bonds and industrial development bonds generally are revenue bonds and
thus not payable from the unrestricted revenues of the issuer. The credit and
quality of such bonds is generally related to the credit of the bank selected to
provide the letter of credit underlying the bond. Payment of principal of and
interest on industrial development revenue bonds is the responsibility of the
corporate user (and any guarantor).
The Funds may also acquire "moral obligation" issues, which are normally
issued by special purpose authorities, and in other tax-exempt investments
including pollution control bonds and tax-exempt commercial paper. Each Fund may
purchase short-term tax-exempt General Obligations Notes, Tax Anticipation
Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Project Notes, and
other forms of short-term tax-exempt loans. Such notes are issued with a
short-term maturity in anticipation of the receipt of tax funds, the proceeds of
bond placements, or other revenues. Project Notes are issued by a state or local
housing agency and are sold by the Department of Housing and Urban Development.
While the issuing agency has the primary obligation with respect to its Project
Notes, they are also secured by the full faith and credit of the United States
through agreements with the issuing authority which provide that, if required,
the federal government will lend the issuer an amount equal to the principal of
and interest on the Project Notes.
There are, of course, variations in the quality of Municipal Securities,
both within a particular classification and between classifications, and the
yields on Municipal Securities depend upon a variety of factors, including
general money market conditions, the financial condition of the issuer, general
conditions of the municipal bond market, the size of a particular offering, the
maturity of the obligations, and the rating of the issue. The ratings of Moody's
and S&P represent their opinions as to the quality of Municipal Securities. It
should be emphasized, however, that ratings are general and are not absolute
standards of quality, and Municipal Securities with the same maturity, interest
rate and rating may have different yields while Municipal Securities of the same
maturity and interest rate with different ratings may have the same yield.
Subsequent to its purchase by a Fund, an issue of Municipal Securities may cease
to be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. Banc One Investment Advisors or the applicable Sub-Advisor
will consider such an event in determining whether the Fund should continue to
hold the obligations.
Municipal securities may include OBLIGATIONS OF MUNICIPAL HOUSING
AUTHORITIES and SINGLE-FAMILY MORTGAGE REVENUE BONDS. Weaknesses in Federal
housing subsidy programs and their administration may result in a decrease of
subsidies available for payment of principal and interest on housing authority
bonds. Economic developments, including fluctuations in interest rates and
increasing construction and operating costs, may also adversely impact revenues
of housing authorities. In the case of some housing authorities, inability to
obtain additional financing could also reduce revenues available to pay existing
obligations. Single-family mortgage revenue bonds are subject to extraordinary
mandatory redemption at par in whole or in part from the proceeds derived from
prepayments of underlying mortgage loans and also from the unused proceeds of
the issue within a stated period which may be within a year from the date of
issue.
MUNICIPAL LEASES are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities and may be
considered to be illiquid. They may take the form of a lease, an installment
purchase contract, a conditional sales contract, or a participation interest in
any of the above. The Board of Trustees is responsible for determining the
credit quality of unrated municipal leases, on an ongoing basis, including an
assessment of the likelihood that the lease will not be canceled.
RISK FACTORS IN MUNICIPAL SECURITIES
Tax Risk. The Code imposes certain continuing requirements on issuers of
tax-exempt bonds regarding the use, expenditure and investment of bond
proceeds and the payment of rebates to the United States of America.
Failure by the issuer to comply subsequent to the issuance of tax-exempt
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bonds with certain of these requirements could cause interest on the
bonds to become includable in gross income retroactive to the date of
issuance.
Housing Authority Tax Risk. The exclusion from gross income for Federal
income tax purposes for certain housing authority bonds depends on
qualification under relevant provisions of the Code and on other
provisions of Federal law. These provisions of Federal law contain
certain ongoing requirements relating to the cost and location of the
residences financed with the proceeds of the single-family mortgage bonds
and the income levels of tenants of the rental projects financed with the
proceeds of the multi-family housing bonds. While the issuers of the
bonds, and other parties, including the originators and servicers of the
single-family mortgages and the owners of the rental projects financed
with the multi-family housing bonds, covenant to meet these ongoing
requirements and generally agree to institute procedures designed to
insure that these requirements will be consistently met, there is no
assurance that the requirements will be consistently met. The failure to
meet these requirements could cause the interest on the bonds to become
taxable, possibly retroactively from the date of issuance, thereby
reducing the value of the bonds and subjecting Shareholders to
unanticipated tax liabilities and possibly requiring a Fund to sell the
bonds at the reduced value. Furthermore, any failure to meet these
ongoing requirements might constitute an event of default under the
applicable mortgage or permit the holder to accelerate payment of the
bond or require the issuer to redeem the bond. In any event, where the
mortgage is insured by the Federal Housing Administration ("FHA"), the
consent of the FHA may be required before insurance proceeds would become
payable to redeem the mortgage subsidy.
Information Risk. Information about the financial condition of issuers of
Municipal Securities may be less available than about corporations having
a class of securities registered under the Securities Exchange Act of
1934.
State and Federal Laws. An issuer's obligations under its Municipal
Securities are subject to the provisions of bankruptcy, insolvency, and
other laws affecting the rights and remedies of creditors, such as the
federal bankruptcy code, and laws, if any, which may be enacted by
Congress or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon the
enforcement of such obligations. The power or ability of an issuer to
meet its obligations for the payment of interest on and principal of its
Municipal Securities may be materially adversely affected by litigation
or other conditions.
Litigation and Current Developments. Such litigation or conditions may
from time to time have the effect of introducing uncertainties in the
market for tax-exempt obligations or certain segments thereof, or may
materially affect the credit risk with respect to particular bonds or
notes. Adverse economic, business, legal or political developments might
affect all or a substantial portion of a Fund's Municipal Securities in
the same manner.
New Legislation. From time to time, proposals have been introduced before
Congress for the purpose of restricting or eliminating the federal income
tax exemption for interest on tax exempt bonds, and similar proposals may
be introduced in the future. The Supreme Court has held that Congress has
the constitutional authority to enact such legislation. It is not
possible to determine what effect the adoption of such proposals could
have on (i) the availability of Municipal Securities for investment by
the Funds, and (ii) the value of the investment portfolios of the Funds.
LIMITATIONS ON THE USE OF MUNICIPAL SECURITIES
The Bond Fund may invest in Municipal Securities either by purchasing
them directly or by purchasing certificates of accrual or similar instruments
evidencing direct ownership of interest payments or principal payments, or both,
on Municipal Securities, provided that, in the opinion of counsel to the initial
seller of each such certificate or instrument, any discount accruing on such
certificate or instrument that is purchased at a yield not greater than the
coupon rate of interest on the related Municipal Securities will to the same
extent as interest on such Municipal Securities be exempt from federal income
tax and state income tax (where applicable) and not treated as a preference item
for individuals for purposes of the federal alternative minimum tax.
The Fund may also invest in Municipal Securities by purchasing from banks
participation interests in all or part of specific holdings of Municipal
Securities. Such participation may be backed in whole or in part by an
irrevocable letter of credit or guarantee of the selling bank. The selling bank
may receive a fee from the Fund in connection with the arrangement. The Fund
will not purchase participation interests unless it
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receives an opinion of counsel or a ruling of the Internal Revenue Service that
interest earned by it on Municipal Securities in which it holds such
participation interest is exempt from federal income tax and state income tax
(where applicable) and not treated as a preference item for individuals for
purposes of the federal alternative minimum tax.
NEW FINANCIAL PRODUCTS
New options and futures contracts and other financial products, and
various combinations thereof, continue to be developed and certain of the Funds
may invest in any such options, contracts and products as may be developed to
the extent consistent with each Fund's investment objective, policies and
restrictions and the regulatory requirements applicable to investment companies.
These various products may be used to adjust the risk and return
characteristics of each Fund's investments. These various products may increase
or decrease exposure to security prices, interest rates, commodity prices, or
other factors that affect security values, regardless of the issuer's credit
risk. If market conditions do not perform consistent with expectations, the
performance of each Fund would be less favorable than it would have been if
these products were not used. In addition, losses may occur if counterparties
involved in transactions do not perform as promised. These products may expose
the Fund to potentially greater return as well as potentially greater risk of
loss than more traditional fixed income investments.
PERCS*
The Equity Funds may invest in Preferred Equity Redemption Cumulative
Stock ("PERCS") which is a form of convertible preferred stock that actually has
more of an equity component than it does fixed income characteristics. These
instruments permit companies to raise capital via a surrogate for common equity.
PERCS are preferred stock which convert to common stock after a specified period
of time, usually three years, and are considered the equivalent of equity by the
ratings agencies. Issuers pay holders a substantially higher dividend yield than
that on the underlying common, and in exchange, the holder's appreciation is
capped, usually at about 30 percent. PERCS are callable at any time. The PERC is
mandatorily convertible into common stock, but is callable at any time at an
initial call price that reflects a substantial premium to the stock's issue
price. PERCS offer a higher dividend than that available on the common stock,
but in exchange the investors agree to the company placing a cap on the
potential price appreciation. The call price declines daily in an amount that
reflects the incremental dividend that holders enjoy. PERCS are listed on an
exchange where the common stock is listed.
*PERCS is a registered trademark of Morgan Stanley, which does not
sponsor and is in no way affiliated with The One Group Investment Trust.
PREFERRED STOCK
Preferred stock is a class of stock that generally pays dividends at a
specified rate and has preference over common stock in the payment of dividends
and liquidation. Preferred stock generally does not carry voting rights. As with
all equity securities, the price of preferred stock fluctuates based on changes
in a company's financial condition and on overall market and economic
conditions.
REAL ESTATE INVESTMENT TRUSTS ("REITS")
The Funds may invest in equity interests or debt obligations issued by
REITs. REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interest. REITs are
generally classified as equity REITs, mortgage REITs or a combination of equity
and mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling property that has appreciated in
value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. Similar to
investment companies, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Code. A Fund will
indirectly bear its proportionate share of expenses incurred by REITs in which a
Fund invests in addition to the expenses incurred directly by a Fund.
Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended.
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REITs are dependent upon management skills, are not diversified, are subject to
heavy cash flow dependency, default by borrowers and self-liquidation. REITs are
also subject to the possibilities of failing to qualify for tax free
pass-through of income under the Code and failing to maintain their exemption
from registration under the Act.
REITs (especially mortgage REITs) are also subject to interest rate
risks. When interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investment in such loans will gradually
align themselves to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investment in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks included in the S&P
Index of 500 Common Stocks.
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, a Fund would acquire
securities from a seller, subject to the seller's agreement to repurchase such
securities at a mutually agreed-upon date and price. The repurchase price would
generally equal the price paid by the Fund 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 will be
required to maintain the value of collateral held pursuant to the agreement at
not less than the repurchase price (including accrued interest).
If the seller were to default on its repurchase obligation or become
insolvent, the Fund holding such obligation would suffer a loss to the extent
that the proceeds from a sale of the underlying portfolio securities were less
than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Fund were delayed pending court action.
Additionally, there is no controlling legal precedent under U.S. law and there
may be no controlling legal precedents under the laws of certain foreign
jurisdictions confirming that a Fund would be entitled, as against a claim by
such seller or its receiver or trustee in bankruptcy, to retain the underlying
securities, although (with respect to repurchase agreements subject to U.S. law)
the Board of Trustees of the Trust believes that, under the regular procedures
normally in effect for custody of a Fund's securities subject to repurchase
agreements and under federal laws, a court of competent jurisdiction would rule
in favor of the Trust if presented with the question. Securities subject to
repurchase agreements will be held by the Trust's custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system. Repurchase
agreements are considered by the SEC to be loans by a Fund under the 1940 Act.
Repurchase Agreement Counterparties. Repurchase counterparties include
Federal Reserve member banks with assets in excess of $1 billion and
registered broker dealers which Banc One Investment Advisors deems
creditworthy under guidelines approved by the Board of Trustees.
REVERSE REPURCHASE AGREEMENTS
Funds may borrow money for temporary purposes by entering into reverse
repurchase agreements. Pursuant to such agreements, a Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed-upon date and price. A Fund would enter
into reverse repurchase agreements only to avoid otherwise selling securities
during unfavorable market conditions to meet redemptions. At the time a Fund
entered into a reverse repurchase agreement, it would place in a segregated
custodial account assets, such as cash or liquid securities consistent with the
Fund's investment restrictions and having a value equal to the repurchase price
(including accrued interest), and would subsequently monitor the account to
ensure that such equivalent value was maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which the Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered by the SEC to be
borrowings by a Fund under the 1940 Act.
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RESTRICTED SECURITIES
The Funds may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933 and other restricted securities. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally sold
to institutional investors, such as the Funds, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, thus
providing liquidity. The Funds believe that Section 4(2) commercial paper and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Funds intend,
therefore, to treat restricted securities that meet the liquidity criteria
established by the Board of Trustees, including Section 4(2) commercial paper
and Rule 144A Securities, as determined by Banc One Investment Advisors, as
liquid and not subject to the investment limitation applicable to illiquid
securities.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a SEC Staff position set forth in the
adopting release for Rule 144A under the Securities Act of 1933 ("RULE 144A").
Rule 144A is a nonexclusive safe-harbor for certain secondary market
transactions involving securities subject to restrictions on resale under
federal securities laws. Rule 144A provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional buyers.
Rule 144A was expected to further enhance the liquidity of the secondary market
for securities eligible for resale. The Funds believe that the Staff of the SEC
has left the question of determining the liquidity of all restricted securities
to the Trustees. The Trustees have directed Banc One Investment Advisors to
consider the following criteria in determining the liquidity of certain
restricted securities:
- the frequency of trades and quotes for the security;
- the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
- dealer undertakings to make a market in the security; and
- the nature of the security and the nature of the marketplace trades.
Certain Section 4(2) commercial paper programs cannot rely on Rule 144A
because, among other things, they were established before the adoption of the
rule. However, the Trustees may determine for purposes of the Trust's liquidity
requirements that an issue of 4(2) commercial paper is liquid if the following
conditions, which are set forth in a 1994 SEC no-action letter, are met:
- The 4(2) paper must not be traded flat or in default as to principal or
interest;
- The 4(2) paper must be rated in one of the two highest rating
categories by a least two NRSROs, or if only one NRSRO rates the security, by
that NRSRO, or if unrated, is determined by Banc One Investment Advisors to be
of equivalent quality; and
- Banc One Investment Advisors must consider the trading market for the
specific security, taking into account all relevant factors, including but not
limited, to whether the paper is the subject of a commercial paper program that
is administered by an issuing and paying agent bank and for which there exists a
dealer willing to make a market in that paper, or is administered by a direct
issuer pursuant to a direct placement program; and
- Banc One Investment Advisors shall monitor the liquidity of the 4(2)
commercial paper purchased and shall report to the Board of Trustees promptly if
any such securities are no longer determined to be liquid if such determination
causes a Fund to hold more than 15% of its net assets in illiquid securities in
order for the Board of Trustees to consider what action, if any, should be taken
on behalf of The One Group Investment Trust, unless Banc One Investment Advisors
is able to dispose of illiquid assets in an orderly manner in an amount that
reduces the Fund's holdings of illiquid assets to less than 15% of its net
assets; and
- Banc One Investment Advisors shall report to the Board of Trustees on
the appropriateness of the purchase and retention of liquid restricted
securities under these Guidelines no less frequently that quarterly.
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SECURITIES LENDING
In order to generate additional income, each of the Funds may lend up to
33-1/3% of the securities in which they are invested pursuant to agreements
requiring that the loan be continuously secured by cash, securities of the U.S.
government or its agencies, shares of an investment trust or mutual fund,
letters of credit or any combination of cash, such securities, shares, or
letters of credit as collateral equal at all times to at least 100% of the
market value plus accrued interest on the securities lent. The Funds will
continue to receive interest on the securities lent while simultaneously seeking
to earn interest on the investment of cash collateral in U.S. government
securities, shares of an investment trust or mutual fund, or commercial paper,
repurchase agreements, variable and floating rate instruments, restricted
securities, asset-backed securities, and the other types of investments
permitted by the applicable Fund's prospectus. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of the
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities fail
financially. However, loans will only be made to borrowers deemed by Banc One
Investment Advisors to be of good standing under guidelines established by the
Trust's Board of Trustees and when, in the judgment of Banc One Investment
Advisors, the consideration which can be earned currently from such securities
loans justifies the attendant risk. Loans are subject to termination by the
Funds or the borrower at any time, and are therefore, not considered to be
illiquid investments.
SHORT-TERM FUNDING AGREEMENTS
The Bond Fund may, in order to enhance yield, make limited investments in
short-term funding agreements issued by banks and highly rated U.S. insurance
companies. Short-term funding agreements issued by insurance companies are
sometimes referred to as Guaranteed Investment Contracts ("GICS"), while those
issued by banks are referred to as Bank Investment Contracts ("BICS"). Pursuant
to such agreements, the Fund makes cash contributions to a deposit account at a
bank or insurance company. The bank or insurance company then credits to the
Fund on a monthly basis guaranteed interest at either a fixed, variable or
floating rate. These contracts are general obligations of the issuing bank or
insurance company (although they may be the obligations of an insurance company
separate account) and are paid from the general assets of the issuing entity.
The Fund will purchase short-term funding agreements only from banks and
insurance companies which, at the time of purchase, are rated in one of the
three highest rating categories and have assets of $1 billion or more.
Generally, there is no active secondary market in short-term funding agreements.
Therefore, short-term funding agreements may be considered by the Fund to be
illiquid investments. To the extent that a short-term funding agreement is
determined to be illiquid, such agreements will be acquired by the Fund only if,
at the time of purchase, no more than 15% of the Fund's net assets will be
invested in short-term funding agreements and other illiquid securities.
SPDRS
Certain Funds may invest in Standard & Poor's Depository Receipts
("SPDRS"). SPDRs are interests in unit investment trusts. Such investment trusts
invest in a securities portfolio that includes substantially all of the common
stocks (in substantially the same weights) as the common stocks included in a
particular Standard & Poor's Index such as the S&P 500. SPDRs are traded on the
American Stock Exchange, but may not be redeemed. The results of SPDRs will not
match the performance of the designated S&P Index due to reductions in the
SPDRs' performance attributable to transaction and other expenses, including
fees paid by the SPDR to service providers. SPDRs distribute dividends on a
quarterly basis.
SPDRs are not actively managed. Rather, a SPDR's objective is to track
the performance of a specified index. Therefore, securities may be purchased,
retained and sold by SPDRs at times when an actively managed trust would not do
so. As a result, you can expect greater risk of loss (and a correspondingly
greater prospect of gain) from changes in the value of securities that are
heavily weighted in the index than would be the case if SPDR was not fully
invested in such securities. Because of this, a SPDRs price can be volatile, a
Fund may sustain sudden, and sometimes substantial, fluctuations in the value of
its investment in SPDRs.
A Fund will limit its investments in SPDRs to 5% of the Fund's total
assets and 3% of the outstanding voting securities of the SPDRs issuer.
Moreover, a Fund's investments in SPDRs will not exceed 10% of the Fund's total
assets, when aggregated with all other investments in investment companies.
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STRUCTURED INSTRUMENTS
Structured instruments are debt securities issued by agencies of the U.S.
government (such as Ginnie Mae, Fannie Mae, and Freddie Mac), banks,
corporations, and other business entities whose interest and/or principal
payments are indexed to certain specific foreign currency exchange rates,
interest rates, or one or more other reference indices. Structured instruments
frequently are assembled in the form of medium-term notes, but a variety of
forms are available and may be used in particular circumstances. Structured
instruments are commonly considered to be derivatives.
The terms of such structured instruments provide that their principal
and/or interest payments are adjusted upwards or downwards to reflect changes in
the reference index while the structured instruments are outstanding. In
addition, the reference index may be used in determining when the principal is
redeemed. As a result, the interest and/or principal payments that may be made
on a structured product may vary widely, depending on a variety of factors,
including the volatility of the reference index and the effect of changes in the
reference index on principal and/or interest payment.
While structured instruments may offer the potential for a favorable rate
of return from time to time, they also entail certain risks. Structured
instruments may be less liquid than other debt securities, and the price of
structured instruments may be more volatile. If the value of the reference index
changes in a manner other than that expected by Banc One Investment Advisors,
principal and/or interest payments on the structured instrument may be
substantially less than expected. In addition, although structured instruments
may be sold in the form of a corporate debt obligation, they may not have some
of the protection against counterparty default that may be available with
respect to publicly traded debt securities (i.e., the existence of a trust
indenture). In that respect, the risks of default associated with structured
instruments may be similar to those associated with swap contracts. See "Swaps,
Caps and Floors."
The Funds will invest only in structured securities that are consistent
with each Fund's investment objective, policies and restrictions and Banc One
Investment Advisors' outlook on market conditions. In some cases, depending on
the terms of the reference index, a structured instrument may provide that the
principal and/or interest payments may be adjusted below zero; however, a Fund
will not invest in structured instruments if the terms of the structured
instrument provide that the Fund may be obligated to pay more than its initial
investment in the structured instrument, or to repay any interest or principal
that has already been collected or paid back.
Structured instruments that are registered under the federal securities
laws may be treated as liquid. In addition, many structured instruments may not
be registered under the federal securities laws. In that event, a Fund's ability
to resell such a structured instrument may be more limited than its ability to
resell other Fund securities. The Fund will treat such instruments as illiquid,
and will limit its investments in such instruments to no more than 15% of its
net assets, when combined with all other illiquid investments of the Fund.
SWAPS, CAPS AND FLOORS
Certain of the Funds may enter into swaps, caps, and floors on various
securities (such as U.S. government securities), securities indexes, interest
rates, prepayment rates, foreign currencies or other financial instruments or
indexes, in order to protect the value of the Fund from interest rate
fluctuations and to hedge against fluctuations in the floating rate market in
which the Fund's investments are traded, for both hedging and non-hedging
purposes. While swaps, caps, and floors (sometimes hereinafter collectively
referred to as "SWAP CONTRACTS") are different from futures contracts (and
options on futures contracts) in that swap contracts are individually negotiated
with specific counterparties, the Funds will use swap contracts for purposes
similar to the purposes for which they use options, futures, and options on
futures. Those uses of swap contracts (i.e., risk management and hedging)
present the Funds with risks and opportunities similar to those associated with
options contracts, futures contracts, and options on futures. See "Futures
Contracts" and "Risk Factors in Futures Contracts."
The Funds may enter into these transactions to manage their exposure to
changing interest rates and other market factors. Some transactions may reduce
each Fund's exposure to market fluctuations while others may tend to increase
market exposure.
Swap contracts typically involve an exchange of obligations by two
sophisticated parties. For example, in an interest rate swap, the Fund may
exchange with another party their respective rights to receive interest, such as
an exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange
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of respective rights to make or receive payments in specified currencies.
Mortgage swaps are similar to interest rate swaps in that they represent
commitments to pay and receive interest. The notional principal amount, however,
is tied to a reference pool or pools of mortgages.
Caps and floors are variations on swaps. The purchase of a cap entitles
the purchaser to receive a principal amount from the party selling the cap to
the extent that a specified index exceeds a predetermined interest rate or
amount. The purchase of an interest rate floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specified index falls below a predetermined interest rate or
amount. Caps and floors are similar in many respects to over-the-counter options
transactions, and may involve investment risks that are similar to those
associated with options transactions and options on futures contracts.
Because swap contracts are individually negotiated, they remain the
obligation of the respective counterparties, and there is a risk that a
counterparty will be unable to meet its obligations under a particular swap
contract. If a counterparty defaults on a swap contract with a Fund, the Fund
may suffer a loss. To address this risk, each Fund will usually enter into
interest rate swaps on a net basis, which means that the two payment streams
(one from the Fund to the counterparty, one to the Fund from the counterparty)
are netted out, with the Fund receiving or paying, as the case may be, only the
net amount of the two payments. Interest rate swaps do not involve the delivery
of securities, other underlying assets, or principal, except for the purposes of
collateralization as discussed below. Accordingly, the risk of loss with respect
to interest rate swaps entered into on a net basis would be limited to the net
amount of the interest payments that the Fund is contractually obligated to
make. If the other party to an interest rate swap defaults, the Fund's risk of
loss consists of the net amount of interest payments that a Fund is
contractually entitled to receive. In addition, the Fund may incur a market
value adjustment on securities held upon the early termination of the swap. To
protect against losses related to counterparty default, the Funds may enter into
swaps that require transfers of collateral for changes in market value. In
contrast, currency swaps and other types of swaps may involve the delivery of
the entire principal value of one designated currency or financial instrument in
exchange for the other designated currency or financial instrument. Therefore,
the entire principal value of such swaps may be subject to the risk that the
other party will default on its contractual delivery obligations.
In addition, because swap contracts are individually negotiated and
ordinarily non-transferable, there also may be circumstances in which it would
be impossible for a Fund to close out its obligations under the swap contract
prior to its maturity. Under such circumstances, the Fund might be able to
negotiate another swap contract with a different counterparty to offset the risk
associated with the first swap contract. Unless the Fund is able to negotiate
such an offsetting swap contract, however, the Fund could be subject to
continued adverse developments, even after Banc One Investment Advisors has
determined that it would be prudent to close out or offset the first swap
contract.
The Funds will not enter into any mortgage swap, interest rate swap, cap
or floor transaction unless the unsecured commercial paper, senior debt, or the
claims paying ability of the other party thereto is rated in one of the top two
rating categories by at least one NRSRO, or if unrated, determined by Banc One
Investment Advisors to be of comparable quality.
The use of swaps involves investment techniques and risks different from
and potentially greater than those associated with ordinary Fund securities
transactions. If Banc One Investment Advisors is incorrect in its expectations
of market values, interest rates, or currency exchange rates, the investment
performance of the Funds would be less favorable than it would have been if this
investment technique were not used. In addition, in certain circumstances entry
into a swap contract that substantially eliminates risk of loss and the
opportunity for gain in an "appreciated financial position" will accelerate gain
to the Funds.
The Staff of the SEC is presently considering its position with respect
to swaps, caps and floors as senior securities. Pending a determination by the
Staff, the Funds will either treat swaps, caps and floors as being subject to
their senior securities restrictions or will refrain from engaging in swaps,
caps and floors. Once the Staff has expressed a position with respect to swaps,
caps and floors, the Funds intend to engage in swaps, caps and floors, if at
all, in a manner consistent with such position. To the extent the net amount of
an interest rate or mortgage swap is held in a segregated account, consisting of
cash or liquid, high grade debt securities, the Funds and Banc One Investment
Advisors believe that swaps do not constitute senior securities under the
Investment Company Act of 1940 and, accordingly, will not treat them as being
subject to each Fund's borrowing restrictions. The net amount of the excess, if
any, of each Fund's obligations over its entitlements with respect to each
interest rate swap will be accrued on a daily basis and an amount of cash or
liquid securities having an aggregate net asset value at least equal to the
accrued excess will be maintained
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in a segregated account by the Funds' Custodian. The Bond Fund generally will
limit its investments in swaps, caps and floors to 25% of its total assets.
TREASURY RECEIPTS
Certain of the Funds may purchase interests in separately traded interest
and principal component parts of U.S. Treasury obligations that are issued by
banks or brokerage firms and are created by depositing U.S. Treasury notes and
U.S. Treasury bonds into a special account at a custodian bank. Receipts include
Treasury Receipts ("TRS"), Treasury Investment Growth Receipts ("TIGRS"), and
Certificates of Accrual on Treasury Securities ("CATS").
U.S. TREASURY OBLIGATIONS
The Funds may invest in bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal Securities ("STRIPS") and
Coupon Under Book Entry Safekeeping ("CUBES"). The Funds may also invest in
Inflation Indexed Treasury Obligations.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain obligations purchased by the Funds may carry variable or floating
rates of interest, may involve a conditional or unconditional demand feature and
may include variable amount master demand notes.
VARIABLE AMOUNT MASTER DEMAND NOTES are demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, a Fund
may demand payment of principal and accrued interest. While the notes are not
typically rated by credit rating agencies, issuers of variable amount master
demand notes (which are normally manufacturing, retail, financial, brokerage,
investment banking and other business concerns) must satisfy the same criteria
as set forth above for commercial paper. Banc One Investment Advisors will
consider the earning power, cash flow, and other liquidity ratios of the issuers
of such notes and will continuously monitor their financial status and ability
to meet payment on demand. In determining average weighted portfolio maturity, a
variable amount master demand note will be deemed to have a maturity equal to
the period of time remaining until the principal amount can be recovered from
the issuer through demand.
The Funds subject to their investment objective policies and
restrictions, may acquire VARIABLE AND FLOATING RATE INSTRUMENTS. A variable
rate instrument is one whose terms provide for the adjustment of its interest
rate on set dates and which, upon such adjustment, can reasonably be expected to
have a market value that approximates its par value. A floating rate instrument
is one whose terms provide for the adjustment of its interest rate whenever a
specified interest rate changes and which, at any time, can reasonably be
expected to have a market value that approximates its par value. Such instrument
are frequently not rated by credit rating agencies; however, unrated variable
and floating rate instruments purchased by a Fund will be determined by Banc One
Investment Advisors under guidelines established by the Trust's Board of
Trustees to be of comparable quality at the time of purchase to rated
instruments eligible for purchase under the Fund's investment policies. In
making such determinations, Banc One Investment Advisors will consider the
earning power, cash flow and other liquidity ratios of the issuers of such
instruments (such issuers include financial, merchandising, bank holding and
other companies) and will continuously monitor their financial condition. There
may be no active secondary market with respect to a particular variable or
floating rate instrument purchased by a Fund. The absence of such an active
secondary market, could make it difficult for the Fund to dispose of the
variable or floating rate instrument involved in the event the issuer of the
instrument defaulted on its payment obligations, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default. Variable or floating
rate instruments may be secured by bank letters of credit or other assets. A
Fund will purchase a variable or floating rate instrument to facilitate
portfolio liquidity or to permit investment of the Fund's assets at a favorable
rate of return.
LIMITATIONS ON THE USE OF VARIABLE AND FLOATING RATE NOTES. Variable
and floating rate instruments for which no readily available market exists will
be purchased in an amount which, together with securities with legal or
contractual restrictions on resale or for which no readily available market
exists (including repurchase agreements providing for settlement more than seven
days after notice), exceeds 15% of the Fund's net assets only if such
instruments are subject to a demand feature that will permit the Fund
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to demand payment of the principal within seven days after demand by the Fund.
There is no limit on the extent to which a Fund may purchase demand instruments
that are not illiquid. If not rated, such instruments must be found by Banc One
Investment Advisors under guidelines established by the Trust's Board of
Trustees, to be of comparable quality to instruments that are rated high
quality. A rating may be relied upon only if it is provided by a nationally
recognized statistical rating organization that is not affiliated with the
issuer or guarantor of the instruments. For a description of the rating symbols
of S&P, Moody's, and Fitch used in this paragraph, see the Appendix.
WARRANTS
Warrants are securities, typically issued with preferred stock or
bonds, that give the holder the right to buy a proportionate amount of common
stock at a specified price, usually at a price that is higher than the market
price at the time of issuance of the warrant. The right may last for a period of
years or indefinitely.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The Funds may purchase securities on a "when-issued" and forward
commitment basis. When a Fund agrees to purchase securities, the Fund's
custodian will set aside cash or liquid portfolio securities equal to the amount
of the commitment in a separate account. The Funds may purchase securities on a
when-issued basis when deemed by Banc One Investment Advisors to present
attractive investment opportunities. When-issued securities are purchased for
delivery beyond the normal settlement date at a stated price and yield, thereby
involving the risk that the yield obtained will be less than that available in
the market at delivery. The Funds generally will not pay for such securities or
earn interest on them until received. Although the purchase of securities on a
when-issued basis is not considered to be leveraging, it has the effect of
leveraging. When Banc One Investment Advisors purchases a when-issued security,
the Custodian will set aside cash or liquid securities to satisfy the purchase
commitment. In such a case, a Fund may be required subsequently to place
additional assets in the separate account in order to assure that the value of
the account remains equal to the amount of the Fund's commitment. The Fund's net
assets may fluctuate to a greater degree when it sets aside portfolio securities
to cover such purchase commitments than when it sets aside cash. In addition,
when a Fund engages in "when-issued" transactions, it relies on the seller to
consummate the trade. Failure of the seller to do so may result in the Fund's
incurring a loss or missing the opportunity to obtain a price considered to be
advantageous.
In a forward commitment transaction, the Funds contract to purchase
securities for a fixed price at a future date beyond customary settlement time.
The Funds are required to hold and maintain in a segregated account until the
settlement date, cash, U.S. government securities or liquid high-grade debt
obligations in an amount sufficient to meet the purchase price. Alternatively,
the Funds may enter into offsetting contracts for the forward sale of other
securities that they own. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date.
Limitations on the Use of When Issued Securities and Forward
Commitments. No Fund intends to purchase "when-issued" securities for
speculative purposes but only for the purpose of acquiring portfolio securities.
Because a Fund will set aside cash or liquid portfolio securities to satisfy its
purchase commitments in the manner described, the Fund's liquidity and the
ability of Banc One Investment Advisors to manage the Fund might, as described
in the Prospectus, be affected in the event its commitments to purchase
when-issued securities ever exceeded 40% of the value of its assets. Commitments
to purchase when-issued securities will not, under normal market conditions,
exceed 25% of a Fund's total assets, and a commitment will not exceed 90 days. A
Fund may dispose of a when-issued security or forward commitment prior to
settlement if Banc One Investment Advisors deems it appropriate to do so.
INVESTMENT RESTRICTIONS
The investment objective and the following investment restrictions are
fundamental policies of each Fund. Fundamental policies cannot be changed with
respect to a Fund without the consent of the holders of a majority of the Fund's
outstanding shares. The term "majority of the outstanding shares" means the vote
of (i) 67% or more of the Fund's shares present at a meeting, if more than 50%
of the outstanding shares of the Fund are present or represented by proxy, or
(ii) more than 50% of the Fund's outstanding shares, whichever is less.
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Each Fund may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities and
repurchase agreements involving such securities) if as a result more than 5% of
the total assets of the Fund would be invested in the securities of such issuer
or the Fund would own more than 10% of the outstanding voting securities of such
issuer. This restriction applies to 75% of the Fund's assets. For purposes of
this limitation, a security is considered to be issued by the government entity
whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a non-governmental user, such user would be considered the
issuer.
2. Purchase any securities which would cause more than 25% of the total
assets of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities. For purposes of this limitation
(i) utility companies will be divided according to their services, for example,
gas, gas transmission, electric and telephone will each be considered a separate
industry; and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objectives and policies; (ii)
enter into repurchase agreements; and (iii) engage in securities lending as
described in the Prospectus and in the Statement of Additional Information.
4. Purchase securities on margin, sell securities short, or participate
on a joint or joint and several basis in any securities trading account.
5. Underwrite the securities of other issuers except to the extent that
a Fund may be deemed to be an underwriter under certain securities laws in the
disposition of "restricted securities."
6. Purchase or sell commodities or commodity contracts, except that the
Funds may purchase or sell financial futures contracts for bona fide hedging and
other permissible purposes.
7. Purchase participation or other direct interests in oil, gas or
mineral exploration or development programs (although investments by the Funds
in marketable securities of companies engaged in such activities are not hereby
precluded).
8. Invest in any issuer for purposes of exercising control or
management.
9. Purchase securities of other investment companies except as
permitted by the Investment Company Act of 1940 and the rules and regulations
thereunder.
10. Purchase or sell real estate (however, each Fund may, to the extent
appropriate to its investment objective, purchase securities secured by real
estate or interests therein or securities issued by companies investing in real
estate or interests therein).
11. Borrow money or issue senior securities, except that each Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets at
the time of its borrowing. A Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding. The foregoing percentages will apply at the time
of the purchase of a security.
The following investment restrictions are non-fundamental except as
noted otherwise and therefore can be changed by the Board of Trustees without
prior shareholder approval.
No Fund may invest in illiquid securities in an amount exceeding, in
the aggregate, 15% of the Fund's net assets. An illiquid security is a security
which cannot be disposed of promptly (within seven days) and in the usual course
of business without a loss, and includes repurchase agreements maturing in
excess
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<PAGE> 69
of seven days, time deposits with a withdrawal penalty, non-negotiable
instruments and instruments for which no market exists.
The foregoing percentages apply at the time of purchase of a security.
Banc One Investment Advisors Corporation shall report to the Board of Trustees
promptly if any of a Fund's investments are no longer determined to be liquid or
if the market value of Fund assets has changed if such determination or change
causes a Fund to hold more than 15% of its net assets in illiquid securities in
order for the Board of Trustees to consider what action, if any, should be taken
on behalf of the Trust, unless Banc One Investment Advisors is able to dispose
of illiquid assets in an orderly manner in an amount that reduces the Fund's
holdings to less than 15% of its net assets.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average value of the portfolio securities. The calculation excludes all
securities whose maturities at the time of acquisition were one year or less.
Portfolio turnover for the Bond Fund is expected to be less than 50%; and for
the Equity Funds is expected to be less than 100%. Higher turnover rates will
generally result in higher brokerage expenses. Portfolio turnover may vary
greatly from year to year as well as within a particular year.
ADDITIONAL TAX INFORMATION CONCERNING THE FUNDS
It is the policy of each Fund to meet the requirements necessary to
qualify as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "CODE"). By following such policy, each
Fund expects to eliminate or reduce to a nominal amount the federal income taxes
to which it may be subject.
In order to qualify as a regulated investment company, each Fund must,
among other things, (1) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, foreign currencies or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies, and (2)
diversify its holdings so that at the end of each quarter of its taxable year
(i) at least 50% of the market value of the Fund's assets is represented by cash
or cash items, United States Government securities, securities of other
regulated investment companies, and other securities limited, in respect of any
one issuer, to an amount not greater than 5% of the value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer, and (ii) not
more than 25% of the value of its total assets is invested in the securities of
any one issuer (other than United States Government securities or the securities
of other regulated investment companies) or of two or more issuers that the Fund
controls and that are engaged in the same, similar, or related trades or
businesses. These requirements may limit the range of the Fund's investments. If
a Fund qualifies as a regulated investment company, it will not be subject to
federal income tax on the part of its income distributed to shareholders,
provided the Fund distributes during its taxable year at least (a) 90% of its
investment company taxable income, and (b) 90% of the excess of (i) its
tax-exempt interest income less (ii) certain deductions attributable to that
income. Each Fund intends to make sufficient distributions to Shareholders to
meet this requirement.
For a discussion of the tax consequences of variable annuity contracts,
refer to the prospectuses of other separate accounts offering variable life and
variable annuity contracts and qualified pension and retirement plan documents
as they may be applicable to your situation. Variable annuity contracts
purchased through insurance company separate accounts provide for the
accumulation of all earnings from interest, dividends, and capital appreciation
without current federal income tax liability for the owner. Depending on the
variable annuity contract, distributions from the contract may be subject to
ordinary income tax and, in addition, on distributions before age 59 1/2, a 10%
penalty tax. Only the portion of a distribution attributable to income on the
investment in the contract is subject to federal income tax. Investors should
consult with competent tax advisors for a more complete discussion of possible
tax consequences in a particular situation.
The Code imposes a non-deductible excise tax on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
"ordinary income" (as defined) for the calendar year plus 98% of their "capital
gain net income" (as defined) for the 1-year period ending on October 31 of such
calendar year. The balance, if any, of such income must be distributed during
the next calendar year. If distributions during a calendar year were less than
the required amount, a particular Fund would be subject to a non-deductible
excise tax
32
<PAGE> 70
equal to 4% of the deficiency. A Fund is exempt from this excise tax if at all
times during the calendar year each shareholder in the Fund was either a trust
described in Section 401(a) of the Code and exempt from tax under section 501(a)
of the Code or a segregated asset account of a life insurance company held in
connection with variable contracts.
Section 817(h) of the Code imposes certain diversification standards on
the underlying assets of variable annuity contracts held in the Funds. The Code
provides that a variable annuity contract shall not be treated as an annuity
contract for any period (and any subsequent period) for which the investments
are not, in accordance with regulations prescribed by the Treasury Department,
adequately diversified. Disqualification of the variable annuity contract as an
annuity contract would result in immediate imposition of federal income tax on
variable annuity contract owners with respect to earnings allocable to the
contract. This liability would generally arise prior to the receipt of payments
under the contract. Section 817(h)(2) of the Code is a safe harbor provision
which provides that variable annuity contracts meet the diversification
requirements if, as of the close of each quarter, the underlying assets meet the
diversification standards for a regulated investment company and no more than
fifty-five percent (55%) of the total assets consists of cash, cash items, U.S.
Government securities and securities of other regulated investment companies.
The Treasury Department has issued Regulations (Treas. Reg. 1.817-5),
that establish diversification requirements for the investment portfolios
underlying variable annuity contracts. The Regulations amplify the
diversification requirements for variable annuity contracts set forth in Section
817(h) of the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be deemed
adequately diversified if (i) no more than 55 percent of the value of the total
assets of the portfolio is represented by any one investment; (ii) no more than
70 percent of such value is represented by any two investments; (iii) no more
than 80 percent of such value is represented by any three investments; and (iv)
no more than 90 percent of such value is represented by any four investments.
For purposes of these Regulations all securities of the same issuer, all
interests in the same real estate project and all interests in the same
commodity are treated as a single investment. The Code provides that for
purposes of determining whether or not the diversification standards imposed on
the underlying assets of variable annuity contracts by Section 817(h) of the
Code have been met, "each United States government agency or instrumentality
shall be treated as a separate issuer."
Each Fund will be managed in such a manner as to comply with the
diversification requirements. It is possible that in order to comply with the
diversification requirements, less desirable investment decisions may be made
which would affect the investment performance of such Fund.
The above discussion of the federal income tax treatment of the Funds
assumes that all the insurance company accounts holding shares of a Fund are
either segregated asset accounts underlying variable contracts as defined in
Section 817(d) of the Code or the general account of a life insurance company as
defined in Section 816 of the Code. Additional tax consequences may apply to
holders of variable contracts investing in a Fund if any of those contracts are
not treated as annuity, endowment or life insurance contracts.
VALUATION
VALUATION OF THE FUNDS
Securities traded on a national securities exchange are valued at the
last quoted sale price on the principal exchange, or if no sale, at their fair
value as determined in good faith under consistently applied procedures
authorized by the Board of Trustees. Securities traded only in the
over-the-counter (OTC) market are valued at the last quoted sale price, or if
there is no sale, at the quoted bid price provided by an independent pricing
agent. Corporate debt securities and debt securities of U.S. issuers, including
municipal securities, are valued by a combination of daily quotes and matrix
evaluations provided by dealers or by an independent pricing service approved by
the Board of Trustees. Inactive or bonds that have little or no trading activity
are evaluated by the independent pricing services through obtaining dealer
quotes. Futures contracts and options thereon traded on a commodities exchange
or board of trade are valued at the last sales price at the close of trading, or
if there was no sale, the quoted bid price at the close of trading. Securities
for which reliable market quotations are not readily available or for which the
pricing agent does not provide a valuation that in the judgment of the Fund's
investment adviser, does not represent fair value, shall each be valued in
accordance with procedures authorized by the Board of Trustees.
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<PAGE> 71
The Funds may invest in repurchase agreements with institutions that the
investment advisor has determined are creditworthy. Each repurchase agreement is
recorded at cost.
The value of a foreign security is determined in its national currency
as of the close of trading on the foreign exchange or other principal market on
which it is traded, which value is then converted into its U.S. Dollar
equivalent at the foreign exchange rate reported by the independent pricing
agent via WM/Reuters Forex as of the close of the London exchange.
ADDITIONAL INFORMATION REGARDING THE CALCULATION OF PER SHARE NET
ASSET VALUE
The net asset value of each Fund is determined and its Shares are
priced as of the times specified in the Funds' Prospectus. The net asset value
per Share of each Fund is calculated by determining the value of the interest in
the securities and other assets of the Fund, less liabilities and dividing such
amount by the number of Shares of the Fund outstanding.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds are sold continuously to insurance company separate
accounts and qualified pension and retirement plans. The Funds may suspend the
right of redemption or postpone the date of payment for Shares during any period
when (a) trading on the New York Stock Exchange (the "EXCHANGE") is restricted
by applicable rules and regulations of the Securities and Exchange Commission,
(b) the Exchange is closed for other than customary weekend and holiday
closings, (c) the Securities and Exchange Commission has by order permitted such
suspension, or (d) an emergency exists as determined by the Securities and
Exchange Commission.
MANAGEMENT OF THE TRUST
TRUSTEES & OFFICERS
Overall responsibility for management of the Funds rests with Board of
Trustees of the Funds . There are currently six Trustees, all of whom, except
John F. Finn, are not "interested persons" of the Funds within the meaning of
that term under the Investment Company Act of 1940. The Trustees, in turn, elect
the officers of the Funds to supervise actively its day-to-day operations.
The Trustees of the Funds, their addresses, ages and principal
occupations during the past five years are set forth below.
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE FUNDS DURING PAST 5 YEARS
- ---------------- -------------- -------------------
<S> <C> <C>
Peter C. Marshall Trustee From November, 1993,
DCI Marketing, Inc. to present, President,
2727 W. Good Hope Road DCI Marketing, Inc.
Milwaukee, WI 53209
Age: 56
Charles I. Post Trustee From July, 1986 to
7615 4th Avenue West present, self-employed as a
Bradenton, FL 34209 management consultant.
Age: 70
John S. Randall Trustee Since 1972, self-employed as a
3005 North Lake Drive management consultant.
Milwaukee, WI 53211
Age: 85
</TABLE>
34
<PAGE> 72
<TABLE>
<S> <C> <C>
Frederick W. Ruebeck Trustee From June, 1988 to
Eli Lilly & Company present; Director of Investments,
Lilly Corporate Center Eli Lilly and Company
307 East McCarty
Indianapolis, IN 46285
Age: 58
Robert A. Oden Jr. Trustee From 1995 to present, President
Office of the President Kenyon College; from 1989 to
Ransom Hall 1995, Headmaster, The Hotchkiss
Kenyon College School
Gambier, OH 43022
Age: 51
John F. Finn Trustee Since 1975, President of Gardner,
President Inc. (wholesale distributor to the
Gardner, Inc. outdoor power equipment industry).
1150 Chesepeake Avenue
Columbus, Ohio 43212
Age: 51
</TABLE>
The Trustees of the Funds receive fees and expenses for each meeting of the
Board of Trustees attended. The Compensation Table on the next page sets forth
the total compensation to the Trustees from the Trust for the fiscal year ended
December 31, 1997.
35
<PAGE> 73
COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS ESTIMATED
AGGREGATE ACCRUED ANNUAL TOTAL
COMPENSATION AS PART BENEFITS COMPENSATION
NAME OF PERSON, FROM THE OF FUND UPON FROM THE
POSITION FUNDS EXPENSES(2) RETIREMENT FUND COMPLEX
- -------- ----- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Peter C. Marshall, $3,000 N/A N/A $39,000
Chairman
Charles I. Post, $3,000 N/A N/A $36,500
Trustee
John S. Randall, $3,000 N/A N/A $36,500
Trustee
Robert A Oden $750 N/A N/A $9,125
Trustee
Frederick W. Ruebeck, $3,000 N/A N/A $36,500
Trustee
<FN>
(1) "Fund Complex" comprises the 5 funds of the Trust, as well as the 33 funds of The One Group(R)as of December
31, 1997. Compensation for the "Fund Complex" is for the fiscal year ended December 31, 1997.
(2) Pursuant to a Deferred Compensation Plan for Trustees of The One Group Investment Trust (the "PLAN") adopted
at the August 19, 1998 Board of Trustee meeting, the Trustees may defer all or a part of their compensation
payable by the Trust. Under the Plan, the Trustees may specify Class I Shares (formerly fiduciary class
shares) of one or more funds of The One Group to be used to measure the performance of a Trustee's deferred
compensation account. A Trustee's deferred compensation account will be paid at such times as elected by the
Trustee subject to certain mandatory payment provisions in the Plan (e.g., death of a Trustee).
</FN>
</TABLE>
The officers of the Funds receive no compensation directly from the Funds for
performing the duties of their offices. The officers of the Trust, their
addresses, ages and principal occupations during the past five years are shown
below:
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- -------------- -------------------
<S> <C> <C>
James F. Laird, Jr.* President Mr. Laird was elected Vice
Three Nationwide Plaza and Treasurer President-General Manager
Columbus, Ohio 43215 of Nationwide Advisory
Age: 41 Services, Inc., the
Administrator of The One
Group Investment
Trust on April 5, 1995.
Prior to being elected General
Manager, Mr. Laird served as
Treasurer of Nationwide
Advisory Services, Inc. since
November, 1987.
</TABLE>
36
<PAGE> 74
<TABLE>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- -------------- -------------------
<S> <C> <C>
Karen R. Tackett* Vice President Since August 1998, Ms.Tackett
Three Nationwide Plaza and Assistant has been Director Strategic
Columbus, Ohio 43215 Treasurer Development of Nationwide Advisory
Age: 32 Services, Inc. From March 1996
until July, 1998, Ms. Tackett was
Accounting Manager for
Nationwide Advisory Services, Inc.
Prior to that, Ms. Tackett was Audit
Manager and held various other
Positions with PricewaterhouseCoopers
LLP fka Coopers & Lybrand L.L.P.
Craig A. Carver* Vice President Mr. Carver has been Tax and
Three Nationwide Plaza and Assistant Compliance Manager of
Columbus, Ohio 43215 Secretary Nationwide Advisory Services,
Age: 43 Inc. since January, 1996.
Prior to that time, Mr. Carver
served as Financial Controls
Manager of Nationwide Advisory
Services, Inc.
Christopher A. Cray* Vice President Mr. Cray has been Treasurer of
Three Nationwide Plaza and Secretary Nationwide Advisory Services,
Columbus, Ohio 43215 Inc. since September, 1997.
Age: 39 Prior to that time he served
as Director-Corporate
Accounting of Nationwide
Insurance Enterprises.
Robert O. Cline* Vice President Mr. Cline has been Associate
Three Nationwide Plaza and Assistant Vice President-Variable
Columbus, Ohio 43215 Treasurer Annuities since May 1998,
Age: 39 and prior thereto and since
1995, Associate Vice
President-Financial Operations, of
Nationwide Financial Services. Prior
to that he served as
Director-Operational Controls and
Treasury Services.
</TABLE>
* All officers listed above are "interested persons" of the Funds as defined in
the Investment Company Act of 1940.
INVESTMENT ADVISOR
Investment advisory services to each of the Funds are provided by Banc
One Investment Advisors. Banc One Investment Advisors makes the investment
decisions for the assets of the Funds and continuously reviews, supervises and
administers the Fund's investment program, subject to the supervision of, and
policies established by, the Trustees. The Funds' shares are not sponsored,
endorsed or guaranteed by, and do not constitute obligations or deposits of any
bank affiliate of Banc One Investment Advisors and are not insured by the FDIC
or issued or guaranteed by the U.S. Government or any of its agencies.
37
<PAGE> 75
As of June 30, 1998, Banc One Investment Advisors, an indirect
wholly-owned subsidiary of BANK ONE CORPORATION, a bank holding company located
in the state of Illinois, managed over $59 billion in assets. BANK ONE
CORPORATION has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Texas, Utah, West
Virginia and Wisconsin. In addition, BANK ONE CORPORATION has several affiliates
that engage in data processing, venture capital, investment and merchant
banking, and other diversified services including trust management, investment
management, brokerage, equipment leasing, mortgage banking, consumer finance,
and insurance.
Banc One Investment Advisors represents a consolidation of the
investment advisory staffs of a number of bank affiliates of BANK ONE
CORPORATION, which have considerable experience in the management of open-end
management investment company portfolios, including The One Group (an open-end
management investment company which offers units of beneficial interest in 33
separate funds, seven of which bear the same name as seven Funds of the Trust
and are managed similarly to such Funds) since 1985.
All investment advisory services are provided to the Funds by Banc One
Investment Advisors pursuant to an investment advisory agreement dated August 1,
1994 (the "Advisory Agreement"). Unless sooner terminated, the Advisory
Agreement will continue in effect until August 31, 1999, and will continue in
effect as to a particular Fund from year to year thereafter if such continuance
is approved at least annually by the Trust's Board of Trustees or by vote of a
majority of the outstanding Shares of such Fund (as defined under "ADDITIONAL
INFORMATION--Miscellaneous" in this Statement of Additional Information), and a
majority of the Trustees who are not parties to the respective investment
advisory agreements or interested persons (as defined in the Investment Company
Act of 1940) of any party to the respective investment advisory agreements by
votes cast in person at a meeting called for such purpose. The Advisory
Agreement is terminable as to a particular Fund at any time on 60 days' written
notice without penalty by the Trustees, by vote of a majority of the outstanding
Shares of that Fund, or by the Fund's Advisor, as the case may be. The Advisory
Agreement also terminates automatically in the event of any assignment, as
defined in the Investment Company Act of 1940.
Banc One Investment Advisors is entitled to a fee, which is calculated
daily and paid monthly, at the following percentages of the average daily net
assets of each Fund: 0.60% for the Bond Fund, 0.74% for the Value Growth Fund,
0.74% for the Mid Cap Opportunities Fund, and 0.74% for the Mid Cap Value Fund.
Banc One Investment Advisors has voluntarily agreed to waive all or part of its
fees in order to limit the Funds' total operating expenses to not more than .75%
of the average daily net assets of the Bond Fund, not more than 0.95% of the
average daily net assets of the Value Growth Fund, not more than 0.95% of the
average daily net assets of the Mid Cap Opportunities Fund, and not more than
0.95% of the average daily net assets of the Mid Cap Value Fund. These fee
waivers are voluntary and may be terminated at any time.
The Advisory Agreement provides that Banc One Investment Advisors shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the performance of the Advisory
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith, or gross negligence on the part of the Advisor in the
performance of its duties, or from reckless disregard by it of its duties and
obligations thereunder.
GLASS-STEAGALL ACT
In 1971, the United States Supreme Court held in INVESTMENT COMPANY
INSTITUTE V. CAMP that the Federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "BOARD") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment advisor, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM V.
INVESTMENT COMPANY INSTITUTE that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisors to registered closed-end investment companies. In the BOARD
OF GOVERNORS case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as
38
<PAGE> 76
investment advisors to investment companies, a national bank performing
investment advisory services for an investment company would not violate the
Glass-Steagall Act.
In the Advisory Agreement, Banc One Investment Advisors has represented
to the Funds that it possesses the legal authority to perform the investment
advisory services contemplated by the agreement and described in the Prospectus
and this Statement of Additional Information without violation of applicable
statutes and regulations. Future changes in either Federal or state statutes and
regulations relating to the permissible activities of banks or bank holding
companies and the subsidiaries or affiliates of those entities, as well as
further judicial or administrative decisions or interpretations of present and
future statutes and regulations, could prevent or restrict Banc One Investment
Advisors from continuing to perform such services for the Funds. Depending upon
the nature of any changes in the services which could be provided by Banc One
Investment Advisors, the Board of Trustees of the Funds would review the Funds'
relationship with Banc One Investment Advisors and consider taking all action
necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of BANK ONE CORPORATION subsidiary banks or
their correspondent banks in connection with customer purchases of Shares of the
Trust, these banks might be required to alter materially or discontinue the
services offered by them to Customers. It is not anticipated, however, that any
change in the Funds' method of operations would affect its net asset value per
Share or result in financial losses to any customer.
PORTFOLIO TRANSACTIONS
Pursuant to the Advisory Agreement, Banc One Investment Advisors
determines, subject to the general supervision of the Board of Trustees of the
Funds and in accordance with each Fund's investment objective and restrictions,
which securities are to be purchased and sold by each such Fund and which
brokers are to be eligible to execute its portfolio transactions. Purchases and
sales of portfolio securities with respect to the Bond Fund usually are
principal transactions in which portfolio securities are purchased directly from
the issuer or from an underwriter or market maker for the securities. Purchases
from underwriters of portfolio securities include a commission or concession
paid by the issuer to the underwriter and purchases from dealers serving as
market makers may include the spread between the bid and asked price.
Transactions on stock exchanges (other than certain foreign stock exchanges)
involve the payment of negotiated brokerage commissions. Transactions in the
over-the-counter market are generally principal transactions with dealers. With
respect to the over-the-counter market, the Funds, where possible, will deal
directly with the dealers who make a market in the securities involved except in
those circumstances where better price and execution are available elsewhere.
While Banc One Investment Advisors generally seeks competitive spreads or
commissions, the Funds may not necessarily pay the lowest spread or commission
available on each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Banc One Investment Advisors with respect to the Funds
based on its best judgment and in a manner deemed fair and reasonable to
Shareholders. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price. Subject to this consideration,
dealers who provide supplemental investment research to Banc One Investment
Advisors may receive orders for transactions by the Funds. Information so
received is in addition to and not in lieu of services required to be performed
by Banc One Investment Advisors and does not reduce the advisory fees payable to
Banc One Investment Advisors. Such information may be useful to Banc One
Investment Advisors in serving both the Funds and other clients and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to Banc One Investment Advisors in carrying out its obligations to
the Funds.
The Funds will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with Banc One Investment Advisors or
its affiliates except as may be permitted under the Investment Company Act of
1940, and will not give preference to correspondents of BANK ONE CORPORATION
subsidiary banks with respect to such transactions, securities, savings
deposits, repurchase agreements, and reverse repurchase agreements.
Investment decisions for each Fund are made independently from those
for the other Funds or any other investment company or account managed by Banc
One Investment Advisors. Any such other investment company or account may also
invest in the same securities as the Funds. When a purchase or sale of the same
security is made at substantially the same time on behalf of a given Fund and
another Fund, investment company or account the transaction will be averaged as
to price, and available investments allocated as to amount, in a manner which
Banc One Investment Advisors believes to be equitable to the
39
<PAGE> 77
Fund(s) and such other investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by a Fund
or the size of the position obtained by a Fund. To the extent permitted by law,
Banc One Investment Advisors may aggregate the securities to be sold or
purchased by it for a Fund with those to be sold or purchased by it for other
Funds or for other investment companies or accounts in order to obtain best
execution. As provided by the Advisory Agreement, in making investment
recommendations for the Funds, Banc One Investment Advisors will not inquire or
take into consideration whether an issuer of securities proposed for purchase or
sale by the Funds is a customer of Banc One Investment Advisors or its parent or
subsidiaries or affiliates and, in dealing with its commercial customers, Banc
One Investment Advisors and its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of such customers are held
by the Funds.
ADMINISTRATOR
Nationwide Advisory Services, Inc. ("NAS") serves as Administrator (the
"ADMINISTRATOR") to each Fund pursuant to an administration agreement with the
Trust (the "ADMINISTRATION AGREEMENT"). The Administrator assists in supervising
all operations of each Fund to which it serves (other than those performed under
the Advisory Agreement, and Custodian and Transfer Agency Agreements for that
Fund). The Administrator is a broker-dealer registered with the Securities and
Exchange Commission, and is a member of the National Association of Securities
Dealers, Inc.
Under the Administration Agreement, the Administrator has agreed to
price the portfolio securities of each Fund it serves and to compute the net
asset value and net income of such Funds on a daily basis, to maintain office
facilities for the Funds, to maintain each such Fund's financial accounts and
records, and to furnish the Funds with data processing, clerical, accounting,
and bookkeeping services, and certain other services required by the Funds with
respect to each such Fund. The Administrator prepares annual and semi-annual
reports to the Securities and Exchange Commission, prepares federal and state
tax returns, prepares filings with state securities commissions, and generally
assists in all aspects of the Trust's operations other than those performed
under the Advisory Agreement, and Custodian and Transfer Agency Agreements.
Under the Administration Agreement, the Administrator may delegate all or any
part of its responsibilities thereunder.
Unless sooner terminated, the Administration Agreement between the
Trust and NAS will continue in effect through August 31, 1999. The
Administration Agreement thereafter shall be renewed automatically for
successive one year terms, unless written notice not to renew is given by the
non-renewing party to the other party at least sixty days prior to the
expiration of the then-current term. The Administration Agreement will be
reviewed and ratified at least annually by the Board of Trustees, provided that
the Administration Agreement is also reviewed and ratified by the majority of
the Trustees who are not parties to the Administration Agreement or interested
persons (as defined in the Investment Company Act of 1940) of any party to the
Administration Agreement, by vote cast in person at a meeting called for the
purpose of reviewing and ratifying the Administration Agreement. The
Administration Agreement is terminable with respect the Trust only upon mutual
agreement of the parties to the Administration Agreement and for cause (as
defined in the Administration Agreement) by the party alleging cause, on not
less than sixty days' notice by the Board of Trustees or by NFS.
The Administrator is entitled to a fee for its services for each of the
Funds, which is calculated daily and paid monthly, at the following annualized
percentages of average net assets of the Trust (less the assets of the Equity
Index Fund): 0.24% of the Trust's average net assets that are less than $250
million and 0.14% of the Trust's average net assets that are greater than $250
million.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered by
the Funds in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
CUSTODIAN, SUB-CUSTODIAN AND TRANSFER AGENT
Cash and securities owned by the Funds are held by State Street Bank
and Trust Company ("STATE STREET") pursuant to a Custodian Agreement with the
Trust (the "CUSTODIAN AGREEMENT"). Under the Custodian Agreement, State Street
(i) maintains a separate account or accounts in the name of each Fund; (ii)
makes receipts and disbursements of money on behalf of each Fund; (iii) collects
and receives all income and other payments and distributions on account of the
Funds' portfolio securities; (iv) responds to
40
<PAGE> 78
correspondence from security brokers and others relating to its duties; and (v)
makes periodic reports to the Board of Trustees concerning the Funds'
operations. State Street may, at its own expense, open and maintain a
sub-custody account or accounts on behalf of the Trust, provided that State
Street shall remain liable for the performance of all of its duties under the
Custodian Agreements.
Bank One Trust Company, N.A. serves as Sub-Custodian in connection with
the Trust's securities lending activities, pursuant to agreements between the
Trust, State Street and Bank One Trust Company.
Bank One Trust Company receives a fee paid by the Trust.
Rules adopted under the Investment Company Act of 1940 permit the Funds
to maintain their securities and cash in the custody of certain eligible banks
and securities depositories.
Nationwide Investors Services, Inc. ("NIS"), One Nationwide Plaza,
Columbus, Ohio, 43215, a subsidiary of NAS, the Administrator of the Trust,
serves as Transfer Agent and Dividend Disbursing Agent for each Fund pursuant to
Transfer Agency Agreement with the Trust (the "TRANSFER AGENCY AGREEMENT").
Under the Transfer Agency Agreement, NIS has agreed (i) to issue and redeem
Shares of the Funds; (ii) to address and mail all communications by the Trust to
its Shareholders, including reports to Shareholders, dividend and distribution
notices, and proxy material for its meetings of Shareholders; (iii) to respond
to correspondence or inquiries by Shareholders and others relating to its
duties; (iv) to maintain Shareholder accounts and certain sub-accounts; and (v)
to make periodic reports to the Board of Trustees concerning the Funds
operations.
EXPERTS
PricewaterhouseCoopers LLP serves as the independent accountants of the Trust.
The law firm of Ropes & Gray, One Franklin Square, 1301 K Street, N.W., Suite
800 East, Washington, D.C. 20005-3333 are counsel to the Trust.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Trust is a Massachusetts business trust. The Trust's Declaration of
Trust was filed with the Secretary of State of the Commonwealth of Massachusetts
on June 7, 1993 and authorizes the Board of Trustees to issue an unlimited
number of Shares, which are units of beneficial interest, without par value. The
Trust's Declaration of Trust authorizes the Board of Trustees to establish one
or more series of Shares of the Trust, and to classify or reclassify any series
into one or more classes by setting or changing in any one or more respects the
preferences, designations, conversion, or other rights, restrictions, or
limitations as to dividends, conditions of redemption, qualifications, or other
terms applicable to the Shares of such class, subject to those matters expressly
provided for in the Declaration of Trust, as amended, with respect to the Shares
of each series of the Trust. The Trust presently includes nine series of Shares
which represent interests in the Government Bond Fund, Asset Allocation Fund,
Growth Opportunities Fund, Large Company Growth Fund, Equity Index Fund, Bond
Fund, Value Growth Fund, Mid Cap Opportunities Fund, and the Mid Cap Value Fund.
The Declaration of Trust may not be amended without the affirmative
vote of a majority of the outstanding shares of the Trust, except that the
Trustees may amend the Declaration of the Trust without the vote or consent of
shareholders to:
(1) designate series of the Trust; (2) change the name of the Trust; or
(3) supply any omission, cure, correct, or supplement any ambiguous, defective,
or inconsistent provision to conform the Declaration of Trust to the
requirements of applicable federal and state laws or regulations if they deem it
necessary.
Shares have no pre-emptive or conversion rights. Shares are fully paid
and non-assessable, except as set forth below. When a majority is required, it
means the lesser of 67% or more of the shares present at a meeting when the
holders of more than 50% of the outstanding shares are present or represented by
proxy, or more than 50% of the outstanding shares. Shares have no subscription
or preemptive rights and only such conversion or exchange rights as the Board of
Trustees may grant in its discretion. When issued for payment as described in
the Prospectus and this Statement of Additional Information, the Trust's Shares
will be fully paid and non-assessable. In the event of a liquidation or
dissolution of the Trust, Shares of a Fund are entitled to receive the assets
available for distribution belonging to the Fund, and a proportionate
41
<PAGE> 79
distribution, based upon the relative asset values of the respective Funds, of
any general assets not belonging to any particular Fund which are available for
distribution.
Rule 18f-2 under the Investment Company Act of 1940 provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding Shares of each Fund affected by the matter. For purposes of
determining whether the approval of a majority of the outstanding Shares of a
Fund will be required in connection with a matter, a Fund will be deemed to be
affected by a matter unless it is clear that the interests of each Fund in the
matter are identical, or that the matter does not affect any interest of the
Fund. Under Rule 18f-2, the approval of an investment advisory agreement or any
change in investment policy would be effectively acted upon with respect to a
Fund only if approved by a majority of the outstanding Shares of such Fund.
However, Rule 18f-2 also provides that the ratification of independent public
accountants, the approval of principal underwriting contracts, and the election
of Trustees may be effectively acted upon by Shareholders of the Trust voting
without regard to series.
The Trust may suspend the right of redemption only under the following
unusual circumstances: (i) when the New York Stock Exchange is closed (other
than weekends and holidays) or trading is restricted; (ii) when an emergency
exists, making disposal of portfolio securities or the valuation of net assets
not reasonably practicable; or (iii) during any period when the Securities and
Exchange Commission has by order permitted a suspension of redemption for the
protection of shareholders.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, holders of units of beneficial interest in a
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the Trust. However, the Trust's Declaration of
Trust provides that Shareholders shall not be subject to any personal liability
for the obligations of the Trust, and that every written agreement, obligation,
instrument, or undertaking made by the Trust shall contain a provision to the
effect that the Shareholders are not personally liable thereunder. The
Declaration of Trust provides for indemnification out of the trust property of
any Shareholder held personally liable solely by reason of his being or having
been a Shareholder. The Declaration of Trust also provides that the Trust shall,
upon request, assume the defense of any claim made against any Shareholder for
any act or obligation of the Trust, and shall satisfy any judgment thereon.
Thus, the risk of a Shareholder incurring financial loss on account of
Shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Trust shall be personally liable in connection with the
administration or preservation of the assets of the trust or the conduct of the
Trust's business; nor shall any Trustee, officer, or agent be personally liable
to any person for any action or failure to act except for his own bad faith,
willful misfeasance, gross negligence, or reckless disregard of his duties. The
Declaration of Trust also provides that all persons having any claim against the
Trustees or the Trust shall look solely to the assets of the Trust for payment.
SHAREHOLDERS
All Shares of the Funds will be purchased by insurance company separate
accounts to fund variable annuity and variable life contracts ("Insurance
Contracts") and qualified pension and retirement plans ("QUALIFIED PLANS"). For
information concerning the purchase and redemption of Shares by Separate
Accounts and Qualified Plans, you should refer to your annuity prospectus or
Qualified Plan Documents as appropriate.
CALCULATION OF PERFORMANCE DATA
The Funds may quote their performance in various ways. All performance
information supplied by the Funds in advertising is historical and is not
intended to indicate future returns. The Funds' share prices, yields and total
returns fluctuate in response to market conditions and other factors, and the
value of Fund shares when redeemed may be more or less than their original cost.
From time to time, Banc One Investment Advisors and/or Administrator
may voluntarily waive all or a portion of its respective fee and absorb certain
expenses for the Funds. Performance information contained in advertisements
includes the effect of deducting a Fund's expenses, but may not include charges
42
<PAGE> 80
and expenses attributable to the variable annuity, variable life or
pension/retirement plan through which you have made your investment (a "FUNDING
VEHICLE"). Since the Funds' shares may only be purchased through a Funding
Vehicle, you should carefully review your insurance or Qualified Plan documents
for information on fees and expenses associated with the Funding Vehicle through
which your shares have been purchased. Excluding such fees and expenses from the
Funds' performance quotations has the effect of increasing the performance
quoted.
A Fund's respective total return and average annual total return is
determined by calculating the change in the value of a hypothetical $1,000
investment in a Fund for each of the periods shown. Total return for a Fund is
computed by determining the average annual compounded rate of return over the
applicable period that would equate the initial amount invested to the ending
redeemable value of the investment. The ending redeemable value includes
dividends and capital gain distributions reinvested at net asset value. The
resulting percentages indicated the positive or negative investment results that
an investor would have experienced from changes in net asset value and
reinvestment of dividends and distributions.
Performance will fluctuate from time to time and is not necessarily
representative of future results. Accordingly, a Fund's performance may not
provide for comparison with bank deposits or other investments that pay a fixed
return for a stated period of time. Performance is a function of a Fund's
quality, composition, and maturity, as well as expenses allocated to the Fund.
Statistical and performance information compiled and maintained by CDA
Technologies, Inc. ("CDA") and Interactive Data Corporation may also be used.
CDA is a performance evaluation service that maintains a statistical data base
of performance, as reported by a diverse universe of independently-managed
mutual funds. Interactive Data Corporation is a statistical access service that
maintains a data base of various industry indicators, such as historical and
current price/earning information and individual stock and fixed income price
and return information.
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H. 15), may also be used. Also current rate information on municipal
debt obligations of various durations, as reported daily by the Bond Buyer, may
also be used. The Bond Buyer is published daily and is an industry-accepted
source for current municipal bond market information.
Comparative information on the Consumer Price Index may also be
included. This Index, as prepared by the U.S. Bureau of Labor Statistics, is the
most commonly used measure of inflation. It indicates the cost fluctuations of a
representative group of consumer goods. It does not represent a return on
investment. From time to time, all of the Funds may quote actual total return
performance in advertising and other types of literature compared to results
reported by the Dow Jones Industrial Average.
The Dow Jones Industrial Average is an industry-accepted unmanaged
index of generally conservative securities used for measuring general market
performance. The performance reported will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The index does
not take into account any brokerage commissions or other fees. Comparative
information on the Consumer Price Index may also be included.
The Funds may also promote the yield and/or total return performance
and use comparative performance information computed by and available from
certain industry and general market research and publications, such as Lipper
Analytical Services, Inc.
The Funds may quote actual yield and/or total return performance in
advertising and other types of literature compared to indices or averages of
alternative financial products available to prospective investors. The
performance comparisons may include the average return of various bank
instruments, some of which may carry certain return guarantees offered by
leading banks and thrifts as monitored by Bank Rate Monitor, and those of
corporate bond and government security price indices of various durations.
Comparative information on the Consumer Price Index may also be included.
The Funds may also use comparative performance information computed by
and available from certain industry and general market research and
publications, as well as statistical and performance information, compiled and
maintained by CDA. and Interactive Data Corporation.
The Funds may also use current interest rate and yield information on
government debt obligations of various durations, as reported weekly by the
Federal Reserve (Bulletin H. 15). In addition, current rate
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<PAGE> 81
information on municipal debt obligations of various durations, as reported
daily by the Bond Buyer, may also be used.
MISCELLANEOUS
The Trust is not required to hold a meeting of Shareholders for the
purpose of annually electing Trustees except that (i) the Trust is required to
hold a Shareholders' meeting for the election of Trustees at such time as less
than a majority of the Trustees holding office have been elected by Shareholders
and (ii) if, as a result of a vacancy on the Board of Trustees, less than
two-thirds of the Trustees holding office have been elected by the Shareholders,
that vacancy may only be filled by a vote of the Shareholders. In addition,
Trustees may be removed from office by a written consent signed by the holders
of Shares representing two-thirds of the outstanding Shares of the Trust at a
meeting duly called for the purpose, which meeting shall be held upon the
written request of the holders of Shares representing not less than 20% of the
outstanding Shares of the Trust. Except as set forth above, the Trustees may
continue to hold office and may appoint successor Trustees.
As used in the Funds' Prospectus and in this Statement of Additional
Information, "assets belonging to a Fund" means the consideration received by
the Trust upon the issuance or sale of Shares in that Fund, together with all
income, earnings, profits, and proceeds derived from the investment thereof,
including any proceeds from the sale, exchange, or liquidation of such
investments, and any funds or payments derived from any reinvestment of such
proceeds, and any general assets of the Trust not readily identified as
belonging to a particular Fund that are allocated to that Fund by the Board of
Trustees. The Board of Trustees may allocate such general assets in any manner
it deems fair and equitable. It is anticipated that the factor that will be used
by the Board of Trustees in making allocations of general assets to particular
Funds will be the relative net asset values of the respective Funds at the time
of allocation. Each Fund's direct liabilities and expenses will be charged to
the assets belonging to that Fund. Each Fund will also be charged in proportion
to its relative net asset value for the general liabilities and expenses of the
Trust. The timing of allocations of general assets and general liabilities and
expenses of the Trust to particular Funds will be determined by the Board of
Trustees of the Trust and will be in accordance with generally accepted
accounting principles. Determinations by the Board of Trustees of the Trust as
to the timing of the allocation of general liabilities and expenses and as to
the timing and allocable portion of any general assets with respect to a
particular Fund are conclusive.
As used in the Funds' Prospectuses and in this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Trust, a
particular Fund, or a particular class of Shares of a Fund, means the
affirmative vote of the lesser of (a) more than 50% of the outstanding Shares of
the Trust, such Fund, or such class of Shares of such Fund, or (b) 67% or more
of the Shares of the Trust, such Fund, or such class of Shares of such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Trust, such Fund, or such class of Shares of such Fund are
represented in person or by proxy.
The Trust is registered with the Securities and Exchange Commission as
a management investment company. Such registration does not involve supervision
by the Commission of the management or policies of the Trust.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Securities and Exchange Commission. Copies of such information may be
obtained from the Commission upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and Statement of Additional Information.
44
<PAGE> 82
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Because The One Group Investment Trust Bond Fund, The One
Group Investment Trust Value Growth Fund, The One Group
Investment Trust Mid Cap Opportunities Fund, and The One
Group Investment Trust Mid Cap Value Fund (the "Funds") are
a series without assets or an operating history, there are
no financial statements for the Funds.
(b) Exhibits
--------
(1)(a) Amended Declaration of Trust dated February 18,
1998 is filed herewith.
(1)(b) Form of Amended Declaration of Trust dated
November 19, 1998 is filed herewith.
(2) Registrant's Bylaws Dated July 8, 1993, are
incorporated by reference to Registrant's
registration statement on Form N-1A, filed
on July 14, 1993.
(3) None
(4) None
(5)(a) Investment Advisory Agreement is incorporated by
reference to Pre-Effective Amendment No. 2 to the
Registrant's registration statement on Form N-1A,
filed on July 29, 1994.
(5)(b) Amended Appendix A to the Investment Advisory
Agreement, dated February 18, 1998, is filed
herewith.
(5)(c) Form of Amended Appendix A to the Investment
Advisory Agreement dated November 19, 1998 is filed
herewith.
(6) None
(7) Deferred Compensation Plan for Trustees of The One
Group Investment Trust is filed herewith.
(8)(a) Custodian Agreement with State Street Bank and
Trust Company, is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registrant's
registration statement on Form N-1A, filed on May
26, 1994.
(8)(b) Subcustodian Agreement for The One Group
Investment Trust between State Street Bank and Trust
Company, Bank One Trust Company, N.A. and the
Registrant dated as of June 11, 1998 is filed
herewith.
(9)(a) Transfer and Dividend Disbursing Agent Agreement
between Registrant and Nationwide Investors
Services, Inc., is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registrant's
registration statement on Form N-1A, filed on May
26, 1994.
(9)(b) Amended Appendix A to the Transfer and Dividend
Disbursing Agent Agreement, dated February 18, 1998,
is filed herewith.
(9)(c) Form of Amended Appendix A for the Transfer and
Dividend Disbursing Agent Agreement dated November
19, 1998 is filed herewith.
(9)(d) Amended and Restated Fund Participation
Agreement among the Registrant, Nationwide Life and
Annuity Insurance Company, and Nationwide Advisory
Services, Inc. is dated as of May 20, 1998 is filed
herewith.
(9)(e) Form of Amended Appendix A to the Fund
Participation Agreement dated November 19, 1998 is
filed herewith.
(9)(f) Amended and Restated Administrative Services
<PAGE> 83
Agreement between Registrant and Nationwide Advisory
Services, Inc. dated August 19, 1998, is filed
herewith.
(9)(g) Form of Amended and Restated Administrative
Services Agreement between Registrant and Nationwide
Advisory Services, Inc. dated as of November 19,
1998 is filed herewith.
(9)(h) Securities Lending Agreement for The One Group
Investment Trust between the Registrant, Banc One
Investment Advisors Corporation, and Bank One Trust
Company, N.A. dated as of June 15, 1998 is filed
herewith.
(10) Opinion of Ropes & Gray is filed herewith.
(11)(a)Consent of Ropes & Gray is filed herewith.
(11)(b)Consent of PriceWaterhouseCoopers LLP, Independent
Accountants, is filed herewith.
(12) None
(13) None
(14) None
(15) None
(16) None
(17) Because the Funds are series without assets or an
operating history, there are no financial data
schedules for the Funds
Copies of powers of attorney of Registrant's trustees and
officers whose names are signed to this Registration.
Statement pursuant to said powers of attorneys are filed
herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT As of
the effective date of this Registration Statement, there are no persons
controlled or under common control with the Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES No longer required by new N-1A.
ITEM 27. INDEMNIFICATION
Limitation of Liability and Indemnification provisions for Trustees,
Shareholders, officers, employees and agents of Registrant are set
forth in Article V, Sections 5.1 through 5.3 of the Declaration of
Trust. No Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever to any Person other than
the Trust or its Shareholders, in connection with Trust Property or the
affairs of the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard for his duty to
such Person; and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature arising in connection
with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee or agent, as such, of the Trust is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account
thereof, be held to any personal liability. The Trust shall indemnify
and hold each Shareholder harmless from and against all claims and
liabilities, to which such Shareholder may become subject by reason of
his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability. The rights accruing to
a Shareholder under Section 5.1 of the Declaration of Trust shall not
exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the
Trust to indemnify or reimburse a Shareholder in any appropriate
situation even though not specifically provided herein.
No Trustee, officer, employee or agent of the Trust shall be liable to
the Trust, its Shareholders, or to any Shareholder, Trustee, officer,
employee or agent thereof for any action or failure to act
<PAGE> 84
(including without limitation the failure to compel in any way any
former or acting Trustee to redress any breach of trust) except for his
own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties.
(a) Subject to the exceptions and limitations contained in
paragraph (b) below:
(i) every person who is or has been a Trustee or officer of
the Trust shall be indemnified by the Trust against all liability and
against all expenses reasonably incurred or paid by him in connection
with any claim, action, suit or proceeding in which he becomes involved
as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the
settlement thereof:
(ii) the words "claim," "action," "suit" or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal, or
other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or the Shareholders by
reason of a final adjudication by the court or other body before which
the proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust:
(iii) in the event of a settlement of other disposition not
involving a final adjudication as provided in paragraphs (b) (i) or (b)
(ii) resulting in a payment by a Trustee or officer, unless there has
been either a determination that such Trustee or officer did not engage
in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or a
reasonable determination, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that he did not engage
in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees
then in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not affect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a Person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such Person. Nothing contained herein
shall affect any rights to indemnification to which personnel other
than Trustees and officers may be entitled by contract or otherwise
under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a)
of Section 5.3 of the Declaration of Trust shall be advanced by the
Trust prior to final disposition thereof upon
<PAGE> 85
receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled to
indemnification under Section 5.3 of the Declaration of Trust, provided
that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses
arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter) or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the recipient ultimately will be found entitled to
indemnification.
As used in Section 5.3 of the Declaration of Trust, a "Disinterested
Trustee" is one (i) who is not an "Interested Person" by any rule,
regulation or order of the Commission), and (ii) against whom none of
such actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or had been
pending. See Item 24(b)(1) (Exhibit 1) above, whose terms and
conditions as summarized herein are hereby incorporated by reference.
Limitation of liability provisions for the Investment Advisor are set
forth in paragraph 4 of the Investment Advisory Agreement. The
Investment Advisor shall not be liable for any instructions, action or
failure to act, or for any loss sustained by reason of the adoption of
any investment policy or the purchase, sale or retention of any
security on the recommendation of the Investment Advisor, whether or
not such recommendation shall have been based upon its own
investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been made and such other
individual, firm or corporation shall have been selected with due care
and in good faith; but nothing herein contained shall be construed to
protect the Manager against any liability to the Trust or its security
holders by reason of willful misfeasance, bad faith or gross negligence
in the performance of its duties or by reason of its reckless disregard
of its obligations and duties under this agreement. See item 24(b)(5)
above (Exhibit 3), whose terms and conditions as summarized herein are
hereby incorporated by reference.
Registrant undertakes that it will comply with the indemnification
provisions of its Declaration of Trust, Investment Advisory Agreement,
and any other agreement to which the Registrant is a party containing
indemnification provisions in accordance with the provisions of
Investment Company Act of 1940 Release No. 11330, as modified from time
to time.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling
persons of the Registrant pursuant to the Registrant's Bylaws, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
<PAGE> 86
the Act and will be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Banc One Investment Advisors Corporation (the "Advisor") performs
investment advisory services for all of the Funds of the Group. As of
June 30, 1998, the Advisor, an indirect wholly-owned subsidiary of BANK
ONE CORPORATION, a bank holding company located in the state of,
Delaware, managed over $59 billion in assets. BANK ONE CORPORATION has
affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Texas, Utah,
West Virginia and Wisconsin. In addition, BANK ONE CORPORATION has
several affiliates that engage in data processing, venture capital,
investment and merchant banking, and other diversified services
including trust management, investment management, brokerage, equipment
leasing, mortgage banking, consumer finance, and insurance. On a
October 2, 1998, BANK ONE CORPORATION estimates that it had assets of
over $235 billion.
To the knowledge of Registrant, none of the directors or officers of
the Advisor, except as set forth herein, is or has been, at any time
during the past two calendar years, engaged in any other business,
profession, vocation or employment of a substantial nature. Set forth
below are the names and principal businesses of the directors of the
Advisor who are engaged in any other business, profession, vocation or
employment of a substantial nature.
BANC ONE INVESTMENT ADVISORS CORPORATION
<TABLE>
<CAPTION>
POSITION WITH
BANC ONE INVESTMENT OTHER SUBSTANTIAL TYPE OF
ADVISORS CORPORATION OCCUPATION BUSINESS
- -------------------- ---------- --------
<S> <C> <C>
David J. Kundert Chairman, Bank One Trust Investment
Chairman & CEO Company, NA, 100 East Broad Street, Advisor
Columbus, Ohio 43215
Frederick L. Cullen Chairman/CEO, Bank One Banking
Director NA; Chairman and ,
Chief Operating Officer,
Banc One Ohio Corporation
100 East Broad Street, Columbus,
Ohio 43215
Garrett Jamison President & Chief Executive Banking
Director Officer, Bank One Trust Company,
NA, 100 East Broad Street, Columbus,
Ohio 43215
Geoffrey von Kuhn Vice Chairman Investment
Director Banc One Capital Corporation Banking
150 East Gay Street, Columbus,
Ohio 43215
Michael J. McMennamin Executive VP & Chief Financial Banking
Director Officer, BANK ONE CORPORATION
100 East Broad Street, Columbus,
Ohio 43215
David R. Meuse Chairman/CEO Banc One Investment
Director Capital Holding Corporation Banking
150 East Gay Street, Columbus,
Ohio 43215
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITER
Not applicable.
<PAGE> 87
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Trust Agreements, Bylaws and Minute Books:
Alan G. Priest
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005-3333
Records relating to investment advisory services:
Banc One Investment Advisors Corporation
1111 Polaris Parkway, Suite 100
Columbus, OH 43271-0211
All other Accounts and Records:
Christopher A. Cray
Nationwide Advisory
Services, Inc.
Three Nationwide Plaza
Columbus, OH 43215
ITEM 31. MANAGEMENT SERVICES
All management-related service contracts entered into by Registrant are
discussed in Parts A and B of this Registration Statement.
ITEM 32. UNDERTAKINGS
Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of Registrant's latest annual report to shareholders upon
request and without charge.
Registrant undertakes to call a meeting of Shareholders, at the request
of at least 10% of the Registrant's outstanding shares, for the purpose of
voting upon the question of removal of a trustee or trustees and to assist in
communications with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
<PAGE> 88
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THERETO DULY AUTHORIZED, IN THE CITY OF WASHINGTON, DISTRICT OF
COLUMBIA ON THE 7TH DAY OF OCTOBER, 1998.
THE ONE GROUP(R) INVESTMENT TRUST (Registrant)
By: James F. Laird, Jr. *
PURSUANT TO THE REQUIREMENT OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO THE
REGISTRATION STATEMENT OF THE ONE GROUP(R) INVESTMENT TRUST HAS BEEN SIGNED
BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON THE ---DAY OF
OCTOBER, 1998.
SIGNATURE TITLE
--------- -----
/S/PETER C. MARSHALL* Trustee
Peter C. Marshall
/S/CHARLES I. POST* Trustee
Charles I. Post
/S/JOHN S. RANDALL* Trustee
John S. Randall
/S/FREDERICK W. RUEBECK* Trustee
Frederick W. Ruebeck
/S/ROBERT A. ODEN JR.* Trustee
Robert A. Oden Jr.
/S/JOHN F. FINN* Trustee
John F. Finn
PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER
/S/CHRISTOPHER A. CRAY* Vice President
Christopher A. Cray and Assistant Treasurer
*By ALAN PRIEST
Alan Priest
Attorney-in-fact
PRINCIPAL EXECUTIVE OFFICER
JAMES F. LAIRD, JR.* President
James F. Laird, Jr.
<PAGE> 89
POWER OF ATTORNEY
-----------------
Frederick W. Ruebeck, whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa
Albertelli, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group(R) Investment Trust (the "Trust"), to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as amended
("Acts"), and any rules, regulations or requirements of the Securities and
Exchange Commission in respect thereof, in connection with the filing and
effectiveness of any and all instruments and/or documents pertaining to the
federal registration of the shares of the Trust, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Trust any and all amendments to the Trust's Registration Statement as
filed with the Securities and Exchange Commission under said Acts, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: May 21, 1998
/s/ Frederick W. Ruebeck
------------------------
Frederick W. Ruebeck
<PAGE> 90
POWER OF ATTORNEY
-----------------
John F. Finn, whose signature appears below, does hereby constitute and
appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The One Group(R)
Investment Trust (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Trust, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Trust any and all amendments
to the Trust's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 27, 1998
/s/ John F. Finn
----------------
John F. Finn
<PAGE> 91
POWER OF ATTORNEY
-----------------
John S. Randall, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The One Group(R)
Investment Trust (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Trust, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Trust any and all amendments
to the Trust's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
/s/ John S. Randall
-------------------
John S. Randall
<PAGE> 92
POWER OF ATTORNEY
-----------------
Charles I. Post, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The One Group(R)
Investment Trust (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Trust, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Trust any and all amendments
to the Trust's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
/s/ Charles I. Post
-------------------
Charles I. Post
<PAGE> 93
POWER OF ATTORNEY
-----------------
Peter C. Marshall, whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa
Albertelli, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group(R) Investment Trust (the "Trust"), to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as amended
("Acts"), and any rules, regulations or requirements of the Securities and
Exchange Commission in respect thereof, in connection with the filing and
effectiveness of any and all instruments and/or documents pertaining to the
federal registration of the shares of the Trust, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Trust any and all amendments to the Trust's Registration Statement as
filed with the Securities and Exchange Commission under said Acts, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: May 21, 1998
/s/ Peter C. Marshall
---------------------
Peter C. Marshall
<PAGE> 94
POWER OF ATTORNEY
-----------------
Robert A. Oden, Jr., whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa
Albertelli, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group(R) Investment Trust (the "Trust"), to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as amended
("Acts"), and any rules, regulations or requirements of the Securities and
Exchange Commission in respect thereof, in connection with the filing and
effectiveness of any and all instruments and/or documents pertaining to the
federal registration of the shares of the Trust, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Trust any and all amendments to the Trust's Registration Statement as
filed with the Securities and Exchange Commission under said Acts, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: May 21, 1998
/s/ Robert A. Oden, Jr.
-----------------------
Robert A. Oden, Jr.
<PAGE> 95
POWER OF ATTORNEY
-----------------
Christopher A. Cray, whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Alyssa
Albertelli, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group(R) Investment Trust (the "Trust"), to comply with the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as amended
("Acts"), and any rules, regulations or requirements of the Securities and
Exchange Commission in respect thereof, in connection with the filing and
effectiveness of any and all instruments and/or documents pertaining to the
federal registration of the shares of the Trust, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Trust any and all amendments to the Trust's Registration Statement as
filed with the Securities and Exchange Commission under said Acts, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: February 12, 1998
/s/ Christopher A. Cray
-----------------------
Christopher A. Cray
<PAGE> 96
<TABLE>
<CAPTION>
EXHIBIT INDEX DESCRIPTION
- ------------- -----------
<S> <C>
(1)(a) Amended Declaration of Trust
(1)(b) Form of Amended Declaration of Trust dated November 19, 1998
(5)(b) Amended Appendix A to the Investment Advisory Agreement
(5)(c) Form of Amended Appendix A to the Investment Advisory
Agreement dated November 19, 1998
(7) Deferred Compensation Plan for Trustees of The One Group
Investment Trust
(8)(b) Subcustodian Agreement for the One Group Investment Trust
between State Street Bank and Trust Company, and Bank One
Trust Company, N.A. and the Registrant
(9)(b) Amended Appendix A to the Transfer and Dividend Disbursing
Agent Agreement
(9)(c) Form of Amended Appendix A to the Transfer and Dividend
Disbursing Agent Agreement dated November 19, 1998
(9)(d) Amended and Restated Fund Participation Agreement among the
Registrant, Nationwide Life and Annuity Insurance Company,
and Nationwide Advisory Services, Inc. dated as of May 20,
1998
(9)(e) Form of Amended Appendix A to the Fund Participation
Agreement dated November 19, 1998
(9)(f) Amended and Restated Administrative Services Agreement dated
August 19, 1998
(9)(g) Form of Amended and Restated Administrative Services
Agreement between Registrant and Nationwide Advisory
Services, Inc. dated as of November 19, 1998
(9)(h) Securities Lending Agreement for The One Group Investment
Trust between the Registrant, Banc One Investment Advisors
Corporation, and Bank One Trust Company, N.A. dated as of
June 15, 1998
(10) Opinion of Ropes & Gray
(11)(a) Consent of Ropes & Gray
(11((b) Consent of PriceWaterhouseCoopers LLP, Independent
Accountants
</TABLE>
<PAGE> 1
Exhibit 1(a)
AMENDED
DECLARATION OF TRUST
THE ONE GROUP(R) INVESTMENT TRUST
WHEREAS, the Trustees desire to establish a trust for the investment
and reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest, as
hereinafter provided:
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the shares of beneficial
interest issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust created hereby is "The One
Group(R) Investment Trust".
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "ADMINISTRATOR" means the party other than the Trust, to the
contract described in Section 4.3 hereof.
(b) "BYLAWS" means the Bylaws referred to in Section 3.9 hereof, as
from time to time amended.
(c) The terms "COMMISSION", "INTERESTED PERSON", and "MAJORITY
SHAREHOLDER VOTE" (the 67% or 50% requirement of the third sentence of Section 2
(a) (42) of the 1940 Act, whichever may be applicable) have the meanings given
them in the 1940 Act, except to the extent that the Trustees have otherwise
defined "Majority Shareholder Vote" in conjunction with the establishment of any
series of shares.
(d) "DECLARATION" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "DECLARATION", "HEREOF",
"HEREIN" and "HEREUNDER" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.
(e) "DISTRIBUTOR" means the party, other than the Trust, to the
contract described in Section 4.2 hereof.
(f) "INVESTMENT ADVISER" means the party, other than the Trust, to the
contract described in section 4.1 hereof.
(g) The "1940 ACT" means the Investment Company Act of 1940 and the
rules and regulations thereunder, as amended from time to time.
<PAGE> 2
(h) "PERSON" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(i) "SHAREHOLDER" means a record owner of outstanding Shares.
(j) "SHARES" means the units of interest into which the beneficial
interest in the Trust shall be divided from time to time, including the shares
of any and all series which may be established by the Trustees, and includes
fractions of Shares as well as whole Shares.
(k) "TRANSFER AGENT" means the party, other than the Trust, to the
contract described in Section 4.4 hereof.
(l) The "TRUST" means The One Group(R) Investment Trust.
(m) The "TRUST PROPERTY" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(n) The "TRUSTEES" means the persons who have signed this Declaration,
so long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected, qualified and
serving as Trustees in accordance with the provisions hereof, and reference
herein to a Trustee or the Trustees shall refer to such person or persons in
their capacity as trustees hereunder.
ARTICLE II
TRUSTEES
SECTION 2.1. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three (3) nor more than fifteen (15), except that the
number of Trustees may be one (1) prior to the commencement of public sale of
Trust Shares.
SECTION 2.2. ELECTION AND TERM. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.4 hereof, the Trustees shall
be elected by the Shareholders at an annual meeting or at a special meeting of
Shareholders. There is no requirement that the Trustees have an annual meeting
of the Shareholders. In the event the Trustees determine to have an annual or
special meeting of the Shareholders, it shall be held at such time and place and
in such manner as the Bylaws shall provide notwithstanding anything in this
section to the contrary. Except in the event of resignations or removals
pursuant to Section 2.3 hereof, each Trustee shall hold office until the next
meeting of shareholders and until his successor is elected and qualified to
serve as Trustee.
SECTION 2.3. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate number of
Trustees after such removal shall not be less than the number required by
Section 2.1. hereof) with cause, by the action of two-thirds of the remaining
Trustees. Upon the resignation or removal of a Trustee, or his otherwise ceasing
to be a Trustee, he shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust or the
remaining Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding sentence.
<PAGE> 3
SECTION 2.4. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the
Trustees. Any such appointment shall not become effective, however, until the
person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.4., the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees shall be conclusive evidence of the existence of such
vacancy.
SECTION 2.5. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees, personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations and maintain offices both
within and without the Commonwealth of Massachusetts, in any and all states of
the United States of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments,
and to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Trust
although such things are not herein specifically mentioned. Any determination as
to what is in the interest of the Trust made by the Trustees in good faith shall
be conclusive. In construing the provisions of the Declaration, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2. INVESTMENTS. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, lend or
otherwise deal in or dispose of negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, and other securities of any kind,
including, without limitation, those issued, guaranteed or sponsored by any and
all Persons including, without limitation, states, territories and possessions
of the United States, the District of Columbia and any of the political
subdivisions, agencies or instrumentalities thereof, and by the United States
<PAGE> 4
Government or its agencies or instrumentalities, or international
instrumentalities, or by any bank or savings institution, or by any corporation
or organization organized under the laws of the United States or of any state,
territory or possession thereof, and of corporations or organizations organized
under foreign laws, or in "when issued" contracts for any such securities, or
retain Trust assets in cash and from time to time change the investments of the
assets of the Trust; and to exercise any and all rights, powers and privileges
of ownership or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of said rights, powers and
privileges in respect of any said instruments.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
SECTION 3.3. LEGAL TITLE. Legal title to all the Trust Property shall
be vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person as nominee, on such terms as the Trustees may determine, provided
that the interest of the Trust therein is appropriately protected. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, he shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust Property shall vest automatically in
the remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
SECTION 3.4. ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII, and IX and Section
6.9 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
SECTION 3.5. BORROWING MONEY; LENDING TRUST ASSETS. The Trustees shall
have power to borrow money or otherwise obtain credit to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust, to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust assets.
SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
SECTION 3.7. COLLECTION AND PAYMENT. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
SECTION 3.8. EXPENSES. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
SECTION 3.9. MANNER OF ACTION; BYLAWS. Except as otherwise provided
herein or in the Bylaws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar
<PAGE> 5
communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of a majority of the
Trustees (unless a higher proportion is required by law). The Trustees may adopt
Bylaws not inconsistent with this Declaration to provide for the conduct of the
business of the Trust and may amend or repeal such Bylaws to the extent such
power is not reserved to the Shareholders.
SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committee which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding any
such position or by reason of any action taken or omitted by any such Person in
such capacity, whether or not constituting negligence, or whether or not the
Trust would have the power to indemnify such Person against such liability; (e)
establish pension, profit-sharing, Share purchase, and other retirement,
incentive and benefit plans for any Trustees, officers, employees and agents of
the Trust; (f) to the extent permitted by law, indemnify any person with whom
the Trust has dealings, including the Investment Adviser, Distributor,
Administrator, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
SECTION 3.11. PRINCIPAL TRANSACTIONS. Except in transactions permitted
by the 1940 Act or any rule or regulation thereunder, or any order of exemption
issued by the Commission, the Trustees shall not, on behalf of the Trust, buy
any securities (other than Shares) from or sell any securities (other than
Shares) to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with the Investment Adviser, Distributor,
Administrator or Transfer Agent or with any Interested Person of such Person;
but the Trust may employ any such Person, or firm or company in which such
Person is an Interested Person, as broker, legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian upon customary terms.
SECTION 3.12. TRUSTEES AND OFFICERS AS SHAREHOLDERS. Except as
hereinafter provided, no officer, Trustee or member of the Advisory Board of the
Trust, and no member, officer, director or trustee of the Investment Adviser or
of the Distributor and no Investment Adviser or Distributor of the Trust, shall
take long or short positions in the securities issued by the Trust.
(1) The foregoing provision shall not prevent the Distributor from
purchasing from the Trust Shares if such purchases are limited (except for
reasonable allowances for clerical errors, delays and errors of transmission and
cancellation of orders) to purchases for the purpose of filling orders for
Shares received by the Distributor and provided that orders to purchase from the
Trust are entered with the Trust or the Custodian promptly upon receipt by the
Distributor of purchase orders for Shares, unless the Distributor is otherwise
instructed by its customer.
(2) The foregoing provision shall not prevent the Distributor from
purchasing Shares as agent for the account of the Trust.
(3) The foregoing provision shall not prevent the purchase from the
Trust or from the Distributor of Shares by any officer, Trustee or member of the
Advisory Board of the Trust or by any member, officer, director or trustee of
the Investment Adviser or of the Distributor at a price not lower than the net
asset value of the Shares at the moment of such purchase, provided that any such
sales are only to be made pursuant to a uniform offer described in the Trust's
current prospectus.
<PAGE> 6
(4) The foregoing provision shall not prevent the Investment Adviser,
the Distributor, or any of their officers, directors or trustees from purchasing
Shares prior to the effective date of the Registration Statement relating to the
Shares under the Securities Act of 1933, as amended.
SECTION 3.13. LITIGATION. The Trustees shall have the power to engage
in and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust to pay or to satisfy
any debts, claims or expenses incurred in connection therewith, including those
of litigation, and such power shall include without limitation the power of the
Trustees or any appropriate committee thereof, in the exercise of their or its
good faith business judgment, to dismiss any action, suit, proceeding, dispute,
claim, or demand, derivative or otherwise, brought by any person, including a
Shareholder in its own name or the name of the Trust, whether or not the Trust
or any of the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR. ADMINISTRATOR
AND TRANSFER AGENT
SECTION 4.1. INVESTMENT ADVISER. Subject to a Majority Shareholder
Vote, the Trustees may, in their discretion, from time to time enter into an
investment advisory or management contract whereby the other party to such
contract shall undertake to furnish the Trust such management, investment
advisory, statistical and research facilities and services, promotional
activities, and such other facilities and services, if any, as the Trustees
shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may, in their discretion, determine. Notwithstanding
any provisions of the Declaration, the Trustees may authorize the Investment
Adviser (subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or exchanges of
portfolio securities of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of the Investment Adviser (and all without further
action by the Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees.
SECTION 4.2. DISTRIBUTOR. The Trustees may, in their discretion, from
time to time enter into a contract, providing for the sale of Shares of the
Trust at the net asset value per Share (as described in Article VIII hereof) ,
whereby the Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In either
case, the contract shall be on such terms and conditions as the Trustees may in
their discretion determine not inconsistent with the provisions of this Article
IV or the Bylaws; and such contract may also provide for the repurchase or sale
of Shares of the Trust by such other party as principal or as agent of the Trust
and may provide that such other party may enter into selected dealer agreements
with registered securities dealers to further the purpose of the distribution or
repurchase of the Shares.
SECTION 4.3. ADMINISTRATOR. The trustees may, in their discretion, from
time to time enter into an administrative services agreement whereby the other
party to such contract shall provide facilities, equipment, and personnel to
carry out certain administrative services for the operation of the business and
affairs of the Trust and each of its separate series. The contract shall have
such terms and conditions as the Trustees may, in their discretion, determine
not inconsistent with the Declaration or the Bylaws. Such services may be
provided by one or more Persons.
<PAGE> 7
SECTION 4.4. TRANSFER AGENT. The Trustees may, in their discretion,
from time to time enter into a transfer agency and shareholder service contract
whereby the other party to such contract shall undertake to furnish transfer
agency and shareholder services to the Trust. The contract shall have such terms
and conditions as the Trustees may, in their discretion, determine not
inconsistent with the Declaration or the Bylaws. Such services may be provided
by one or more Persons.
SECTION 4.5. PARTIES TO CONTRACT. Any contract of the character
described in Sections 4.1, 4.2, 4.3, and 4.4 of this Article IV or any Custodian
contract, as described in the Bylaws, may be entered into with any Person,
although one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other party to the contract,
and no such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship; nor shall any Person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of said contract or accountable for any
profit realized directly or indirectly therefrom, provided that the contract,
when entered into, was not inconsistent with the provisions of this Article IV
or the Bylaws. The same Person may be the other party to contracts entered into
pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above or Custodian contracts, and any
individual may be financially interested or otherwise affiliated with Persons
who are parties to any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS
TRUSTEES AND OTHERS
SECTION 5.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder as such shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs of
the Trust. No Trustee, officer, employee or agent of the Trust shall be subject
to any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to, such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any shareholder, Trustee, officer,
employee or agent, as such, of the Trust is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonable incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.
SECTION 5.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of his duties.
SECTION 5.3. MANDATORY INDEMNIFICATION. (a) Subject to the exceptions
and limitations contained in paragraph (b) below:
(i) Every person who is, or has been a Trustee or officer of the Trust
shall be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
<PAGE> 8
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof.
(ii) The words "claim", "action", "suit" or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust or the Shareholders by
reason of a final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraphs (b) (i) or (b)(ii)
resulting in a payment by a Trustee or officer, unless there has been either a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office by the court or other body approving the
settlement or other disposition or a reasonable determination, based upon a
review of readily available facts (as opposed to a full trial-type inquiry) that
he did not engage in such conduct:
(A) by vote of a majority of the Disinterested
Trustees acting on the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a Person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors and administrators of such Person.
Nothing contained herein shall affect any rights to indemnification to which
personnel other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this Section
5.3 shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or an behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry) , that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
<PAGE> 9
As used in this Section 5.3, a "Disinterested Trustee" is one (i) who
is not an "Interested Person" of the Trust (including anyone who has been
exempted from being an "Interested Person" by any rule, regulation or order of
the Commission) , and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same similar
grounds is then or had been pending.
Agents and employees of the Trust who are not Trustees or officers of
the Trust may be indemnified under the same standards and procedures set forth
in this Section 5.3., in the discretion of the Board.
SECTION 5.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
SECTION 5.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS.
ETC. No purchaser, lender, Transfer Agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as Trustees under the Declaration or in
their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees shall recite that the same
is executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of any such instrument are not binding
upon any of the Trustees or Shareholders, individually, but bind only the Trust
estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees individually. The Trustees shall at all times maintain insurance for
the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
SECTION 5.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
the Administrator, Transfer Agent, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or expert
may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest,
without par value, of the following classes or series, or such others as may be
authorized by the Trustees pursuant to Section 6.9:
The One Group(R) Investment Trust
o Government Bond Fund
o Asset Allocation Fund
o Growth Opportunities Fund
o Large Company Growth Fund
Equity Index Fund
<PAGE> 10
The number of shares of beneficial interest authorized hereunder is unlimited.
All Shares issued hereunder including, without limitation, Shares issued in
connection with a dividend in Shares or a split of Shares, shall be fully paid
and non-assessable.
SECTION 6.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust
Property of every description and the right to conduct any business herein
before described are vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition or division
of any property, profits, rights or interests of the Trust nor can they be
called upon to assume any losses of the Trust or suffer an assessment of any
kind by virtue of their ownership of Shares. The Shares shall be personal
property giving only the rights in the Declaration specifically set forth. The
Shares shall not entitle the holder to preference, preemptive, appraisal,
conversion or exchange rights, except as the Trustees may determine with respect
to any series of Shares.
SECTION 6.3. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a Trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
SECTION 6.4. ISSUANCE OR SHARES. The Trustees, in their discretion,
may, from time to time without vote of the shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day in accordance with the determination of
net asset value per Share as set forth in Section 8.3 hereof), and on such terms
as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. The Trustees may from time to
time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole shares and/or 1/1,000ths of a Share or integral multiples thereof.
SECTION 6.5. REGISTER OF SHARES; SHARE CERTIFICATES. A register will be
kept at the principal office of the Trust or at an office of the Transfer Agent
which shall contain the names and addresses of the Shareholders and the number
of Shares held by them respectively and a record of all transfers thereof. Such
register shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or distributions or otherwise to exercise
or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive
payment of any dividend or distribution, nor to have notice given to him as
herein or in the Bylaws provided, until he has given his address to the Transfer
Agent or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may authorize
the issuance of Share certificates and promulgate appropriate rules and
regulations as to their use.
SECTION 6.6. TRANSFER OF SHARES. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery, the transfer shall be recorded on
the register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is
<PAGE> 11
made, the Shareholder of record shall be deemed to be the holder of such Shares
for all purposes hereunder and neither the Trustees nor any Transfer Agent or
registrar nor any officer or agent of the Trust shall be affected by any notice
of such death, bankruptcy or incompetence, or other operation of law.
SECTION 6.7. NOTICES. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
SECTION 6.8. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.2 hereof or as
required by Section 16 (a) of the 1940 Act; (ii) with respect to any investment
advisory or management contract as provided in section 4.1; (iii) with respect
to termination of the Trust as provided in Section 9.2; (iv) with respect to any
amendment of the Declaration to the extent and as provided in Section 9.3; (v)
with respect to any merger, consolidation or sale of assets as provided in
Section 9.4; (vi) with respect to incorporation of the Trust to the extent and
as provided in Section 9.5; (vii) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders; and (viii) with
respect to such additional matters relating to the Trust as may be required by
the Declaration, the Bylaws, the 1940 Act or any registration of the Trust with
the Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional Share shall
be entitled to proportionate fractional vote, except that Shares held in the
treasury of the Trust shall not be voted and that the Trustees may, in
conjunction with the establishment of any series of Shares, establish conditions
under which the several series shall have separate voting rights or no voting
rights. There shall be no cumulative voting in the election of Trustees. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, the Declaration or the Bylaws to be taken by
Shareholders. The Bylaws may include further provisions for Shareholders' votes
and meetings and related matters.
SECTION 6.9. SERIES DESIGNATION. The Trustees, in their discretion, may
authorize the division of Shares into additional series, and the different
series shall be established and designated, and the variations in the relative
rights and preferences as between the different series shall be fixed and
determined by the Trustees, provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different series as
to investment objective, purchase price, right of redemption and the price,
terms and manner of redemption, special and relative rights as to dividends and
on liquidation, conversion rights, and conditions under which the several series
shall have separate voting rights. All references to Shares in the Declaration
shall be deemed to be shares of any or all series as the context may require.
If the Trustees shall divide the shares of the Trust into two or more
series, the following provisions shall be applicable:
(a) the number of authorized shares and the number of shares of each
series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued shares or any shares previously issued and reacquired of
any series into one or more series that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or some
other series), reissue for such consideration and on such terms as they may
determine, or cancel any shares of any series reacquired by the Trust at their
discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust Property
shall be governed by Section 3.2 of this Declaration with respect to the five
existing series which represents the interests in the assets of the Trust
immediately prior to the establishment of any additional series and the power of
the Trustees to invest and reinvest assets applicable to any such additional
series shall be as set forth in the instrument of the Trustees establishing such
series which is hereinafter described.
<PAGE> 12
(c) All consideration received by the Trust for the issue or sale of
shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
In the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular series, the Trustees shall allocate them among any one or more of
the series established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the shareholders
of all series for all purposes.
(d) The assets belonging to each particular series shall be charged
with the liabilities of the Trust in respect of that series and all expenses,
costs, charges and reserves attributable to that series, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular series shall be allocated
and charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such basis as
the Trustees, in their sole discretion, deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding upon the shareholders.
(e) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 8.2 of this Trust with respect to the five existing
series which represents the interests in the assets of the Trust immediately
prior to the establishment of any additional series. With respect to any other
series, dividends and distributions on shares of a particular series may be paid
with such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Trustees may determine, to the holders of shares of
that series, from such of the income and capital gains, accrued or realized,
from the assets belonging to that series, as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that series. All
dividends and distributions on shares of a particular series shall be
distributed pro rata to the holders of that series in proportion to the number
of shares of that series held by all such holders at the date and time of record
established for the payment of such dividends or distributions.
The establishment and designation of any series of shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument. At any
time that there are no shares outstanding of any particular series previously
established and designated, the Trustees may, by an instrument executed by a
majority of their number, abolish that series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.
ARTICLE VII
REDEMPTIONS
SECTION 7.1. REDEMPTIONS. In case any Shareholder at any time desires
to dispose of his Shares, he may deposit his certificate or certificates
therefor, duly endorsed in blank or accompanied by an instrument of transfer
executed in blank, or if the Shareholder has no certificates, a written request
or other such form of request as the Trustees may from time to time authorize,
at the office of the Transfer Agent or at the office of any bank or trust
company, either in or outside of Massachusetts, which is a member of the Federal
Reserve System and which the said Transfer Agent has designated in writing for
that purpose, together with an irrevocable offer in writing in a
<PAGE> 13
form acceptable to the Trustees to sell the Shares represented thereby to the
Trust at the net asset value thereof per Share, determined as provided in
Section 8.1 hereof, next after such deposit. Payment for said Shares shall be
made to the Shareholder within seven (7) days after the date on which the
deposit is made, unless (i) the date of payment is postponed pursuant to Section
7.2 hereof, or (ii) the receipt, or verification of receipt, of the purchase
price for the Shares to be redeemed is delayed, in either of which event payment
may be delayed beyond seven (7) days.
SECTION 7.2. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings; (ii)
during which trading on the New York Stock Exchange is restricted; (iii) during
which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets; or
(iv) during any other period when the Commission may for the protection of
security holders of the Trust by order permit suspension of the right of
redemption or postponement of the date of payment or redemption; provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall
take effect at such time as the Trust shall specify, but not later than the
close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption until the Trust
shall declare the suspension at an end, except that the suspension shall
terminate in any event on the first day on which said stock exchange shall have
reopened or the period specified in (ii) or (iii) shall have expired (as to
which, in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.
SECTION 7.3. REDEMPTION OF SHARES: DISCLOSURE OF HOLDING. If the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares or other securities of the Trust has or may become
concentrated in any Person to an extent which would disqualify the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for redemption by any such Person of a number, or principal amount, of Shares or
other securities of the Trust sufficient to maintain or bring the direct or
indirect ownership of Shares or other securities of the Trust into conformity
with the requirements for such qualification; and (ii) to refuse to transfer or
issue Shares or other securities of the Trust to any Person whose acquisition of
the Shares or other securities of the Trust in question would result in such
disqualification. The redemption shall be effected at the redemption price and
in the manner provided in Section 7.1.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other authority.
SECTION 7.4. REDEMPTIONS OF ACCOUNTS OF LESS THAN $500. The Trustees
shall have the power at any time to redeem Shares of any Shareholder at a
redemption price determined in accordance with Section 7.1, if at such time the
aggregate net asset value of the Shares in such Shareholder's account is less
than $500. A shareholder will be notified that the value of his account is less
than $500 and allowed thirty (30) days to make an additional investment before
redemption is processed.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE
NET INCOME AND DISTRIBUTIONS
<PAGE> 14
SECTION 8.1. NET ASSET VALUE. For all purposes under this Declaration
of Trust, the net asset value shall be determined by the Trustees as soon as
possible after the close of the New York Stock Exchange on each business day
upon which such Exchange is open, such net asset value to become effective one
hour after such close and remain in effect until the next determination of such
net asset value becomes effective; provided, however, that the Trustees may in
their discretion make a more frequent determination of the net asset value which
shall become effective one hour after the time as of which such net asset value
is determined.
Such net asset value shall be determined in the following manner:
(a) All securities listed on any recognized Exchange shall be appraised
at the quoted closing sale prices and in the event that there was no sale of any
particular security on such day the quoted closing bid price thereof shall be
used, or if any such security was not quoted on such day or if the determination
of the net asset value is being made as of a time other than the close of the
New York Stock Exchange, then the same shall be appraised in such manner as
shall be deemed by the Trustees to reflect its fair value.
All other securities and assets of the Trust, including cash, prepaid
and accrued items, and dividends receivable, shall be appraised in such manner
as shall be deemed by the Trustees to reflect their fair value.
(b) From the total value of the Trust Property as so determined shall
be deducted the liabilities of the Trust, including reserves for taxes, and such
expenses and liabilities of the Trust as may be determined by the Trustees to be
accrued liabilities.
(c) The resulting amount shall represent the net asset value of the
Trust Property. The net asset value of a share of any class shall be the result
of the division of the net asset value of the underlying assets of that class by
the number of shares of that class outstanding. The net asset value of the Trust
Property and shares as so determined shall be final and conclusive.
SECTION 8.2. DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall from
time to time distribute ratably among the Shareholders such proportion of the
net profits, surplus (including paid-in surplus), capital, or assets held by the
Trustees as they may deem proper. Such distribution may be made in cash or
property (including without limitation any type of obligations of the Trust or
any assets thereof) , and the Trustees may distribute ratably among the
Shareholders additional Shares issuable hereunder in such manner, at such times,
and on such terms as the Trustees may deem proper. Such distributions may be
among the Shareholders of record at the time of declaring a distribution or
among the Shareholders of record at such later date as the Trustees shall
determine. The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they may deem desirable to use in the conduct of
its affairs or to retain for future requirements or extensions of the business.
The Trustees may adopt and offer to Shareholders such dividend reinvestment
plans, cash dividend payout plans or related plans as the Trustees shall deem
appropriate.
Inasmuch as the computation of net income and gains for Federal Income
Tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
SECTION 8.3. DETERMINATION OF NET INCOME. The term "net income" with
respect to a class of shares is hereby defined as the gross earnings of the
class, excluding gains on sales of securities and stock dividends received, less
the expenses of the Trust allocated to the class by the Trustees in such manner
as they determine to be fair and equitable or otherwise chargeable to the class.
The expenses shall include (1) taxes attributable to the income of the Trust
exclusive of gains on sales, and (2) other charges properly deductible for the
maintenance and administration of the Trust; but there shall not be deducted
from gross or net income any losses on securities,
<PAGE> 15
realized or unrealized. The Trustees shall otherwise have full discretion to
determine which items shall be treated as income and which items as capital and
their determination shall be binding upon the Beneficiaries.
SECTION 8.4. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions as they may deem necessary or desirable.
Without limiting the generality of the foregoing, the Trustees may establish
additional series of Shares in accordance with Section 6.9.
ARTICLE IX
DURATION; TERMINATION OF TRUST
AMENDMENT; MERGERS; ETC.
SECTION 9.1. DURATION. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
SECTION 9.2. TERMINATION OF TRUST. (a) The Trust must be terminated:
(i) by the affirmative vote of the holders of not less than two-thirds
of the Shares outstanding and entitled to vote at any meeting of Shareholders,
or (ii) by an instrument in writing, without a meeting, signed by a majority of
the Trustees and consented to by the holders of not less than two-thirds of such
Shares, or by such other vote as may be established by the Trustees with respect
to any series of Shares, or (iii) by the Trustees by written notice to the
Shareholders.
Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and
all of the powers of the Trustees under this Declaration shall continue until
the affairs of the Trust shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Trust Property to one or more persons at public or private sale
for consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities, and to do all
other acts appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property shall require Shareholder approval in
accordance with Section 9.4 hereof.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly each,
among the Shareholders according to their respective rights.
(iv) After termination of the Trust and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties hereunder, and the rights and interests of
all Shareholders shall thereupon cease.
SECTION 9.3. AMENDMENT PROCEDURE. (a) This Declaration may be amended
by a Majority Shareholder Vote or by any instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by the holders of
not less than a majority of the Shares outstanding and entitled to vote. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders to designate series in accordance with Section 6.9
<PAGE> 16
hereof, to change the name of the Trust, to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision hereof,
or if they deem it necessary to conform this Declaration to the requirements of
applicable federal laws or regulations or the requirements of the regulated
investment company provisions of the Internal Revenue Code, but the Trustees
shall not be liable for failing to do so.
(b) No amendment may be made under this Section 9.3 which would change
any rights with respect to any Shares of the Trust by reducing the amount
payable thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or consent of the
holders of two-thirds of the Shares outstanding and entitled to vote, or by such
other vote as may be established by the Trustees with respect to any series of
Shares. Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit assessments
upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
SECTION 9.4. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property, including its goodwill, upon such terms and conditions and for
such consideration when and as authorized at any meeting of Shareholders called
for the purpose by the affirmative vote of the holders of not less than
two-thirds of the Shares outstanding and entitled to vote, or by an instrument
or instruments in writing without a meeting, consented to by the holders of not
less than two-thirds of such Shares, or by such other vote as may be established
by the Trustees with respect to any series of Shares; provided, however, that,
if such merger, consolidation, sale, lease or exchange is recommended by the
Trustees, the vote or written consent of the holders of a majority of Shares
outstanding and entitled to vote, or by such other vote as may be established by
the Trustees with respect to any series of Shares, shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange shall
be deemed for all purposes to have been accomplished under and pursuant to the
statutes of the Commonwealth of Massachusetts.
SECTION 9.5. INCORPORATION. With the approval of the holders of a
majority of the Shares outstanding and entitled to vote, or by such other vote
as may be established by the Trustees with respect to any series of Shares, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization in exchange for the shares or
securities thereof or otherwise, and to lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization in which the Trust holds or is about to
acquire shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Trust Property to such organization or
entities.
ARTICLE X
REPORTS TO SHAREHOLDERS
<PAGE> 17
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. FILING. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was duly taken in a manner
provided herein, and unless such amendment or such certificate sets forth some
later time for the effectiveness of such amendment, such amendment shall be
effective upon its filing. A restated Declaration, integrating into a single
instrument all of the provisions of the Declaration which are then in effect and
operative, may be executed from time to time by a majority of the Trustees and
shall, upon filing with the Secretary of the Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained herein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
SECTION 11.2. RESIDENT AGENT. The name of the Trust's resident agent is
The One Group(R) Investment Trust, c/o CT Corporation System, and its post
office address is 2 Oliver Street, Boston, Massachusetts 02109.
SECTION 11.3. GOVERNING LAW. This Declaration is executed by the
Trustees and delivered with reference to the laws of the Commonwealth of
Massachusetts, and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed according to the
laws of said State.
SECTION 11.4. COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall sufficiently evidenced by any such original counterpart.
SECTION 11.5. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any Bylaws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
SECTION 11.6. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of the Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provisions shall be deemed never to have
constituted a part of the Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
<PAGE> 18
SECTION 11.7. INDEX AND HEADING FOR REFERENCE ONLY. The Index and
heading preceding the text, articles and sections hereof have been inserted for
convenience and reference only and shall not be construed to affect the meaning,
construction, or effect of this Declaration.
IN WITNESS WHEREOF, the undersigned Trustees have hereunto set their hands this
18th day of February, 1998.
Address: Three Nationwide Plaza ----------------------------------
26th Floor Peter C Marshall
Columbus, Ohio 43215 Trustee
Charles I. Post
Trustee
John S. Randall
Trustee
Frederick W. Ruebeck
Trustee
Robert A. Oden, Jr.
Trustee
By: ________________________
Alan G. Priest
Attorney-in-Fact
<PAGE> 1
Exhibit 1(b)
AMENDED
DECLARATION OF TRUST
THE ONE GROUP(R) INVESTMENT TRUST
WHEREAS, the Trustees desire to establish a trust for the investment
and reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest, as
hereinafter provided:
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the shares of beneficial
interest issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust created hereby is "The One
Group(R) Investment Trust".
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "ADMINISTRATOR" means the party other than the Trust, to the
contract described in Section 4.3 hereof.
(b) "BYLAWS" means the Bylaws referred to in Section 3.9 hereof, as
from time to time amended.
(c) The terms "COMMISSION", "INTERESTED PERSON", and "MAJORITY
SHAREHOLDER VOTE" (the 67% or 50% requirement of the third sentence of Section 2
(a) (42) of the 1940 Act, whichever may be applicable) have the meanings given
them in the 1940 Act, except to the extent that the Trustees have otherwise
defined "Majority Shareholder Vote" in conjunction with the establishment of any
series of shares.
(d) "DECLARATION" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "DECLARATION", "HEREOF",
"HEREIN" and "HEREUNDER" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.
(e) "DISTRIBUTOR" means the party, other than the Trust, to the
contract described in Section 4.2 hereof.
(f) "INVESTMENT ADVISER" means the party, other than the Trust, to the
contract described in section 4.1 hereof.
(g) The "1940 ACT" means the Investment Company Act of 1940 and the
rules and regulations thereunder, as amended from time to time.
<PAGE> 2
(h) "PERSON" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(i) "SHAREHOLDER" means a record owner of outstanding Shares.
(j) "SHARES" means the units of interest into which the beneficial
interest in the Trust shall be divided from time to time, including the shares
of any and all series which may be established by the Trustees, and includes
fractions of Shares as well as whole Shares.
(k) "TRANSFER AGENT" means the party, other than the Trust, to the
contract described in Section 4.4 hereof.
(l) The "TRUST" means The One Group(R) Investment Trust.
(m) The "TRUST PROPERTY" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(n) The "TRUSTEES" means the persons who have signed this Declaration,
so long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected, qualified and
serving as Trustees in accordance with the provisions hereof, and reference
herein to a Trustee or the Trustees shall refer to such person or persons in
their capacity as trustees hereunder.
ARTICLE II
TRUSTEES
--------
SECTION 2.1. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three (3) nor more than fifteen (15), except that the
number of Trustees may be one (1) prior to the commencement of public sale of
Trust Shares.
SECTION 2.2. ELECTION AND TERM. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.4 hereof, the Trustees shall
be elected by the Shareholders at an annual meeting or at a special meeting of
Shareholders. There is no requirement that the Trustees have an annual meeting
of the Shareholders. In the event the Trustees determine to have an annual or
special meeting of the Shareholders, it shall be held at such time and place and
in such manner as the Bylaws shall provide notwithstanding anything in this
section to the contrary. Except in the event of resignations or removals
pursuant to Section 2.3 hereof, each Trustee shall hold office until the next
meeting of shareholders and until his successor is elected and qualified to
serve as Trustee.
SECTION 2.3. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate number of
Trustees after such removal shall not be less than the number required by
Section 2.1. hereof) with cause, by the action of two-thirds of the remaining
Trustees. Upon the resignation or removal of a Trustee, or his otherwise ceasing
to be a Trustee, he shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust or the
remaining Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding sentence.
<PAGE> 3
SECTION 2.4. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the
Trustees. Any such appointment shall not become effective, however, until the
person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.4., the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees shall be conclusive evidence of the existence of such
vacancy.
SECTION 2.5. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees, personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
------------------
SECTION 3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations and maintain offices both
within and without the Commonwealth of Massachusetts, in any and all states of
the United States of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments,
and to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Trust
although such things are not herein specifically mentioned. Any determination as
to what is in the interest of the Trust made by the Trustees in good faith shall
be conclusive. In construing the provisions of the Declaration, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2. INVESTMENTS. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, lend or
otherwise deal in or dispose of negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, and other securities of any kind,
including, without limitation, those issued, guaranteed or sponsored by
<PAGE> 4
any and all Persons including, without limitation, states, territories and
possessions of the United States, the District of Columbia and any of the
political subdivisions, agencies or instrumentalities thereof, and by the United
States Government or its agencies or instrumentalities, or international
instrumentalities, or by any bank or savings institution, or by any corporation
or organization organized under the laws of the United States or of any state,
territory or possession thereof, and of corporations or organizations organized
under foreign laws, or in "when issued" contracts for any such securities, or
retain Trust assets in cash and from time to time change the investments of the
assets of the Trust; and to exercise any and all rights, powers and privileges
of ownership or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of said rights, powers and
privileges in respect of any said instruments.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
SECTION 3.3. LEGAL TITLE. Legal title to all the Trust Property shall
be vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person as nominee, on such terms as the Trustees may determine, provided
that the interest of the Trust therein is appropriately protected. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, he shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust Property shall vest automatically in
the remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
SECTION 3.4. ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII, and IX and Section
6.9 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
SECTION 3.5. BORROWING MONEY; LENDING TRUST ASSETS. The Trustees shall
have power to borrow money or otherwise obtain credit to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust, to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust assets.
SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
SECTION 3.7. COLLECTION AND PAYMENT. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
SECTION 3.8. EXPENSES. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
<PAGE> 5
SECTION 3.9. MANNER OF ACTION; BYLAWS. Except as otherwise provided
herein or in the Bylaws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of a majority of the
Trustees (unless a higher proportion is required by law). The Trustees may adopt
Bylaws not inconsistent with this Declaration to provide for the conduct of the
business of the Trust and may amend or repeal such Bylaws to the extent such
power is not reserved to the Shareholders.
SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committee which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding any
such position or by reason of any action taken or omitted by any such Person in
such capacity, whether or not constituting negligence, or whether or not the
Trust would have the power to indemnify such Person against such liability; (e)
establish pension, profit-sharing, Share purchase, and other retirement,
incentive and benefit plans for any Trustees, officers, employees and agents of
the Trust; (f) to the extent permitted by law, indemnify any person with whom
the Trust has dealings, including the Investment Adviser, Distributor,
Administrator, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
SECTION 3.11. PRINCIPAL TRANSACTIONS. Except in transactions permitted
by the 1940 Act or any rule or regulation thereunder, or any order of exemption
issued by the Commission, the Trustees shall not, on behalf of the Trust, buy
any securities (other than Shares) from or sell any securities (other than
Shares) to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with the Investment Adviser, Distributor,
Administrator or Transfer Agent or with any Interested Person of such Person;
but the Trust may employ any such Person, or firm or company in which such
Person is an Interested Person, as broker, legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian upon customary terms.
SECTION 3.12. TRUSTEES AND OFFICERS AS SHAREHOLDERS. Except as
hereinafter provided, no officer, Trustee or member of the Advisory Board of the
Trust, and no member, officer, director or trustee of the Investment Adviser or
of the Distributor and no Investment Adviser or Distributor of the Trust, shall
take long or short positions in the securities issued by the Trust.
(1) The foregoing provision shall not prevent the Distributor from
purchasing from the Trust Shares if such purchases are limited (except for
reasonable allowances for clerical errors, delays and errors of transmission and
cancellation of orders) to purchases for the purpose of filling orders for
Shares received by the Distributor and provided that orders to purchase from the
Trust are entered with the Trust or the Custodian promptly upon receipt by the
Distributor of purchase orders for Shares, unless the Distributor is otherwise
instructed by its customer.
(2) The foregoing provision shall not prevent the Distributor from
purchasing Shares as agent for the account of the Trust.
(3) The foregoing provision shall not prevent the purchase from the
Trust or from the Distributor of Shares by any officer, Trustee or member of the
Advisory Board of the Trust or by any member, officer, director or
<PAGE> 6
trustee of the Investment Adviser or of the Distributor at a price not lower
than the net asset value of the Shares at the moment of such purchase, provided
that any such sales are only to be made pursuant to a uniform offer described in
the Trust's current prospectus.
(4) The foregoing provision shall not prevent the Investment Adviser,
the Distributor, or any of their officers, directors or trustees from purchasing
Shares prior to the effective date of the Registration Statement relating to the
Shares under the Securities Act of 1933, as amended.
SECTION 3.13. LITIGATION. The Trustees shall have the power to engage
in and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust to pay or to satisfy
any debts, claims or expenses incurred in connection therewith, including those
of litigation, and such power shall include without limitation the power of the
Trustees or any appropriate committee thereof, in the exercise of their or its
good faith business judgment, to dismiss any action, suit, proceeding, dispute,
claim, or demand, derivative or otherwise, brought by any person, including a
Shareholder in its own name or the name of the Trust, whether or not the Trust
or any of the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR. ADMINISTRATOR
AND TRANSFER AGENT
SECTION 4.1. INVESTMENT ADVISER. Subject to a Majority Shareholder
Vote, the Trustees may, in their discretion, from time to time enter into an
investment advisory or management contract whereby the other party to such
contract shall undertake to furnish the Trust such management, investment
advisory, statistical and research facilities and services, promotional
activities, and such other facilities and services, if any, as the Trustees
shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may, in their discretion, determine. Notwithstanding
any provisions of the Declaration, the Trustees may authorize the Investment
Adviser (subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or exchanges of
portfolio securities of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of the Investment Adviser (and all without further
action by the Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees.
SECTION 4.2. DISTRIBUTOR. The Trustees may, in their discretion, from
time to time enter into a contract, providing for the sale of Shares of the
Trust at the net asset value per Share (as described in Article VIII hereof) ,
whereby the Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In either
case, the contract shall be on such terms and conditions as the Trustees may in
their discretion determine not inconsistent with the provisions of this Article
IV or the Bylaws; and such contract may also provide for the repurchase or sale
of Shares of the Trust by such other party as principal or as agent of the Trust
and may provide that such other party may enter into selected dealer agreements
with registered securities dealers to further the purpose of the distribution or
repurchase of the Shares.
SECTION 4.3. ADMINISTRATOR. The trustees may, in their discretion, from
time to time enter into an administrative services agreement whereby the other
party to such contract shall provide facilities, equipment, and personnel to
carry out certain administrative services for the
<PAGE> 7
operation of the business and affairs of the Trust and each of its separate
series. The contract shall have such terms and conditions as the Trustees may,
in their discretion, determine not inconsistent with the Declaration or the
Bylaws. Such services may be provided by one or more Persons.
SECTION 4.4. TRANSFER AGENT. The Trustees may, in their discretion,
from time to time enter into a transfer agency and shareholder service contract
whereby the other party to such contract shall undertake to furnish transfer
agency and shareholder services to the Trust. The contract shall have such terms
and conditions as the Trustees may, in their discretion, determine not
inconsistent with the Declaration or the Bylaws. Such services may be provided
by one or more Persons.
SECTION 4.5. PARTIES TO CONTRACT. Any contract of the character
described in Sections 4.1, 4.2, 4.3, and 4.4 of this Article IV or any Custodian
contract, as described in the Bylaws, may be entered into with any Person,
although one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other party to the contract,
and no such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship; nor shall any Person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of said contract or accountable for any
profit realized directly or indirectly therefrom, provided that the contract,
when entered into, was not inconsistent with the provisions of this Article IV
or the Bylaws. The same Person may be the other party to contracts entered into
pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above or Custodian contracts, and any
individual may be financially interested or otherwise affiliated with Persons
who are parties to any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS
----------------------------------------
TRUSTEES AND OTHERS
-------------------
SECTION 5.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder as such shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs of
the Trust. No Trustee, officer, employee or agent of the Trust shall be subject
to any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to, such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any shareholder, Trustee, officer,
employee or agent, as such, of the Trust is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonable incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.
SECTION 5.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of his duties.
<PAGE> 8
SECTION 5.3. MANDATORY INDEMNIFICATION. (a) Subject to the exceptions
and limitations contained in paragraph (b) below:
(i) Every person who is, or has been a Trustee or officer of the Trust
shall be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof.
(ii) The words "claim", "action", "suit" or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust or the Shareholders by
reason of a final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraphs (b) (i) or (b)(ii)
resulting in a payment by a Trustee or officer, unless there has been either a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office by the court or other body approving the
settlement or other disposition or a reasonable determination, based upon a
review of readily available facts (as opposed to a full trial-type inquiry) that
he did not engage in such conduct:
(A) by vote of a majority of the Disinterested
Trustees acting on the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a Person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors and administrators of such Person.
Nothing contained herein shall affect any rights to indemnification to which
personnel other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this Section
5.3 shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or an behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
<PAGE> 9
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3, a "Disinterested Trustee" is one (i) who
is not an "Interested Person" of the Trust (including anyone who has been
exempted from being an "Interested Person" by any rule, regulation or order of
the Commission) , and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same similar
grounds is then or had been pending.
Agents and employees of the Trust who are not Trustees or officers of
the Trust may be indemnified under the same standards and procedures set forth
in this Section 5.3., in the discretion of the Board.
SECTION 5.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
SECTION 5.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS.
ETC. No purchaser, lender, Transfer Agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as Trustees under the Declaration or in
their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees shall recite that the same
is executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of any such instrument are not binding
upon any of the Trustees or Shareholders, individually, but bind only the Trust
estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees individually. The Trustees shall at all times maintain insurance for
the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
SECTION 5.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
the Administrator, Transfer Agent, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or expert
may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
-----------------------------
SECTION 6.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest,
without par value, of the following classes or series, or such others as may be
authorized by the Trustees pursuant to Section 6.9:
The One Group(R) Investment Trust
<PAGE> 10
- Government Bond Fund
- Asset Allocation Fund
- Growth Opportunities Fund
- Large Company Growth Fund
- Equity Index Fund
- Bond Fund
- Value Growth Fund
- Mid Cap Opportunities Fund
- Mid Cap Value Fund
The number of shares of beneficial interest authorized hereunder is unlimited.
All Shares issued hereunder including, without limitation, Shares issued in
connection with a dividend in Shares or a split of Shares, shall be fully paid
and non-assessable.
SECTION 6.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust
Property of every description and the right to conduct any business herein
before described are vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition or division
of any property, profits, rights or interests of the Trust nor can they be
called upon to assume any losses of the Trust or suffer an assessment of any
kind by virtue of their ownership of Shares. The Shares shall be personal
property giving only the rights in the Declaration specifically set forth. The
Shares shall not entitle the holder to preference, preemptive, appraisal,
conversion or exchange rights, except as the Trustees may determine with respect
to any series of Shares.
SECTION 6.3. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a Trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
SECTION 6.4. ISSUANCE OR SHARES. The Trustees, in their discretion,
may, from time to time without vote of the shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day in accordance with the determination of
net asset value per Share as set forth in Section 8.3 hereof), and on such terms
as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. The Trustees may from time to
time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole shares and/or 1/1,000ths of a Share or integral multiples thereof.
SECTION 6.5. REGISTER OF SHARES; SHARE CERTIFICATES. A register will be
kept at the principal office of the Trust or at an office of the Transfer Agent
which shall contain the names and addresses of the Shareholders and the number
of Shares held by them respectively and a record of all transfers thereof. Such
register shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or distributions or otherwise to exercise
or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive
payment of any dividend or distribution, nor to have notice given to him as
herein or in the Bylaws provided, until he has given his address to the Transfer
Agent or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may authorize
the issuance of Share certificates and promulgate appropriate rules and
regulations as to their use.
<PAGE> 11
SECTION 6.6. TRANSFER OF SHARES. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery, the transfer shall be recorded on
the register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
SECTION 6.7. NOTICES. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
SECTION 6.8. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.2 hereof or as
required by Section 16 (a) of the 1940 Act; (ii) with respect to any investment
advisory or management contract as provided in section 4.1; (iii) with respect
to termination of the Trust as provided in Section 9.2; (iv) with respect to any
amendment of the Declaration to the extent and as provided in Section 9.3; (v)
with respect to any merger, consolidation or sale of assets as provided in
Section 9.4; (vi) with respect to incorporation of the Trust to the extent and
as provided in Section 9.5; (vii) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders; and (viii) with
respect to such additional matters relating to the Trust as may be required by
the Declaration, the Bylaws, the 1940 Act or any registration of the Trust with
the Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional Share shall
be entitled to proportionate fractional vote, except that Shares held in the
treasury of the Trust shall not be voted and that the Trustees may, in
conjunction with the establishment of any series of Shares, establish conditions
under which the several series shall have separate voting rights or no voting
rights. There shall be no cumulative voting in the election of Trustees. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, the Declaration or the Bylaws to be taken by
Shareholders. The Bylaws may include further provisions for Shareholders' votes
and meetings and related matters.
SECTION 6.9. SERIES DESIGNATION. The Trustees, in their discretion, may
authorize the division of Shares into additional series, and the different
series shall be established and designated, and the variations in the relative
rights and preferences as between the different series shall be fixed and
determined by the Trustees, provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different series as
to investment objective, purchase price, right of redemption and the price,
terms and manner of redemption, special and relative rights as to dividends and
on liquidation, conversion rights, and conditions under which the several series
shall have separate voting rights. All references to Shares in the Declaration
shall be deemed to be shares of any or all series as the context may require.
If the Trustees shall divide the shares of the Trust into two or more
series, the following provisions shall be applicable:
<PAGE> 12
(a) the number of authorized shares and the number of shares of each
series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued shares or any shares previously issued and reacquired of
any series into one or more series that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or some
other series), reissue for such consideration and on such terms as they may
determine, or cancel any shares of any series reacquired by the Trust at their
discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust Property
shall be governed by Section 3.2 of this Declaration with respect to the five
existing series which represents the interests in the assets of the Trust
immediately prior to the establishment of any additional series and the power of
the Trustees to invest and reinvest assets applicable to any such additional
series shall be as set forth in the instrument of the Trustees establishing such
series which is hereinafter described.
(c) All consideration received by the Trust for the issue or sale of
shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
In the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular series, the Trustees shall allocate them among any one or more of
the series established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the shareholders
of all series for all purposes.
(d) The assets belonging to each particular series shall be charged
with the liabilities of the Trust in respect of that series and all expenses,
costs, charges and reserves attributable to that series, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular series shall be allocated
and charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such basis as
the Trustees, in their sole discretion, deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding upon the shareholders.
(e) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 8.2 of this Trust with respect to the five existing
series which represents the interests in the assets of the Trust immediately
prior to the establishment of any additional series. With respect to any other
series, dividends and distributions on shares of a particular series may be paid
with such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Trustees may determine, to the holders of shares of
that series, from such of the income and capital gains, accrued or realized,
from the assets belonging to that series, as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that series. All
dividends and distributions on shares of a particular series shall be
distributed pro rata to the holders of that series in proportion to the number
of shares of that series held by all such holders at the date and time of record
established for the payment of such dividends or distributions.
The establishment and designation of any series of shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument. At any
time that there are no
<PAGE> 13
shares outstanding of any particular series previously established and
designated, the Trustees may, by an instrument executed by a majority of their
number, abolish that series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
to this Declaration.
ARTICLE VII
REDEMPTIONS
-----------
SECTION 7.1. REDEMPTIONS. In case any Shareholder at any time desires
to dispose of his Shares, he may deposit his certificate or certificates
therefor, duly endorsed in blank or accompanied by an instrument of transfer
executed in blank, or if the Shareholder has no certificates, a written request
or other such form of request as the Trustees may from time to time authorize,
at the office of the Transfer Agent or at the office of any bank or trust
company, either in or outside of Massachusetts, which is a member of the Federal
Reserve System and which the said Transfer Agent has designated in writing for
that purpose, together with an irrevocable offer in writing in a form acceptable
to the Trustees to sell the Shares represented thereby to the Trust at the net
asset value thereof per Share, determined as provided in Section 8.1 hereof,
next after such deposit. Payment for said Shares shall be made to the
Shareholder within seven (7) days after the date on which the deposit is made,
unless (i) the date of payment is postponed pursuant to Section 7.2 hereof, or
(ii) the receipt, or verification of receipt, of the purchase price for the
Shares to be redeemed is delayed, in either of which event payment may be
delayed beyond seven (7) days.
SECTION 7.2. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings; (ii)
during which trading on the New York Stock Exchange is restricted; (iii) during
which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets; or
(iv) during any other period when the Commission may for the protection of
security holders of the Trust by order permit suspension of the right of
redemption or postponement of the date of payment or redemption; provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (ii) , (iii) , or (iv) exist. Such suspension shall
take effect at such time as the Trust shall specify, but not later than the
close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption until the Trust
shall declare the suspension at an end, except that the suspension shall
terminate in any event on the first day on which said stock exchange shall have
reopened or the period specified in (ii) or (iii) shall have expired (as to
which, in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.
SECTION 7.3. REDEMPTION OF SHARES: DISCLOSURE OF HOLDING. If the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares or other securities of the Trust has or may become
concentrated in any Person to an extent which would disqualify the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for redemption by any such Person of a number, or principal amount, of Shares or
other securities of the Trust sufficient to maintain or bring the direct or
indirect ownership of Shares or other securities of the Trust into conformity
with the requirements for such qualification; and (ii) to refuse to transfer or
issue Shares or other securities of the Trust to any Person whose acquisition of
the Shares or other securities of the Trust in question would result in such
disqualification. The redemption shall be effected at the redemption price and
in the manner provided in Section 7.1.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
<PAGE> 14
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other authority.
SECTION 7.4. REDEMPTIONS OF ACCOUNTS OF LESS THAN $500. The Trustees
shall have the power at any time to redeem Shares of any Shareholder at a
redemption price determined in accordance with Section 7.1, if at such time the
aggregate net asset value of the Shares in such Shareholder's account is less
than $500. A shareholder will be notified that the value of his account is less
than $500 and allowed thirty (30) days to make an additional investment before
redemption is processed.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE
--------------------------------
NET INCOME AND DISTRIBUTIONS
----------------------------
SECTION 8.1. NET ASSET VALUE. For all purposes under this Declaration
of Trust, the net asset value shall be determined by the Trustees as soon as
possible after the close of the New York Stock Exchange on each business day
upon which such Exchange is open, such net asset value to become effective one
hour after such close and remain in effect until the next determination of such
net asset value becomes effective; provided, however, that the Trustees may in
their discretion make a more frequent determination of the net asset value which
shall become effective one hour after the time as of which such net asset value
is determined.
Such net asset value shall be determined in the following manner:
(a) All securities listed on any recognized Exchange shall be appraised
at the quoted closing sale prices and in the event that there was no sale of any
particular security on such day the quoted closing bid price thereof shall be
used, or if any such security was not quoted on such day or if the determination
of the net asset value is being made as of a time other than the close of the
New York Stock Exchange, then the same shall be appraised in such manner as
shall be deemed by the Trustees to reflect its fair value.
All other securities and assets of the Trust, including cash, prepaid
and accrued items, and dividends receivable, shall be appraised in such manner
as shall be deemed by the Trustees to reflect their fair value.
(b) From the total value of the Trust Property as so determined shall
be deducted the liabilities of the Trust, including reserves for taxes, and such
expenses and liabilities of the Trust as may be determined by the Trustees to be
accrued liabilities.
(c) The resulting amount shall represent the net asset value of the
Trust Property. The net asset value of a share of any class shall be the result
of the division of the net asset value of the underlying assets of that class by
the number of shares of that class outstanding. The net asset value of the Trust
Property and shares as so determined shall be final and conclusive.
SECTION 8.2. DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall from
time to time distribute ratably among the Shareholders such proportion of the
net profits, surplus (including paid-in surplus), capital, or assets held by the
Trustees as they may deem proper. Such distribution may be made in cash or
property (including without limitation any type of obligations of the Trust or
any assets thereof) , and the Trustees may distribute ratably among the
Shareholders additional Shares issuable hereunder in such manner, at such times,
and on such terms as the Trustees may deem proper. Such distributions may be
among the Shareholders of record at the time of declaring a distribution or
among the Shareholders of record at such later date as the Trustees shall
determine. The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they may deem desirable to use in the conduct of
its affairs or to
<PAGE> 15
retain for future requirements or extensions of the business. The Trustees may
adopt and offer to Shareholders such dividend reinvestment plans, cash dividend
payout plans or related plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal Income
Tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
SECTION 8.3. DETERMINATION OF NET INCOME. The term "net income" with
respect to a class of shares is hereby defined as the gross earnings of the
class, excluding gains on sales of securities and stock dividends received, less
the expenses of the Trust allocated to the class by the Trustees in such manner
as they determine to be fair and equitable or otherwise chargeable to the class.
The expenses shall include (1) taxes attributable to the income of the Trust
exclusive of gains on sales, and (2) other charges properly deductible for the
maintenance and administration of the Trust; but there shall not be deducted
from gross or net income any losses on securities, realized or unrealized. The
Trustees shall otherwise have full discretion to determine which items shall be
treated as income and which items as capital and their determination shall be
binding upon the Beneficiaries.
SECTION 8.4. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions as they may deem necessary or desirable.
Without limiting the generality of the foregoing, the Trustees may establish
additional series of Shares in accordance with Section 6.9.
ARTICLE IX
DURATION; TERMINATION OF TRUST
------------------------------
AMENDMENT; MERGERS; ETC.
------------------------
SECTION 9.1. DURATION. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
SECTION 9.2. TERMINATION OF TRUST. (a) The Trust must be terminated:
(i) by the affirmative vote of the holders of not less than two-thirds
of the Shares outstanding and entitled to vote at any meeting of Shareholders,
or (ii) by an instrument in writing, without a meeting, signed by a majority of
the Trustees and consented to by the holders of not less than two-thirds of such
Shares, or by such other vote as may be established by the Trustees with respect
to any series of Shares, or (iii) by the Trustees by written notice to the
Shareholders.
Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and
all of the powers of the Trustees under this Declaration shall continue until
the affairs of the Trust shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Trust Property to one or more persons at public or private sale
for consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities, and to do all
other acts appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property shall require Shareholder approval in
accordance with Section 9.4 hereof.
<PAGE> 16
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly each,
among the Shareholders according to their respective rights.
(iv) After termination of the Trust and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties hereunder, and the rights and interests of
all Shareholders shall thereupon cease.
SECTION 9.3. AMENDMENT PROCEDURE. (a) This Declaration may be amended
by a Majority Shareholder Vote or by any instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by the holders of
not less than a majority of the Shares outstanding and entitled to vote. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders to designate series in accordance with Section 6.9 hereof, to
change the name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary to conform this Declaration to the requirements of applicable
federal laws or regulations or the requirements of the regulated investment
company provisions of the Internal Revenue Code, but the Trustees shall not be
liable for failing to do so.
(b) No amendment may be made under this Section 9.3 which would change
any rights with respect to any Shares of the Trust by reducing the amount
payable thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or consent of the
holders of two-thirds of the Shares outstanding and entitled to vote, or by such
other vote as may be established by the Trustees with respect to any series of
Shares. Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit assessments
upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
SECTION 9.4. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property, including its goodwill, upon such terms and conditions and for
such consideration when and as authorized at any meeting of Shareholders called
for the purpose by the affirmative vote of the holders of not less than
two-thirds of the Shares outstanding and entitled to vote, or by an instrument
or instruments in writing without a meeting, consented to by the holders of not
less than two-thirds of such Shares, or by such other vote as may be established
by the Trustees with respect to any series of Shares; provided, however, that,
if such merger, consolidation, sale, lease or exchange is recommended by the
Trustees, the vote or written consent of the holders of a majority of Shares
outstanding and entitled to vote, or by such other vote as may be established by
the Trustees with respect to any series of Shares, shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange shall
be deemed for all purposes to have been accomplished under and pursuant to the
statutes of the Commonwealth of Massachusetts.
SECTION 9.5. INCORPORATION. With the approval of the holders of a
majority of the Shares outstanding and entitled to vote, or by such other vote
as may be established by the Trustees with respect to any series of Shares, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property
or
<PAGE> 17
to carry on any business in which the Trust shall directly or indirectly have
any interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization in exchange for the shares or
securities thereof or otherwise, and to lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization in which the Trust holds or is about to
acquire shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Trust Property to such organization or
entities.
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. FILING. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was duly taken in a manner
provided herein, and unless such amendment or such certificate sets forth some
later time for the effectiveness of such amendment, such amendment shall be
effective upon its filing. A restated Declaration, integrating into a single
instrument all of the provisions of the Declaration which are then in effect and
operative, may be executed from time to time by a majority of the Trustees and
shall, upon filing with the Secretary of the Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained herein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
SECTION 11.2. RESIDENT AGENT. The name of the Trust's resident agent is
The One Group(R) Investment Trust, c/o CT Corporation System, and its post
office address is 2 Oliver Street, Boston, Massachusetts 02109.
SECTION 11.3. GOVERNING LAW. This Declaration is executed by the
Trustees and delivered with reference to the laws of the Commonwealth of
Massachusetts, and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed according to the
laws of said State.
SECTION 11.4. COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall sufficiently evidenced by any such original counterpart.
SECTION 11.5. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any
<PAGE> 18
Bylaws adopted by or the identity of any officers elected by the Trustees, or
(f) the existence of any fact or facts which in any manner relate to the affairs
of the Trust, shall be conclusive evidence as to the matters so certified in
favor of any Person dealing with the Trustees and their successors.
SECTION 11.6. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of the Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provisions shall be deemed never to have
constituted a part of the Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
SECTION 11.7. INDEX AND HEADING FOR REFERENCE ONLY. The Index and
heading preceding the text, articles and sections hereof have been inserted for
convenience and reference only and shall not be construed to affect the meaning,
construction, or effect of this Declaration.
IN WITNESS WHEREOF, the undersigned Trustees have hereunto set their hands this
19th day of November, 1998.
Address: Three Nationwide Plaza ------------------------------
26th Floor Peter C Marshall
Columbus, Ohio 43215 Trustee
Charles I. Post
Trustee
John S. Randall
Trustee
Frederick W. Ruebeck
Trustee
Robert A. Oden, Jr.
Trustee
By: ________________________
Alan G. Priest
Attorney-in-Fact
<PAGE> 1
Exhibit 5(b)
APPENDIX A
FEE PAYABLE TO ADVISER (AS A PERCENTAGE
FUNDS OF THE TRUST OF EACH FUND'S AVERAGE DAILY NET ASSETS)
- ------------------ ----------------------------------------
Government Bond Fund 0.45%
Asset Allocation Fund 0.70%
Growth Opportunities Fund 0.65%
Large Company Growth Fund 0.65%
Equity Index Fund 0.30%
THE ONE GROUP(R) INVESTMENT TRUST
By: __________________________
Title: __________________________
BANC ONE INVESTMENT ADVISORS CORPORATION
By: __________________________
Title: __________________________
Dated: February 18, 1998
<PAGE> 1
Exhibit 5(c)
APPENDIX A
FEE PAYABLE TO ADVISER (AS A PERCENTAGE
FUNDS OF THE TRUST OF EACH FUND'S AVERAGE DAILY NET ASSETS)
- ------------------ ----------------------------------------
Government Bond Fund 0.45%
Asset Allocation Fund 0.70%
Growth Opportunities Fund 0.65%
Large Company Growth Fund 0.65%
Equity Index Fund 0.30%
Bond Fund 0.60%
Value Growth Fund 0.74%
Mid Cap Opportunities Fund 0.74%
Mid Cap Value Fund 0.74%
THE ONE GROUP(R) INVESTMENT TRUST
By: __________________________
Title: __________________________
BANC ONE INVESTMENT ADVISORS CORPORATION
By: __________________________
Title: __________________________
Dated: November 19, 1998
<PAGE> 1
Exhibit 7
DEFERRED COMPENSATION PLAN FOR
TRUSTEES OF THE ONE GROUP(R) INVESTMENT TRUST
This Deferred Compensation Plan for Trustees ("Plan") is designed to
permit members of the Board of Trustees of The One Group Investment Trust (the
"Trust") to elect to defer the receipt of all or a portion of the compensation
earned by them as such trustees in lieu of receiving payment of such
compensation currently.
1. ELIGIBILITY. Any member of the Board of Trustees (the "Board") of the Trust
(each a "Trustee") shall be Eligible to participate in the Plan, if he or she so
elects.
2. AMOUNT OF DEFERRAL. A Trustee participating in the Plan (a "Participating
Trustee") may defer receipt of all or a specified portion of the compensation
(including fees for attending meetings) earned by such trustee for serving as a
member of the Board, or as a member of any committee of the Board of which such
trustee from time to time may be a member. Reimbursement of expenses associated
with attending meetings of the Board or committees of the Board may not be
deferred.
3. DEFERRED COMPENSATION ACCOUNT. A book entry deferred compensation account
(the "Account") shall be established in the name of each Participating Trustee.
Under the Plan, any compensation earned by a Participating Trustee will be
credited to his or her Account on the first business day after the date such
compensation otherwise would have been payable to such Participating Trustee.
4. DEFERRED COMPENSATION ACCOUNT INVESTMENT.
(a) Participating Trustees may specify Fiduciary Class shares of one or
more of the funds of The One Group ("Eligible Funds") that will be used to
measure the investment performance of the Participating Trustee's Account. A
Participating Trustee may change his or her Eligible Fund selection no more
frequently then quarterly, to be effective on the first day of the following
quarter.
(b) The value of the Account will equal the amount such Account would
have had if the amount credited to it had been invested and reinvested in shares
of the designated Eligible Funds. The initial value of the amount credited to
the Account will be effected at the Eligible Fund's current net asset value as
set forth in The One Group's Declaration of Trust and currently effective
Registration Statement The Account will be credited or charged with book
adjustments representing all interest, dividends and other earnings and all
gains and losses that would have been realized had the amounts credited to the
Account actually been invested in the Eligible Funds.
(i) In the event that an Eligible Fund combines, reclassifies
or substitutes other securities by merger, consolidation or otherwise
for its outstanding shares, the number of shares credited to the
Participating Trustee's Account shall be adjusted to preserve rights
substantially proportionate to the rights held immediately prior to
such event.
(ii) On each payable date of a dividend or capital gains
distribution declared by the Board, the Account will be credited with
amounts representing the number of full and fractional shares of the
Eligible Fund that the shares credited to the Account would have
purchased if reinvested at the net asset value on the record date
established by the Board with respect to such dividend and/or capital
gains distribution.
(c) The Plan does not obligate the Trust to purchase, hold or dispose
of any investments, and
<PAGE> 2
if the Trust should choose to purchase investments, including the shares of
Eligible Funds, in order to match its obligations exactly, all such investments
will continue to be part of the general assets and property of the Trust. If the
Trust purchases shares of the Eligible Funds, the shares will be held solely in
the name of the Trust. The Trust will not purchase shares of Eligible Funds if
the purchase of such shares would result in a violation of Section 12(d)(1) of
the Investment Company Act of 1940. If the Trust purchases shares of Eligible
Funds, it will vote such shares in proportion to the votes of all other
shareholders of such Eligible Fund.
5. MANNER OF ELECTING DEFERRAL.
(a) A Participating Trustee shall elect to participate in the Plan and
defer his or her compensation by completing, signing and filing with the Trust a
Notice of Election to Defer Compensation (the "Notice of Election"), a form of
which is attached to this Plan. The Notice of Election shall include:
(i) the amount of compensation to be deferred;
(ii) the name of the Eligible Fund or Funds against which
the performance of the Account is to be measured;
(iii) the manner of payment of such deferred compensation
(i.e., in a lump sum or the number of annual
installments);
(iv) the time or times of payment of such deferred
compensation; and
(v) any beneficiary designated pursuant to Section 8(c)
of the Plan.
(b) The Participating Trustee's deferred fees will be distributed
commencing on a date specified by the Participating Trustee on the Notice of
Election, which shall be no sooner than:
(i) the first business day of January of the year
following the year in which the Participating
Trustee ceases to be a trustee, and
(ii) a date one year after the deferral election.
Notwithstanding the foregoing, deferred compensation under the Plan shall be
distributed:
(i) in the event of the Participating Trustee's death,
as provided in Section 8(c) of this Plan, or
(ii) upon the occurrence of any of the following events:
1. the dissolution, liquidation, or winding up
of the Trust, whether voluntary or
involuntary;
2. the voluntary sale, conveyance or transfer
of all or substantially all of the Trust's
assets (unless the obligations of the Trust
have been assumed by another investment
company);
<PAGE> 3
3. the merger of the Trust into another
investment company or its consolidation with
one or more other investment companies
(unless the obligations of the Trust are
assumed by such surviving entity and the
surviving entity is another investment
company); or
4. the date on which an unforeseeable event
causing material financial hardship occurs
which is not within the Participating
Trustee's control, subject to approval by
the Plan's Administrator.
6. EFFECTIVE DATE OF DEFERRAL ELECTIONS.
(a) Any election by a trustee, or nominee for election as a trustee, to
defer compensation pursuant to the Plan shall be irrevocable from and after the
date on which such trustee's Notice of Election is filed with the Trust (except
as provided in Section 7(b) of the Plan), and shall be effective to defer such
person's compensation as a trustee as follows:
(i) as to any trustee in office on the effective date of
the Plan who files a Notice of Election no later than
60 days after such effective date, the Notice shall
be effective to defer any compensation which is
earned by such trustee after the date of the filing
of the Notice of Election;
(ii) as to any nominee for the office of trustee who has
not previously served as a trustee and who files a
Notice of Election prior to his election as a
trustee, such election to defer shall be effective to
defer any compensation which is earned by such
nominee after his election as a trustee; and
(iii) as to any other trustee, the election to defer shall
be effective to defer any compensation that is earned
from and after January 1 of the calendar year next
succeeding the year in which the Notice of Election
is filed.
(b) Any election to defer compensation made by a trustee shall continue
in effect until the Trust is notified in writing by such trustee prior to the
end of any calendar year that he or she wishes to terminate or modify such
election with respect to (and only with respect to) compensation earned after
the calendar year in which such amended Notice of Election is filed with the
Trust. Upon receipt by the Trust of such an amended Notice of Election, any
compensation earned by such trustee from and after January 1 of the calendar
year succeeding the day on which such notice was received shall be paid
currently and no longer deferred as provided in the Plan. However, any amounts
in such Participating Trustee's Account on such January 1 shall continue to be
payable in accordance with the Notice of Election (or Notices) pursuant to which
it was deferred.
(c) A Participating Trustee who has filed a Notice of Election to
terminate deferment of compensation may thereafter again file a Notice of
Election to participate pursuant to Section 6 hereof effective for the calendar
year subsequent to the calendar year in which he or she files the new Notice.
7. PAYMENT OF DEFERRED COMPENSATION.
(a) No payment may be made from any Account except as provided in this
Section.
(b) The aggregate value of a Participating Trustee's Account will be
paid in a lump sum or
<PAGE> 4
in installments, as specified in his or her Notice (or Notices) of Election and
at the time or times specified in the Notice (or Notices) of Election. If
installments are elected by a Participating Trustee, the amount of the first
payment shall be a fraction of the then value of such Participating Trustee's
Account, the numerator of which is one, and the denominator of which is the
total number of installments. The amount of each subsequent payment shall be a
fraction of the then value of such Participating Trustee's Account remaining
after the prior payment, the numerator of which is one and the denominator of
which is the total number of installments elected minus the number of
installments previously paid. If a lump sum is elected, payment shall be made in
the amount credited to the Participating Trustee's Account.
(c) In the event of a Participating Trustee's death before he or she
has received payment of all amounts in such Participating Trustee's Account, the
value of such Account shall be paid in accordance with the provisions of the
Plan as soon as reasonably possible to the beneficiary designated in such
Participating Trustee's Notice of Election. If such beneficiary does not survive
the Participating Trustee or no beneficiary is designated, payment of all
amounts in the Account shall be made in a lump sum to such Participating
Trustee's estate. Any beneficiary so designated by a Participating Trustee may
be changed at any time by notice in writing from such trustee to the Trust.
Payment under this subsection shall equal the amount credited to the
Participating Trustee's Account at the time of his death.
(d) Upon the occurrence of an unforeseen event causing material
financial hardship, the administrator shall distribute to the Participating
Trustee, in a single lump sum, an amount equal to the lesser of amount requested
by the Participating Trustee and amount remaining in the Account.
8. STATEMENT OF ACCOUNT. the Trust will furnish each Participating Trustee with
a quarterly statement setting forth the value of such Participating Trustee's
Account as of the end of each calendar quarter and all credits to and payments
from such Account during such quarter. Such statements will be furnished no
later than 60 days after the end of each calendar quarter.
9. RIGHTS IN ACCOUNT. Credits to Accounts shall remain part of the general
assets of the Trust, shall at all times be the sole and absolute property of the
Trust and shall in no event be deemed to constitute a fund, trust or collateral
security for the payment of the deferred compensation to which trustees are
entitled from such Accounts. The right of any Participating Trustee or his
designated beneficiary or estate to receive future payment of deferred
compensation under the provisions of the Plan shall be an unsecured claim
against general assets of the Trust, if any, available at the time of payment.
10. NON-ASSIGNABILITY. No Participating Trustee, his or her designated
beneficiary or estate, nor any other person shall have the right to encumber,
pledge, sell, assign or transfer the right to receive payments under this Plan,
except by will or by the laws of descent and distribution. All such payments and
the right thereto are expressly declared to be non-assignable.
11. ADMINISTRATION. The Plan shall be administered by such officers of the Trust
as are appointed by the Chairman of the Board or, if no Chairman of the Board
has been appointed, by the President of the Trust. All Notices shall be filed
with the officers as appointed and such officers shall be responsible for
maintaining records of all Accounts and for furnishing the quarterly statements
of account provided for in Section 8 of the Plan. Such officers shall also have
the general authority to interpret, construe and implement provisions of the
Plan. Any determination by such officers shall be binding on the Participating
Trustee and shall be final and conclusive.
12. AMENDMENT OR TERMINATION. The Plan may at any time be amended, modified or
terminated by the Board. However, no amendment, modification or termination
shall adversely affect any Participating
<PAGE> 5
Trustee's rights in respect of amounts theretofore credited to his or her
Account.
13. EFFECTIVE DATE. This Plan shall be effective as of __________________ and
any amendments hereto shall be effective on the date of adoption thereof by the
Board.
<PAGE> 6
Notice of Election to Defer Compensation
Under the
Deferred Compensation Plan
for the Trustees of
The One Group Investment Trust
------------------------------
I hereby elect to defer compensation to which I may hereafter become
entitled, as follows (check one):
1. EFFECTIVE DATE:
_____ (a) Compensation earned after the date of this
election
_____ (b) Compensation earned after _______________________.
[future date}
2. AMOUNT DEFERRED:
_____ (a) All Compensation
_____ (b) $_______ per quarter
_____ (c) Other: ___________________________
__________________________________
3. TIME OF PAYMENT:
_____ (a) The first business day of January of the year
following the year in which I cease to be a
Trustee
_____ (b) The first business day of ______________________
[specify]
________________________________.
[month(s) and year(s)]
4. MANNER OF PAYMENTS:
_____ (a) Entire amount in a lump sum
_____ (b) In __________________ equal installments
<PAGE> 7
5. PERIOD OF ELECTION:
Subject to my further election to change or terminate it, my
election shall continue:
_____ (a) Until I cease to be a Trustee
_____ (b) Until _______________________.
[specify date or event]
6. DESIGNATION OF BENEFICIARY:
I hereby designate ______________________________ of
_______________________ * as my beneficiary to receive
payments in the event of my death before payments in full
hereunder have been made. In the event that the said
beneficiary predeceases me, I hereby designate ______________
of _______________________________ * as beneficiary instead.
7. ELIGIBLE FUNDS
I hereby elect that my Account under the Plan be considered to
be invested as follows (in multiples of [ %]):
________________________ Fund _______________%
________________________ Fund _______________%
________________________ Fund _______________%
________________________ Fund _______________%
*If more than one beneficiary is to be designated, add a page listing
the beneficiaries and specify the percentage of each payment to be
received by each beneficiary.
<PAGE> 8
8. AMENDMENT OR TERMINATION:
I hereby (amend) (terminate) my written directions as
indicated in Notice of Election to Defer Compensation
dated _______________________, in accordance with
Section 6(b) of the Deferred Compensation Plan and in
the following manner:
_____________________________________________________
_____________________________________________________
-------------------------------------
[Signature of Trustee]
Date:
---------------------------
- ---------------------------------
<PAGE> 1
Exhibit 8(b)
SUBCUSTODIAN AGREEMENT
FOR
THE ONE GROUP(R) INVESTMENT TRUST
This Subcustodian Agreement (the "Agreement") is entered into as of
June 11, 1998 by and between State Street Bank and Trust Company, a
Massachusetts trust company (the "Custodian") and Bank One Trust Company, N.A.
(the "Subcustodian") and The One Group Investment Trust, an open-end management
investment company registered under the Investment Company Act of 1940 (the
"Investment Trust").
BACKGROUND INFORMATION
A. The Custodian has been appointed as custodian for the Investment Trust
pursuant to a Custodian Contract dated May 18, 1994 as amended from
time to time.
B. Banc One Investment Advisors Corporation, an investment advisor
registered under the Investment Advisers Act of 1940 ( "BOIA") serves
as investment adviser to the Investment Trust.
C. The Investment Trust, BOIA, and the Subcustodian intend to enter into a
Securities Lending Agreement for The One Group Investment Trust (the
"Securities Lending Agreement") in order to permit the Investment Trust
to utilize the securities lending program developed by BOIA and the
Subcustodian (the "Securities Lending Program"). Upon execution of the
Securities Lending Agreement, BOIA will authorize the Subcustodian to
establish for each Fund of the Investment Trust an account (each, a
"Securities Lending Account", collectively, the "Securities Lending
Accounts") to facilitate loans of securities in accordance with the
Securities Lending Agreement.
STATEMENT OF AGREEMENT
The parties hereby acknowledge the accuracy of the foregoing Background
Information and hereby agree as follows:
Sec.1. APPOINTMENT OF THE SUBCUSTODIAN. The Investment Trust hereby
instructs the Custodian to appoint and the Custodian hereby appoints
Subcustodian to hold certain securities of the Investment Trust to be lent
through the Securities Lending Program as may be designated by BOIA from time to
time under ss.2 hereof and delivered to Subcustodian. Subcustodian represents
that it is qualified to act as a custodian for a registered investment company
under the Investment Company Act of 1940, as amended. Subcustodian shall only be
responsible for custody hereunder of securities actually delivered to it and
then only while they are held in and as a part of a Securities Lending Account
and not subject to a loan. All securities accepted by Subcustodian on behalf of
the Investment Trust under the terms of this Agreement shall be in "street name"
or other good delivery form.
Sec.2. DESIGNATION OF SECURITIES BY BOIA. The Investment Trust hereby
authorizes BOIA to designate securities of the Investment Trust that are
eligible for participation in the Securities Lending Program. Upon receipt of
instructions from BOIA, the Custodian shall deliver such securities to
Subcustodian to be held in accordance with this Agreement. Capitalized terms not
defined herein shall have the meaning assigned to them in the Securities Lending
Agreement.
Sec.3. REGISTRATION OF SECURITIES. Except as otherwise provided in the
Securities Lending Agreement, securities held by the Subcustodian (other than
bearer securities) shall be registered in the name of the Custodian or in the
name of any nominee of the Custodian or in the name of the Subcustodian or of
any nominee of the Subcustodian or in the name of any depository designated by
the Subcustodian or its nominee.
Sec.4. ACCOUNTS. Securities shall be held in a separate Securities
Lending Account for each Fund of the Investment Trust and, except for securities
held in a Securities Depository or Book Entry Account as defined below,
physically segregated at all times from those of any other persons, firms, or
corporations. All securities received as Collateral in connection with loans of
securities or investments of Cash Collateral may be held in the Securities
Lending Account established for the particular Fund of the Investment Trust or
commingled in a collateral account
<PAGE> 2
established for the Securities Lending Program. The Subcustodian may hold
securities in: (i) the bank vault of Subcustodian; (ii) such other banks or
trust companies as have been approved by the Investment Trust and pursuant to a
written agreement between such other banks or trust companies and the
Subcustodian; (iii) its accounts with a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository (the "Securities
Depository"); or (iv) a book-entry account which is maintained for the
Subcustodian by a Federal Reserve Bank (the "Book Entry Account").
So long as Subcustodian maintains any account pursuant to (iii) or (iv)
above for the Investment Trust, Subcustodian shall: (i) identify as belonging to
the Investment Trust a quantity of such securities in the fungible bulk of
securities (A) registered in the name of Subcustodian or its nominee, or (B)
shown on Subcustodian's account on the books of the Securities Depository, the
Book-Entry Account, or Subcustodian's agent; (ii) promptly send to the Custodian
reports it receives from the appropriate Federal Reserve Bank or Securities
Depository on its system of internal accounting control; and (iii) send to the
Custodian such reports of the systems of internal accounting control of
Subcustodian and its agents through which such securities are deposited as are
available and as the Custodian may reasonably request from time to time.
Sec.5. DELIVERY OF CASH AND SECURITIES. Upon receipt of instructions
from BOIA, the Subcustodian shall release and deliver cash or securities from a
Securities Lending Account in connection with a lending transaction in
accordance with the Securities Lending Agreement. Upon receipt of instructions
from the Custodian or BOIA specifying the cash or securities to be delivered,
the Subcustodian shall deliver to the Custodian cash or securities held in a
Securities Lending Account that have not been transferred to a borrower under
the Securities Lending Agreement. In providing the services hereunder, it is
understood that the Subcustodian shall neither render advice to the Custodian,
BOIA, or the Investment Trust as to the value of securities or other property,
or make recommendations as to the advisability of investing in, purchasing,
loaning, or selling securities or other property, nor shall the Subcustodian,
either directly or indirectly, have any discretionary authority or control with
respect to purchasing, loaning, or selling securities or other property for the
Investment Trust.
Sec.6. COLLECTION OF INCOME. Subcustodian shall collect all income and
other payments with respect to registered securities held in a Securities
Lending Account and not out on loan to which the Investment Trust shall be
entitled by law or pursuant to custom in the securities business, and shall
collect all income and principal and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities are held by
Subcustodian in a Securities Lending Account and not out on loan. With respect
to securities held in a Securities Lending Account and not out on loan,
Subcustodian shall detach and present for payment all coupons and other income
and principal items requiring presentation as and when they become due, shall
collect dividends and interest when due on securities, and shall endorse and
deposit for collection, in the name of the Investment Trust, checks, drafts, and
other negotiable instruments on the same day as received.
With respect to securities of foreign issuers held in a Securities
Lending Account and not out on loan, while Subcustodian will use its best
efforts to collect any monies which may to its knowledge become collectible
arising from such securities, including dividends, interest, and other income,
it is understood that Subcustodian shall have under no responsibility for any
failure or delay in effecting such collections or giving such notices.
Subcustodian shall not be under any obligation or duty to take action
to effect collection of any amount, if the securities (domestic or foreign) on
which such amount is payable are in default and payment is refused after due
demand or presentation. Subcustodian will, however, notify the Custodian in
writing within a reasonable period of time of such default and refusal to pay.
Sec.7. AUTHORIZATION TO LOAN SECURITIES. Pursuant to the Securities
Lending Agreement, BOIA and the Investment Trust have authorized the
Subcustodian to transfer pursuant to one or more Loan Agreements as defined in
the Securities Lending Agreement and against receipt of collateral
("Collateral") as provided for therein, securities delivered to the Subcustodian
by the Custodian to any entity named on a list of borrowers attached to the
Securities Lending Agreement as Exhibit B as amended from time to time (each a
"Borrower"). Subject to the supervision of
- 2 -
<PAGE> 3
BOIA, the Subcustodian shall perform the following acts in accordance with loans
of securities under the Securities Lending Agreement:
(a) enter into Loan Agreements on such terms as approved by BOIA;
(b) receive and release Collateral as provided in the applicable
Loan Agreement;
(c) receive distributions on loaned securities;
(d) accept substitutions of Collateral and execute and deliver or
send any receipts required under the Loan Agreement in
connection therewith;
(e) deliver and receive securities in accordance with instructions
from BOIA;
(f) make investments of Cash Collateral in accordance with
instructions of BOIA;
(g) take such action upon termination of a loan as may be directed
by BOIA;
(h) take such other actions as specified in the Securities Lending
Agreement; and
(i) within a reasonable time after learning of a default, give
notice thereof to BOIA, and thereafter take such actions, if
any, as may be specified by BOIA.
Sec.8. INSTRUCTIONS. Instructions furnished to the Custodian by BOIA or
to the Subcustodian by BOIA or the Custodian with respect to this Agreement
shall be signed by such officer or officers of the party giving such
instructions as are authorized from time to time by such party (each an
"Authorized Person"); provided, however, that each of the Custodian and the
Subcustodian is authorized to accept and act upon orders, whether given orally,
by telephone or otherwise, which the Custodian or the Subcustodian reasonably
believes to be given by an Authorized Person. All oral instructions shall be
promptly confirmed in writing. The records of the Subcustodian and the Custodian
shall be presumed to reflect accurately any oral instructions given by an
Authorized Person or a person believed by such party to be an Authorized Person.
Sec.9. VOTING AND OTHER ACTIONS. If a security is not out on loan pursuant
to a Loan Agreement, Subcustodian shall promptly deliver or mail to BOIA all
forms of proxies and all notices of meetings affecting or relating to securities
held for the account of the Investment Trust. Upon receipt of instructions of
BOIA, Subcustodian shall execute and deliver such proxies or other
authorizations as may be required. Neither Subcustodian nor its nominee shall
vote any securities or execute any proxy to vote the same or give any consent to
take any other action with respect thereto.
Sec.10. RESPONSIBILITY OF SUBCUSTODIAN. The Subcustodian shall use the
same care with respect to the receiving, safekeeping, handling, and delivering
of securities, as applicable, held under this Agreement as it uses in respect
of its own similar securities, but it need not maintain any special insurance
for the benefit of the Custodian, BOIA, or the Investment Trust. The
Subcustodian shall not be liable for any action taken or thing done by it in
carrying out the terms and provisions of this Agreement if done in good faith
and without negligence or willful misconduct on the Subcustodian's part. The
Custodian shall not be liable for any action taken or thing done by it in
carrying out the terms and provisions of this Agreement if done in good faith
and without negligence or willful misconduct on the Custodian's part.
The Custodian shall have no responsibility for any liabilities of any
party arising out of the operation of the Securities Lending Program, as to
which the Subcustodian, the Funds, and BOIA shall have recourse only to each
other. Except for liabilities and expenses arising out of the Securities Lending
Program as to which all parties agree that the Custodian shall have no
responsibility, the Subcustodian agrees to indemnify the Custodian against, and
to
- 3 -
<PAGE> 4
hold it harmless from, any liabilities, and any related out-of-pocket expenses,
which it may incur as a result of loss of securities while such securities are
held in the Subcustodian's custody and not subject to a loan provided such loss
is caused by the Subcustodian's bad faith, willful misconduct or negligence. The
indemnification provided hereunder by the Subcustodian shall not extend to any
special or consequential damages arising out of the performance of this
Agreement.
Without limiting or impairing any rights the Subcustodian may have
hereunder, at the election of the Custodian, it shall be entitled to be
subrogated to the rights of the Subcustodian with respect to any claim against
any person the Subcustodian may have as a consequence of any such loss, expense
or damage, of and to the extent the Custodian has not been made whole for any
such loss, expense or damage; provided, however, nothing in this Agreement shall
impair the Investment Trust's rights under the Custodian Agreement or under the
Securities Lending Agreement.
Subcustodian shall release and deliver securities held in the Securities
Lending Account and not out on loan and take any other action as directed by
BOIA, with respect to dividends, splits, distributions, spin-offs, puts, calls,
conversions, redemptions, tenders, exchanges, mergers, reorganizations, rights,
warrants, or any other similar activity relating to the securities. Subcustodian
shall request direction of BOIA upon receipt of actual notice where the
Investment Trust has an option as to any such activity. For purposes of this
paragraph, Subcustodian shall be deemed to have actual notice if any such
activity is published in one or more of the following publications: J.J. Kenny's
Munibase System, Financial Card Service, Xcitek, Inc., Standard & Poors' Called
Bond Listing, Depository Trust Reorganization Notices, and THE WALL STREET
JOURNAL. If Subcustodian does not have actual notice of such activity, any such
activity will be handled by Subcustodian on a "best efforts" basis. The
Subcustodian will follow all instructions from BOIA with respect to voting as to
any particular issue(s).
As long as and to the extent that it exercises reasonable care,
Subcustodian shall not be responsible for the title, validity, or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and Subcustodian shall be held harmless in acting
upon instructions from an Authorized Person under this Agreement or in
accordance with the Securities Lending Agreement.
Subcustodian shall be entitled to rely upon and may act upon advice of
counsel (who may or may not be counsel for the Custodian or the Investment
Trust) on all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
If the Custodian, the Investment Trust or BOIA require Subcustodian to
take any action with respect to securities, which action involves the payment of
monies or which action may, in the opinion of Subcustodian, result in
Subcustodian's or its nominee's being liable for the payment of money or
incurring liability of some other form, BOIA or the Investment Trust, as a
prerequisite to requiring Subcustodian to take such action, shall provide
indemnity to Subcustodian in an amount and form satisfactory to Subcustodian.
Neither Custodian nor Subcustodian shall be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused directly or indirectly, by circumstances beyond its
reasonable control, including without limitation: acts of God; earthquakes;
fires; floods; wars; civil or military disturbance; sabotage; epidemics; riots;
terrorism; interruptions, loss or malfunctions of utilities or communications
service; accidents; labor disputes; acts of civil or military authority;
governmental action; or inability to obtain labor, material, equipment, or
transportation.
Subcustodian shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in this Agreement
and the Securities Lending Agreement.
Sec.11. FEES. The Investment Trust shall in connection with each loan
hereunder pay to the Subcustodian the Subcustodian's Fee, which shall accrue
daily, and which shall be set forth on Exhibit E of the Securities Lending
Agreement.
- 4 -
<PAGE> 5
Sec.12. RECORDS AND REPORTS. Custodian hereby acknowledges that it may
have the right to receive broker confirmations within the time period
prescribed by 12 C.F.R. Section 12.5 at no additional cost. In lieu of
receiving such confirmations within such time period, Custodian and
Subcustodian agree to the alternative procedures set forth in this Section. The
Subcustodian shall furnish statements of account monthly or in such other
manner and frequency as the Subcustodian and the Custodian shall agree.
The Subcustodian shall provide the Custodian, upon request, with any
quarterly or annual reports prepared in the normal course of business of the
Subcustodian by the Subcustodian's independent public accountants on the account
system, internal accounting controls and procedures for safeguarding securities
relating to the services provided by the Subcustodian under this Agreement.
The Subcustodian will not refuse any reasonable request for inspection and
audit of its books and records by an agent of a Fund or the Custodian, as such
records may relate to this Agreement.
The Subcustodian shall cooperate with each Fund and the Custodian and
their respective independent public accountants in connection with annual and
other audits of the books and records of the Custodian or the Funds.
Sec.13. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall
become effective as of the date hereof and shall continue in full force and
effect until terminated as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto, and may be terminated by any party
hereto by an instrument in writing delivered or mailed, postage prepaid to the
other parties, such termination to take effect not sooner than thirty (30) days
after the date of delivery or mailing; provided, however, that the Custodian may
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Subcustodian by the Federal Deposit Insurance
Corporation or upon the happening of a like event at the direction of an
appropriate regulatory body or court of competent jurisdiction. Notwithstanding
the foregoing, this Agreement shall not terminate with respect to loans of
securities in effect under the Securities Lending Agreement on the date of
termination. Upon termination of this Agreement, the Subcustodian shall promptly
deliver to the Custodian all property then held by the Subcustodian under this
Agreement or cash proceeds thereof.
Sec.14. COMMUNICATIONS RECEIVED BY THE SUBCUSTODIAN. All communications
required or permitted to be given under this Agreement shall be in writing
(including telex, telegraph or telefax, facsimile, or similar electronic
transmittal device) unless expressly provided otherwise, and addressed as
follows:
(a) If to the Subcustodian: Bank One Trust Company, N.A.
235 West Schrock Road
Columbus, Ohio 43271-1075
Attention: Securities Lending
Telephone: (614) 248-1167
Telefax: (614) 248-1126
(b) If to the Custodian: State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02119
Attention: Christopher J. Meyers
Telephone: (617) 985-6345
Telefax: (617) 537-5152
(c) If to BOIA: Banc One Investment Advisors Corporation
1111 Polaris Parkway
Columbus, Ohio 43240
Attention: Steven E. Cutler
Telephone: (614) 213-8522
Telefax: (614) 213-7173
- 5 -
<PAGE> 6
(d) If to The Investment Trust: The One Group Investment Trust
c/o Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
Attention: Christopher A. Cray
Telephone: (614) 677-2393
Telefax: (614) 249-7424
Sec.15. GOVERNING LAW. This Agreement shall be construed and enforced
according to the laws of the State of Ohio and all provisions shall be
administered according to the laws of said State, except as said laws are
superseded or preempted by any Federal law.
Sec.16. SEVERABILITY. The intention of the parties to this agreement is to
comply fully with all laws, rules, regulations, and public policies, and this
Agreement shall be construed consistently with all laws, rules, regulations, and
public policies to the extent possible. If and to the extent that any court of
competent jurisdiction determines it is impossible to construe any provision of
this agreement consistently with any law, rule, regulation, or public policy and
consequently holds that provision to be invalid, such holding shall in no way
affect the validity of the other provisions of this Agreement, which shall
remain in full force and effect.
Sec.17. NON-WAIVER. No failure by any party to insist upon compliance with
any term of this Agreement, to exercise any option, enforce any right, or seek
any remedy upon any default of any other party shall affect, or constitute a
waiver of, the first party's right to insist upon such strict compliance,
exercise that option, enforce that right, or seek that remedy with respect to
that default or any prior, contemporaneous, or subsequent default. No custom or
practice of the parties at variance with any provision of this Agreement shall
affect or constitute a waiver of, any party's right to demand strict compliance
with all provisions of this agreement.
Sec.18. CAPTIONS. The captions of the various sections of this Agreement
are not part of the context of this Agreement, but are only labels to assist in
locating those sections and shall be ignored in construing this Agreement.
Sec.19. ARBITRATION Any controversy or claim arising out of or relating to
this Agreement, or the breach of the same, shall be settled through consultation
and negotiation in good faith and a spirit of mutual cooperation. However, if
those attempts fail, the parties agree that any misunderstandings or disputes
arising from this Agreement shall be decided by arbitration which shall be
conducted, upon request by either party, before three (3) arbitrators (unless
both parties agree upon one (1) arbitrator), designated by the American
Arbitration Association (the "AAA"), in accordance with the terms of the
Commercial Arbitration Rules of the AAA, and, to the maximum extent applicable,
the United States Arbitration Act (Title 9 of the United States Code), or if
such Act is not applicable, any substantially equivalent state law. The parties
further agree that the arbitrator(s) will decide which party must bear the
expenses of the arbitration proceedings.
Sec.20. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties and may not be modified or amended except by a writing
signed by the parties hereto.
[SIGNATURE PAGES FOLLOW]
- 6 -
<PAGE> 7
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed this 11TH day of June, 1998.
THE ONE GROUP INVESTMENT TRUST
By: /s/ James F. Laird, Jr.
-----------------------------------------
James F. Laird, Jr., President
BANK ONE TRUST COMPANY, N.A.
(as Subcustodian)
By: /s/ Steven E. Cutler
-----------------------------------------
Steven E. Cutler, Officer
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By: /s/ Charles R. Whittemore, Jr.
-----------------------------------------
Name: Charles R. Whittemore, Jr.
---------------------------------------
Title: Vice President
--------------------------------------
- 7 -
<PAGE> 1
Exhibit 9(b)
APPENDIX A
FUNDS OF THE TRUST
Government Bond Fund
Asset Allocation Fund
Growth Opportunities Fund
Large Company Growth Fund
Equity Index Fund
THE ONE GROUP(R) INVESTMENT TRUST
By: __________________________
Title: __________________________
NATIONWIDE INVESTORS SERVICES, INC.
By: __________________________
Title: __________________________
Dated: February 18, 1998
<PAGE> 1
Exhibit 9(c)
APPENDIX A
FUNDS OF THE TRUST
Government Bond Fund
Asset Allocation Fund
Growth Opportunities Fund
Large Company Growth Fund
Equity Index Fund
Bond Fund
Value Growth Fund
Mid Cap Opportunities Fund
Mid Cap Value Fund
THE ONE GROUP(R) INVESTMENT TRUST
By: __________________________
Title: __________________________
NATIONWIDE INVESTORS SERVICES, INC.
By: __________________________
Title: __________________________
Dated: November 19, 1998
<PAGE> 1
Exhibit 9(d)
AMENDED AND RESTATED
FUND PARTICIPATION AGREEMENT
This Amended and Restated Fund Participation Agreement (the "Agreement") , dated
as of the 29th day of July, 1994, and amended and restated as of the 21st day of
May, 1996, and further amended and restated as of the 18th day of February,
1998, and further amended and restated as of the 20th day of May, 1998, is made
by and among Nationwide Life and Annuity Insurance Company ("'Nationwide"), The
One Group(R) Investment Trust (the "Trust"), and the Trust's administrator,
Nationwide Advisory Services, Inc. (the "Administrator"), each of which hereby
agrees that shares of the series listed in Appendix A hereto (the "Funds") shall
be made available to serve as underlying investment media for The One(R)
Investors AnnuitySM Contracts and the One Investor Select Annuity Contract
(collectively the "Contracts") to be offered by Nationwide and to certain other
separate accounts funding variable annuity and variable life contracts issued by
other life insurance companies, and qualified pension and retirement plans,
subject to the following conditions:
1. Nationwide represents that it has established the Nationwide VA
Separate Account-C (the "Variable Account"), a separate account under
Ohio law, and has registered it as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act") to serve as an investment
vehicle for the Contracts. The Contracts provide for the allocation of
net amounts received by Nationwide to separate series of the Variable
Account for investment in the shares of the Funds. Selection of a
particular series is made by the Contract owner who may change such
selection from time to time in accordance with the terms of the
applicable Contract.
2. Nationwide agrees to make every reasonable effort to market its
Contracts. In marketing its Contracts, Nationwide will comply with all
applicable state or Federal laws.
3. The Administrator or its designee will provide closing net asset value,
dividend and capital gain information at the close of trading each
business day to Nationwide. "Business day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates net asset value for each Fund as set forth in the Trust's
prospectus and Statement of Additional Information. Nationwide will use
this data to calculate unit values, which will in turn be used to
process that same business day's Variable Account unit value. The
Variable Account processing will be done the same evening, and orders
for purchases or redemptions will be placed the morning of the
following business day. Orders will be sent directly to the Trust or
its specified designee. Payment for purchases will be wired to a
custodial account designated by the Trust or the Administrator and
payment for redemptions will be wired to an account designated by
Nationwide so as to coincide with the order for Trust shares. The
Administrator or its designee will execute the orders at the net asset
value as determined as of the close of trading on the prior day.
Dividends and capital gains distributions shall be reinvested in
<PAGE> 2
additional shares at the ex-date net asset value. Notwithstanding the
above, the Administrator or its designee shall not be held responsible
for providing Nationwide with net asset value, dividend and capital
gain information when the New York Stock Exchange is closed, when an
emergency exists making the valuation of net assets not reasonably
practicable, or during any period when the Securities and Exchange
Commission ("SEC") has by order permitted the suspension of pricing
shares for the protection of shareholders.
4. All expenses incident to the performance by the Trust under this
Agreement shall be the responsibility of the Trust or the
Administrator, as agreed to among themselves, but in no event shall
such expenses be the responsibility of Nationwide or the Variable
Account. The Trust shall pay the cost of registration of Fund shares
with the SEC. The Trust shall pay for and distribute to Nationwide,
proxy material, periodic Trust reports to shareholders and other
material the Trust may require to be sent to Contract owners. The Trust
will pay the mailing expenses of Nationwide for distributing such proxy
material, reports and other material to the Contract owners, who are
the beneficial shareholders of the Trust. The Trust shall pay the cost
of qualifying Fund shares in states where required. The Administrator
shall pay for and distribute to Nationwide, Trust prospectuses. In the
event that the Variable Account prospectus and the Trust prospectus are
printed together in one document form, the Trust's share of the
printing cost for such disclosure document will be equal to the total
cost of printing the disclosure documents multiplied by the ratio of
the total number of pages in the Trust's prospectus to the total number
of pages in the disclosure document, with Nationwide paying the rest.
The Administrator will provide Nationwide with a copy of the Statement
of Additional Information suitable for duplication.
5. Nationwide and its agents shall make no representations concerning the
Trust except those contained in the then-current prospectus and
Statement of Additional Information of the Trust and in current printed
sales literature of the Trust.
6. Administrative services to Contract owners shall be the responsibility
of Nationwide and shall not be the responsibility of the Trust or the
Administrator. The Trust and the Administrator recognize that
Nationwide will be the sole shareholder of Trust shares issued pursuant
to the Contracts.
7.1 The Trust represents that it believes, in good faith, that the Funds
will at all times qualify as regulated investment companies under
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code") and that it will make every effort to maintain such
qualification of the Funds and that it will notify Nationwide
immediately upon having a reasonable basis for believing that a Fund
has ceased to so qualify or that it might not so qualify in the future.
7.2 Nationwide represents that it believes, in good faith, that the
Contracts will at all times be treated as annuity contracts under
applicable provisions of the Code, and that it will make every effort
to maintain such treatment and that it will notify the Trust
immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or
<PAGE> 3
that they might not be so treated in the future.
7.3 The Trust represents that it believes, in good faith, that the Funds
will at all times comply with the diversification requirements set
forth in Section 817(h) of the Code and Section 1.817-5(b) of the
regulations under the Code, and that it will make every effort to
maintain the Fund's compliance with such diversification requirements,
and that it will notify Nationwide immediately upon having a reasonable
basis for believing that a Fund has ceased to so qualify or that a Fund
might not so qualify in the future.
7.4 Nationwide represents that it believes, in good faith, that the
Variable Account is a "segregated asset account" and that interests in
the Variable Account are offered exclusively through the purchase of a
"variable contract" within the meaning of such terms under Section
1.8170-5(f)(2) of the regulations under the Code, and that it will make
every effort to continue to meet such definitional requirements, and
that it will notify the Trust immediately upon having a reasonable
basis for believing that such requirements have ceased to be met or
that they might not be met in the future.
7.5 The Trust shall provide Nationwide within ten (10) business days after
the end of each calendar quarter a letter from the appropriate officer
of the Trust certifying to the continued accuracy of the
representations contained in Section 7.1 and Section 7.3 above, and
attaching a detailed listing of the individual securities and other
assets, if any, held by the Trust as of the end of such calendar
quarter.
8. The Administrator or its designee shall provide Nationwide within five
(5) business days after the end of each month a monthly statement of
account confirming all transactions made during that month in the
Variable Account.
9. The Trust agrees that to the extent the Trust decides in the future to
finance distribution expenses pursuant to Rule 12b-1 of the 1940 Act,
the Trust will undertake to have the board of trustees, a majority of
whom are not interested persons of the Trust, formulate and approve any
plan under Rule 12b-1 to finance distribution expenses.
10. The Trust and Administrator agree to provide Nationwide no later than
March 1 of each year with the investment advisory and other expenses of
the Trust incurred during the Trust's most recently completed fiscal
year as of March 1, to permit Nationwide to fulfill its prospectus
disclosure obligations under the SEC's variable annuity fee table
requirements.
11. This Agreement shall terminate as to the sale and issuance of new Contracts:
(a) at the option of any party hereto upon six (6) months advance
written notice to the others;
(b) at the option of the Trust, if they determine that liquidation
of the Trust is in the best interests of the Trust and its
beneficial shareholders. Reasonable advance notice of election
to liquidate shall be furnished by the Trust to permit the
<PAGE> 4
substitution of Fund shares with the shares of another
investment company, pursuant to SEC regulation;
(c) at the option of Nationwide if Trust shares are not available
for any reason to meet the requirements of Contracts as
determined by Nationwide. Reasonable advance notice of
election to terminate shall be furnished by Nationwide;
(d) at the option of any party hereto upon institution of formal
proceedings against any other party hereto by the National
Association of Securities Dealers ("NASD"), the SEC or any
other regulatory body;
(e) upon a decision by Nationwide, in accordance with regulations
of the SEC, to substitute such Trust shares with the shares of
another investment company for Contracts for which the Trust
shares have been selected to serve as the underlying
investment medium. Nationwide will give sixty (60) days
written notice to the Trust and the Administrator of any
proposed vote to substitute Trust shares;
(f) upon assignment of this Agreement by any party unless made
with the written consent of each other party;
(g) in the event Trust shares are not registered, issued or sold
in conformance with Federal law or such law precludes the use
of Trust shares as an underlying investment medium of
Contracts issued or to be issued by Nationwide. Prompt notice
shall be given by either party to the other in the event the
conditions of this provision occur.
12. Termination as the result of any cause listed in the preceding
paragraph, except for paragraph 11. (b) , shall not affect the Trust's
obligation to furnish Trust shares for Contracts then in force for
which the shares of the Trust serve or may serve as an underlying
medium, unless such further sale of Trust shares is proscribed by law
or the SEC or other regulatory body.
13. Each notice required by this Agreement shall be given by wire and
confirmed in writing to:
Nationwide Life and Annuity Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215
Attn: Robert O. Cline, Associate Vice President
Trust
The One Group(R) Investment Trust
Three Nationwide Plaza
Columbus, Ohio 43215
Attn: James F. Laird, President and Treasurer
<PAGE> 5
Administrator
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
Attn: Christopher A. Cray, Treasurer
14. Advertising and sales literature with respect to the Trust prepared by
Nationwide or its agents for use in marketing its Contracts will be
submitted to the Trust for review before Nationwide submits such
material to the SEC or NASD for review.
15. So long as and to the extent that the SEC continues to interpret the
1940 Act to require pass-through voting privileges for variable
contract owners, Nationwide will distribute all proxy material
furnished by the Trust and will vote Trust shares in accordance with
instructions received from the Contract owners of such Trust shares.
Nationwide shall vote the Trust shares for which no instructions have
been received in the same proportion as Trust shares for which said
instructions have been received from Contract owners. Nationwide and
its agents will in no way recommend action in connection with or oppose
or interfere with the solicitation of proxies for the Trust shares held
for such Contract owners.
16. (a) Nationwide agrees to indemnify and hold harmless the Trust,
the Administrator and the Trust's investment adviser (the
"Adviser") and each of their directors, officers, employees,
agents and each person, if any, who controls the Trust, the
Administrator or the Adviser within the meaning of the
Securities Act of 1933 (the "Act") against any losses, claims,
damages or liabilities to which the Trust, Administrator or
the Adviser or any such director, officer, employee, agent or
controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in information furnished
by Nationwide for use in the Registration Statement
or prospectus of the Trust or in the Registration
Statement or prospectus for the Variable Account;
(ii) the omission or the alleged omission to state in the
Registration Statement or prospectus of the Variable
Account a material fact required to be stated therein
or necessary to make the statements therein not
misleading;
(iii) conduct, statements or representations of Nationwide
or its agents, with respect to the sale and
distribution of Contracts for which Trust shares are
an underlying investment; or
(iv) the failure of Nationwide to provide the services and
furnish the materials under the terms of this
Agreement;
<PAGE> 6
provided however, that Nationwide shall not be liable in any
such case to the extent any such statement, omission or
representation or such alleged statement, alleged omission or
alleged representation was made in reliance upon and in
conformity with information furnished to Nationwide by or on
behalf of the Trust, the Administrator, or the Adviser.
Nationwide will reimburse any legal or other expenses
reasonably incurred by the Trust, the Administrator or the
Adviser or any such director, officer, employee, agent or
controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability
which Nationwide may otherwise have.
(b) The Trust agrees to indemnify and hold harmless Nationwide and
each of its directors, officers, employees, agents and each
person, if any, who controls Nationwide within the meaning of
the Act against any losses, claims, damages or liabilities to
which Nationwide or any such director, officer, employee,
agent or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in the Registration
Statement or prospectus or sales literature of the
Trust;
(ii) the omission or the alleged omission to state in the
Registration Statement or prospectus of the Trust a
material fact required to be stated therein or
necessary to make the statements therein not
misleading;
(iii) the Trust's failure to keep the Trust fully
diversified and qualified as a regulated investment
company as required by the applicable provisions of
the Code, the 1940 Act, and the applicable
regulations promulgated thereunder;
(iv) the Trust's or the Administrator's (1) incorrect
calculation of the daily net asset value, dividend
rate or capital gain distribution rate; (2) incorrect
reporting of the daily net asset value, dividend rate
or capital gain distribution rate; or (3) untimely
reporting of the net asset value, dividend rate or
capital gain distribution rate; or
(v) the failure of the Trust or the Administrator to
provide the services and furnish the materials under
the terms of this Agreement;
<PAGE> 7
provided however, that the Trust and the Administrator will
not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based
upon an untrue statement or omission or alleged omission made
in such Registration Statement or prospectus in conformity
with written information furnished to the Trust by Nationwide
specifically for use therein.
The Trust and the Administrator will reimburse any legal or
other expenses reasonably incurred by Nationwide or any such
director, officer, employee, agent or controlling person in
connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement
will be in addition to any liability which the Trust and the
Administrator may otherwise have.
(c) Each party shall promptly notify the other in writing of any
situation which presents or appears to involve a claim which
may be subject of indemnification hereunder and the
indemnifying party shall have the option to defend against any
such claim. In the event the indemnifying party so elects, it
will notify the indemnified party and shall assume the defense
of such claim, and the indemnified party shall cooperate fully
with the indemnifying party, at the indemnifying party's
expense, in the defense of such claim. Notwithstanding the
foregoing, the indemnified party shall be entitled to
participate in the defense of such claim at its own expense
through counsel of its own choosing. Neither party shall
confess any claim nor make any compromise in any action or
proceeding which may result in a finding of wrongdoing by the
other party without the other party's prior written consent.
Any notice given by the indemnifying party to an indemnified
party or participation in or control of the litigation of any
such claim by the indemnifying party shall in no event be
deemed to be an admission by the indemnifying party of
culpability, and the indemnifying party shall be free to
contest liability with respect to the claim among parties.
(d) It is understood and expressly agreed that the obligations and
liabilities of the Trust hereunder shall not be binding upon
any of the Trustees, shareholders, nominees, officers, agents
or employees of the Trust, personally, but shall bind only the
assets and property of the Trust, as provided in the
Declaration of Trust of the Trust. The execution and delivery
of this Agreement have been authorized by the Trustee's and
signed by an authorized officer of the Trust, acting as such,
and neither such authorization by such Trustee's nor such
execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the
assets and property of the Trust as provided in its
Declaration of Trust.
17. The forbearance or neglect of any party to insist upon strict
compliance by any other party, with any of the provisions of this
Agreement, whether continuing or not, or to declare a forfeiture of
termination against the other parties, shall not be construed as a
waiver of any of the rights or privileges of any party hereunder. No
waiver of any right or privilege of any party arising from any default
or failure of performance by any party
<PAGE> 8
shall affect the rights or privileges of the other parties in the event
of a further default or failure of performance.
18. The obligations of The One Group(R) Investment Trust entered into in
the name or on behalf thereof by any of the Trustees, representatives
or agents are made not individually, but in such capacities, and are
not binding upon any of the Trustees, Shareholders or representatives
of the Trust personally, but bind only the assets of the Trust, and all
persons dealing with any series of Shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement
of any claims against the Trust.
19. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of Massachusetts. This Agreement
shall be subject to the provisions of the federal securities statutes,
rules and regulations, including such exemptions from those statutes,
rules and regulations as the SEC may grant and the terms hereof shall
be interpreted and construed in accordance therewith.
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By: ______________________________________
Title: ______________________________________
THE ONE GROUP(R) INVESTMENT TRUST
By: ______________________________________
Title: ______________________________________
NATIONWIDE ADVISORY SERVICES, INC.
By: ______________________________________
Title: ______________________________________
<PAGE> 9
APPENDIX A
FUNDS OF THE TRUST
Government Bond Fund
Asset Allocation Fund
Growth Opportunities Fund
Large Company Growth Fund
Equity Index Fund
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By: ______________________________________
Title: ______________________________________
THE ONE GROUP(R) INVESTMENT TRUST
By: ______________________________________
Title: ______________________________________
NATIONWIDE ADVISORY SERVICES, INC.
By: ______________________________________
Title: ______________________________________
Dated: May 20, 1998
<PAGE> 1
Exhibit 9(e)
AMENDED AND RESTATED
FUND PARTICIPATION AGREEMENT
This Amended and Restated Fund Participation Agreement (the "Agreement"), dated
as of the 29th day of July, 1994, and amended and restated as of the 21st day of
May, 1996, and further amended and restated as of the 18th day of February,
1998, and further amended and restated as of the 20th day of May, 1998 and the
19th day of November, 1998, is made by and among Nationwide Life and Annuity
Insurance Company ("'Nationwide"), The One Group(R) Investment Trust (the
"Trust"), and the Trust's administrator, Nationwide Advisory Services, Inc. (the
"Administrator"), each of which hereby agrees that shares of the series listed
in Appendix A hereto (the "Funds") shall be made available to serve as
underlying investment media for The One(R) Investors Annuity(SM) Contracts and
the One Investor Select Annuity Contract (collectively the "Contracts") to be
offered by Nationwide and to certain other separate accounts funding variable
annuity and variable life contracts issued by other life insurance companies,
and qualified pension and retirement plans, subject to the following conditions:
1. Nationwide represents that it has established the Nationwide VA
Separate Account-C (the "Variable Account"), a separate account under
Ohio law, and has registered it as a unit investment trust under the
Investment Company Act of 1940 ("1940 Act") to serve as an investment
vehicle for the Contracts. The Contracts provide for the allocation of
net amounts received by Nationwide to separate series of the Variable
Account for investment in the shares of the Funds. Selection of a
particular series is made by the Contract owner who may change such
selection from time to time in accordance with the terms of the
applicable Contract.
2. Nationwide agrees to make every reasonable effort to market its
Contracts. In marketing its Contracts, Nationwide will comply with all
applicable state or Federal laws.
3. The Administrator or its designee will provide closing net asset value,
dividend and capital gain information at the close of trading each
business day to Nationwide. "Business day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates net asset value for each Fund as set forth in the Trust's
prospectus and Statement of Additional Information. Nationwide will use
this data to calculate unit values, which will in turn be used to
process that same business day's Variable Account unit value. The
Variable Account processing will be done the same evening, and orders
for purchases or redemptions will be placed the morning of the
following business day. Orders will be sent directly to the Trust or
its specified designee. Payment for purchases will be wired to a
custodial account designated by the Trust or the Administrator and
payment for redemptions will be wired to an account designated by
Nationwide so as to coincide with the order for Trust shares. The
Administrator or its designee will execute the orders at the net asset
value as determined as of the close of trading on the prior day.
Dividends and capital gains distributions shall be reinvested in
<PAGE> 2
additional shares at the ex-date net asset value. Notwithstanding the
above, the Administrator or its designee shall not be held responsible
for providing Nationwide with net asset value, dividend and capital
gain information when the New York Stock Exchange is closed, when an
emergency exists making the valuation of net assets not reasonably
practicable, or during any period when the Securities and Exchange
Commission ("SEC") has by order permitted the suspension of pricing
shares for the protection of shareholders.
4. All expenses incident to the performance by the Trust under this
Agreement shall be the responsibility of the Trust or the
Administrator, as agreed to among themselves, but in no event shall
such expenses be the responsibility of Nationwide or the Variable
Account. The Trust shall pay the cost of registration of Fund shares
with the SEC. The Trust shall pay for and distribute to Nationwide,
proxy material, periodic Trust reports to shareholders and other
material the Trust may require to be sent to Contract owners. The Trust
will pay the mailing expenses of Nationwide for distributing such proxy
material, reports and other material to the Contract owners, who are
the beneficial shareholders of the Trust. The Trust shall pay the cost
of qualifying Fund shares in states where required. The Administrator
shall pay for and distribute to Nationwide, Trust prospectuses. In the
event that the Variable Account prospectus and the Trust prospectus are
printed together in one document form, the Trust's share of the
printing cost for such disclosure document will be equal to the total
cost of printing the disclosure documents multiplied by the ratio of
the total number of pages in the Trust's prospectus to the total number
of pages in the disclosure document, with Nationwide paying the rest.
The Administrator will provide Nationwide with a copy of the Statement
of Additional Information suitable for duplication.
5. Nationwide and its agents shall make no representations concerning the
Trust except those contained in the then-current prospectus and
Statement of Additional Information of the Trust and in current printed
sales literature of the Trust.
6. Administrative services to Contract owners shall be the responsibility
of Nationwide and shall not be the responsibility of the Trust or the
Administrator. The Trust and the Administrator recognize that
Nationwide will be the sole shareholder of Trust shares issued pursuant
to the Contracts.
7.1 The Trust represents that it believes, in good faith, that the Funds
will at all times qualify as regulated investment companies under
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code") and that it will make every effort to maintain such
qualification of the Funds and that it will notify Nationwide
immediately upon having a reasonable basis for believing that a Fund
has ceased to so qualify or that it might not so qualify in the future.
7.2 Nationwide represents that it believes, in good faith, that the
Contracts will at all times be treated as annuity contracts under
applicable provisions of the Code, and that it will make every effort
to maintain such treatment and that it will notify the Trust
immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or
<PAGE> 3
that they might not be so treated in the future.
7.3 The Trust represents that it believes, in good faith, that the Funds
will at all times comply with the diversification requirements set
forth in Section 817(h) of the Code and Section 1.817-5(b) of the
regulations under the Code, and that it will make every effort to
maintain the Fund's compliance with such diversification requirements,
and that it will notify Nationwide immediately upon having a reasonable
basis for believing that a Fund has ceased to so qualify or that a Fund
might not so qualify in the future.
7.4 Nationwide represents that it believes, in good faith, that the
Variable Account is a "segregated asset account" and that interests in
the Variable Account are offered exclusively through the purchase of a
"variable contract" within the meaning of such terms under Section
1.8170-5(f)(2) of the regulations under the Code, and that it will make
every effort to continue to meet such definitional requirements, and
that it will notify the Trust immediately upon having a reasonable
basis for believing that such requirements have ceased to be met or
that they might not be met in the future.
7.5 The Trust shall provide Nationwide within ten (10) business days after
the end of each calendar quarter a letter from the appropriate officer
of the Trust certifying to the continued accuracy of the
representations contained in Section 7.1 and Section 7.3 above, and
attaching a detailed listing of the individual securities and other
assets, if any, held by the Trust as of the end of such calendar
quarter.
8. The Administrator or its designee shall provide Nationwide within five
(5) business days after the end of each month a monthly statement of
account confirming all transactions made during that month in the
Variable Account.
9. The Trust agrees that to the extent the Trust decides in the future to
finance distribution expenses pursuant to Rule 12b-1 of the 1940 Act,
the Trust will undertake to have the board of trustees, a majority of
whom are not interested persons of the Trust, formulate and approve any
plan under Rule 12b-1 to finance distribution expenses.
10. The Trust and Administrator agree to provide Nationwide no later than
March 1 of each year with the investment advisory and other expenses of
the Trust incurred during the Trust's most recently completed fiscal
year as of March 1, to permit Nationwide to fulfill its prospectus
disclosure obligations under the SEC's variable annuity fee table
requirements.
11. This Agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of any party hereto upon six (6) months advance
written notice to the others;
(b) at the option of the Trust, if they determine that liquidation
of the Trust is in the best interests of the Trust and its
beneficial shareholders. Reasonable advance notice of election
to liquidate shall be furnished by the Trust to permit the
<PAGE> 4
substitution of Fund shares with the shares of another
investment company, pursuant to SEC regulation;
(c) at the option of Nationwide if Trust shares are not available
for any reason to meet the requirements of Contracts as
determined by Nationwide. Reasonable advance notice of
election to terminate shall be furnished by Nationwide;
(d) at the option of any party hereto upon institution of formal
proceedings against any other party hereto by the National
Association of Securities Dealers ("NASD"), the SEC or any
other regulatory body;
(e) upon a decision by Nationwide, in accordance with regulations
of the SEC, to substitute such Trust shares with the shares of
another investment company for Contracts for which the Trust
shares have been selected to serve as the underlying
investment medium. Nationwide will give sixty (60) days
written notice to the Trust and the Administrator of any
proposed vote to substitute Trust shares;
(f) upon assignment of this Agreement by any party unless made
with the written consent of each other party;
(g) in the event Trust shares are not registered, issued or sold
in conformance with Federal law or such law precludes the use
of Trust shares as an underlying investment medium of
Contracts issued or to be issued by Nationwide. Prompt notice
shall be given by either party to the other in the event the
conditions of this provision occur.
12. Termination as the result of any cause listed in the preceding
paragraph, except for paragraph 11. (b) , shall not affect the Trust's
obligation to furnish Trust shares for Contracts then in force for
which the shares of the Trust serve or may serve as an underlying
medium, unless such further sale of Trust shares is proscribed by law
or the SEC or other regulatory body.
13. Each notice required by this Agreement shall be given by wire and confirmed
in writing to:
Nationwide Life and Annuity Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215
Attn: Robert O. Cline, Associate Vice President
Trust
The One Group(R) Investment Trust
Three Nationwide Plaza
Columbus, Ohio 43215
Attn: James F. Laird, President and Treasurer
<PAGE> 5
Administrator
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
Attn: Christopher A. Cray, Treasurer
14. Advertising and sales literature with respect to the Trust prepared by
Nationwide or its agents for use in marketing its Contracts will be
submitted to the Trust for review before Nationwide submits such
material to the SEC or NASD for review.
15. So long as and to the extent that the SEC continues to interpret the
1940 Act to require pass-through voting privileges for variable
contract owners, Nationwide will distribute all proxy material
furnished by the Trust and will vote Trust shares in accordance with
instructions received from the Contract owners of such Trust shares.
Nationwide shall vote the Trust shares for which no instructions have
been received in the same proportion as Trust shares for which said
instructions have been received from Contract owners. Nationwide and
its agents will in no way recommend action in connection with or oppose
or interfere with the solicitation of proxies for the Trust shares held
for such Contract owners.
16. (a) Nationwide agrees to indemnify and hold harmless the Trust, the
Administrator and the Trust's investment adviser (the "Adviser") and
each of their directors, officers, employees, agents and each person,
if any, who controls the Trust, the Administrator or the Adviser within
the meaning of the Securities Act of 1933 (the "Act") against any
losses, claims, damages or liabilities to which the Trust,
Administrator or the Adviser or any such director, officer, employee,
agent or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in information furnished
by Nationwide for use in the Registration Statement
or prospectus of the Trust or in the Registration
Statement or prospectus for the Variable Account;
(ii) the omission or the alleged omission to state in the
Registration Statement or prospectus of the Variable
Account a material fact required to be stated therein
or necessary to make the statements therein not
misleading;
(iii) conduct, statements or representations of Nationwide
or its agents, with respect to the sale and
distribution of Contracts for which Trust shares are
an underlying investment; or
(iv) the failure of Nationwide to provide the services and
furnish the materials under the terms of this
Agreement;
<PAGE> 6
provided however, that Nationwide shall not be liable in any
such case to the extent any such statement, omission or
representation or such alleged statement, alleged omission or
alleged representation was made in reliance upon and in
conformity with information furnished to Nationwide by or on
behalf of the Trust, the Administrator, or the Adviser.
Nationwide will reimburse any legal or other expenses
reasonably incurred by the Trust, the Administrator or the
Adviser or any such director, officer, employee, agent or
controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability
which Nationwide may otherwise have.
(b) The Trust agrees to indemnify and hold harmless Nationwide and
each of its directors, officers, employees, agents and each
person, if any, who controls Nationwide within the meaning of
the Act against any losses, claims, damages or liabilities to
which Nationwide or any such director, officer, employee,
agent or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in the Registration
Statement or prospectus or sales literature of the
Trust;
(ii) the omission or the alleged omission to state in the
Registration Statement or prospectus of the Trust a
material fact required to be stated therein or
necessary to make the statements therein not
misleading;
(iii) the Trust's failure to keep the Trust fully
diversified and qualified as a regulated investment
company as required by the applicable provisions of
the Code, the 1940 Act, and the applicable
regulations promulgated thereunder;
(iv) the Trust's or the Administrator's (1) incorrect
calculation of the daily net asset value, dividend
rate or capital gain distribution rate; (2) incorrect
reporting of the daily net asset value, dividend rate
or capital gain distribution rate; or (3) untimely
reporting of the net asset value, dividend rate or
capital gain distribution rate; or
(v) the failure of the Trust or the Administrator to
provide the services and furnish the materials under
the terms of this Agreement;
<PAGE> 7
provided however, that the Trust and the Administrator will
not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based
upon an untrue statement or omission or alleged omission made
in such Registration Statement or prospectus in conformity
with written information furnished to the Trust by Nationwide
specifically for use therein.
The Trust and the Administrator will reimburse any legal or
other expenses reasonably incurred by Nationwide or any such
director, officer, employee, agent or controlling person in
connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement
will be in addition to any liability which the Trust and the
Administrator may otherwise have.
(c) Each party shall promptly notify the other in writing of any
situation which presents or appears to involve a claim which
may be subject of indemnification hereunder and the
indemnifying party shall have the option to defend against any
such claim. In the event the indemnifying party so elects, it
will notify the indemnified party and shall assume the defense
of such claim, and the indemnified party shall cooperate fully
with the indemnifying party, at the indemnifying party's
expense, in the defense of such claim. Notwithstanding the
foregoing, the indemnified party shall be entitled to
participate in the defense of such claim at its own expense
through counsel of its own choosing. Neither party shall
confess any claim nor make any compromise in any action or
proceeding which may result in a finding of wrongdoing by the
other party without the other party's prior written consent.
Any notice given by the indemnifying party to an indemnified
party or participation in or control of the litigation of any
such claim by the indemnifying party shall in no event be
deemed to be an admission by the indemnifying party of
culpability, and the indemnifying party shall be free to
contest liability with respect to the claim among parties.
(d) It is understood and expressly agreed that the obligations and
liabilities of the Trust hereunder shall not be binding upon
any of the Trustees, shareholders, nominees, officers, agents
or employees of the Trust, personally, but shall bind only the
assets and property of the Trust, as provided in the
Declaration of Trust of the Trust. The execution and delivery
of this Agreement have been authorized by the Trustee's and
signed by an authorized officer of the Trust, acting as such,
and neither such authorization by such Trustee's nor such
execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the
assets and property of the Trust as provided in its
Declaration of Trust.
17. The forbearance or neglect of any party to insist upon strict
compliance by any other party, with any of the provisions of this
Agreement, whether continuing or not, or to declare a forfeiture of
termination against the other parties, shall not be construed as a
waiver of any of the rights or privileges of any party hereunder. No
waiver of any right or privilege of any party arising from any default
or failure of performance by any party
<PAGE> 8
shall affect the rights or privileges of the other parties in the event
of a further default or failure of performance.
18. The obligations of The One Group(R) Investment Trust entered into in
the name or on behalf thereof by any of the Trustees, representatives
or agents are made not individually, but in such capacities, and are
not binding upon any of the Trustees, Shareholders or representatives
of the Trust personally, but bind only the assets of the Trust, and all
persons dealing with any series of Shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement
of any claims against the Trust.
19. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of Massachusetts. This Agreement
shall be subject to the provisions of the federal securities statutes,
rules and regulations, including such exemptions from those statutes,
rules and regulations as the SEC may grant and the terms hereof shall
be interpreted and construed in accordance therewith.
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By:
-------------------------------
Title:
------------------------------
THE ONE GROUP(R) INVESTMENT TRUST
By:
-------------------------------
Title:
------------------------------
NATIONWIDE ADVISORY SERVICES, INC.
By:
-------------------------------
Title:
------------------------------
<PAGE> 9
APPENDIX A
FUNDS OF THE TRUST
- ------------------
Government Bond Fund
Asset Allocation Fund
Growth Opportunities Fund
Large Company Growth Fund
Equity Index Fund
Bond Fund
Value Growth Fund
Mid Cap Opportunities Fund
Mid Cap Value Fund
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By: ____________________________________
Title: ___________________________________
THE ONE GROUP(R) INVESTMENT TRUST
By: ____________________________________
Title: ___________________________________
NATIONWIDE ADVISORY SERVICES, INC.
By: ____________________________________
Title: ___________________________________
Dated: November 19, 1998
<PAGE> 1
Exhibit 9(f)
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
This Second Amended and Restated Administrative Services Agreement ("Agreement")
is made as of this 19th day of August, 1998, between The One Group(R) Investment
Trust, a Massachusetts business trust (herein called the "Trust"), and
Nationwide Advisory Services, Inc., an Ohio corporation, (herein called the
"Administrator").
WHEREAS, the Trust and the Administrator executed an Administrative Services
Agreement dated May 20, 1994 and the Trust and the Administrator executed an
Amended and Restated Administrative Services Agreement on August 23, 1996,
February 18, 1998, May 20, 1998, and August 19, 1998.
WHEREAS, the parties hereto desire to amend the Amended and Restated
Administrative Services Agreement; and
WHEREAS, the Trust is a Massachusetts business trust, consisting of the series
of shares listed in Appendix A hereto (the "Funds"), which operates as an
open-end management investment company and will so register under the Investment
Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Trust desires to retain the Administrator as administrator to
provide certain administrative services described below with respect to each of
the Funds, and the Administrator is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR. The Trust hereby appoints the
Administrator as administrator of the Funds on the terms and conditions
set forth in this Agreement; and the Administrator hereby accepts such
appointment and agrees to perform the services and duties set forth in
Section 2 of this Agreement in consideration of the compensation
provided for in Section 4 hereof.
2. SERVICES AND DUTIES. As Administrator, and subject to the supervision
and control of the Trust's Board of Trustees, the Administrator will
provide facilities, equipment, and personnel to carry out the following
administrative services for operation of the business and affairs of
the Trust and each of its Funds:
a. prepare, file, and maintain the Trust's governing documents,
including the Declaration of Trust (which has already been
prepared and filed), the Bylaws, minutes of meetings of
Trustees and shareholders, and proxy statements for
<PAGE> 2
meetings of shareholders;
b. prepare and file with the Securities and Exchange Commission
and the appropriate state securities authorities the
registration statements for the Trust and the Trust's shares
and amendments thereto, the Trust's reports pursuant to
Investment Company Act Rule 24f-2, reports to shareholders and
regulatory authorities, including form N-SAR, and
prospectuses, proxy statements, and such other documents as
may be necessary or convenient to enable the Trust to make
continuous offering of its shares and to conduct its affairs;
c. prepare, negotiate, and administer contracts on behalf of the
Trust with, among others, the Trust's custodian and transfer
agent;
d. supervise the Trust's custodian and fund accounting personnel
in the maintenance of the Trust's general ledger and in the
preparation of the Trust's financial statements, including
oversight of expense accruals and payments, determination of
the net asset value of the Trust's assets and of the Trust's
shares, and of the declaration and payments of dividends and
other distributions to shareholders;
e. calculate performance data of the Funds for dissemination to
information services covering the investment company industry;
f. prepare and file on a timely basis the Trust's Federal and
State income and other tax returns;
g. examine and review the operations of the Trust's custodian,
transfer agent and investment adviser to promote compliance
with applicable state and federal law;
h. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
i. perform internal audit examinations in accordance with
procedures to be adopted by the Administrator and the Trust;
j. assist with the design, development, and operation of the
Trust;
k. provide individuals reasonably acceptable to the Trust's Board
of Trustees for nomination, appointment, or election as
officers of the Trust, who will be responsible for the
management of certain of the Trust's affairs as determined by
the Trust's Board. of Trustees;
l. monitor the Trust's compliance with Section 817 and Sections
851 through 855 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, so as to
enable the Trust to comply with the diversification
requirements applicable to investments of variable contracts
and to maintain its status as a "regulated investment
company;"
<PAGE> 3
m. advise the Trust and its Board of Trustees on matters
concerning the Trust and its affairs; and
n. provide the Trust with office space and personnel.
The foregoing, along with any additional services that the
Administrator shall agree in writing to perform for the Trust
hereunder, shall hereafter be referred to as "Administrative Services."
In compliance with the requirements of Rule 31a-3 under the Investment
Company Act, the Administrator hereby agrees that all records that it
maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Administrator further agrees to preserve for the
periods prescribed by Investment Company Act Rule 31a-2 the records
required to be maintained by Investment Company Act Rule 31a-1.
Administrative Services shall not include any duties, functions, or
services to be performed for the Trust by the Trust's investment
adviser, custodian, or transfer agent pursuant to their agreements with
the Trust.
The Administrator acknowledges the importance of efficient and prompt
transmission of information to Nationwide Life and Annuity Insurance
Company, the purchaser of Trust shares to fund the obligations of
certain variable annuity contracts. The Administrator agrees to use its
best efforts to meet the deadline for transmission of pricing
information presently set by Nationwide Life and Annuity Insurance
Company and such other time deadlines as may be established from time
to time in the future.
When performing Administrative Services to the Trust, the Administrator
will comply with the provisions of the Declaration of Trust and Bylaws
of the Trust, will safeguard and promote the welfare of the Trust, and
will comply with the policies that the Trustees may from time to time
reasonably determine, provided that such policies are not in conflict
with this Agreement, the Trust's governing documents, or any applicable
statutes or regulations.
3. EXPENSES. The Administrator shall be responsible for expenses incurred
in providing all the Administrative Services to the Trust, including
the compensation of the Administrator employees who serve as Officers
of the Trust. The Trust (or the Trust's investment adviser) shall be
responsible for all other expenses incurred by the Administrator on
behalf of the Trust, including without limitation: (i) investment
advisory fees; (ii) interest and taxes; (iii) brokerage commissions and
other costs in connection with the purchase or sale of securities and
other investment instruments; (iv) all expenses incurred in valuing
portfolio securities for the Equity Index Fund; (v) fees and expenses
of the Trust's trustees, other than those who are "interested persons"
of the Administrator, distributor or investment adviser of the Trust;
(vi) legal and audit expenses; (vii) custodian, registrar and transfer
agent fees and expenses; (viii) fees and expenses related to the
registration and qualification of the Trust and the Trust's shares for
distribution under state and federal securities laws; (ix) expenses of
printing and mailing reports and notices and proxy material to
beneficial shareholders of the Trust; (x) all other
<PAGE> 4
expenses incidental to holding meetings of the Trust's shareholders,
including proxy solicitations therefor, (xi) insurance premiums for
fidelity and other coverage; (xii) association membership dues; (xiii)
such nonrecurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Trust is a
party and the legal obligation which the Trust may have to indemnify
the Trust's trustees and officers with respect thereto.
4. COMPENSATION. For the Administrative Services provided, the Trust
hereby agrees to pay and the Administrator hereby agrees to accept as
full compensation for its services rendered hereunder an administrative
fee, payable monthly as soon as practicable after the last day of each
month. The administrative fee shall be computed on a daily basis at
annual rates equal to the following percentages of the average net
assets of the Trust (less assets of the Equity Index Fund): 0.24% of
the Trust's average net assets up to $250 million, and 0.14% of Trust's
average net assets in excess of $250 million. The administrative fee
for the Equity Index Fund shall be payable in the manner described
above and shall be computed on a daily basis at the annual rate of
0.14% of the average daily net assets of the Equity Index Fund.
In the event the total expenses of any one of the Funds in any fiscal
year exceed expense limitations imposed by applicable state securities
regulations, the Administrator and the Trust's investment adviser shall
reimburse that Fund by the amount of such excess in proportion to their
respective fees (after giving effect to any waiver of fees agreed to by
the Administrator and investment adviser).
In case of termination of this Agreement during any month, the
administrative fee for that month shall be reduced proportionately on
the basis of the number of business days during which it is in effect,
and the fee computed upon the average net assets for the business days
it is so in effect for that month.
5. RESPONSIBILITY OF ADMINISTRATOR.
a. The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad
faith or negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and
duties under this Agreement. Any person, even though also an
officer, director, partner, employee or agent of the
Administrator, who may be or become an officer, trustee,
employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of
the Trust (other than services or business in connection with
the duties of the Administrator hereunder) in accordance with
his responsibilities to the Trust as such officer, employee or
agent, to be rendering such services to or acting solely for
the Trust and not as an officer, director, partner, employee
or agent or one under the control or direction of the
Administrator even through paid by the Administrator.
<PAGE> 5
b. The Administrator shall be kept indemnified by the Trust and
be without liability for any action taken or thing done by it
in performing the Administrative Services in accordance with
the above standards; provided, however, that the Trust will
not indemnify the Administrator for the portion of any loss or
claim caused, directly or indirectly, by the negligence of the
Administrator. In order that the indemnification provisions
contained in this Section 5 shall apply, however, it is
understood that if in any case the Trust may be asked to
indemnify or save the Administrator harmless, the Trust shall
be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care
to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the
probability of such a claim for indemnification against the
Trust. The Trust shall have the option to defend the
Administrator against any claim which may be the subject of
this indemnification. In the event that the Trust so elects it
will so notify the Administrator and thereupon the Trust shall
take over complete defense of the claim, and the Administrator
shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this
Section. The Administrator shall in no case confess any claim
or make any compromise in any case in which the Trust will be
asked to indemnify the Administrator except with the Trust's
written consent.
6. DURATION AND TERMINATION
a. The initial term of this Agreement shall commence as of May
20, 1994 and extend until August 31, 1997.
b. Thereafter, this Agreement shall be automatically renewed each
year for an additional term of one year, unless notice of
termination has been delivered by either party to the other no
less than 90 days before the beginning of such additional
term.
c. Notwithstanding the foregoing, this Agreement may be
terminated at any time by mutual agreement of the parties
hereto or for "cause" (as defined below), in either case on
not less than 60 days' notice given by the Trust's Board of
Trustees or given by the Administrator. For purposes of this
Agreement, "cause" shall mean (a) willful misfeasance, bad
faith, gross negligence or reckless disregard on the part of
the Administrator with respect to its obligations and duties
set forth herein; (b) a final judicial, regulatory or
administrative ruling or order in which the Administrator has
been found guilty of criminal misconduct or of unethical
behavior in the operation of its business; (c) the dissolution
or liquidation of either party or other cessation of business
other than a reorganization or recapitalization of such party
as an ongoing business; (d) financial difficulties on the part
of either party which is evidenced by the authorization or
commencement of, or involvement by way of pleading, answer,
consent, or acquiescence in, a voluntary or involuntary case
under Title 11 of the United States Code, as may be in effect
<PAGE> 6
from time to time, or any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration
of the rights of creditors; or (e) any other circumstances
which may substantially impair the performance of either
party's obligations and duties, or the ability to perform
those obligations and duties, as contemplated herein.
d. This Agreement shall be reviewed under the "cause" provisions
of Section 6(c) at least annually annually by the Trust's
Board of Trustees.
e. Upon the termination of this Agreement, the Trust shall pay
to the Administrator such compensation as may be payable prior
to the effective date of such termination. In the event that
the Trust designates a successor to any of the Administrator's
obligations hereunder, the Administrator shall, at the
direction of the Trust, transfer to such successor all
relevant books, records and other data established or
maintained by the Administrator under the foregoing
provisions.
7. AMENDMENT. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
8. LIMITATIONS OF LIABILITY OF TRUSTEES EMPLOYEES, AGENTS AND SHAREHOLDERS
OF THE TRUST. The Administrator is expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust and
agrees that the obligations assumed by the Trust pursuant to this
Agreement shall be limited in any case to the Trust and its assets and
that the Administrator shall not seek satisfaction of any such
obligations from the shareholders of the Trust, the Trustees, officers,
employees or agents of the Trust, or any of them.
9. PROPRIETARY AND CONFIDENTIAL INFORMATION. The Administrator agrees on
behalf of itself and its directors, officers, and employees to treat
confidentially and as proprietary information of the Trust all records
and other information relative to the Trust and prior, present, or
potential Shareholders, and not to use such records and information for
any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing
by the Trust, which approval may not be withheld where the
Administrator may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust.
Failure by the Administrator to comply with the provisions of this
Section will constitute "cause" for purposes of Section 6(c).
10. NOTICES. Notices of any kind to be given to the Trust hereunder by the
Administrator shall be in writing and shall be duly given if delivered
to the Trust and to its investment adviser at the following address:
<PAGE> 7
The One Group(R) Investment Trust
Three Nationwide Plaza
3-26-02
Columbus, Ohio 43215
Attn.: James F. Laird, Jr., President and Treasurer
Notices of any kind to be given to the Administrator hereunder by the
Trust shall be in writing and shall be duly given if delivered to the
Administrator at:
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
Attn.: Christopher A. Cray, Treasurer
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a
court or regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to
the provisions of Section 5, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Massachusetts law;
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission
thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE ONE GROUP(R) INVESTMENT TRUST
By:
--------------------------------------
Title:
-----------------------------------
NATIONWIDE ADVISORY SERVICES, INC.
THE ONE GROUP(R) INVESTMENT TRUST
By:
--------------------------------------
Title:
-----------------------------------
<PAGE> 8
APPENDIX A
FUNDS OF THE TRUST
Government Bond Fund
Asset Allocation Fund
Growth Opportunities Fund
Large Company Growth Fund
Equity Index Fund
THE ONE GROUP(R) INVESTMENT TRUST
By:
--------------------------------------
Title:
-----------------------------------
NATIONWIDE ADVISORY SERVICES, INC.
By:
--------------------------------------
Title:
-----------------------------------
Dated: August 19, 1998
<PAGE> 1
Exhibit 9(g)
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
This Second Amended and Restated Administrative Services Agreement ("Agreement")
is made as of this 19th day of November, 1998, between The One Group(R)
Investment Trust, a Massachusetts business trust (herein called the "Trust"),
and Nationwide Advisory Services, Inc., an Ohio corporation, (herein called the
"Administrator").
WHEREAS, the Trust and the Administrator executed an Administrative Services
Agreement dated May 20, 1994 and the Trust and the Administrator executed an
Amended and Restated Administrative Services Agreement on August 23, 1996,
February 18, 1998, May 20, 1998, August 19, 1998 and November 19, 1998.
WHEREAS, the parties hereto desire to amend the Amended and Restated
Administrative Services Agreement; and
WHEREAS, the Trust is a Massachusetts business trust, consisting of the series
of shares listed in Appendix A hereto (the "Funds"), which operates as an
open-end management investment company and will so register under the Investment
Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Trust desires to retain the Administrator as administrator to
provide certain administrative services described below with respect to each of
the Funds, and the Administrator is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR. The Trust hereby appoints the
Administrator as administrator of the Funds on the terms and conditions
set forth in this Agreement; and the Administrator hereby accepts such
appointment and agrees to perform the services and duties set forth in
Section 2 of this Agreement in consideration of the compensation
provided for in Section 4 hereof.
2. SERVICES AND DUTIES. As Administrator, and subject to the supervision
and control of the Trust's Board of Trustees, the Administrator will
provide facilities, equipment, and personnel to carry out the following
administrative services for operation of the business and affairs of
the Trust and each of its Funds:
a. prepare, file, and maintain the Trust's governing documents,
including the Declaration of Trust (which has already been
prepared and filed), the Bylaws, minutes of meetings of
Trustees and shareholders, and proxy statements for
<PAGE> 2
meetings of shareholders;
b. prepare and file with the Securities and Exchange Commission
and the appropriate state securities authorities the
registration statements for the Trust and the Trust's shares
and amendments thereto, the Trust's reports pursuant to
Investment Company Act Rule 24f-2, reports to shareholders and
regulatory authorities, including form N-SAR, and
prospectuses, proxy statements, and such other documents as
may be necessary or convenient to enable the Trust to make
continuous offering of its shares and to conduct its affairs;
c. prepare, negotiate, and administer contracts on behalf of the
Trust with, among others, the Trust's custodian and transfer
agent;
d. supervise the Trust's custodian and fund accounting personnel
in the maintenance of the Trust's general ledger and in the
preparation of the Trust's financial statements, including
oversight of expense accruals and payments, determination of
the net asset value of the Trust's assets and of the Trust's
shares, and of the declaration and payments of dividends and
other distributions to shareholders;
e. calculate performance data of the Funds for dissemination to
information services covering the investment company industry;
f. prepare and file on a timely basis the Trust's Federal and
State income and other tax returns;
g. examine and review the operations of the Trust's custodian,
transfer agent and investment adviser to promote compliance
with applicable state and federal law;
h. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
i. perform internal audit examinations in accordance with
procedures to be adopted by the Administrator and the Trust;
j. assist with the design, development, and operation of the
Trust;
k. provide individuals reasonably acceptable to the Trust's Board
of Trustees for nomination, appointment, or election as
officers of the Trust, who will be responsible for the
management of certain of the Trust's affairs as determined by
the Trust's Board. of Trustees;
l. monitor the Trust's compliance with Section 817 and Sections
851 through 855 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, so as to
enable the Trust to comply with the diversification
requirements applicable to investments of variable contracts
and to maintain its status as a "regulated investment
company;"
<PAGE> 3
m. advise the Trust and its Board of Trustees on matters
concerning the Trust and its affairs; and
n. provide the Trust with office space and personnel.
The foregoing, along with any additional services that the
Administrator shall agree in writing to perform for the Trust
hereunder, shall hereafter be referred to as "Administrative Services."
In compliance with the requirements of Rule 31a-3 under the Investment
Company Act, the Administrator hereby agrees that all records that it
maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Administrator further agrees to preserve for the
periods prescribed by Investment Company Act Rule 31a-2 the records
required to be maintained by Investment Company Act Rule 31a-1.
Administrative Services shall not include any duties, functions, or
services to be performed for the Trust by the Trust's investment
adviser, custodian, or transfer agent pursuant to their agreements with
the Trust.
The Administrator acknowledges the importance of efficient and prompt
transmission of information to Nationwide Life and Annuity Insurance
Company, the purchaser of Trust shares to fund the obligations of
certain variable annuity contracts. The Administrator agrees to use its
best efforts to meet the deadline for transmission of pricing
information presently set by Nationwide Life and Annuity Insurance
Company and such other time deadlines as may be established from time
to time in the future.
When performing Administrative Services to the Trust, the Administrator
will comply with the provisions of the Declaration of Trust and Bylaws
of the Trust, will safeguard and promote the welfare of the Trust, and
will comply with the policies that the Trustees may from time to time
reasonably determine, provided that such policies are not in conflict
with this Agreement, the Trust's governing documents, or any applicable
statutes or regulations.
3. EXPENSES. The Administrator shall be responsible for expenses incurred
in providing all the Administrative Services to the Trust, including
the compensation of the Administrator employees who serve as Officers
of the Trust. The Trust (or the Trust's investment adviser) shall be
responsible for all other expenses incurred by the Administrator on
behalf of the Trust, including without limitation: (i) investment
advisory fees; (ii) interest and taxes; (iii) brokerage commissions and
other costs in connection with the purchase or sale of securities and
other investment instruments; (iv) all expenses incurred in valuing
portfolio securities for the Equity Index Fund; (v) fees and expenses
of the Trust's trustees, other than those who are "interested persons"
of the Administrator, distributor or investment adviser of the Trust;
(vi) legal and audit expenses; (vii) custodian, registrar and transfer
agent fees and expenses; (viii) fees and expenses related to the
registration and qualification of the Trust and the Trust's shares for
distribution under state and federal securities laws; (ix) expenses of
printing and mailing reports and notices and proxy material to
beneficial shareholders of the Trust; (x) all other expenses incidental
to holding meetings of the Trust's shareholders, including proxy
<PAGE> 4
solicitations therefor, (xi) insurance premiums for fidelity and other
coverage; (xii) association membership dues; (xiii) such nonrecurring
or extraordinary expenses as may arise, including those relating to
actions, suits or proceedings to which the Trust is a party and the
legal obligation which the Trust may have to indemnify the Trust's
trustees and officers with respect thereto.
4. COMPENSATION. For the Administrative Services provided, the Trust
hereby agrees to pay and the Administrator hereby agrees to accept as
full compensation for its services rendered hereunder an administrative
fee, payable monthly as soon as practicable after the last day of each
month. The administrative fee shall be computed on a daily basis at
annual rates equal to the following percentages of the average net
assets of the Trust (less assets of the Equity Index Fund): 0.24% of
the Trust's average net assets up to $250 million, and 0.14% of Trust's
average net assets in excess of $250 million. The administrative fee
for the Equity Index Fund shall be payable in the manner described
above and shall be computed on a daily basis at the annual rate of
0.14% of the average daily net assets of the Equity Index Fund.
In the event the total expenses of any one of the Funds in any fiscal
year exceed expense limitations imposed by applicable state securities
regulations, the Administrator and the Trust's investment adviser shall
reimburse that Fund by the amount of such excess in proportion to their
respective fees (after giving effect to any waiver of fees agreed to by
the Administrator and investment adviser).
In case of termination of this Agreement during any month, the
administrative fee for that month shall be reduced proportionately on
the basis of the number of business days during which it is in effect,
and the fee computed upon the average net assets for the business days
it is so in effect for that month.
5. RESPONSIBILITY OF ADMINISTRATOR.
a. The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad
faith or negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and
duties under this Agreement. Any person, even though also an
officer, director, partner, employee or agent of the
Administrator, who may be or become an officer, trustee,
employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of
the Trust (other than services or business in connection with
the duties of the Administrator hereunder) in accordance with
his responsibilities to the Trust as such officer, employee or
agent, to be rendering such services to or acting solely for
the Trust and not as an officer, director, partner, employee
or agent or one under the control or direction of the
Administrator even through paid by the Administrator.
<PAGE> 5
b. The Administrator shall be kept indemnified by the Trust and
be without liability for any action taken or thing done by it
in performing the Administrative Services in accordance with
the above standards; provided, however, that the Trust will
not indemnify the Administrator for the portion of any loss or
claim caused, directly or indirectly, by the negligence of the
Administrator. In order that the indemnification provisions
contained in this Section 5 shall apply, however, it is
understood that if in any case the Trust may be asked to
indemnify or save the Administrator harmless, the Trust shall
be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care
to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the
probability of such a claim for indemnification against the
Trust. The Trust shall have the option to defend the
Administrator against any claim which may be the subject of
this indemnification. In the event that the Trust so elects it
will so notify the Administrator and thereupon the Trust shall
take over complete defense of the claim, and the Administrator
shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this
Section. The Administrator shall in no case confess any claim
or make any compromise in any case in which the Trust will be
asked to indemnify the Administrator except with the Trust's
written consent.
6. DURATION AND TERMINATION
a. The initial term of this Agreement shall commence as of May
20, 1994 and extend until August 31, 1997.
b. Thereafter, this Agreement shall be automatically renewed each
year for an additional term of one year, unless notice of
termination has been delivered by either party to the other no
less than 90 days before the beginning of such additional
term.
c. Notwithstanding the foregoing, this Agreement may be
terminated at any time by mutual agreement of the parties
hereto or for "cause" (as defined below), in either case on
not less than 60 days' notice given by the Trust's Board of
Trustees or given by the Administrator. For purposes of this
Agreement, "cause" shall mean (a) willful misfeasance, bad
faith, gross negligence or reckless disregard on the part of
the Administrator with respect to its obligations and duties
set forth herein; (b) a final judicial, regulatory or
administrative ruling or order in which the Administrator has
been found guilty of criminal misconduct or of unethical
behavior in the operation of its business; (c) the dissolution
or liquidation of either party or other cessation of business
other than a reorganization or recapitalization of such party
as an ongoing business; (d) financial difficulties on the part
of either party which is evidenced by the authorization or
commencement of, or involvement by way of pleading, answer,
consent, or acquiescence in, a voluntary or involuntary case
under Title 11 of the United States Code, as may be in effect
<PAGE> 6
from time to time, or any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration
of the rights of creditors; or (e) any other circumstances
which may substantially impair the performance of either
party's obligations and duties, or the ability to perform
those obligations and duties, as contemplated herein.
d. This Agreement shall be reviewed under the "cause" provisions
of Section 6(c) at least annually annually by the Trust's
Board of Trustees.
e. Upon the termination of this Agreement, the Trust shall pay to
the Administrator such compensation as may be payable prior to
the effective date of such termination. In the event that the
Trust designates a successor to any of the Administrator's
obligations hereunder, the Administrator shall, at the
direction of the Trust, transfer to such successor all
relevant books, records and other data established or
maintained by the Administrator under the foregoing
provisions.
7. AMENDMENT. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
8. LIMITATIONS OF LIABILITY OF TRUSTEES EMPLOYEES, AGENTS AND SHAREHOLDERS
OF THE TRUST. The Administrator is expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust and
agrees that the obligations assumed by the Trust pursuant to this
Agreement shall be limited in any case to the Trust and its assets and
that the Administrator shall not seek satisfaction of any such
obligations from the shareholders of the Trust, the Trustees, officers,
employees or agents of the Trust, or any of them.
9. PROPRIETARY AND CONFIDENTIAL INFORMATION. The Administrator agrees on
behalf of itself and its directors, officers, and employees to treat
confidentially and as proprietary information of the Trust all records
and other information relative to the Trust and prior, present, or
potential Shareholders, and not to use such records and information for
any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing
by the Trust, which approval may not be withheld where the
Administrator may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust.
Failure by the Administrator to comply with the provisions of this
Section will constitute "cause" for purposes of Section 6(c).
10. NOTICES. Notices of any kind to be given to the Trust hereunder by the
Administrator shall be in writing and shall be duly given if delivered
to the Trust and to its investment adviser at the following address:
<PAGE> 7
The One Group(R) Investment Trust
Three Nationwide Plaza
3-26-02
Columbus, Ohio 43215
Attn.: James F. Laird, Jr., President and Treasurer
Notices of any kind to be given to the Administrator hereunder by the
Trust shall be in writing and shall be duly given if delivered to the
Administrator at:
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
Attn.: Christopher A. Cray, Treasurer
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a
court or regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to
the provisions of Section 5, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Massachusetts law;
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission
thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE ONE GROUP(R) INVESTMENT TRUST
By:
------------------------------------
Title:
---------------------------------
NATIONWIDE ADVISORY SERVICES, INC.
By:
------------------------------------
Title:
---------------------------------
<PAGE> 8
APPENDIX A
FUNDS OF THE TRUST
Government Bond Fund
Asset Allocation Fund
Growth Opportunities Fund
Large Company Growth Fund
Equity Index Fund
Bond Fund
Value Growth Fund
Mid Cap Opportunities Fund
Mid Cap Value Fund
THE ONE GROUP(R) INVESTMENT TRUST
By:
------------------------------------
Title:
---------------------------------
NATIONWIDE ADVISORY SERVICES, INC.
By:
------------------------------------
Title:
---------------------------------
Dated: November 19, 1998
<PAGE> 1
Exhibit (9)(h)
SECURITIES LENDING AGREEMENT
FOR THE ONE GROUP(R) INVESTMENT TRUST
This Securities Lending Agreement (the "Agreement") is entered into as
of June 15, 1998 by and between The One Group Investment Trust, an open-end
management investment company formed under the Investment Company Act of 1940
(the "Lender"), Banc One Investment Advisors Corporation, an investment adviser
under the Investment Advisers Act of 1940 (the "Advisor"), and Bank One Trust
Company, N.A., a national banking association (the "Subcustodian").
BACKGROUND INFORMATION
A. The Advisor serves as investment Advisor to the Lender
pursuant to an Investment Advisory Agreement dated August 1,
1994, as amended from time to time.
B. The Advisor in conjunction with the Subcustodian has developed
a securities lending program (the "Securities Lending
Program"), (the exact terms and conditions of which are
contained in, and subject to this Agreement) pursuant to which
Advisor will provide lending agent services to Lender for
purposes of lending Lender's securities.
C. The Lender desires to appoint the Advisor as its lending agent
and Subcustodian as its custodian for the purpose of lending
securities. The Advisor has agreed to act as agent for the
Lender and the Subcustodian has agreed to act as custodian for
the Lender in accordance with the terms of this Agreement. The
Lender has established a securities lending account for each
fund of the Lender (collectively, the "Accounts") with the
Subcustodian which will, from time to time, hold the
securities which are the subject of, and can be loaned
pursuant to the terms and conditions of this Agreement.
STATEMENT OF AGREEMENT
The parties hereby acknowledge the accuracy of the foregoing background
information and hereby agree as follows:
Section l. APPOINTMENT. The Lender hereby appoints the Advisor as its
agent to act as set forth in this Agreement and the Advisor hereby accepts the
appointment as agent and agrees to so act. The Lender agrees that the Advisor is
acting as a fully disclosed agent and not as principal in connection with the
Securities Lending Program. The Advisor and the Subcustodian shall have the
right to disclose the identity of the Lender to any Borrower as defined herein
or give notice that such identity is available upon request.
Lender is a series investment company consisting of a variety of
investment portfolios and is entering this Agreement on behalf of the investment
portfolios identified on EXHIBIT A attached hereto and incorporated hereby by
reference ("Funds"). Any reference to Lender in this Agreement shall be deemed a
reference solely to the particular Fund to which a given lending transaction
under this Agreement relates. Under no circumstances shall the rights,
obligations, or remedies with respect to a particular Fund constitute a right,
obligation or remedy applicable to any other Fund. In particular and without
limiting the generality of the foregoing: (a) any event of default regarding one
Fund shall not create any right or obligation with respect to any other Fund,
(b) Advisor and the Subcustodian shall have no right to set off claims of a Fund
by applying property of any other Fund, and (c) no Fund shall have the right to
set off against assets or property held by a Borrower or Subcustodian for any
other Fund.
Lender was created under as a Massachusetts Business Trust under a
Declaration of Trust filed on June 7, 1993 as amended by the Amended Declaration
of Trust (the "Trust Agreement"). The Trust Agreement provides, among other
things, that trustees of Lender are responsible for the actions of Lender in
their capacity as trustees and not personally. Advisor expressly acknowledges
and agrees that the obligations of Lender hereunder shall not be binding upon
any of the shareholders, trustees, officers, employees or agents of Lender, but
shall only bind the trust property of Lender, as provided in the Trust
Agreement. The execution and delivery of this Agreement by an officer of the
Lender has been approved by the trustees of the Lender, and neither the
authorization nor the execution and
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<PAGE> 2
delivery shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Lender as provided in the Trust Agreement.
Section 2. AUTHORIZATION AND APPROVAL OF BORROWERS. The Advisor has
reviewed and approved the standard form of Master Securities Loan Agreement
attached hereto as EXHIBIT B and substantially similar agreements heretofore
executed by the Subcustodian for the lending of customer securities and
substantially similar agreements hereafter approved by Advisor and executed by
the Subcustodian (the "Loan Agreement" or "Loan Agreements"). The Lender hereby
authorizes the Advisor to lend securities delivered to the Subcustodian in
accordance with the Loan Agreements to any of the Borrowers specified by Advisor
on the list attached hereto as EXHIBIT C as amended from time to time by the
Advisor (each a "Borrower").
The Advisor is authorized to negotiate rebates with the Borrower to be paid to
the Borrower for the use of Cash Collateral (as defined in section 8(c)) as well
as the fees to be paid to the Lender for the loan of securities collateralized
by Collateral other than Cash Collateral.
Section 3. LENDER'S REPRESENTATIONS. In order to permit the Advisor and
the Subcustodian to make such representations as may be required by the Loan
Agreement, the Lender hereby represents and warrants to the Advisor, which
representations and warranties shall be deemed to be continuing and to be
reaffirmed on any day that a loan under this Agreement is outstanding, that:
(a) This Agreement is, and each loan will be, legally and validly
entered into, does not, and will not, violate any statute, regulation, rule,
order, or judgment binding on the Lender, or any agreement binding on the Lender
or affecting its property, and is enforceable against the Lender in accordance
with its terms, except as may be limited by bankruptcy, insolvency, or similar
laws, or by equitable principles relating to or limiting creditors' rights
generally;
(b) The person executing this Agreement and any other persons
designated from time to time by the Lender in writing (each such person, an
"Authorized Person") are duly and properly authorized to act on behalf of the
Lender or the Advisor, respectively;
(c) The Lender owns the securities held in each Account or subject to a
loan under this Agreement free and clear of all liens, claims, security
interests and encumbrances and no such security has been sold. Lender agrees to
immediately notify the Advisor and identify any of the Securities which are no
longer subject to the representations set forth in this paragraph (c) or which
are otherwise being withdrawn from participation in the Securities Lending
Program;
(d) The Lender is acting as principal with respect to loans made under
this Agreement; and
(e) The Lender is not subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") with respect to this Agreement and
the securities held in the Account.
Section 4. LOAN OPPORTUNITIES. The Lender acknowledges and agrees that
the Advisor or the Subcustodian may lend securities owned by other of the
Advisor's or the Subcustodian's customers to Borrowers. The Lender agrees that
it shall have no claim against the Advisor or the Subcustodian based on, or
relating to, loans made for other customers or loan opportunities refused
hereunder, whether or not the Advisor has made fewer or more loans for any other
customer than for the Lender, and whether or not any loan for another customer,
or the opportunity refused, could have resulted in loans made under this
Agreement.
Section 5. MAKING OF LOANS. The Advisor will notify Borrowers that it
is prepared to lend securities of the Lender held in the Account. If the Advisor
determines, in response to a Borrower's orally advising the Advisor of its
desire to borrow securities, to lend securities of the Lender pursuant to a Loan
Agreement, the Advisor will instruct the Subcustodian to deliver the securities,
and is hereby authorized to take such actions to effect the loan
- 2 -
<PAGE> 3
as are required by the Loan Agreement; provided, however, that the Advisor shall
lend no more than 33-1/3% of the Fund's total assets. For each Borrower, the
Advisor shall establish a maximum limit on the amount of securities that will be
delivered to each Borrower in connection with loans of the Lender's securities
(the "Borrower Limit"). The Subcustodian shall not deliver Lender's securities
to a Borrower when the value of the loan exceeds the Borrower Limit.
Section 6. LOAN TERMINATION. The Advisor shall, subject to the terms of
the Loan Agreement, terminate a loan made to a Borrower whenever the Advisor
shall actually receive:
(a) oral or written instructions to terminate the loan from a
person believed by the Advisor to be an Authorized Person of
the Lender;
(b) oral or written notice from the Lender that the loaned
security is no longer subject to the representations set form
in section 3(c) or that the securities are no longer eligible
for participation in the Securities Lending Program;
(c) a written instruction from an Authorized Person or a person
believed by the Advisor to be an Authorized Person of the
Lender that the Borrower with whom the loan is outstanding is
to be deleted from the list referred to in Section 2 hereof;
(d) actual notice of a default under any Loan Agreement pursuant
to which securities have been loaned; or
(e) termination of this Agreement.
Notwithstanding the foregoing or any other provision in this Agreement,
the Advisor may at any time terminate any loan in its absolute discretion.
Section 7. OUTSTANDING LOANS. Subject to the supervision of the
Advisor, the Subcustodian shall perform the following acts in connection with
loans of securities hereunder:
(a) enter into Loan Agreements on such terms as approved by the
Advisor;
(b) receive and release Collateral as provided in the applicable
Loan Agreement;
(c) receive distributions on loaned securities;
(d) accept substitutions of Collateral and execute and deliver or
send any receipts required under the Loan Agreement in
connection therewith;
(e) deliver and receive securities in accordance with instructions
from the Advisor;
(f) make investments of Cash Collateral in accordance with
instructions of the Advisor;
(g) take such action upon termination of a loan as may be directed
by the Advisor; and
(h) within a reasonable time after learning of a default, give
notice thereof to the Advisor, and thereafter take such
actions, if any, as may be specified by the Advisor.
The Advisor shall perform the following acts in connection with loans of
securities hereunder:
(a) select Borrowers with whom loans of securities may be made
hereunder;
- 3 -
<PAGE> 4
(b) negotiate the terms of the loans;
(c) invest Cash Collateral in accordance with Section 8 hereof;
(d) prepare each business day a mark-to-market valuation of the
then fair market value of the loaned securities, including
income accrued but unpaid thereon and instruct the
Subcustodian to receive and release Collateral as provided in
the applicable Loan Agreement;
(e) within a reasonable time after learning of a default, give
notice thereof to the Lender, and thereafter take such
actions, if any, as may be specified in written instructions
actually received from a person believed by the Advisor to be
an Authorized Person of the Lender. In the absence of
instructions from the Lender to the Advisor, Advisor is
authorized, without notice to Lender, to exercise such rights
of Lender and to pursue such available remedies of Lender
under the appropriate Loan Agreement as it deems appropriate;
provided, however, nothing herein shall require Advisor or the
Subcustodian to expend their own funds to exercise such rights
or pursue such remedies; and
(f) take such action upon termination of a loan as may be required
by the Loan Agreement.
Section 8. COLLATERAL.
(a) In connection with loans of securities made on behalf of the Lender
that are secured by collateral other than letters of credit, the Advisor agrees
to limit collateral accepted and investments of cash collateral to those
securities in which the Fund of the Lender owning the loaned securities could
invest and, subject to this requirement, the Lender authorizes the Advisor: (i)
to accept collateral of the types which are designated on EXHIBIT D with such
changes as recommended from time to time by the Advisor with the approval of the
Lender (the "Collateral"); and (ii) to invest cash received as collateral for a
loan of securities in any of the types of investments specified on EXHIBIT D as
modified from time to time. Where a loan of securities is to be collateralized
by a letter of credit, the Advisor shall instruct the Subcustodian to accept
only an irrevocable letter of credit that contains an immediate draw-down
capability from a financial institution listed on the Advisor's Bank Approved
List(s), a copy of which is attached hereto as EXHIBIT F, with such additions
and deletions as are approved by the Advisor. The Lender hereby authorizes the
Advisor to purchase or sell investments of Cash Collateral to or from other
accounts advised by the Advisor or held by its affiliates.
(b) All uncertificated U.S. government or agency securities, and any
other securities received by the Subcustodian as Collateral in connection with
any transactions involving Cash Collateral (as defined below), shall be
segregated by a separate recordation hereunder on the books of the Subcustodian,
and may be held as the Subcustodian may determine in any form or manner in which
the Subcustodian is permitted to hold securities including, without limitation,
by depositing the same with a subcustodian or agent as have been approved by the
Lender or in the Federal Reserve/Treasury Book-Entry System (the "Book-Entry
System") or the Depository Trust Company (the "Depository"), or their respective
successors or nominees. Subcustodian is hereby authorized to enter into such
agreements as are necessary to appoint such agents, subcustodians, and
Depositories.
(c) All money received as, or with respect to, Collateral, including
money received with respect to investment of the same, or upon the maturity,
sale, or liquidation of any such investments ("Cash Collateral"), may, in the
Advisor's sole discretion, be invested and reinvested in the types of
investments listed in EXHIBIT D as modified from time to time.
(d) Notwithstanding the foregoing, or any other provision contained in
this Agreement, the Advisor shall at all times have: (i) the right to cause the
Subcustodian to hold in the Collateral Account (as defined in section 10) a
portion of the Cash Collateral uninvested without any obligation to pay interest
thereon whenever the Advisor, in its sole discretion, deems it advisable,
provided the Advisor uses its best efforts to minimize such amount, and (ii)
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<PAGE> 5
the absolute right, without obtaining any approval of the Lender, to liquidate
any investment or reinvestment and cause the net proceeds to be credited to the
Account.
(e) The Subcustodian shall maintain the notifications required by
applicable law with respect to securities transactions involving Cash Collateral
and shall furnish monthly activity statements. The Subcustodian shall comply
with all applicable legal requirements regarding the custody of the Lender's
securities under the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder including, if applicable, Rule 17f-2.
(f) The Subcustodian shall execute, as agent for the Lender, any
certificates of ownership, declarations or other certificates required under the
tax laws or pursuant to any other law or governmental regulation now or
hereafter in effect with respect to securities held as Collateral. The
Subcustodian shall, in addition, supply any information regarding Collateral
transactions required by any applicable law or governmental regulation without
first giving notice to the Lender or the Advisor.
(g) The Advisor shall take such actions with respect to the Collateral
as are required from time to time pursuant to any Loan Agreement.
(h) All investments of Cash Collateral made in accordance with this
Agreement shall be for the account and risk of the Lender. To the extent that
any loss arising out of such investments of Cash Collateral results in a
deficiency in the amount of Cash Collateral available for return to a Borrower
pursuant to the Loan Agreement, the Lender agrees to pay the Subcustodian on
demand cash in an amount equal to such deficiency. In addition, the Subcustodian
shall be entitled to charge the Lender's accounts for such deficiency in
accordance with Section 10 of this Agreement.
(i) All Collateral and securities or other property acquired through
the investment of Cash Collateral shall be controlled by, and subject to the
instructions of, the Advisor; provided, however, that the Advisor shall comply
with any instructions of the Lender with respect to the same.
Section 9. SUBCUSTODIAN'S FEES. The Lender shall in connection with
each loan hereunder pay to the Subcustodian the fee (the "Subcustodian's Fee")
as specified on EXHIBIT E, which Subcustodian's Fee shall accrue daily.
Section 10. THE COLLATERAL ACCOUNT. The Advisor and the Subcustodian
shall act as follows with respect to the account in which the Subcustodian holds
Collateral on behalf of the Lender (the "Collateral Account"):
(a) The Subcustodian shall monthly: (i) credit the Collateral Account
with all amounts, if any, paid by a Borrower in connection with a loan
collateralized in whole or in part with Collateral other than Cash Collateral;
(ii) credit the Collateral Account with the earnings, if any, arising from the
investment of Cash Collateral; (iii) debit the Collateral Account by an amount
equal to the amounts to be paid to the Borrower pursuant to the Loan Agreement;
and (iv) debit the Collateral Account in an amount equal to the accrued
Subcustodian's Fee described in Section 9 hereof;
(b) Whenever the Loan Agreement requires a return of Cash Collateral,
the Subcustodian shall debit the Collateral Account by the amount so returned;
(c) In the event debits to the Collateral Account pursuant to the
foregoing subsections 10(a) and 10(b) produce a deficit therein, the
Subcustodian shall sell or otherwise liquidate investments made with Cash
Collateral and credit the net proceeds of such sale or liquidation to satisfy
the deficit. In the event the foregoing does not eliminate the deficit, the
Subcustodian shall have the right to charge the deficiency to any other account
or accounts
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<PAGE> 6
maintained by the Lender with the Subcustodian; provided, however, that the
Subcustodian shall not have the right to charge any accounts maintained for one
Fund (as defined in section 1 hereof) for the obligations of another Fund.
(d) If the Subcustodian, in its sole discretion, advances funds on
behalf of the Lender in order to eliminate a deficiency created under the
foregoing subsections 10(a), 10(b), or 10(c), the Subcustodian shall notify the
Advisor. Upon receipt of such notice by the Advisor, the Lender agrees to repay
the Subcustodian upon demand the amount of any advance described herein plus
accrued interest at a rate per annum (based on a 360-day year for the actual
number of days involved) not to exceed the fed funds rate as publicly announced
to be in effect from time to time, such rate to be adjusted on the effective
date of any change in the fed funds rate.
(e) Except with respect to amounts representing the crediting of a Loan
Fee as defined in the Loan Agreement, if any, paid by a Borrower, money from
time to time held in the Collateral Account shall be controlled by, and subject
to the instructions of, the Advisor; provided, however, that the Advisor shall
comply with any instructions of the Lender with respect to the same.
Section 11. RIGHTS OF BORROWERS WITH RESPECT TO LOANED SECURITIES.
Until a loan is terminated in accordance with Section 6, the Borrower shall
exercise all of the incidents of ownership of the loaned securities, including
the right to transfer the loaned securities to others; provided, however, that
the Lender shall be entitled to receive distributions, dividends, and other
payments made on or in connection with the loaned securities to the extent
provided and in accordance with the terms of the applicable Loan Agreement. The
Lender hereby expressly waives the right to vote any securities that are subject
to a loan.
Section 12. RESPONSIBILITY. The Advisor and the Subcustodian undertake
to perform such duties and only such duties as are specifically set forth in
this Agreement. The Advisor and the Subcustodian shall not be liable for any
loss or damage, including counsel fees and court costs, whether or not resulting
from their acts or omissions to act hereunder or otherwise, unless the loss or
damage arises out of the Advisor's or the Subcustodian's own negligence. Except
for any liability, loss, or expense arising from or connected with the Advisor's
or the Subcustodian's own negligence, the Lender agrees to reimburse and hold
the Advisor and the Subcustodian harmless from and against any liability, loss
and expense, including counsel fees and expenses and court costs, arising in
connection with this Agreement or any Loan Agreement or arising from or
connected with claims of any third parties, including any Borrower, from and
against all taxes and other governmental charges, and from and against any
out-of-pocket or incidental expenses. The Subcustodian may charge any amounts to
which it or the Advisor is entitled hereunder against the Account. Without
limiting the generality of the foregoing, the Lender agrees: (i) that the
Advisor and the Subcustodian shall not be responsible for any statements,
representations, or warranties which any Borrower makes in connection with any
securities loans hereunder, if reasonably relied upon in good faith, or for the
performance by any Borrower of the terms of the Loan Agreement, or any agreement
related thereto; (ii) that the Advisor and the Subcustodian shall be fully
protected in acting in accordance with the oral or written instructions of any
person reasonably believed by them to be an Authorized Person; (iii) that in the
event of a default by a Borrower under the Loan Agreement, the Advisor and the
Subcustodian shall be fully protected in acting in accordance with this
Agreement; and (iv) that the Advisor and the Subcustodian shall not be under any
duty or obligation to advance or expend their own funds to take action to effect
payment by a Borrower of any amounts owed by the Borrower pursuant to the Loan
Agreement, provided the Subcustodian timely advises the Advisor of the
non-payment by the Borrower of any such amount. The indemnification provided to
Advisor and the Subcustodian hereunder shall survive termination of this
Agreement. The Lender acknowledges and agrees that all investments of Cash
Collateral shall be for the account of the Lender and any reinvestment risk
associated with Cash Collateral shall be borne solely by the Lender and that
neither the Advisor nor the Subcustodian shall provide indemnification to the
Lender in connection with this Agreement or the Securities Lending Program.
Section 13. SEVERABILITY. If any provisions of this Agreement shall be
held or made invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be deemed to be severable.
- 6 -
<PAGE> 7
Section 14. EXCLUSIVITY. The Lender agrees that it shall not enter into
any other securities loan agreement with any other bank or securities
broker/dealer whereby the other bank or broker/dealer is permitted to make loans
on behalf of the Lender of securities held by the Subcustodian as the Lender's
custodian.
Section 15. CONFLICTS OF INTEREST AND DISCLOSURE. NOTHING IN THIS
AGREEMENT SHALL PRECLUDE THE ADVISOR, THE SUBCUSTODIAN, OR THEIR AFFILIATES FROM
ENTERING INTO SEPARATE ARRANGEMENTS OR AGREEMENTS WITH BORROWERS INVOLVING THE
PROVISION OF PRODUCTS OR SERVICES INCLUDING, WITHOUT LIMITATION, DEPOSITS,
LOANS, OR BROKERAGE SERVICES. THE ADVISOR AND THE SUBCUSTODIAN HEREBY DISCLOSE
THAT THEY OR THEIR AFFILIATES MAY RECEIVE COMPENSATION OR REMUNERATION FROM THE
BORROWERS IN CONNECTION WITH SUCH SEPARATE ARRANGEMENTS OR AGREEMENTS,
INCLUDING, WITHOUT LIMITATION, VOLUME DISCOUNTS AND DISCOUNTED PERIODICAL
SUBSCRIPTIONS. THE ADVISOR AND THE SUBCUSTODIAN FURTHER DISCLOSE THAT
INVESTMENTS OF CASH COLLATERAL MADE PURSUANT TO SECTION 8 MAY HAVE THEIR OWN
FEES AND EXPENSES WHICH MAY REDUCE THE EARNINGS PAYABLE TO LENDER PURSUANT TO
THIS AGREEMENT.
Section 16. STATEMENTS. The Subcustodian will at least monthly furnish
the Lender with statements relating to loans hereunder, and other information
reasonably requested by the Lender.
Section 17. NOTICES, ASSIGNMENTS, AMENDMENT, CONSTRUCTION.
(a) Any notice, instruction, other instrument or writing, authorized or
required to be given hereunder to the Subcustodian shall be sufficiently given
only if and when actually received by the Subcustodian, including receipt by
telefax, at its offices at:
Bank One Trust Company, NA
235 West Schrock Road
Columbus, OH 43271-1075
Attn: Securities Lending
or at such other place as the Subcustodian may, from time to time, designate in
writing and, except as expressly provided to the contrary herein, signed by an
Authorized Person; and any notice, other instrument, writing, report or advice
authorized or required by the Agreement to be given to the Lender shall be
sufficiently given only if and when actually received by the Lender, including
receipt by telefax, at its offices at:
The One Group Investment Trust
c/o Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
or at such other place as the Lender may from time to time designate in writing;
and any notice, instruction, other instrument or writing authorized or required
by the Agreement to be given to the Advisor shall be sufficiently given only if
and when actually received by the Advisor, including receipt by telefax, at its
offices at:
Banc One Investment Advisors Corporation
1111 Polaris Parkway
Columbus, Ohio 43240
Attn.: Steven E. Cutler
or at such other place as the Advisor may from time to time designate in
writing.
- 7 -
<PAGE> 8
(b) This Agreement shall not be assignable by the parties hereto
without the written consent of the other parties. This Agreement shall be
binding upon each party and its respective successors and permitted assigns;
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the transactions contemplated hereby and supersedes all
prior discussions, understandings, agreements and negotiations between the
parties hereto with respect to such transactions. This Agreement shall not be
amended or modified in any manner except by a written agreement executed by the
parties hereto with the same formality as this Agreement;
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio;
(e) The headings in this Agreement are for convenience only and shall
not be used in construing this Agreement; and
(f) Either the Lender or the Advisor may terminate this Agreement by
delivering to the other party a written notice specifying a date of termination,
not earlier than the date of receipt of such notice by the other party, provided
that this Agreement shall continue in full force and effect with respect to all
loans of securities in effect on the date of termination.
Section 18. CUSTODY. Lender acknowledges that the Advisor is only
performing the securities lending services described in this Agreement and that
the Advisor retains no custody or possession of the securities, assets, and/or
cash in the Account and performs no depository services with respect to the
Account.
Section 19. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach of the same, shall be settled through
consultation and negotiation in good faith and a spirit of mutual cooperation.
However, if those attempts fail, the parties agree that any misunderstandings or
disputes arising from this Agreement shall be decided by arbitration which shall
be conducted, upon request by either party, before three (3) arbitrators (unless
both parties agree upon one (1) arbitrator), designated by the American
Arbitration Association (the "AAA"), in accordance with the terms of the
Commercial Arbitration Rules of the AAA, and, to the maximum extent applicable,
the United States Arbitration Act (Title 9 of the United States Code), or if
such Act is not applicable, any substantially equivalent state law. The parties
further agree that the arbitrator(s) will decide which party must bear the
expenses of the arbitration proceedings.
Section 20. SIPA NOTICE. THE PROVISIONS OF THE SECURITIES INVESTOR
PROTECTION ACT OF 1970 MAY NOT PROTECT THE LENDER WITH RESPECT TO LOANS
HEREUNDER AND, THEREFORE, THE COLLATERAL DELIVERED TO THE SUBCUSTODIAN AS
SUBCUSTODIAN FOR THE LENDER MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF A
BORROWER'S OBLIGATION IN THE EVENT SUCH BORROWER FAILS TO RETURN THE LOANED
SECURITIES.
SIGNATURE PAGE FOLLOWS
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, the Lender, the Advisor, and the Subcustodian have caused
this Agreement to be duly executed as of the date first above written.
The One Group Investment Trust
("Lender")
By: /s/ James F. Laird, Jr.
---------------------------------------------
James F. Laird, Jr., President
Banc One Investment Advisors Corporation
("Advisor")
By: /s/ Mark A. Beeson
---------------------------------------------
Mark A. Beeson, Senior Managing Director
Bank One Trust Company, N.A.
("Subcustodian")
By: /s/ Steven E. Cutler
---------------------------------------------
Steven E. Cutler, Officer
LIST OF EXHIBITS
Exhibit A -- List of Funds
Exhibit B -- Loan Agreement
Exhibit C -- List of Borrowers
Exhibit D -- Types of Collateral
Exhibit E -- Subscustodian's Fees
Exhibit F -- Approved Letter of Credit Banks
- 9 -
<PAGE> 10
EXHIBIT A
LIST OF FUNDS
JUNE 15, 1998
Government Bond Fund
Asset Allocation Fund
Growth Opportunities Fund
Large Company Growth Fund
Equity Index Fund
The One Group Investment Trust
("Lender")
By: /s/ James F. Laird, Jr.
---------------------------------------------
James F. Laird, Jr., President
Banc One Investment Advisors Corporation
("Advisor")
By: /s/ Mark A. Beeson
---------------------------------------------
Mark A. Beeson, Senior Managing Director
Bank One Trust Company, N.A.
("Subcustodian")
By: /s/ Steven E. Cutler
---------------------------------------------
Steven E. Cutler, Officer
- 10 -
<PAGE> 11
EXHIBIT B
Public Securities Association
40 Broad Street. New York. NY 10004-2373
Telephone (212) 809-7000
MASTER SECURITIES LOAN AGREEMENT
Dated as of
-----------------
Between:
Bank One Trust Company, NA
- --------------------------------------------------
and
- ---------------------
This Agreement sets forth the terms and conditions under which one party
("Lender") may, from time to time, lend to the other party ("Borrower") certain
securities against a pledge of collateral. Capitalized terms not otherwise
defined herein shall have the meanings provided in Section 26.
The parties hereto agree as follows:
1. LOANS OF SECURITIES.
1.1 Subject to the terms and conditions of this Agreement, Borrower or
Lender may, from time to time, orally seek to initiate a transaction in which
Lender will lend securities to Borrower. Borrower and Lender shall agree orally
on the terms of each Loan, including the issuer of the securities, the amount of
securities to be lent, the basis of compensation, and the amount of Collateral
to be transferred by Borrower, which terms may be amended during the Loan.
1.2 Notwithstanding any other provision in this Agreement regarding when
a Loan commences, a Loan hereunder shall not occur until the Loaned Securities
and the Collateral therefor have been transferred in accordance with Section 16.
1.3 WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER. IT IS
UNDERSTOOD AND AGREED THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION
ACT OF 1970 MAY NOT PROTECT LENDER WITH RESPECT TO LOANED SECURITIES HEREUNDER
AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY CONSTITUTE THE ONLY
SOURCE OF SATISFACTION OF
- 1 -
<PAGE> 12
BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE
LOANED SECURITIES.
2. TRANSFER OF LOANED SECURITIES.
2.1 Unless otherwise agreed, Lender shall transfer Loaned Securities to
Borrower hereunder on or before the Cutoff Time on the date agreed to by
Borrower and Lender for the commencement of the Loan.
2.2 Unless otherwise agreed, Borrower shall provide Lender, in each Loan
in which Lender is a Customer, with a schedule and receipt listing the Loaned
Securities. Such schedule and receipt may consist of (a) a schedule provided to
Borrower by Lender and executed and returned by Borrower when the Loaned
Securities are received, (b) in the case of securities transferred through a
Clearing Organization which provides transferors with a notice evidencing such
transfer, such notice, or (c) a confirmation or other document provided to
Lender by Borrower.
3. COLLATERAL.
3.1 Unless otherwise agreed, Borrower shall, prior to or concurrently
with the transfer of the Loaned Securities to Borrower, but in no case later
than the close of business on the day of such transfer, transfer to Lender
Collateral with a market value at least equal to a percentage of the market
value of the Loaned Securities agreed to by Borrower and Lender (which shall be
not less than 100% of the market value of the Loaned Securities) (the "Margin
Percentage").
3.2 The Collateral transferred by Borrower to Lender, as adjusted
pursuant to Section 8, shall be security for Borrower's obligations in respect
of such Loan and for any other obligations of Borrower to Lender. Borrower
hereby pledges with, assigns to, and grants Lender a continuing first security
interest in, and a lien upon, the Collateral, which shall attach upon the
transfer of the Loaned Securities by Lender to Borrower and which shall cease
upon the transfer of the Loaned Securities by Borrower to Lender. In addition to
the rights and remedies given to Lender hereunder, Lender shall have all the
rights and remedies of a secured party under the New York Uniform Commercial
Code. It is understood that Lender may use or invest the Collateral, if such
consists of cash. at its own risk, but that (unless Lender is a Broker-Dealer)
Lender shall, during the term of any Loan hereunder, segregate Collateral from
all securities or other assets in its possession. Lender may pledge, repledge,
hypothecate, rehypothecate, lend, relend, sell or otherwise transfer the
Collateral, or re-register Collateral evidenced by physical certificates in any
name other than Borrower's, only (a) if Lender is Broker-Dealer or (b) in the
event of a Default by Borrower. Segregation of Collateral may be accomplished by
appropriate identification on the books and records of Lender if it is a
"financial intermediary" or a "clearing corporation" within the meaning of the
New York Uniform Commercial Code.
3.3 Except as otherwise provided herein, upon transfer to Lender of the
Loaned Securities on the day a Loan is terminated pursuant to Section 5, Lender
shall be obligated to transfer the Collateral (as adjusted pursuant to Section
8) to Borrower no later than the Cutoff Time on such day
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<PAGE> 13
or, if such day is not a day on which a transfer of such Collateral may be
effected under Section 16, the next day on which such a transfer may be
effected.
3.4 If Borrower transfers Collateral to Lender, as provided in Section
3.1, and Lender does not transfer the Loaned Securities to Borrower, Borrower
shall have the absolute right to the return of the Collateral: and if Lender
transfers Loaned Securities to Borrower and Borrower does not transfer
Collateral to Lender as provided in Section 3.1, Lender shall have the absolute
right to the return of the Loaned Securities.
3.5 Borrower may, upon reasonable notice to Lender (taking into account
all relevant factors, including industry practice, the type of Collateral to be
substituted and the applicable method of transfer), substitute Collateral for
Collateral securing any Loan or Loans; PROVIDED, HOWEVER, that such substituted
Collateral shall (a) consist only of cash, securities or other property that
Borrower and Lender agreed would be acceptable Collateral prior to the Loan or
Loans and (b) have a market value such that the aggregate market value of such
substituted Collateral, together with all other Collateral for Loans in which
the party substituting such Collateral is acting as Borrower, shall equal or
exceed the agreed upon Margin Percentage of the market value of the Loaned
Securities. Prior to the expiration of any letter of credit supporting
Borrower's obligations hereunder, Borrower shall, no later than the Cutoff Time
on the date such letter of credit expires, obtain an extension of the expiration
of such letter of credit or replace such letter of credit by providing Lender
with a substitute letter of credit in an amount at least equal to the amount of
the letter of credit for which it is substituted.
3.6 Lender acknowledges that, in connection with Loans of Government
Securities and as otherwise permitted by applicable law, some securities
provided by Borrower as Collateral under this Agreement may not be guaranteed by
the United States.
4. FEES FOR LOAN.
4.1 Unless otherwise agreed, (a) Borrower agrees to pay Lender a loan fee
(a "Loan Fee"), computed daily on each Loan to the extent such Loan is
secured by Collateral other than cash, based on the aggregate par value
(in the case of Loans of Government Securities) or the aggregate market
value (in the case of all other Loans) of the Loaned Securities on the
day for which such Loan Fee is being computed, and (b) Lender agrees to
pay Borrower a fee or rebate (a "Cash Collateral Fee") on Collateral
consisting of cash, computed daily based on the amount of cash held by
Lender as Collateral, in the case of each of the Loan Fee and the Cash
Collateral Fee at such rates as Borrower and Lender may agree. Except as
Borrower and Lender may otherwise agree (in the event that cash
Collateral is transferred by clearing house funds or otherwise). Loan
Fees shall accrue from and including the date on which the Loaned
Securities are transferred to Borrower to, but excluding, the date on
which such Loaned Securities are returned to Lender, and Cash Collateral
Fees shall accrue from and including the date on which the cash
Collateral is transferred to Lender to, but excluding, the date on which
such cash Collateral is returned to Borrower.
- 3 -
<PAGE> 14
4.2 Unless otherwise agreed, any Loan Fee or Cash Collateral Fee payable
hereunder shall be payable:
(a) in the case of any Loan of securities other than Government
Securities, upon the earlier of (i) the fifteenth day of the month
following the calendar month in which such fee was incurred or
(ii) the termination of all Loans hereunder (or, if a transfer of
cash in accordance with Section 16 may not be effected on such
fifteenth day or the day of such termination. as the case may be,
the next day on which such a transfer may be effected); and
(b) in the case of any Loan of Government Securities, upon the
termination of such Loan.
Notwithstanding the foregoing, all Loan Fees shall be payable by Borrower
immediately in the event of a Default hereunder by Borrower and all Cash
Collateral Fees shall be payable immediately by Lender in the event of a Default
by Lender.
5. TERMINATION OF THE LOAN. Unless otherwise agreed, (a) Borrower may terminate
a Loan on any Business Day by giving notice to Lender and transferring the
Loaned Securities to Lender before the Cutoff Time on such Business Day, and (b)
Lender may terminate a Loan on a termination date established by notice given to
Borrower prior to the close of business on a Business Day. The termination date
established by a termination notice given by Lender to Borrower shall be a date
no earlier than the standard settlement date for trades of the Loaned Securities
entered into on the date of such notice, which date shall, unless Borrower and
Lender agree to the contrary, be (i) in the case of Government Securities, the
next Business Day following such notice and (ii) in the case of all other
securities, the fifth Business Day following such notice. Unless otherwise
agreed, Borrower shall, on or before the Cutoff Time on the termination date of
a Loan, transfer the Loaned Securities to Lender; PROVIDED, HOWEVER, that upon
such transfer by Borrower, Lender shall transfer the Collateral (as adjusted
pursuant to Section 8) to Borrower in accordance with Section 3.3.
6. RIGHTS OF BORROWER IN RESPECT OF THE LOANED SECURITIES. Except as set forth
in Sections 7.1 and 7.2 and as otherwise agreed by Borrower and Lender, until
Loaned Securities are required to be redelivered to Lender upon termination of a
Loan hereunder, Borrower shall have all of the incidents of ownership of the
Loaned Securities, including the right to transfer the Loaned Securities to
others. Lender hereby waives the right to vote, or to provide any consent or to
take any similar action with respect to, the Loaned Securities in the event that
the record date or deadline for such vote, consent or other action falls during
the term of the Loan.
7. DIVIDENDS, DISTRIBUTIONS, ETC.
7.1 Lender shall be entitled to receive all distributions made on or in
respect of the Loaned Securities which are not otherwise received by Lender, to
the full extent it would be so entitled if the Loaned Securities had not been
lent to Borrower, including, but not limited to: (a) cash and all other
property, (b) stock dividends, (c) securities received as a result of split ups
of the Loaned Securities
- 4 -
<PAGE> 15
and distributions in respect thereof, (d) interest payments. and (e) all rights
to purchase additional securities.
7.2 Any cash distributions made on or in respect of the Loaned
Securities, which Lender is entitled to receive pursuant to Section 7.1, shall
be paid by the transfer of cash to Lender by Borrower, on the date any such
distribution is paid. in an amount equal to such cash distribution, so long as
Lender is not in Default at the time of such payment. Non-cash distributions
received by Borrower shall be added to the Loaned Securities on the date of
distribution and shall be considered such for all purposes, except that if the
Loan has terminated, Borrower shall forthwith transfer the same to Lender.
7.3 Borrower shall be entitled to receive all cash distributions made on
or in respect of non-cash Collateral which are not otherwise received by
Borrower, to the full extent it would be so entitled if the Collateral had not
been transferred to Lender. Any distributions of cash made on or in respect of
such Collateral which Borrower is entitled to receive hereunder shall be paid by
the transfer of cash to Borrower by Lender, on the date any such distribution is
paid, in an amount equal to such cash distribution, so long as Borrower is not
in Default at the time of such payment.
7.4 (a) Unless otherwise agreed, if (i) Borrower is required to make a
payment (a "Borrower Payment") with respect to cash distributions on Loaned
Securities under Sections 7.1 and 7.2 ("Securities Distributions"), or (ii)
Lender is required to make a payment (a "Lender Payment") with respect to cash
distributions on Collateral under Section 7.3 ("Collateral Distributions"), and
(iii) Borrower or Lender, as the case may be ("Payor"), shall be required by law
to collect any withholding or other tax, duty, fee, levy or charge required to
be deducted or withheld from such Borrower Payment or Lender Payment ("Tax"),
then Payor shall (subject to subsections (b) and (c) below), pay such additional
amounts as may be necessary in order that the net amount of the Borrower Payment
or Lender Payment received by the Lender or Borrower, as the case may be
("Payee"), after payment of such Tax equals the net amount of the Securities
Distribution or Collateral Distribution that would have been received if such
Securities Distribution or Collateral Distribution had been paid directly to the
Payee.
(b) No additional amounts shall be payable to a Payee under subsection
(a) above to the extent that Tax would have been imposed on a Securities
Distribution or Collateral Distribution paid directly to the Payee.
(c) No additional amounts shall be payable to a Payee under subsection
(a) above to the extent that such Payee is entitled to an exemption from. or
reduction in the rate of, Tax on a Borrower Payment or Lender Payment subject to
the provision of a certificate or other documentation, but has failed timely to
provide such certificate or other documentation.
(d) Each party hereto shall be deemed to represent that, as of the
commencement of any Loan hereunder, no Tax would be imposed on any cash
distribution paid to it with respect to (i) Loaned Securities subject to a Loan
in which it is acting as Lender or (ii) Collateral for any Loan in which it is
acting as Borrower, unless such party has given notice to the contrary to the
other party hereto
- 5 -
<PAGE> 16
(which notice shall specify the rate at which such Tax would be imposed). Each
party agrees to notify the other of any change that occurs during the term of a
Loan in the rate of any Tax that would be imposed on any such cash distributions
payable to it.
7.5 To the extent that, under the provisions of Sections 7.1 through 7.4
(a) a transfer of cash or other property by Borrower would give rise to a Margin
Excess (as defined in Section 8.3 below) or (b) a transfer of cash or other
property by Lender would give rise to a Margin Deficit (as defined in Section
8.2 below), Borrower or Lender (as the case may be) shall not be obligated to
make such transfer of cash or other property in accordance with such Sections,
but shall in lieu of such transfer immediately credit the amounts that would
have been transferable under such Sections to the account of Lender or Borrower
(as the case may be).
8. MARK TO MARKET.
8.1 Borrower shall daily mark to market any Loan hereunder and in the
event that at the close of trading on any Business Day the market value of the
Collateral for any Loan to Borrower shall be less than 100% of the market value
of all the outstanding Loaned Securities subject to such Loan. Borrower shall
transfer additional Collateral no later than the close of the next Business Day
so that the market value of such additional Collateral, when added to the market
value of the other Collateral for such Loan, shall equal 100% of the market
value of the Loaned Securities.
8.2 In addition to any rights of Lender under Section 8.1, in the event
that at the close of trading on any Business Day the aggregate market value of
all Collateral for Loans by Lender shall be less than the Margin Percentage of
the market value of all the outstanding Loaned Securities subject to such Loans
(a "Margin Deficit"), Lender may, by notice to Borrower, demand that Borrower
transfer to Lender additional Collateral so that the market value of such
additional Collateral, when added to the market value of all other Collateral
for such Loans, shall equal or exceed the agreed upon Margin Percentage of the
market value of the Loaned Securities. Unless otherwise agreed. such transfer is
to be made no later than the close of the next Business Day following the day of
Lender's notice to Borrower.
8.3 In the event that at the close of trading on any Business Day the
market value of all Collateral for Loans to Borrower shall be greater than the
Margin Percentage of the market value of all the outstanding Loaned Securities
subject to such Loans (a "Margin Excess"), Borrower may, by notice to Lender,
demand that Lender transfer to Borrower such amount of the Collateral selected
by Borrower so that the market value of the Collateral for such Loans, after
deduction of such amounts, shall thereupon not exceed the Margin Percentage of
the market value of the Loaned Securities. Unless otherwise agreed, such
transfer is to be made no later than the close of the next Business Day
following the day of Borrower's notice to Lender.
8.4 Borrower and Lender may agree, with respect to one or more Loans
hereunder, to mark the values to market pursuant to Sections 8.2 and 8.3 by
separately valuing the Loaned Securities lent and the Collateral given in
respect thereof on a Loan-by-Loan basis.
- 6 -
<PAGE> 17
8.5 Borrower and Lender may agree, with respect to any or all Loans
hereunder, that the respective rights of Lender and Borrower under Sections 8.2
and 8.3 may be exercise only where a Margin Excess or Margin Deficit exceeds a
specified dollar amount or a specified percentage of the market value of the
Loaned Securities under such Loans (which amount or percentage shall be agreed
to by Borrower and Lender prior to entering into any such Loans).
9. REPRESENTATIONS. Each party to this Agreement hereby makes the following
representations and warranties, which shall continue during the term of any Loan
hereunder:
9.1 Each party hereto represents and warrants that (a) it has the power
to execute and deliver this Agreement, to enter into the Loans contemplated
hereby and to perform its obligations hereunder; (b) it has taken all necessary
action to authorize such execution, delivery and performance; and (c) this
Agreement constitutes a legal, valid and binding obligation enforceable against
in accordance with its terms.
9.2 Each party hereto represents and warrants that the execution,
delivery and performance by it of this Agreement and each Loan hereunder will at
all times comply with all applicable laws and regulations including those of
applicable regulatory and self-regulatory organizations.
9.3 Each party hereto represents and warrants that it has not relied on
the other for any tax or accounting advice concerning this Agreement and that it
has made its own determination as to the tax and accounting treatment of any
Loan and any dividends, remuneration or other funds received hereunder.
9.4 Borrower represents and warrants that it is acting for its own
account. Lender represents and warrants that it is acting for its own account
unless it expressly specifies otherwise in writing and complies with Section
10.3(b).
9.5 Borrower represents and warrants that (a) it has, or will have at the
time of transfer of any Collateral, the right to grant a first security interest
therein subject to the terms and conditions hereof, and (b) it (or the person to
whom it relends the Loaned Securities) is borrowing or will borrow the Loaned
Securities (except for Loaned Securities that quality as "exempted securities"
under Regulation T of the Board of Governors of the Federal Reserve System) for
the purpose of making delivery of such securities in the case of short sales,
failure to receive securities required to be delivered, or as otherwise
permitted pursuant to Regulation T as in effect from time to time.
9.6 Lender represents and warrants that it has, or will have at the time
of transfer of any Loaned Securities, the right to transfer the Loaned
Securities subject to the terms and conditions hereof.
10. COVENANTS.
10.1 Each party hereto agrees and acknowledges that (a) each Loan
hereunder is a "securities contract," as such term is defined in Section 741(7)
of Title 11 of the United States Code (the
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<PAGE> 18
"Bankruptcy Code"), (b) each and every transfer of funds, securities and other
property under this Agreement and each Loan hereunder is a "settlement payment"
or a "margin payment," as such terms are used in Sections 362(b)(6) and 546(e)
of the Bankruptcy Code, and (c) the rights given to Borrower and Lender
hereunder upon a Default by the other constitute the right to cause the
liquidation of a securities contract and the right to set off mutual debts and
claims in connection with a securities contract, as such terms are used in
Sections 555 and 362(b)(6) of the Bankruptcy Code. Each party hereto further
agrees and acknowledges that if a party hereto is an "insured depository
institution," as such term is defined in the Federal Deposit Insurance Act, as
amended ("FDIA"), then each Loan hereunder is a "securities contract" and
"qualified financial contract," as such terms are defined in the FDIA and any
rules, orders or policy statements thereunder.
10.2 Borrower agrees to be liable as principal with respect to its
obligations hereunder.
10.3 Lender agrees either (a) to be liable as principal with respect to
its obligations hereunder or (b) to execute and comply fully with the provisions
of Annex I (the terms and conditions of which Annex are incorporated herein and
made a part hereof).
10.4 Promptly upon (and in any event within seven (7) Business Days
after) demand by Lender, Borrower shall furnish Lender with Borrower's most
recent publicly-available financial statements and any other financial
statements mutually agreed upon by Borrower and Lender. Unless otherwise agreed,
if Borrower is subject to the requirements of Rule 17a-5(c) under the Exchange
Act, it may satisfy the requirements of this Section by furnishing Lender with
its most recent statement required to be furnished to customers pursuant to such
Rule.
10.5 Except to the extent required by applicable law or regulation or as
otherwise agreed, Borrower and Lender agree that Loans hereunder shall in no
event be "exchange contracts" for purposes of the rules of any securities
exchange and that Loans hereunder shall not be governed by the buy-in or similar
rules of any such exchange, registered national securities or other
self-regulatory organization.
11. EVENTS OF DEFAULT. All Loans hereunder may, at the option of the
non-defaulting party exercised by notice to the defaulting party (which option
shall be deemed to have been exercised, even if no notice is given, immediately
upon the occurrence of an event specified in subsection (e) below), be
terminated immediately upon the occurrence of any one or more of the following
events (individually, a "Default"):
(a) if any Loaned Securities shall not be transferred to
Lender upon termination of the Loan as required by Section
5:
(b) if any Collateral shall not be transferred to Borrower
upon termination of the Loan as required by Sections 3.3
and 5:
(c) if either party shall fail to transfer Collateral as
required by Section 8;
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<PAGE> 19
(d) if either party (i) shall fail to transfer to the other
party amounts in respect of distributions required to be
transferred by Section 7, (ii) shall have received notice
of such failure from the non-defaulting party, and (iii)
shall not have cured such default by the Cutoff Time on
the next day after such notice on which a transfer of cash
may be effected in accordance with Section 16;
(e) if (i) either party shall commence as debtor any case or
proceeding under any bankruptcy, insolvency.
reorganization, liquidation. dissolution or similar law,
or seek the appointment of a receiver, conservator,
trustee, custodian or similar official for such party or
any substantial part of its property, (ii) any such case
or proceeding shall be commenced against either party, or
another shall seek such an appointment, or any application
shall be filed against either party for a protective
decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not
timely contested by such party, (B) results in the entry
of an order for relief, such an appointment, the issuance
of such a protective decree or the entry of an order
having a similar effect, or (C) is not dismissed within 15
days, (iii) either party shall make a general assignment
for the benefit of creditors, or (iv) either party shall
admit in writing its inability to pay its debts as they
become due;
(f) if either party shall have been suspended or expelled from
membership or participation in any national securities
exchange or registered national securities association of
which it is a member or other self-regulatory organization
to whose rules it is subject or if it is suspended from
dealing in securities by any federal or state government
agency thereof.
(g) if either party shall have its license, charter, or other
authorization necessary to conduct a material portion of
its business withdrawn, suspended or revoked by any
applicable federal or state government or agency thereof;
(h) if any representation made by either party in respect of
this Agreement or any Loan or Loans hereunder shall be
incorrect or untrue in any material respect during the
term of any Loan hereunder;
(i) if either party notifies the other, orally or in writing,
of its inability to or its intention not to perform its
obligations hereunder or otherwise disaffirms, rejects or
repudiates any of its obligations hereunder; or
(j) if either party (i) shall fail to perform any material
obligation under this Agreement not specifically set forth
in clauses (a) through (i) above, including but not
limited to the payment of fees as required by Section 4,
and the payment of transfer taxes as required by Section
14, (ii) shall have received notice of such failure from
the non-defaulting party and (iii) shall not have cured
such failure
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<PAGE> 20
by the Cutoff Time on the next day after such notice on
which a transfer of cash may be effected under Section 16.
12. LENDER'S REMEDIES. Upon the occurrence of a Default under Section 11
entitling Lender to terminate all Loans hereunder, Lender shall have the right
(without further notice to Borrower), in addition to any other remedies provided
herein or under applicable law, (a) to purchase a like amount of Loaned
Securities ("Replacement Securities") in the principal market for such
securities in a commercially reasonable manner, (b) to sell any Collateral in
the principal market for such Collateral in a commercially reasonable manner and
(c) to apply and set off the Collateral and any proceeds thereof (including any
amounts drawn under a letter of credit supporting any Loan) against the payment
of the purchase price for such Replacement Securities and any amounts due to
Lender under Sections 4, 7, 14 and 17. In the event Lender shall exercise such
rights, Borrower's obligation to return a like amount of the Loaned Securities
shall terminate. Lender may similarly apply the Collateral and any proceeds
thereof to any other obligation of Borrower under this Agreement, including
Borrower's obligations with respect to distributions paid to Borrower (and not
forwarded to Lender) in respect of Loaned Securities. In the event that (i) the
purchase price of Replacement Securities (plus all other amounts, if any, due to
Lender hereunder) exceeds (ii) the amount of the Collateral, Borrower shall be
liable to Lender for the amount of such excess together with interest thereon at
a rate equal to (A) in the case of purchases of Foreign Securities, LIBOR, (B)
in the case of purchases of any other securities (or other amounts, if any, due
to Lender hereunder), the Federal Funds Rate or (C) such other rate as may be
specified in Schedule B, in each case as such rate fluctuates from day to day,
from the date of such purchase until the date of payment of such excess. As
security for Borrower's obligation to pay such excess, Lender shall have, and
Borrower hereby grants, a security interest in any property of Borrower then
held by or for Lender and a right of setoff with respect to such property and
any other amount payable by Lender to Borrower. The purchase price of
Replacement Securities purchased under this Section 12 shall include, and the
proceeds of any sale of Collateral shall be determined after deduction of,
broker's fees and commissions and all other reasonable costs, fees and expenses
related to such purchase or sale (as the case may be). In the event Lender
exercises its rights under this Section 12, Lender may elect in its sole
discretion, in lieu of purchasing all or a portion of the Replacement Securities
or selling all or a portion of the Collateral, to be deemed to have made,
respectively, such purchase of Replacement Securities or sale of Collateral for
an amount equal to the price therefor on the date of such exercise obtained from
a generally recognized source or the most recent closing bid quotation from such
a source. Subject to Section 19, upon the satisfaction of all obligations
hereunder, any remaining Collateral shall be returned to Borrower.
13. BORROWER'S REMEDIES. Upon the occurrence of a Default under Section 11
entitling Borrower to terminate all Loans hereunder, Borrower shall have the
right (without further notice to Lender), in addition to any other remedies
provided herein or under applicable law, (a) to purchase a like amount of
Collateral ("Replacement Collateral") in the principal market for such
Collateral in a commercially reasonable manner, (b) to sell a like amount of the
Loaned Securities in the principal market for such securities in a commercially
reasonable manner and (c) to apply and set off the Loaned Securities and any
proceeds thereof against (i) the payment of the purchase price for such
Replacement Collateral (ii) Lender's obligation to return any cash or other
Collateral and (iii) any
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<PAGE> 21
amounts due to Borrower under Sections 4, 7 and 17. In such event, Borrower may
treat the Loaned Securities as its own and Lender's obligation to return a like
amount of the Collateral shall terminate; PROVIDED, HOWEVER, that Lender shall
immediately return any letters of credit supporting any Loan upon the exercise
or deemed exercise by Borrower of its termination rights under Section 11.
Borrower may similarly apply the Loaned Securities and any proceeds thereof to
any other obligation of Lender under this Agreement, including Lender's
obligations with respect to distributions paid to Lender (and not forwarded to
Borrower) in respect of Collateral. In the event that (i) the sales price
received from such Loaned Securities is less than (ii) the purchase price of
Replacement Collateral (plus the amount of any cash or other Collateral not
replaced by Borrower and all other amounts, if any, due to Borrower hereunder),
Lender shall be liable to Borrower for the amount of any such deficiency.
together with interest on such amounts at a rate equal to (A) in the case of
Collateral consisting of Foreign Securities, LIBOR, (B) in the case of
Collateral consisting of any other securities (or other amounts due, if any, to
Borrower hereunder), the Federal Funds Rate or (C) such other rate as may be
specified in Schedule B, in each case as such rate fluctuates from day to day,
from the date of such sale until the date of payment of such deficiency. As
security for Lender's obligation to pay such deficiency, Borrower shall have,
and Lender hereby grants, a security interest in any property of Lender then
held by or for Borrower and a right of setoff with respect to such property and
any other amount payable by Borrower to Lender. The purchase price of any
Replacement Collateral purchased under this Section 13 shall include, and the
proceeds of any sale of Loaned Securities shall be determined after deduction
of, broker's fees and commissions and all other reasonable costs, fees and
expenses related to such purchase or sale (as the case may be). In the event
Borrower exercises its rights under this Section 13, Borrower may elect in its
sole discretion. in lieu of purchasing all or a portion of the Replacement
Collateral or selling all or a portion of the Loaned Securities, to be deemed to
have made, respectively, such purchase of Replacement Collateral or sale of
Loaned Securities for an amount equal to the price therefor on the date of such
exercise obtained from a generally recognized source or the most recent closing
bid quotation from such a source. Subject to Section 19, upon the satisfaction
of all Lender's obligations hereunder, any remaining Loaned Securities (or
remaining cash proceeds thereof) shall be returned to Lender. Without limiting
the foregoing, the parties hereto agree that they intend the Loans hereunder to
be loans of securities. If, however, any Loan is deemed to be a loan of money by
Borrower to Lender, then Borrower shall have, and Lender shall be deemed to have
granted, a security interest in the Loaned Securities and the proceeds thereof.
14. TRANSFER TAXES. All transfer taxes with respect to the transfer of the
Loaned Securities by Lender to Borrower and by Borrower to Lender upon
termination of the Loan shall be paid by Borrower.
15. MARKET VALUE.
15.1 Unless otherwise agreed, if the principal market for the securities
to be valued is a national securities exchange in the United States, their
market value shall be determined by their last sale price on such exchange on
the preceding Business Day or, if there was no sale on that day, by the last
sale price on the next preceding Business Day on which there was a sale on such
exchange,
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<PAGE> 22
all as quoted on the Consolidated Tape or, if not quoted on the Consolidated
Tape, then as quoted by such exchange.
15.2 Except as provided in Section 15.3 or 15.4 or as otherwise agreed,
if the principal market for the securities to be valued is the over-the-counter
market, their market value shall be determined as follows. If the securities are
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), their market value shall be the closing sale price on NASDAQ
on the preceding Business Day or, if the securities are issues for which last
sale prices are not quoted on NASDAQ, the closing bid price on such day. If the
securities to be valued are not quoted on NASDAQ, their market value shall be
the highest bid quotation as quoted in any of The Wall Street Journal. the
National Quotation Bureau pink sheets, the Salomon Brothers quotation sheets,
quotations sheets of registered market makers and, if necessary, dealers'
telephone quotations on the preceding Business Day. In each case, if the
relevant quotation did not exist on such day, then the relevant quotation on the
next preceding Business Day in which there was such a quotation shall be the
market value.
15.3 Unless otherwise agreed, if the securities to be valued are
Government Securities, their market value shall be the average of the bid and
ask prices as quoted on Prophesy at 3:30 P.M. New York time on the Business Day
preceding the date on which such determination is made. If the securities are
not so quoted on such day, their market value shall be determined as of the next
preceding Business Day on which they were so quoted. If the securities to be
valued are Government Securities that are not quoted on Prophesy, their market
value shall be determined as of the close of business on the preceding Business
Day in accordance with market practice for such securities.
15.4 Unless otherwise agreed, if the securities to be valued are Foreign
Securities, their market value shall be determined as of the close of business
on the preceding Business Day in accordance with market practice in the
principal market for such securities.
15.5 Unless otherwise agreed, the market value of a letter of credit
shall be the undrawn amount thereof.
15.6 All determinations of market value under Sections 15.1, 15.2, 15.3
and 15.4 shall include, where applicable, accrued interest to the extent not
already included therein (other than any interest transferred to the other party
pursuant to Section 7), unless market practice with respect to the valuation of
such securities in connection with securities loans is to the contrary. All
determinations of market value that are required to be made at the close of
trading on any Business Day pursuant to Section 8 or otherwise hereunder shall
be made as if being determined at the commencement of trading on the next
Business Day. The determinations of market value provided for in this Section 15
shall apply for all purposes under this Agreement, except for purposes of
Sections 12 and 13.
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<PAGE> 23
16. TRANSFERS.
16.1 All transfers of securities hereunder shall be by (a) physical
delivery of certificates representing such securities together with duly
executed stock and bond transfer powers, as the case may be, with signatures
guaranteed by a bank or a member firm of the New York Stock Exchange, Inc., (b)
transfer on the books of a Clearing Organization, or (c) such other means as
Borrower and Lender may agree. In every transfer of securities hereunder, the
transferor shall take all steps necessary (i) to effect a "transfer" under
Section 8-313 of the New York Uniform Commercial Code or, where applicable,
under any U.S. federal regulation governing transfers of securities and (ii) to
provide the transferee with comparable rights under any applicable foreign law
or regulation.
16.2 All transfers of cash Collateral hereunder shall be by (a) wire
transfer in immediately available, freely transferable funds or (b) such other
means as Borrower and Lender may agree. All other transfers of cash hereunder
shall be made in accordance with the preceding sentence or by delivery of a
certified or official bank check representing next-day New York Clearing House
Funds.
16.3 All transfers of a letter of credit from Borrower to Lender shall be
made by physical delivery to Lender of an irrevocable letter of credit issued by
a 'bank' as defined in Section 3(a)(6)(A)-(C) of the Exchange Act. Transfer of a
letter of credit from Lender to Borrower shall be made by causing such letter of
credit to be returned or by causing the amount of such letter of credit to be
reduced to the amount required after such transfer.
16.4 A transfer of securities, cash or letters of credit may be effected
under this Section 16 on any day except (a) a day on which the transferee is
closed for business at its address set forth in Schedule A hereto or (b) a day
on which a Clearing Organization or wire transfer system is closed, if the
facilities of such Clearing Organization or wire transfer system are required to
effect such transfer.
17. CONTRACTUAL CURRENCY.
17.1 Borrower and Lender agree that: (a) any payment in respect of a
distribution under Section 7 shall be made in the currency in which the
underlying distribution of cash was made; (b) any return of cash shall be made
in the currency in which the underlying transfer of cash was made and (c) any
other payment of cash in connection with a Loan under this Agreement shall be in
the currency agreed upon by Borrower and Lender in connection with such Loan
(the currency established under clause (a), (b) or (c) hereinafter referred to
as the "Contractual Currency"). Notwithstanding the foregoing, the payee of any
such payment may, at its option, accept tender thereof in any other currency;
PROVIDED, HOWEVER, that, to the extent permitted by applicable law, the
obligation of the payor to make such payment will be discharged only to the
extent of the amount of Contractual Currency that such payee may, consistent
with normal banking procedures, purchase with such other currency (after
deduction of any premium and costs of exchange) on the banking day next
succeeding its receipt of such currency.
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<PAGE> 24
17.2 If for any reason the amount in the Contractual Currency received
under Section 17.1, including amounts received after conversion of any recovery
under any judgment or order expressed in a currency other than the Contractual
Currency, falls short of the amount in the Contractual Currency due in respect
of this Agreement, the party required to make the payment will (unless a Default
has occurred and such party is the non-defaulting party) as a separate and
independent obligation and to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall.
17.3 If for any reason the amount in the Contractual Currency received
under Section 17.1 exceeds the amount in the Contractual Currency due in respect
of this Agreement, then the party receiving the payment will (unless a Default
has occurred and such party is the non-defaulting party) refund promptly the
amount of such excess.
18. ERISA. Lender shall, if any of the securities transferred to the Borrower
hereunder for any Loan have been or shall be obtained, directly or indirectly,
from or using the assets of any Plan, so notify Borrower in writing upon the
execution of the Agreement or upon initiation of such Loan under Section 1.1. If
Lender so notifies Borrower, then Borrower and Lender shall conduct the Loan in
accordance with the terms and conditions of Department of Labor Prohibited
Transaction Exemption 81-6 (46 Fed. Reg. 7527, Jan. 23, 1981; as amended, 52
Fed. Reg. 18754, May 19, 1987), or any successor thereto (unless Borrower and
Lender have agreed prior to entering into a Loan that such Loan will be
conducted in reliance on another exemption, or without relying on any exemption,
from the prohibited transaction provisions of Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, and Section 4975 of the
Internal Revenue Code of 1986, as amended). Without limiting the foregoing and
notwithstanding any other provision of this Agreement, if the Loan will be
conducted in accordance with Prohibited Transaction Exemption 81- 6, then:
(a) Borrower represents and warrants to Lender that it is
either (i) a bank subject to federal or state supervision,
(ii) a broker-dealer registered under the Exchange Act or
(iii) exempt from registration under Section 15(a)(1) of
the Exchange Act as a dealer in Government Securities.
(b) Borrower represents and warrants that, during the term of
any Loan hereunder, neither Borrower nor any affiliate of
Borrower has any discretionary authority or control with
respect to the investment of the assets of the Plan
involved in the Loan or renders investment advice (within
the meaning of 29 C.F.R. Section 2510.3-21(c)) with respect
to the assets of the Plan involved in the Loan. Lender
agrees that, prior to or at the commencement of any Loan
hereunder, it will communicate to Borrower information
regarding the Plan sufficient to identify to Borrower any
person or persons that have discretionary authority or
control with respect to the investment of the assets of the
Plan involved in the Loan or that render investment advice
(as defined in the preceding sentence) with respect to the
assets of the Plan involved in the Loan. In the event
Lender fails to communicate and keep current during the
term of any Loan such information.
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<PAGE> 25
Lender rather than Borrower shall be deemed to have made
the representation and warranty in the first sentence of
this clause (b).
(c) Borrower and Lender agree that:
(i) the term "Collateral" shall mean cash, securities
issued or guaranteed by the United States government
or its agencies or instrumentalities, or irrevocable
bank letters of credit issued by a person other than
Borrower or an affiliate thereof:
(ii) prior to the making of any Loans hereunder, Borrower
shall provide Lender with (A) the most recent
available audited statement of Borrower's financial
condition and (B) the most recent available
unaudited statement of Borrower's financial
condition (if more recent than the most recent
audited statement), and each Loan made hereunder
shall be deemed a representation by Borrower that
there has been no material adverse change in
Borrower's financial condition subsequent to the
date of the latest financial statements or
information furnished in accordance herewith;
(iii) the Loan may be terminated by Lender at any time.
whereupon Borrower shall deliver the Loaned
Securities to Lender within the lesser of (A) the
customary delivery period for such securities: (B)
five Business Days and (c) the time negotiated for
such delivery between Borrower and Lender: PROVIDED,
HOWEVER, that Borrower and Lender may agree to a
longer period only if permitted by Prohibited
Transaction Exemption 81-6; and
(iv) the Collateral transferred shall be security only for
obligations of Borrower to the Plan with respect to
Loans, and shall not be security for any obligation
of Borrower to any agent or affiliate of the Plan.
19. SINGLE AGREEMENT. Borrower and Lender acknowledge that, and have entered
into this Agreement in reliance on the fact that, all Loans hereunder constitute
a single business and contractual relationship and have been entered into in
consideration of each other. Accordingly, Borrower and Lender hereby agree that
payments, deliveries and other transfers made by either of them in respect of
any Loan shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Loan hereunder, and the
obligations to make any such payments, deliveries and other transfers may be
applied against each other and netted. In addition, Borrower and Lender
acknowledge that, and have entered into this Agreement in reliance on the fact
that, all Loans hereunder have been entered into in consideration of each other.
Accordingly, Borrower and Lender hereby agree that (a) each shall perform all of
its obligations in respect of each Loan hereunder, and that a default in the
performance of any such obligation by Borrower or by Lender (the "Defaulting
Party") in any Loan hereunder shall constitute a default by the Defaulting Party
under all such Loans hereunder, and (b) the non-defaulting party shall be
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<PAGE> 26
entitled to set off claims and apply property held by it in respect of any Loan
hereunder against obligations owing to it in respect of any other Loan with the
Defaulting Party.
20. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
21. WAIVER. The failure of a party to this Agreement to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. All waivers in
respect of a Default must be in writing.
22. REMEDIES. All remedies hereunder and all obligations with respect to any
Loan shall survive the termination of the relevant Loan, return of Loaned
Securities or Collateral and termination of this Agreement.
23. NOTICES AND OTHER COMMUNICATIONS. Unless another address is specified in
writing by the respective party to whom any notice or other communication is to
be given hereunder, all such notices or communications shall be in writing or
confirmed in writing and delivered at the respective addresses set forth in
Schedule A attached hereto. All notices shall be effective upon actual receipt,
PROVIDED, HOWEVER, that if any notice shall be received by a party on a day on
which such party is not open for business at its office located at the address
set forth in Schedule A, such notice shall be deemed to have been received by
such party at the opening of business on the next day on which such party is
open for business at such address.
24. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
24.1 EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY SUCH COURT, SOLELY
FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT TO ENFORCE ITS
OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY LOAN
HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF
RESIDENCE OR DOMICILE.
24.2 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY
HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE> 27
25. MISCELLANEOUS. This Agreement supersedes any other agreement between the
parties hereto concerning loans of securities between Borrower and Lender. This
Agreement shall not be assigned by either party without the prior written
consent of the other party and any attempted assignment without such consent
shall be null and void. Subject to the foregoing, this Agreement shall be
binding upon and shall ensure to the benefit of Borrower and Lender and their
respective heirs, representatives, successors and assigns. This Agreement may be
terminated by either party upon written notice to the other, subject only to
fulfillment of any obligations then outstanding. This Agreement shall not be
modified, except by an instrument in writing signed by the party against whom
enforcement is sought. The parties hereto acknowledge and agree that. in
connection with this Agreement and each Loan hereunder, time is of the essence.
Each provision and agreement herein shall be treated as separate and independent
from any other provision herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.
26. DEFINITIONS. For the purposes hereof:
26.1 "Broker-Dealer" shall mean any person that is a broker (including a
municipal securities broker), dealer, municipal securities dealer, government
securities broker or government securities dealer as defined in the Exchange
Act, regardless of whether the activities of such person are conducted in the
United States or otherwise require such person to register with the Securities
and Exchange Commission or other regulatory body.
26.2 "Business Day" shall mean, with respect to any Loan hereunder, a day
on which regular trading occurs in the principal market for the Loaned
Securities subject to such Loan, PROVIDED, HOWEVER, that for purposes of Section
15, such term shall mean a day on which regular trading occurs in the principal
market for the securities whose value is being determined. Notwithstanding the
foregoing, (i) for purposes of Section 8, "Business Day" shall mean any day on
which regular trading occurs in the principal market for any Loaned Securities
or for any securities Collateral under any outstanding Loan hereunder and "next
Business Day" shall mean the next day on which a transfer of Collateral may be
effected in accordance with Section 16; and (ii) in no event shall a Saturday or
Sunday be considered a Business Day.
26.3 "Clearing Organization" shall mean The Depository Trust Company, or,
if agreed to by Borrower and Lender, such other clearing agency at which
Borrower (or Borrower's agent) and Lender (or Lender's agent) maintain accounts,
or a book-entry system maintained by a Federal Reserve Bank.
26.4 "Collateral" shall mean, whether now owned or hereafter acquired and
to the extent permitted by applicable law, (a) any property which Borrower and
Lender agree shall be acceptable collateral prior to the Loan and which is
transferred to Lender pursuant to Section 3 or 8 (including as collateral, for
definitional purposes, any letters of credit mutually acceptable to Lender and
Borrower), (b) any property substituted therefor pursuant to Section 3.5, (c)
all accounts in which such property is deposited and all securities and the like
in which any cash collateral is invested or reinvested, and (d) any proceeds of
any of the foregoing. For purposes of return of Collateral by Lender or purchase
or sale of securities pursuant to Section 12 or 13, such term shall include
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<PAGE> 28
securities of the same issuer, class and quantity as the Collateral initially
transferred by Borrower to Lender.
26.5 "Customer" shall mean any person that is a customer of Borrower
under Rule 15c3-3 under the Exchange Act or any comparable regulation of the
Secretary of the Treasury under Section 15C of the Exchange Act (to the extent
that Borrower is subject to such Rule or comparable regulation).
26.6 "Cutoff Time" shall mean a time on a Business Day by which a
transfer of cash, securities or other property must be made by Borrower or
Lender to the other, as shall be agreed by Borrower and Lender in Schedule B or
otherwise orally or in writing or, in the absence of any such agreement, as
shall be determined in accordance with market practice.
26.7 "Default" shall have the meaning assigned in Section 11.
26.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
26.9 "Federal Funds Rate" shall mean the rate of interest (expressed as
an annual rate), as published in Federal Reserve Statistical Release H.15(519)
or any publication substituted therefor, charged for federal funds (dollars in
immediately available funds borrowed by banks on an overnight unsecured basis)
on that day or, if that day is not a banking day in New York City, on the next
preceding banking day.
26.10 "Foreign Securities" shall mean, unless otherwise agreed,
securities that are principally cleared and settled outside the United States.
26.11 "Government Securities" shall mean government securities as defined
in Section 3(a)(42)(A)-(C) of the Exchange Act.
26.12 "LIBOR" shall mean for any date, the offered rate for deposits in
U.S. dollars for a period of three months which appears on the Reuters Screen
LIBO page as of 11:00 A.M., London time, on such date (or, if at least two such
rates appear, the arithmetic mean of such rates).
26.13 "Loan" shall mean a loan of securities hereunder.
26.14 "Loaned Security" shall mean any security which is a security as
defined in the Exchange Act, transferred in a Loan hereunder until such security
(or an identical security) is transferred back to Lender hereunder, except that,
if any new or different security shall be exchanged for any Loaned Security by
recapitalization, merger, consolidation or other corporate action, such new or
different security shall, effective upon such exchange, be deemed to become a
Loaned Security in substitution for the former Loaned Security for which such
exchange is made. For purposes of return of Loaned Securities by Borrower or
purchase or sale of securities pursuant to Section 12 or 13, such term shall
include securities of the same issuer, class and quantity as the Loaned
Securities, as adjusted pursuant to the preceding sentence.
- 18 -
<PAGE> 29
26.15 "Plan" shall mean (a) any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 which is
subject to Part 4 of Subtitle B of Title I of such Act: (b) any "plan" as
defined in Section 4975(e)(1) of the Internal Revenue Code of 1986: or (c) any
entity the assets of which are deemed to be assets of any such "employee benefit
plan" or "plan" by reason of the Department of Labor's plan asset regulation, 29
C.F.R. Section 2510.3-101.
Bank One Trust Company, NA
By:
-----------------------------------------
Title:
-----------------------------------------
Date:
-----------------------------------------
By:
-----------------------------------------
Title:
-----------------------------------------
Date:
-----------------------------------------
- 19 -
<PAGE> 30
ANNEX I
LENDER ACTING AS AGENT
This Annex sets forth the terms and conditions governing all
transactions in which a party lending securities ("Agent") in a Loan is acting
as agent for one or more third parties (each a "Principal"). Unless otherwise
defined. capitalized terms used in this Annex shall have the meanings assigned
in the Securities Loan Agreement of which it forms a part (such agreement,
together with this Annex and any other schedules or exhibits, referred to as the
"Agreement") and. unless otherwise specified, all section references herein are
intended to refer to sections of such Securities Loan Agreement.
1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. In addition to the
representations and warranties set forth in Section 9 of the Agreement. Agent
hereby makes the following representations and warranties, which shall continue
during the term of any Loan: Principal has duly authorized Agent to execute and
deliver the Agreement on its behalf, has the power to so authorize Agent and to
enter into the Loans contemplated by the Agreement and to perform the
obligations of Lender under such Loans, and has taken all necessary action to
authorize such execution and delivery by Agent and such performance by it.
2. IDENTIFICATION OF PRINCIPALS. Agent agrees (a) to provide Borrower
prior to any Loan under the Agreement with a written list of Principals for
which it intends to act as Agent (which list may be amended in writing from time
to time with the consent of Borrower), and (b) to provide Borrower, before the
close of business on the next Business Day after orally agreeing to enter into a
Loan, with notice of the specific Principal or Principals for whom it is acting
in connection with such Loan. If (i) Agent fails to identify such Principal or
Principals prior to the close of business on such next Business Day or (ii)
Borrower shall determine in its sole discretion that any Principal or Principals
identified by Agent are not acceptable to it, Borrower may reject and rescind
any Loan with such Principal or Principals, return to Agent any Loaned
Securities previously transferred to Borrower and refuse any further performance
under such Loan, and Agent shall immediately return to Borrower any Collateral
previously transferred to Agent in connection with such Loan; PROVIDED, HOWEVER,
that (A) Borrower shall promptly (and in any event within one Business Day)
notify Agent of its determination to reject and rescind such Loan and (B) to the
extent that any performance was rendered by any party under any Loan rejected by
Borrower, such party shall remain entitled to any fees or other amounts that
would have been payable to it with respect to such performance if such Loan had
not been rejected. Borrower acknowledges that Agent shall not have any
obligation to provide it with confidential information regarding the financial
status of its Principals; Agent agrees, however, that it will assist Borrower in
obtaining from Agent's Principals such information regarding the financial
status of such Principals as Borrower may reasonably request.
3. LIMITATION OF AGENT'S LIABILITY. The parties expressly acknowledge
that if the representations and warranties of Agent under the Agreement,
including this Annex. are true and correct in all material respects during the
term of any Loan and Agent otherwise complies with the provisions of this Annex,
then (a) Agent's obligations under the Agreement shall not include a
- 20 -
<PAGE> 31
guarantee of performance by its Principal or Principals and (b) Borrower's
remedies shall not include a right of setoff against obligations, if any, of
Agent arising in other transactions in which Agent is acting as principal.
4. MULTIPLE PRINCIPALS.
(a) In the event that Agent proposes to act for more than one Principal
hereunder, Borrower and Agent shall elect whether (i) to treat Loans under this
Agreement as transactions entered into on behalf of separate Principals or (ii)
to aggregate such Loans as if they were transactions by a single Principal.
Failure to make such an election in writing shall be deemed an election to treat
Loans under this Agreement as transactions on behalf of separate Principals.
(b) In the event that Borrower and Agent elect (or are deemed to elect)
to treat Loans under the Agreement as transactions on behalf of separate
Principals, the parties agree that (i) Agent will provide Borrower, together
with the notice described in Section 2(b) of this Annex, notice specifying the
portion of each Loan allocable to the account of each of the Principals for
which it is acting (to the extent that any such Loan is allocable to the account
of more than one Principal); (ii) the portion of any individual Loan allocable
to each Principal shall be deemed a separate Loan under the Agreement; (iii) the
mark to market obligations of Borrower and Lender under Section 8 of the
Agreement shall be determined on a Loan-by-Loan basis (unless the parties agree
to determine such obligations on a Principal-by-Principal basis), and (iv)
Borrower's and Lender's remedies under the Agreement upon the occurrence of a
Default shall be determined as if Agent had entered into a separate Agreement
with Borrower on behalf of each of its Principals.
(c) In the event that Borrower and Agent elect to treat Loans under
this Agreement as if they were transactions by a single Principal, the parties
agree that (i) Agent's notice under Section 2(b) of this Annex need only
identify the names of its Principals but not the portion of each Loan allocable
to each Principal's account: (ii) the mark to market obligations of Borrower and
Lender under Section 8 shall, subject to any greater requirement imposed by
applicable law, be determined on an aggregate basis for all Loans entered into
by Agent on behalf of any Principal; and (iii) Borrower's and Lender's remedies
upon the occurrence of a Default shall be determined as if all Principals were a
single Lender.
(d) Notwithstanding any other provision of the Agreement (including
without limitation this Annex), the parties agree that any transactions by Agent
on behalf of a Plan shall be treated as transactions on behalf of separate
Principals in accordance with Section 4(b) of this Annex (and all mark to market
obligations of the parties shall be determined on a Loan-by-Loan basis).
5. INTERPRETATION OF TERMS. All references to "Lender" in the Agreement
shall, subject to the provisions of this Annex (including among other provisions
the limitations on Agent's liability in Section 3 of this Annex), be construed
to reflect that (i) each Principal shall have, in connection with any Loan or
Loans entered into by Agent on its behalf, the rights, responsibilities,
privileges and obligations of a "Lender" directly entering into such Loan or
Loans with Borrower under the Agreement, and (ii) Agent's Principal or
Principals have designated Agent as their sole agent for
- 21 -
<PAGE> 32
performance of Lender's obligations to Borrower and for receipt of performance
by Borrower of its obligations to Lender in connection with any Loan or Loans
under the Agreement (including, among other things, as agent for each Principal
in connection with transfers of securities, cash or other property and as agent
for giving and receiving all notices under the Agreement). Both Agent and its
Principal or Principals shall be deemed "parties" to the Agreement and all
references to a "party" or "either party" in the Agreement shall be deemed
revised and accordingly (and any Default by Agent under paragraph (e) or any
other applicable provision of Section 11 shall be deemed a Default by Lender).
Bank One Trust Company, NA
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
- 22 -
<PAGE> 33
SCHEDULE A
NAMES AND ADDRESSES FOR COMMUNICATIONS
IF TO LENDER: Bank One Trust Company, N. A.
Attn: Securities Lending
1111 Polaris Parkway
Columbus, OH 43240
or, if by postal service,
P.O. Box 710211
Columbus, OH 43271-0211
IF TO BORROWER:
- 23 -
<PAGE> 34
AMENDMENT TO MASTER
SECURITIES LOAN AGREEMENT
This Amendment to the Master Securities Loan Agreement (the "Agreement") is
entered into by and between BANK ONE TRUST COMPANY, N. A. in its capacity as
agent for its customers and not individually (the "Lender") and
_______________________ (the "Borrower") who hereby agree to amend the Agreement
as follows:
1. Section 3.1 of the Agreement is hereby deleted in its entirety and the
following is substituted in its place:
3.1 Unless otherwise agreed, Borrower shall, prior to the transfer of
the Loaned Securities to Borrower, but in no case later than the close
of business on the day that such transfer is to occur, transfer to
Lender Collateral with a market value at least equal to a percentage of
the market value of the Loaned Securities agreed to by Borrower and
Lender (which shall be not less than 105% of the market value of the
Loaned Securities if the Loaned Securities are Foreign Securities and
102% of the market value of the Loaned Securities if the Loaned
Securities are securities other than Foreign Securities) (the "Margin
Percentage").
2. Section 3.6 is hereby deleted in its entirety and the following new section
3.6 is substituted in its place:
3.6 Except as otherwise provided in an agreement entered into by
Borrower and Lender pursuant to Section 1.1 or Section 3.5(b), Lender
acknowledges that, in connection with Loans of Government Securities
and as otherwise permitted by applicable law, some securities provided
by Borrower as Collateral under this Agreement may not be guaranteed by
the United States.
3. Section 5 is hereby deleted in its entirety and the following new
Section 5 is substituted in its place:
5. TERMINATION OF THE LOAN. Unless otherwise agreed, (a) Borrower may
terminate a loan on any Business Day by giving notice to Lender prior to 10:00
a.m. in the case of government securities and prior to 11:30 a.m. in the case of
all other securities on such Business Day and transferring the Loaned Securities
to Lender before the Cutoff Time on such Business Day, and (b) Lender may
terminate a loan on a termination date established by a notice given by Lender
Borrower prior to the close of business on a Business Day. The termination
date established by a termination notice given by Lender to Borrower shall be a
date no earlier than the standard settlement date for trades of the Loaned
Securities entered into on the date of such notice, which date shall, unless
Borrower and Lender agree to the contrary, be (i) in the case of government
securities, the next Business Day following such notice, (ii) in the case of
Foreign Securities, the fifth Business Day
- 1 -
<PAGE> 35
following such notice, and (iii) in the case of all other securities, the third
Business Day following such notice. Unless otherwise agreed, Borrower shall, on
or before the Cutoff Time on the termination date of a Loan, transfer the Loaned
Securities to Lender, provided, however, that after such transfer by Borrower,
Lender shall transfer the Collateral (as adjusted pursuant to Section 8) to
Borrower in accordance with Section 3.3
4. Section 8.1 is hereby deleted in its entirety and substituting the following
is substituted in its place:
8.1 Borrower shall daily mark to market any Loan hereunder and in the
event that at the close of trading on any Business Day the market value
of the Collateral for any Loan to Borrower shall be less than: (i) 102%
of the market value of all the outstanding Loaned Securities which are
Foreign Securities subject to such Loan, and (ii) 100% of the market
value of all the outstanding Loaned Securities other than Foreign
Securities subject to such Loan, Borrower shall transfer additional
Collateral no later than the close of the next Business Day so that the
market value of such additional Collateral, when added to the market
value of the other Collateral for such Loan, shall equal: (i) 105% of
the market value of the Loaned Securities if the Loaned Securities are
Foreign Securities, and (ii) 102% of the market value of the Loaned
Securities if the Loaned Securities are not Foreign Securities.
5. Section 15.3 is hereby amended by deleting the references to "Prophesy" and
replacing them with "Bloomberg."
6. Section 24.1 is hereby amended by deleting the reference to "New York" and
replacing it with "Ohio" and by deleting the reference to "New York City" and
replacing it with "Columbus, Ohio."
7. The second sentence of Section 25 is hereby deleted it is entirety and the
following new sentence is substituted in its place:
This Agreement shall not be assigned by either party without the prior
written consent of the other party and any attempted assignment without such
consent shall be null and void except that Lender may assign this Agreement to
another affiliate of BANC ONE CORPORATION in its capacity as agent for its
customers and not individually without the consent of the Borrower.
8. Section 26.2 shall be deleted in its entirety and the following shall be
substituted in its place:
26.2 "Business Day" shall mean, with respect to any Loan hereunder, a
day on which regular trading occurs in the principal market for the
Loaned Securities subject to such Loan, PROVIDED, HOWEVER that for
purpose of Section 15, such term shall mean a day on which regular
trading occurs in the principal market for the securities whose value
is being determined. Notwithstanding the foregoing, (i) if the
securities are Foreign Securities, "Business Day" shall in no event
include a day on which the Lender or its agent are not open for
business; (ii) in no event shall a Saturday or Sunday be considered a
Business Day; and
- 2 -
<PAGE> 36
(iii) subject to sections (i) and (ii) above, for purposes of Section
8, "Business Day" shall mean any day on which regular trading occurs in
the principal market for any Loaned Securities or for any securities
Collateral under any outstanding Loan hereunder and subject to sections
(i) and (ii) above, "next Business Day" shall mean the next day on
which a transfer of Collateral may be effected in accordance with
Section 16.
9. Section 26.6 is hereby deleted in entirety and the following new Section 26.6
is substituted in its place:
"Cutoff Time" shall mean a time on a Business Day by which transfer of
cash, securities or other property must be made by Borrower or Lender to the
other, which for loans of government securities, shall mean the official Fed
wire dealer close on the termination date and which for loans of all other
securities, shall mean the close of the appropriate depository on the
termination date or such other times as shall be agreed upon by Borrower and
Lender orally or in writing.
10. The Agreement as amended by this Amendment constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and supersedes all prior discussions, understandings, agreements and
negotiations between the parties hereto with respect to such transactions. The
headings in this Amendment are for convenience only and shall not be used in
construing this Amendment.
IN WITNESS WHEREOF, this Amendment to the Agreement is executed by Bank One
Trust Company, N. A. in its capacity as agent for its Customers and not
individually and _________________________________________________.
BANK ONE TRUST COMPANY, N. A.
AS AGENT FOR ITS CUSTOMERS AND
NOT INDIVIDUALLY ---------------------------------
BY: BY:
----------------------------- -----------------------------
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<PAGE> 37
SECURITIES LENDING AGREEMENT
EXHIBIT C
APPROVED BORROWERS
ABN/AMRO Chicago Corporation
Alpine Associates
BT Securities Corporation/Bankers Trust Company
Banc One Capital Markets
Barclays Capital Inc./Barclays Bank PLC
Bear Stearns & Co., Inc./Bear Stearns Securities Corporation
CIBC Oppenheimer Corp.
Chase Securities, Inc.
Credit Suisse First Boston Corporation
Dean Witter Reynolds, Inc.
Deutsche Morgan Grenfell
Donaldson, Lufkin & Jenrette Securities Corp.
Dresdner Securities (USA) Inc.
E. D. & F. Man International
First Options of Chicago
Fuji Securities Inc.
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
Gruntal & Co.
HSBC Securities, Inc.
LIT Clearing Services
Aubrey G. Lanston & Co. Inc.
Lehman Brothers Inc.
Lipco Partners, L. P.
Maple Partners U. S.A., Inc. (formerly First Marathon America Inc.)
Merrill Lynch, Pierce, Fenner & Smith, Inc./Merrill Lynch Government
Securities Inc.
J. P. Morgan Securities Inc.
Morgan Stanley & Co./MS Securities Services
NationsBanc Montgomery Securities, Inc.
Nesbitt Burns Securities Inc.
Nomura Securities International, Inc.
PaineWebber, Inc.
Paloma Securities, L. P.
Paribas Corporation
Pax Clearing Corporation
Prudential Securities, Inc.
Raymond James & Associates
SBC Warburg Dillon Read, Inc.
Salomon Brothers, Inc.
Sanwa Securities (USA) Co. L. P.
- 4 -
<PAGE> 38
Schroder & Co.
Scotia Capital Markets (USA) Inc.
Smith Barney Inc.
Societe Generale Securities Corporation
Spear, Leeds & Kellogg
Tokyo-Mitsubishi Securities (USA), Inc.
U. S. Clearing Corp.
UBS Securities Inc.
Wheat First Securities
Zions First National Bank
- 5 -
<PAGE> 39
SECURITIES LENDING AGREEMENT
EXHIBIT D
GOVERNMENT BOND FUND
When securities are loaned pursuant to the Securities Lending Agreement dated
June 15, 1998, between THE ONE GROUP INVESTMENT TRUST (the "Lender"), Banc One
Investment Advisors Corporation (the "ADVISOR") AND BANK ONE TRUST COMPANY, N.
A. (THE "SUBCUSTODIAN") the Lender instructs as follows:
1. TYPES OF COLLATERAL. The Adviser may instruct the Subcustodian to accept the
types of collateral checked below when securities are loaned subject to the
terms of the above described Securities Lending Agreement.
|X| Cash
|X| Securities issued or guaranteed by the United States
Government or its agencies
|X| A letter or letters of credit
2. INVESTMENT OF CASH COLLATERAL. In making the investments of cash
received as collateral discussed in the Securities Lending Agreement,
including income received from such collateral, the Adviser is
authorized and directed to use any of the types of investments (the
"Permitted Investments") checked below:
A. Short term obligations of corporations, including but not
limited to commercial paper, promissory notes, master variable
demand notes, and private placements, whose:
[ ] Commercial paper is rated in the highest category of at
least two nationally recognized securities rating
organizations at the time of purchase, or if the
corporation has not received a rating from any
nationally recognized securities organization, the
security must meet such standards as may be necessary
to be assigned a "highest category" rating as
determined by the Adviser.
[ ] Commercial paper is rated not less than the second
highest category of all nationally recognized
securities rating organizations at the time of
purchase.
- 6 -
<PAGE> 40
B. Loan participation certificates of corporations whose:
[ ] Commercial paper is rated in the highest category of at
least two nationally recognized securities rating
organizations at the time of purchase, or if the
corporation has not received a rating from any
nationally recognized securities organization, the
security must meet such standards as may be necessary
to be assigned a "highest category" rating as
determined by the Adviser.
[ ] Commercial paper is rated not less than the second
highest category of all nationally rated securities
rating organizations at the time of purchase.
C. [ ] Short term obligations of banks, including, but not
limited to, certificates of deposit, bankers'
acceptances, and time deposits, including without
limitations any such instrument issued by the
Subcustodian or one of its affiliates.
D. [X] Short term obligations of the United States Government
or its agencies.
E. [X] Repurchase agreements collateralized by securities
issued or guaranteed by the United States Government or
its agencies.
F. [X] Money market mutual funds or other securities of
any open-end or closed-end investment company or
investment trust registered under the Investment
Company Act of 1940, as amended, which invest solely in
securities issued or guaranteed by the United States
Government or its agencies and repurchase agreements
collateralized by such securities.
G. [ ] Collective short-term investment funds organized
and operated by the Adviser or its affiliates for
Employee Benefit Trusts only.
3. MATURITY OF COLLATERAL INVESTMENTS. The Adviser may instruct the
Subcustodian to make Permitted Investments as authorized in Section 2
that may be of longer or shorter maturity than the term of any
transaction to which they relate, it being understood that "short term"
Permitted Investments shall include Permitted Investments with such
maturities as are described in this section. The maturity of each
Permitted Investment will be based upon Lender instructions, if any, the
Adviser's estimate of the volume of securities that is likely to be
loaned on a continuous basis, the rates available on alternate
investments, interest rate trends, and overall market conditions. The
average weighted maturity of Permitted Investments shall not exceed 90
days, and in no case shall the final maturity of a Permitted Investment
exceed 12 months in the case of fixed rate investments and 36 months in
the case of floating rate investments. The difference between the
average weighted maturity of loan transactions and the average weighted
maturity of Permitted Investments shall not exceed 90 days. For the
purpose of calculating the average weighted maturity of loan
transactions, maturity shall, in the case of "term" loans, mean the
number of days remaining until the termination of the loan
- 7 -
<PAGE> 41
transaction, or in the case of "open" loans, one day. For the purpose
of calculating the average weighted maturity of Permitted Investments,
maturity shall mean: (1) one day in the case of money market mutual
funds, master notes, and other instruments that may be liquidated
without notice, (2) the number of days remaining to the next reset date
in the case of floating rate securities, (3) the number of days
remaining until the next put date in the case of securities subject to
unconditional and irrevocable puts of the issue to the obligor, or (4)
the actual number of days remaining until the maturity date for all
other Permitted Investments.
4. When the Lender has authorized the Adviser to direct the Subcustodian
to accept a letter of credit as collateral for securities loans, such
standby letter of credit shall be clean, unconditional, and
irrevocable. The Adviser shall accept letters from banks whose:
[X] Certificates of deposit or commercial paper is rated in
the highest category of at least two nationally
recognized securities rating organizations.
[ ] Certificates of deposit or commercial paper is rated
not less than the second highest category of all
nationally recognized securities rating organizations.
THE ONE GROUP INVESTMENT TRUST
("Lender")
By: /s/ JAMES F. LAIRD, JR.
--------------------------------------------
James F. Laird, Jr., President
BANC ONE INVESTMENT ADVISORS CORPORATION
("Adviser")
By: /s/ MARK A. BEESON
--------------------------------------------
Mark A. Beeson, Senior Managing Director
BANK ONE TRUST COMPANY, N. A.
("Subcustodian")
By: /s/ STEVEN E. CUTLER
--------------------------------------------
Steven E. Cutler, Officer
- 8 -
<PAGE> 42
SECURITIES LENDING AGREEMENT
EXHIBIT D
ASSET ALLOCATION FUND
EQUITY INDEX FUND
GROWTH OPPORTUNITIES FUND
LARGE COMPANY GROWTH FUND
When securities are loaned pursuant to the Securities Lending Agreement dated
June 15, 1998, between THE ONE GROUP INVESTMENT TRUST (THE "LENDER"), BANC ONE
INVESTMENT ADVISORS CORPORATION (THE "ADVISER") AND BANK ONE TRUST COMPANY, N.
A. (THE "SUBCUSTODIAN"), the Lender instructs as follows:
1. TYPES OF COLLATERAL. The Adviser may instruct the Subcustodian to
accept the types of collateral checked below when securities are loaned
subject to the terms of the above described Securities Lending
Agreement.
[X] Cash
[X] Securities issued or guaranteed by the United States
Government or its agencies
[X] A letter or letters of credit
2. INVESTMENT OF CASH COLLATERAL. In making the investments of cash
received as collateral discussed in the Securities Lending Agreement,
including income received from such collateral, the Adviser is
authorized and directed to use any of the types of investments (the
"Permitted Investments") checked below:
A. Short term obligations of corporations, including but not
limited to commercial paper, promissory notes, master variable
demand notes, and private placements, whose:
[X] Commercial paper is rated in the highest category of
at least two nationally recognized securities rating
organizations at the time of purchase, or if the
corporation has not received a rating from any
nationally recognized securities organization, the
security must meet such standards as may be necessary
to be assigned a "highest category" rating as
determined by the Adviser.
[ ] Commercial paper is rated not less than the second
highest category of all nationally recognized
securities rating organizations at the time of
purchase.
- 9 -
<PAGE> 43
B. Loan participation certificates of corporations whose:
[X] Commercial paper is rated in the highest category of
at least two nationally recognized securities rating
organizations at the time of purchase, or if the
corporation has not received a rating from any
nationally recognized securities organization, the
security must meet such standards as may be necessary
to be assigned a "highest category" rating as
determined by the Adviser.
[ ] Commercial paper is rated not less than the second
highest category of all nationally rated securities
rating organizations at the time of purchase.
C. [X] Short term obligations of banks, including, but
not limited to, certificates of deposit, bankers'
acceptances, and time deposits, including without
limitations any such instrument issued by the
Subcustodian or one of its affiliates.
D. [X] Short term obligations of the United States
Government or its agencies.
E. [X] Repurchase agreements.
F. [ ] Money market mutual funds or other securities of
any open-end or closed-end investment company or
investment trust registered under the Investment
Company Act of 1940, as amended.
G. [ ] Collective short-term investment funds organized
and operated by the Adviser or its affiliates for
Employee Benefit Trusts only.
3. MATURITY OF COLLATERAL INVESTMENTS. The Adviser may instruct the
Subcustodian to make Permitted Investments as authorized in Section 2
that may be of longer or shorter maturity than the term of any
transaction to which they relate, it being understood that "short term"
Permitted Investments shall include Permitted Investments with such
maturities as are described in this section. The maturity of each
Permitted Investment will be based upon Lender instructions, if any, the
Adviser's estimate of the volume of securities that is likely to be
loaned on a continuous basis, the rates available on alternate
investments, interest rate trends, and overall market conditions. The
average weighted maturity of Permitted Investments shall not exceed 90
days, and in no case shall the final maturity of a Permitted Investment
exceed 12 months in the case of fixed rate investments and 36 months in
the case of floating rate investments. The difference between the
average weighted maturity of loan transactions and the average weighted
maturity of Permitted Investments shall not exceed 90 days. For the
purpose of calculating the average weighted maturity of loan
transactions, maturity shall, in the case of "term" loans, mean the
number of days remaining until the termination of the loan transaction,
or in the case of "open" loans, one day. For the purpose of calculating
the average weighted maturity of Permitted Investments, maturity shall
mean: (1) one day in the case of money market mutual funds, master
notes, and other instruments that may be liquidated without notice, (2)
the number of days remaining to the next reset date in the case of
floating rate securities, (3) the number of days remaining until the
next put date in the case of securities subject to unconditional and
irrevocable puts of the issue to the obligor, or (4) the actual number
of days remaining until the maturity date for all other Permitted
Investments.
4. When the Lender has authorized the Adviser to direct the Subcustodian
to accept a letter of credit as collateral for securities loans, such
standby letter of credit shall be clean, unconditional, and
irrevocable. The Adviser shall accept letters from banks whose:
- 10 -
<PAGE> 44
[X] Certificates of deposit or commercial paper is rated
in the highest category of at least two nationally
recognized securities rating organizations.
[ ] Certificates of deposit or commercial paper is rated
not less than the second highest category of all
nationally recognized securities rating
organizations.
THE ONE GROUP INVESTMENT TRUST
("Lender")
By: /s/ JAMES F. LAIRD, JR.
---------------------------------------------
James F. Laird, Jr., President
BANC ONE INVESTMENT ADVISORS CORPORATION
("Adviser")
By: /s/ MARK A. BEESON
---------------------------------------------
Mark A. Beeson, Senior Managing Director
BANK ONE TRUST COMPANY, N. A. ("Subcustodian")
By: /s/ STEVEN E. CUTLER
---------------------------------------------
Steven E. Cutler, Officer
- 11 -
<PAGE> 45
SECURITIES LENDING AGREEMENT
EXHIBIT E
SCHEDULE OF FEES
U. S. GOVERNMENT AND AGENCY SECURITIES
The subcustodian shall be paid a fee of 5 basis points, calculated on an annual
basis and accrued daily, based upon the value of collateral received from the
Borrower for each loan under this Agreement.
EQUITIES AND CORPORATE BONDS
The subcustodian shall be paid a fee of 10 basis points, calculated on an annual
basis and accrued daily, based upon the value of collateral received from the
Borrower for each loan under this Agreement.
- 12 -
<PAGE> 46
EXHIBIT F
APPROVED LETTER OF CREDIT BANKS
- 13 -
<PAGE> 47
MMF DOMESTIC BANK APPROVED LIST
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CUSIP PROGRAM REST. ISSUER TYPE GUARANTOR
<S> <C> <C> <C> <C> <C>
None American National Bank & Trust Company of Chicago GTD First Chicago NBD Corp
- ---------------------------------------------------------------------------------------------------------------------------
211135 None Bank of America Illinois GTD Bankamerica Corporation
080492 None Bank of America National Trust & SA GTD Bankamerica Corporation
- ---------------------------------------------------------------------------------------------------------------------------
None Bank of America NW GTD Bankamerica Corporation
None Bank of New York GTD Bank of New York Company, Inc. (The)
060579 None Bank of New York Company, Inc. (The) STD Bank of New York Company, Inc. (The)
066050 None Bankamerica Corporation STD Bankamerica Corporation
066337 None Bankers Trust Company GTD Bankers Trust New York Corp
066365 None Bankers Trust New York Corp STD Bankers Trust New York Corp
None Barnett Bank NA GTD Barnett Banks Inc.
088055 None Barnett Banks Inc. STD Barnett Banks Inc.
None Branch Banking and Trust Company BB&T GTD Southern National Corp
None Chase Manhattan Bank NA GTD Chase Manhattan Corporation
181610 None Chase Manhattan Corporation STD Chase Manhattan Corporation
172905 None Citibank (New York State) GTD Citicorp
None Citibank (South Dakota) NA GTD Citicorp
None Citibank NA GTD Citicorp
173034 None Citicorp STD Citicorp
- ---------------------------------------------------------------------------------------------------------------------------
200339 None Comerica Bank-Detroit GTD Comerica Incorporated
200340 None Comerica Incorporated STD Comerica Incorporated
None Corestastes Bank DEL NA GTD CoreStates Financial Corp
None CoreStates Bank, NA GTD CoreStates Financial Corp
218695 None CoreStates Financial Corp STD CoreStates Financial Corp
- -------------------------------------------------------------------------------------------------------------------
Thursday, April 09, 1998
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CUSIP PROGRAM REST. ISSUER INDUSTRY SPC MDY'S DCR FITCH TBW IBCA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
None American National Bank & Trust Company of Chicago Banking A-l+ NR NR F-1+ NR Al
- ------------------------------------------------------------------------------------------------------------------------------------
211135 None Bank of America Illinois Banking A-l+ NR D-1+ F-1+ NR Al+
080492 None Bank of America National Trust & SA Banking A-1 + NR D-l+ F-1+ NR Al+
- ------------------------------------------------------------------------------------------------------------------------------------
None Bank of America NW Banking NR NR NR NR NR NR
None Bank of New York Banking A-1+ NR D-1 F-l+ T-1 Al+
060579 None Bank of New York Company, Inc. (The) BHC A-1 P-1 D-1 F-1 T-1 Al+
066050 None Bankamerica Corporation BHC A-1 P-1 D-1 F-1+ T-1 Al+
066337 None Bankers Trust Company Banking A-1 NR D-1 NR T-1 Al+
066365 None Bankers Trust New York Corp BHC A-1 P-1 D-1 F-1 + T-1 Al
None Barnett Bank NA Banking A-1 NR D-1 NR NR NR
088055 None Barnett Banks Inc. BHC A-2 P-1 D-1 NR T-1 Al
None Branch Banking and Trust Company BB&T Banking A-2 P-1 NR NR T-1 NR
None Chase Manhattan Bank NA Banking NR NR D-l+ NR Al+
181610 None Chase Manhattan Corporation BHC A-1 P-1 D-1 F-1 T-1 Al
172905 None Citibank (New York State) Banking A-l+ NR NR NR NR NR
None Citibank (South Dakota) NA Banking A-l+ NR NR NR NR NR
None Citibank NA Banking A-1+ NR D-1+ F-l+ NR Al+
173034 None Citicorp BHC A-1 P-1 0-1 F-1+ T-1 Al+
- -----------------------------------------------------------------------------------------------------------------------------------
200339 None Comerica Bank-Detroit Banking A-1 NR D-l+ NR NR Al
200340 None Comerica Incorporated BHC NR NR D-1 NR T-1 Al
None Corestastes Bank DEL NA Banking NR NR NR NR NR NR
None CoreStates Bank, NA Banking A-1 NR D-l+ NR NR Al
218695 None CoreStates Financial Corp BHC NR NR D-1 NR T-1 Al
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Thursday, April 09, 1998 Page l of 4
<PAGE> 48
<TABLE>
<CAPTION>
CUSIP PROGRAM REST. ISSUER TYPE GUARANTOR INDUSTRY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
None FCC National Bank GTD First Chicago NBD Corp
318773 None Fifth Third Bancorp STD Fifth Third Bancorp
318774 None Fifth Third Bank GTD Fifth Third Bancorp
- -----------------------------------------------------------------------------------------------------------------------------------
319455 None First Chicago NBD Corp STD First Chicago NBD Corp
None First National Bank of Chicago GTD First Chicago NBD Corp
- -----------------------------------------------------------------------------------------------------------------------------------
337358 None First Union Corporation STD First Union Corporation
None First Union National Bank of North Carolina GTD First Union Corporation
3390E None Fleet Financial Group STD Fleet Financial Group
NA None Government Development Bank of Puerto Rico STD Government Development Bank of Puerto Rico
391417 Susp Great Western Bank, a FSB GTD Great Western Financial Corp
391442 Susp Great Western Financial Corp STD Great Western Financial Corp
414830 None Harris Trust and Savings Bank STD
588287 None HSBC Americas Inc STD
446150 None Huntington Bancshares Incorporated STD Huntington National Bank
446438 None Huntington National Bank GTD Huntington National Bank
616880 None JP Morgan & Co. Incorporated STD JP Morgan & Co. Incorporated
None Key Bank NA GTD KeyCorp
492919 None Key Bank of New York GTD KeyCorp
492922 None Key Bank of Washington GTD KeyCorp
493267 None KeyCorp STD KeyCorp
- -----------------------------------------------------------------------------------------------------------------------------------
None LaSalle National Bank STD
617362 None Morgan Guaranty Trust Company of New York GTD JP Morgan & Co. Incorporated
635349 None National City Bank GTD National City Corporation
635357 None National City Bank Columbus GTD National City Corporation
635405 None National City Corporation STD National City Corporation
None NationsBank NA GTD NationsBank Corporation
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
CUSIP PROGRAM REST. ISSUER INDUSTRY SPC MDY'S DCR FITCH TBW IBCA
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
None FCC National Bank Banking A-1+ NR NR F-1+ NR Al
318773 None Fifth Third Bancorp BHC A-1+ P-1 D-1+ F-1+ T-1 NR
318774 None Fifth Third Bank Banking NR NR D-1 + F-1+ NR NR
- -----------------------------------------------------------------------------------------------------------------------------------
319455 None First Chicago NBD Corp BHC A-1 P-1 D-1+ F-1 NR Al
None First National Bank of Chicago Banking A-l+ NR D-1+ F-1+ NR Al
- -----------------------------------------------------------------------------------------------------------------------------------
337358 None First Union Corporation BHC A-1 P-1 D-1 NR T-1 Al
None First Union National Bank of North Carolina Banking A-1 NR D-1 NR NR A1
3390E None Fleet Financial Group Banking A2 P-1 D-1 F-1 TBW-1 NR
NA None Government Development Bank of Puerto Rico RBanking Al+ NR NR NR T-1 NR
391417 Susp Great Western Bank, a FSB Banking A-2 P-1 NR F-1 NR NR
391442 Susp Great Western Financial Corp BHC A-2 P-2 NR NR T-1 NR
414830 None Harris Trust and Savings Bank BHC A-l+ NR NR NR NR NR
588287 None HSBC Americas Inc Banking A-1 P-2 NR F-1 NR Al
446150 None Huntington Bancshares Incorporated BHC NR NR NR NR T-1 Al
446438 None Huntington National Bank Banking A-1 NR D-1 NR NR Al
616880 None JP Morgan & Co. Incorporated BHC A-1+ P-1 D-14 NR T-1 Al+
None Key Bank NA Banking NR NR D-1+ NR NR A1
492919 None Key Bank of New York Banking A-1 NR D-1+ NR NR A1
492922 None Key Bank of Washington Banking A-1 NR D1+ NR NR NR
493267 None KeyCorp BHC A-2 P-1 D-1 NR T-1 Al
- -----------------------------------------------------------------------------------------------------------------------------------
None LaSalle National Bank BHC NR NR NR NR NR NR
617362 None Morgan Guaranty Trust Company of New York Banking A-1 NR D-l+ NR NR A1+
635349 None National City Bank Banking NR NR D-1+ NR T-1 Al
635357 None National City Bank Columbus Banking A-1 NR D-1+ NR T-1 NR
635405 None National City Corporation BHC NR NR D-2 F-2 T-1 Al
None NationsBank NA Banking NR NR NR NR NR Al
</TABLE>
- ------------------------------------------------------------------------------
Thursday, April 09, 1998 Page 2 Of 4
<PAGE> 49
<TABLE>
<CAPTION>
CUSIP PROGRAM REST. ISSUER TYPE GUARANTOR
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
638585 None NationsBank Corporation STD NationsBank Corporation
None NationsBank of Georgia, NA GTD NationsBank Corporation
628857 None Nationsbank of Texas, NA GTD NationsBank Corporation
- --------------------------------------------------------------------------------------------------------------------------
None NBD Bancorp, Inc. GTD First Chicago NBD Corp
None NBD Bank NA GTD First Chicago NBD Corp
- --------------------------------------------------------------------------------------------------------------------------
68586G None Northern Trust Company GTD Northern Trust Corporation
685859 None Northern Trust Corporation STD Northern Trust Corporation
None Norwest Bank Minnesota NA GTD Norwest Corporation
669330 None Norwest Corporation STD Norwest Corporation
693475 None PNC Bank Corp. STD PNC Bank Corp.
None PNC Bank Kentucky GTD PNC Bank Corp.
69347S None PNC Bank NA GTD PNC Bank Corp.
None PNC Bank Ohio NA GTD PNC Bank Corp.
None Republic National Bank of New York GTD Republic New York Corporation
760719 None Republic New York Corporation STD Republic New York Corporation
None Security Pacific Bank Washington, NA GTD Bankamerica Corporation
843444 None Southern National Corp STD Southern National Corp
85508 None Star Bank NA GTD Star Banc Corporation
None State Street Bank and Trust Company STD State Street Boston Corp.
857473 None State Street Boston Corp. STD State Street Boston Corp.
- --------------------------------------------------------------------------------------------------------------------------
None SunTrust Bank, Atlanta GTD Suntrust Banks, Inc.
867914 None Suntrust Banks, Inc. STD Suntrust Banks, Inc.
None Union Bank of California STD
911598 None US Bancorp STD US Bancorp
None US Bank of Washington NA GTD US Bancorp
None US National Bank of Oregon GTD US Bancorp
<CAPTION>
CUSIP PROGRAM REST. ISSUER INDUSTRY SPC MDY'S DCR FITCH TBW IBCA
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
638585 None NationsBank Corporation BHC A-1 P-1 D-1+ F-1 T-1 A1
None NationsBank of Georgia, NA Banking NR NR NR NR NR NR
628857 None Nationsbank of Texas, NA Banking A-1 NR D-l+ F-1+ NR Al
- ------------------------------------------------------------------------------------------------------------------------------------
None NBD Bancorp, Inc. Banking NR NR D-1+ NR NR NR
None NBD Bank NA Banking NR NR D-1+ NR NR NR
- ------------------------------------------------------------------------------------------------------------------------------------
68586G None Northern Trust Company Banking A-1+ NR NR NR NR Al+
685859 None Northern Trust Corporation BHC A-1+ P-1 NR NR T-1 A1+
None Norwest Bank Minnesota NA Banking NR NR D-1+ F-1+ NR Al+
669330 None Norwest Corporation BHC A-1+ P-1 D-l+ F-1+ T-1 Al+
693475 None PNC Bank Corp. BHC NR NR NR NR T-1 Al
None PNC Bank Kentucky Banking A-1 NR NR NR NR NR
69347S None PNC Bank NA Banking NR NR D-1 + NR NR Al
None PNC Bank Ohio NA Banking A-1 NR NR NR NR NR
None Republic National Bank of New York Banking A-1+ NR D-1+ F-1+ NR A1+
760719 None Republic New York Corporation BHC A-1 + P-1 D-1 + F-l+ T-1 Al+
None Security Pacific Bank Washington, NA Banking NR NR NR NR NR NR
843444 None Southern National Corp BHC A-2 P-1 NR NR T-1 NR
85508 None Star Bank NA Banking Al NR NR Fl T-1 NR
None State Street Bank and Trust Company Banking A-1+ NR NR NR NR Al+
857473 None State Street Boston Corp. BHC A-1+ P-1 NR NR T-1 Al+
- ------------------------------------------------------------------------------------------------------------------------------------
None SunTrust Bank, Atlanta Banking NR NR NR NR NR Al+
867914 None Suntrust Banks, Inc. BHC A-1 P-1 NR NR T-1 A1+
None Union Bank of California BHC A-1 NR NR NR T-1 A1
911598 None US Bancorp BHC NR P-1 D-1+ NR T-1 Al
None US Bank of Washington NA Banking NR NR D-1+ NR NR A1
None US National Bank of Oregon Banking A-1 NR D-1+ NR NR Al
</TABLE>
- -------------------------------------------------------------------------------
Thursday, April 09, 1998 Page 3 of 4
<PAGE> 50
<TABLE>
<CAPTION>
CUSIP PROGRAM REST. ISSUER TYPE GUARANTOR
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
None Wachovia Bank of Georgia NA GTD Wachovia Corporation
None Wachovia Bank of North Carolina, NA GTD Wachovia Corporation
929771 None Wachovia Corporation STD Wachovia Corporation
- ---------------------------------------------------------------------------------------------------------------------
949740 None Wells Fargo & Company STD Wells Fargo & Company
None Wells Fargo Bank, NA GTD Wells Fargo & Company
<CAPTION>
CUSIP PROGRAM REST. ISSUER INDUSTRY SPC MDY'S DCR FITCH TBW IBCA
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
None Wachovia Bank of Georgia NA Banking A-1+ NR NR NR NR A1+
None Wachovia Bank of North Carolina, NA Banking A-l+ NR NR NR NR Al+
929771 None Wachovia Corporation BHC A-l+ P-1 NR NR T-1 Al+
- --------------------------------------------------------------------------------------------------------------------------------
949740 None Wells Fargo & Company BHC A-1 P-1 D-1 NR T-1 Al
None Wells Fargo Bank, NA Banking A-1 NR D-1 NR NR Al
</TABLE>
- ------------------------------------------------------------------------------
Thursday, April 09, 1998 Page 4 of 4
<PAGE> 51
<TABLE>
<CAPTION>
CUSIP PROGRAM REST. ISSUER TYPE GUARANTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NA 3(a)3 185 AB Spintab GTD Swedbank
NA None Abbey National North America GTD Abbey National pic
NA None Abbey National Pic STD Abbey National Pic
- -------------------------------------------------------------------------------------------------------------------
00077Q None ABN Amro Holding NV STD ABN Amro Holding NV
00077Q None ABN Amro North Am. Fin. GTD ABN Amro Holding NV
- -------------------------------------------------------------------------------------------------------------------
NA None Banca Monte del Paschi di Siena SpA STD Banco Monte del Paschi di Siena SpA
ES021390 None Banco Santander SA STD Banco Santander SA
063671 None Bank of Montreal STD Bank of Montreal
054159 None Bank of Nova Scotia SCOTIABANK STD Bank of Nova Scotia SCOTIABANK
004596 185 Bank of Tokyo - Mitsubishi STD Bank of Tokyo - Mitsubishi
NA None Banque Nationale de Paris BNP STD Banque Nationale de Paris BNP
003090 185 Banque Paribas STD Banque Parias
06738C None Barclays Bank Pic STD Barclays Bank Pic
06738C None Barclays US Funding Corp GTD Barclays Bank Pic
NA None Bayerische Landesbank GZ STD Bayerische Landesbank GZ
000207 None Bayerische Vereinsbank AG STD Bayerische Vereinsbank AG
NA 65 BHF Finance Inc. GTD BHF-Bank AG
NA 65 BHF-BANK AG STD BHF-BANK AG
NA None Canadian Imperial Bank of Commerce (CIBC) STD Canadian Imperial Bank of Commerce CIBC
NA None Canadian Imperial Holdings Inc. GTD Canadian Imperial Bank of Commerce
- -------------------------------------------------------------------------------------------------------------------
NA None Commerzbank AG STD Commerzbank AG
NA None Credit Agricole CA STD Credit Agricole CA
NA None Credit Agricole USA Inc. GTD Credit Agricole
<CAPTION>
CUSIP PROGRAM REST. ISSUER INDUSTRY SPC MDY'S DCR FITCH TBW IBCA
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NA 3(a)3 185 AB Spintab Banking A-2 P-1 NR NR T-1 SK
NA None Abbey National North America Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Abbey National Pic Banking A-1+ NR NR Fl+ T-1 SK
- -------------------------------------------------------------------------------------------------------------------
00077Q None ABN Amro Holding NV Banking A-1+ P-1 NR Fl+ T-1 SK
00077Q None ABN Amro North Am. Fin. Banking A-l+ P-1 NR Fl+ T-1 SK
- -------------------------------------------------------------------------------------------------------------------
NA None Banca Monte del Paschi di Siena SpA Banking A-2 P-1 NR Fl T-1 SK
ES021390 None Banco Santander SA Banking A-l+ NR NR Fl+ T-1 SK
063671 None Bank of Montreal Banking A-l+ P-1 NR Fl+ T-1 SK
054159 None Bank of Nova Scotia SCOTIABANK Banking A-1+ P-1 NR Fl+ T-1 SK
004596 185 Bank of Tokyo - Mitsubishi Banking A-1 NR NR Fl+ T-1 SK
NA None Banque Nationale de Paris BNP Banking A-1 P-1 NR F1+ T-1 SK
003090 185 Banque Paribas Banking A-1 P-1 NR Fl T-1 SK
06738C None Barclays Bank Pic Banking A-l+ P-1 NR Fl+ T-1 SK
06738C None Barclays US Funding Corp Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Bayerische Landesbank GZ Banking A-1+ P-1 NR Fl+ T-1 SK
000207 None Bayerische Vereinsbank AG Banking A-1+ P-1 NR Fl+ T-1 SK
NA 65 BHF Finance Inc. Banking A-2 P-1 NR Fl+ T-1 SK
NA 65 BHF-BANK AG Banking A-2 NR NR Fl+ T-1 SK
NA None Canadian Imperial Bank of Commerce (CIBC) Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Canadian Imperial Holdings Inc. Banking A-l+ P-1 NR Fl+ T-1 SK
- -------------------------------------------------------------------------------------------------------------------
NA None Commerzbank AG Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Credit Agricole CA Banking NR NR NR Fl+ T-1 SK
NA None Credit Agricole USA Inc. Banking Al+ NR NR Fl+ T-1 SK
</TABLE>
- -------------------------------------------------------------------------------
Wednesday, April 29, 1998 Page 1
<PAGE> 52
<TABLE>
<CAPTION>
CUSIP PROGRAM REST. ISSUER TYPE GUARANTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NA None Credit Suisse STD Credit Suisse
NA None Credit Suisse Financial Services GTD Credit Suisse
NA Susp Dai-Ichi Kangyo Bank Ltd DKB STD Dai-Ichi Kangyo Bank Ltd DKB
- -------------------------------------------------------------------------------------------------------------------
248206 None Dan Danske Bank STD Dan Danske Bank
248206 None Dan Danske Corp. GTD Dan Danske Bank
- -------------------------------------------------------------------------------------------------------------------
NA None Deutsche Bank AG STD Deutsche Bank AG
NA None Deutsche Financial Inc. GTD Deutsche Bank AG
261561 None Dresdner Bank STD Dresdner Bank
NA Susp Fuji Bank Ltd. STD Fuji Bank Ltd.
NA None Halifax Building Society STD Halifax Building Society
NA None HSBC Holdings Pic STD HSBC Holdings Pic
NA Susp Industrial Bank of Japan Ltd STD Industrial Bank of Japan Ltd
NA None Kredietbank KB STD Kredietbank KB
NA None Kredietbank NA Financial GTD Kredietbank NV
NA None Lloyds Bank pic STD Lloyds Bank pic
632525 None National Australia Bank STD National Australia Bank
632525 None National Australia Funding GTD National Australia Bank
638539 None National Westminister Bank Pic STD National Westminister Bank Pic
NA None Rabobank Nederland STD Rabobank Nederland
NA None Rabobank USA Financial GTD Rabobank Nederland
- -------------------------------------------------------------------------------------------------------------------
NA None Royal Bank of Canada RBC STD Royal Bank of Canada RBC
NA Susp Sanwa Bank Ltd STD Sanwa Bank Ltd
870536 None SBS - Swiss Bank Corporation STD SBS - Swiss Bank Corporation
NA None Societe Generale STD Societe Generale
NA None Societe Generale NA Inc. . GTD Societe Generale
004860 Susp Sumitomo Bank Ltd STD Sumitomo Bank Ltd
<CAPTION>
CUSIP PROGRAM REST. ISSUER INDUSTRY SPC MDY'S DCR FITCH TBW IBCA
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NA None Credit Suisse Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Credit Suisse Financial Services Banking A-1+ P-1 NR Fl+ T-1 SK
NA Susp Dai-Ichi Kangyo Bank Ltd DKB Banking A-1 NR NR Fl+ T-1 SK
- ----------------------------------------------------------------------------------------------------------------------------------
248206 None Dan Danske Bank Banking A-1 P-1 NR Fl+ T-1 SK
248206 None Dan Danske Corp. Banking A-1 P-1 NR Fl+ T-1 SK
- ----------------------------------------------------------------------------------------------------------------------------------
NA None Deutsche Bank AG Banking A-1+ NR NR Fl+ T-1 SK
NA None Deutsche Financial Inc. Banking A-1+ P-1 NR Fl+ T-1 SK
261561 None Dresdner Bank Banking A-1+ P-1 NR Fl+ T-1 SK
NA Susp Fuji Bank Ltd. Banking A-2 NR NR Fl+ T-1 SK
NA None Halifax Building Society Banking A-l+ P-1 NR Fl+ T-1 SK
NA None HSBC Holdings Pic Banking NR NR NR Fl+ T-1 SK
NA Susp Industrial Bank of Japan Ltd Banking A-1 NR NR Fl+ T-1 SK
NA None Kredietbank KB Banking A-l+ NR NR Fl+ T-1 SK
NA None Kredietbank NA Financial Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Lloyds Bank pic Banking A-1+ P-1 NR Fl+ T-1 SK
632525 None National Australia Bank Banking A-1+ P-1 NR Fl+ T-1 SK
632525 None National Australia Funding Banking A-1+ P-1 NR Fl+ T-1 SK
638539 None National Westminister Bank Pic Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Rabobank Nederland Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Rabobank USA Financial Banking A-1+ P-1 NR Fl+ T-1 SK
- ----------------------------------------------------------------------------------------------------------------------------------
NA None Royal Bank of Canada RBC Banking A-1+ P-1 NR Fl+ T-1 SK
NA Susp Sanwa Bank Ltd Banking A-1 NR NR F1+ T-1 SK
870536 None SBS - Swiss Bank Corporation Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Societe Generale Banking A-1+ P-1 NR Fl+ T-1 SK
NA None Societe Generale NA Inc. . Banking A-1+ P-1 NR Fl+ T-1 SK
004860 Susp Sumitomo Bank Ltd Banking A-2 NR NR Fl+ T-1 SK
</TABLE>
- -------------------------------------------------------------------------------
Wednesday, April 29, 1998 Page 2
<PAGE> 53
<TABLE>
<CAPTION>
CUSIP PROGRAM REST. ISSUER TYPE GUARANTOR
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NA 185 daysSwedbank STD Swedbank
891160 None Toronto Dominion Bank STD Dominion Bank
891160 None Toronto Dominion Holdings GTD Toronto Dominion Bank
NA None Unibank A/S STD Unibank A/S
90474L 3(a)3 None Unifunding Inc. GTD Unionbank A/S
90531P None Union Bank of Switzerland UBS STD Union Bank of Switzerland UBS
957526 None Westdeutsche Landesbank GZ STD Westdeutsche Landesbank GZ
<CAPTION>
CUSIP PROGRAM REST. ISSUER INDUSTRY SPC MDY'S DCR FITCH TBW IBCA
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NA 185 daysSwedbank Banking A-2 P-1 NR NR TBW-1 SK
891160 None Toronto Dominion Bank Banking A-l+ P-1 NR Fl+ T-1 SK
891160 None Toronto Dominion Holdings Banking A-l+ P-1 NR Fl+ T-1 SK
NA None Unibank A/S Banking A-1 P1 NR Fl T-1 SK
90474L 3(a)3 None Unifunding Inc. Banking A-1 P1 NR F1 T-1 SK
90531P None Union Bank of Switzerland UBS Banking A-1+ P-1 NR Fl+ T-1 SK
957526 None Westdeutsche Landesbank GZ Banking A-l+ P-1 NR Fl+ T-1 SK
</TABLE>
- -----------------------------------------------------------------------------
Wednesday, April 29,1998 Page
<PAGE> 1
Exhibit 10
October 7, 1998
The One Group(R) Investment Trust
One Nationwide Plaza
Columbus, Ohio 43215
Ladies and Gentlemen:
You have informed us that you intend to file a Rule 485(a)
Post-Effective Amendment to your Registration Statement under the Investment
Company Act of 1940, as amended, with the Securities and Exchange Commission
(the "Commission") for the purpose of adding disclosure regarding The One
Group(R) Investment Trust Bond, Value Growth, Mid Cap Opportunities, and Mid Cap
Value Funds.
We have examined your Amended and Restated Agreement and Declaration of
Trust, as further amended, as on file at the office of the Secretary of The
Commonwealth of Massachusetts. We are familiar with the actions taken by your
Trustees to authorize the issue and sale from time to time of your shares of
beneficial interest at not less than the public offering price of such shares
and have assumed that the Shares have been issued and sold in accordance with
such action. We have also examined a copy of your Code of Regulations and such
other documents as we have deemed necessary for the purposes of this opinion.
Based on the foregoing, we are of the opinion that the Shares being
registered have been duly authorized and when sold will be legally issued, fully
paid and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or its Trustees. The Declaration of Trust provides for indemnification out of
the property of the Trust for all loss and expense of any shareholder of the
Trust held personally liable solely by reason of his being or having been a
shareholder. Thus, the risk of a share-
<PAGE> 2
The One Group(R) Investment Trust
October 7, 1998
Page 2
holder incurring financial loss on account of being a shareholder is limited to
circumstances in which the Trust itself would be unable to meet its obligations.
We consent to this opinion accompanying the Post-Effective Amendment
No. 8 when filed with the Commission.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE> 1
Exhibit 11(a)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference to our
firm under the caption "Legal Counsel" included in or made a part of
Post-Effective Amendment No. 8 to the Registration Statement of The One Group(R)
Investment Trust on Form N-1A (Nos. 33-66080 and 811-7874) under the Securities
Act of 1933, as amended.
/s/ ROPES & GRAY
ROPES & GRAY
Washington, D.C.
October 7, 1998
<PAGE> 1
Exhibit 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 8
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated February 11, 1998, relating to the financial statements and
financial highlights appearing in the December 31, 1997 Annual Report to
Shareholders of The One Group Investment Trust, which is incorporated by
reference into the Registration Statement. We also consent to the reference to
us under the heading "Experts" in such Statement of Additional Information.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
October 1, 1998
