<PAGE> 1
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THE ONE(R) GROUP(SM) INVESTMENT TRUST
ANNUAL REPORT
DECEMBER 31, 1997
================================================================================
<PAGE> 2
THE ONE(R) GROUP(SM) INVESTMENT TRUST
ANNUAL REPORT
DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................... 1
Management Discussion of Fund Performance:
Government Bond Fund................................... 2
Asset Allocation Fund.................................. 4
Growth Opportunities Fund.............................. 6
Large Company Growth Fund.............................. 8
Statements of Investments:
Government Bond Fund................................... 10
Asset Allocation Fund.................................. 11
Growth Opportunities Fund.............................. 15
Large Company Growth Fund.............................. 18
Statements of Assets and Liabilities........................ 21
Statements of Operations.................................... 22
Statements of Changes in Net Assets......................... 23
Financial Highlights........................................ 25
Notes to Financial Statements............................... 27
</TABLE>
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
The One(R) Group(SM) Investment Trust
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Government Bond Fund, the Asset
Allocation Fund, the Growth Opportunities Fund, and the Large Company Growth
Fund (constituting The One Group Investment Trust, hereafter referred to as the
"Trust") at December 31, 1997, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
New York, New York
February 11, 1998
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 1
<PAGE> 4
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
GOVERNMENT BOND FUND
DECEMBER 31, 1997
PERFORMANCE
For the year ended December 31, 1997, the Government Bond Fund posted a total
return of 9.67%.
While interest rates rose erratically during the first quarter of the year, they
showed an overall downward trend for the year, which pushed bond prices upward.
The 10-year Treasury note, for example, yielded 6.20% on December 31, 1996, and
fell to 5.74% on December 31, 1997. The Fund's 30-day SEC yield followed suit,
falling to 5.87% on December 31, 1997, from 6.32% a year earlier.
Maintaining our normally high allocations to mortgage-backed securities and
other yield producers, along with targeting certain securities that enabled us
to benefit from rising bond prices (see next section), contributed to the Fund's
strong performance. At year end, approximately 56% of the portfolio's assets
were invested in mortgage-backed securities, while 22% were invested in agencies
and 21% were invested in Treasuries.
HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
8/1/94* 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Government Bond 10,000 9,910 11,564 11,875 13,023
Solomon Bros. 3-7 Year Treas./Gov't 10,000 9,883 11,507 11,927 12,916
</TABLE>
* Initial public offering commenced August 1, 1994.
Government Bond Fund
Average Annual Total Return
<TABLE>
<CAPTION>
One Year Since Inception
-------- ---------------
<S> <C>
9.67% 8.03%
</TABLE>
Past performance is not predictive of future performance.
2 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 5
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
GOVERNMENT BOND FUND -- (CONTINUED)
DECEMBER 31, 1997
STRATEGIES AND TACTICS
In addition to focusing on yield, another component of the Fund's investment
strategy was maintaining a neutral duration. (Duration is a measure of a fund's
price sensitivity to interest rate changes. A longer duration indicates greater
sensitivity; a shorter duration indicates less.) Early in the year, maintaining
a neutral duration helped limit the effects of rising interest rates and the
subsequent decline in bond prices.
During the second half of the year, though, the sharp decline in interest rates
caused the duration on many mortgage-backed securities to shorten dramatically.
This made our efforts to maintain a neutral duration even more important.
Specifically, when interest rates fall, bond prices rise, and funds with longer
durations tend to outperform those with shorter durations. By targeting
long-duration securities (those with relatively low prepayment risk), we were
able to overcome the effects of declining interest rates on certain
mortgage-backed securities and maintain the Fund's average duration in a neutral
range of 5.0 years to 5.25 years. This tactic also helped the Fund take
advantage of rising bond prices, which contributed to the Fund's solid one-year
return.
OUTLOOK
Looking ahead, we believe that interest rates will continue to decline in 1998
due to a slowing economy and the ongoing crises in Asia. Furthermore, rates may
get an additional push downward from investors shifting their assets away from
the stock market and into the bond market. All of this activity should bode well
for the bond market's performance in 1998.
/s/ THOMAS E. DONNE
- --------------------
Thomas E. Donne, CFA
Fund Co-Manager
/s/ MICHAEL J. SAIS
- --------------------
Michael J. Sais, CFA
Fund Co-Manager
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 3
<PAGE> 6
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
ASSET ALLOCATION FUND
DECEMBER 31, 1997
PERFORMANCE AND STRATEGY
For the year ended December 31, 1997, the Asset Allocation Fund posted a total
return of 22.90%.
Declining interest rates and stronger-than-expected corporate earnings growth
were the primary forces at work in the bond and stock markets during the year.
Our research at the beginning of the year showed that stock valuations, relative
to bond valuations, were fairly high but corporate earnings momentum, or
profitability, remained strong. As a result, the Fund's asset allocation
remained at approximately 55% stocks and 45% bonds. On November 11, 1997, after
the U.S. market began to feel the effect of the currency and economic crisis in
Southeast Asia, Banc One Investment Advisors' Asset Allocation Committee changed
the allocation to approximately 48% stocks and 41% bonds.
HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
8/1/94* 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Asset Allocation 10,000 9,868 11,909 13,329 16,382
Blended Index ** 10,000 10,054 12,933 14,864 18,327
LB Interm. Gov't Corp 10,000 10,154 13,965 17,170 22,896
S&P 500 10,000 9,928 11,950 11,913 12,851
</TABLE>
* Initial public offering commenced August 1, 1994.
** Blended Index consists of 60% S&P 500 & 40% Lipper Intermediate U.S.
Government Bond Index.
Asset Allocation Fund
Average Annual Total Return
<TABLE>
<CAPTION>
One Year Since Inception
-------- ---------------
<S> <C>
22.90% 15.53%
</TABLE>
Past performance is not predictive of future performance.
EQUITY
The strong relative performance in the Fund's stock portfolio was due primarily
to good stock selection in select economic sectors, including the consumer
cyclical, health care, technology and electric utilities sectors.
The Fund's equity philosophy is research driven. The equity portion of the Fund
reflects the "best ideas" of the equity research team. As such, portfolio
returns are driven by stock selection, not market timing or sector rotation.
Our equity process employs a systematic approach to stock selection that
involves analyzing various valuation, fundamental and risk parameters. Banc One
Investment Advisors currently researches approximately 600 issues within 15
economic sectors. Analysts annually review each company in their respective
economic sector-based coverage list. Each review is similar to a business case
study and represents a rigorous exercise in validating near-term and long-term
earnings drivers in front of a peer group of analysts and fund managers. In
1997, our analysts visited nearly 150 company management teams to discuss their
company's respective business model and long-term strategy.
4 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 7
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
ASSET ALLOCATION FUND -- (CONTINUED)
DECEMBER 31, 1997
FIXED INCOME
The bulk of the return in the Fund's bond portfolio was generated by coupon
income. We were able to enhance the portfolio's coupon returns by keeping close
to half of the portfolio's fixed-income assets (approximately 47%) in corporate
and mortgage-backed securities. The portfolio's performance further benefited
from an increase in bond prices, as bond market yields declined during the year.
Our primary strategy was to maintain a neutral duration posture of 4.1 years.
(Duration is a measure of a Fund's price sensitivity to interest rate changes. A
longer duration indicates greater sensitivity; a shorter duration indicates
less.) This helped limit the portfolio's risk profile early in the year when
interest rates increased and during the remainder of the year as interest rates
dropped.
In addition, we maintained diversity among government, agency, mortgage-backed
and corporate securities. Exposure to mortgage-backed securities helped the
Fund's performance, as this sector outperformed the others on a relative basis.
As a group, corporate bonds were the poorest-performing securities. At the end
of the year, approximately 50% of the Fund's bond portfolio was invested in
Treasury securities, 25% in mortgage-backed securities and 25% in corporate and
asset-backed securities.
Credit quality within the Fund's bond portfolio remained high, with 80% of the
portfolio's securities AAA-rated, 3% AA-rated, 12% A-rated and 5% BBB-rated.
NOTABLE STOCK HOLDINGS
The strongest market sectors during the year were the bank and financial areas,
posting gains of approximately 66% and 50%, respectively. Together, these two
sectors accounted for about 20% of the Fund's equity position. Strong earnings
and acquisition activity were the primary reasons for the favorable performance
from these sectors.
On the other hand, the weakest sectors were the communications technology and
industrial commodities sectors, gaining only 3% and 16%, respectively.
OUTLOOK
We expect the U.S. equity market to remain volatile during the short term, due
primarily to the events in Southeast Asia. Looking ahead, most of the Fund's
equity return is likely to come from earnings growth rather than price/earnings
ratio expansion. However, the market is becoming more concerned about the impact
Southeast Asia will have on earnings. As such, we believe that corporate
earnings probably have seen their peak for a while and should advance between 6%
and 7% over the next year, leading to a more tepid equity market environment in
1998.
Our outlook suggests that economic activity will moderate slightly in 1998. How
bond yields respond depends largely on whether or not the Federal Reserve takes
action on interest rates. Given the uncertainty, we will maintain a neutral
duration. In addition, we most likely will maintain a defensive posture toward
the corporate and mortgage sectors until the rewards of increasing exposure to
these sectors outweigh the risks.
/s/ DANIEL KAPUSTA
- ------------------
Daniel Kapusta
Fund Manager
/s/ SCOTT GRIMSHAW
- ------------------
Scott Grimshaw
Fund Manager
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 5
<PAGE> 8
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
GROWTH OPPORTUNITIES FUND
DECEMBER 31, 1997
PERFORMANCE AND STRATEGY
For the one-year period ended December 31, 1997, the Growth Opportunities Fund
posted a total return of 29.81%.
The market climate remained positive for most of the year as interest rates and
inflation continued to move lower. In addition, investors helped maintain a
strong level of liquidity by pouring billions of dollars into the U.S. equity
markets shattering 1996's record. The outlook for many of the Fund's mid-size
growth companies remained strong during the year due to their abilities to meet
or surpass revenue and earnings expectations.
Only late in the year did the market climate become shaky as various Asian
economies and financial markets suffered severe downturns. This forced Wall
Street analysts to revise downward their earnings and revenue projections.
Facing this scenario for the first time in several years, investors quickly
began to sell stocks. On the positive side, more money was funneled into quality
names offered in the U.S., the world's safe haven. The year ended on a strong
note but not without much volatility, particularly in the technology sector.
As influential as these events were, they did not distract us from our overall
strategy--to find attractive companies in favorable industries. Of course there
are several factors that make a company attractive, including market growth, the
positioning of that company within its industry, product cycle, revenue/earnings
prospects and, the most important factor, management's ability to execute its
business plan. The only long-term sustainable competitive advantage of any
company is its senior management team's ability to visualize and execute. Our
ongoing task, therefore, is to constantly search for the best management teams.
HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
8/1/94* 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Growth Opportunities 10,000 9,700 12,033 13,919 18,068
Russell 2000 10,000 10,258 13,092 15,257 18,648
S&P/BARRA Midcap 400 Growth 10,000 10,316 13,132 15,552 20,245
</TABLE>
* Initial public offering commenced August 1, 1994.
Growth Opportunities Fund
Average Annual Total Return
<TABLE>
<CAPTION>
One Year Since Inception
-------- ---------------
<S> <C>
29.81% 18.88%
</TABLE>
Past performance is not predictive of future performance.
6 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 9
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
GROWTH OPPORTUNITIES FUND -- (CONTINUED)
DECEMBER 31, 1997
NOTABLE STOCK HOLDINGS
We increased the Fund's financial and retail sector weights during the year. The
fundamental outlook for financial companies and domestic retailers continues to
improve and stocks in both sectors should continue to benefit from a strong
domestic economy.
We reduced the Fund's weighting in the technology and cyclical sectors where
company fundamentals and pricing power continue to deteriorate.
Among the Fund's larger holdings, Dell Computer was the best performer,
increasing more than 300% for the year. In fact, Dell appreciated so much during
the year that it moved from a medium-capitalization stock to a
large-capitalization stock. With a superb management team at its helm, the
company continues to execute a solid business model and surpass investor
expectations.
OUTLOOK
Overall, we believe that the equity markets should remain on positive ground in
1998. If interest rates decline, as we believe they may, this should reduce the
downside risk for the market. Nevertheless, the market is likely to remain
choppy until investors can better quantify the impact of the Asian crisis on
company prospects.
Until the picture on Asia is clearer and market conditions stabilize, we do not
expect to make any major changes to the Fund. At that point we will continue to
invest in companies offering the highest quality and most predictable revenue
and earnings prospects.
/s/ ASHI PARIKH
- ---------------
Ashi Parikh
Fund Manager
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 7
<PAGE> 10
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
LARGE COMPANY GROWTH FUND
DECEMBER 31, 1997
PERFORMANCE AND STRATEGY
The Large Company Growth Fund posted a total return of 31.93% for the fiscal
year ended December 31, 1997.
For most of the year, the market climate for large multinational companies
remained strong as interest rates and inflation continued to move lower.
Consequently, companies continued to meet or surpass revenue and earnings
expectations. At the same time, liquidity remained favorable as investors poured
billions of dollars into the U.S. equity markets shattering 1996's record
volume.
Conditions began to change in the fourth quarter when the impact of the Asian
financial crisis hit the U.S. stock market. Volatility increased dramatically
and Wall Street analysts were forced to revise their revenue and earnings
projections downward. Facing the possible deceleration of earnings and revenues
for the first time in several years, market participants began to sell quickly.
On the positive side, money gravitated toward the large-growth area of the
market as investors found comfort in the quality and predictability that these
companies offer. In the end, large-growth stocks performed very well for an
unprecedented third-consecutive year.
The year's events did not affect our overall strategy--to find attractive
companies in attractive industries. Of course, there are several factors that
make a company attractive including market growth, the positioning of that
company within its industry, product cycle, revenue/earnings prospects and, the
most important factor, management's ability to execute its business plan. The
only long-term sustainable competitive advantage of any company is its senior
managers' ability to visualize and execute. Our task, therefore, is to
constantly search for the best management teams.
HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
8/1/94* 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Large Co. 10,000 10,052 12,478 14,558 19,207
S&P 500 10,000 10,154 13,965 17,170 22,896
S&P/BARRA 500 Growth 10,000 10,454 14,421 17,878 24,409
</TABLE>
* Initial public offering commenced August 1, 1994.
Growth Opportunities Fund
Average Annual Total Return
<TABLE>
<CAPTION>
One Year Since Inception
-------- ---------------
<S> <C>
31.93% 21.03%
</TABLE>
Past performance is not predictive of future performance.
8 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 11
THE ONE(R) GROUP(SM) INVESTMENT TRUST
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
LARGE COMPANY GROWTH FUND -- (CONTINUED)
DECEMBER 31, 1997
NOTABLE STOCK HOLDINGS
Throughout the year the Fund was heavily invested in the pharmaceutical,
consumer non-durables and technology sectors. These sectors continued to show
consistency and predictability in earnings growth.
We made some slight sector shifts in the second half of the year by increasing
the Fund's technology and financial weightings and reducing its weightings
toward consumer cyclicals and process industries. We believe the technology
sector offers the highest underlying pure growth opportunities and the financial
sector offers strong fundamentals while continuing to serve as the backbone of
this market run. We reduced exposure to cyclicals because the sector's
fundamentals and pricing power appear to be deteriorating.
Over the past 12 months, a number of the Fund's stock holdings provided
exceptional performance but the most noteworthy came from Dell Computer, which
increased more than 300% for the year. With a superb management team at its
helm, the company continues to execute a solid business model and surpass
investor expectations.
OUTLOOK
We believe much of the "bad news" associated with the Asian market severe
downturns has been already priced into the U.S. stock market. We therefore think
the market should stabilize and head upward again. Nevertheless, investors will
not be comfortable until they obtain more concrete facts on the Asian situation
and how it will affect company prospects.
Consequently, we do not expect to make any major strategic or tactical changes
to the Fund until the market stabilizes. At that time, we expect to strengthen
the Fund's commitment to the technology sector.
/s/ ASHI PARIKH
- ---------------
Ashi Parikh
Fund Manager
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 9
<PAGE> 12
THE ONE(R) GROUP(SM) INVESTMENT TRUST
GOVERNMENT BOND FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(43.1%)
$1,000,000 Resolution Funding Corp.,
Principal STRIP, 10/15/00 $ 853,249
1,000,000 Resolution Funding Corp.,
Principal STRIP, 10/15/16 316,099
1,000,000 Resolution Funding Corp.,
Principal STRIP, 10/15/17 297,099
2,000,000 Resolution Funding Corp.,
Principal STRIP, 01/15/20 515,318
2,000,000 Resolution Funding Corp.,
Principal STRIP, 07/15/20 499,696
900,000 U.S. Treasury Notes, 7.50%,
11/15/01 954,563
1,250,000 U.S. Treasury Notes, 5.625%,
12/31/02 1,245,313
750,000 U.S. Treasury Notes, 6.50%,
08/15/05 782,578
550,000 U.S. Treasury Notes, 6.875%,
05/15/06 588,671
1,000,000 U.S. Treasury Bond, 6.25%,
08/15/23 1,030,625
1,500,000 FHLB, 6.145%, 09/30/02 1,512,995
1,000,000 FNMA Medium Term Note, 6.54%,
09/10/07 1,033,453
-----------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS 9,629,659
(cost $9,300,334) -----------
MORTGAGE-BACKED SECURITIES (55.8%)
211,101 FGLMC 5Y, 6.50%,
Pool #G50324, 01/01/01 211,540
271,387 FGLMC 15Y, 6.50%,
Pool #E62574, 01/01/11 271,954
843,292 FGLMC 15Y, 7.00%,
Pool #E63959, 02/01/11 856,632
994,559 FGLMC 30Y, 6.00%,
Pool #D70244, 04/01/26 962,244
918,997 FGLMC 30Y, 6.50%,
Pool #D65545, 11/01/25 909,990
277,529 FGLMC 15Y, 8.50%,
Pool #E20150, 12/01/09 289,643
898,970 FGLMC 30Y, 8.00%,
Pool #D55955, 09/01/24 931,026
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES
(CONTINUED)
$ 425,387 FNMA 7Y, 7.00%,
Pool #359952, 09/01/03 $ 431,491
539,897 FNMA 15Y, 7.50%,
Pool #279759, 08/01/09 554,106
242,190 FNMA 15Y, 6.50%,
Pool #356206, 11/01/11 242,495
441,802 FNMA 30Y, 6.50%,
Pool #250375, 09/01/25 436,831
976,986 FNMA 30Y, 6.50%,
Pool #338417, 05/01/26 964,822
946,067 FNMA 30Y, 6.50%,
Pool #341811, 05/01/26 934,287
938,423 FNMA GOLD 30Y, 7.00%,
Pool #1936, 07/17/05 956,704
559,170 GNSF 30Y, 7.50%,
Pool #326977, 05/15/23 574,714
436,506 GNSF 30Y, 9.00%,
Pool #780029, 11/15/24 469,790
119,743 GNSF 30Y, 7.00%,
Pool #405535, 12/15/25 120,752
872,489 GNSF 30Y, 7.00%,
Pool #404252, 12/15/25 879,843
478,291 GNSF 30Y, 7.50%,
Pool #2341, 12/20/26 487,885
980,258 GNMA, 6.00%,
Pool #90094, 07/20/27 988,040
-----------
TOTAL MORTGAGE-BACKED SECURITIES 12,474,789
(cost $12,236,613) -----------
SUBTOTAL INVESTMENTS 22,104,448
-----------
(cost $21,536,947)
REPURCHASE AGREEMENT (.5%)
105,000 Prudential Securities, Inc.,
6.80%, dated 12/31/97, due
01/02/98, Collateralized by
$152,448 FHARM, 6.19%, due
10/01/24, market value $108,150
(cost $105,000) 105,000
-----------
TOTAL INVESTMENTS $22,209,448
(cost $21,641,947) ===========
</TABLE>
- --------------------------------------------------------------------------------
Cost also represents cost for federal income tax purposes.
The abbreviations in the above statement stand for the following:
FGLMC Federal Home Loan Mortgage Corporation Gold
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
GNSF Ginnie Mae Single Family
FHLB Federal Home Loan Bank
FHARM Federal Home Loan Adjustable Rate Mortgage
STRIP Separate Trading of Registered Interest and Principal Securities
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
10 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 13
THE ONE(R) GROUP(SM) INVESTMENT TRUST
ASSET ALLOCATION FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCK (47.7%)
AEROSPACE/DEFENSE (0.3%)
2,200 Boeing Company (The) $ 107,663
-----------
BROADCASTING (0.2%)
3,381 Tele-Communications, Inc.
Class A 94,457
-----------
BUSINESS EQUIPMENT/SERVICES (0.4%)
1,300 Jacobs Energy Group, Inc.* 32,988
3,700 Service Corp International 136,669
-----------
169,657
-----------
CONSUMER DURABLE (0.9%)
3,700 Autozone, Inc.* 107,300
4,500 Chrysler Corp. 158,344
2,100 Lear Corp.* 99,750
-----------
365,394
-----------
CAPITAL GOODS (3.4%)
2,100 Cooper Industries, Inc. 102,900
2,700 Emerson Electric Co. 152,381
7,200 General Electric Co. 528,300
1,900 Harsco Corp. 81,938
1,200 Hubbell Inc. Class B 59,175
2,300 Mark IV Inds., Inc. 50,313
1,100 Precision Castparts Corp. 66,344
3,600 Teleflex, Inc. 135,900
4,800 Tyco International Ltd. 216,300
-----------
1,393,551
-----------
CONSUMER NON-DURABLE (4.9%)
5,500 Archer-Daniels-Midland Co. 119,281
4,000 Coca Cola Co. 266,500
3,700 ConAgra, Inc. 121,406
3,600 Intimate Brands, Inc. 86,625
2,800 McCormick & Co., Inc. 78,400
3,500 Newell Co. 148,750
2,300 Olin Corp. 107,813
6,600 PepsiCo, Inc. 240,488
8,700 Philip Morris Companies, Inc. 394,219
1,400 Procter & Gamble Co. 111,738
2,500 Quaker Oats Co. 131,875
2,100 Revlon, Inc. Class A* 74,156
4,000 RJR Nabisco Holding Corp. 150,000
-----------
2,031,251
-----------
CONSUMER SERVICES (2.2%)
1,900 Belo, (AH) Corp. Series A 106,638
1,200 Walt Disney Co. 118,875
1,200 Estee Lauder Cos. 61,725
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
CONSUMER SERVICES (CONTINUED)
3,450 Hasbro, Inc. $ 108,675
4,200 Hilton Hotels Corp. 124,950
1,900 MGM Grand, Inc.* 68,519
2,800 Time Warner, Inc. 173,600
580 Tricon Global Restaurants, Inc. 16,856
2,900 Viacom, Inc. Class B 120,169
-----------
900,007
-----------
ENERGY (4.0%)
1,800 Ashland, Inc. 96,638
2,400 Atlantic Richfield Co. 192,300
1,600 Devon Energy Corp. 61,600
1,500 Dresser Industries, Inc. 62,906
7,100 Exxon Corporation 434,431
3,000 Mobil Corp. 216,563
4,600 Royal Dutch Petroleum Co. 249,263
3,700 Tosco Corp. 139,906
3,800 USX -- Marathon Group 128,250
2,000 Weatherford Enterra, Inc.* 87,500
-----------
1,669,357
-----------
FINANCIAL SERVICES (8.5%)
1,000 Allstate Corp. 90,875
1,100 American Express Co. 98,175
1,700 American International Group, 184,875
Inc.
1,800 Charter One Financial, Inc. 113,625
1,800 Chase Manhattan Corp. 197,100
700 CIGNA Corp. 121,144
2,100 Equitable Companies, Inc. 104,475
4,100 Fannie Mae 233,956
1,300 First of America Bank Corp. 100,263
4,300 First Union Corp. 220,375
2,900 Fleet Financial Group, Inc. 217,319
1,600 Hartford Financial Services 149,700
Group
2,600 Morgan Stanley Dean Witter, 153,725
Discover & Co.*
3,900 Nationsbank Corp. 237,169
3,000 PNC Bank Corp. 171,188
1,800 Provident Companies, Inc. 69,525
2,600 Regions Financial Corp. 109,687
2,600 SouthTrust Corp. 164,937
1,900 State Street Corp. 110,556
1,200 Transamerica Corp. 127,800
4,400 Travelers Group, Inc. 237,050
1,400 Washington Mutual, Inc. 89,338
600 Wells Fargo & Co. 203,662
-----------
3,506,519
-----------
</TABLE>
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 11
<PAGE> 14
THE ONE(R) GROUP(SM) INVESTMENT TRUST
ASSET ALLOCATION FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
HEALTHCARE (5.3%)
3,300 Abbott Laboratories $ 216,356
2,400 American Home Products Corp. 183,600
1,800 Amgen, Inc. 97,425
2,300 Baxter International, Inc. 116,006
3,500 Bristol-Meyers Squibb Co. 331,188
1,150 Cardinal Health, Inc. 86,394
2,000 Guidant Corp. 124,500
2,900 HealthSouth Corp.* 80,475
1,300 Johnson & Johnson Co. 85,638
4,100 Lilly Eli & Co. 285,462
2,500 Medpartners-Mulikin* 55,938
1,800 Merck & Co., Inc. 191,250
1,200 Pfizer, Inc. 89,475
2,800 Tenet Healthcare Corp.* 92,750
1,300 Warner-Lambert Co. 161,200
-----------
2,197,657
-----------
RAW MATERIALS (1.8%)
1,800 Betzdearborn, Inc. 109,913
2,700 Crompton & Knowles Corp. 71,550
2,700 Du Pont (E.I.) De Nemours & Co. 162,159
3,250 Ferro Corp. 79,016
3,700 Morton International, Inc. 127,188
2,400 Nalco Chemical Co. 94,950
2,700 Praxair, Inc. 121,500
-----------
766,276
-----------
RETAIL (3.2%)
4,000 Cendant Corp.* 137,500
4,800 CompUSA, Inc.* 148,800
2,600 Dayton Hudson Corp. 175,500
3,000 Gymboree Corp.* 82,125
5,100 Just For Feet, Inc.* 66,938
4,300 Kroger Co.* 158,831
6,600 Officemax, Inc.* 94,050
1,800 Outback Steakhouse, Inc.* 51,750
3,500 Toys 'R' Us, Inc.* 110,031
7,400 Wal-Mart Stores, Inc. 291,837
-----------
1,317,362
-----------
SHELTER (1.2%)
4,600 Kaufman & Broad Home Corp. 103,213
2,900 Kimberly Clark Corp. 143,006
2,000 Leggett & Platt, Inc. 83,750
1,800 Masco Corp. 91,575
2,200 Pentair, Inc.* 79,063
-----------
500,607
-----------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
TECHNOLOGY (6.5%)
1,100 Altera Corp.* $ 36,437
3,300 Analog Devices, Inc.* 91,369
1,900 BMC Software, Inc.* 124,688
3,900 Cadence Design Systems, Inc.* 95,550
4,150 Cisco Systems, Inc.* 231,363
3,750 Compaq Computer Corp.* 211,641
2,700 Dell Computer Corp.* 226,800
900 General Motors Corp. Class H 33,244
2,200 Hewlett-Packard Co.* 137,500
5,100 Intel Corp. 358,275
3,300 International Business Machines 345,056
Co
1,200 Lockheed Martin Corp. 118,200
3,700 Microsoft Corp.* 478,225
2,900 Orbital Sciences Corp.* 86,275
506 Raytheon Co. Class A 24,960
3,200 Teradyne, Inc.* 102,400
-----------
2,701,983
-----------
UTILITIES (4.9%)
2,700 AES Corp.* 125,887
1,900 Century Telephone Enterprises, 94,644
Inc
2,100 FPL Group, Inc. 124,294
3,600 GPU, Inc. 151,650
4,400 GTE Corp. 229,900
4,900 LCI International, Inc.* 150,675
1,580 Lucent Technologies, Inc. 126,203
1,900 MCN Corp. 76,713
1,100 National Fuel Gas Co. 53,556
3,900 New York St. Electric & Gas 138,450
Corp.
3,700 SBC Communications, Inc. 271,025
3,600 Sprint Corp. 211,050
3,000 Texas Utilities Co. 124,688
4,900 WorldCom, Inc.* 148,225
-----------
2,026,960
-----------
TOTAL COMMON STOCK 19,748,701
(cost $17,716,788) -----------
<CAPTION>
- ----------
PRINCIPAL
- ----------
<C> <S> <C>
CORPORATE BONDS (9.2%)
BANKS (3.1%)
$ 250,000 Banco Central Hispano
7.50%, 06/15/05 262,449
250,000 BankAmerica Corp.
8.125%, 02/01/02 266,211
250,000 Huntington National Bank
6.75%, 06/15/03 254,419
</TABLE>
12 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 15
THE ONE(R) GROUP(SM) INVESTMENT TRUST
ASSET ALLOCATION FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
BANKS (CONTINUED)
250,000 Midland Bank PLC
6.95%, 03/15/11 $ 254,375
230,000 Society National Bank
6.75%, 06/15/03 234,806
-----------
1,272,260
-----------
BROKER DEALERS (1.0%)
$ 200,000 Lehman Brothers Holdings, Inc.,
8.875%, 11/01/98 204,230
200,000 Morgan Stanley Group,
6.50%, 03/30/01 201,772
-----------
406,002
-----------
DIVERSIFIED FINANCE (2.8%)
100,000 Associates Corp. of North
America,
6.125%, 02/01/98 100,009
250,000 Chrysler Financial Corp.,
5.875%, 02/07/01 248,586
200,000 Ford Capital,
9.375%, 05/15/01 218,838
250,000 GMAC Medium Term Note,
8.25%, 02/24/04 273,334
333,000 McDonnel Douglas Finance,
6.45%, 12/05/02 336,622
-----------
1,177,389
-----------
RETAIL (0.6%)
250,000 Sears Roebuck Acceptance Corp.,
7.13%, 05/02/03 259,035
-----------
TELECOMMUNICATIONS (1.1%)
250,000 AT&T Corp.,
7.50%, 06/01/06 268,141
200,000 Ohio Bell Telephone Co.,
5.75%, 05/01/00 199,375
-----------
467,516
-----------
TRANSPORTATION (0.6%)
250,000 Hunt, J.B., Transport,
6.25%, 09/01/03 246,803
-----------
TOTAL CORPORATE BONDS 3,829,005
(cost $3,736,848) -----------
ASSET-BACKED SECURITIES (0.8%)
74,569 Advanta Mortgage Loan Trust,
94-3A2, 7.60%, 07/25/10 74,790
250,000 Circuit City 1995 1-A,
6.375%, 08/15/05 252,422
-----------
TOTAL ASSET-BACKED SECURITIES 327,212
(cost $325,634) -----------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED
SECURITIES (9.8%)
465,279 FNMA 7 Year Balloon Pool,
#250357, 6.50%, 09/01/02 $ 467,028
106,871 FNMA Pool #270725,
7.00%, 08/01/25 107,861
499,197 FNMA Pool #402032,
7.50%, 10/01/27 510,803
$1,000,001 FGLMC 30Y Pool #C00476,
8.00%, 09/01/26 1,035,140
489,616 FGLMC 30Y Pool #D81027,
7.50%, 07/01/27 501,459
499,269 FGLMC Pool #D83256,
7.00%, 10/01/27 503,802
191,778 GNMA 15Y Pool #412559,
7.00%, 02/15/11 195,473
232,181 GNMA 30Y Pool #398663,
7.50%, 5/15/26 237,983
477,503 GNMA 30Y Pool #2360,
7.50%, 01/20/27 486,966
-----------
TOTAL MORTGAGE-BACKED
SECURITIES 4,046,515
(cost $3,997,947) -----------
U.S. GOVERNMENT
OBLIGATIONS (21.2%)
70,000 U.S. Treasury Bills,
5.10%, 02/26/98 69,527
40,000 U.S. Treasury Bills,
5.06%, 03/12/98 39,608
1,500,000 U.S. Treasury Note,
5.25%, 01/31/01 1,481,718
3,200,000 U.S. Treasury Note,
6.50%, 08/31/01 3,278,998
2,275,000 U.S.Treasury Note,
7.25%, 05/15/04 2,455,578
1,175,000 U.S. Treasury Bond,
7.875%, 02/15/21 1,442,679
-----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS 8,768,108
(cost $8,535,532) -----------
SHORT TERM DEBT (5.6%)
2,348,000 Merrill Lynch & Company,
5.73%, 03/19/98 2,319,690
(cost $2,319,517) -----------
SUBTOTAL INVESTMENTS 39,039,231
(cost $36,632,266) -----------
</TABLE>
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 13
<PAGE> 16
THE ONE(R) GROUP(SM) INVESTMENT TRUST
ASSET ALLOCATION FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
REPURCHASE
AGREEMENT (5.2%)
2,169,000 Prudential Securities, Inc.,**
6.80%, dated 12/31/97, due
01/02/98, Collateralized by
$3,149,138 FHARM 6.207%, due
10/01/24, market value
$2,234,070 (cost $2,169,000) $ 2,169,000
-----------
TOTAL INVESTMENTS $41,208,231
(cost $38,801,266) ===========
</TABLE>
- --------------------------------------------------------------------------------
Cost for federal income tax purposes: $38,842,526
* Denotes a non-income producing security
** Security is segregated as collateral on futures contracts
The abbreviations in the above statement stand for the following:
<TABLE>
<S> <C>
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
FGLMC Federal Home Loan Mortgage Corporation Gold
FHARM Federal Home Adjustable Rate Mortgage
PLC Public Limited Company
</TABLE>
Portfolio holding percentages represent market value as percentage of net
assets.
See accompanying notes to financial statements.
At December 31, 1997, the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
NUMBER OF COVERED BY APPRECIATION
CONTRACTS CONTRACT TYPE EXPIRATION CONTRACTS AT 12/31/97
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 Long -- Standard March 1998 $2,447,750 $15,400
& Poor's 500
</TABLE>
14 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 17
THE ONE(R) GROUP(SM) INVESTMENT TRUST
GROWTH OPPORTUNITIES FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCK (93.9%)
BUSINESS EQUIPMENT/SERVICES
(13.2%)
10,600 America Online, Inc.* $ 945,388
10,600 Cintas Corp. 413,400
3,900 Corrections Corporation of
America* 144,544
6,300 Fiserv, Inc.* 309,488
4,400 GTech Holdings Corp.* 140,525
400 J.D. Edwards & Co.* 11,800
9,700 Manpower, Inc. 341,925
6,000 Miller Herman, Inc. 327,375
17,800 Omnicom Group 754,275
13,300 Paychex, Inc. 673,313
3,400 Pittston Services Group* 136,850
13,400 Reynolds & Reynolds Co. 247,063
11,900 Staples, Inc.* 330,225
8,566 Sterling Commerce, Inc.* 329,255
1,200 Stewart Enterprises, Inc. 55,950
15,700 Sungard Data Systems, Inc.* 486,700
20,200 U.S.A. Waste Services, Inc.* 792,850
3,900 Viad Corp. 75,318
5,100 Wallace Computer Services, Inc. 198,262
-----------
6,714,506
-----------
CAPITAL GOODS (3.1%)
50 Crane Co. 2,170
6,475 Diebold, Inc. 327,796
5,400 Fastenal Co. 206,550
4,200 Federal Signal Corp. 90,825
5,800 Hubbell Inc. Class B 286,012
3,600 Precision Castparts Corp. 217,125
8,000 Sundstrand Corp. 403,000
700 U.S. Filter Corp.* 20,956
-----------
1,554,434
-----------
CONSUMER DURABLE (1.9%)
5,000 Danaher Corp. 315,625
3,600 Federal-Mogul Corp. 145,800
17,800 Harley-Davidson, Inc. 487,275
-----------
948,700
-----------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
CONSUMER NON DURABLE (8.7%)
4,100 Berwinger Wine Estates
Holdings, Inc.* $ 155,800
42,100 Coca-Cola Enterprises, Inc. 1,497,182
8,400 Dial Corp. (The) 174,825
5,900 Dole Food Company, Inc. 269,925
12,600 Flowers Industries, Inc. 259,088
7,300 General Nutrition Co. 248,200
31,300 Interstate Bakeries Corp. 1,169,837
6,200 Jones Apparel Group, Inc.* 266,600
2,500 Lancaster Colony Corp. 140,937
5,900 Unifi, Inc. 240,056
-----------
4,422,450
-----------
CONSUMER SERVICES (1.4%)
7,400 Callaway Golf Co. 211,362
13,800 International Game Technology 348,450
3,000 Promus Hotel Corp.* 125,813
-----------
685,625
-----------
ENERGY (7.4%)
300 Camco International, Inc. 19,106
14,800 Ensco International, Inc. 495,800
1,400 Forcenergy, Inc. 36,662
19,600 Global Marine, Inc.* 480,200
2,200 Houston Exploration Co.* 40,425
22,400 Intelect Communications, Inc.* 114,800
14,300 Nabors Industries, Inc.* 449,556
7,000 Noble Affiliates, Inc. 246,750
13,300 Noble Drilling Corp.* 407,313
5,600 Smith International, Inc.* 343,700
5,700 Tidewater, Inc. 314,213
17,200 Tosco Corp. 650,375
7,200 Varco International, Inc.* 154,350
-----------
3,753,250
-----------
FINANCIAL SERVICES (11.6%)
15,900 AFLAC, Inc. 812,887
9,200 Capital One Financial Corp. 498,525
5,025 Charter One Financial, Inc. 317,204
2,500 ESG Re Limited* 58,750
3,100 First of America Bank Corp. 239,088
4,200 First Security Corp. 175,875
2,100 Firstar Corp. 89,118
16,200 Franklin Resources, Inc. 1,408,387
16,100 Northern Trust Corp. 1,122,975
3,900 Old Republic International
Corp. 145,032
6,000 Price, T Rowe Associates, Inc. 377,250
7,450 Robert Half International,
Inc.* 298,000
3,600 TCF Financial Corp. 122,175
3,200 Wilmington Trust Corp. 199,600
-----------
5,864,866
-----------
</TABLE>
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 15
<PAGE> 18
THE ONE(R) GROUP(SM) INVESTMENT TRUST
GROWTH OPPORTUNITIES FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
HEALTHCARE (8.6%)
8,500 Biogen, Inc.* $ 309,187
9,500 Centocor, Inc.* 315,875
19,500 Chiron Corp* 331,500
7,300 Dentsply International, Inc. 222,650
8,900 Foundation Health Systems, Inc. 199,137
5,500 Health Care & Retirement Corp.* 221,375
18,400 Health Management Associates,
Inc.* 464,600
4,150 Healthcare Compare Corp.* 212,169
6,500 Hillenbrand Industries, Inc. 332,719
10,100 Omnicare, Inc. 313,100
9,200 Oxford Health Plans, Inc.* 143,175
5,900 Quorum Health Group, Inc.* 154,138
2,500 R. P. Scherer Corp.* 152,500
11,500 Stryker Corp.* 428,375
2,900 Sybron International Corp.* 136,118
6,200 Vencor, Inc.* 151,513
8,800 Watson Pharmaceuticals Inc.* 285,450
-----------
4,373,581
-----------
RAW MATERIALS (3.4%)
9,000 Airgas, Inc.* 126,000
3,200 Betzdearborn, Inc. 195,400
4,800 Crompton & Knowles Corp. 127,200
3,600 Cytec Industries, Inc.* 168,975
12,800 IMC Global Inc. 419,200
4,900 Ispat International* 105,963
7,900 Lyondell Petrochemical Co. 209,350
6,250 RPM, Inc. 95,312
5,900 Solutia, Inc. 157,456
3,600 Witco Corp. 146,925
-----------
1,751,781
-----------
RETAIL (10.5%)
3,600 Barnes & Noble, Inc.* 120,150
5,500 Bed, Bath and Beyond, Inc.* 211,750
6,000 Claire's Stores, Inc. 116,625
11,500 CompUSA, Inc.* 356,500
10,231 Consolidated Stores Corp.* 449,524
15,288 Dollar General Corp. 554,190
18,050 Family Dollar Stores 529,090
79,500 Just For Feet, Inc.* 1,043,437
9,600 Kohls Corp.* 654,000
3,700 Lands End, Inc.* 129,732
5,500 Mac Frugals Bargains
Close-Outs, Inc.* 226,188
1,800 Outback Steakhouse, Inc.* 51,750
18,600 Starbucks Corp.* 713,775
4,500 Tiffany & Co. 162,282
-----------
5,318,993
-----------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
SHELTER (2.1%)
3,400 Hon Industries, Inc. $ 200,600
10,700 Leggett & Platt, Inc. 448,063
5,000 Sealed Air Corp.* 308,750
7,400 Sunstone Hotel Investors, Inc. 127,650
-----------
1,085,063
-----------
TECHNOLOGY (17.8%)
15,400 ADC Telecommunications, Inc.* 642,950
9,100 Altera Corp.* 301,437
10,600 American Power Conversion
Corp.* 250,425
19,233 Analog Devices, Inc.* 532,513
14,000 Atmel Corp.* 259,875
12,200 BMC Software, Inc.* 800,625
24,300 Cadence Design Systems, Inc.* 595,350
27,600 Compuware Corp.* 883,200
14,800 Dell Computer Corp.* 1,243,200
3,100 Electronic Arts, Inc.* 117,218
600 Excel Switching Corp.* 10,725
6,400 Lexmark International Group,
Inc.* 243,200
7,900 Linear Technology Corp. 455,238
13,600 Maxim Integrated Products* 469,200
5,000 Networks Associates, Inc.* 264,375
6,600 Quantum Corp.* 132,413
5,800 SCI Systems, Inc.* 252,663
11,300 Solectron Corp.* 469,656
3,900 Structural Dynamics Research
Corp.* 87,750
1,400 Symbol Technologies, Inc. 52,850
5,000 Synopsys, Inc.* 178,750
11,800 Teradyne, Inc.* 377,600
2,700 Varian Associates, Inc. 136,519
7,100 Xilinx, Inc.* 248,944
-----------
9,006,676
-----------
TRANSPORTATION (0.5%)
7,300 Illinios Central Corp. Series A 248,656
-----------
UTILITIES (3.7%)
11,600 360(degree)Communications Co.* 234,175
19,700 AES Corp.* 918,513
1,100 CalEnergy Company, Inc.* 31,625
10,100 LCI International, Inc.* 310,575
7,200 Seagull Energy Corp.* 148,500
4,500 Southern New England
Telecommunications Corp. 226,406
-----------
1,869,794
-----------
TOTAL COMMON STOCK 47,598,375
(cost $43,616,821) -----------
</TABLE>
16 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 19
THE ONE(R) GROUP(SM) INVESTMENT TRUST
GROWTH OPPORTUNITIES FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------
PRINCIPAL SECURITY VALUE
- -------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENTS (5.6%)
$ 2,849,000 Prudential Securities
6.80%, dated 12/31/97, due
01/02/98, Collateralized by
$2,893,000 U.S. Treasury
Bill, 5.12%, due 06/25/98,
market value $2,906,435
(cost $2,849,000) $ 2,849,000
-----------
TOTAL INVESTMENTS $50,447,375
(cost $46,465,821) ===========
</TABLE>
- --------------------------------------------------------------------------------
* Denotes a non-income producing security.
Cost for federal income tax purposes: $46,792,528.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 17
<PAGE> 20
THE ONE(R) GROUP(SM) INVESTMENT TRUST
LARGE COMPANY GROWTH FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCK (84.6%)
AEROSPACE/DEFENSE (0.4%)
5,500 United Technologies Corp. $ 400,469
-----------
BANKS (0.4%)
8,250 MBNA Corp. 225,328
3,800 State Street Corp. 221,113
-----------
446,441
-----------
BROADCASTING (1.0%)
36,200 Tele-Communications, Inc.
Class A* 1,011,338
-----------
BUSINESS EQUIPMENT/SERVICES
(0.3%)
1,900 Computer Science Corp.* 158,650
2,300 Interpublic Group Companies,
Inc. 114,569
-----------
273,219
-----------
CABLE (0.1%)
3,800 Comcast Corp. Class A 119,937
-----------
CAPITAL GOODS (6.0%)
68,500 General Electric Co. 5,026,188
5,500 Illinois Tool Works, Inc. 330,687
15,000 Tyco International Ltd. 675,938
-----------
6,032,813
-----------
CHEMICALS (2.4%)
2,300 Air Products & Chemicals, Inc. 189,175
28,600 Du Pont (E.I.) De Nemours & Co. 1,717,787
13,300 Monsanto Co. 558,600
-----------
2,465,562
-----------
CHEMICALS -- SPECIALTY (0.1%)
2,660 Solutia, Inc. 70,989
-----------
COMMUNICATION-EQUIPMENT (0.2%)
2,700 Bay Networks, Inc.* 69,019
3,300 Tellabs, Inc.* 174,487
-----------
243,506
-----------
COMPUTER -- EQUIPMENT (0.7%)
8,200 EMC Corp.* 224,987
4,400 International Business Machines
Corp. 460,075
-----------
685,062
-----------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE/SERVICES
(0.6%)
3,000 Automatic Data Processing, Inc. $ 184,125
8,300 First Data Corp. 242,775
4,400 HBO & Co. 211,200
-----------
638,100
-----------
CONGLOMERATES (0.2%)
2,600 Honeywell, Inc. 178,100
-----------
CONSUMER NON DURABLE (6.3%)
2,600 CPC International, Inc. 280,800
51,500 Coca Cola Enterprises, Inc. 3,431,188
9,800 Colgate-Palmolive Co. 720,300
4,800 Eastman Kodak Co. 291,900
2,700 Hershey Foods Corp. 167,231
8,300 Nike, Inc. Class B 325,775
1,100 Pioneer Hi Bred International,
Inc. 117,975
5,300 Sysco Corp. 241,481
10,800 Unilever N.V. 674,325
-----------
6,250,975
-----------
CONSUMER PRODUCTS (0.2%)
4,400 Newell Co. 187,000
-----------
CONSUMER SERVICES (1.3%)
10,000 Hilton Hotels Corp. 297,500
3,400 McGraw-Hill Companies, Inc. 251,600
11,500 Time Warner, Inc. 713,000
-----------
1,262,100
-----------
DRUGS (6.9%)
12,800 American Home Products Corp. 979,200
22,000 Bristol-Meyers Squibb Co. 2,081,750
29,500 Pfizer, Inc. 2,199,594
12,800 Schering-Plough Corp. 795,200
6,600 Warner-Lambert Co. 818,400
-----------
6,874,144
-----------
ELECTRONICS (2.6%)
37,600 Intel Corp. 2,641,400
-----------
ELECTRONICS-INSTRUMENTS (0.4%)
10,500 KLA Instruments Corp.* 405,562
-----------
ENERGY (0.3%)
5,500 Halliburton Co. 285,656
-----------
FINANCIAL-BANKS (3.9%)
13,600 American Express Co. 1,213,800
16,475 American International Group, 1,791,656
Inc.
1,600 Morgan, J P & Co., Inc. 180,600
6,522 U.S. Bancorp 730,056
-----------
3,916,112
-----------
</TABLE>
18 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 21
THE ONE(R) GROUP(SM) INVESTMENT TRUST
LARGE COMPANY GROWTH FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (4.0%)
11,600 Chase Manhattan Corp. $ 1,270,200
24,000 Fannie Mae 1,369,500
11,110 First Union Corp. 569,388
2,700 Marsh & McLennan Companies,
Inc. 201,319
4,950 Schwab, Charles Corp. 207,590
3,300 SunAmerica, Inc. 141,075
4,050 Travelers Group, Inc. 218,194
-----------
3,977,266
-----------
FOOD AND BEVERAGE (6.9%)
12,200 Anheuser-Busch Companies, Inc. 536,800
9,200 Heinz (H.J.) Co. 467,475
3,800 Kellogg Co. 188,575
34,500 PepsiCo, Inc. 1,257,094
74,600 Philip Morris Companies, Inc. 3,380,312
4,200 Quaker Oats Co. 221,550
13,900 Sara Lee Corp. 782,744
-----------
6,834,550
-----------
HEALTHCARE (9.9%)
20,300 Abbott Laboratories 1,330,919
6,600 Amgen, Inc.* 357,225
5,500 Baxter International, Inc. 277,406
4,250 Cardinal Health, Inc. 319,281
2,300 Elan PLC ADR* 117,731
1,000 Guidant Corp. 62,250
8,900 HealthSouth Corp.* 246,975
26,400 Johnson & Johnson Co. 1,739,100
25,000 Lilly Eli & Co. 1,740,625
15,000 Medtronic, Inc. 784,688
27,000 Merck & Co., Inc. 2,868,750
-----------
9,844,950
-----------
HOUSEHOLD -- PRODUCTS (3.7%)
12,487 Gillette Co. 1,254,163
30,600 Procter & Gamble Co. 2,442,263
-----------
3,696,426
-----------
INSURANCE (0.1%)
1,100 St. Paul Companies, Inc. 90,269
-----------
MACHINERY AND CAPITAL GOODS
(0.8%)
12,200 Applied Materials, Inc.* 367,525
8,100 Emerson Electric Co. 457,144
-----------
824,669
-----------
MEDICAL PRODUCTS (0.2%)
3,800 Boston Scientific, Inc.* 174,325
-----------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
MULTIPLE INDUSTRY (0.9%)
6,600 Allied-Signal, Inc. $ 256,988
8,100 Minnesota Mining &
Manufacturing Co. 664,706
-----------
921,694
-----------
OFFICE EQUIPMENT AND SUPPLIES
(0.3%)
4,400 Xerox Corp. 324,775
-----------
OIL AND GAS (1.2%)
10,000 Schlumberger Ltd. 805,000
5,535 Union Pacific Resources Group, 134,224
Inc.
5,800 Unocal Corp. 225,112
-----------
1,164,336
-----------
PRINTING AND PUBLISHING (0.7%)
11,200 Gannett Co., Inc. 692,300
-----------
RAW MATERIALS (0.2%)
3,600 Praxair, Inc. 162,000
-----------
RESTAURANTS (0.9%)
16,100 McDonalds Corp. 768,775
3,450 Tricon Global Restaurants,
Inc.* 100,266
-----------
869,041
-----------
RETAIL (5.1%)
15,000 Cendant Corp.* 515,625
3,300 Dayton Hudson Corp. 222,750
9,300 Gap, Inc. 329,569
17,450 Home Depot, Inc. 1,027,369
9,700 Kroger Co.* 358,294
59,000 Wal-Mart Stores, Inc. 2,326,812
10,000 Walgreen Co. 313,750
-----------
5,094,169
-----------
SHELTER (0.7%)
14,000 Kimberly Clark Corp. 690,375
-----------
TECHNOLOGY (10.3%)
800 3COM Corp.* 27,950
3,800 Cabletron System, Inc.* 57,000
27,450 Cisco Systems, Inc.* 1,530,337
15,300 Compaq Computer Corp. 863,494
11,250 Computer Associates 594,844
International, Inc.
13,000 Dell Computer Corp.* 1,092,000
31,100 Microsoft Corp.* 4,019,675
6,600 Northern Telecom Ltd. 587,400
16,625 Oracle Corp.* 370,945
2,500 Parametric Technology, Corp.* 118,437
4,100 Sun Microsystems, Inc.* 163,487
</TABLE>
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 19
<PAGE> 22
THE ONE(R) GROUP(SM) INVESTMENT TRUST
LARGE COMPANY GROWTH FUND
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
TECHNOLOGY (CONTINUED)
18,800 Texas Instruments, Inc. $ 846,000
-----------
10,271,569
-----------
TELECOMMUNICATIONS (1.3%)
13,875 Lucent Technologies, Inc. 1,108,266
5,600 WorldCom, Inc.* 169,400
-----------
1,277,666
-----------
TOYS (0.4%)
9,700 Mattel, Inc. 361,325
-----------
UTILITIES (2.7%)
20,600 GTE Corp. 1,076,350
21,700 SBC Communications, Inc. 1,589,525
-----------
2,665,875
-----------
TOTAL COMMON STOCK 84,326,065
(cost $66,182,212) -----------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (15.3%)
$15,271,000 Prudential Securities, Inc.,
6.80%, dated 12/31/97, due
01/02/98, Collateralized by
$15,325,000 U.S. Treasury
Note, 5.125%, due 02/28/98,
market value $15,312,434
(cost $15,271,000) $15,271,000
-----------
TOTAL INVESTMENTS $99,597,065
(cost $81,453,212) ===========
</TABLE>
- --------------------------------------------------------------------------------
* Denotes a non-income producing security.
Cost for federal income tax purposes: $81,468,430.
The abbreviation on the above statement stands for the following:
<TABLE>
<S> <C>
ADR American Depository Receipt
PLC Public Limited Company
</TABLE>
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
20 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 23
THE ONE(R) GROUP(SM) INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT ASSET GROWTH LARGE COMPANY
BOND ALLOCATION OPPORTUNITIES GROWTH
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost
$21,536,947, $36,632,266, $43,616,821
and $66,182,212, respectively) $22,104,448 $39,039,231 $47,598,375 $84,326,065
Repurchase agreements, at value 105,000 2,169,000 2,849,000 15,271,000
----------- ----------- ----------- -----------
Total investments 22,209,448 41,208,231 50,447,375 99,597,065
Cash 361 347 246 267
Receivable for investment securities sold -- -- 279,803 --
Interest and dividends receivable 168,514 266,027 25,063 126,099
Deferred organization expenses 2,993 4,810 5,731 4,806
----------- ----------- ----------- -----------
Total assets 22,381,316 41,479,415 50,758,218 99,728,237
----------- ----------- ----------- -----------
LIABILITIES
Payable for futures variation margin -- 500 -- --
Investment advisory fee payable 8,434 16,848 30,749 68,746
Administration fee payable 4,430 8,160 10,008 19,873
Other accrued expenses 3,880 8,231 10,761 11,977
----------- ----------- ----------- -----------
Total liabilities 16,744 33,739 51,518 100,596
----------- ----------- ----------- -----------
NET ASSETS $22,364,572 $41,445,676 $50,706,700 $99,627,641
=========== =========== =========== ===========
REPRESENTED BY:
Capital $21,797,071 $38,996,348 $47,051,854 $81,499,006
Net unrealized appreciation on investments
and financial futures 567,501 2,422,365 3,981,554 18,143,853
Accumulated undistributed (distributions in
excess of) realized gain on investments
and financial futures -- 25,093 (326,708) (15,218)
Accumulated undistributed (distributions in
excess of) net investment income -- 1,870 -- --
----------- ----------- ----------- -----------
NET ASSETS $22,364,572 $41,445,676 $50,706,700 $99,627,641
=========== =========== =========== ===========
Shares of beneficial interest outstanding, no
par value (unlimited number of shares
authorized) 2,133,652 3,141,544 3,569,560 5,789,817
=========== =========== =========== ===========
NET ASSET VALUE, redemption and offering
price per share $ 10.48 $ 13.19 $ 14.21 $ 17.21
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 21
<PAGE> 24
THE ONE(R) GROUP(SM) INVESTMENT TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT ASSET GROWTH LARGE COMPANY
BOND ALLOCATION OPPORTUNITIES GROWTH
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividend income $ -- $ 188,714 $ 160,374 $ 851,454
Interest income 1,193,358 950,985 147,397 339,033
----------- ----------- ----------- -----------
Total income 1,193,358 1,139,699 307,771 1,190,487
----------- ----------- ----------- -----------
EXPENSES:
Investment advisory fees 78,818 189,332 233,609 458,066
Administration fees 42,036 64,914 86,256 169,132
Professional fees 8,460 9,272 12,009 18,235
Custodian fees 11,000 35,000 55,000 34,214
Insurance expense 6,100 3,100 2,200 8,388
Trustees' fees 1,460 2,245 2,776 6,012
Other 6,955 7,681 7,603 11,783
----------- ----------- ----------- -----------
Total expenses before waivers 154,829 311,544 399,453 705,830
Less waivers 23,466 44,906 4,114 1,114
----------- ----------- ----------- -----------
Net expenses 131,363 266,638 395,339 704,716
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) $ 1,061,995 $ 873,061 $ (87,568) $ 485,771
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments $ 45,096 $ 2,513,172 $ 4,801,260 $ 3,943,220
Net realized gain on financial futures -- 576,198 149,850 --
Net change in unrealized appreciation on
investments 596,960 1,416,110 3,493,572 13,307,669
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN 642,056 4,505,480 8,444,682 17,250,889
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 1,704,051 $ 5,378,541 $ 8,357,114 $17,736,660
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
22 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 25
THE ONE(R) GROUP(SM) INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT BOND ASSET ALLOCATION
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 1,061,995 $ 752,961 $ 873,061 $ 328,956
Net realized gain on investments and
financial futures 45,096 3,774 3,089,370 283,448
Net change in unrealized appreciation
(depreciation) of investments 596,960 (319,475) 1,416,110 615,234
----------- ----------- ----------- -----------
Net increase in net assets from
operations 1,704,051 437,260 5,378,541 1,227,638
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,061,995) (752,586) (871,191) (323,941)
In excess of net investment income (5,056) -- --
From net realized gain from investment
transactions (41,992) (3,690) (3,031,880) (283,448)
In excess of realized gain from investment
transactions -- -- -- (39,340)
Tax return of capital distribution -- -- -- (30,180)
----------- ----------- ----------- -----------
Decrease in net assets from distributions
to shareholders (1,109,043) (756,276) (3,903,071) (676,909)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 6,514,599 5,454,874 21,414,090 8,337,534
Net asset value of shares issued to
shareholders from reinvestment of
distributions 1,109,043 756,276 3,903,071 676,909
Cost of shares redeemed (475,970) (286,338) (230,267) (136,365)
----------- ----------- ----------- -----------
Increase in net assets from capital share
transactions 7,147,672 5,924,812 25,086,894 8,878,078
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS 7,742,680 5,605,796 26,562,364 9,428,807
----------- ----------- ----------- -----------
NET ASSETS-BEGINNING OF PERIOD 14,621,892 9,016,096 14,883,312 5,454,505
----------- ----------- ----------- -----------
NET ASSETS-END OF PERIOD $22,364,572 $14,621,892 $41,445,676 $14,883,312
=========== =========== =========== ===========
Undistributed (distributions in excess of) net
realized gain on investments and financial
futures $ -- $ 84 $ 25,093 $ (32,397)
=========== =========== =========== ===========
Undistributed (distributions in excess of) net
investment income $ -- $ 375 $ 1,870 $ --
=========== =========== =========== ===========
SHARE ACTIVITY:
Shares sold 631,011 533,833 1,615,750 716,926
Reinvestment of distributions 108,358 75,094 296,400 57,290
Shares redeemed (46,749) (28,346) (18,108) (11,806)
----------- ----------- ----------- -----------
Net increase in number of shares 692,620 580,581 1,894,042 762,410
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 23
<PAGE> 26
THE ONE(R) GROUP(SM) INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES LARGE COMPANY GROWTH
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (87,568) $ 262,476 $ 485,771 $ 377,339
Net realized gain on investments and
financial futures 4,951,110 1,332,692 3,943,220 908,100
Net change in unrealized appreciation of
investments 3,493,572 352,379 13,307,669 3,402,753
----------- ----------- ----------- -----------
Net increase in net assets from
operations 8,357,114 1,947,547 17,736,660 4,688,192
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (262,683) (485,771) (378,493)
In excess of net investment income -- -- (11,566) --
From net realized gain from investment
transactions (4,757,643) (1,332,692) (3,931,556) (909,099)
In excess of realized gain from investment
transactions (17,827) (400,841) (1,846) (24,531)
Tax return of capital distribution (61,358) -- (6,585) --
----------- ----------- ----------- -----------
Decrease in net assets from distributions
to shareholders (4,836,828) (1,996,216) (4,437,324) (1,312,123)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 20,249,383 13,771,622 39,242,534 22,166,931
Net asset value of shares issued to
shareholders from reinvestment of
distributions 4,836,828 1,996,216 4,437,323 1,312,123
Cost of shares redeemed (238,598) (65,570) (244,898) (80,813)
----------- ----------- ----------- -----------
Increase in net assets from capital share
transactions 24,847,613 15,702,268 43,434,959 23,398,241
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS 28,367,899 15,653,599 56,734,295 26,774,310
NET ASSETS-BEGINNING OF PERIOD 22,338,801 6,685,202 42,893,346 16,119,036
----------- ----------- ----------- -----------
NET ASSETS-END OF PERIOD $50,706,700 $22,338,801 $99,627,641 $42,893,346
=========== =========== =========== ===========
Distributions in excess of net realized gain
on investments and financial futures $ 326,708 $ 422,570 $ 15,218 $ 24,531
=========== =========== =========== ===========
SHARE ACTIVITY:
Shares sold 1,400,572 1,104,187 2,412,572 1,716,635
Reinvestment of distributions 342,551 164,755 258,782 97,037
Shares redeemed (17,586) (5,144) (18,404) (6,234)
----------- ----------- ----------- -----------
Net increase in number of shares 1,725,537 1,263,798 2,652,950 1,807,438
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
24 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 27
THE ONE(R) GROUP(SM) INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT BOND
---------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 1, -
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994*
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE --
BEGINNING OF PERIOD $ 10.15 $ 10.48 $ 9.69 $ 10.00
Net investment income 0.60 0.59 0.64 0.22
Net realized and unrealized
appreciation (depreciation) 0.35 (0.33) 0.94 (0.31)
------- ------- ------- -------
Total from investment operations 0.95 0.26 1.58 (0.09)
------- ------- ------- -------
Distributions:
From net investment income (0.60) (0.59) (0.64) (0.22)
From net realized gains from
investments (0.02) -- (0.15) --
In excess of realized gains from
investment transactions -- -- -- --
Tax return of capital -- -- -- --
------- ------- ------- -------
Total distributions (0.62) (0.59) (0.79) (0.22)
------- ------- ------- -------
Net increase (decrease) in net
asset value 0.33 (0.33) 0.79 (0.31)
------- ------- ------- -------
NET ASSET VALUE --
END OF PERIOD $ 10.48 $ 10.15 $ 10.48 $ 9.69
======= ======= ======= =======
Total return** 9.67% 2.69% 16.69% (.90%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets end of period (000) $22,365 $14,622 $ 9,016 $ 5,112
Ratio of expenses to average net
assets 0.75% 0.75% 0.75% 0.75%**
Ratio of expenses to average net
assets excluding waivers/
reimbursements*** 0.88% 1.01% 1.47% 1.94%**
Ratio of net investment income to
average net assets 6.06% 6.11% 6.54% 6.09%**
Ratio of net investment income to
average net assets excluding
waivers/reimbursements*** 5.93% 5.85% 5.80% 4.90%**
Portfolio turnover** 21.3% 21.3% 34.1% 3.5%
Average commission rate paid**** -- -- -- --
<CAPTION>
ASSET ALLOCATION
---------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 1, -
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994*
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE --
BEGINNING OF PERIOD $ 11.93 $ 11.24 $ 9.81 $ 10.00
Net investment income 0.39 0.34 0.36 0.06
Net realized and unrealized
appreciation (depreciation) 2.31 0.98 1.64 (0.19)
------- ------- ------- -------
Total from investment operation 2.70 1.32 s 2.00 (0.13)
------- ------- ------- -------
Distributions:
From net investment income (0.39) (0.34) (0.36) (0.06)
From net realized gains from
investments (1.05) (0.23) (0.21) --
In excess of realized gains fro m
investment transactions -- (0.04) -- --
Tax return of capital -- (0.02) -- --
------- ------- ------- -------
Total distributions (1.44) (0.63) (0.57) (0.06)
------- ------- ------- -------
Net increase (decrease) in ne t
asset value 1.26 0.69 1.43 (0.19)
------- ------- ------- -------
NET ASSET VALUE --
END OF PERIOD $ 13.19 $ 11.93 $ 11.24 $ 9.81
======= ======= ======= =======
Total return** 22.90% 11.92% 20.69% (1.32%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets end of period (000) $41,446 $14,883 $ 5,455 $ 2,063
Ratio of expenses to average net
assets 1.00% 1.00% 1.00% 1.00%**
Ratio of expenses to average net
assets excluding waivers/
reimbursements*** 1.15% 1.44% 1.96% 2.36%**
Ratio of net investment income to
average net assets 3.24% 3.27% 3.66% 1.88%**
Ratio of net investment income to
average net assets excluding
waivers/reimbursements*** 3.07% 2.83% 2.70% 0.52%**
Portfolio turnover** 60.9% 64.8% 66.3% --
Average commission rate paid**** 4.5286c 4.4023c -- --
</TABLE>
- ------------------------------------------------------
* Initial public offering was August 1, 1994.
** Ratios are annualized for periods of less than one year. Total return and
portfolio turnover are not annualized.
*** Ratios calculated as if no expenses were waived.
**** Represents the total amount of commission paid in portfolio equity
transactions divided by the total number of shares purchased and sold by
the Fund for which commissions were charged.
See accompanying notes to financial statements.
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 25
<PAGE> 28
THE ONE(R) GROUP(SM) INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES
---------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 1, -
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994*
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE --
BEGINNING OF PERIOD $ 12.11 $ 11.52 $ 9.70 $ 10.00
------- ------- ------- -------
Net investment income (loss) (0.03) 0.18 0.04 --
Net realized and unrealized
appreciation (depreciation) 3.63 1.62 2.29 (0.30)
------- ------- ------- -------
Total from investment operations 3.60 1.80 2.33 (0.30)
------- ------- ------- -------
Distributions:
From net investment income -- (0.19) (0.04) --
From net realized gains from
investments (1.48) (0.78) (0.47) --
In excess of realized gains from
investment transactions -- (0.24) -- --
Tax return of capital (0.02) -- -- --
------- ------- ------- -------
Total distributions (1.50) (1.21) (0.51) --
------- ------- ------- -------
Net increase (decrease) in net
asset value 2.10 0.59 1.82 (0.30)
------- ------- ------- -------
NET ASSET VALUE --
END OF PERIOD $ 14.21 $ 12.11 $ 11.52 $ 9.70
======= ======= ======= =======
Total return** 29.81% 15.67% 24.06% (3.00%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000) $50,707 $22,339 $ 6,685 $ 940
Ratio of expenses to average net
assets 1.10% 1.06% 0.90% 0.90%**
Ratio of expenses to average net
assets excluding
waivers/reimbursements*** 1.11% 1.40% 2.78% 2.96%**
Ratio of net investment income to
average net assets (.25%) 1.85% 0.46% (0.17%)**
Ratio of net investment income to
average net assets excluding
waivers/reimbursements*** (.26%) 1.51% (1.42%) (2.22%)**
Portfolio turnover** 175.6% 326.9% 193.3% 3.5%
Average commission rate paid**** 5.1070c 3.1357c -- --
<CAPTION>
LARGE COMPANY GROWTH
-------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 1, -
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994*
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE --
BEGINNING OF PERIOD $ 13.67 $ 12.12 $ 9.99 $ 10.00
------- ------- ------- -------
Net investment income (loss) 0.10 0.16 0.20 0.05
Net realized and unrealized
appreciation (depreciation) 4.25 1.86 2.20 0.01
------- ------- ------- -------
Total from investment operations 4.35 2.02 2.40 0.06
------- ------- ------- -------
Distributions:
From net investment income (0.10) (0.16) (0.20) (0.05)
From net realized gains from
investments (0.71) (0.30) (0.07) (0.02)
In excess of realized gains from
investment transactions -- (0.01) -- --
Tax return of capital -- -- -- --
------- ------- ------- -------
Total distributions (0.81) (0.47) (0.27) (0.07)
------- ------- ------- -------
Net increase (decrease) in net
asset value 3.54 1.55 2.13 (0.01)
------- ------- ------- -------
NET ASSET VALUE --
END OF PERIOD $ 17.21 $ 13.67 $ 12.1 $ 9.99
======= ======= ======= =======
Total return** 31.93% 16.67% 24.13% 0.52%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000) $99,628 $42,893 $16,119 $ 4,175
Ratio of expenses to average net
assets 1.00% 0.98% 0.90% 0.90%**
Ratio of expenses to average net
assets excluding
waivers/reimbursements*** 1.00% 1.16% 1.64% 2.08%**
Ratio of net investment income to
average net assets 0.69% 1.29% 2.02% 1.39%**
Ratio of net investment income to
average net assets excluding
waivers/reimbursements*** 0.69% 1.11% 1.28% 0.22%**
Portfolio turnover** 34.4% 38.7% 37.4% 4.4%
Average commission rate paid**** 3.4800c 3.6143c -- --
</TABLE>
- ------------------------------------------------------
* Initial public offering was August 1, 1994. See note 1.
** Ratios are annualized for periods less than one year. Total return and
portfolio turnover are not annualized
*** Ratios calculated as if no expenses were waived.
**** Represents the total amount of commission paid in portfolio equity
transactions divided by the total number of shares purchased and sold by
the Fund for which commissions were charged.
See accompanying notes to financial statements.
26 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 29
THE ONE(R) GROUP(SM) INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The ONE(R) GROUP(SM) Investment Trust (the Trust) was organized as a
Massachusetts Business Trust on June 7, 1993. The Trust is registered under the
Investment Company Act of 1940 as an open-end management investment company. The
Trust comprises four portfolios: the Government Bond Fund, the Asset Allocation
Fund, the Growth Opportunities (formerly the Small Company Growth) Fund, and the
Large Company Growth Fund (the Funds). The shares of the Funds are sold only to
Nationwide Life and Annuity Insurance Company, a subsidiary of Nationwide
Insurance Company, to fund the benefits of the ONE(R) GROUP(SM) Variable
Annuity.
Effective May 1, 1996, the Small Company Growth Fund changed its name to the
Growth Opportunities Fund.
Banc One Investment Advisors Corporation (Banc One) serves as Investment Advisor
to the Trust. Nationwide Advisory Services, Inc. (NAS), (formerly Nationwide
Financial Services, Inc.), serves as Administrator to the Trust. Nationwide
Investors Services, Inc. (NIS), an affiliate of NAS, serves as the Transfer
Agent to the Trust. For its services, NIS receives an annual fee of $2,500 for
each fund.
Investment operations commenced on August 23, 1994 for the Government Bond and
the Large Company Growth Funds, September 29, 1994 for the Asset Allocation Fund
and November 3, 1994 for the Growth Opportunities Fund.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization costs incurred in connection with the organization and initial
registration of the Trust were paid by the Administrator and have been
reimbursed by the Funds. Such organization costs have been deferred and are
being amortized ratably over a period of sixty months from the commencement of
operations. If any of the initial shares are redeemed before the end of the
amortization period, the proceeds of the redemption will be reduced by the
pro-rata share of the unamortized organization costs.
SECURITY VALUATION
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 and 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 judgement 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.
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 Funds require that the securities purchased in a
repurchase agreement transaction be transferred to the custodian in a manner
sufficient to enable the Funds to obtain those securities in the event of a
counterparty default. The seller, under the repurchase agreement, is required to
maintain the value of the securities held at not less than the repurchase price,
including accrued
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 27
<PAGE> 30
THE ONE(R) GROUP(SM) INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
interest. Repurchase agreements are considered to be loans under the Investment
Company Act of 1940, as amended.
FEDERAL INCOME TAX
The Trust treats each Fund as a separate entity for federal income tax purposes.
Each Fund intends to continue to qualify as a regulated investment company by
complying with the provisions available to certain investment companies as
defined in applicable sections of the Internal Revenue Code, and to make
distributions from net investment income and from net realized capital gains
sufficient to relieve it from all, or substantially all, Federal Income Taxes.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Net realized gains or
losses from sales of securities are determined on the specific identification
method. Dividend income is recorded on the ex-dividend date; interest income is
recorded on an accrual basis and includes, where applicable, the pro-rata
amortization of premium or accretion of discount.
DIVIDENDS TO SHAREHOLDERS
Dividends are recorded on the ex-dividend date. The Funds declare and pay income
dividends quarterly. Distributable net realized capital gains are declared and
distributed at least annually. Dividends and distributions to shareholders are
determined in accordance with Federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
considered either permanent or temporary in nature. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their nature for Federal income tax purposes;
temporary differences do not require reclassification. Dividends and
distributions that exceed net investment income and net realized gains for
financial reporting purposes but not for tax purposes are reported as dividends
in excess of net investment income and net realized gains. To the extent
distributions exceed current and accumulated earnings and profits for Federal
income tax purposes, they are reported as distributions of paid-in-capital.
Accordingly, as of December 31, 1997, the capital accounts have been adjusted by
the following amounts:
<TABLE>
<CAPTION>
UNDISTRIBUTED
NET INVESTMENT DISTRIBUTIONS IN EXCESS
INCOME OF NET REALIZED GAIN CAPITAL
-------------- ----------------------- --------
<S> <C> <C> <C>
Growth Opportunities $87,568 $(18,420) $ 69,148
Large Company Growth 11,566 6,080 (17,646)
Government Bond 4,681 (3,188) (1,493)
</TABLE>
EXPENSES
Direct expenses of a Fund are allocated to that Fund. The general expenses of
the Trust are allocated to the Funds based on the relative net assets of the
Funds at the time the expense is incurred.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
28 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
<PAGE> 31
THE ONE(R) GROUP(SM) INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3 -- AGREEMENTS
As Investment Advisor, Banc One manages the investments of each Fund of the
Trust and earns a fee from the Funds at the following annual rates: .45% of the
average daily net assets of the Government Bond Fund, .70% of the average daily
net assets of the Asset Allocation Fund, .65% of the average daily net assets of
the Growth Opportunities Fund and .65% of the average daily net asset of the
Large Company Growth Fund. Such fees are calculated daily and paid monthly.
NAS provides administrative and accounting services to the Funds. For its
services, NAS earns a fee from the Trust at an annual rate of .24% of the
Trust's aggregate average daily net assets up to $250 million, .19% of such net
assets in excess of $250 million but less that $500 million, .16% of such net
assets in excess of $500 million but less than $1 billion, and .14% of such net
assets in excess of $1 billion.
The Investment Advisor has voluntarily agreed to waive all or part of its fees
in order to limit the Funds' operating expenses to no more than .75% of the
average daily net assets of the Government Bond Fund, 1.00% of the average daily
net assets of the Asset Allocation Fund, 1.10% of the average daily net assets
of each of the Growth Opportunities Fund and 1.00% of the average daily net
assets of the Large Company Growth Fund. Prior to May 1, 1996, the Growth
Opportunities and Large Company Growth Funds' expense limits were both .90%.
During the year ended December 31, 1997, the Investment Advisor voluntarily
waived fees in the amount of $23,466 in the Government Bond Fund, $44,906 in the
Asset Allocation Fund, $4,114 in the Growth Opportunities Fund and $1,114 in the
Large Company Growth Fund, representing $0.014, $0.022, $0.002 and $0.0003 per
average share, respectively.
NOTE 4 -- INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding U.S. Government obligations,
short-term securities and financial futures), and purchases and sales of U.S.
Government obligations for the year ended December 31, 1997 are summarized as
follows:
<TABLE>
<CAPTION>
SECURITIES
PURCHASES SALES
----------- -----------
<S> <C> <C>
Asset Allocation $25,793,770 $13,639,000
Growth Opportunities 77,897,420 58,724,989
Large Company Growth 49,949,011 21,858,801
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS
PURCHASES SALES
----------- -----------
<S> <C> <C>
Government Bond $10,738,638 $ 3,620,612
Asset Allocation 9,037,184 281,619
Growth Opportunities 128,330 160,000
</TABLE>
The Asset Allocation and Growth Opportunity Funds can engage in trading of
financial futures contracts. The funds' are exposed to market risks in excess of
the amounts recognized in the statement of assets and liabilities as a result of
changes in the value of the underlying financial instruments. Investments in
financial futures require the funds to "mark to market" such futures on a daily
basis, to reflect the change in the market value of the contract at the close of
each day's trading. Typically, variation margin payments are made or received to
reflect
THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT 29
<PAGE> 32
THE ONE(R) GROUP(SM) INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
daily unrealized gains or losses. When the contracts are closed, the Funds
recognizes a realized gain or loss. Realized gains and losses have been computed
on the specific identification method.
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 was
originally struck. The Funds' purpose in entering into futures contracts is to
remain fully invested and reduce transaction costs.
Net unrealized appreciation (depreciation) on investments at December 31, 1997,
based on cost for federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
------------ ------------ --------------
<S> <C> <C> <C>
Government Bond $ 568,030 $ (529) $ 567,501
Asset Allocation 2,578,935 (213,230) 2,365,705
Growth Opportunities 6,166,233 (2,511,386) 3,654,847
Large Company Growth 18,681,113 (552,478) 18,128,635
</TABLE>
NOTE 5 -- SHARES HELD BY AFFILIATES
As of December 31, 1997, Nationwide Life and Annuity Insurance Company
beneficially owned shares of the Funds with the following net asset values:
<TABLE>
<S> <C>
Government Bond $6,511,592
Asset Allocation 1,597,239
Growth Opportunities 45,170
Large Company Growth 5,762,023
</TABLE>
As of December 31, 1997, Banc One Capital Corporation owned shares of the Asset
Allocation Fund with a net asset value of $737,187.
30 THE ONE(R) GROUP(SM) INVESTMENT TRUST ANNUAL REPORT
