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As filed with the Securities and Exchange Commission on December 17, 1998
Registration No.___
U.S. Securities and Exchange Commission
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/ / Pre-Effective Amendment No. ___ / / Post-Effective Amendment No. ___
(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
THE ONE GROUP (R)
Area Code and Telephone Number
(800) 480-4111
Address of Principal Executive Offices:
1111 Polaris Parkway
P.O. Box 710211
Columbus, Ohio 43271-0211
Name and Address of Agent for Service:
Mark S. Redman
3435 Stelzer Road
Columbus, OH 43219
With Copy to:
Alan G. Priest Michael V. Wible
Ropes & Gray Bank One Corporation
One Franklin Square 100 E. Broad Street, 5th Floor
Washington, DC 20005 Columbus, OH 43271-0158
W. Bruce McConnel, III
Drinker Biddle & Reath LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933.
It is proposed that this filing will become effective on January __, 1999
pursuant to Rule 488 under the Securities Act of 1933.
Title of Securities being registered: Units of Beneficial Interest No filing fee
is due because of reliance on Section 24(f).
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THE ONE GROUP (R)
FORM N-14
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a)
ITEM NO. HEADING
- -------- -------
Part A
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1. Beginning of Registration Statement
and Outside Front Cover Page.......................... Cover Page
2. Beginning and Outside
Back Cover Page....................................... Table of Contents
3. Fee Table, Synopsis Information
and Risk Factors...................................... Summary; Information Relating to the Proposed
Reorganization; Appendix II - Comparative Fee Tables;
Appendix III - Comparison of Investment Objectives and
Certain Significant Policies; Appendix IV - Shareholder
Transactions and Services
4. Information About the Transaction..................... Summary; Information Relating to the Proposed
Reorganization; Appendix III - Comparison of Investment
Objectives and Certain Significant Policies; Appendix IV -
Shareholder Transactions and Services
5. Information About the Registrant...................... Summary; Information Relating to the Proposed
Reorganization; Additional Information About The One
Group (R); Additional Information About Pegasus Funds;
Appendix III - Comparison of Investment Objectives and
Certain Significant Policies; Appendix IV - Shareholder
Transactions and Services
5A. Management's Discussion of
Fund Performance...................................... Appendix V - Management's Discussion of Fund Performance
- Existing One Group Funds
6. Information About the Company
Being Acquired........................................ Summary; Information Relating to the Proposed
Reorganization; Additional Information About The One
Group (R); Additional Information About Pegasus Funds;
Appendix III - Comparison of Investment Objectives and
Certain Significant Policies; Appendix IV - Shareholder
Transactions and Services
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7. Voting Information.................................... Summary; Information Relating to Voting Matters
8. Interest of Certain Persons
and Experts........................................... Information Relating to Voting Additional Information
About The One Group (R); Additional Information
About Pegasus Funds
9. Additional Information Required
for Reoffering by Persons Deemed
to be Underwriters.................................... Inapplicable
Part B
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10. Cover Page......................................... Statement of Additional Information Cover Page
11. Table of Contents................................... Table of Contents
12. Additional Information
About the Registrant................................ Statement of Additional Information of The One Group (R)
dated November 1, 1998*
13. Additional Information
About the Company Being
Acquired............................................ Statements of Additional Information of Pegasus Funds
dated April 30, 1998*
14. Financial Statements................................... Pro Forma Financial Statements
Part C
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Items 15-17. Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Registration Statement.
* Incorporated herein by reference thereto.
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PEGASUS FUNDS
P.O. BOX 5142
WESTBOROUGH, MASSACHUSETTS 01581
January __, 1999
Dear Shareholder:
The Board of Trustees of the Pegasus Funds has called a Special Meeting
of Shareholders to be held at 10:00 a.m. (Eastern time) on March 17, 1999 at the
offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio (the
"Meeting"). At the Meeting, you will be asked:
(1) To consider a proposed reorganization of your Pegasus Fund
into a corresponding Fund of The One Group (R) ("One Group").
Enclosed you will find several documents furnished to you in connection
with the Special Meeting of Shareholders of the Pegasus Money Market, Treasury
Money Market, Municipal Money Market, Michigan Municipal Money Market, Cash
Management, Treasury Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management, Municipal Cash Management, Managed Assets
Conservative, Managed Assets Balanced, Managed Assets Growth, Equity Income,
Growth, Mid-Cap Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and
Value, Equity Index, Market Expansion Index, International Equity, Intermediate
Bond, Bond, Short Bond, Multi Sector Bond, High Yield Bond, Municipal Bond,
Short Municipal Bond, Intermediate Municipal Bond and Michigan Municipal Bond
Funds (collectively, the "Pegasus Portfolios"). We hope this material will
receive your immediate attention and that, if you cannot attend the meeting in
person, you will vote your proxy promptly.
The Board of Trustees of Pegasus Funds recommends that shareholders of
each of the Pegasus Portfolios approve a proposed Agreement and Plan of
Reorganization (the "Reorganization Agreement"). The Reorganization Agreement
provides that each of the following Pegasus Portfolios will transfer all of its
assets and liabilities to the One Group investment portfolio (each, a "One Group
Fund") identified opposite its name:
PEGASUS FUNDS ONE GROUP FUNDS
- ------------- ---------------
Money Market Fund Prime Money Market Fund
Treasury Money Market Fund U.S. Treasury Securities Money Market Fund
Municipal Money Market Fund Municipal Money Market Fund
Michigan Municipal Money Market Fund Michigan Municipal Money Market Fund
Cash Management Fund Cash Management Money Market Fund
Treasury Cash Management Fund Treasury Cash Management Money Market Fund
Treasury Prime Cash Management Fund Treasury Prime Cash Management Money Market Fund
U.S. Government Securities Cash U.S. Government Securities Cash
Management Fund Management Money Market Fund
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PEGASUS FUND ONE GROUP FUNDS
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Municipal Cash Management Fund Municipal Cash Management Money Market Fund
Managed Assets Conservative Fund Investor Balanced Fund
Managed Assets Balanced Fund Investor Growth & Income Fund
Managed Assets Growth Fund Investor Growth Fund
Equity Income Fund Income Equity Fund
Growth Fund Large Company Growth Fund
Mid-Cap Opportunity Fund Diversified Mid Cap Fund
Small-Cap Opportunity Fund Small-Cap Value Fund
Intrinsic Value Fund Disciplined Value Fund
Growth and Value Fund Value Growth Fund
Equity Index Fund Equity Index Fund
Market Expansion Index Fund Market Expansion Index Fund
International Equity Fund Diversified International Fund
Intermediate Bond Fund Intermediate Bond Fund
Bond Fund Bond Fund
Short Bond Fund Limited Volatility Bond Fund
Multi Sector Bond Fund Income Bond Fund
High Yield Bond Fund High Yield Bond Fund
Municipal Bond Fund Tax-Free Bond Fund
Short Municipal Bond Fund Short-Term Municipal Bond Fund
Intermediate Municipal Bond Fund Intermediate Tax-Free Bond Fund
Michigan Municipal Bond Fund Michigan Municipal Bond Fund
After the transfer, shares of the One Group Funds will be distributed
to the corresponding Pegasus Portfolios' shareholders and the Pegasus Funds will
be liquidated.
As a result of these transactions, shares of your Pegasus Portfolio
would, in effect, be exchanged at net asset value and on a tax-free basis for
shares of a corresponding One Group Fund. Class A, Class B and Institutional
Class shares ("Class I" shares) of the Pegasus Portfolios will be exchanged for
One Group Class A, Class B and Class I shares, respectively. Service Class
("Class S") shareholders of the Pegasus Cash Management, Treasury Cash
Management, Treasury Prime Cash Management, U.S. Government Securities Cash
Management and Municipal Cash Management Funds will receive Class A shares of
the One Group Cash Management Money Market, Treasury Cash Management Money
Market, Treasury Prime Cash Management Money Market, U.S. Government Securities
Cash Management Money Market and Municipal Cash Management Money Market Funds,
respectively.
In considering the proposed reorganization, you should note, among
other things, the following benefits:
1. The compatibility of the investment objectives and policies of
the One Group with those of the Pegasus Portfolios;
2. The performance of the One Group Funds as compared to that of
the Pegasus Portfolios;
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3. The enhanced range of investment options which will be
available to investors in the One Group. Upon completion of
the Reorganization, the One Group will offer 48 different
funds;
4. The tax-free nature of the transaction; and
5. The investment leverage and market presence that the One Group
will achieve as a result of the Reorganization.
THE BOARD OF TRUSTEES BELIEVES THAT THE PROPOSED COMBINATION OF THE
PEGASUS PORTFOLIOS WITH THEIR CORRESPONDING ONE GROUP FUNDS IS IN THE BEST
INTERESTS OF THE PEGASUS PORTFOLIOS AND THEIR SHAREHOLDERS AND RECOMMEND THAT
YOU VOTE IN FAVOR OF SUCH PROPOSAL.
The Notice of Special Meeting of Shareholders, the accompanying
Combined Prospectus/Proxy Statement, Prospectuses for the currently operating
One Group Funds and the form of proxy are enclosed. Please read these materials
carefully. If you are unable to attend the meeting in person, we urge you to
sign, date, and return the proxy card so that your shares may be voted in
accordance with your instructions.
If you have any questions, you may call ______________ which has been
retained to assist in the solicitation of proxies at (800) ___-____. Thank you
for your cooperation.
Sincerely,
John P. Gould
Chairman of the Board of Trustees
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PEGASUS FUNDS
P.O. Box 5142
Westborough, Massachusetts 01581
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on March 17, 1999
To Pegasus Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the Shareholders
("Shareholders") of each investment portfolio (a "Pegasus Portfolio") of Pegasus
Funds ("Pegasus") will be held at the offices of BISYS Fund Services, 3435
Stelzer Road, Columbus, Ohio, on March 17, 1999 at 10:00 a.m. (Eastern time) for
the following purposes:
ITEM 1. With respect to each Pegasus Portfolio:
To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Agreement")
and the transactions contemplated thereby, including (a) the
transfer of all of the assets and liabilities of the Pegasus
Money Market, Treasury Money Market, Municipal Money Market,
Michigan Municipal Money Market, Cash Management, Treasury
Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management, Municipal Cash
Management, Managed Assets Conservative, Managed Assets
Balanced, Managed Assets Growth, Equity Income, Growth,
Mid-Cap Opportunity, Small-Cap Opportunity, Intrinsic Value,
Growth and Value, Equity Index, Market Expansion Index,
International Equity, Intermediate Bond, Bond, Short Bond,
Multi Sector Bond, High Yield Bond, Municipal Bond, Short
Municipal Bond, Intermediate Municipal Bond, and Michigan
Municipal Bond Funds to corresponding investment portfolios
("One Group Funds") of The One Group (R) (the "One Group") in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Funds; (b) the distribution of
such One Group Fund shares to the shareholders of the Pegasus
Portfolios according to their respective interests; and (c)
the termination of Pegasus under state law and the Investment
Company Act of 1940, as amended.
ITEM 2. With respect to each Pegasus Portfolio:
To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
The proposed reorganization and related matters are described in the
attached Combined Prospectus/Proxy Statement. Appendix I to the Combined
Prospectus/Proxy Statement is a copy of the Reorganization Agreement.
Shareholders of record as of the close of business on December 18, 1998
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
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SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE EACH ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY
PEGASUS' BOARD OF TRUSTEES. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL
MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
SUBMITTING TO PEGASUS A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED
PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
-----------------------------
W. Bruce McConnel, III
Secretary
January __, 1999
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COMBINED PROSPECTUS/PROXY STATEMENT
DATED JANUARY __, 1999
THE ONE GROUP (R)
3435 Stelzer Road
Columbus, Ohio 43219
(800) 480-4111
TO ACQUIRE THE ASSETS OF THE:
PEGASUS FUNDS
P.O. Box 5142
Westborough, Massachusetts 01581
1-800-688-3350
(for calls concerning the proxy statement)
This Combined Prospectus/Proxy Statement is furnished in connection
with the solicitation of proxies by the Board of Trustees of Pegasus Funds
("Pegasus") in connection with a Special Meeting (the "Meeting") of Shareholders
("Shareholders") to be held on March 17, 1999 at 10:00 a.m. (Eastern time) at
the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio at which
Shareholders will be asked to consider and approve a proposed Agreement and Plan
of Reorganization dated ___________, 199_ (the "Reorganization Agreement"), by
and between Pegasus and The One Group (R) ("One Group") and the transactions
contemplated therein. A copy of the Reorganization Agreement is attached as
Appendix I.
Pegasus and One Group are each open-end, management investment
companies. First Chicago NBD Investment Management Company ("FCNIMCO") currently
provides investment advisory services to each of the investment portfolios of
Pegasus (the "Pegasus Portfolios"). Banc One Investment Advisors Corporation
("BOIA") presently provides investment advisory services to each of the
investment portfolios offered by One Group (the "One Group Funds"). Banc One
Corporation, the parent company of BOIA, recently completed a merger with First
Chicago NBD Corporation ("FCN"), the parent company of FCNIMCO. In the merger,
Banc One Corporation and FCN combined into a new corporation named "Bank One
Corporation" ("BOC") which has since taken steps to consolidate the mutual fund
investment advisory activities of its subsidiaries. As part of that
consolidation, FCNIMCO and BOIA recently recommended to the Boards of Trustees
of Pegasus and One Group the proposed reorganization of Pegasus and One Group
("Reorganization") described below.
In reviewing the proposed Reorganization, the Pegasus Board concluded
that participation in the proposed transaction is in the best interests of the
Pegasus Portfolios and their shareholders. The Board has further concluded that
the economic interests of the shareholders of the Pegasus Portfolios will not be
diluted as a result of the proposed transaction. In reaching this conclusion,
the Board considered, among other things:
1. The compatibility of the investment objectives and policies of the One
Group Funds with those of the Pegasus Portfolios;
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2. The performance of the One Group Funds as compared to that of the
Pegasus Portfolios;
3. The enhanced range of investment options which will be available to
investors in the One Group. Upon completion of the Reorganization, the
One Group will offer 48 different funds;
4. The tax-free nature of the transaction; and
5. The investment leverage and market presence that the One Group will
achieve as a result of the Reorganization.
The Reorganization Agreement provides that each of the following
sixteen investment portfolios of Pegasus (collectively, the "Reorganizing
Pegasus Portfolios") will transfer all its assets and liabilities to the
currently operating One Group investment portfolio (collectively, the "Existing
One Group Funds") identified below opposite its name:
REORGANIZING PEGASUS PORTFOLIOS EXISTING ONE GROUP FUNDS
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Pegasus Money Market Fund The One Group Prime Money Market Fund
Pegasus Treasury Money Market Fund The One Group U.S. Treasury Securities Money Market Fund
Pegasus Municipal Money Market Fund The One Group Municipal Money Market Fund
Pegasus Managed Assets Conservative Fund The One Group Investor Balanced Fund
Pegasus Managed Assets Balanced Fund The One Group Investor Growth & Income Fund
Pegasus Managed Assets Growth Fund The One Group Investor Growth Fund
Pegasus Equity Income Fund The One Group Income Equity Fund
(to be renamed Equity Income Fund upon Reorganization)
Pegasus Growth Fund The One Group Large Company Growth Fund
(to be renamed Large Cap Growth Fund upon Reorganization)
Pegasus Intrinsic Value Fund The One Group Disciplined Value Fund
(to be renamed Mid Cap Value Fund upon Reorganization)
Pegasus Growth and Value Fund The One Group Value Growth Fund
(to be renamed Diversified Equity Fund upon Reorganization)
Pegasus Equity Index Fund The One Group Equity Index Fund
Pegasus Intermediate Bond Fund The One Group Intermediate Bond Fund
Pegasus Short Bond Fund The One Group Limited Volatility Bond Fund
(to be renamed Short-Term Bond Fund upon Reorganization)
Pegasus Multi Sector Bond Fund The One Group Income Bond Fund
Pegasus High Yield Bond Fund The One Group High Yield Bond Fund
Pegasus Intermediate Municipal Bond Fund The One Group Intermediate Tax-Free Bond Fund
The Reorganization Agreement also provides that each of the following
fourteen investment portfolios of Pegasus (collectively, the "Continuing Pegasus
Portfolios") will transfer all its assets and liabilities to the newly organized
One Group investment portfolio (collectively, the "New One Group Funds")
identified below opposite its name:
CONTINUING PEGASUS PORTFOLIOS NEW ONE GROUP FUNDS
- ----------------------------- -------------------
Pegasus Michigan Municipal Money Market The One Group Michigan Municipal Money Market Fund
Fund
Pegasus Cash Management Fund The One Group Cash Management Money Market Fund
Pegasus Treasury Cash Management Fund The One Group Treasury Cash Management Money Market Fund
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CONTINUING PEGASUS PORTFOLIOS NEW ONE GROUP FUNDS
- ----------------------------- -------------------
Pegasus Treasury Prime Cash The One Group Treasury Prime Cash Management
Management Fund Money Market Fund
Pegasus U.S. Government Securities Cash The One Group U.S. Government Securities Cash
Management Fund Management Money Market Fund
Pegasus Municipal Cash Management Fund The One Group Municipal Cash Management Money Market Fund
Pegasus Mid-Cap Opportunity Fund The One Group Diversified Mid Cap Fund
Pegasus Small-Cap Opportunity Fund The One Group Small Cap Value Fund
Pegasus Market Expansion Index Fund The One Group Market Expansion Index Fund
Pegasus International Equity Fund The One Group Diversified International Fund
Pegasus Bond Fund The One Group Bond Fund
Pegasus Municipal Bond Fund The One Group Tax-Free Bond Fund
Pegasus Short Municipal Bond Fund The One Group Short-Term Municipal Bond Fund
Pegasus Michigan Municipal Bond Fund The One Group Michigan Municipal Bond Fund
In exchange for the transfers of these assets and liabilities, One
Group will issue shares in the thirty One Group investment portfolios listed
above (collectively, the "One Group Funds") to the corresponding Pegasus
investment portfolios listed above (collectively, the "Pegasus Portfolios"). The
transaction between the Reorganizing Pegasus Portfolios and the Existing One
Group Funds and between the Pegasus Michigan Municipal Money Market, Mid-Cap
Opportunity, Small-Cap Opportunity, Market Expansion Index, International
Equity, Bond, Municipal Bond, Short Municipal Bond and Michigan Municipal Bond
Funds and their corresponding New One Group Funds is referred to herein as the
"Reorganizing Portfolios Transaction" and the transaction between the remaining
Continuing Pegasus Portfolios and their corresponding New One Group Funds is
referred to herein as the "Continuing Portfolios Transaction." The transactions
are expected to occur on or about March 22, 1999 and March 29, 1999,
respectively.
The Pegasus Portfolios have two or three classes of shares outstanding.
The One Group Funds offer comparable classes of shares. Holders of each share
class of a Pegasus Portfolio will receive shares of the corresponding One Group
Fund share class. Class A shares, Class B shares and Institutional Class shares
("Class I" shares) of the Pegasus Portfolios will be exchanged for One Group
Class A, Class B and Class I shares, respectively. Class S shareholders of the
Pegasus Cash Management, Treasury Cash Management, Treasury Prime Cash
Management, U.S. Government Securities Cash Management and Municipal Cash
Management Funds will receive Class A shares of the One Group Cash Management
Money Market, Treasury Cash Management Money Market, Treasury Prime Cash
Management Money Market, U.S. Government Securities Cash Management Money Market
and Municipal Cash Management Money Market Funds, respectively.
The Pegasus Portfolios will make liquidating distributions of the One
Group Funds' shares to the Shareholders of the Pegasus Portfolios, so that a
holder of a share class in a Pegasus Portfolio will receive shares of a share
class (as described herein) of the corresponding One Group Fund with the same
aggregate net asset value as the Shareholder had in the Pegasus Portfolio
immediately before the transaction. Following the Reorganization, Shareholders
of the Pegasus Portfolios will be Shareholders of their corresponding One Group
Funds, and Pegasus will be terminated under state law and the Investment Company
Act of 1940, as amended (the "1940 Act").
The Existing One Group Funds currently are conducting investment
operations as described in this Combined Prospectus/Proxy Statement. The New One
Group Funds have recently been organized for the
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purpose of continuing the investment operations of the Continuing Pegasus
Portfolios, and have no substantial assets or prior history of investment
operations.
This Combined Prospectus/Proxy Statement sets forth the information
that a Shareholder of Pegasus should know before voting on the Reorganization
Agreement (and related transactions), and should be retained for future
reference. The Prospectuses relating to the shares of the Existing One Group
Funds, which describe those Funds' operations, accompany this Combined
Prospectus/Proxy Statement and the information contained therein is incorporated
by reference into this Combined Prospectus/Proxy Statement. Additional
information is set forth in the Statements of Additional Information relating to
the Existing One Group Funds and this Combined Prospectus/Proxy Statement, which
are dated November 1, 1998 and December __, 1998, respectively, and in the
Prospectuses and Statements of Additional Information, each dated April 30,
1998, relating to Pegasus. Each of these documents is on file with the
Securities and Exchange Commission (the "SEC"), is available without charge upon
written or oral request by writing or calling either Pegasus or One Group at
their respective addresses or telephone numbers indicated above, and is
incorporated herein by reference.
This Combined Prospectus/Proxy Statement constitutes the Proxy
Statement of Pegasus for the Meeting of its Shareholders, and One Group's
Prospectus for the shares of its Existing and New One Group Funds that have been
registered with the SEC and are to be issued in connection with the
Reorganization.
The following summarizes the proposals to be voted on by Pegasus
Shareholders at the meeting:
PROPOSAL SHAREHOLDERS SOLICITED
- -------- ----------------------
1. To approve a Reorganization Shareholders of each Pegasus Portfolio
Agreement, which provides for voting separately on a class-by-class
(a) the transfer of all of the assets basis on the Reorganization Agreement.
and liabilities of the Pegasus
Portfolios to corresponding One
Group Funds in exchange for
Class A, Class B or Class I
shares, as applicable, of the
One Group Funds, (b) the distribution
of such One Group Fund shares to the
Shareholders of the Pegasus
Portfolios according to their
respective interests, and (c) the
termination of Pegasus under state
law and the 1940 Act.
This Combined Prospectus/Proxy Statement is expected to first be sent
to Shareholders on or about January 19, 1999.
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THE SECURITIES OF THE ONE GROUP FUNDS OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY PEGASUS, ONE GROUP OR THEIR RESPECTIVE
DISTRIBUTORS.
EACH MONEY MARKET FUND SEEKS TO MAINTAIN A NET ASSET VALUE OF $1.00 PER SHARE.
AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL BE ABLE
TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF PEGASUS AND ONE GROUP ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED, ENDORSED OR OTHERWISE SUPPORTED BY BANK ONE CORPORATION, ANY OF ITS
AFFILIATES, OR ANY BANK. SHARES OF PEGASUS AND ONE GROUP ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER GOVERNMENTAL AGENCY. MUTUAL FUND SHARES INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE DISTRIBUTOR OF
PEGASUS IS BISYS FUND SERVICES LIMITED PARTNERSHIP. THE DISTRIBUTOR OF ONE GROUP
IS THE ONE GROUP SERVICES COMPANY.
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TABLE OF CONTENTS
PAGE
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FEE TABLES.........................................................................................................
SUMMARY............................................................................................................
Proposed Reorganization...................................................................................
Overview of Pegasus and One Group.........................................................................
Purchase/Redemption Procedures............................................................................
Federal Income Tax Consequences...........................................................................
Principal Risk Factors....................................................................................
Voting Information........................................................................................
Management Discussion.....................................................................................
INFORMATION RELATING TO THE PROPOSED REORGANIZATION................................................................
Description of the Reorganization Agreement...............................................................
Pegasus Board Consideration...............................................................................
Capitalization............................................................................................
Federal Income Tax Consequences...........................................................................
One Group Board Composition...............................................................................
COMPARISON OF PEGASUS AND ONE GROUP................................................................................
Investment Objectives and Policies .......................................................................
Expense Ratios............................................................................................
Investment Adviser - Pegasus Portfolios...................................................................
Investment Adviser - One Group Funds......................................................................
Certain Other Service Providers...........................................................................
Distribution Plan and Shareholder Servicing Arrangements - Pegasus Portfolios.............................
Distribution Plan and Shareholder Servicing Arrangements - One Group......................................
Shareholder Transactions and Services.....................................................................
INFORMATION RELATING TO VOTING MATTERS.............................................................................
General Information.......................................................................................
Shareholder and Board Approvals...........................................................................
Appraisal Rights..........................................................................................
Quorum....................................................................................................
Annual Meetings...........................................................................................
ADDITIONAL INFORMATION ABOUT THE ONE GROUP.........................................................................
ADDITIONAL INFORMATION ABOUT PEGASUS...............................................................................
LITIGATION.........................................................................................................
FINANCIAL STATEMENTS...............................................................................................
OTHER BUSINESS.....................................................................................................
SHAREHOLDER INQUIRIES..............................................................................................
Appendix I - Agreement and Plan of Reorganization................................................................ I-1
Appendix II - Comparative Fee Tables.............................................................................. II-1
Appendix III - Comparison of Investment Objectives and Certain Significant Policies................................ III-1
Appendix IV - Shareholder Transactions and Services............................................................... IV-1
Appendix V - Management's Discussion of Fund Performance -
Existing One Group Funds.................................................................................. V-1
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FEE TABLES
All shareholders of the Pegasus Municipal Money Market, Michigan
Municipal Money Market, Cash Management, Treasury Cash Management, Treasury
Prime Cash Management, Municipal Cash Management, Managed Assets Conservative,
Mid-Cap Opportunity, Small-Cap Opportunity, Equity Index, International Equity,
Intermediate Bond, Bond, Short Bond, Multi-Sector Bond, High Yield Bond,
Municipal Bond, Intermediate Municipal Bond and the Pegasus Michigan Municipal
Bond Funds, are projected to experience lower annualized per share total
operating expense ratios upon consummation of the Reorganization. All
shareholders of the Pegasus Money Market, Treasury Money Market, Managed Assets
Balanced, Managed Assets Growth, Equity Income, Growth, Intrinsic Value, and
Growth and Value Funds, are projected to experience higher annualized per share
total expense ratios upon consummation of the Reorganization. The Pegasus U.S.
Government Securities Cash Management, Pegasus Market Expansion Index and
Pegasus Short Municipal Bond Funds are projected to experience no increase in
annualized per share total expense ratios upon consummation of the
Reorganization. Such projections take into account potential savings in fixed
and variable expenses resulting from synergies and renegotiated contract terms
with vendors, as well as voluntary fee waivers and/or expense reimbursements.
The voluntary fee waivers and/or expense reimbursements may be terminated at any
time except as noted below. For detailed information regarding pro forma and
other expense information, see the Tables under "Expense Ratios," "Investment
Adviser - Pegasus Portfolios," "Investment Adviser - One Group Funds" under the
heading "Comparison of Pegasus and One Group" and Appendix II - Comparative Fee
Tables. BOIA as investment adviser to the Existing One Group Funds has agreed to
limit the total operating expense ratios of the Existing One Group Funds
following the Reorganization as set forth in the Table under "Comparison of
Pegasus and One Group - Expense Ratios" and Appendix II until August 1999. With
respect to the New One Group Funds, BOIA has agreed to waive a portion of its
investment advisory fee until at least March 2000 so that the rate of total
operating expenses actually paid will not exceed the rate currently paid for
total operating expenses by the corresponding Continuing Pegasus Portfolios.
SUMMARY
The following is a summary of certain information relating to the
Reorganization and is qualified by reference to the more complete information
contained elsewhere in this Combined Prospectus/Proxy Statement, the
Prospectuses and Statements of Additional Information of Pegasus and One Group,
and the Appendices attached hereto. Pegasus' Annual Reports and Semi-Annual
Reports to Shareholders may be obtained free of charge by calling 1-800-688-3350
or writing Pegasus Funds, P.O. Box 5142, Westborough, Massachusetts 01581. One
Group's Annual Reports to Shareholders may be obtained free of charge by calling
1-800-480-4111 or writing to The One Group (R), 3435 Stelzer Road, Columbus,
Ohio 43219.
PROPOSED REORGANIZATION. The Reorganization Agreement provides for: (1) the
transfer of all of the Fund Assets and Liabilities of each of the Reorganizing
Pegasus Portfolios and Continuing Pegasus Portfolios (each a "Pegasus
Portfolio," together the "Pegasus Portfolios") to a corresponding Existing One
Group Fund or a New One Group Fund (each a "One Group Fund," together the "One
Group Funds") in exchange for Shares of designated classes of the corresponding
One Group Fund; and (2) the distribution of One Group Fund Shares to the
shareholders of the Pegasus Portfolios in liquidation of the Pegasus Portfolios.
The Reorganization is subject to a number of conditions with respect to each
Pegasus Portfolio, including shareholder approval. Shareholders of each Pegasus
Portfolio will vote separately on
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the Reorganization on a class-by-class basis. Following the Reorganization,
Pegasus will wind up its affairs and deregister as an investment company under
the 1940 Act. If a majority of the shares of one or more classes of a Pegasus
Portfolio fails to approve the Reorganization, that Pegasus Portfolio will not
participate in the Reorganization and Pegasus will not be terminated under state
law. In such a case, the Pegasus Board of Trustees will contemplate what further
action is appropriate.
As a result of the proposed Reorganization, a Pegasus Portfolio
shareholder will become a shareholder of the corresponding One Group Fund and
will hold, immediately after the Exchange Date (as defined in the Reorganization
Agreement), shares of the designated classes of the corresponding One Group Fund
having a total dollar value equal to the total dollar value of the shares of the
Pegasus Portfolio that the shareholder held immediately before the Exchange
Date. The exchange of the Fund Assets and Liabilities of each Pegasus Portfolio,
other than the Pegasus Cash Management, Treasury Cash Management, Treasury Prime
Cash Management, U.S. Government Securities Cash Management and Municipal Cash
Management Funds, is expected to occur on or about March 22, 1999 or such later
date as may be determined pursuant to the Reorganization Agreement. The exchange
of the Fund Assets and Liabilities of the remaining Pegasus Portfolios is
expected to occur on or after March 29, 1999 or such later date as may be
determined pursuant to the Reorganization Agreement.
OVERVIEW OF PEGASUS AND ONE GROUP. The investment objectives and policies of the
Pegasus Portfolios are similar to those of their corresponding One Group Funds.
There are, however, certain significant differences. For example, the Pegasus
Small-Cap Opportunity Fund primarily invests in companies with a market
capitalization of $100 million to $1 billion while The One Group Small Cap Value
Fund invests in companies with a market capitalization of $100 million to $2
billion. Likewise, the Pegasus Mid-Cap Opportunity Fund invests primarily in
companies with a market capitalization of $500 million to $3 billion while The
One Group Diversified Mid-Cap Fund invests in companies with a market
capitalization of $500 million to $5 billion. Investments in companies with
smaller market capitalizations may be riskier than investments in companies with
larger market capitalizations.
The Intermediate Municipal Bond Fund and the International Equity Fund
of Pegasus are "non-diversified" funds, but the corresponding One Group Funds
are diversified. Non-diversified funds may invest a more significant portion of
their assets in the securities of a single issuer which increases the risk of
loss if an issuer fails to make interest or principal payments or if the market
value of a security declines. The Pegasus High Yield Bond Fund has no stated
policy on weighted average maturity, but as of September 30, 1998, the Fund's
average weighted maturity was 6.2 years. The weighted average maturity of the
investments of The One Group High Yield Bond Fund must range between five and
ten years. This is significant because the longer the maturity of an investment,
the greater its volatility. The Pegasus Multi Sector Bond Fund may invest in
investment grade debt securities only, but the corresponding One Group Income
Bond Fund may invest up to 30% of its total assets in securities rated below
investment grade (sometimes known as "junk bonds"). As of December 1, 1998, The
One Group Income Bond Fund had invested less than 10% of its total assets in
below investment grade securities. Investments in securities rated below
investment grade are high risk investments subject to greater risk of loss,
valuation difficulties, interest rate sensitivity, low liquidity and changes in
credit quality. The percentage of assets allocated to the various underlying
mutual funds varies for the Pegasus Managed Assets Funds and The One Group
Investor Funds. For additional investment related information, see "Comparison
of Pegasus and One Group - Investment Objectives and Policies," Appendix III -
Comparison of Investment Objectives and Certain Significant Policies attached to
this Combined
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Prospectus/Proxy Statement, and Pegasus' and Existing One Group Funds'
Prospectuses and Statements of Additional Information, which are incorporated by
reference herein.
FCNIMCO presently serves as the investment adviser to each Pegasus
Portfolio. Federated Investment Counseling ("Federated") currently serves as
sub-adviser to the Pegasus High Yield Bond Fund. BOIA currently serves as
investment adviser to The One Group Funds. FCNIMCO and BOIA are affiliates of
BOC. Banc One High Yield Partners, LLC, an affiliate of BOIA, serves as
sub-adviser to The One Group High Yield Bond Fund and Independence International
Associates, Inc. serves as sub-adviser to The One Group International Equity
Index Fund. The Pegasus Portfolios and One Group Funds have different trustees
and service providers, but similar custodial, administrative and distribution
arrangements. State Street Bank and Trust Company ("State Street") serves as
Custodian to The One Group and sub-custodian to Pegasus. BISYS Fund Services
serves as co-administrator and distributor for Pegasus and an affiliate, The One
Group Services Company ("OGSC"), serves as administrator and distributor for The
One Group. BOIA serves as sub-administrator of The One Group. See "Investment
Advisers," "Certain Other Service Providers" and "Distribution Plan and
Shareholder Servicing Arrangements" under "Comparison of Pegasus and One Group."
The Table under "Comparison of Pegasus and One Group - Expense Ratios,"
shows the current annualized per share total operating expense ratio for each
share class of each Pegasus Portfolio along with the pro forma total operating
expense ratio that could be expected for each designated class of shares of the
corresponding One Group Fund after the Reorganization. The section entitled "Fee
Tables" above and Appendix II - Comparative Fee Tables to this Combined
Prospectus/Proxy Statement provide additional information about the fees and
expenses for each of the Pegasus Portfolios and corresponding One Group Funds.
PURCHASE/REDEMPTION PROCEDURES. The purchase, redemption, dividend and other
policies and procedures of the Pegasus Portfolios and the One Group Funds are
generally similar. See "Comparison of Pegasus and One Group - Shareholder
Transactions and Services" and Appendix IV - Shareholder Transactions and
Services to this Combined Prospectus/Proxy Statement. NO SALES CHARGE OR
CONTINGENT DEFERRED SALES CHARGE ("CDSC") WILL BE IMPOSED ON ANY OF THE
SHAREHOLDERS OF PEGASUS PORTFOLIOS IN CONNECTION WITH THE REORGANIZATION.
FEDERAL INCOME TAX CONSEQUENCES. Ropes & Gray, independent outside counsel to
One Group and to its Board of Trustees, is expected to issue an opinion (based
on certain assumptions) as of the effective time of each of the Reorganizing
Pegasus Portfolios Transaction and the Continuing Pegasus Portfolios Transaction
that each transaction, will not give rise to the recognition of income, gain or
loss for federal income tax purposes to the Pegasus Portfolios or the One Group
Funds or their respective shareholders. Such an opinion is required by the
Reorganization Agreement with respect to each Pegasus Portfolio that is not a
money market fund, but is not required with respect to a Pegasus Portfolio that
is a money market fund.
Shareholders should note that each One Group Fund may, to the extent
permitted by law and consistent with the opinion to be issued by Ropes & Gray
discussed above, dispose of some of the securities acquired by it in connection
with the transaction. Disposition of securities may have tax consequences to
shareholders. In addition, immediately prior to the transaction, each Pegasus
Portfolio
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will declare and distribute a dividend which will have the effect of
distributing to shareholders all of the Pegasus Portfolio's investment company
taxable income and net realized capital gains. To the extent that a Pegasus
Portfolio's investments, consistent applicable law and with the opinion to be
issued by Ropes & Gray, are restructured prior to the Reorganization, the
Pegasus Portfolio may realize a greater amount of net capital gains which would
then need to be distributed to Pegasus shareholders. These distributions may
have tax consequences to Pegasus shareholders. For additional information, see
the sections below entitled "Federal Income Tax Consequences" and "Pegasus Board
Consideration" under "Information Relating to the Proposed Reorganization."
BOARD CONSIDERATION. Based upon their evaluation of the relevant information
presented to them, and in light of their fiduciary duties under federal and
state law, Pegasus' and One Group's Boards, including their members who are not
"interested persons" within the meaning of the 1940 Act, have unanimously
determined that the proposed Reorganization is in the best interests of their
Funds' respective shareholders and that the interests of such shareholders will
not be diluted as a result of the Reorganization. In making this determination,
the Pegasus Board considered the potential overall effect of the Reorganization
on shareholders of the Pegasus Portfolios including the following factors in
particular: (1) the relative performance of the Pegasus Portfolios and One Group
Funds; (2) comparative management fees and expense ratios; (3) tax-free nature
of the transaction; (4) compatibility of fund investment objectives, policies
and limitations; (5) terms and conditions of the Reorganization Agreement; (6)
capabilities, practices, and resources of BOIA and the other service providers;
(7) investment leverage and market presence; (8) enhanced shareholder services;
(9) products offered; (10) back office support; (11) availability of Class C
shares; and (12) benefits to other persons, especially BOIA and its affiliates.
For a more complete discussion of the factors affecting the Board's
decision, see "Information Relating to the Proposed Reorganization - Pegasus
Board Consideration."
PEGASUS' BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE REORGANIZATION AGREEMENT.
PRINCIPAL RISK FACTORS. Because of the similarities in investment objectives and
policies, the Pegasus Portfolios and The One Group Funds (for purposes of this
discussion only, collectively, the "Funds") are subject to similar investment
risks. The following discussion identifies certain broad risks inherent in
investing in the Funds. The One Group Investor Funds and the Pegasus Managed
Assets Funds invest primarily in the securities of other One Group Funds and
Pegasus Portfolios ("Underlying Funds"), respectively. These Funds do not invest
in individual securities (other than certain short-term instruments). However,
to the extent the Underlying Funds invest in various securities the following
risks apply. For more specific risks relating to specific securities purchased
by a particular Fund described below, see the sections entitled "Investment
Practices" and "Investment Risks" in The One Group Prospectuses, and "Risk
Factors" and "Supplemental Information" in the Pegasus Prospectuses.
Volatility. The One Group Income Equity, Disciplined Value, Value
Growth, Equity Index, Intermediate Bond, Limited Volatility Bond and
Intermediate Tax-Free Bond Funds have a "beta" statistic higher than that of
their corresponding Pegasus Portfolios. The "beta" statistic measures the
relative volatility (that is, the variability in returns) to a common market
index. Specifically, "beta" equals the expected change in fund return per 1%
change in the index return.
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The chart below illustrates "beta" statistic differentials for One
Group Funds with betas higher than their corresponding Pegasus Portfolios during
the three-year period ended June 30, 1998:
FUND NAME INDEX 3 YR BETA VS INDEX
- --------- ----- ------------------
One Group Income Equity S&P 5001 0.87
Pegasus Equity Income 0.62
One Group Disciplined Value S&P 500 0.76
Pegasus Intrinsic Value 0.70
One Group Value Growth S&P 500 1.04
Pegasus Growth and Value 0.79
One Group Equity Index S&P 500 1.00
Pegasus Equity Index 0.98
One Group Intermediate Bond Lehman Aggregate(2) 0.77
Pegasus Intermediate Bond 0.74
One Group Limited Volatility Bond Lehman Aggregate 0.42
Pegasus Short Bond 0.30
One Group Intermediate Tax-Free Bond Lehman Aggregate 0.68
Pegasus Intermediate Municipal Bond 0.58
None of these funds has a "beta" statistic indicative of a high risk posture
relative to its index. As a general policy, BOIA attempts to limit the
volatility of all One Group Funds by managing them within a band around a market
index. BOIA attempts to use stock selection to outperform the index without
assuming significant risk. As a result, the One Group Funds generally seek to
achieve higher returns while maintaining volatility consistent with the chosen
index. BOIA believes that this strategy achieves an acceptable risk/return
tradeoff.
Equity Securities. The Pegasus Managed Assets Conservative, Managed
Assets Balanced, Managed Assets Growth, Equity Income, Growth, Mid-Cap
Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and Value, Equity
Index, Market Expansion Index, International Equity Funds and The One Group
Investor Balanced, Investor Growth & Income, Investor Growth, Income Equity,
Large Company Growth, Diversified Mid Cap, Small Cap Value, Disciplined Value,
Value Growth,
- -------------------
(1) The S&P 500 Index is comprised of 500 widely held common stocks. It
consists of 400 industrial, 40 utility, 20 transportation and 40
financial companies listed on U.S. market exchanges. It is a
capitalization-based index, calculated on a total return basis with
dividends reinvested.
(2) The Lehman Brothers Aggregate Bond Index is comprised of
publicly-issued fixed-rate non-convertible domestic bond issues rated
investment grade or higher, with at least one year to maturity and
having an outstanding par value of at least $100 million. It is a
capitalization-based index, calculated on a total return basis
inclusive of accrued income.
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Equity Index, Market Expansion Index, and Diversified International Funds invest
in equity securities, which may increase or decrease in value. As a result, the
value of your investment in a Fund may increase or decrease in value. The
Pegasus High Yield Bond Fund and The One Group Intermediate Bond, Income Bond,
Limited Volatility Bond, High Yield Bond and Bond Funds also invest to a limited
extent in preferred stocks.
Small Capitalization Companies. The Pegasus Small-Cap Opportunity and
The One Group Small Cap Value Funds invest in small capitalization companies.
Investments in smaller, younger 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 affecting 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.
Fixed Income Securities. Each Fund may invest in 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.
Non-Diversified Funds. The Pegasus Michigan Municipal Money Market,
International Equity, Municipal Bond, Short Municipal Bond, Intermediate
Municipal Bond and Michigan Municipal Bond Funds and The One Group Michigan
Municipal Money Market and Michigan Municipal Bond Funds are "non-diversified"
funds. This means that the Funds may invest a more significant portion of their
assets in the securities of a single issuer than can a "diversified" fund. In
addition, these Funds' investments may be concentrated geographically. These
concentrations increase the risk of loss to the Funds if an issuer fails to make
interest or principal payments or if the market value of a security declines. A
diversified Fund invests in a larger number of issuers, with a smaller
percentage in each issuer. Although diversification reduces the risk that a
fund's investments will be affected by a single issuer, other factors, such as
risks inherent in the underlying securities, are also relevant.
State Specific Municipal Securities. Because the Pegasus Michigan
Municipal Money Market and Michigan Municipal Bond Funds and The One Group
Michigan Municipal Money Market and Michigan Municipal Bond Funds concentrate
their investments in Michigan, the following factors may have a
disproportionately negative effect on the Funds' investments. First, the economy
of Michigan is dependent on the automobile manufacturing industry which is
highly cyclical. This cyclical economy affects the revenue streams of the state
and its political subdivisions because it impacts their tax sources. Second,
state based sources, including increased sales tax, are being used to pay a
larger portion of the cost of public education than in the past. These recent
changes in the payment of education costs will affect state and local revenue of
Michigan governmental units in future years in varying ways.
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Index Funds. The Pegasus Market Expansion Index and Equity Index Funds
and The One Group Market Expansion Index and Equity Index Funds are index funds.
An index fund's investment objective is to track the performance of a specified
index. Therefore, securities may be purchased, retained and sold by an index
fund at times when an actively managed fund 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 the Funds were not fully invested in such securities.
Because of this, an index fund's share price can be volatile and you should be
prepared to handle sudden, and sometimes substantial, fluctuations in the value
of your investment.
International Funds. Investments in foreign securities involve risks
different from investments in U.S. securities. These include the risk of losses
attributable to unfavorable governmental or political actions, seizure of
foreign assets, changes in tax or trade statutes, and governmental collapse and
war. Investments in foreign securities also involve 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 may affect the ability of an issuer to
repay U.S. dollar denominated debt, thereby increasing credit risk. Because of
these risk factors, the share price of both the Pegasus International Equity
Fund and The One Group Diversified International Fund can be volatile, and you
should be prepared to sustain sudden, and sometimes, substantial, fluctuations
in the value of your investment.
Lower Rated Investment Grade Securities. All Pegasus Portfolios, other
than the money market funds, and The One Group Income Bond, Limited Volatility
Bond, Bond, Investor Balanced, Investor Growth & Income, Investor Growth, and
Intermediate Bond Funds may invest in debt securities rated in the lowest
investment grade category. Securities in this rating 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.
High Yield/Junk Bonds. The Pegasus Managed Assets Growth, Managed
Assets Balanced, Managed Assets Conservative, Equity Income, Equity Index,
Growth and Value, Intrinsic Value, Growth, Mid-Cap Opportunity, Small-Cap
Opportunity, International Equity, Market Expansion Index and High Yield Bond
Funds and The One Group Investor Growth, Investor Growth & Income, Investor
Balanced, Income Bond and High Yield Bond Funds may invest in debt securities
rated below investment grade. These securities are regarded as predominantly
speculative. Securities rated below investment grade generally provide a higher
yield than higher rated securities of similar maturity, but are subject to a
greater degree of risk that the issuer may not be able to make principal and
interest payments. Issuers of these securities may not be as strong financially
as those issuing higher rated securities. Such high yield issuers may include
smaller, less creditworthy companies or highly indebted firms.
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. Thus, periods of economic uncertainty and change can
result in
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the increased volatility of market prices of high yield bonds and of the fund's
net asset value. 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. Issuers of high yield securities also are more vulnerable to
real or perceived economic changes, political changes or adverse developments
specific to the issuer. A projection of an economic downturn, for example, could
cause the price of these securities to decline because a recession could lessen
the ability of a highly leveraged company to make principal and interest
payments on its debt securities. In the event of a default, these Funds would
experience a decline in the market value of their investments. In addition, a
long-term track record on bond default rates, such as that for investment grade
corporate bonds, does not exist for the high yield market. It may be that future
default rates on high-yield bonds will be more widespread and higher than in the
past, especially during periods of deteriorating economic conditions.
The market prices of debt securities generally fluctuate with changes
in interest rates so that these Funds' net asset values can be expected to
decrease as long-term interest rates rise and to increase as long-term rates
fall. The market prices of high yield securities structured as zero coupon or
pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically.
Credit quality in the high yield market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security.
Because investments in high yield securities involve greater investment
risk, achievement of a fund's investment objective may be more dependent on its
adviser's credit analysis than would be the case if the fund were investing in
higher rated securities. The One Group Funds may seek to hedge investments
through transactions in options, futures contracts and related options. The One
Group Funds also may use swap agreements to further manage exposure to high
yield securities.
Derivatives. Some of the Funds invest in securities that are considered
to be derivatives. These securities may be more volatile and may be riskier than
other investments. These include:
o Each Pegasus Portfolio, other than the money market funds, and each
One Group Fund, other than the money market funds and the Limited Volatility
Bond Fund, may purchase options, futures contracts or options on futures
contracts.
o The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value, Intrinsic
Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity, International Equity,
Market Expansion Index, Multi Sector Bond and High Yield Bond Funds and The One
Group Investor Balanced, Investor Growth & Income, Investor Growth, Large
Company Growth, Diversified Mid Cap, Small Cap Value, Value Growth, Market
Expansion Index, Equity Index, Diversified International, Income Bond and High
Yield Bond Funds may hold warrants.
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o The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value, Intrinsic
Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity, International Equity,
Market Expansion Index, Short Bond, Intermediate Bond, Multi Sector Bond, Bond,
High Yield Bond, Intermediate Municipal Bond, Municipal Bond, Michigan Municipal
Bond and Short Municipal Bond Funds, and The One Group Prime Money Market,
Municipal Money Market, Michigan Municipal Money Market, Municipal Cash
Management Money Market, Investor Growth, Investor Growth & Income, Investor
Balanced, Diversified Mid Cap, Small Cap Value, Market Expansion Index,
Diversified International, Intermediate Bond, Bond, Limited Volatility, Income
Bond, High Yield Bond, Intermediate Tax-Free Bond, Tax-Free Bond, Michigan
Municipal Bond and Short-Term Municipal Bond Funds may invest in mortgage-backed
securities, which may include collateralized mortgage obligations and Real
Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs).
o The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value, Intrinsic
Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity, International Equity,
Market Expansion Index, Short Bond, Intermediate Bond, Multi Sector Bond, Bond
and High Yield Bond Funds, and The One Group Prime Money Market, Municipal Money
Market, Investor Growth, Investor Growth & Income, Investor Balanced,
Diversified Mid Cap, Small Cap Value, Market Expansion Index, Diversified
International, Intermediate Bond, Bond, Limited Volatility, Income Bond, High
Yield Bond, Municipal Bond, Michigan Municipal Bond, Short-Term Municipal Bond
and Intermediate Tax-Free Bond Funds may purchase asset-backed securities.
o The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value, Intrinsic
Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity, International Equity,
Market Expansion Index, Short Bond, Intermediate Bond, Multi Sector Bond, Bond,
High Yield Bond, Municipal Bond, Short Municipal Bond, Intermediate Municipal
Bond and Michigan Municipal Bond Funds and The One Group Investor Growth,
Investor Growth & Income, Investor Balanced, Income Equity, Equity Index, Value
Growth, Disciplined Value, Large Company Growth, Diversified Mid Cap, Small Cap
Value, Diversified International, Market Expansion Index, Intermediate Bond,
Limited Volatility Bond, Income Bond, Bond, High Yield Bond, Intermediate
Tax-Free Bond, Tax-Free Bond, Michigan Municipal Bond and Short-Term Municipal
Bond Funds may invest in swap, cap and floor transactions.
o Each Pegasus Fund, other than the money market funds, and The One
Group Investor Growth, Investor Growth & Income, Investor Balanced, Intermediate
Bond, Income Bond, Bond, High Yield Bond, Intermediate Tax-Free Bond, Tax-Free
Bond, Short-Term Municipal Bond and Michigan Municipal Bond Funds may invest in
inverse floating rate instruments. Inverse floating rate instruments are
floating rate debt instruments with interest rates that reset in the opposite
direction from the market rate of interest to which the inverse floater is
indexed.
o The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value, Intrinsic
Value, Growth, Mid-Cap
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Opportunity, Small-Cap Opportunity, International Equity, Market Expansion
Index, Short Bond, Intermediate Bond, Multi Sector Bond, Bond, High Yield Bond,
Intermediate Municipal Bond, Municipal Bond, Michigan Municipal Bond and Short
Municipal Bond Funds, and The One Group Investor Growth, Investor Growth &
Income, Investor Balanced, Diversified Mid Cap, Small Cap Value, Diversified
International, Market Expansion Index, Limited Volatility Bond, Intermediate
Bond, Income Bond, Bond, High Yield Bond, Intermediate Tax-Free Bond, Tax-Free
Bond, Michigan Municipal Bond and Short-Term Municipal Bond Funds may invest in
structured instruments.
o Each Fund, other than the Pegasus money market funds, and The One
Group money market funds and Limited Volatility Bond Fund, may invest in new
financial products.
The above discussion is qualified in its entirety by the disclosure in
The One Group Funds Prospectuses accompanying this Combined Prospectus/Proxy
Statement and the information in the Pegasus Funds Prospectuses incorporated
herein by reference.
VOTING INFORMATION. This Combined Prospectus/Proxy Statement is being furnished
in connection with the solicitation of proxies by Pegasus' Board of Trustees at
the Meeting. Only shareholders of record at the close of business on December
18, 1998 will be entitled to vote at the Meeting. Each whole or fractional share
is entitled to a whole or fractional vote, respectively. Shares represented by a
properly executed proxy will be voted in accordance with the instructions
thereon or, if no specification is made, the persons named as proxies will vote
in favor of each proposal set forth in the Notice of Meeting. Proxies may be
revoked at any time before they are exercised by submitting to Pegasus a written
notice of revocation or a subsequently executed proxy or by attending the
Meeting and voting in person. For additional information, see "Information
Relating to Voting Matters."
MANAGEMENT DISCUSSION. A discussion of the management and performance of The One
Group Funds (except The One Group High Yield Bond Fund and the New One Group
Funds) and an analysis of their performance can be found at Appendix V to this
Combined Prospectus/Proxy Statement.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
The terms and conditions of the Reorganization are set forth in the
Reorganization Agreement. Certain provisions of the Reorganization Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Reorganization Agreement, a copy of which is attached as
Appendix I to this Combined Prospectus/Proxy Statement.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. The Reorganization Agreement
provides that on the Exchange Date (as that term is defined in the
Reorganization Agreement), the Assets and Liabilities existing at the Valuation
Time (as that term is defined in the Reorganization Agreement) of each Pegasus
Portfolio will be transferred to its corresponding One Group Fund, as previously
described (see pages 2-3 of this Combined Prospectus/Proxy Statement), in
exchange for full and fractional Shares of the designated classes of the
corresponding One Group Fund.
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The Shares issued by each One Group Fund in the Reorganization will
have an aggregate dollar value equal to the aggregate dollar value of the net
assets per share of the respective Pegasus Portfolio at the Valuation Time.
Immediately after the Exchange Date, each Pegasus Portfolio will distribute the
Shares of the One Group Fund received in the Reorganization to its shareholders
in liquidation of each Pegasus Portfolio. Each shareholder owning shares of a
particular Pegasus Portfolio at the Exchange Date will receive Shares of the
designated class of the corresponding One Group Fund, and will receive any
unpaid dividends or distributions that were declared before the Exchange Date on
Pegasus Portfolio shares. One Group will establish an account for each former
shareholder of the Pegasus Portfolios reflecting the appropriate number of One
Group Fund Shares distributed to that shareholder. These accounts will be
substantially identical to the accounts currently maintained by Pegasus for each
shareholder. Shares of the One Group Funds are in uncertificated form.
With respect to each Pegasus Portfolio, the Reorganization is subject
to a number of conditions, including approval of the Reorganization Agreement
and the related matters described in this Combined Prospectus/Proxy Statement by
Pegasus shareholders at the Meeting; the receipt of certain legal opinions
described in the Reorganization Agreement (which include an opinion of One
Group's counsel addressed to Pegasus that the One Group Fund Shares issued in
the Reorganization will be validly issued, fully paid and non-assessable); the
receipt of certain certificates from the parties concerning the continuing
accuracy of the representations and warranties in the Reorganization Agreement;
[the receipt of certain information from the independent accountants of Pegasus
regarding tax matters;] and the parties' performance in all material respects of
their respective covenants and undertakings in the Reorganization Agreement.
The Reorganization Agreement provides that Pegasus and One Group will
each be responsible for their own expenses in connection with the
Reorganization. However, BOIA has agreed to assume the costs of proxy materials
proxy solicitations and certain other fees payable by Pegasus in connection with
the Reorganization as described on page 32. The Reorganization Agreement also
provides, among other things, that the Reorganization may be abandoned at any
time upon the mutual consent of both Pegasus and One Group, or by either One
Group or Pegasus under certain conditions; and that officers of One Group and of
Pegasus may amend, modify or supplement the Reorganization Agreement, provided
however, that following the Meeting, no such amendment may have the effect of
changing the provisions for determining the number of Shares of the
corresponding One Group Fund to be issued to the shareholders of any Pegasus
Portfolio without obtaining the Pegasus Portfolio shareholders' further
approval. In the event the transactions contemplated by the Reorganization
Agreement are not consummated by reason of Pegasus or One Group being either
unwilling or unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to that party's obligations referred to in Sections
8(a) and 10 of the Reorganization Agreement), the party failing to consummate
shall pay directly all reasonable fees and expenses incurred by Pegasus or by
One Group in connection with such transactions, including without limitation,
legal, accounting and filing fees.
PEGASUS BOARD CONSIDERATION. At a meeting on ___________, 199_, the Board of
Trustees of Pegasus approved the Reorganization Agreement and determined that
the Reorganization of the Pegasus Portfolios and the One Group Funds would be in
the best interests of each Pegasus Portfolio. The Trustees further determined
that the interests of existing shareholders of the Pegasus Portfolios would not
be diluted upon effectuation of the Reorganization. The Trustees recommend
approval of the Reorganization Agreement
17
26
after considering the potential overall effect of the Reorganization on the
shareholders of the Pegasus Portfolios including the following factors:
1. Performance. The total returns of the One Group Funds are competitive with,
and in many cases superior to, those of the Pegasus Portfolios as shown below.
Total returns for Class A and Class B shares reflect any applicable sales load.
The Trustees noted, however, that the performance shown is based on historical
earnings and is not predictive of future performance.
Pegasus One Group Prime
Money Market Fund Money Market Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 4.20% 3.55% 4.42% 4.22% 3.56% 4.43%
1 Year Annualized - 10/31/98 5.08% 4.29% 5.34% 5.11% 4.32% 5.37%
3 Year Annualized - 10/31/98 5.05% 4.52% 5.25% 5.05% -- 5.31%
5 Year Annualized - 10/31/98 4.84% 4.52% 4.96% 4.82% -- 5.08%
10 Year Annualized - 10/31/98 5.47% 5.31% 5.53% 5.55%
Pegasus Treasury One Group U.S. Treasury Securities
Money Market Fund Money Market Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 4.08% -- 4.29% 4.04% 3.39% 4.25%
1 Year Annualized - 10/31/98 4.94% -- 5.20% 4.89% 4.10% 5.15%
3 Year Annualized - 10/31/98 4.93% -- 5.12% 4.88% -- 5.14%
5 Year Annualized - 10/31/98 4.72% -- 4.84% 4.62% -- 4.88%
10 Year Annualized - 10/31/98 -- -- -- -- -- 5.32%
Pegasus Municipal One Group Municipal
Money Market Fund Money Market Fund
------------------------------------------ -------------------------------------------
Class A Class I Class A Class I
------- ------- ------- -------
YTD Ending 10/31/98 2.40% 2.61% 2.39% 2.60%
1 Year Annualized - 10/31/98 2.93% 3.19% 2.93% 3.19%
3 Year Annualized - 10/31/98 3.00% 3.19% 2.98% 3.22%
5 Year Annualized - 10/31/98 2.92% 3.03% 2.87% 3.11%
10 Year Annualized - 10/31/98 3.59% 3.65% -- 3.69%
Pegasus Managed Assets One Group Investor
Conservative Fund Balanced Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 -1.27% -1.54% 4.16% 3.87% 3.05% 9.09%
1 Year Annualized - 10/31/98 0.62% 1.38% 6.19% 6.77% 5.96% 12.20%
3 Year Annualized - 10/31/98 8.96% 9.17% 11.12% -- -- --
5 Year Annualized - 10/31/98 8.72% -- 10.06% -- -- --
10 Year Annualized - 10/31/98 10.75% -- 11.56%
18
27
Pegasus Managed Assets One Group Investor
Balanced Fund Growth & Income Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 -2.51% -2.82% 2.75% 4.16% 3.14% 9.14%
1 Year Annualized - 10/31/98 0.08% 0.99% 5.53% 7.77% 6.92% 13.05%
3 Year Annualized - 10/31/98 10.08% 9.06% 12.21% -- -- --
5 Year Annualized - 10/31/98 -- -- -- -- -- --
Pegasus Managed Assets One Group Investor
Growth Fund Growth Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 -4.02 -4.47 1.19 3.73 2.99 8.88
1 Year Annualized - 10/31/98 -0.96 -0.51 4.43 8.14 7.37 13.50
3 Year Annualized - 10/31/98 -- -- -- -- -- --
5 Year Annualized - 10/31/98 -- -- -- -- -- --
Pegasus One Group Income Equity
Equity Income Fund Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 -7.72% -7.85% -2.65% 4.53% 3.86% 9.76%
1 Year Annualized - 10/31/98 -4.07% -2.92% 1.24% 11.39% 10.78% 16.99%
3 Year Annualized - 10/31/98 13.19% 13.53% 15.47% 20.30% 20.61% 22.51%
5 Year Annualized - 10/31/98 11.33% 11.74% 12.90% 16.75% -- 18.15%
10 Year Annualized - 10/31/98 12.05 12.32 13.13 -- -- 15.45%
Pegasus
Growth Fund One Group Large Company Growth Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 9.45% 9.42% 15.36% 19.70% 19.54% 25.59%
1 Year Annualized - 10/31/98 14.19% 15.23% 20.41% 27.09% 27.02% 33.41%
3 Year Annualized - 10/31/98 21.29% 21.76% 23.68% 25.11% 25.68% 27.52%
5 Year Annualized - 10/31/98 17.07% 17.49% 18.66% -- -- 21.82%
10 Year Annualized - 10/31/98 15.82% 16.08% 16.91% -- -- --
Pegasus
Intrinsic Value Fund One Group Disciplined Value Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 -11.50% -12.04% -6.67% -6.52% -7.03% -1.93%
1 Year Annualized - 10/31/98 -8.05% -7.45% -2.99% 2.11% 1.81% 7.10%
3 Year Annualized - 10/31/98 13.01% 13.53% 15.16% 15.83% 16.00% 17.91%
5 Year Annualized - 10/31/98 11.65% 12.28% 12.92% 12.99% -- 14.29%
10 Year Annualized - 10/31/98 12.12% 12.50% 12.76% -- -- --
19
28
Pegasus One Group Value Growth Fund
Growth and Value Fund (formerly Value Growth Fund)
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 -1.18% -1.43% 4.20% 8.28% 7.59% 13.64%
1 Year Annualized - 10/31/98 5.49% 6.53% 11.29% 14.95% 14.47% 20.72%
3 Year Annualized - 10/31/98 17.44% 17.74% 19.67% 22.01% 22.27% 24.21%
5 Year Annualized - 10/31/98 14.88% 15.37% 16.19% 16.50% -- 17.76%
10 Year Annualized - 10/31/98 13.24% 13.54% 13.88% -- -- --
Pegasus One Group Equity
Equity Index Fund Index Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 10.75% 10.47% 14.42% 8.96% 8.40% 14.33%
1 Year Annualized - 10/31/98 17.69% 17.42% 21.62% 15.88% 15.46% 21.65%
3 Year Annualized - 10/31/98 24.19% 23.70% 25.66% 23.29% 23.63% 25.57%
5 Year Annualized - 10/31/98 20.13% 20.10% 20.99% 19.46% -- 20.83%
10 Year Annualized - 10/31/98 17.11% 17.09% 17.52% -- -- --
Pegasus
Short Bond Fund One Group Limited Volatility Bond Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 4.66 4.07 5.94 3.04 2.80 6.42
1 Year Annualized - 10/31/98 5.45 4.72 6.78 2.96 2.78 6.45
3 Year Annualized - 10/31/98 5.55 5.29 6.10 4.97 4.94 6.32
5 Year Annualized - 10/31/98 5.17 5.02 5.50 4.75 -- 5.68
10 Year Annualized - 10/31/98 6.75 6.67 6.92 -- -- --
Pegasus One Group Income
Multi Sector Bond Fund Bond Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 3.43 3.03 6.90 1.16 0.39 6.08
1 Year Annualized - 10/31/98 4.87 4.38 8.44 1.43 0.54 6.36
3 Year Annualized - 10/31/98 5.90 5.64 7.32 4.73 4.77 6.56
5 Year Annualized - 10/31/98 6.03 6.16 6.93 4.53 -- 5.76
10 Year Annualized - 10/31/98 -- -- -- -- -- 7.62
Pegasus Intermediate One Group Intermediate
Municipal Bond Fund Tax-Free Bond Fund
------------------------------------------ -------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 10/31/98 1.72% 1.21% 5.08% 0.54% -0.34% 5.43%
1 Year Annualized - 10/31/98 3.39% 2.80% 6.86% 2.39% 1.50% 7.44%
3 Year Annualized - 10/31/98 4.69% 4.32% 6.05% 4.81% 4.88% 6.71%
5 Year Annualized - 10/31/98 4.65% 4.67% 5.63% 4.32% -- 5.54%
10 Year Annualized - 10/31/98 6.86% 6.88% 7.50% -- -- --
No performance comparison is provided for the Pegasus Michigan
Municipal Money Market, Cash Management, Treasury Cash Management, Treasury
Prime Cash Management, U.S. Government Securities Cash Management, Municipal
Cash Management, Mid-Cap Opportunity, Small-Cap Opportunity, Market Expansion
Index, International Equity, Bond, High Yield Bond, Municipal Bond, Short
Municipal Bond and Michigan Municipal Bond Funds because the corresponding One
Group Funds have not yet commenced operations as of October 31, 1998 and the
investment policies and historical performance of these Pegasus Portfolios
(other than the High Yield Bond Fund) will carry forward.
20
29
For additional information concerning performance of the Pegasus
Portfolios and One Group Funds, see the Statement of Additional Information
prepared in connection with this Combined Prospectus/Proxy Statement, Pegasus'
Prospectuses, Statements of Additional Information, Annual Reports and
Semi-Annual Reports to Shareholders, One Group's Prospectuses, Statements of
Additional Information and Annual Reports to Shareholders, and Appendix V
Management's Discussion of Fund Performance - Existing One Group Funds attached
to this Combined Prospectus/Proxy Statement.
2. Management Fees and Expense Ratios. The Trustees noted that in many instances
the investment advisory fees, and in some instances the total operating expense
ratios, of the One Group Funds are or will be higher than those of the
corresponding Pegasus Portfolios. For comparative information, see the sections
entitled "Investment Adviser - Pegasus Portfolios," "Investment Adviser - One
Group" and "Expense Ratios" under "Comparison of Pegasus and One Group" below,
"Fee Tables" above and Appendix II - Comparative Fee Tables attached to this
Combined Prospectus/Proxy Statement.
BOIA has agreed to limit the total operating expense ratios of the
Existing One Group Funds following the Reorganization until August 1999 as set
forth under the "Pro Forma Total Operating Expenses" column in the Table under
"Comparison of Pegasus and One Group - Expense Ratios" and Appendix II -
Comparative Fee Tables to this Combined Prospectus/Proxy Statement. See also
"Fee Tables" above. With respect to the New One Group Funds, BOIA has agreed to
waive a portion of its advisory fee until at least March 2000 so that the rate
of total operating expenses actually paid will not exceed the rate currently
paid for total operating expenses by the Continuing Pegasus Portfolios.
Furthermore, if the Reorganization Agreement is approved, One Group's increased
asset size to approximately $50 billion and resulting leverage with its service
providers may result in lower overall expense ratios. BOIA's current estimates
anticipate expense savings.
3. Tax-Free Conversion of Pegasus Portfolio Shares. If a Pegasus shareholder
were to redeem his or her investment in a Pegasus Portfolio, other than a money
market fund, in order to invest in a One Group Fund or another investment
product, the shareholder would recognize gain or loss for Federal income tax
purposes upon the redemption of those shares. By contrast, the proposed
Reorganization of each Pegasus Portfolio will cause shareholders to exchange
their investments in the Pegasus Portfolios for investments in the One Group
Funds without recognition of gain or loss for Federal income tax purposes. After
the Reorganization, as a shareholder of One Group, investors may redeem any or
all of their One Group shares (other than Class B shares) at any time, without
incurring a redemption fee or sales charge. At that time, a taxable gain or loss
would be recognized. For further information concerning the tax consequences of
the Reorganization, see "Information Relating to the Proposed Reorganization -
Federal Income Tax Consequences" below.
4. Compatibility of Fund Investment Objectives, Policies and Limitations and
Related Tax Consequences. The Trustees considered the compatibility of One Group
Funds' investment objectives, policies and limitations with those of the
corresponding Pegasus Portfolios. For information relating to certain
significant differences in the investment objectives, policies and related risk
factors, see the sections entitled "Overview of Pegasus and One Group" and
"Principal Risk Factors" under "Summary" above, "Comparison of Pegasus and One
Group - Investment Objectives and Policies" below and
21
30
Appendix III - Comparison of Investment Objectives and Certain Significant
Policies attached to this Combined Prospectus/Proxy Statement.
The Trustees noted that the One Group Funds may dispose of some of the
securities acquired by them in the Reorganization and that such dispositions may
have tax consequences to shareholders. In addition, to the extent that a Pegasus
Portfolio's investments are restructured prior to the Reorganization, the
Portfolio may realize capital gains and losses which may have tax consequences
to shareholders. The ability of either entity to dispose of assets in connection
with the Reorganization is limited by the Internal Revenue Code. For additional
information, see "Comparison of Pegasus and One Group - Federal Income Tax
Consequences" below.
5. Terms and Conditions of the Reorganization Agreement. The Trustees considered
the terms and conditions of the Reorganization Agreement. See "Summary -
Proposed Reorganization," "Information Relating to the Proposed Reorganization -
Description of the Reorganization Agreement" and Appendix I - Agreement and Plan
of Reorganization attached hereto.
6. Capabilities, Practices and Resources of BOIA and the Other Service
Providers. The Trustees considered the capabilities, practices and resources of
BOIA and the other service providers. For further information, see "Summary -
Overview of Pegasus and One Group" above, and the sections entitled "Investment
Advisers," "Certain Other Service Providers," "Distribution Plan and Shareholder
Servicing Arrangements" under "Comparison of Pegasus and One Group" below.
7. Investment Leverage and Market Presence. The Reorganization is expected to
result in greater investment leverage and market presence for the One Group. If
the Reorganization Agreement is consummated, the One Group would have
approximately $50 billion in assets under management. BOIA believes fund
investment opportunities increase as assets increase.
8. Enhanced Shareholder Services. OGSC and BOIA provide a higher level of
shareholder servicing for One Group shareholders, including a dedicated
shareholder support function, broker-dealer desk and a transaction oriented
state-of-the-art website. The website allows investors to purchase and exchange
shares of their One Group Funds. The website is directly linked to the BOC
website for convenient use. It contains up-to-date investor tools such as
pricing and account history queries, retirement planning, and investment
profiling tools, and allows on-line prospectus access. Moreover, shareholders of
One Group have access to weekly-recorded economic updates, as well as updates on
the equity and fixed income markets through a state of the art voice response
unit ("VRU").
9. Expanded Product Offering. Through exchange privileges, current Pegasus
shareholders (other than those shareholders owning shares of an institutional
money market fund) will be able to exchange the One Group shares they receive in
the Reorganization for any of the 48 funds (excluding the 7 institutional money
market funds) which will be offered by One Group to the general public after the
Reorganization. Institutional money market fund shareholders may exchange their
new One Group shares for any of the 7 institutional money market funds offered
by One Group. Investors in One Group will enjoy a wide variety of investment
options and strategies, ranging from various equity styles and state specific
municipal bond funds, to taxable and tax-advantaged bond funds and
funds-of-funds.
22
31
10. Strong Back Office. OGSC provides a strong back office infrastructure for
One Group, including fund administration and fund accounting services. A
wholly-owned subsidiary of BISYS Fund Services, OGSC leverages the extensive
knowledge and experience of BISYS, yet is dedicated to The One Group.
11. Availability of Class C Shares. Unlike Pegasus, the One Group offers Class C
Shares.
12. Benefits to Other Persons, Especially BOIA and Its Affiliates. The Trustees
considered the potential benefits of the Reorganization to other persons,
especially BOIA and its affiliates.
CAPITALIZATION. As proposed, the sixteen Reorganizing Pegasus Portfolios would
be reorganized into the sixteen corresponding Existing One Group Funds. The
following table sets forth as of June 30, 1998, (1) the capitalization of each
of the Reorganizing Pegasus Portfolios, (2) the capitalization of each of the
corresponding Existing One Group Funds, and (3) the pro forma capitalization of
each of the Existing One Group Funds as adjusted to give effect to the
Reorganization of the Reorganizing Pegasus Portfolios. The capitalization of
each Reorganizing Pegasus Portfolio and Existing One Group Fund is likely to be
different at the effective time of the Reorganizing Pegasus Portfolios
Transaction as a result of daily share purchase and redemption activity in the
respective Portfolios and Funds, as well as the effects of the other ongoing
operations of the respective Portfolios and Funds prior to the effective time of
the Reorganizing Pegasus Portfolios Transaction. Information on the
capitalization of the fourteen Continuing Pegasus Portfolios and their
corresponding New One Group Funds is not included because the Continuing Pegasus
Portfolios would be reorganized into the New One Group Funds which would have
only nominal assets and liabilities.
23
32
Pegasus Money One Group Prime Pro Forma
Market Fund Money Market Fund Combined
----------- ----------------- --------
Total Net Assets $2,708,552,219 $3,223,901,238 $5,932,453,457
Class A Shares $1,167,246,199 $605,291,334 $1,772,537,533
Class B Shares $1,180,010 $1,912,430 $3,092,440
Class I Shares $1,540,126,010 $2,616,697,474 $4,156,823,484
Shares Outstanding 2,708,549,425 3,223,806,869 5,932,356,294
Class A Shares 1,167,243,404 605,275,293 1,772,518,697
Class B Shares 1,180,010 1,911,896 3,091,906
Class I Shares 1,540,126,011 2,616,619,680 4,156,745,691
Net Asset Value Per Share
Class A Shares $1.00 $1.00 $1.00
Class B Shares $1.00 $1.00 $1.00
Class I Shares $1.00 $1.00 $1.00
One Group U.S. Treasury
Pegasus Treasury Securities Pro Forma
Money Market Fund Money Market Fund Combined
----------------- ------------------ --------
Total Net Assets $1,062,585,850 $3,887,139,739 $4,949,725,589
Class A Shares $219,101,494 $861,349,389 $1,080,450,883
Class B Shares N/A $181,171 $181,171
Class C Shares N/A $1,162 $1,162
Class I Shares $843,484,356 $3,025,608,017 $3,869,092,373
Shares Outstanding 1,062,602,578 3,886,904,029 4,949,506,607
Class A Shares 219,118,222 861,312,823 1,080,431,045
Class B Shares N/A 181,172 181,172
Class C Shares N/A 1,162 1,162
Class I Shares 843,484,356 3,025,408,872 3,868,893,228
Net Asset Value Per Share
Class A Shares $1.00 $1.00 $1.00
Class B Shares N/A $1.00 $1.00
Class C Shares N/A $1.00 $1.00
Class I Shares $1.00 $1.00 $1.00
24
33
Pegasus Municipal
Money One Group Municipal Pro Forma
Market Fund Money Market Fund Combined
----------- ----------------- --------
Total Net Assets $764,664,703 $602,935,643 $1,367,600,346
Class A Shares $209,296,247 $104,808,547 $314,104,794
Class I Shares $555,368,456 $498,127,096 $1,053,495,552
Shares Outstanding 764,720,453 603,066,850 1,367,787,303
Class A Shares 209,350,372 104,821,450 314,171,822
Class I Shares 555,370,081 498,245,400 1,053,615,481
Net Asset Value Per Share
Class A Shares $1.00 $1.00 $1.00
Class I Shares $1.00 $1.00 $1.00
Pegasus Managed
Assets Conservative One Group Investor Pro Forma
Fund Balanced Fund Combined
---- ------------- --------
Total Net Assets $134,985,917 $203,277,567 $338,231,988
Class A Shares $100,507,996 $32,604,462 $133,112,458
Class B Shares $22,223,117 70,462,733 $92,685,850
Class C Shares N/A $6,652,937 $6,652,937
Class I Shares $12,254,804 $93,557,435 $105,780,743
Shares Outstanding 9,147,504 17,207,740 28,618,891
Class A Shares 6,814,414 2,755,243 11,251,270
Class B Shares 1,505,363 5,962,388 7,842,516
Class C Shares N/A 565,081 565,081
Class I Shares 827,727 7,925,028 8,960,024
Net Asset Value Per Share
Class A Shares $14.75 $11.83 $11.83
Class B Shares $14.76 $11.82 $11.82
Class C Shares N/A $11.77 $11.77
Class I Shares $14.81 $11.81 $11.81
25
34
Pegasus Managed Assets
Assets Balanced One Group Investor Pro Forma
Fund Growth & Income Fund Combined
---- -------------------- --------
Total Net Assets $277,228,675 $229,830,622 $507,054,440
Class A Shares $169,028,463 $39,873,760 $208,902,223
Class B Shares $15,874,569 $85,467,873 $101,342,442
Class C Shares N/A $6,428,710 $6,428,710
Class I Shares $92,325,643 $98,060,279 $190,381,065
Shares Outstanding 23,320,248 18,219,060 40,139,308
Class A Shares 14,298,714 3,142,422 16,462,238
Class B Shares 1,198,186 6,761,003 8,016,902
Class C Shares N/A 512,841 512,841
Class I Shares 7,823,748 7,802,794 15,147,327
Net Asset Value Per Share
Class A Shares $11.82 $12.69 $12.69
Class B Shares $13.25 $12.64 $12.64
Class C Shares N/A $12.54 $12.54
Class I Shares $11.80 $12.57 $12.57
Pegasus Managed Assets One Group Investor Pro Forma
Growth Fund Growth Fund Combined
----------- ----------- --------
Total Net Assets $21,899,958 $220,699,449 $242,599,407
Class A Shares $9,404,036 $55,056,896 $64,460,932
Class B Shares $10,912,932 $70,514,733 $81,427,665
Class C Shares N/A $8,772,688 $8,772,688
Class I Shares $1,582,990 $86,355,132 $87,938,122
Shares Outstanding 1,847,635 16,475,898 18,109,765
Class A Shares 787,670 4,131,090 4,836,569
Class B Shares 928,030 5,236,548 6,046,714
Class C Shares N/A 657,648 657,648
Class I Shares 131,935 6,450,612 6,568,834
Net Asset Value Per Share
Class A Shares $11.94 $13.33 $13.33
Class B Shares $11.76 $13.47 $13.47
Class C Shares N/A $13.34 $13.34
Class I Shares $12.00 $13.39 $13.39
26
35
Pegasus Equity One Group Income Pro Forma
Income Fund Equity Fund Combined
----------- ----------- --------
Total Net Assets $328,320,624 $976,168,311 $1,304,466,364
Class A Shares $13,397,091 $117,682,024 $131,079,115
Class B Shares $3,637,767 $165,813,214 $169,450,981
Class C Shares N/A $795,480 $795,480
Class I Shares $311,285,766 $691,877,593 $1,003,140,788
Shares Outstanding 26,402,536 40,556,276 54,196,212
Class A Shares 1,074,534 4,894,497 5,451,780
Class B Shares 291,641 6,886,250 7,037,320
Class C Shares N/A 33,035 33,035
Class I Shares 25,036,361 28,742,494 41,674,077
Net Asset Value Per Share
Class A Shares $12.47 $24.04 $24.04
Class B Shares $12.47 $24.08 $24.08
Class C Shares N/A $24.08 $24.08
Class I Shares $12.43 $24.07 $24.07
Pegasus Growth One Group Large Pro Forma
Fund Company Growth Fund Combined
---- ------------------- --------
Total Net Assets $847,715,182 $1,990,628,224 $2,838,316,707
Class A Shares $109,752,170 $199,051,299 $308,803,469
Class B Shares $4,353,084 $280,563,764 $284,916,848
Class C Shares N/A $491,859 $491,859
Class I Shares $733,609,928 1,510,521,302 $2,244,104,531
Shares Outstanding 49,937,827 87,419,506 124,619,585
Class A Shares 6,471,853 8,533,858 13,240,212
Class B Shares 261,575 12,341,219 12,532,732
Class C Shares N/A 21,792 21,792
Class I Shares 43,204,399 66,522,637 98,824,849
Net Asset Value Per Share
Class A Shares $16.96 $23.32 $23.32
Class B Shares $16.64 $22.73 $22.73
Class C Shares N/A $22.57 $22.57
Class I Shares $16.98 $22.71 $22.71
27
36
Pegasus Intrinsic One Group Disciplined Pro Forma
Value Fund Value Fund Combined
---------- ---------- --------
Total Net Assets $683,010,616 $694,209,090 $1,377,219,706
Class A Shares $132,278,364 $29,442,860 $161,721,224
Class B Shares $5,341,678 $30,094,907 $35,436,585
Class I Shares $545,390,574 $634,671,323 $1,180,061,897
Shares Outstanding 42,744,414 41,084,545 81,486,443
Class A Shares 8,254,937 1,738,826 9,552,078
Class B Shares 469,782 1,785,585 2,102,599
Class I Shares 34,019,695 37,560,134 69,831,766
Net Asset Value Per Share
Class A Shares $16.02 $16.93 $16.93
Class B Shares $11.37 $16.85 $16.85
Class I Shares $16.03 $16.90 $16.90
Pegasus Growth and One Group Pro Forma
Value Fund Value Growth Fund Combined
---------- ----------------- --------
Total Net Assets $1,227,370,787 $737,575,048 $1,964,945,835
Class A Shares $264,449,804 $80,500,100 $344,949,904
Class B Shares $9,612,670 $25,501,072 $35,113,742
Class C Shares N/A $1,234,273 $1,234,273
Class I Shares $953,308,313 $630,339,603 $1,583,647,916
Shares Outstanding 72,759,641 54,603,610 145,473,009
Class A Shares 15,604,881 5,963,678 25,552,552
Class B Shares 938,778 1,902,425 2,619,788
Class C Shares N/A 91,611 91,611
Class I Shares 56,215,982 46,645,896 117,209,058
Net Asset Value Per Share
Class A Shares $16.95 $13.50 $13.50
Class B Shares $10.24 $13.40 $13.40
Class C Shares N/A $13.47 $13.47
Class I Shares $16.96 $13.51 $13.51
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Pegasus Equity One Group Pro Forma
Index Fund Equity Index Fund Combined
---------- ----------------- --------
Total Net Assets $981,290,293 $1,244,778,050 $2,226,068,343
Class A Shares $281,046,761 $218,517,419 $499,564,180
Class B Shares $2,821,942 $351,624,116 $354,446,058
Class C Shares N/A $3,214,236 $3,214,236
Class I Shares $697,421,590 $671,422,279 $1,368,843,869
Shares Outstanding 39,629,988 45,844,648 81,978,556
Class A Shares 11,332,956 8,048,525 18,400,155
Class B Shares 188,271 12,959,252 13,063,268
Class C Shares N/A 118,427 118,427
Class I Shares 28,108,761 24,718,444 50,396,706
Net Asset Value Per Share
Class A Shares $24.80 $27.15 $27.15
Class B Shares $14.99 $27.13 $27.13
Class C Shares N/A $27.14 $27.14
Class I Shares $24.81 $27.16 $27.16
Pegasus Intermediate One Group Intermediate Pro Forma
Bond Fund Bond Fund Combined
--------- --------- --------
Total Net Assets $593,679,600 $746,159,292 $1,339,838,892
Class A Shares $86,340,805 $44,566,620 $130,907,425
Class B Shares $728,387 $19,924,343 $20,652,730
Class C Shares N/A $868,686 $868,686
Class I Shares $506,610,408 $680,799,643 $1,187,410,051
Shares Outstanding 56,515,680 73,742,862 127,533,898
Class A Shares 8,222,132 4,392,082 12,466,572
Class B Shares 69,980 1,969,711 1,983,942
Class C Shares N/A 85,636 83,447
Class I Shares 48,223,568 67,295,433 112,999,937
Net Asset Value Per Share
Class A Shares $10.50 $10.15 $10.50
Class B Shares $10.41 $10.12 $10.41
Class C Shares N/A $10.14 $10.41
Class I Shares $10.51 $10.12 $10.51
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Pegasus Short One Group Pro Forma
Bond Fund Limited Volatility Fund Combined
--------- ----------------------- --------
Total Net Assets $259,058,041 $613,102,190 $872,151,629
Class A Shares $14,082,561 $15,582,402 $29,664,963
Class B Shares $273,648 $4,851,117 $5,124,765
Class I Shares $244,701,832 $592,668,671 $837,361,901
Shares Outstanding 25,534,348 58,347,823 82,996,852
Class A Shares 1,387,147 1,484,029 2,825,225
Class B Shares 27,205 458,824 484,713
Class I Shares 24,119,996 56,404,970 79,686,914
Net Asset Value Per Share
Class A Shares $10.15 $10.50 $10.50
Class B Shares $10.06 $10.57 $10.57
Class I Shares $10.15 $10.51 $10.51
Pegasus Multi-Sector One Group Pro Forma
Bond Fund Income Bond Fund Combined
--------- ---------------- --------
Total Net Assets $131,260,895 $928,511,932 $1,059,757,735
Class A Shares $12,159,376 $14,737,824 $26,897,200
Class B Shares $603,757 $15,511,055 $16,114,812
Class I Shares $118,497,762 $898,263,053 $1,016,745,723
Shares Outstanding 16,221,028 97,587,753 130,984,875
Class A Shares 1,503,596 1,549,876 3,325,329
Class B Shares 74,393 1,617,401 1,984,621
Class I Shares 14,643,039 94,420,476 125,674,925
Net Asset Value Per Share
Class A Shares $8.09 $9.51 $8.09
Class B Shares $8.12 $9.59 $8.12
Class I Shares $8.09 $9.51 $8.09
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Pegasus High Yield One Group High Yield Pro Forma
Bond Fund Bond Fund* Combined
--------- ---------- --------
Total Net Assets $68,442,132 N/A $68,442,132
Class A Shares $1,574,353 N/A $1,574,353
Class B Shares $234,824 N/A $234,824
Class I Shares $66,632,955 N/A $66,632,955
Shares Outstanding 6,642,830 N/A 6,642,830
Class A Shares 153,979 N/A 153,979
Class B Shares 22,931 N/A 22,931
Class I Shares 6,465,920 N/A 6,465,920
Net Asset Value Per Share
Class A Shares $10.22 N/A $10.22
Class B Shares $10.24 N/A $10.24
Class I Shares $10.31 N/A $10.31
Pegasus Intermediate One Group Intermediate Pro Forma
Municipal Bond Fund Tax-Free Bond Fund Combined
------------------- ------------------ --------
Total Net Assets $454,779,406 $513,859,726 $968,622,640
Class A Shares $20,176,884 $14,515,087 $34,691,971
Class B Shares $800,830 $5,658,736 $6,459,566
Class I Shares $433,801,692 $493,685,903 $927,471,103
Shares Outstanding 36,966,397 46,100,591 86,888,062
Class A Shares 1,640,534 1,303,116 3,114,326
Class B Shares 65,162 507,110 578,869
Class I Shares $35,260,701 44,290,365 83,194,867
Net Asset Value Per Share
Class A Shares $12.30 $11.14 $11.14
Class B Shares $12.29 $11.16 $11.16
Class I Shares $12.30 $11.15 $11.15
- -----------------------
* The One Group High Yield Bond Fund commenced investment operations on
November 12, 1998.
FEDERAL INCOME TAX CONSEQUENCES. With respect to each Pegasus Portfolio that is
not a money market fund, consummation of the Reorganization is subject to the
condition that Pegasus and One Group receive an opinion from Ropes & Gray, in
form reasonably satisfactory to both Pegasus and One Group and dated as of the
Exchange Date, to the effect that for federal income tax purposes: (i) no gain
or loss will be recognized by the Pegasus Portfolio upon transfer of the assets
to the corresponding One Group Fund in exchange for Shares and the assumption by
such One Group Fund of the liabilities of the Pegasus Portfolio; (ii) no gain or
loss will be recognized by the shareholders of the Pegasus Portfolio upon the
exchange of their shares for Shares; (iii) the basis of the Shares a Pegasus
shareholder receives in connection with the transaction will be the same as the
basis of his or her Pegasus Portfolio shares exchanged therefor; (iv) a Pegasus
shareholder's holding period for his or her Shares will be determined
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by including the period for which he or she held the Pegasus Portfolio shares
exchanged therefor, provided that he or she held such Pegasus Portfolio shares
as capital assets; (v) no gain or loss will be recognized by the corresponding
One Group Fund upon the receipt of the assets of the corresponding Pegasus
Portfolio in exchange for Shares and the assumption by the One Group Fund of the
liabilities of the corresponding Pegasus Portfolio; (vi) the basis in the hands
of the corresponding One Group Fund of the assets of the corresponding Pegasus
Portfolio transferred to the One Group Fund in the transaction will be the same
as the basis of the assets in the hands of the corresponding Pegasus Portfolio
immediately prior to the transfer; and (vii) the holding periods of the assets
of the Pegasus Portfolio in the hands of the corresponding One Group Fund will
include the periods for which such assets were held by the Pegasus Portfolio.
Receipt of such an opinion with respect to any Pegasus Portfolio that is a money
market fund is not a condition to the Reorganization. In any event, however, no
material amount of taxable gain or loss will be recognized by any money market
fund or money market fund shareholders by reason of the Reorganization.
Pegasus and One Group have not sought a tax ruling from the Internal
Revenue Service ("IRS"), but are acting in reliance upon the opinion of counsel
discussed in the previous paragraph. That opinion is not binding on the IRS and
does not preclude the IRS from adopting a contrary position. Shareholders should
consult their own advisers concerning the potential tax consequences to them,
including state and local income taxes.
Shareholders should note that each One Group Fund may, to the extent
permitted by law and consistent with the opinion to be issued by Ropes & Gray
discussed above, dispose of some of the securities acquired by it in connection
with the transaction. Disposition of securities may have tax consequences to
shareholders. In addition, immediately prior to the transaction, each Pegasus
Portfolio will declare and distribute a dividend which will have the effect of
distributing to Pegasus shareholders all of the Pegasus Portfolio's investment
company taxable income and net realized capital gains. To the extent that a
Pegasus Portfolio's investments are restructured prior to the Reorganization,
the Pegasus Portfolio may realize a greater amount of net capital gains which
would then need to be distributed to Pegasus shareholders. These distributions
may have tax consequences to Pegasus shareholders. The ability of either entity
to dispose of assets in connection with the Reorganization is limited by federal
tax requirements. For additional information, see "Information Relating to the
Proposed Reorganization -- Federal Income Tax Consequences."
BOARD COMPOSITION
Listed below are the current members of the Board of Trustees of One
Group. Following the Reorganization, three members of the current Board of
Trustees of Pegasus will be invited to join the One Group Board of Trustees. One
Group will hold a shareholders meeting to elect these new Trustees. Pegasus will
pay a retirement benefit of $60,000 to each of its Trustees who does not become
a One Group Trustee, in recognition of the Trustee's services to Pegasus. These
amounts, together with certain other expenses of the Reorganization, will be
reimbursed by BOIA or an affiliate.
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POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE WITH THE TRUST DURING THE PAST 5 YEARS
- ---------------- --- -------------- ---------------------------
Peter C. Marshall 56 Trustee From November, 1993 to present,
DCI Marketing, Inc. President, DCI Marketing, Inc.;
2727 W. Good Hope Road from August, 1992 to November,
Milwaukee, WI 53209 1993, Vice President-Finance and
Treasurer DCI Marketing, Inc.
Charles I. Post 70 Trustee From July, 1986 to present,
7615 4th Avenue West consultant
Bradenton, FL 34209
Frederick W. Ruebeck 58 Trustee From June, 1988 to present,
Eli Lilly & Company Director of Investments, Eli Lilly
Lilly Corporate Center and Company
307 East McCarty
Indianapolis, IN 46285
Robert A. Oden, Jr. 51 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
John F. Finn 51 Trustee From 1975 to present, President of Gardner,
President Inc.
Gardner, Inc.
1150 Chesapeake Avenue
Columbus, Ohio 43212
COMPARISON OF PEGASUS AND ONE GROUP
INVESTMENT OBJECTIVES AND POLICIES. The investment objectives, policies and
restrictions of the Pegasus Portfolios are, in general, similar to those of
their corresponding One Group Funds. There are, however, certain differences.
For example, the percentage of assets allocated to the various Underlying Funds
varies for the three Pegasus Managed Assets Funds and the three One Group
Investor Funds; and the Intermediate Municipal Bond Fund and the International
Equity Fund of Pegasus are "non-diversified" funds, but the corresponding One
Group Funds are diversified. Diversification reduces the risk that a fund's
investments will be affected by a single issuer.
The Bond Funds have certain differences. The Pegasus Multi Sector Bond
Fund may invest in investment grade debt securities only, but the corresponding
One Group Income Bond Fund may invest up to 30% of its assets in securities
rated below investment grade (also known as junk bonds). Investments in
securities rated below investment grade are high risk investments subject to
greater risk of loss, valuation difficulties, interest rate sensitivity, low
liquidity and changes in credit quality. The One Group Limited Volatility Bond
Fund must invest 80% of its total assets in debt securities with short to
intermediate maturities, while the Pegasus Short Bond Fund has no such
limitation. The average
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weighted maturities of the investments of the Pegasus Short Bond, Intermediate
Bond, Multi Sector Bond, Bond and High Yield Bond Funds differ from those of
their corresponding One Group Limited Volatility, Intermediate Bond, Income Bond
and High Yield Bond Funds. Generally, these Pegasus Funds have shorter average
weighted maturities. This is significant because a longer average weighted
maturity will cause greater fluctuations in the value of a fund.
The Equity Funds have differences as well. The Pegasus Small-Cap
Opportunity Fund primarily invests in companies with market capitalization of
$100 million to $1 billion while The One Group Small Cap Value Fund invests in
companies with a market capitalization of $100 million to $2 billion. The
Pegasus Mid-Cap Opportunity Fund invests primarily in equity securities of
companies with a market capitalization of $500 million to $3 billion. The One
Group Diversified Mid-Cap Fund invests primarily in equity securities of
companies with a market capitalization of $500 million to $5 billion.
For additional information, see "Overview of Pegasus and One Group" and
"Principal Risk Factors" under "Summary" above and Appendix III - Comparison of
Investment Objectives and Certain Significant Policies attached to this Combined
Prospectus and Proxy Statement. Further information on the investment
objectives, policies and restrictions of the One Group Funds and the Pegasus
Portfolios is also included in their respective Prospectuses and Statements of
Additional Information, which have been incorporated herein by reference.
EXPENSE RATIOS. The following table shows (1) the current total expense ratios
of the Pegasus Portfolios, before and after fee waivers and/or expense
reimbursements, based on information contained in the Pegasus Prospectuses dated
April 30, 1998, (2) the current total expense ratios of the corresponding
Existing One Group Funds, before and after fee waivers and/or expense
reimbursements, based on information contained in the One Group Prospectuses
dated November 1, 1998, and (3) the pro forma annualized total expense ratios of
the combined funds, based upon the fee arrangements, before and after fee
waivers and/or expense reimbursements, that will be in place upon consummation
of the Reorganization. BOIA has agreed to limit the total operating expense
ratios of the Existing One Group Funds following the Reorganization as set forth
under the column "Pro Forma Total Operating Expenses" in the following Table
until at least August 1999. With respect to the New One Group Funds, BOIA has
agreed to waive a portion of its investment advisory fee until at least March
2000 so that the rate of total operating expenses actually paid will at least
equal the rate currently paid for total operating expense by the corresponding
Continuing Pegasus Portfolios. Detailed pro forma expense information for each
proposed reorganization is included in Appendix II - Comparative Fee Tables to
this Combined Prospectus/Proxy Statement.
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Pro Forma
Total Operating Total Operating Total Operating
Expenses Corresponding Expenses Combined Expenses
Pegasus Fund Before/After One Group Fund Share Before/After Fund Share Class Before/After
Share Class Waivers Class Waivers Post-Reorganization Waivers
----------- ------- ----- ------- ------------------- -------
Pegasus Money Market Fund One Group Prime Money One Group Prime Money
Market Fund Market Fund
Class A Shares 0.77%/0.75% Class A Shares 0.77%/0.77% Class A Shares 0.82%/0.77%
Class B Shares 1.52%/1.50% Class B Shares 1.52%/1.52% Class B Shares 1.57%/1.52%
Class I Shares 0.52%/0.50% Class I Shares 0.52%/0.52% Class I Shares 0.57%/0.52%
Pegasus Treasury Money One Group U.S. Treasury One Group U.S. Treasury
Market Fund Securities Money Market Securities Money Market
Fund Fund
Class A Shares 0.73%/0.73% Class A Shares 0.77%/0.77% Class A Shares 0.78%/0.75%
Class B Shares N/A Class B Shares 1.52%/1.52% Class B Shares 1.53%/1.50%
Class I Shares 0.48%/0.48% Class I Shares 0.52%/0.52% Class I Shares 0.53%/0.50%
Pegasus Municipal Money One Group Municipal One Group Municipal
Market Fund Money Market Fund Money Market Fund
Class A Shares 0.73%/0.73% Class A Shares 0.80%/0.72% Class A Shares 0.82%/0.70%
Class B Shares N/A Class B Shares N/A Class B Shares N/A
Class I Shares 0.48%/0.48% Class I Shares 0.55%/0.47% Class I Shares 0.57%/0.45%
Pegasus Michigan Municipal One Group Michigan One Group Michigan
Money Market Fund Municipal Money Market Municipal Money Market
Fund Fund
Class A Shares 0.76%/0.75% Class A Shares 0.84%/0.74% Class A Shares 0.84%/0.74%
Class B Shares N/A Class B Shares N/A Class B Shares N/A
Class I Shares 0.51%/0.50% Class I Shares 0.59%/0.49% Class I Shares 0.59%/0.49%
Pegasus Cash One Group Cash One Group Cash
Management Fund Management Money Market Management Money Market
Fund Fund
Class I Shares 0.39%/0.35% Class I Shares 0.39%/0.34% Class I Shares 0.39%/0.34%
Class S Shares 0.64%/0.60% Class A Shares 0.64%/0.59% Class A Shares 0.64%/0.59%
Pegasus Treasury Cash One Group Treasury Cash One Group Treasury Cash
Management Fund Management Money Market Management Money Market
Class I Shares 0.38%/0.35% Fund Fund
Class S Shares 0.63%/0.60% Class I Shares 0.38%/0.34% Class I Shares 0.38%/0.34%
Class A Shares 0.63%/0.59% Class A Shares 0.63%/0.59%
Pegasus Treasury Prime One Group Treasury One Group Treasury
Cash Management Prime Cash Management Prime Cash Management
Fund Money Market Fund Money Market Fund
Class I Shares 0.40%/0.35% Class I Shares 0.40%/0.34% Class I Shares 0.40%/0.34%
Class S Shares 0.65%/0.60% Class A Shares 0.65%/0.59% Class A Shares 0.65%/0.59%
Pegasus U.S. Government One Group U.S. One Group U.S.
Securities Cash Management Government Securities Government Securities
Fund Cash Management Money Cash Management Money
Market Fund Market Fund
Class I Shares 0.37%/0.35% Class I Shares 0.38%/0.35% Class I Shares 0.38%/0.35%
Class S Shares 0.62%/0.60% Class A Shares 0.63%/0.60% Class A Shares 0.63%/0.60%
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Pro Forma
Total Operating Total Operating Total Operating
Expenses Corresponding Expenses Combined Expenses
Pegasus Fund Before/After One Group Fund Share Before/After Fund Share Class Before/After
Share Class Waivers Class Waivers Post-Reorganization Waivers
----------- ------- ----- ------- ------------------- -------
Pegasus Municipal Cash One Group Municipal One Group Municipal
Management Fund Cash Management Money Cash Management Money
Market Fund Market Fund
Class I Shares 0.38%/0.35% Class I Shares 0.38%/0.34% Class I Shares 0.38%/0.34%
Class S Shares 0.63%/0.60% Class A Shares 0.63%/0.59% Class A Shares 0.63%/0.59%
Pegasus Managed Assets One Group Investor One Group Investor
Conservative Fund Balanced Fund Balanced Fund
Class A Shares 1.38%/1.25% Class A Shares 1.43%/1.23% Class A Shares 1.43%/1.23%
Class B Shares 2.13%/2.00% Class B Shares 2.08%/1.98% Class B Shares 2.08%/1.98%
Class I Shares 1.13%/1.00% Class I Shares 1.08%/0.98% Class I Shares 1.08%/0.98%
Pegasus Managed Assets One Group Investor One Group Investor
Balanced Fund Growth & Income Fund Growth & Income Fund
Class A Shares 1.38%/1.25% Class A Shares 1.46%/1.28% Class A Shares 1.46%/1.28%
Class B Shares 2.13%/2.00% Class B Shares 2.11%/2.03% Class B Shares 2.11%/2.03%
Class I Shares 1.13%/1.00% Class I Shares 1.11%/1.03% Class I Shares 1.11%/1.03%
Pegasus Managed Assets One Group Investor One Group Investor
Growth Fund Growth Fund Growth Fund
Class A Shares 1.67%/1.25% Class A Shares 1.47%/1.30% Class A Shares 1.47%/1.30%
Class B Shares 2.42%/2.00% Class B Shares 2.12%/2.05% Class B Shares 2.12%/2.05%
Class I Shares 1.42%/1.00% Class I Shares 1.12%/1.05% Class I Shares 1.12%/1.05%
One Group Income Equity One Group Equity Income
Pegasus Equity Income Fund Fund Fund
Class A Shares 0.95%/0.95% Class A Shares 1.35%/1.25% Class A Shares 1.31%/1.21%
Class B Shares 1.70%/1.70% Class B Shares 2.00%/2.00% Class B Shares 1.96%/1.96%
Class I Shares 0.70%/0.70% Class I Shares 1.00%/1.00% Class I Shares 0.96%/0.96%
One Group Large Company One Group Large Cap
Pegasus Growth Fund Growth Fund Growth Fund
Class A Shares 1.07%/1.07% Class A Shares 1.35%/1.25% Class A Shares 1.29%/1.19%
Class B Shares 1.82%/1.82% Class B Shares 2.00%/2.00% Class B Shares 1.94%/1.94%
Class I Shares 0.82%/0.82% Class I Shares 1.00%/1.00% Class I Shares 0.94%/0.94%
Pegasus Mid-Cap One Group Diversified One Group Diversified
Opportunity Fund MidCap Fund MidCap Fund
Class A Shares 1.14%/1.14% Class A Shares 1.36%/1.11% Class A Shares 1.36%/1.11%
Class B Shares 1.89%/1.89% Class B Shares 2.01%/1.86% Class B Shares 2.01%/1.86%
Class I Shares 0.89%/0.89% Class I Shares 1.01%/0.86% Class I Shares 1.01%/0.86%
Pegasus Small-Cap One Group Small Cap One Group Small Cap
Opportunity Fund Value Fund Value Fund
Class A Shares 1.19%/1.19% Class A Shares 1.31%/1.16% Class A Shares 1.31%/1.16%
Class B Shares 1.94%/1.94% Class B Shares 1.96%/1.91% Class B Shares 1.96%/1.91%
Class I Shares 0.94%/0.94% Class I Shares 0.96%/0.91% Class I Shares 0.96%/0.91%
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Pro Forma
Total Operating Total Operating Total Operating
Expenses Corresponding Expenses Combined Expenses
Pegasus Fund Before/After One Group Fund Share Before/After Fund Share Class Before/After
Share Class Waivers Class Waivers Post-Reorganization Waivers
----------- ------- ----- ------- ------------------- -------
Pegasus Intrinsic Value One Group Disciplined One Group Mid Cap Value
Fund Value Fund Fund
Class A Shares 1.09%/1.09% Class A Shares 1.35%/1.25% Class A Shares 1.31%/1.21%
Class B Shares 1.84%/1.84% Class B Shares 2.00%/2.00% Class B Shares 1.96%/1.96%
Class I Shares 0.84%/0.84% Class I Shares 1.00%/1.00% Class I Shares 0.96%/0.96%
Pegasus Growth and Value One Group Value Growth One Group Value Growth
Fund Fund Fund
Class A Shares 1.11%/1.11% Class A Shares 1.35%/1.25% Class A Shares 1.32%/1.22%
Class B Shares 1.86%/1.86% Class B Shares 2.00%/2.00% Class B Shares 1.97%/1.97%
Class I Shares 0.86%/0.86% Class I Shares 1.00%/1.00% Class I Shares 0.97%/0.97%
One Group Equity Index One Group Equity Index
Pegasus Equity Index Fund Fund Fund
Class A Shares 0.65%/0.65% Class A Shares 0.90%/0.75% Class A Shares 0.93%/0.61%
Class B Shares 1.40%/1.40% Class B Shares 1.55%/1.50% Class B Shares 1.58%/1.36%
Class I Shares 0.40%/0.40% Class I Shares 0.55%/0.50% Class I Shares 0.58%/0.36%
Pegasus Market Expansion One Group Market One Group Market
Index Fund* Expansion Index Fund Expansion Index Fund
Class A Shares 1.17%/0.82% Class A Shares 1.22%/0.82% Class A Shares 1.22%/0.82%
Class B Shares 1.92%/1.57% Class B Shares 1.87%/1.57% Class B Shares 1.87%/1.57%
Class I Shares 0.92%/0.57% Class I Shares 0.87%/0.57% Class I Shares 0.87%/0.57%
Pegasus International One Group International One Group Diversified
Equity Fund Opportunities Fund International Fund
Class A Shares 1.44%/1.32% Class A Shares 1.38%/1.27% Class A Shares 1.38%/1.27%
Class B Shares 2.19%/2.07% Class B Shares 2.03%/2.02% Class B Shares 2.03%/2.02%
Class I Shares 1.19%/1.07% Class I Shares 1.03%/1.02% Class I Shares 1.03%/1.02%
Pegasus Intermediate Bond One Group Intermediate One Group Intermediate
Fund Bond Fund Bond Fund
Class A Shares 0.90%/0.90% Class A Shares 1.17%/0.87% Class A Shares 1.17%/0.83%
Class B Shares 1.65%/1.65% Class B Shares 1.82%/1.52% Class B Shares 1.82%/1.48%
Class I Shares 0.65%/0.65% Class I Shares 0.82%/0.62% Class I Shares 0.82%/0.58%
Pegasus Bond Fund One Group Bond Fund One Group Bond Fund
Class A Shares 0.88%/0.88% Class A Shares 1.16%/0.85% Class A Shares 1.16%/0.85%
Class B Shares 1.63%/1.63% Class B Shares 1.81%/1.50% Class B Shares 1.81%/1.50%
Class I Shares 0.63%/0.63% Class I Shares 0.81%/0.60% Class I Shares 0.81%/0.60%
Pegasus Short Bond One Group Limited One Group Short-Term
Fund Volatility Fund Bond Fund
Class A Shares 0.84%/0.84% Class A Shares 1.17%/0.87% Class A Shares 1.16%/0.78%
Class B Shares 1.59%/1.59% Class B Shares 1.82%/1.37% Class B Shares 1.81%/1.28%
Class I Shares 0.59%/0.59% Class I Shares 0.82%/0.62% Class I Shares 0.81%/0.53%
37
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Pro Forma
Total Operating Total Operating Total Operating
Expenses Corresponding Expenses Combined Expenses
Pegasus Fund Before/After One Group Fund Share Before/After Fund Share Class Before/After
Share Class Waivers Class Waivers Post-Reorganization Waivers
----------- ------- ----- ------- ------------------- -------
Pegasus Multi Sector Bond One Group Income Bond One Group Income Bond
Fund Fund Fund
Class A Shares 0.90%/0.90% Class A Shares 1.17%/0.87% Class A Shares 1.16%/0.87%
Class B Shares 1.65%/1.65% Class B Shares 1.82%/1.52% Class B Shares 1.81%/1.52%
Class I Shares 0.65%/0.65% Class I Shares 0.82%/0.62% Class I Shares 0.81%/0.62%
Pegasus High Yield Bond One Group High Yield One Group High Yield
Fund Bond Fund Bond Fund
Class A Shares 1.24%/1.14% Class A Shares 1.45%/1.20% Class A Shares 1.37%/1.12%
Class B Shares 1.99%/1.89% Class B Shares 2.10%/1.85% Class B Shares 2.02%/1.77%
Class I Shares 0.99%/0.89% Class I Shares 1.10%/0.95% Class I Shares 1.02%/0.87%
One Group Tax-Free Bond One Group Tax-Free Bond
Pegasus Municipal Bond Fund Fund Fund
Class A Shares 0.88%/0.88% Class A Shares 1.03%/0.87% Class A Shares 1.03%/0.87%
Class B Shares 1.63%/1.63% Class B Shares 1.68%/1.52% Class B Shares 1.68%/1.52%
Class I Shares 0.63%/0.63% Class I Shares 0.68%/0.62% Class I Shares 0.68%/0.62%
Pegasus Short Municipal One Group Short-Term One Group Short-Term
Bond Fund Municipal Bond Fund Municipal Bond Fund
Class A Shares 0.94%/0.87% Class A Shares 1.24%/0.87% Class A Shares 1.24%/0.87%
Class B Shares 1.69%/1.62% Class B Shares 1.89%/1.52% Class B Shares 1.89%/1.52%
Class I Shares 0.69%/0.62% Class I Shares 0.89%/0.62% Class I Shares 0.89%/0.62%
Pegasus Intermediate One Group Intermediate One Group Intermediate
Municipal Bond Fund Tax-Free Bond Fund Tax-Free Bond Fund
Class A Shares 0.85%/0.85% Class A Shares 1.19%/0.91% Class A Shares 1.14%/0.83%
Class B Shares 1.60%/1.60% Class B Shares 1.84%/1.56% Class B Shares 1.79%/1.48%
Class I Shares 0.60%/0.60% Class I Shares 0.84%/0.66% Class I Shares 0.79%/0.58%
Pegasus Michigan Municipal One Group Michigan One Group Michigan
Bond Fund Municipal Bond Fund Municipal Bond Fund
Class A Shares 0.91%/0.91% Class A Shares 1.06%/0.90% Class A Shares 1.06%/0.90%
Class B Shares 1.66%/1.66% Class B Shares 1.71%/1.55% Class B Shares 1.71%/1.55%
Class I Shares 0.66%/0.66% Class I Shares 0.71%/0.65% Class I Shares 0.71%/0.65%
- -----------------------
* The Pegasus Market Expansion Index commenced investment operations on
August 1, 1998.
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SHARE CLASSES. The non-money market funds of Pegasus currently offer
three share classes: Class A, Class B, and Class I. The Pegasus Money Market
Fund offers Class A, Class B and Class I shares, but B shares are only offered
through an exchange from a non-money market fund. The Treasury Money Market,
Municipal Money Market and Michigan Municipal Money Market Funds offer Class A
and Class I shares. The Pegasus Cash Management Funds offer Class I and Class S
Shares. Class A shares and Class B shares may be purchased through a number of
institutions including FCNIMCO, First National Bank of Chicago ("FNBC"),
American National Bank and Trust Company ("ANB") and their affiliates, including
First NBD Investment Services, Inc., a registered broker-dealer, BISYS which
serves the Trust as its Distributor and certain banks, securities dealers and
other industry professionals such as investment advisers, accountants and estate
planning firms. Class I and Class S shares of the Cash Management Funds are sold
to institutional investors, including banks (such as FNBC, NBD Bank ("NBD"), and
ANB or their affiliates), acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity, public agencies and municipalities,
employee benefit plans or other programs, registered investment advisers and
other financial institutions. For more information, see the section entitled
"Description of Classes" in the Pegasus Prospectuses incorporated by reference
into this Combined Prospectus/Proxy Statement.
The One Group Funds currently offer five classes of shares: Class A,
Class B, Class C, Class I and Service Class Shares. Class A, Class B and Class C
shares are offered to the general public. The Institutional Money Market Funds
offer Class I shares only. The One Group Prime and U.S. Treasury Securities
Money Market Funds offer Class A, Class B, Class C, Class I and Service Class
shares. The One Group Ohio Municipal and Michigan Municipal Money Market Funds
offer Class A, Class C, Class I and Service Class shares. Class I shares are
offered to institutional investors, including affiliates of BOC and any bank,
depository institution, insurance company, pension plan or other organization
authorized to act in fiduciary, advisory, agency, custodial or similar
capacities. Service Class shares are offered to entities purchasing such shares
on behalf of investors requiring additional administrative or accounting
services such as sweep processing. For more information, see the section
entitled "How To Do Business With The One Group" in the One Group Prospectuses
incorporated by reference into the Combined Prospectus/Proxy Statement.
INVESTMENT ADVISER - PEGASUS PORTFOLIOS. FCNIMCO, an indirect subsidiary of BOC,
serves as investment adviser for the Pegasus Portfolios. Federated serves as
sub-adviser to the High Yield Bond Fund subject to the oversight and supervision
of FCNIMCO. Pursuant to the Pegasus investment advisory agreement and FCNIMCO's
sub-advisory agreement with Federated, FCNIMCO and, Federated in the case of the
High Yield Bond Fund, provide the day-to-day management of each Pegasus
Portfolio's investments, subject to the overall authority of the Board and in
conformity with applicable state law and the stated policies of the Portfolio.
FCNIMCO, and Federated in the case of the High Yield Bond Fund, are responsible
for making investment decisions for each Pegasus Portfolio, placing purchase and
sale orders and providing research, statistical analysis and continuous
supervision of each Portfolio's investments.
FCNIMCO located at Three First National Plaza, Chicago Illinois 60670,
is a registered investment adviser.
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48
Federated, located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222, is a registered investment adviser and a subsidiary of
Federated Investors.
FCNIMCO is entitled to and has received advisory fees from the Pegasus
Portfolios, computed daily and paid monthly, at the following annual rates,
expressed as a percentage of the Portfolios' average daily net assets:
EFFECTIVE ADVISORY FEE
RATE FOR FISCAL
YEAR OR PERIOD
ENDED DECEMBER 31,
PEGASUS PORTFOLIOS CURRENT CONTRACTUAL ADVISORY FEE RATE 1997 (AFTER WAIVERS)
- ------------------ ------------------------------------- --------------------
Money Market Fund .30% of the first $1 billion, .275% of .28%
the next $1 billion and .25% of average
daily net assets in excess of $2 billion
Treasury Money Market Fund .30% of the first $1 billion, .275% of .29%
the next $1 billion and .25% of average
daily net assets in excess of $2 billion
Municipal Money Market Fund .30% of the first $1 billion, .275% of .30%
the next $1 billion and .25% of average
daily net assets in excess of $2 billion
Michigan Municipal Money Market Fund .30% of the first $1 billion, .275% of .27%
the next $1 billion and .25% of average
daily net assets in excess of $2 billion
Cash Management Fund .20% .17%
Treasury Cash Management Fund .20% .17%
Treasury Prime Cash Management Fund .20% .16%
U. S. Government Securities Cash
Management Fund .20% .17%
Municipal Cash Management Fund .20% .17%
Managed Assets Conservative Fund .65% .52%
Managed Assets Balanced Fund .65% .52%
Managed Assets Growth Fund .65% .35%
Equity Income Fund .50% .50%
Growth Fund .60% .60%
Mid-Cap Opportunity Fund .60% .60%
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49
EFFECTIVE ADVISORY FEE
RATE FOR FISCAL
YEAR OR PERIOD
ENDED DECEMBER 31,
PEGASUS PORTFOLIOS CURRENT CONTRACTUAL ADVISORY FEE RATE 1997 (AFTER WAIVERS)
- ------------------ ------------------------------------- --------------------
Small-Cap Opportunity Fund .70% .70%
Intrinsic Value Fund .60% .60%
Growth and Value Fund .60% .59%
Equity Index Fund .10% .08%
Market Expansion Index Fund .25% N/A
International Equity Fund .80% .80%
Intermediate Bond Fund .40% .40%
Bond Fund .40% .40%
Short Bond Fund .35% .33%
Multi Sector Bond Fund .40% .40%
High Yield Bond Fund .70% .61%
Municipal Bond Fund .40% .40%
Short Municipal Bond Fund .40% N/A
Intermediate Municipal Bond Fund .40% .40%
Michigan Municipal Bond Fund .40% .34%
- --------------------------
For the services provided by Federated to the High Yield Bond Fund,
FCNIMCO pays, out of the fees it receives from Pegasus, a monthly fee at the
following annual rate (as a percentage of the Fund's average daily net assets):
.50% on the first $30 million of average daily net assets; .40% on the next $20
million; .30% on the next $25 million; .25% on the next $25 million; and .20% of
the Fund's average daily net assets in excess of $100 million. For the fiscal
year ended December 31, 1997, Federated was paid an effective advisory fee rate
of .61%.
INVESTMENT ADVISER - ONE GROUP FUNDS. BOIA, an indirect subsidiary of BOC,
serves as investment adviser to the One Group Funds. Under its investment
advisory agreement with One Group, BOIA makes the day- to-day investment
decisions for the One Group Funds and continuously reviews, supervises and
administers their investment programs subject to the supervision of, and
policies established by, the Board of Trustees of One Group. Independence
International Associates, Inc. ("Independence International")
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50
serves as sub-adviser to the International Equity Index Fund and Banc One High
Yield Partners LLC ("Banc One Partners") serves as sub-adviser to the High Yield
Bond Fund subject to the oversight and supervision of BOIA. Pursuant to BOIA's
sub-advisory agreements with Independence International and Banc One Partners,
BOIA and Independence International, in the case of the International Equity
Index Fund, and Banc One Partners, in the case of the High Yield Bond Fund,
provide the day-to-day management of each One Group Fund's investments, subject
to the overall authority of BOIA and the Board and in conformity with applicable
state law and the stated policies of the Fund.
Independence International, located at 75 State Street, Boston,
Massachusetts, 02109, is a registered investment adviser and an indirect
subsidiary of John Hancock Mutual Life Insurance Company. Banc One Partners,
located at 1111 Polaris Parkway, P.O. Box 710211, Columbus, Ohio 43271-0211, is
a registered investment adviser. BancOne Partners is controlled by BOIA and
Pacholder Associates, Inc., an investment advisory firm which specializes in
high yield, high risk, fixed income securities.
BOIA, located at 1111 Polaris Parkway, Columbus, Ohio 43271, is a
registered investment adviser and an indirect subsidiary of BOC. BOIA is
entitled to and has received advisory fees from the One Group Funds, computed
daily and paid monthly, at the following annual rates, expressed as a percentage
of the Funds' average daily net assets:
EFFECTIVE ADVISORY
FEE RATE FOR FISCAL
YEAR OR PERIOD ENDED
CURRENT CONTRACTUAL ADVISORY JUNE 30, 1998
ONE GROUP FUNDS FEE RATE (AFTER WAIVERS)
- --------------- -------- ---------------
Prime Money Market Fund .35% .30%
U.S. Treasury Securities Money
Market Fund .35% .28%
Municipal Money Market Fund .35% .25%
Michigan Municipal Money Market Fund(1) .35% N/A
Cash Management Money Market Fund(1) .20% N/A
Treasury Cash Management Money Market
Fund(1) .20% N/A
Treasury Prime Cash Management
Money Market Fund(1) .20% N/A
U.S. Government Cash Management Money
Market Fund(1) .20% N/A
Municipal Cash Management Money
Market Fund(1) .20% N/A
Investor Balanced Fund .05% .04%
Investor Growth & Income Fund .05% .04%
Investor Growth Fund .05% .03%
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51
EFFECTIVE ADVISORY
FEE RATE FOR FISCAL
YEAR OR PERIOD ENDED
CURRENT CONTRACTUAL ADVISORY JUNE 30, 1998
ONE GROUP FUNDS FEE RATE (AFTER WAIVERS)
- --------------- -------- ---------------
Income Equity Fund .74% of the first $1.5 billion, .74%(2)
(to be renamed Equity Income Fund upon .70% of the next $500 million, and
Reorganization) .65% of average daily net assets
in excess of $2 billion
Large Company Growth Fund .74% of the first $1.5 billion, .74%(2)
(to be renamed Large Cap Growth Fund .70% of the next $500 million, and
upon Reorganization) .65% of average daily net assets
in excess of $2 billion
Diversified Mid-Cap Fund(1) .74% of the first $1.5 billion, N/A
.70% of the next $500 million, and
.65% of average daily net assets
in excess of $2 billion
Small-Cap Value Fund(1) .74% of the first $1.5 billion, N/A
.70% of the next $500 million, and
.65% of average daily net assets
in excess of $2 billion
Disciplined Value Fund .74% of the first $1.5 billion, .74%(2)
(to be renamed Mid-Cap Value Fund upon .70% of the next $500 million, and
Reorganization) .65% of average daily net assets
in excess of $2 billion
Value Growth Fund .74% of the first $1.5 billion, .74%(2)
.70% of the next $500 million, and
.65% of average daily net assets
in excess of $2 billion
Equity Index Fund .30% .10%
Market Expansion Index Fund(1) .35% N/A
Diversified International Fund(1) .80% N/A
Intermediate Bond Fund .60% .34%
Bond Fund(1) .60% N/A
Limited Volatility Bond Fund .60% .31%
- --------------------------
(1) The New One Group Funds have recently been organized for the purpose of
continuing the investment operations of the Continuing Pegasus Portfolios.
With respect to the New One Group Funds, BOIA has agreed to waive a portion
of its investment advisory fee until at least March, 2000 so that the rate
of total operating expenses actually paid will equal the rate currently
paid for total operating expenses by the corresponding Continuing Pegasus
Portfolios.
(2) The effective advisory fee rate was based on a contractual rate of .74%
then in effect.
(3) The One Group High Yield Bond Fund commenced operations on November 13,
1998
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52
EFFECTIVE ADVISORY
FEE RATE FOR FISCAL
YEAR OR PERIOD ENDED
CURRENT CONTRACTUAL ADVISORY JUNE 30, 1998
ONE GROUP FUNDS FEE RATE (AFTER WAIVERS)
- --------------- -------- ---------------
(to be renamed Short-Term Bond Fund upon
Reorganization)
Income Bond Fund .60% .40%
High Yield Bond Fund(3) .75% N/A
Tax-Free Bond Fund(1) .45% N/A
Short-Term Municipal Bond Fund(1) .60% N/A
Intermediate Tax-Free Bond Fund .60% .39%
Michigan Municipal Bond Fund(1) .45% N/A
Independence International is entitled to a fee from BOIA at the
following annual rates as a percentage of average daily net assets: up to $10
million -- .275%, over $10,000,000 up to $25,000,000 -- .225%, over $25,000,000
up to $50,000,000 -- .195%, over $50,000,000 up to $100,000,000 -- .125%, over
$100,000,000 -- .060%. Independence International was paid at an effective
sub-advisory fee rate of .55% for the fiscal year or period ended June 30, 1998.
For its services, Banc One Partners is entitled to a fee, from BOIA
equal to .70% of the High Yield Bond Fund's average daily net assets. Banc One
Partners received no payment for the period ended June 30, 1998, since the High
Yield Bond Fund had not commenced operations during that period.
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53
CERTAIN OTHER SERVICE PROVIDERS
FOR THE PEGASUS PORTFOLIOS AND ONE GROUP FUNDS
- ---------------------------------------- -------------------------------------- --------------------------------------
PEGASUS PORTFOLIOS ONE GROUP FUNDS
- ---------------------------------------- -------------------------------------- --------------------------------------
Administrators FCNIMCO and BISYS Fund Services One Group Services Company ("OGSC")
Limited Partnership d/b/a BISYS Fund (Administrator)
Services ("BISYS") Banc One Investment Advisors
("Co-Administrators") ("BOIA") ("Sub-Administrator")
- ---------------------------------------- -------------------------------------- --------------------------------------
Transfer Agents First Data Investor Services Group, State Street Bank and Trust Company
Inc. ("FDISG") ("State Street")
- ---------------------------------------- -------------------------------------- --------------------------------------
Custodian NBD Bank ("NBD") ("Custodian") State Street ("Custodian")
State Street ("Sub-Custodian") Bank One Trust Company, N.A.
("BOTC") ("Sub-Custodian")
- ---------------------------------------- -------------------------------------- --------------------------------------
Distributor BISYS OGSC
- ---------------------------------------- -------------------------------------- --------------------------------------
FCNIMCO and BISYS (located at 3435 Stelzer Road, Columbus, Ohio
43219-3035) jointly serve as the Co-Administrators for the Pegasus Portfolios
pursuant to an Administration Agreement with the Trust. Under the Administration
Agreement, FCNIMCO and BISYS generally assist in all aspects of the Trust's
operations, other than providing investment advice, subject to the overall
authority of the Pegasus Board in accordance with Massachusetts law. Under the
terms of the Administration Agreement Pegasus pays FCNIMCO, as agent for the
Co-Administrators, a monthly administration fee at the annual rate of .15% of
each Pegasus Portfolio's average daily net assets. For the fiscal year ended
December 31, 1997, Pegasus paid administration fees at the effective annual rate
of .15% of each Pegasus Portfolio's average daily net assets.
The Managed Assets Conservative, Managed Assets Balanced and Managed
Assets Growth Funds (collectively, the "Asset Allocation Funds") invest in
shares of certain of the other Pegasus Portfolios (the "Underlying Funds").
FCNIMCO and the Co-Administrators reimburse the Asset Allocation Funds the full
amount of advisory fees and administration fees incurred by each of the
Underlying Funds with respect to shares held by the Asset Allocation Funds.
FCNIMCO and BISYS can discontinue or modify any such reimbursements at their
discretion. Investors in the Asset Allocation Funds do indirectly bear that
portion of the expenses of the Underlying Funds related to other expenses such
as custody, transfer agency and professional fees.
OGSC, a wholly-owned subsidiary of The BISYS Group, Inc., serves as the
Administrator for the One Group Funds and BOIA acts as Sub-Administrator. OGSC
is responsible for responding to shareholder inquiries and requests for
information, as well as providing regulatory reporting and compliance. For these
services, OGSC receives a fee based on the total assets of One Group. With
respect to each of the One Group Funds (other than the institutional money
market funds and the Investor Funds), for the first $1.5 billion in One Group
assets, OGSC receives an annual fee of .20% of each Fund's average daily net
assets; the annual rate declines to .18% on assets between $1.5 and $2 billion,
45
54
and to .16% on assets in excess of $2 billion. With respect to the institutional
money market funds, OGSC receives an annual fee of .05% of each institutional
money market fund's average daily net assets. OGSC receives from One Group
Investor Funds an annual fee of .10% of each Investor Fund's average daily net
assets on $500,000,000 in Fund assets. The fee declines to .075% on net assets
between $500,000,000 and $1 billion, and to .05% on assets over $1 billion. The
fees are calculated daily and paid monthly. Some Funds are not included in these
calculations. As Sub-Administrator, BOIA provides office space, equipment and
facilities, as well as legal and regulatory support.
OGSC is located at 3435 Stelzer Road, Columbus, Ohio 43219.
FDISG, located at P.O. Box 5142, Westborough , Massachusetts
01581-5120, serves as transfer agent to the Pegasus Portfolios.
State Street, located at P.O. Box 8500, Boston Massachusetts
02266-8500, serves as transfer agent and custodian to the One Group Funds. BOTC
serves as sub-custodian in connection with the Funds' securities lending
activities under an agreement with State Street. BOTC is located at 774 Park
Meadow Road, Westerville, OH 43271.
NBD Bank ("NBD") serves as Pegasus' custodian. As of September 8, 1998,
NBD has entered into a Sub-Custodian Agreement with State Street Bank and Trust
Company ("State Street"). As sub-custodian State Street agreed to hold, deliver
and register securities, maintain bank accounts, collect income, pay fund
monies, appoint agents and deposit fund assets in U.S. Securities Systems, among
other things. NBD, located at 900 Tower Drive, Troy, Michigan 48098, is an
indirect wholly-owned subsidiary of BOC.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICING ARRANGEMENTS - PEGASUS PORTFOLIOS.
BISYS is the principal underwriter and distributor for Pegasus. Pegasus has
adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (the
"Pegasus 12b-1 Plan") with respect to Class B Shares of the Pegasus Portfolios
that offer such shares and a Shareholders Services Plan with respect to Class A
and Class B shares. Under the Pegasus 12b-1 Plan, the Class B Shares have agreed
to pay BISYS for advertising, marketing and distributing shares of each
Portfolio at an aggregate annual rate of 0.75% of the average daily net asset
value of such Portfolio's outstanding Class B Shares. BISYS may pay
institutions, including FCNIMCO, and its subsidiaries and affiliates
(collectively, "Service Agents"), for distribution services to Class B
shareholders. BISYS determines the amounts, if any, to be paid to Service Agents
under the Pegasus 12b-1 Plan and the basis on which such payments are made. The
fees payable under the Pegasus 12b-1 Plan are payable without regard to actual
expenses incurred. The Cash Management Funds have a Distribution and Services
Plan with respect to Class S shares adopted by the Board of Trustees under which
BISYS is paid a fee of up to .25% of the average daily net asset value of
Class S.
In addition to the 12b-1 Plan, Pegasus has adopted a Shareholder
Services Plan for the Class A and Class B Shares (each a "Shareholder Services
Plan") for each Pegasus Portfolio other than the Cash Management Funds. Under
each Shareholder Services Plan, each Pegasus Portfolio pays BISYS for the
provision of certain administrative support services to the shareholders of
these shares a fee at the annual rate of .25% of the value of the average daily
net assets of such Class A or Class B Shares. The services provided may include
personal services related to shareholder accounts, such as answering shareholder
46
55
inquiries regarding the applicable Portfolio and providing reports and other
information, and services related to the maintenance of shareholder accounts.
Under each Shareholder Services Plan, BISYS may make payments to Service Agents
in respect of those services.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICING ARRANGEMENTS - ONE GROUP. OGSC, a
wholly-owned subsidiary of The BISYS Group, Inc., is the principal underwriter
and distributor for The One Group.
One Group has adopted a 12b-1 Plan under the 1940 Act (the "Plan") with
respect to its funds under which fees are paid by One Group to OGSC as
compensation for its services and expenses. OGSC in turn pays all or part of
such fees to shareholder servicing agents that sell shares of One Group. Plan
fees vary by share class. Class A shares for all funds except the Prime,
Municipal and U.S. Treasury Securities Money Market Funds are subject to a Plan
fee of .35% of the average daily net assets of the Fund, which is currently
being waived to .25%. Class A shares of the Prime, Municipal and U.S. Treasury
Securities Money Market Funds pay a Plan fee of .25% of average daily net assets
of the Fund. Class B and Class C shares pay a Plan fee (including shareholder
service fee) of 1.00% of average daily net assets of the Fund, which is
currently being waived to .90% for the Intermediate Bond and Income Bond and to
.75% for the Limited Volatility Bond Fund. Service Class shares of the Prime,
Municipal, Michigan Municipal and U.S. Treasury Securities Money Market Funds
are subject to a Plan fee of .75% of the average daily net assets of the Fund,
which is currently being waived to .55%. There are no Plan fees for Class I
shares. As with the Pegasus 12b-1 and Shareholder Servicing Plans, OGSC may use
up to .25% of the Plan fees for shareholder servicing and up to .75% for
distribution.
See the Existing One Group Fund Prospectuses accompanying this Combined
Prospectus/Proxy Statement, which are incorporated herein by reference, and the
Pegasus Prospectuses for additional information on the service providers.
SHAREHOLDER TRANSACTIONS AND SERVICES. The Pegasus Portfolios and their
corresponding One Group Funds offer generally similar shareholder services and
transactions. There are, however, some differences. For example, the minimum
initial investment amount for Class I shares of the Pegasus Portfolios is
generally $1,000,000, while the minimum initial investment amount for Class I
shares of the One Group is generally $1,000. For a more detailed comparison of
shareholder transactions and services see Appendix IV - Shareholder Transactions
and Services.
After the Reorganization, One Group will continue to honor any standing
instructions regarding the corresponding Pegasus Portfolio share classes under
arrangements such as automatic withdrawal plans, systematic investment plans or
dividend reinvestment plans. In such cases, standing instructions will be
subject to the same or similar terms (e.g., minimum investments, account
balances and minimum transaction amounts) currently in effect, except that there
may be exceptions with respect to the timing of transactions which may need to
be altered to comport with One Group's procedures. Shareholders will be notified
of any such exceptions. After the Reorganization, any instructions given with
respect to any new account will be subject to the terms of the applicable One
Group Fund share class. For a complete description and comparison of the terms
applicable to standing instructions and other account features regarding the
Pegasus Portfolios and One Group Funds, see Appendix IV to this Combined
Prospectus/Proxy Statement.
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INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. This Combined Prospectus/Proxy Statement is being furnished
in connection with the solicitation of proxies by Pegasus' Board of Trustees in
connection with the Meeting. It is expected that the solicitation of proxies
will be primarily by mail. Officers and service contractors of Pegasus may also
solicit proxies by telephone, telegraph, facsimile or personal interview.
Shareholder Communications Corporation has been retained to assist in the
solicitation of proxies primarily by contacting shareholders by telephone and
telegram. Authorizations to execute proxies may be obtained by telephonic or
electronically transmitted instructions in accordance with procedures designed
to authenticate the shareholder's identity. In all cases where a telephonic
proxy is solicited, the shareholder will be asked to provide his or her address,
social security number (in the case of an individual) or taxpayer identification
number (in the case of an entity) and the number of shares owned and to confirm
that the shareholder has received the Combined Prospectus/Proxy Statement and
proxy card in the mail. Within 72 hours of receiving a shareholder's telephonic
or electronically transmitted voting instructions, a confirmation will be sent
to the shareholder to ensure that the vote has been taken in accordance with the
shareholder's instructions and to provide a telephone number to call immediately
if the shareholder's instructions are not correctly reflected in the
confirmation. Shareholders requiring further information with respect to
telephonic or electronically transmitted voting instructions or the proxy
generally should contact ADP toll-free at 1-800-___-____. Any shareholder giving
a proxy may revoke it at any time before it is exercised by submitting to
Pegasus a written notice of revocation or a subsequently executed proxy or by
attending the Meeting and voting in person.
Only shareholders of record at the close of business on December __,
1998 will be entitled to vote at the Meeting. On that date, the following
Pegasus Shares were outstanding and entitled to be voted:
NAME OF PEGASUS FUND AND CLASS SHARES ENTITLED TO VOTE
------------------------------ -----------------------
Pegasus Money Market Fund.............................................. ________________
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Treasury Money Market Fund .................................... ________________
Class A ...................................................... ________________
Class I ...................................................... ________________
Pegasus Municipal Money Market Fund ................................... ________________
Class A ...................................................... ________________
Class I....................................................... ________________
Pegasus Michigan Municipal Money Market Fund .......................... ________________
Class A ...................................................... ________________
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NAME OF PEGASUS FUND AND CLASS SHARES ENTITLED TO VOTE
------------------------------ -----------------------
Class I ...................................................... ________________
Pegasus Cash Management Fund .......................................... ________________
Class I Shares ............................................... ________________
Class S Shares ............................................... ________________
Pegasus Treasury Cash Management Fund ................................. ________________
Class I Shares ............................................... ________________
Class S Shares ............................................... ________________
Pegasus Treasury Prime Cash Management Fund ........................... ________________
Class I Shares ............................................... ________________
Class S Shares ............................................... ________________
Pegasus U.S. Government Securities Cash Management Fund
Class I Shares ............................................... ________________
Class S Shares ............................................... ________________
Pegasus Municipal Cash Management Fund ................................ ________________
Class I Shares ............................................... ________________
Class S Shares ............................................... ________________
Pegasus Managed Assets Conservative Growth Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Managed Assets Balanced Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Managed Assets Growth Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Equity Income Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
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NAME OF PEGASUS FUND AND CLASS SHARES ENTITLED TO VOTE
------------------------------ -----------------------
Pegasus Growth Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Mid-Cap Opportunity Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Small-Cap Opportunity Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Intrinsic Value Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Growth and Value Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Equity Index Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Market Expansion Index Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus International Equity Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Intermediate Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
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59
NAME OF PEGASUS FUND AND CLASS SHARES ENTITLED TO VOTE
------------------------------ -----------------------
Class I ...................................................... ________________
Pegasus Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Short Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Multi Sector Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus High Yield Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Municipal Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Short Municipal Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Intermediate Municipal Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
Pegasus Michigan Municipal Bond Fund
Class A ...................................................... ________________
Class B ...................................................... ________________
Class I ...................................................... ________________
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Each share or fraction thereof is entitled to one vote or fraction
thereof, and all shares will vote separately by class.
Pegasus and One Group have been advised by FCNIMCO that the shares of
each Pegasus Portfolio over which BOC or its affiliates have voting power will,
wherever possible, be voted in accordance with instructions received from
beneficial owners or fiduciaries of such accounts who are not related to BOC or
its affiliates. As to employee benefit plans, BOC may vote such shares in
accordance with the recommendation of an independent fiduciary. Where BOC is
required to vote Pegasus shares, it will vote them in the same proportions as
the shares of all other voting shareholders of each respective class of each
Pegasus Portfolio were actually voted.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting or any adjournment
thereof. For information on adjournment of the meeting, see "Quorum" below.
SHAREHOLDER AND BOARD APPROVALS. The Reorganization Agreement (and the
transactions contemplated thereby) is being submitted for approval at the
Meeting by the holders of a majority of the outstanding shares of each share
class of each of the Pegasus Money Market, Treasury Money Market, Municipal
Money Market, Michigan Municipal Money Market, Cash Management, Treasury Cash
Management, Treasury Prime Cash Management, U.S. Government Securities Cash
Management, Municipal Cash Management, Managed Assets Conservative, Managed
Assets Balanced, Managed Assets Growth, Equity Income, Growth, Mid-Cap
Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and Value, Equity
Index, Market Expansion Index, International Equity, Intermediate Bond, Bond,
Short Bond, Multi Sector Bond, High Yield Bond, Municipal Bond, Short Municipal
Bond, Intermediate Municipal Bond and Michigan Municipal Bond Funds in
accordance with the provisions of Pegasus' Declaration of Trust and the
requirements of the 1940 Act. The term "majority of the outstanding shares" of a
share class of each Pegasus Portfolio as used herein means the lesser of (a) 67%
of the shares of a particular share class of the Pegasus Portfolio present at
the meeting if the holders of more than 50% of the outstanding shares of such a
share class are present in person or by proxy, or (b) more than 50% of the
outstanding shares of such share class.
The approval of the Reorganization by the shareholders of One Group is
not being solicited because their approval or consent is not legally required.
As of December __, 1998, FCNIMCO and its affiliates beneficially owned
___% of the outstanding shares of the Pegasus Money Market, Treasury Money
Market, Municipal Money Market, Michigan Municipal Money Market, Cash
Management, Treasury Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management, Municipal Cash Management, Managed Assets
Conservative, Managed Assets Balanced, Managed Assets Growth, Equity Income,
Growth, Mid-Cap Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and
Value, Equity Index, Market Expansion Index, International Equity, Intermediate
Bond, Short Bond, Bond, Multi Sector Bond, High Yield Bond, Municipal Bond,
Short Municipal Bond, Intermediate Municipal Bond and Michigan Municipal Bond
Funds on behalf of their customer accounts.
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As of December __, 1998, the name, address and percentage of ownership
of the persons who owned of record 5% or more of any class of the Reorganizing
Pegasus Portfolios, and the percentage of the respective share classes of the
corresponding One Group Funds that would be owned by those persons upon the
consummation of the Reorganization based upon their holdings on December __,
1998, are as follows:
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62
PRO FORMA
PERCENTAGE OF PERCENTAGE OF
PERCENTAGE OF REORGANIZING CLASS OF ONE
REORGANIZING CLASS OF SHARES CLASS OWNED ON PEGASUS FUND OWNED GROUP FUND OWNED
PEGASUS FUND NAME AND ADDRESS OWNED RECORD DATE ON RECORD DATE ON CONSUMMATION
------------ ---------------- ----- ----------- -------------- ---------------
Money Market Fund
Treasury Money Market
Fund
Municipal Money Market
Fund
Managed Assets
Conservative Fund
Managed Assets Balanced
Fund
Managed Assets Growth
Fund
Equity Income Fund
Growth Fund
Intrinsic Value Fund
Growth and Value Fund
Equity Index Fund
Intermediate Bond Fund
54
63
PRO FORMA
PERCENTAGE OF PERCENTAGE OF
PERCENTAGE OF REORGANIZING CLASS OF ONE
REORGANIZING CLASS OF SHARES CLASS OWNED ON PEGASUS FUND OWNED GROUP FUND OWNED
PEGASUS FUND NAME AND ADDRESS OWNED RECORD DATE ON RECORD DATE ON CONSUMMATION
------------ ---------------- ----- ----------- -------------- ---------------
Multi Sector Bond Fund
Short Bond Fund
High Yield Bond Fund
Intermediate Municipal
Bond Fund
As of December ___, 1998, the name, address and percentage of ownership
of each person who owns of record 5% or more of any class of shares of the
Continuing Pegasus Funds is listed below. Prior to the Continuing Pegasus Funds
Transaction the New One Group Funds will have only nominal assets. Accordingly,
the persons who own of record 5% or more of any class of shares of the
Continuing Pegasus Funds will not materially change upon consummation of the
Continuing Pegasus Funds Transaction.
PRO FORMA
PERCENTAGE OF PERCENTAGE OF
PERCENTAGE OF CONTINUING CLASS OF ONE
CONTINUING CLASS OF SHARES CLASS OWNED ON PEGASUS FUND OWNED GROUP FUND OWNED
PEGASUS FUND NAME AND ADDRESS OWNED RECORD DATE ON RECORD DATE ON CONSUMMATION
------------ ---------------- ----- ----------- -------------- ---------------
Michigan Municipal Money
Market Fund
Cash Management Fund
Treasury Cash Management
Fund
Treasury Prime Cash
Management Fund
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64
PRO FORMA
PERCENTAGE OF PERCENTAGE OF
PERCENTAGE OF CONTINUING CLASS OF ONE
CONTINUING CLASS OF SHARES CLASS OWNED ON PEGASUS FUND OWNED GROUP FUND OWNED
PEGASUS FUND NAME AND ADDRESS OWNED RECORD DATE ON RECORD DATE ON CONSUMMATION
------------ ---------------- ----- ----------- -------------- ---------------
U.S. Government
Securities Cash
Management Fund
Municipal Cash
Management Fund
Mid-Cap Opportunities
Fund
Small-Cap Opportunities
Fund
Market Expansion Index
Fund
International Equity
Fund
Bond Fund
Municipal Bond Fund
Short Municipal Bond
Fund
Michigan Municipal Bond
Fund
As of December __, 1998, the trustees/directors and officers of
Pegasus, as a group, owned less than 1% of the outstanding shares of each of the
Pegasus Funds.
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65
On December __, 1998, Trussal & Co., 9000 Haggerty Road, Belleville,
Michigan 48111, held of record the outstanding Class I Shares, as listed below,
of each investment portfolio of the Pegasus Funds as nominee of NBD Bank's Trust
Division and affiliated banks which acted as agent or custodian on behalf of
their customers. NBD Bank possessed or shared voting or investment power and may
be deemed for certain purposes to be the beneficial owner with respect to those
Class I Shares listed below at December __, 1998.
=============================== =========================================== ========================================
PEGASUS FUND TRUSSAL & CO. NBD BANK
- ------------------------------- ------------------------------------------- ----------------------------------------
Money Market Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Treasury Money Market Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Municipal Money Market Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Michigan Municipal Money
Market Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Cash Management Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Treasury Cash Management Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Treasury Prime Cash
Management Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
U.S. Government Securities
Cash Management Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Municipal Cash Management Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Managed Assets Conservative
Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Managed Assets Balanced Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Managed Assets Growth Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Equity Income Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Growth Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Mid-Cap Opportunity Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Small-Cap Opportunity Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Intrinsic Value Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
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- ------------------------------- ------------------------------------------- ----------------------------------------
Growth and Value Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Equity Index Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Market Expansion Index Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
International Equity Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Intermediate Bond Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Bond Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Short Bond Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Multi Sector Bond Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
High Yield Bond Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Municipal Bond Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Short Municipal Bond Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Intermediate Municipal Bond
Fund
- ------------------------------- ------------------------------------------- ----------------------------------------
Michigan Municipal Bond Fund
=============================== =========================================== ========================================
As of December __, 1998, the Automated Cash Management System ("ACMS"),
9000 Haggerty Road, Belleville, Michigan 48111, held of record the following
Class I Shares on behalf of its participants (no participant owned beneficially
5% or more of such Shares):
======================================== ========================== ======================= ============================
Pegasus Fund Number of Shares Held Percent of Class Percent of Fund Shares
Owned on Record Date Owned on Record Date
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Money Market Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Treasury Money Market Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Municipal Money Market Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Michigan Municipal Money Market Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Cash Management Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Treasury Cash Management Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Treasury Prime Cash Management Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
U.S. Government Securities Cash
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
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- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Management Fund
- ---------------------------------------- -------------------------- ----------------------- ----------------------------
Municipal Cash Management Fund
======================================== ========================== ======================= ============================
As of December __, 1998, the name, address and percentage of ownership
of the persons who owned of record 5% or more of the outstanding shares of the
respective share classes of the Existing One Group Funds are as follows:
PERCENTAGE OF THE
PERCENTAGE OF EXISTING ONE GROUP PERCENTAGE OF
THE EXISTING ONE CLASS OF SHARES CLASS OWNED ON FUND OWNED ON CLASS OWNED ON
GROUP FUND NAME AND ADDRESS OWNED RECORD DATE RECORD DATE CONSUMMATION
---------- ---------------- ----- ----------- ----------- ------------
Prime Money Market
Fund
U.S. Treasury
Securities Money
Market Fund
Municipal Money
Market Fund
Investor Balanced Fund
Investor Growth &
Income Fund
Investor Growth Fund
Income Equity Fund
Large Company Growth
Fund
Disciplined Value Fund
Value Growth Fund
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68
PERCENTAGE OF THE
PERCENTAGE OF EXISTING ONE GROUP PERCENTAGE OF
THE EXISTING ONE CLASS OF SHARES CLASS OWNED ON FUND OWNED ON CLASS OWNED ON
GROUP FUND NAME AND ADDRESS OWNED RECORD DATE RECORD DATE CONSUMMATION
---------- ---------------- ----- ----------- ----------- ------------
Equity Index Fund
Intermediate Bond Fund
Limited Volatility
Bond Fund
Income Bond Fund
High Yield Bond Fund
Intermediate Tax-Free
Bond Fund
As of _____, 1998, the trustees and officers of One Group Funds, as a
group, owned less then 1% of the outstanding shares of the respective share
classes of each of the One Group's investment portfolios.
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69
APPRAISAL RIGHTS. Shareholders are not entitled to any rights of share appraisal
under Pegasus' Declaration of Trust or By-laws, or under the laws of the
Commonwealth of Massachusetts, in connection with the Reorganization.
Shareholders have, however, the right to redeem from Pegasus their Pegasus
Portfolio shares at net asset value until the effective time of the
Reorganization, and thereafter shareholders may redeem from One Group the shares
of the One Group Fund acquired by them in the Reorganization at net asset value.
QUORUM. In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve
the Reorganization Agreement and the transactions contemplated thereby are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of the proxies. Any such adjournment
will require the affirmative vote of a majority of those shares affected by the
adjournment that are represented at the Meeting in person or by proxy. If a
quorum is present, the persons named as proxies will vote those proxies which
they are entitled to vote FOR the Reorganization Agreement, in favor of such
adjournments, and will vote those proxies required to be voted AGAINST such
Proposal against any adjournment. A shareholder vote may be taken with respect
to one or more of the share classes on the Proposal prior to any such
adjournment as to which sufficient votes have been received for approval. A
quorum is constituted with respect to each of the share classes of each of the
Pegasus Portfolios by the presence in person or by proxy of the holders of more
than 50% of the outstanding shares thereof entitled to vote at the Meeting. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions, but not broker "non-votes" (that is, proxies from brokers
or nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power),
will be treated as shares that are present at the Meeting but which have not
been voted. Abstentions and broker "non-votes" will have the effect of a "no"
vote for purposes of obtaining the requisite approval of the Proposal.
ANNUAL MEETINGS. Neither One Group nor Pegasus presently intends to hold annual
meetings of shareholders for the election of trustees and other business unless
otherwise required by the 1940 Act. Under certain circumstances, however,
holders of at least 10% of the outstanding shares of Pegasus or 20% of the
outstanding shares of One Group have the right to call a meeting of
shareholders.
ADDITIONAL INFORMATION ABOUT THE ONE GROUP AND PEGASUS.
Information about the Existing One Group Funds is included in the
Prospectuses accompanying this Combined Prospectus/Proxy Statement, which are
incorporated by reference herein. Additional information about these Funds is
included in their Statement of Additional Information dated November 1, 1998,
which have been filed with the SEC under the Securities Act of 1933 and
Investment Company Act of 1940. The file numbers of The One Group Prospectuses
and Statements of Additional Information are Registration Numbers
002-95973/811-04236. A copy of the Statement of Additional Information may be
obtained without charge by writing The One Group Services Company at 3435
Stelzer Road, Columbus, Ohio 43219 or by calling 1-800-480-4111. Information
about Pegasus is incorporated herein by reference from its Prospectuses dated
April 30, 1998 and Statements of Additional Information, dated April 30, 1998,
copies of which may be obtained without charge by writing or calling Pegasus at
the
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70
address and telephone number shown on the cover page of this Combined
Prospectus/Proxy Statement. The SEC file numbers for the Pegasus Fund's
Prospectuses and related Statements of Additional Information are Registration
Numbers 33-13990/811-5148.
The One Group and Pegasus are subject to the informational requirements
of the Securities Exchange Act of 1934 and the 1940 Act, as applicable, and, in
accordance with such requirements, files proxy materials, reports and other
information with the SEC. Reports and other information filed by One Group and
Pegasus can be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, New
York 10048; 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 90
Devonshire Street, Suite 700, Boston, MA 02109; and 601 Walnut Street, Suite
1005E, Philadelphia, PA 19106. Copies of such material may also be obtained from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549, at
prescribed rates. The SEC maintains a website (www.SEC.gov) which also contains
Prospectuses and Statements of Additional Information and other information
regarding The One Group and Pegasus.
LITIGATION
Neither Pegasus nor One Group is involved in any litigation that would
have any material adverse effect upon either the Pegasus or One Group Funds.
FINANCIAL STATEMENTS
The financial highlights and financial statements for Pegasus for the
fiscal year or period ended December 31, 1997 are contained in Pegasus' Annual
Reports to Shareholders and in Pegasus' Prospectuses and Statements of
Additional Information dated April 30, 1998, each of which is incorporated by
reference into this Combined Prospectus/Proxy Statement. Unaudited financial
highlights and financial statements for the Pegasus Portfolios for the six-month
fiscal period ended June 30, 1998 are contained in Pegasus' Semi-Annual Reports
to Shareholders, which are incorporated by reference into this Combined
Prospectus/Proxy Statement. The financial highlights and the financial
statements for the Existing One Group Funds for the fiscal year ended June 30,
1998 are contained in One Group's Annual Reports to Shareholders and in One
Group's Prospectuses and Statement of Additional Information dated November 1,
1998, each of which is incorporated by reference into this Combined
Prospectus/Proxy Statement.
The audited financial highlights and financial statements of Pegasus
for the fiscal year or period ended December 31, 1997, contained in Pegasus'
Annual Reports and incorporated by reference in this Combined Proxy/Prospectus,
have been incorporated herein in reliance on the report of Arthur Andersen LLP,
independent auditors, given upon the authority of such firm as experts in
accounting and auditing.
The audited financial highlights and financial statements of the
Existing One Group Funds for the fiscal year ended June 30, 1998, contained in
One Group's Annual Reports and incorporated by reference in this Combined
Proxy/Prospectus, have been audited by PricewaterhouseCoopers LLP, independent
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71
public accountants, as indicated in their reports with respect thereto and are
incorporated herein in reliance upon the authority of said firm as experts in
accounting and auditing.
Unaudited pro forma combined financial statements of the Pegasus and
One Group Funds for the twelve-month period ending June 30, 1998 are included in
the Statement of Additional Information. Because the Reorganization Agreement
provides that the One Group Funds, other than the Income Bond and Intermediate
Bond Funds, will be the surviving funds following the Reorganization and because
the One Group Funds' investment objectives and policies will remain unchanged,
the pro forma combined financial statements reflect the transfer of assets and
liabilities of each Pegasus Portfolio to the corresponding One Group Fund as
contemplated by the Reorganization Agreement. In the case of the combinations of
the Pegasus Multi Sector Fund and One Group Income Bond Fund and the Pegasus
Intermediate Bond Fund and One Group Intermediate Bond Fund, the Pegasus Funds
will be the survivor for accounting purposes.
OTHER BUSINESS
Pegasus' Board of Trustees knows of no other business to be brought
before the Meeting. However, should any other matter requiring a vote of
shareholders arise, the persons named in the enclosed proxy card will vote on
matters according to their best judgment in the interest of the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Pegasus in writing at the
address on the cover page of this Combined Prospectus/Proxy Statement or by
telephoning 1-800-___-____.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PEGASUS WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS DECEMBER 31, 1997
ANNUAL REPORTS AND ITS JUNE 30, 1998 SEMI-ANNUAL REPORTS TO ANY SHAREHOLDER UPON
REQUEST ADDRESSED TO: PEGASUS FUNDS P. O. BOX 5142, WESTBOROUGH, MASSACHUSETTS
01581 OR BY TELEPHONE AT 1-800-688-3350.
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72
Appendix I
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This Agreement and Plan of Reorganization (the "Agreement") is made as
of ___________, 199_ by and between The One Group(R), a Massachusetts business
trust, ("One Group") and Pegasus Funds, a Massachusetts business trust
("Pegasus"). The capitalized terms used herein shall have the meaning ascribed
to them in this Agreement.
I. PLAN OF REORGANIZATION
----------------------
(a) Pegasus will sell, assign, convey, transfer and deliver to One Group,
and One Group will acquire, on the Exchange Date all of the properties and
assets existing at the Valuation Time in Pegasus Money Market Fund ("Pegasus
Money Market"), Pegasus Treasury Money Market Fund ("Pegasus Treasury"), Pegasus
Municipal Money Market Fund ("Pegasus Municipal"), Pegasus Michigan Municipal
Money Market Fund ("Pegasus Michigan Money Market"), Pegasus Cash Management
Money Market Fund ("Pegasus Cash Management"), Pegasus Treasury Prime Cash
Management Money Market Fund ("Pegasus Treasury Prime Cash"), Pegasus U.S.
Government Securities Cash Management Money Market Fund ("Pegasus Government
Cash"), Pegasus Municipal Cash Management Money Market Fund ("Pegasus Municipal
Cash"), Pegasus Treasury Cash Management Fund ("Pegasus Treasury Cash"), Pegasus
Short Bond Fund ("Pegasus Short Bond"), Pegasus Intermediate Bond Fund ("Pegasus
Intermediate Bond"), Pegasus Multi Sector Bond Fund ("Pegasus Multi Sector"),
Pegasus Bond Fund ("Pegasus Bond"), Pegasus High Yield Bond Fund ("Pegasus High
Yield"), Pegasus Intermediate Municipal Bond Fund ("Pegasus Intermediate
Municipal"), Pegasus Municipal Bond Fund ("Pegasus Municipal Bond"), Pegasus
Michigan Municipal Bond Fund ("Pegasus Michigan Municipal"), Pegasus Short
Municipal Bond Fund ("Pegasus Short Municipal"), Pegasus Equity Income Fund
("Pegasus Equity Income"), Pegasus Equity Index Fund ("Pegasus
1
73
Equity Index"), Pegasus Growth and Value Fund ("Pegasus Value"), Pegasus
Intrinsic Value Fund ("Pegasus Intrinsic Value"), Pegasus Growth Fund ("Pegasus
Growth"), Pegasus Mid-Cap Opportunity Fund ("Pegasus Mid-Cap"), Pegasus
Small-Cap Opportunity Fund ("Pegasus Small-Cap"), Pegasus International Equity
Fund ("Pegasus International"), Pegasus Market Expansion Index Fund ("Pegasus
Expansion"), Pegasus Managed Assets Growth Fund ("Pegasus Managed Assets"),
Pegasus Managed Assets Balanced Fund ("Pegasus Managed Balanced"), and Pegasus
Managed Assets Conservative Fund ("Pegasus Managed Conservative") (Pegasus Money
Market, Pegasus Treasury, Pegasus Municipal, Pegasus Michigan Municipal, Pegasus
Cash Management, Pegasus Treasury Prime Cash, Pegasus Government Cash, Pegasus
Municipal Cash, Pegasus Treasury Cash, Pegasus Short Bond, Pegasus Intermediate
Bond, Pegasus Multi Sector, Pegasus Bond, Pegasus High Yield, Pegasus
Intermediate Municipal, Pegasus Municipal Bond, Pegasus Michigan Municipal,
Pegasus Short Municipal, Pegasus Equity Income, Pegasus Equity Index, Pegasus
Value, Pegasus Intrinsic Value, Pegasus Growth, Pegasus Mid-Cap, Pegasus
Small-Cap, Pegasus International, Pegasus Expansion, Pegasus Managed Assets,
Pegasus Managed Balanced, and Pegasus Managed Conservative, each is a "Pegasus
Fund" and are collectively the "Pegasus Funds"), such acquisition to be made by
The One Group Prime Money Market Fund ("One Group Prime"), The One Group U.S.
Treasury Securities Money Market Fund ("One Group Treasury Securities"), The One
Group Municipal Money Market Fund ("One Group Municipal"), The One Group
Michigan Municipal Money Market Fund, ("One Group Michigan Money Market"), The
One Group Cash Management Money Market Fund ("One Group Cash Management"), The
One Group Treasury Prime Cash Management Money Market Fund ("One Group Treasury
Prime Cash"), The One Group U.S. Government Securities Cash Management Money
Market Fund ("One Group Government
2
74
Cash"), The One Group Municipal Cash Management Money Market ("One Group
Municipal Cash"), The One Group Treasury Cash Management ("One Group Treasury
Cash"), The One Group Limited Volatility Bond Fund ("One Group Limited
Volatility"), The One Group Intermediate Bond Fund ("One Group Intermediate
Bond"), The One Group Income Bond Fund ("One Group Income"), The One Group Bond
Fund ("One Group Bond"), The One Group High Yield Bond Fund ("One Group High
Yield"), The One Group Intermediate Tax-Free Bond Fund ("One Group Intermediate
Tax-Free"), The One Group Municipal Bond Fund ("One Group Municipal Bond"), The
One Group Michigan Municipal Bond Fund ("One Group Michigan Municipal"), The One
Group Short Municipal Bond Fund ("One Group Short Municipal"), The One Group
Equity Income Fund ("One Group Equity Income"), The One Group Equity Index Fund
("One Group Equity Index"), The One Group Value Growth Fund ("One Group Value"),
The One Group Disciplined Value Fund ("One Group Disciplined"), The One Group
Large Company Growth Fund ("One Group Growth"), The One Group Mid-Cap
Opportunities Fund ("One Group Mid-Cap"), The One Group Small Cap Opportunity
Fund ("One Group Small Cap"), The One Group International Equity Fund ("One
Group International"), The One Group Small Cap Index Fund ("One Group Small Cap
Index"), The One Group Investor Growth Fund ("One Group Investor Growth"), The
One Group Investor Growth & Income Fund ("One Group Investor Income") and The
One Group Investor Balanced Fund ("One Group Investor Balanced") (One Group
Prime, One Group Treasury Securities, One Group Municipal, One Group Michigan
Money Market, One Group Cash Management, One Group Treasury Prime Cash, One
Group Government Cash, One Group Municipal Cash, One Group Treasury Cash, One
Group Limited Volatility, One Group Intermediate Bond, One Group Income, One
Group Bond, One Group High Yield, One Group Intermediate Tax-Free, One Group
Municipal Bond,
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75
One Group Michigan Municipal, One Group Short Municipal, One Group Income
Equity, One Group Equity Index, One Group Value, One Group Disciplined, One
Group Growth, One Group Mid-Cap, One Group Small Cap, One Group International,
One Group Small Cap Index, One Group Investor Growth, One Group Investor Income
and One Group Investor Balanced, each is a "One Group Fund" and are collectively
the "One Group Funds"), respectively, of One Group. For purposes of this
Agreement the respective Pegasus Funds correspond to the One Group Funds as
follows: Pegasus Money Market corresponds to One Group Prime; Pegasus Treasury
corresponds to One Group Treasury Securities; Pegasus Municipal corresponds to
One Group Municipal; Pegasus Michigan Money Market corresponds to One Group
Michigan Money Market; Pegasus Cash Management corresponds to One Group Cash
Management; Pegasus Treasury Prime Cash corresponds to One Group Treasury Prime
Cash; Pegasus Government Cash corresponds to One Group Government Cash; Pegasus
Municipal Cash corresponds to One Group Municipal Cash; Pegasus Treasury Cash
corresponds to One Group Treasury Cash; Pegasus Short Bond corresponds to One
Group Limited Volatility; Pegasus Intermediate Bond corresponds to One Group
Intermediate Bond; Pegasus Multiple Sector Bond corresponds to One Group Income;
Pegasus Bond corresponds to One Group Bond; Pegasus High Yield corresponds to
One Group High Yield; Pegasus Intermediate Municipal corresponds to One Group
Intermediate Tax-Free; Pegasus Municipal Bond corresponds to One Group Municipal
Bond; Pegasus Michigan Municipal corresponds to One Group Michigan Municipal;
Pegasus Short Municipal corresponds to One Group Short Municipal; Pegasus Equity
Income corresponds to One Group Income Equity; Pegasus Equity Index corresponds
to One Group Equity Index; Pegasus Value corresponds to One Group Value; Pegasus
Intrinsic Value corresponds to One Group Disciplined; Pegasus Growth corresponds
to One Group Growth;
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Pegasus Mid-Cap corresponds to One Group Mid-Cap; Pegasus Small-Cap corresponds
to One Group Small Cap; Pegasus International corresponds to One Group
International; Pegasus Expansion corresponds to One Group Small Cap Index;
Pegasus Managed Assets corresponds to One Group Investor Growth; Pegasus Managed
Balanced corresponds to One Group Investor Income; and Pegasus Managed
Conservative corresponds to One Group Investor Balanced. In consideration
therefor, each One Group Fund shall, on the Exchange Date, assume all of the
liabilities of the corresponding Pegasus Fund, which liabilities shall include
any obligation of the corresponding Pegasus Fund to indemnify the Trustees and
officers of Pegasus Funds to the fullest extent permitted by applicable law and
by Pegasus's Declaration of Trust, as in affect as of the date of this
Agreement, and issue a number of full and fractional One Group Class A, Class B
or Class I shares of the corresponding One Group Fund (collectively, "Shares")
having an aggregate net asset value equal to the value of all of the assets of
each Pegasus Fund transferred to the corresponding One Group Fund on such date
less the value of all of the liabilities of each Pegasus Fund assumed by the
corresponding One Group Fund on that date. It is intended that each
reorganization described in this Agreement shall be a tax-free reorganization
under the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, each Pegasus Fund shall distribute in complete liquidation to
its respective shareholders of record as of the Exchange Date the Shares
received by it, each shareholder being entitled to receive that number of Shares
equal to the proportion which the number of shares of beneficial interest of the
applicable class of the Pegasus Fund held by such shareholder bears to the
number of such shares of such class of the Pegasus Fund outstanding on such
date. Pegasus Class I, Class A and Class B shareholders will receive One Group
Class I, Class A and Class B shares,
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respectively. Class I and Class S shareholders of Pegasus Cash Management,
Pegasus Treasury Prime Cash, Pegasus Government Cash, Pegasus Municipal Cash,
and Pegasus Treasury Cash, will receive Class I and Class A shares,
respectively, of One Group Cash Management, One Group Treasury Prime Cash, One
Group Government Cash, One Group Municipal Cash, and One Group Treasury Cash,
respectively.
II. AGREEMENT
---------
One Group and Pegasus represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF PEGASUS. Pegasus and each Pegasus
Fund jointly and severally represent and warrant to and agree with One Group and
each One Group Fund that:
(a) Pegasus is a business trust duly established and validly existing
under the laws of the Commonwealth of Massachusetts and has power to own all of
its properties and assets and to carry out its obligations under this Agreement.
Pegasus and each Pegasus Fund is not required to qualify as a foreign
association in any jurisdiction. Pegasus and each Pegasus Fund has all necessary
federal, state and local authorizations to carry on its business as now being
conducted and to fulfill the terms of this Agreement, except as set forth in
Section 1(l).
(b) Pegasus is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
Each Pegasus Fund has elected to qualify and has qualified as a regulated
investment company under Part I of Subchapter M of the Code, as of and since its
first taxable year, and qualifies and intends to continue to qualify as a
regulated investment company for its taxable year ending upon its liquidation.
Each Pegasus
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Fund has been a regulated investment company under such sections of the Code at
all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each Pegasus Fund at and for the year ended
December 31, 1997, such statements and schedules having been audited by Arthur
Anderson, LLP, independent accountants to Pegasus, have been furnished to One
Group. Unaudited statements of net assets, statement of operations, statement of
changes in net assets, and schedules of portfolio investments for the period
ended June 30, 1998 also have been provided to One Group.
(d) The prospectuses of each Pegasus Fund dated April 30, 1998
(collectively, the "Pegasus Prospectuses") and the Statement of Additional
Information for the Pegasus Funds dated April 30, 1998 and on file with the
Securities and Exchange Commission (the "Commission"), which have been
previously furnished to One Group, did not as of their dates and do not as of
the date hereof contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Pegasus or any Pegasus Fund, threatened against
Pegasus or any Pegasus Fund which assert liability on the part of Pegasus or any
Pegasus Fund.
(f) There are no material contracts outstanding to which Pegasus or any
Pegasus Fund is a party, other than as disclosed in the Pegasus Prospectuses and
the corresponding Statement of Additional Information, or in the Registration
Statement and the Proxy Statement as defined herein.
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(g) Neither Pegasus nor any Pegasus Fund has any known liabilities of a
material nature, contingent or otherwise, other than those shown as belonging to
it on its above referenced statement of assets and liabilities as of June 30,
1998, and those incurred in the ordinary course of Pegasus's business as an
investment company since that date. Prior to the Exchange Date, Pegasus will
advise One Group of all known material liabilities, contingent or otherwise,
incurred by it and each Pegasus Fund subsequent to June 30, 1998, whether or not
incurred in the ordinary course of business.
(h) As used in this Agreement, the term "Investments" shall mean each
Pegasus Fund's investments shown on the schedule of its portfolio investments as
of June 30, 1998 referred to in Section 1(c) hereof, as supplemented with such
changes as Pegasus or each Pegasus Fund shall make after June 30, 1998, which
changes have been disclosed to One Group, and changes made on and after the date
of this Agreement after advising One Group of such proposed changes, and changes
resulting from stock dividends, stock split-ups, mergers and similar corporate
actions.
(i) Each Pegasus Fund has filed or will file all federal and state tax
returns which, to the knowledge of Pegasus's officers, are required to be filed
by each Pegasus Fund and has paid or will pay all federal and state taxes shown
to be due on said returns or on any assessments received by each Pegasus Fund.
All tax liabilities of each Pegasus Fund have been adequately provided for on
its books, and no tax deficiency or liability of any Pegasus Fund has been
asserted, and no question with respect thereto has been raised, by the Internal
Revenue Service or by any state or local tax authority for taxes in excess of
those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval as described in Section 8(a) and otherwise as described in
Section 1(1), Pegasus on behalf of each Pegasus Fund will have full right, power
and authority to sell, assign, transfer and
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deliver the Investments and any other assets and liabilities of each Pegasus
Fund to be transferred to the corresponding One Group Fund pursuant to this
Agreement. At the Exchange Date, subject only to the delivery of the Investments
and any such other assets and liabilities as contemplated by this Agreement, One
Group will, on behalf of each One Group Fund, acquire the Investments and any
such other assets subject to no encumbrances, liens or security interests in
favor of any third party creditor of Pegasus or a Pegasus Fund and, except as
described in Section 1(k), without any restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as amended (the
"1933 Act"), of any of the Investments would be required if they were, as of the
time of such transfer, the subject of a public distribution by either of Pegasus
or One Group, except as previously disclosed to One Group by Pegasus in writing.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Pegasus or any
Pegasus Fund of the transactions contemplated by this Agreement, except such as
may be required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, state securities or blue sky laws (which
term as used herein shall include the laws of the District of Columbia and of
Puerto Rico) or the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"H-S-R Act"), assuming that, for purposes of this representation, the Pegasus
Funds and The One Group may be considered affiliated persons or affiliated
persons of affiliated persons solely by reason of having a common investment
advisor.
(m) The registration statement (the "Registration Statement") filed with
the Commission by One Group on Form N-14 relating to the Shares issuable
hereunder, and the proxy statement of Pegasus included therein (the "Proxy
Statement"), on the effective date of the Registration
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Statement and insofar as they relate to Pegasus and the Pegasus Funds, (i) will
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder and (ii) will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and at the time of the shareholders' meeting referred to in Section
8(a) below and on the Exchange Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
"Prospectus"), as amended or supplemented by any amendments or supplements filed
with the Commission by One Group, insofar as it relates to Pegasus and the
Pegasus Funds, will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the representations
and warranties in this subsection shall apply only to statements of fact
relating to Pegasus and any Pegasus Fund contained in the Registration
Statement, the Prospectus or the Proxy Statement, or omissions to state in any
thereof a material fact relating to Pegasus or any Pegasus Fund, as such
Registration Statement, Prospectus and Proxy Statement shall be furnished to
Pegasus in definitive form as soon as practicable following effectiveness of the
Registration Statement and before any public distribution of the Prospectus or
Proxy Statement.
(n) All of the issued and outstanding shares of beneficial interest of
each Pegasus Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws.
(o) Each of the Pegasus Funds is qualified, and will at all times through
the Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code.
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(p) At the Exchange Date, each of the Pegasus Funds, as One Group may
reasonably direct via written instructions, will have sold such of its assets,
if any, as necessary to assure that, after giving effect to the acquisition of
the assets pursuant to this Agreement, each of the One Group Funds (other than
One Group Michigan Money Market and One Group Michigan Municipal) will remain a
"diversified company" within the meaning of Section 5(b) (l) of the 1940 Act and
in compliance with such other mandatory investment restrictions as are set forth
in the One Group Prospectuses previously furnished to Pegasus.
2. REPRESENTATIONS AND WARRANTIES OF ONE GROUP. One Group and each One
Group Fund jointly and severally represent and warrant to and agree with Pegasus
and each Pegasus Fund that:
(a) One Group is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts and has power to carry on
its business as it is now being conducted and to carry out this Agreement. One
Group and each One Group Fund is not required to qualify as a foreign
association in any jurisdiction. One Group and each One Group Fund has all
necessary federal, state and local authorizations to own all of its properties
and assets and to carry on its business as now being conducted and to fulfill
the terms of this Agreement, except as set forth in Section 2(i).
(b) One Group is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect. Each One Group Fund that has had active operations
prior to the Exchange Date, has elected to qualify and has qualified as a
regulated investment company under Part I of Subchapter M of the Code, as of and
since its first taxable year, and qualifies and intends to continue to qualify
as a regulated investment company for its taxable year ending June 30, 1999.
Each One Group Fund
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that has had active operations prior to the Exchange Date, has been a regulated
investment company under such sections of the Code at all times since its
inception. Each One Group Fund that has not had active operations prior to the
Exchange Date intends to qualify as a regulated investment company under Part I
of Subchapter M under the Code.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each One Group Fund for the year ended June
30, 1998, such statements and schedules having been audited by
PricewaterhouseCoopers LLP, independent accountants to One Group, have been
furnished to Pegasus. Such statements of assets and liabilities and schedules
fairly present the financial position of the One Group Funds as of their
respective dates, and said statements of operations and changes in net assets
fairly reflect the results of its operations and changes in financial position
for the periods covered thereby in conformity with generally accepted accounting
principles.
(d) The prospectuses of each One Group Fund dated November 1, 1998,
(collectively, the "One Group Prospectuses"), and the Statement of Additional
Information for the One Group Funds, dated November 1, 1998, and on file with
the Commission, which have been previously furnished to Pegasus, did not as of
their dates and do not as of the date hereof contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of One Group or any One Group Fund, threatened
against One Group or any One Group Fund which assert liability on the part of
One Group or any One Group Fund.
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(f) There are no material contracts outstanding to which One Group or any
One Group Fund is a party, other than as disclosed in the One Group Prospectuses
and the corresponding Statement of Additional Information or in the Registration
Statement and the Proxy Statement.
(g) Neither One Group nor any One Group Fund has any known liabilities of
a material nature, contingent or otherwise, other than those shown as belonging
to it on its above referenced statement of assets and liabilities as of June 30,
1998 referred to above and those incurred in the ordinary course of the business
of One Group as an investment company or any One Group Fund since such date.
Prior to the Exchange Date, One Group will advise Pegasus of all known material
liabilities, contingent or otherwise, incurred by it and each One Group Fund
subsequent to June 30, 1998, whether or not incurred in the ordinary course of
business.
(h) Each One Group Fund has filed or will file all federal and state tax
returns which, to the knowledge of One Group's officers, are required to be
filed by each One Group Fund and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by each One
Group Fund. All tax liabilities of each One Group Fund have been adequately
provided for on its books, and no tax deficiency or liability of any One Group
Fund has been asserted, and no question with respect thereto has been raised, by
the Internal Revenue Service or by any state or local tax authority for taxes in
excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by One Group or any One Group Fund of
the transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, state securities or Blue Sky
laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise as
described in Section 2 (i), One Group on behalf of each One Group Fund will have
full right, power and
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authority to purchase the Investments and any other assets and assume the
liabilities of each Pegasus Fund to be transferred to the corresponding One
Group Fund pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement,
on the effective date of the Registration Statement and insofar as they relate
to One Group and the One Group Funds: (i) will comply in all material respects
with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules
and regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of the
shareholders' meeting referred to in Section 8(a) and at the Exchange Date, the
Prospectus, as amended or supplemented by any amendments or supplements filed
with the Commission by One Group or any One Group Fund, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the Registration
Statement, the Prospectus or the Proxy Statement made in reliance upon and in
conformity with information furnished by Pegasus or any Pegasus Fund for use in
the Registration Statement, the Prospectus or the Proxy Statement.
(l) Shares to be issued to each Pegasus Fund have been duly authorized
and, when issued and delivered pursuant to this Agreement and the Prospectus,
will be legally and validly issued and will be fully paid and nonassessable by
One Group and no shareholder of One Group will have any preemptive right of
subscription or purchase in respect thereof.
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(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each One Group Fund that has had active operations prior to the
Exchange Date is qualified and will at all times through the Exchange Date
qualify for taxation as a "regulated investment company" under Sections 851 and
852 of the Code. Each One Group Fund that has not had active operations prior to
the Exchange Date, upon the filing of its first income tax return at the
completion of its first taxable year will elect to be a regulated investment
company and until such time will take all steps necessary to ensure
qualification as a regulated investment company.
3. REORGANIZATION. (a) Subject to the requisite shareholder approval as
described in Section 8(a) and to the other terms and conditions contained herein
(including each Pegasus Fund's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof ), Pegasus and each Pegasus Fund agree to
sell, assign, convey, transfer and deliver to the corresponding One Group Fund,
and One Group and each One Group Fund agree to acquire from the corresponding
Pegasus Fund, on the Exchange Date all of the Investments and all of the cash
and other assets of each Pegasus Fund in exchange for that number of Shares of
the corresponding One Group Fund provided for in Section 4 and the assumption by
the corresponding One Group Fund of all the liabilities of the Pegasus Fund.
Pursuant to this Agreement, each Pegasus Fund will, as soon as practicable after
the Exchange Date, distribute in liquidation all of the Shares received by it to
its shareholders in exchange for their shares of beneficial interest of such
Pegasus Fund.
(b) Pegasus, on behalf of each Pegasus Fund, will pay or cause to be paid
to the corresponding One Group Fund any interest and cash dividends received by
it on or after the
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Exchange Date with respect to the Investments transferred to the One Group Funds
hereunder. Pegasus, on behalf of each Pegasus Fund, will transfer to the
corresponding One Group Fund any rights, stock dividends or other securities
received by Pegasus or any Pegasus Fund after the Exchange Date as stock
dividends or other distributions on or with respect to the Investments
transferred, which rights, stock dividends and other securities shall be deemed
included in the assets transferred to each One Group Fund at the Exchange Date
and shall not be separately valued, in which case any such distribution that
remains unpaid as of the Exchange Date shall be included in the determination of
the value of the assets of the Pegasus Fund acquired by the corresponding One
Group Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, One Group will
deliver to Pegasus a number of Shares having an aggregate net asset value equal
to the value of the assets of the corresponding Pegasus Fund acquired by each
One Group Fund, less the value of the liabilities of such Pegasus Fund assumed,
determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each Pegasus Fund's net
assets will be computed as of the Valuation Time using the valuation procedures
for the corresponding One Group Fund as set forth in the One Group Prospectus
for the particular One Group Fund.
(b) Subject to Section 4(d) hereof, the net asset value of a share of
each One Group Fund will be determined to the nearest full cent as of the
Valuation Time, using the valuation procedures set forth in the One Group
Prospectus for the particular One Group Fund.
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m.
Eastern Standard time on FRIDAY, MARCH 19, 1999, for all Pegasus and One Group
Funds other than, Pegasus Cash Management, Pegasus Treasury Prime Cash, Pegasus
Government Cash, Pegasus Municipal Cash, Pegasus Treasury Cash, One Group Cash
Management, One Group Treasury Prime Cash,
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One Group Government Cash, One Group Municipal Cash, One Group Treasury Cash,
and Friday MARCH 26, 1999, for Pegasus Cash Management, Pegasus Treasury Prime
Cash, Pegasus Government Cash, Pegasus Municipal Cash, Pegasus Treasury Cash,
One Group Cash Management, One Group Treasury Prime Cash, One Group Government
Cash, One Group Municipal Cash, and One Group Treasury Cash or such earlier or
later day as may be mutually agreed upon in writing by the parties hereto (the
"Valuation Time").
(d) No formula will be used to adjust the net asset value of any Pegasus
Fund or One Group Fund to take into account differences in realized and
unrealized gains and losses.
(e) Each One Group Fund shall issue its Shares to the corresponding
Pegasus Fund on one share deposit receipt per class registered in the name of
the corresponding Pegasus Fund. Each Pegasus Fund shall distribute in
liquidation the Shares received by it hereunder pro rata to its shareholders of
each class of shares by redelivering such share deposit receipt to One Group's
transfer agent which will as soon as practicable set up open accounts for each
Pegasus Fund shareholder in accordance with written instructions furnished by
Pegasus.
(f) Each One Group Fund shall assume all liabilities of the corresponding
Pegasus Fund, whether accrued or contingent, in connection with the acquisition
of assets and subsequent dissolution of the corresponding Pegasus Fund or
otherwise, except that recourse for assumed liabilities relating to a particular
Pegasus Fund will be limited to the corresponding One Group Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5 (e),
all fees and expenses, including accounting expenses, portfolio transfer taxes
(if any) or other similar expenses incurred in connection with the consummation
by One Group and Pegasus of the transactions contemplated by this Agreement will
be paid by the party directly incurring such
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fees and expenses, except that the costs of proxy materials and proxy
solicitation will be borne by Banc One Investment Advisors Corporation;
provided, however, that such expenses will in any event be paid by the party
directly incurring such expenses if and to the extent that the payment by the
other party of such expenses would result in the disqualification of any One
Group Fund or any Pegasus Fund, as the case may be, as a "regulated investment
company" within the meaning of Section 851 of the Code.
(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of Pegasus being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Pegasus's obligations referred to in Section 8(a) or Section 10) Pegasus shall
pay directly all reasonable fees and expenses incurred by One Group in
connection with such transactions, including, without limitation, legal,
accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of One Group being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to One Group's obligations referred to in Section 8(a) or Section 9), One Group
shall pay directly all reasonable fees and expenses incurred by Pegasus in
connection with such transactions, including without limitation legal,
accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) One Group or Pegasus being either
unwilling or unable to go forward or (ii) the nonfulfillment or failure of any
condition to Pegasus or One Group's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of
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Pegasus and One Group shall bear the expenses it has actually incurred in
connection with such transactions as specified in Section 5 of this Agreement.
(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
6. PERMITTED ASSETS. One Group agrees to advise Pegasus promptly if at
any time prior to the Exchange Date the assets of any Pegasus Fund include any
assets that the corresponding One Group Fund is not permitted, or reasonably
believes to be unsuitable for it, to acquire, including without limitation any
security that, prior to its acquisition by any Pegasus Fund, One Group has
informed Pegasus is unsuitable for the corresponding One Group Fund to acquire.
7. EXCHANGE DATE. Delivery of the assets of the Pegasus Funds to be
transferred, assumption of the liabilities of the Pegasus Funds to be assumed,
and the delivery of Shares to be issued shall be made at the offices of Banc One
Investment Advisors Corporation at 9:00 a.m. on MONDAY, MARCH 22, 1999, for all
Pegasus and One Group Funds other than, Pegasus Cash Management, Pegasus
Treasury Prime Cash, Pegasus Government Cash, Pegasus Municipal Cash, Pegasus
Treasury Cash, One Group Cash Management, One Group Treasury Prime Cash, One
Group Government Cash, One Group Municipal Cash, One Group Treasury Cash, and
Monday, MARCH 29 1999, for Pegasus Cash Management, Pegasus Treasury Prime Cash,
Pegasus Government Cash, Pegasus Municipal Cash, Pegasus Treasury Cash, One
Group Cash Management, One Group Treasury Prime Cash, One Group Government Cash,
One Group Municipal Cash, and One Group Treasury Cash or at such other time and
date agreed to by
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Pegasus and One Group, the date and time upon which such delivery is to take
place being referred to herein as the "Exchange Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Pegasus agrees to
call a special meeting of the shareholders of each Pegasus Fund as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of each Pegasus Fund to and
the assumption of all of the liabilities of each Pegasus Fund by the
corresponding One Group Fund as herein provided, adopting this Agreement, and
authorizing the liquidation and dissolution of any Pegasus Fund, and, except as
set forth in Section 13, it shall be a condition to the obligations of each of
the parties hereto that the holders of the shares of beneficial interest of each
Pegasus Fund, and each class of shares of each Pegasus Fund if such is required
under the 1940 Act, shall have approved this Agreement and the transactions
contemplated herein in the manner required by law and Pegasus's Declaration of
Trust at such a meeting on or before the Valuation Time.
(b) Pegasus and each Pegasus Fund agree that the liquidation and
dissolution of each Pegasus Fund will be effected in the manner provided in
Pegasus's Declaration of Trust in accordance with applicable law, and that it
will not make any distributions of any Shares to the shareholders of a Pegasus
Fund without first paying or adequately providing for the payment of all of such
Pegasus Fund's known debts, obligations and liabilities.
(c) Each of One Group and Pegasus will cooperate with the other, and each
will furnish to the other the information relating to itself required by the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
to be set forth in the Registration Statement, including the Prospectus and the
Proxy Statement.
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9. CONDITIONS TO ONE GROUP'S OBLIGATIONS. The obligations of One Group
and each One Group Fund hereunder shall be subject to the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Pegasus
Funds, shall have been approved as set forth in Section 8(a).
(b) Pegasus shall have furnished to One Group a statement of each Pegasus
Fund's assets and liabilities, with values determined as provided in Section 4
of this Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on Pegasus's behalf by its
President (or any Vice President) and Treasurer, and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation Time
and as of the Exchange Date there has been no material adverse change in the
financial position of any Pegasus Fund since June 30, 1998, other than changes
in the Investments since that date or changes in the market value of the
Investments, or changes due to net redemptions of shares of the Pegasus Funds,
dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Pegasus and each Pegasus Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, Pegasus and each Pegasus Fund has complied with this Agreement and
satisfied all the conditions on its part to be performed or satisfied at or
prior to each of such dates, and Pegasus shall have furnished to One Group a
statement, dated the Exchange Date, signed by Pegasus's President (or any Vice
President) and Treasurer certifying those facts as of such dates.
(d) Pegasus shall have delivered to One Group a letter from Arthur
Andersen, LLP dated the Exchange Date stating that such firm prepared the
federal and state income tax returns of
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each Pegasus Fund for the year ended December 31, 1997, and will prepare the
Federal and state income tax returns of each Pegasus Fund for the year ended
December 31, 1998.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) One Group shall have received an opinion of Drinker Biddle & Reath
LLP, in form reasonably satisfactory to One Group and dated the Exchange Date,
to the effect that (i) Pegasus is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts, and neither
Pegasus nor any Pegasus Fund is, to the knowledge of such counsel, required to
qualify to do business as a foreign association in any jurisdiction, (ii) this
Agreement has been duly authorized, executed, and delivered by Pegasus and,
assuming that the Registration Statement, the Prospectus and the Proxy Statement
comply with the 1933 Act, the 1934 Act and the 1940 Act and assuming due
authorization, execution and delivery of this Agreement by One Group, is a valid
and binding obligation of Pegasus subject to applicable bankruptcy, insolvency,
fraudulent conveyance and similar laws or court decisions regarding enforcement
of creditors' rights generally, (iii) Pegasus and each Pegasus Fund has power to
sell, assign, convey, transfer and deliver the Investments and other assets
contemplated hereby and, upon consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement, Pegasus and each Pegasus
Fund will have duly sold, assigned, conveyed, transferred and delivered such
Investments and other assets to One Group, (iv) the execution and delivery of
this Agreement did not, and the consummation of the transactions contemplated
hereby will not, violate Pegasus's Declaration of Trust, or Bylaws, as amended,
the current Pegasus Prospectus and Statement of Additional Information, or any
provision of any agreement known to such counsel to which Pegasus or any Pegasus
Fund is a party or by which it is bound, it being understood that with
22
94
respect to investment restrictions as contained in Pegasus's Declaration of
Trust, or Bylaws, or then-current prospectus or statement of additional
information of each Pegasus Fund, such counsel may rely upon a certificate of an
officer of Pegasus whose responsibility it is to advise Pegasus with respect to
such matters and (v) no consent, approval, authorization or order of any court
or governmental authority is required for the consummation by Pegasus or any
Pegasus Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act, and it being
understood that such opinion shall not be deemed to apply to One Group's
compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state securities
or blue sky laws and H-S-R Act. For purposes of analysis regarding the 1940 Act,
Drinker Biddle & Reath LLP may assume as fact that the Pegasus Funds and the One
Group Funds may be considered affiliated persons or affiliated persons of an
affiliated person solely by reason of having a common investment adviser.
(g) One Group shall have received an opinion of Ropes & Gray, counsel to
One Group addressed to The One Group and each One Group Fund, in form reasonably
satisfactory to One Group and dated the Exchange Date, to the effect that for
Federal income tax purposes (i) no gain or loss will be recognized by any
Pegasus Fund upon the transfer of the assets to the corresponding One Group Fund
in exchange for Shares and the assumption by such One Group Fund of the
liabilities of the Pegasus Fund; (ii) no gain or loss will be recognized by the
shareholders of any Pegasus Fund upon the exchange of their shares for Shares;
(iii) the basis of the Shares a Pegasus shareholder receives in connection with
the transaction will be the same as the basis of his or her Pegasus Fund shares
exchanged therefor; (iv) a Pegasus shareholder's holding period for his or her
Shares will be determined by including the period for which he or
23
95
she held the Pegasus Fund shares exchanged therefor, provided that he or she
held such Pegasus Fund shares as capital assets; (v) no gain or loss will be
recognized by any One Group Fund upon the receipt of the assets of the
corresponding Pegasus Fund in exchange for Shares and the assumption by the One
Group Fund of the liabilities of the corresponding Pegasus Fund; (vi) the basis
in the hands of the One Group Fund of the assets of the corresponding Pegasus
Fund transferred to the One Group Fund in the transaction will be the same as
the basis of the assets in the hands of the corresponding Pegasus Fund
immediately prior to the transfer; and (vii) the holding periods of the assets
of the corresponding Pegasus Fund in the hands of the One Group Fund will
include the periods for which such assets were held by the corresponding Pegasus
Fund provided, that with respect to Pegasus Money Market, Pegasus Treasury,
Pegasus Municipal, Pegasus Michigan Municipal, Pegasus Cash Management, Pegasus
Treasury Prime Cash, Pegasus Government Cash, Pegasus Municipal Cash, Pegasus
Treasury Cash, One Group Prime, One Group Treasury Securities, One Group
Municipal, One Group Michigan Money Market, One Group Cash Management, One Group
Treasury Prime Cash, One Group Government Cash, One Group Municipal Cash, and
One Group Treasury Cash (the "Money Market Funds"), One Group shall seek an
opinion from Ropes & Gray with respect to Federal income tax matters enumerated
in this Section 9(g), but receipt of such opinion with respect to the Money
Market Funds shall not be a condition to the transaction.
(h) The assets of each Pegasus Fund to be acquired by the corresponding
One Group Fund will include no assets which the corresponding One Group Fund, by
reason of limitations contained in its Declaration of Trust or of investment
restrictions disclosed in the One Group Prospectuses in effect on the Exchange
Date, may not properly acquire.
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(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of One Group
contemplated by the Commission and or any state regulatory authority.
(j) All proceedings taken by Pegasus in connection with the transactions
contemplated by this Agreement and all documents incidental thereto reasonably
shall be satisfactory in form and substance to One Group.
(k) Prior to the Exchange Date, each Pegasus Fund shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its shareholders all of its investment
company taxable income for its taxable year ended December 31, 1998 and the
short taxable year beginning on January 1, 1999 and ending on the Exchange Date
(computed without regard to any deduction for dividends paid), and all of its
net capital gain realized in its taxable year ended December 31, 1998 and the
short taxable year beginning on January 1, 1999 and ending on the Exchange Date
(after reduction for any capital loss carryover).
(l) Pegasus shall have furnished to One Group a certificate, signed by
the President (or any Vice President) and the Treasurer of Pegasus, as to the
tax cost to One Group of the securities delivered to One Group pursuant to this
Agreement, together with any such other evidence as to such tax cost as One
Group may reasonably request.
(m) Pegasus's custodian shall have delivered to One Group a certificate
identifying all of the assets of each Pegasus Fund held by such custodian as of
the Valuation Time.
(n) Pegasus's transfer agent shall have provided to One Group (i) the
originals or true copies of all of the records of each Pegasus Fund in the
possession of such transfer agent as of
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the Exchange Date, (ii) a certificate setting forth the number of shares of each
class of Pegasus Fund outstanding as of the Valuation Time and (iii) the name
and address of each holder of record of any such shares of each Pegasus Fund and
the number of shares of each class held of record by each such shareholder.
(o) All of the issued and outstanding shares of beneficial interest of
each Pegasus Fund shall have been offered for sale and sold in conformity with
all applicable federal or state securities or blue sky laws and, to the extent
that any audit of the records of Pegasus or any Pegasus Fund or its transfer
agent by One Group or its agents shall have revealed otherwise, either (i)
Pegasus and each Pegasus Fund shall have taken all actions that in the
reasonable opinion of One Group, are necessary to remedy any prior failure on
the part of Pegasus to have offered for sale and sold such shares in conformity
with such laws or (ii) Pegasus shall have furnished (or caused to be furnished)
surety, or deposited (or caused to be deposited) assets in escrow, for the
benefit of One Group in amounts sufficient and upon terms satisfactory, in the
opinion of One Group, to indemnify One Group against any expense, loss, claim,
damage or liability whatsoever that may be asserted or threatened by reason of
such failure on the part of Pegasus to have offered and sold such shares in
conformity with such laws.
(p) Pegasus shall have duly executed and delivered to One Group bills of
sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as One Group may deem necessary or desirable to transfer all of
Pegasus's and each Pegasus Fund's entire right, title and interest in and to the
Investments and all other assets of each Pegasus Fund.
10. CONDITIONS TO PEGASUS'S OBLIGATIONS. The obligations of Pegasus and
each Pegasus Fund hereunder shall be subject to the following conditions:
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(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Pegasus
Funds, shall have been approved as described in Section 8(a).
(b) One Group shall have furnished to Pegasus a Statement of each One
Group Fund's net assets, together with a list of portfolio holdings with values
determined as provided in Section 4, all as of the Valuation Time, certified on
One Group's behalf by its President (or any Vice President) and Treasurer (or
any Assistant Treasurer), and a certificate of both such officers, dated the
Exchange Date, to the effect that as of the Valuation Time and as of the
Exchange Date there has been no material adverse change in the financial
position of any One Group Fund since June 30, 1998, other than changes in its
portfolio securities since that date, changes in the market value of its
portfolio securities, changes due to net redemptions, dividends paid or losses
from operations.
(c) One Group shall have executed and delivered to Pegasus an Assumption
of Liabilities Certificate and other instruments as Pegasus may deem necessary
and desirable dated as of the Exchange Date pursuant to which each One Group
Fund will assume all of the liabilities of the corresponding Pegasus Fund
existing at the Valuation Time in connection with the transactions contemplated
by this Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of One Group and each One Group Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, One Group and each One Group Fund has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to each of such dates, and One Group shall have furnished
to
27
99
Pegasus a statement, dated the Exchange Date, signed by One Group's President
(or any Vice President) and Treasurer certifying those facts as of such dates.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) Pegasus shall have received an opinion of Ropes & Gray, in form
reasonably satisfactory to Pegasus and dated the Exchange Date, to the effect
that (i) One Group is a business trust and validly existing in conformity with
the laws of the Commonwealth of Massachusetts, and, (to the knowledge of such
counsel), neither One Group nor any One Group Fund is required to qualify to do
business as a foreign association in any jurisdiction, (ii) the Shares to be
delivered to Pegasus as provided for by this Agreement are duly authorized and
upon such delivery will be validly issued and will be fully paid and
nonassessable by One Group and no shareholder of One Group has any preemptive
right to subscription or purchase in respect thereof, (iii) this Agreement has
been duly authorized, executed and delivered by One Group and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Pegasus, is a valid and binding
obligation of One Group, (iv) One Group and each One Group Fund has the power to
acquire and assume all of the liabilities of Pegasus and the Pegasus Funds and,
upon consummation of the transactions contemplated hereby in accordance with the
terms of this Agreement, One Group and each respective One Group Fund shall have
duly acquired and assumed such liabilities, (v) the execution and delivery of
this Agreement did not, and the consummation of the transactions contemplated
hereby will not, violate One Group's Declaration of Trust, as amended, or Code
of Regulations, One Group's current Prospectus and Statement of Additional
Information, or any provision of any agreement
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100
known to such counsel to which One Group or any One Group Fund is a party or by
which it is bound, it being understood that with respect to investment
restrictions as contained in One Group's Declaration of Trust, as amended, Code
of Regulations or then-current prospectus or statement of additional information
of each One Group Fund, such counsel may rely upon a certificate of an officer
of One Group whose responsibility it is to advise One Group with respect to such
matters, (vi) no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by One Group or any One
Group Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act and it being
understood that such opinion shall not be deemed to apply to Pegasus's
compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state securities
or blue sky laws and the H-S-R Act; and (vii) the Registration Statement has
become effective under the 1933 Act, and to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
(g) Pegasus shall have received an opinion of Ropes & Gray addressed to
Pegasus and each Pegasus Fund, and in a form reasonably satisfactory to Pegasus
and dated the Exchange Date, with respect to the matters specified in Section
9(g) of this Agreement, subject to the provision in such Section 9(g).
(h) All proceedings taken by One Group in connection with the
transactions contemplated by this Agreement and all documents incidental thereto
reasonably shall be satisfactory in form and substance to Pegasus.
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(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of Pegasus,
contemplated by the Commission or any state regulatory authority.
11. INDEMNIFICATION. (a) The Pegasus Funds will indemnify and hold
harmless One Group, its trustees and its officers (for purposes of this
subsection, the "Indemnified Parties") against any and all expenses, losses,
claims, damages and liabilities at any time imposed upon or reasonably incurred
by any one or more of the Indemnified Parties in connection with, arising out
of, or resulting from any claim, action, suit or proceeding in which any one or
more of the Indemnified Parties may be involved or with which any one or more of
the Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to Pegasus or any Pegasus
Fund contained in the Registration Statement, the Prospectus or the Proxy
Statement or any amendment or supplement to any of the foregoing, or arising out
of or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to Pegasus or any Pegasus Fund required to be
stated therein or necessary to make the statements relating to Pegasus or any
Pegasus Fund therein not misleading, including, without limitation, any amounts
paid by any one or more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding or threatened claim,
action, suit or proceeding made with the prior consent of Pegasus. The
Indemnified Parties will notify Pegasus in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any notice of legal
process or any suit brought against or claim made against any Indemnified Party
as to any matters covered by this Section 11(a). Pegasus shall be entitled to
participate at its own expense in the defense of any claim, action, suit
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102
or proceeding covered by this Section 11(a), or, if it so elects, to assume at
its expense by counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and if Pegasus elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the defense
of any such claim, action, suit or proceeding at their expense. The Pegasus
Funds' obligation under this Section 11(a) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the Pegasus
Funds will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this Section 11(a) without the
necessity of the Indemnified Parties first paying the same.
(b) The One Group Funds will indemnify and hold harmless Pegasus, its
trustees and its officers (for purposes of this subsection, the "Indemnified
Parties") against any and all expenses, losses, claims, damages and liabilities
at any time imposed upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or resulting from any
claim, action, suit or proceeding in which any one or more of the Indemnified
Parties may be involved or with which any one or more of the Indemnified Parties
may be threatened by reason of any untrue statement or alleged untrue statement
of a material fact relating to One Group or any One Group Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any amendment
or supplement to any of the foregoing, or arising out of or based upon the
omission or alleged omission to state in any of the foregoing a material fact
relating to One Group or any One Group Fund required to be stated therein or
necessary to make the statements relating to One Group or any One Group Fund
therein not misleading, including, without limitation, any amounts paid by any
one or more of the Indemnified Parties in a reasonable compromise or settlement
of any such claim, action, suit or proceeding, or threatened
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claim, action, suit or proceeding made with the prior consent of One Group. The
Indemnified Parties will notify One Group in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any notice of legal
process or any suit brought against or claim made against any Indemnified Party
as to any matters covered by this Section 11(b). One Group shall be entitled to
participate at its own expense in the defense of any claim, action, suit or
proceeding covered by this Section 11(b), or, if it so elects, to assume at its
expense by counsel satisfactory to the Indemnified Parties the defense of any
such claim, action, suit or proceeding, and, if One Group elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the defense
of any such claim, action, suit or proceeding at their own expense. The One
Group Funds' obligation under this Section 11(b) to indemnify and hold harmless
the Indemnified Parties shall constitute a guarantee of payment so that the One
Group Funds will pay in the first instance any expenses, losses, claims, damages
and liabilities required to be paid by it under this Section 11(b) without the
necessity of the Indemnified Parties first paying the same.
12. NO BROKER, ETC. Each of One Group and Pegasus represents that there
is no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
13. TERMINATION. One Group and Pegasus may, by mutual consent of their
respective trustees, terminate this Agreement, and One Group or Pegasus, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by August 30, 1999, this Agreement shall
automatically terminate on that date unless a later date is agreed to by One
Group and Pegasus.
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Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by this
Agreement is obtained with respect to only one or more Pegasus Funds but not all
of the Pegasus Funds, One Group and Pegasus agree to consummate those
transactions with respect to those Pegasus Funds whose shareholders have
approved this Agreement and those transactions.
In the event that shareholder approval of this Agreement and the
transactions contemplated by this Agreement is required, but is obtained with
respect to only one class of shares of a Pegasus Fund, the transaction with
respect to that Pegasus Fund will not be consummated unless and until
shareholder approval is obtained with respect to both classes.
14. RULE 145. Pursuant to Rule 145 under the 1933 Act, One Group will, in
connection with the issuance of any Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a party to the
transaction pursuant to Rule 145 (c), cause to be affixed upon the certificates
issued to such person (if any) a legend as follows:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO THE ONE
GROUP OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (ii) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ONE GROUP SUCH REGISTRATION IS NOT REQUIRED."
and, further, One Group will issue stop transfer instructions to One Group's
transfer agent with respect to such shares. Pegasus will provide One Group on
the Exchange Date with the name of
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any shareholder of the Pegasus Funds who is to the knowledge of Pegasus an
affiliate of Pegasus on such date.
15. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
16. SOLE AGREEMENT; AMENDMENTS This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
the Commonwealth of Massachusetts provided, however, that no such amendment may
have the effect of changing the provisions for determining the number or value
of shares to be paid to the Pegasus Fund's shareholders under Sections I(b) and
II(4)(b) this Agreement to the material detriment of such shareholder's without
their further approval.
17. AGREEMENT AND DECLARATION OF TRUST The names "Pegasus Funds" and
"Trustees of Pegasus Funds" refer respectively to Pegasus and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust, to which reference is hereby made and a copy of which is
on file at the office of the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "Pegasus Funds" entered into in the name or
on behalf thereof by any of the Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or
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shareholders of Pegasus personally, but bind only the assets of Pegasus, and all
persons dealing with any of the series or funds of Pegasus, such as Pegasus
Funds, must look solely to the assets of Pegasus belonging to such series or
funds for the enforcement of any claims against Pegasus.
The names "The One Group" and "Trustees of The One Group" refer
respectively to One Group and the Trustees, as trustees but not individually or
personally, acting from time to time under a Declaration of Trust dated May 23,
1985 to which reference is hereby made and a copy of which is on file at the
office of the Secretary of The Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The One Group" 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 One Group personally, but bind only
the assets of One Group, and all persons dealing with any series or fund of One
Group, such as the One Group Funds, must look solely to the assets of One Group
belonging to such series for the enforcement of any claims against One Group.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
PEGASUS FUNDS
By:
-------------------------------
THE ONE GROUP
By:
-------------------------------
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APPENDIX II
COMPARATIVE FEE TABLE FOR EACH PORTFOLIO
Pegasus One Group
Money Market Prime Money Combined
Fund Market Fund(1) Fund Pro Forma
------------ -------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None None None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None+ None None 5.00% None None 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(2) .27% .27% .27% .35% .35% .35% .32% .32% .32%
12b-1 Fees(3) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee
waivers)(4) .48% .48% .23% .17% .17% .17% .20% .20% .20%
Total Fund Operating Expenses
(after fee waivers)(5,6) .75% 1.50% .50% .77% 1.52% .52% .77% 1.52% .52%
- --------------------------
* If shares of the One Group Prime Money Market Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ Shares of the Pegasus Money Market Fund acquired through an exchange of
shares offered with a CDSC will be subject to a CDSC of up to a maximum
of 5% upon redemption in accordance with the Prospectus for the
particular B shares. See "How to Redeem Shares."
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waiver, Advisory Fees for the Combined Fund would be
.35% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class A and Class B shareholders of the
One Group Prime Money Market Fund, Class B shareholders of the Pegasus
Money Market Fund and Combined Fund may pay more than the equivalent of
the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers. The amount of 12b-1 Fees
shown for the One Group Prime Money Market Fund and Combined Fund
includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Money Market Fund are reflected under "Other Expenses."
(4) Without the fee waivers, Other Expenses for the Combined Fund would be
.22% for all classes of shares.
(5) The Investment Adviser of the Pegasus Money Market Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to .75%, 1.50% and
.50%, respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Advisory Fees and expense
reimbursement arrangements, Total Fund Operating Expenses would be .77%
for Class A shares, 1.52% for Class B shares, and .52% for Class I
shares of the Pegasus Money Market Fund and .82% for Class A shares,
1.57% for Class B shares, and .57% for Class I shares of the Combined
Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Money Market Fund
Class A Shares $ 8 $24 $42 $93
Class A Shares (without fee waivers) $ 8 $25 $43 $95
Class B Shares $65/$15* $77/$47* $102/$82* $149
Class B Shares (without fee waivers) $65/$15* $78/$48* $103/$83* $151**
Class I Shares $ 5 $16 $28 $63
Class I Shares (without fee waivers) $ 5 $17 $29 $65
One Group Prime Money Market Fund
Class A Shares $ 8 $25 $43 $95
Class B Shares $65/$15* $78/$48* $103/$83* $161**
Class I Shares $ 5 $17 $29 $65
Combined Fund Pro Forma
Class A Shares $ 8 $25 $43 $95
Class A Shares (without fee waivers) $ 8 $26 $46 $101
Class B Shares $65/$15* $78/$48* $103/$83* $161**
Class B Shares (without fee waivers) $66/$16* $80/$50* $106/$86* $167**
Class I Shares $ 5 $17 $29 $65
Class I Shares (without fee waivers) $ 6 $18 $32 $71
* Assuming no redemption of Class B shares.
** Class B shares of the One Group Prime Money Market Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
108
Pegasus One Group
Treasury Money U.S. Treasury Securities Combined
Market Fund Money Market Fund(1) Fund Pro Forma
-------------- ----------------------- --------------
Class A Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None None None
Sales Charge on Reinvested
Dividends None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds,
as applicable) None None None 5.00% None None 5.00% None
Redemption Fees None None None None None None None None
Exchange Fees None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(2) .30% .30% .35% .35% .35% .32% .32% .32%
12b-1 Fees(3) None None .25% 1.00% None .25% 1.00% None
Other Expenses .43% .18% .17% .17% .17% .18% .18% .18%
Total Fund Operating Expenses
(after fee waivers)(4,5) .73% .48% .77% 1.52% .52% .75% 1.50% .50%
- --------------------------
* If shares of the One Group U.S. Treasury Securities Money Market Fund
or Combined Fund are purchased or sold through an account with a
Shareholder Servicing Agent, separate transaction fees may be charged
by the Shareholder Servicing Agent. In addition, a $10.00 sub-minimum
account fee may be applicable and a $7.00 charge will be deducted from
redemption amounts paid by wire.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waiver, Advisory Fees for the Combined Fund would be
.35% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class A and Class B shareholders of the
One Group U.S. Treasury Securities Money Market Fund and Combined Fund
may pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. The amount of 12b-1 Fees shown for the One Group U.S. Treasury
Securities Money Market Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees
payable by the Class A shareholders of the Pegasus Treasury Money
Market Fund are reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Treasury Money Market Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .75%
and .50%, respectively, for the Class A and Class I shares.
(5) Without the voluntary reduction of Advisory Fees, Total Fund Operating
Expenses would be .78% for Class A shares, 1.53% for Class B shares,
and .53% for Class I shares for the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Treasury Money Market Fund
Class A Shares $ 7 $23 $41 $91
Class I Shares $ 5 $15 $27 $60
One Group U.S. Treasury Securities Money
Market Fund
Class A Shares $ 8 $25 $43 $99
Class B Shares $65/$15* $78/$48* $103/$83* $161**
Class I Shares $ 5 $17 $29 $65
Combined Fund Pro Forma
Class A Shares $ 8 $24 $42 $93
Class A Shares (without fee waivers) $ 8 $25 $43 $97
Class B Shares $65/$15* $78/$48* $103/$83* $161**
Class B Shares (without fee waivers) $66/$16* $78/$48* $103/$83* $162**
Class I Shares $ 5 $16 $28 $63
Class I Shares (without fee waivers) $ 5 $17 $30 $66
* Assuming no redemption of Class B shares.
** Class B shares of the One Group U.S. Treasury Securities Money Market Fund
and the Combined Fund automatically convert to Class A Shares after eight (8)
years. Therefore, the "10 Years" example above reflects this conversion.
-2-
109
Pegasus One Group
Municipal Money Municipal Money Combined
Market Fund(1) Market Fund(1) Fund Pro Forma
-------------- -------------- --------------
Class A Class I Class A Class I Class A Class I
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None
Sales Charge on Reinvested
Dividends None None None None None None
Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fees None None None None None None
Exchange Fees None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(2) .30% .30% .27% .27% .25% .25%
12b-1 Fees(3) None None .25% None .25% None
Other Expenses (after fee waivers)(4) .43% .18% .20% .20% .20% .20%
Total Fund Operating Expenses
(after fee waivers)(5,6) .73% .48% .72% .47% .70% .45%
- --------------------------
* If shares of the One Group Municipal Money Market Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from the redemption
amounts paid by wire.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group Municipal
Money Market Fund and Combined Fund would be .35% for all classes of
shares.
(3) Due to 12b-1 Fees, long-term Class A shareholders of the One Group
Municipal Money Market Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. The amount of
12b-1 Fees shown for the One Group Municipal Money Market Fund and
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A shareholders of the
Pegasus Municipal Money Market Fund are reflected under "Other
Expenses."
(4) Without the fee waiver, Other Expenses for the Combined Fund would be
22% for all classes of shares.
(5) The Investment Adviser of the Pegasus Municipal Money Market Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .75%
and .50%, respectively, for the Class A and Class I shares.
(6) Without the voluntary reduction of Investment Advisory Fees and expense
reimbursement arrangements, Total Fund Operating Expenses would be .80%
for Class A shares and .55% for Class I shares of the One Group
Municipal Money Market and .82% for Class A and .57% for Class I shares
of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Municipal Money Market Fund
Class A Shares $ 7 $23 $41 $91
Class I Shares $ 5 $15 $27 $60
One Group Municipal Money Market Fund
Class A Shares $ 7 $23 $40 $89
Class A Shares (without fee waivers) $ 8 $26 $44 $99
Class I Shares $ 5 $15 $26 $59
Class I Shares (without fee waivers) $ 6 $18 $31 $69
Combined Fund Pro Forma
Class A Shares $ 7 $22 $39 $87
Class A Shares (without fee waivers) $ 8 $26 $46 $101
Class I Shares $ 5 $14 $25 $57
Class I Shares (without fee waivers) $ 6 $18 $32 $71
-3-
110
Pegasus One Group
Michigan Municipal Michigan Municipal Combined
Money Market Fund Money Market Fund* Fund Pro Forma
----------------- ------------------ --------------
Class A Class I Class A Class I Class A Class I
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None
Sales Charge on Reinvested
Dividends None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fees None None None None None None
Exchange Fees None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(1) .27% .27% .27% .27% .27% .27%
12b-1 Fees (after fee waivers)(2) None None .25% None .25% None
Other Expenses (after fee waivers)(3) .48% .23% .22% .22% .22% .22%
Total Fund Operating Expenses
(after fee waivers)(4) .75% .50% .74% .49% .74% .49%
- --------------------------
* The One Group Michigan Municipal Money Market Fund has not yet
commenced operations. The One Group Michigan Municipal Money Market
Fund will continue the operations of the Pegasus Michigan Municipal
Money Market Fund upon consummation of the Reorganization relating to
that Fund.
** If shares of the One Group Michigan Municipal Money Market Fund or
Combined Fund are purchased or sold through an account with a
Shareholder Servicing Agent, separate transaction fees may be charged
by the Shareholder Servicing Agent. In addition, a $10.00 sub-minimum
account fee may be applicable and charge will be deducted from the
redemption amounts paid by wire.
(1) Without the fee waivers, Advisory Fees for the One Group Michigan
Municipal Money Market Fund and Combined Fund would be .35% for all
classes of shares.
(2) Due to 12b-1 Fees, long-term Class A shareholders of the One Group
Michigan Municipal Money Market Fund and Combined Fund may pay more
than the equivalent of the maximum front-end sales charges permitted
under the rules of The National Association of Securities Dealer. The
amount of 12b-1 fees shown for the One Group Michigan Municipal Money
Market Fund and Combined Fund includes fees for shareholder servicing
and distribution. Shareholder servicing fees payable by the Class A
shareholders of the Pegasus Michigan Municipal Money Market Fund are
reflected under "Other Expenses."
(3) Other Expenses for the One Group Michigan Municipal Money Market Fund
and Combined Fund are based on estimated amounts for the current fiscal
year. Without the fee waiver, Other Expenses for the One Group Michigan
Municipal Money Market Fund and Combined Fund would be .24% for all
classes of shares.
(4) The Investment Adviser of the Pegasus Michigan Municipal Money Market
Fund has voluntarily agreed to limit the Total Fund Operating Expenses
to .75% and .50%, respectively, for the Class A and Class I shares.
Without the voluntary reduction of investment advisory fees and expense
reimbursement arrangements, Total Fund Operating Expenses would be .76%
for Class A shares and .51% for Class I shares of the Pegasus Michigan
Municipal Money Market Fund. Without a voluntary reduction of Advisory
Fees and other expense reimbursement arrangements, Total Fund Operating
Expenses for the One Group Michigan Municipal Money Market Fund and
Combined Fund would be .84% for Class A shares and .59% for Class I
shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Michigan Municipal Money Market Fund
Class A Shares $ 8 $24 $42 $93
Class A Shares (without fee waivers) $ 8 $24 $42 $94
Class I Shares $ 5 $16 $28 $63
Class I Shares (without fee waivers) $ 5 $16 $29 $64
One Group Michigan Municipal Money Market Fund
Class A Shares $ 8 $24 $41 $92
Class A Shares (without fee waivers) $ 9 $27 $47 $104
Class I Shares $ 5 $16 $27 $62
Class I Shares (without fee waivers) $ 6 $19 $33 $74
Combined Fund Pro Forma
Class A Shares $ 8 $24 $41 $92
Class A Shares (without fee waivers) $ 9 $27 $47 $104
Class I Shares $ 5 $16 $27 $62
Class I Shares (without fee waivers) $ 6 $19 $33 $74
-4-
111
One Group
Pegasus Cash Management
Cash Management Money Market Combined
Fund Fund* Fund Pro Forma
--------------- ---------------- --------------
Institutional Service Class I Class A Class I Class A
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1) .16% .16% .16% .16% .16% .16%
12b-1 Fees(2) None .25% None .25% None .25%
Other Expenses (after fee
waivers)(3) .19% .19% .18% .18% .18% .18%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4) .35% .60% .34% .59% .34% .59%
- --------------------------
* The One Group Cash Management Money Market Fund has not yet commenced
investment operations. The One Group Cash Management Money Market Fund
will continue the operations of the Pegasus Cash Management Fund upon
consummation of the Reorganization relating to that Fund.
+ If shares of the One Group Cash Management Money Market Fund or
Combined Fund are purchased or sold through an account with a
Shareholder Servicing Agent, separate transaction fees may be charged
by the Shareholder Servicing Agent. In addition, a $7.00 charge will be
deducted from the redemption amounts paid by wire.
(1) Without Advisory Fee waivers, Advisory Fees for the Pegasus Cash
Management Fund, the One Group Cash Management Money Market Fund and
Combined Fund would be .20% for all classes of shares.
(2) The amount of 12b-1 Fees shown for the One Group Cash Management Money
Market Fund and Combined Fund includes fees for shareholder servicing
and distribution.
(3) Other Expenses for the One Group Cash Management Money Market Fund and
Combined Fund are based on estimated amounts for this current fiscal
year. Without the fee waiver, Other Expenses for the One Group Cash
Management Money Market Fund and Combined Fund would be .19% for all
classes of shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements,
Total Fund Operating Expenses for the Pegasus Cash Management Fund
would be .39% for the Institutional Shares and .64% for the Service
Shares. Without Advisory Fee Waivers, Total Fund Operating Expenses for
the One Group Cash Management Money Market Fund and Combined Fund would
be .39% for Class I and .64% for Class A shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Cash Management Fund
Institutional Shares $4 $11 $20 $44
Institutional Shares (without fee waivers) $4 $13 $22 $49
Service Shares $6 $19 $33 $75
Service Shares (without fee waivers) $7 $20 $36 $80
One Group Cash Management Money Market Fund
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $13 $22 $49
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $7 $20 $36 $80
Combined Fund Pro Forma
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $13 $22 $49
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $7 $20 $36 $80
-5-
112
One Group
Pegasus Treasury Cash
Treasury Cash Management Combined
Management Fund Money Market Fund* Fund Pro Forma
--------------- ------------------ --------------
Institutional Service Class I Class A Class I Class A
Shares Shares Shares Shares Shares Shares
PEGASUS TRANSACTION EXPENSES-
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1) .17% .17% .17% .17% .17% .17%
12b-1 Fees(2) None .25% None .25% None .25%
Other Expenses (after fee
waivers)(3) .18% .18% .17% .17% .17% .17%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4) .35% .60% .34% .59% .34% .59%
- --------------------------
* The One Group Treasury Cash Management Money Market Fund has not yet
commenced operations. The One Group Treasury Cash Management Money
Market Fund will continue the operations of the Pegasus Treasury Cash
Management Fund upon consummation of the Reorganization relating to
that Fund.
+ If shares of the One Group Treasury Cash Management Money Market Fund
or Combined Fund are purchased or sold through an account with a
Shareholder Servicing Agent, separate transaction fees may be charged
by the Shareholder Servicing Agent. In addition, a $7.00 charge is
deducted from the redemption amounts paid by wire.
(1) Without Advisory Fee waivers, Advisory Fees for the Pegasus Treasury
Cash Management Fund, the One Group Treasury Cash Management Fund and
Combined Fund would be .20% for all classes of shares.
(2) The amount of 12b-1 Fees shown for the One Group Treasury Cash
Management Money Market Fund and Combined Fund includes fees for
shareholder servicing and distribution.
(3) Other Expenses for the One Group Treasury Cash Management Money Market
Fund and Combined Fund are based on estimated amounts for the current
fiscal year. Without the fee waiver, Other Expenses for the One Group
Treasury Cash Management Money Market Fund and Combined Fund would be
.18% for all classes of shares.
(4) Without Advisory Fee Waivers and expense reimbursement arrangements,
Total Fund Operating Expenses would be .38% for the Institutional
Shares and .63% for the Service Shares of the Pegasus Treasury Cash
Management Fund and .38% for the Class I Shares and .63% for the Class
A Shares of the One Group Treasury Cash Management Money Market Fund
and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Treasury Cash Management Fund
Institutional Shares $4 $11 $20 $44
Institutional Shares (without fee waivers) $4 $12 $21 $48
Service Shares $6 $19 $33 $75
Service Shares (without fee waivers) $6 $20 $35 $79
One Group Treasury Cash Management Money Market
Fund
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $12 $21 $48
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $6 $20 $35 $79
Combined Fund Pro Forma
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $12 $21 $48
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $6 $20 $35 $79
-6-
113
One Group
Pegasus Treasury Prime Cash
Treasury Prime Cash Management Combined
Management Fund Money Market Fund* Fund Pro Forma
------------------- ------------------- --------------
Institutional Service Class I Class A Class I Class A
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1) .15% .15% .15% .15% .15% .15%
12b-1 Fees(2) None .25% None .25% None .25%
Other Expenses
(after fee waiver and/or
expense reimbursements)(3) .20% .20% .19% .19% .19% .19%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4) .35% .60% .34% .59% .34% .59%
- --------------------------
* The One Group Treasury Prime Cash Management Money Market Fund has not
yet commenced operations. The One Group Treasury Prime Cash Management
Money Market Fund will continue the operations of the Pegasus Treasury
Prime Cash Management Fund upon consummation of the Reorganization
relating to that Fund.
+ If shares of the One Group Treasury Prime Cash Management Money Market
Fund or Combined Fund are purchased or sold through an account with a
Shareholder Servicing Agent, separate transaction fees may be charged
by the Shareholder Servicing Agent. In addition, a $7.00 charge will be
deducted from the redemption amounts paid by wire.
(1) Without Advisory Fee waivers, Advisory Fees would be .20% for the
Pegasus Treasury Prime Cash Management Fund and .20% for the One Group
Treasury Prime Cash Management Money Market Fund and the Combined Fund
for all classes of shares.
(2) The amount of 12b-1 Fees shown for the One Group Treasury Prime Cash
Management Money Market Fund and Combined Fund includes fees for
shareholder servicing and distribution.
(3) Other Expenses for the One Group Treasury Prime Cash Management Money
Market Fund and Combined Fund are based on estimated amounts for the
current fiscal year. Without the fee waiver, Other Expenses for the One
Group Treasury Prime Cash Management Money Market Fund and Combined
Fund would be .20% for all classes of shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements,
Total Fund Operating Expenses would be .40% for the Institutional
Shares and .65% for the Service Shares of the Pegasus Treasury Prime
Cash Management Fund. Without waivers, Total Fund Operating Expenses
for the One Group Treasury Prime Cash Management Money Market Fund and
Combined Fund would be .40% for the Class I shares and .65% for Class A
shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Treasury Cash Management Fund
Institutional Shares $4 $11 $20 $44
Institutional Shares (without fee waivers) $4 $13 $22 $51
Service Shares $6 $19 $33 $75
Service Shares (without fee waivers) $7 $21 $36 $81
One Group Treasury Cash Management Money
Market Fund
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $13 $22 $51
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $7 $21 $36 $81
Combined Fund Pro Forma
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $13 $22 $51
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $7 $21 $36 $81
-7-
114
Pegasus One Group
U.S. Government U.S. Government Securities
Securities Cash Cash Management Combined
Management Fund Money Market Fund* Fund Pro Forma
--------------- ------------------ --------------
Institutional Service Class I Class A Class I Class A
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1) .18% .18% .18% .18% .18% .18%
12b-1 Fees (2) None .25% None .25% None .25%
Other Expenses
(after fee waivers and/or
expense reimbursements)(3) .17% .17% .17% .17% .17% .17%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4) .35% .60% .35% .60% .35% .60%
- --------------------------
* The One Group U.S. Government Securities Cash Management Money Market
Fund has not yet commenced investment operations. The One Group U.S.
Government Securities Cash Management Money Market Fund will continue
the operations of the Pegasus U.S. Government Securities Cash
Management Fund upon consummation of the Reorganization relating to
that Fund.
+ If shares of the One Group U.S. Government Securities Money Market Cash
Management Fund or Combined Fund are purchased or sold through an
account with a Shareholder Servicing Agent, separate transaction fees
may be charged by the Shareholder Servicing Agent. In addition, a $7.00
charge will be deducted from the redemption amounts paid by wire.
(1) Without fee waivers, Advisory Fees would be .20% for the Pegasus U.S.
Government Securities Cash Management Fund, the One Group U.S.
Government Securities Cash Management Money Market Fund and Combined
Fund for all classes of shares.
(2) The amount of 12b-1 Fees shown for the Combined Fund includes fees for
shareholder servicing and distribution.
(3) Other Expenses for the One Group U.S. Government Securities Cash
Management Money Market Fund and Combined Fund are based on estimated
amounts for the current fiscal year. Without the fee waiver, Other
Expenses for the One Group U.S. Government Securities Cash Management
Money Market Fund and Combined Fund would be .18% for all classes of
shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements,
Total Fund Operating Expenses would be .37% for the Institutional
Shares and .62% for the Service Shares of the Pegasus U.S. Government
Securities Prime Cash Management Fund. Without Advisory Fee waivers,
Total Fund Operating Expenses would be .38% for the Class I shares and
.63% for Class A shares of the One Group U.S. Government Securities
Cash Management Money Market Fund and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus U.S. Government
Securities Cash Management Fund
Institutional Shares $4 $11 $20 $44
Institutional Shares (without fee waivers) $4 $12 $21 $47
Services Shares $6 $19 $33 $75
Services Shares (without fee waivers) $6 $20 $35 $77
One Group U.S. Government Securities
Cash Management Money Market Fund
Class I Shares $4 $11 $20 $44
Class I Shares (without fee waivers) $4 $12 $21 $48
Class A Shares $6 $19 $33 $75
Class A Shares (without fee waivers) $6 $20 $35 $79
Combined Fund Pro Forma
Class I Shares $4 $11 $20 $44
Class I Shares (without fee waivers) $4 $12 $21 $48
Class A Shares $6 $19 $33 $75
Class A Shares (without fee waivers) $6 $20 $35 $79
-8-
115
Pegasus One Group
Municipal Cash Municipal Cash Management Combined
Management Fund Money Market Fund* Fund Pro Forma
--------------- ------------------------- --------------
Institutional Service Class I Class A Class I Class A
Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1) .17% .17% .17% .17% .17% .17%
12b-1 Fees (after fee waivers)(2) None .25% None .25% None .25%
Other Expenses
(after fee waivers and/or
expense reimbursements)(3) .18% .18% .17% .17% .17% .17%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4) .35% .60% .34% .59% .34% .59%
- --------------------------
* The One Group Municipal Cash Management Money Market Fund has not yet
commenced investment operations. The One Group Municipal Cash
Management Money Market Fund will continue the operations of the
Pegasus Municipal Cash Management Fund upon consummation of the
Reorganization relating to that Fund.
+ If shares of the One Group Municipal Cash Management Money Market Fund
or Combined Fund are purchased or sold through an account with a
Shareholder Servicing Agent, separate transaction fees may be charged
by the Shareholder Servicing Agent. In addition, a $7.00 charge will be
deducted from the redemption amounts paid by wire.
(1) Without Advisory Fee waivers, Advisory Fees would be .20% for the
Pegasus Municipal Cash Management Fund and the One Group Municipal Cash
Management Money Market Fund and Combined Fund for all classes of
shares.
(2) The amount of 12b-1 Fees shown for the One Group Municipal Cash
Management Money Market Fund and Combined Fund includes fees for
shareholder servicing and distribution.
(3) Other Expenses for the One Group Municipal Cash Management Money Market
Fund and Combined Fund are based on estimated amounts for the current
fiscal year. Without the fee waiver, Other Expenses for the One Group
Municipal Cash Management Money Market Fund and Combined Fund would be
.18% for all classes of shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements,
Total Fund Operating Expenses would be .38% for the Institutional
Shares and .63% for the Service Shares of the Pegasus Municipal Cash
Management Fund. Without Advisory Fee waivers and expense reimbursement
arrangements, Total Fund Operating Expenses would be .38% for Class I
shares and .63% for Class A shares of the One Group Municipal Cash
Management Money Market Fund and Combined Fund. The following examples
are calculated using Combined total operating expenses.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Municipal Cash Management Fund
Institutional Shares $4 $11 $20 $44
Institutional Shares (without fee waivers) $4 $12 $21 $48
Service Shares $6 $19 $33 $75
Service Shares (without fee waivers) $6 $20 $35 $79
One Group Municipal Cash Management Money
Market Fund
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $12 $21 $48
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $6 $20 $35 $79
Combined Fund Pro Forma
Class I Shares $3 $11 $19 $43
Class I Shares (without fee waivers) $4 $12 $21 $48
Class A Shares $6 $19 $33 $74
Class A Shares (without fee waivers) $6 $20 $35 $79
-9-
116
Pegasus One Group
Managed Assets Investor Balanced Combined
Conservative Fund++ Fund (1) Fund Pro Forma
------------------- ------------------ --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees(2) .52% .52% .52% .05% .05% .05% .05% .05% .05%
12b-1 Fees (after fee waivers)(3) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses
(after fee waivers and/or
expense reimbursements) .73% .73% .48% .15% .15% .15% .15% .15% .15%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4,5,6) 1.25% 2.00% 1.00% .45% 1.20% .20% .45% 1.20% .20%
- --------------------------
* If shares of the One Group Investor Balanced Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from the redemption
amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
++ Expenses for the Pegasus Managed Assets Conservative Fund include
expenses borne indirectly by the Fund in connection with its
investments in the Underlying Funds. There is no layering of fees.
(1) Expense information has been restated to reflect current fees.
(2) Without Advisory Fee waivers, Advisory Fees for the Pegasus Managed
Assets Conservative Fund would be .65% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Managed Assets Conservative Funds and Class A and Class B shareholders
of the One Group Investor Balanced and Combined Fund may pay more than
the equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares of the
One Group Investor Balanced Fund and Combined Fund. The amount of 12b-1
Fees shown for the One Group Investor Balanced Fund and Combined Fund
includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Managed Assets Conservative Fund are reflected under "Other
Expenses."
(4) The Investment Adviser of the Pegasus Managed Assets Conservative Fund
has voluntarily agreed to limit the total operating expenses to 1.25%,
2.00% and 1.00%, respectively, for the Class A, Class B and Class I
shares.
(5) Without the voluntary reduction of Investment Advisory, 12b-1 Fees and
other expenses, Total Fund Operating Expenses would be 1.38% for Class
A Shares, 2.13% for Class B Shares, and 1.13% for Class I Shares of the
Pegasus Managed Assets Conservative Fund. Without the voluntary
reduction of 12b-1 fees, Total Fund Operating Expenses for Class A
shares of the One Group Investor Balanced and Combined Fund would be
.55%.
(6) After combining the Total Fund Operating Expenses of the One Group
Investor Balanced Fund and Combined Fund with those of the Underlying
Funds, the estimated average weighted expense ratio is 1.23% for Class
A shares, 1.98% for Class B shares and .98% for Class I shares. The
following examples are calculated using Combined total operating
expenses.
-10-
117
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Managed Assets Conservative Fund
Class A Shares $62 $88 $115 $194
Class A Shares (without fee waivers) $63 $92 $122 $207
Class B Shares $70/$20* $93/$63* $128/$109* $204+
Class B Shares (without fee waivers) $72/$22* $97/$67* $134/$114* $218+
Class I Shares $10 $32 $55 $122
Class I Shares (without fee waivers) $12 $36 $62 $137
One Group Investor Balanced Fund
Class A Shares $57 $83 $111 $189
Class A Shares (without fee waivers) $59 $88 $119 $208
Class B Shares $70/$20* $93/$63* $128/$108* $213**
Class B Shares (without fee waivers) $71/$21* $95/$65* $131/$111* $223**
Class I Shares $10 $32 $55 $122
Class I Shares (without fee waivers) $11 $34 $59 $131
Combined Fund Pro Forma
Class A Shares $64 $59 $117 $194
Class A Shares (without fee waivers) $66 $95 $127 $215
Class B Shares $70/$20* $92/$62* $127/$107* $211**
Class B Shares (without fee waivers) $71/$21* $95/$65* $132/$112* $224**
Class I Shares $10 $31 $54 $120
Class I Shares (without fee waivers) $11 $34 $60 $132
* Assuming no redemption of Class B shares
** Class B shares of the One Group Investor Balanced Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-11-
118
Pegasus One Group Investor
Managed Assets Growth & Income Combined
Balanced Fund++ Fund(1) Fund Pro Forma
--------------- ------------------ --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(2) .52% .52% .52% .05% .05% .05% .05% .05% .05%
12b-1 Fees (after fee
waivers)(3) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee waivers
and expense reimbursements) .73% .73% .48% .15% .15% .15% .15% .15% .15%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4,5,6) 1.25% 2.00% 1.00% .45% 1.20% .20% .45% 1.20% .20%
- --------------------------
* If shares of the One Group Investor Growth & Income Fund or Combined
Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the
Shareholder Servicing Agent. In addition, a $10.00 sub-minimum account
fee may be applicable and a $7.00 charge will be deducted from the
redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
++ Expenses for the Pegasus Managed Assets Balanced Fund include expenses
borne indirectly by the Fund in connection with its investments in the
Underlying Funds. There is no layering of fees.
(1) Expense information has been restated to reflect current fees.
(2) Without Advisory Fee waivers, Advisory Fees for the Pegasus Managed
Assets Balanced Fund would be .65% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Managed Assets Balanced Fund and Class A and Class B shareholders of
the One Group Investor Growth & Income and Combined Fund may pay more
than the equivalent of the maximum front-end sales charges permitted by
the rules of the National Association of Securities Dealers. Without
the voluntary waiver, 12b-1 Fees would be .35% for Class A shares of
the One Group Investor Growth & Income Fund and Combined Fund. The
amount of 12b-1 Fees shown for the One Group Investor Growth & Income
Fund and Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A and
Class B shareholders of the Pegasus Managed Assets Balanced Fund are
reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Managed Assets Balanced Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.25%,
2.00% and 1.00%, respectively, for the Class A, Class B and Class I
shares.
(5) Without the voluntary reduction of Investment Advisory, 12b-1 Fees and
Other Expenses, Total Fund Operating Expenses would be 1.38% for Class
A shares, 2.13% for Class B shares, and 1.13% for Class I shares of the
Pegasus Managed Assets Balanced Fund. Without the voluntary reduction
of 12b-1 Fees, Total Fund Operating Expenses would be .55% for Class A
shares of the One Group Investor Growth & Income Fund and Combined
Fund.
(6) After combining the Total Fund Operating Expenses of the One Group
Investor Growth and Income Fund and Combined with those of the
Underlying Funds, estimated average weighted expense ratio is 1.28% for
Class A shares, 2.03% for Class B shares and 1.03% for Class I shares.
The following examples are calculated using Combined total operating
expenses.
-12-
119
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Managed Assets Balanced Fund
Class A Shares $62 $88 $115 $194
Class A Shares (without fee waivers) $63 $92 $122 $207
Class B Shares $70/$20* $93/$63* $128/$108* $204+
Class B Shares (without fee waivers) $72/$22* $97/$67* $134/$114* $218+
Class I Shares $10 $32 $55 $122
Class I Shares (without fee waivers) $12 $36 $62 $137
One Group Investor Growth & Income Fund
Class A Shares $58 $84 $113 $195
Class A Shares (without fee waivers) $59 $89 $121 $212
Class B Shares $71/$21* $94/$64* $130/$110* $219**
Class B Shares (without fee waivers) $71/$21* $96/$66* $133/$113* $228**
Class I Shares $11 $33 $58 $128
Class I Shares (without fee waivers) $11 $35 $61 $135
Combined Fund Pro Forma
Class A Shares $65 $91 $119 $199
Class A Shares (without fee waivers) $67 $96 $128 $218
Class B Shares $71/$21* $94/$64* $129/$109* $217**
Class B Shares (without fee waivers) $71/$21* $96/$66* $133/$113* $228**
Class I Shares $11 $33 $57 $126
Class I Shares (without fee waivers) $11 $35 $61 $135
* Assuming no redemption of Class B shares
** Class B shares of the One Group Investor Growth & Income Fund and the
Combined Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-13-
120
Pegasus One Group
Managed Assets Investor Growth Combined
Growth Fund++ Fund(1) Fund Pro Forma
------------- --------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(2) .23% .23% .23% .05% .05% .05% .05% .05% .05%
12b-1 Fees (after fee
waivers)(3) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses 1.02% 1.02% .77% .15% .15% .15% .15% .15% .15%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4,5,6) 1.25% 2.00% 1.00% .45% 1.20% .20% .45% 1.20% .20%
- --------------------------
* If shares of the One Group Investor Growth Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from the redemption
amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
++ Expenses for the Pegasus Managed Assets Growth Fund include expenses
borne indirectly by the Fund in connection with its investments in the
Underlying Funds. There is no layering of fees.
(1) Expense information has been restated to reflect current fees.
(2) Without Advisory Fee waivers, Advisory Fees for the Pegasus Managed
Assets Growth Fund would be .65% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Managed Assets Growth Fund and Class A and Class B shareholders of the
One Group Investor Growth Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares of the
One Group Investor Growth Fund and Combined Fund. The amount of 12b-1
Fees shown for the One Group Investor Growth Fund and Combined Fund
includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Managed Assets Growth Fund are reflected under "Other
Expenses."
(4) The Investment Adviser of the Pegasus Managed Assets Growth Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.25%,
2.00% and 1.00%, respectively, for the Class A, Class B and Class I
shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees,
Total Fund Operating Expenses would be 1.67% for Class A shares, 2.42%
for Class B shares, and 1.42% for Class I shares of the Pegasus Managed
Assets Growth Fund. Without the voluntary reduction of 12b-1 Fees,
Total Fund Operating Expenses would be .55% for Class A shares of the
One Group Investor Growth Fund and Combined Fund.
(6) After combining the Total Fund Operating Expenses of the One Group
Investor Growth Fund and Combined Fund with those of the Underlying
Funds, the estimated average weighted expense ratio is 1.30% for Class
A shares, 2.05% for Class B shares and 1.05% for Class I shares. The
following examples are calculated using Combined total operating
expenses.
-14-
121
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Managed Assets Growth Fund
Class A Shares $62 $88 $115 $194
Class A Shares (without fee waivers) $66 $100 $136 $238
Class B Shares $70/$20* $93/$63* $128/$108* $204+
Class B Shares (without fee waivers) $75/$25* $105/$75* $149/$129* $248+
Class I Shares $10 $32 $55 $122
Class I Shares (without fee waivers) $14 $45 $78 $170
One Group Investor Growth Fund
Class A Shares $58 $85 $114 $197
Class A Shares (without fee waivers) $59 $89 $121 $212
Class B Shares $71/$21* $95/$65* $131/$111* $221**
Class B Shares (without fee waivers) $71/$21* $96/$66* $133/$113* $228**
Class I Shares $11 $34 $59 $131
Class I Shares (without fee waivers) $11 $35 $61 $135
Combined Fund Pro Forma
Class A Shares $65 $92 $120 $201
Class A Shares (without fee waivers) $67 $97 $129 $219
Class B Shares $71/$21* $94/$64* $130/$110* $219**
Class B Shares (without fee waivers) $72/$22* $96/$66* $134/$114* $229**
Class I Shares $11 $33 $58 $128
Class I Shares (without fee waivers) $11 $36 $62 $136
* Assuming no redemption of Class B shares
** Class B shares of the One Group Investor Growth Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore,
the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-15-
122
Pegasus One Group
Equity Income Equity Income Combined
Fund Fund(1) Fund Pro Forma
------------- ------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees .50% .50% .50% .74% .74% .74% .74% .74% .74%
12b-1 Fees (after fee waivers)(2) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses .45% .45% .20% .26% .26% .26% .22% .22% .22%
Total Fund Operating Expenses
(after fee waivers)(3,4) .95% 1.70% .70% 1.25% 2.00% 1.00% 1.21% 1.96% .96%
- --------------------------
* If shares of the One Group Equity Income Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee maybe
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Equity
Income Fund and Class A and Class B Shareholders of the One Group
Equity Income Fund and Combined Fund may pay more than the equivalent
of the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares of the One Group
Equity Income Fund and Combined Fund. The amount of 12b-1 Fees shown
for the One Group Equity Income Fund and Combined Fund includes fees
for shareholder servicing and distribution. Shareholder servicing fees
payable by the Class A and Class B shareholders of the Pegasus Equity
Income Fund are reflected under "Other Expenses."
(3) The Investment Adviser of the Pegasus Equity Income Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.21%,
1.96% and .96%, respectively, for the Class A, Class B and Class I
shares.
(4) Without the voluntary reduction of 12b-1 Fees, Total Fund Operating
Expenses would be 1.35% for Class A shares of the One Group Equity
Income Fund and 1.31% for Class A Shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Equity Income Fund
Class A Shares $59 $79 $100 $161
Class B Shares $67/$17* $84/$54* $113/$93* $173+
Class I Shares $ 7 $22 $39 $ 87
One Group Equity Income Fund
Class A Shares $57 $83 $111 $189
Class A Shares (without fee waivers) $58 $86 $116 $200
Class B Shares $70/$20* $93/$63* $128/$108* $213**
Class I Shares $10 $32 $55 $122
Combined Fund Pro Forma
Class A Shares $64 $89 $116 $191
Class A Shares (without fee waivers) $65 $92 $121 $202
Class B Shares $70/$20* $92/$62* $126/$106* $209**
Class I Shares $10 $31 $53 $118
* Assuming no redemption of Class B shares
** Class B shares of the One Group Equity Income and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-16-
123
Pegasus One Group
Growth Large Cap Combined
Fund Growth Fund(1) Fund Pro Forma
------- -------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees .60% .60% .60% .74% .74% .74% .71% .71% .71%
12b-1 Fees (after fee waivers)(2) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses .47% .47% .22% .26% .26% .26% .23% .23% .23%
Total Fund Operating Expenses
(after fee waivers)(3,4) 1.07% 1.82% .82% 1.25% 2.00% 1.00% 1.19% 1.94% .94%
- --------------------------
* If shares of the One Group Large Cap Growth Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Growth
Fund and Class A and Class B shareholders of the One Group Large Cap
Growth Fund and the Combined Fund may pay more than the equivalent of
the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares of the One Group
Large Cap Growth Fund and Combined Fund. The amount of 12b-1 Fees shown
for the One Group Large Cap Growth Fund and Combined Fund includes fees
for shareholder servicing and distribution. Shareholder servicing fees
payable by the Class A and Class B shareholders of the Pegasus Growth
Fund are reflected under "Other Expenses."
(3) The Investment Adviser of the Pegasus Growth Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to 1.25%, 2.00% and
1.00%, respectively, for the Class A, Class B and Class I shares.
(4) Without the voluntary reduction of 12b-1 Fees, Total Fund Operating
Expenses would be 1.35% for Class A shares of the One Group Large Cap
Growth Fund and 1.29% for Class A Shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Growth Fund
Class A Shares $60 $82 $106 $175
Class B Shares $69/$19* $88/$58* $119/$99* $186+
Class I Shares $ 8 $27 $46 $103
One Group Large Company Growth Fund
Class A Shares $57 $83 $111 $189
Class A Shares (without fee waivers) $58 $86 $116 $200
Class B Shares $70/$20* $93/$63* $128/$108* $213**
Class I Shares $10 $32 $55 $122
Combined Fund Pro Forma
Class A Shares $64 $88 $114 $189
Class A Shares (without fee waivers) $65 $91 $120 $200
Class B Shares $70/$20* $91/$61* $125/$105* $207**
Class I Shares $10 $31 $53 $118
* Assuming no redemption of Class B shares
** Class B shares of the One Group Large Cap Growth Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-17-
124
Pegasus Mid-Cap One Group Diversified
Opportunity Mid Cap Combined
Fund Fund* Fund Pro Forma
---------------- ---------------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 5.25% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1) .60% .60% .60% .60% .60% .60% .60% .60% .60%
12b-1 Fees (after fee waivers)(2) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after wee
waivers)(3) .54% .54% .29% .26% .26% .26% .26% .26% .26%
Total Fund Operating Expenses
(after fee waivers)(4) 1.14% 1.89% .89% 1.11% 1.86% .86% 1.11% 1.86% .86%
- --------------------------
* The One Group Diversified Mid-Cap Fund has not yet commenced
operations. The One Group Diversified Mid Cap Fund will continue the
operations of the Pegasus Mid-Cap Opportunity Fund upon consummation of
the Reorganization relating to the Fund.
** If shares of the One Group Diversified Mid-Cap Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Without the fee waivers, Advisory Fees for the One Group Diversified
Mid Cap Fund and Combined Fund would be .74% for all classes of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Mid-Cap Opportunity Fund and long-term Class A and Class B shareholders
of the One Group Diversified Mid-Cap Fund and Combined Fund may pay
more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. Without the voluntary waiver, 12b-1 Fees would be .35% for
Class A shares. The amount of 12b-1 fees shown for the One Group
Diversified Mid-Cap Fund and Combined Fund includes fees for
shareholders servicing and distribution. Shareholders servicing fees
payable by the Class A and Class B shareholders of the Pegasus Mid-Cap
Opportunity Fund are reflected under "Other Expenses."
(3) Without the fee waiver, Other Expenses for the One Group Diversified
Mid Cap Fund and Combined Fund would be .27% for all classes of shares.
(4) The Investment Adviser of the Pegasus Mid-Cap Opportunity Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.27%,
2.02% and 1.02%, respectively, for the Class A, Class B and Class I
shares. Without the voluntary reduction of Investment Advisory, 12b-1
and other Fees, Total Fund Operating Expenses for the One Group
Diversified Mid Cap Fund and Combined Fund would be 1.36% for Class A
shares, 2.01% for Class B shares and 1.01% for Class I shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Mid-Cap Opportunity Fund
Class A Shares $61 $85 $110 $182
Class B Shares $69/$19* $90/$60* $123/$103* $194+
Class I Shares $ 9 $29 $50 $110
One Group Diversified Mid-Cap Fund
Class A Shares $63 $86 $110 $181
Class A Shares (without fee waivers) $66 $93 $123 $207
Class B Shares $69/$19* $88/$58* $121/$101* $198**
Class B Shares (without fee waivers) $70/$20* $93/$63* $128/$108* $217**
Class I Shares $ 9 $27 $48 $106
Class I Shares (without fee waivers) $10 $32 $56 $124
Combined Fund Pro Forma
Class A Shares $63 $86 $110 $181
Class A Shares (without fee waivers) $66 $93 $123 $207
Class B Shares $69/$19* $88/$58* $121/$101* $198**
Class B Shares (without fee waivers) $70/$20* $93/$63* $128/$108* $217**
Class I Shares $ 9 $27 $48 $106
Class I Shares (without fee waivers) $10 $32 $56 $124
* Assuming no redemption of Class B shares
** Class B shares of the One Group Diversified Mid Cap Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-18-
125
Pegasus One Group
Small-Cap Small Cap Combined
Opportunity Fund Value Fund* Fund Pro Forma
---------------- ----------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 5.25% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1) .70% .70% .70% .70% .70% .70% .70% .70% .70%
12b-1 Fees (after fee waivers)(2) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses(3) .49% .49% .24% .21% .21% .21% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(4) 1.19% 1.94% .94% 1.16% 1.91% .91% 1.16% 1.91% .91%
- --------------------------
* The One Group Small Cap Value Fund has not yet commenced investment
operations. The One Group Small Cap Value Fund will continue the
operations of the Pegasus Small-Cap Opportunity Fund upon consummation
of the Reorganization relating to that Fund.
** If shares of the One Group Small Cap Value Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from the redemption
amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Without the fees waivers, Advisory Fees for the One Group Small Cap
Value Fund and Combined Fund would be .74% for all classes of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Small-Cap Opportunity Fund and long-term Class A and Class B
shareholders of the One Group Small Cap Value Fund and Combined Fund
may pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. Without the voluntary waiver, 12b-1 Fees for A shares of the
One Group Small Cap Value Fund and Combined Fund would be .35%. The
amount of 12b-1 Fees shown for the One Group Small Cap Value Fund and
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Small-Cap Opportunity Fund are reflected
under "Other Expenses."
(3) Other Expenses for the One Group Small Cap Value Fund and Combined Fund
are based on estimated amounts for the current fiscal year. Without the
fee waiver, Other Expenses for the One Group Small Cap Value Fund and
Combined Fund would be .22% for all classes of shares.
(4) The Investment Adviser of the Pegasus Small Cap Opportunity Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.42%,
2.17% and 1.17%, respectively, for the Class A, Class B and Class I
shares. Without the voluntary reduction of Investment Advisory, 12b-1
and other Fees, Total Fund Operating Expenses for the One Group Small
Cap Value Fund and Combined Fund would be 1.31% for Class A Shares,
1.96% for Class B shares and .96% for Class I shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Small-Cap Opportunity Fund
Class A Shares $62 $86 $112 $188
Class B Shares $70/$20* $91/$61* $126/$106* $199+
Class I Shares $10 $30 $52 $116
One Group Small Cap Value Fund
Class A Shares $64 $87 $113 $186
Class A Shares (without fee waivers) $65 $92 $121 $202
Class B Shares $69/$19* $90/$60* $123/$103* $204**
Class B Shares (without fee waivers) $70/$20* $92/$62* $126/$106* $212**
Class I Shares $ 9 $29 $50 $112
Class I Shares (without fee waivers) $10 $31 $53 $118
Combined Fund Pro Forma
Class A Shares $64 $87 $113 $186
Class A Shares (without fee waivers) $65 $92 $121 $202
Class B Shares $69/$19* $90/$60* $123/$103* $204**
Class B Shares (without fee waivers) $70/$20* $92/$62* $126/$106* $212**
Class I Shares $ 9 $29 $50 $112
Class I Shares (without fee waivers) $10 $31 $53 $118
* Assuming no redemption of Class B shares
** Class B shares of the One Group Small Cap Value Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-19-
126
Pegasus One Group
Intrinsic Mid Cap Combined
Value Fund Value Fund(1) Fund Pro Forma
---------- ------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees .60% .60% .60% .74% .74% .74% .74% .74% .74%
12b-1 Fees (after fee waiver)(2) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses .49% .49% .24% .26% .26% .26% .22% .22% .22%
Total Fund Operating Expenses
(after fee waivers)(3,4) 1.09% 1.84% .84% 1.25% 2.00% 1.00% 1.21% 1.96% .96%
- --------------------------
* If shares of the One Group Mid Cap Value Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Intrinsic Value Fund and Class A and Class B shares of the One Group
Mid Cap Value Fund and the Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares of the
One Group Mid Cap Value Fund and Combined Fund. The amount of 12b-1
Fees shown for the One Group Mid Cap Value Fund and Combined Fund
includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Intrinsic Value Fund are reflected under "Other Expenses."
(3) The Investment Adviser of the Pegasus Intrinsic Value Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.19%,
1.94% and 0.94%, respectively, for the Class A, Class B and Class I
shares.
(4) Without the voluntary reduction of 12b-1 Fees, Total Fund Operating
Expenses would be 1.35% for Class A shares of the One Group Mid Cap
Value Fund and 1.31% for Class A Shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Intrinsic Value Fund
Class A Shares $61 $83 $107 $177
Class B Shares $69/$19* $88/$58* $120/$100* $188+
Class I Shares $ 9 $27 $47 $104
One Group Mid Cap Value Fund
Class A Shares $57 $83 $111 $189
Class A Shares (without fee waivers) $58 $86 $116 $200
Class B Shares $70/$20* $93/$63* $128/$108* $213**
Class I Shares $10 $32 $55 $122
Combined Fund Pro Forma
Class A Shares $64 $89 $116 $191
Class A Shares (without fee waivers) $65 $92 $121 $202
Class B Shares $70/$20* $92/$62* $126/$106* $209**
Class I Shares $10 $31 $53 $118
* Assuming no redemption of Class B shares
** Class B shares of the One Group Mid Cap Value Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-20-
127
Pegasus One Group
Growth and Value Diversified Equity Combined
Fund Fund(1) Fund Pro Forma
---- ------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees .60% .60% .60% .74% .74% .74% .73% .73% .73%
12b-1 Fees (after fee waivers)(2) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses .51% .51% .26% .26% .26% .26% .24% .24% .24%
Total Fund Operating Expenses
(after fee waivers)(3,4) 1.11% 1.86% .86% 1.25% 2.00% 1.00% 1.22% 1.97% .97%
- --------------------------
* If shares of the One Group Diversified Equity Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Growth
and Value Fund and Class A and Class B shares of the One Group
Diversified Equity Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares of the
One Group Diversified Equity Fund and Combined Fund. The amount of
12b-1 Fees shown for the One Group Diversified Equity Fund and Combined
Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Growth and Value Fund are reflected under
"Other Expenses."
(3) The Investment Adviser of the Pegasus Growth and Value Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.12%,
1.87% and 0.87%, respectively, for the Class A, Class B and Class I
shares.
(4) Without the voluntary reduction of 12b-1 Fees, Total Fund Operating
Expenses would be 1.35% for Class A shares of the One Group Diversified
Equity Fund and 1.32% for Class A shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Growth and Value Fund
Class A Shares $61 $84 $108 $179
Class B Shares $69/$19* $89/$59* $121/$101* $190+
Class I Shares $ 9 $28 $ 48 $106
One Group Diversified Equity Fund
Class A Shares $57 $83 $111 $189
Class A Shares (without fee waivers) $58 $86 $116 $200
Class B Shares $70/$20* $93/$63* $128/$108* $213**
Class I Shares $10 $32 $ 55 $122
Combined Fund Pro Forma
Class A Shares $64 $89 $116 $192
Class A Shares (without fee waivers) $65 $92 $121 $203
Class B Shares $70/$20* $92/$62* $126/$106* $210**
Class I Shares $10 $31 $ 54 $119
* Assuming no redemption of Class B shares
** Class B shares of the One Group Diversified Equity Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-21-
128
Pegasus One Group
Equity Index Equity Index Combined
Fund Fund(1) Fund Pro Forma
---- ------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 3.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds, as
applicable) None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(2) .10% .10% .10% .25% .25% .25% .15% .15% .15%
12b-1 Fees (after fee waivers)(3) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses(4) .55% .55% .30% .25% .25% .25% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers and/or expense
reimbursements)(5,6) .65% 1.40% .40% .75% 1.50% .50% .61% 1.36% .36%
- --------------------------
* If shares of the One Group Equity Index Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group Equity Index
Fund and Combined Fund would be .30% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Equity
Index Fund and long-term Class A and Class B shares of the One Group
Equity Index Fund and Combined Fund may pay more than the equivalent of
the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares of the One Group
Equity Index Fund and Combined Fund. The amount of 12b-1 Fees shown for
the One Group Equity Index Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees
payable by the Class A and Class B shareholders of the Pegasus Equity
Index Fund are reflected under "Other Expenses."
(4) Without the fee waiver, Other Expenses for the Combined Fund would be
.28% for all classes of shares.
(5) The Investment Adviser of the Pegasus Equity Index Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to .86%, 1.41% and
.51%, respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Investment Advisory, 12b-1 and other
Fees, Total Fund Operating Expenses would be .90% for Class A shares,
1.55% for Class B shares, and .55% for Class I shares of the One Group
Equity Index Fund and .93% for Class A shares, 1.58% for Class B shares
and .58% for Class I shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Equity Index Fund
Class A Shares $36 $50 $65 $109
Class B Shares $44/$14* $65/$45* $87/$77* $129+
Class I Shares $4 $13 $22 $51
One Group Equity Index Fund
Class A Shares $52 $68 $85 $134
Class A Shares (without fee waivers) $54 $72 $93 $151
Class B Shares $65/$15* $77/$47* $102/$82* $159**
Class B Shares (without fee waivers) $66/$16* $79/$49* $104/$84* $167**
Class I Shares $5 $16 $28 $63
Class I Shares (without fee waivers) $6 $18 $31 $69
Combined Fund Pro Forma
Class A Shares $58 $71 $85 $125
Class A Shares (without fee waivers) $61 $81 $101 $161
Class B Shares $64/$14* $73/$43* $84/$74* $143**
Class B Shares (without fee waivers) $66/$16* $80/$50* $106/$86* $170**
Class I Shares $4 $12 $20 $46
Class I Shares (without fee waivers) $6 $19 $32 $73
* Assuming no redemption of Class B shares
** Class B shares of the One Group Equity Index Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-22-
129
Pegasus One Group
Market Expansion Market Expansion Combined
Index Fund(1) Index Fund* Fund Pro Forma
---------------- ----------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 3.00% None None 5.25% None None 5.25% None None
Transaction Fee Imposed on
Purchases*** .50% .50% .50% .50% .50% .50% .50% .50% .50%
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds, as
applicable) None+ 3.00% None None+ 3.00% None None+ 3.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(2) .00% .00% .00% .15% .15% .15% .15% .15% .15%
12b-1 Fees(3) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses(4)
(after fee waivers and/or
expense reimbursements) .82% .82% .57% .42% .42% .42% .42% .42% .42%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(5,6) .82% 1.57% .57% .82% 1.57% .57% .82% 1.57% .57%
- --------------------------
* The One Group Market Expansion Index Fund has not yet commenced
operations. The One Group Market Expansion Index Fund will continue the
operations of the Pegasus Market Expansion Index Fund upon consummation
of the Reorganization relating to that Fund.
** If shares of the One Group Market Expansion Index Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Agent. In addition, a $7.00 charged is deducted from the redemptions
amounts paid by wire.
*** To prevent the Pegasus Market Expansion Index Fund and the One Group
Market Expansion Index Fund from being adversely affected by the
transaction costs associated with share purchases, the Fund will sell
shares at a price equal to the net asset value of the shares plus a
transaction fee equal to 0.50% of such value. Such fees are not sales
charges, but are retained by the Fund for the benefit of all
shareholders. This fee will not apply to in-kind contributions,
reinvested dividends or capital gain contributions; however, it will
apply to exchanges. Furthermore, a sales charge will also be imposed on
purchases of Class A shares. Currently, a transaction fee is not being
charged; however, the Fund reserves the right to impose this fee at a
future date.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the voluntary reduction of Investment Advisory fee waivers,
Advisory Fees for the Pegasus Market Expansion Index Fund would be .25%
for all classes of shares. Without the fee waivers, Advisory Fees for
the One Group Market Expansion Index Fund and Combined Fund would be
.35% for all classes.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Market
Expansion Index Fund and long-term Class A and Class B shareholders of
the One Group Market Expansion Index Fund and Combined Fund may pay
more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. Without the voluntary waivers, 12b-1 fees would be .35% for
Class A shares of the One Group Market Expansion Index Fund and
Combined Fund. The amount of 12b-1 Fees shown for the One Group Market
Expansion Index Fund and Combined Fund includes fees for shareholder
servicing and distribution. Shareholder servicing fees payable by the
Class A and Class B shareholders of the Pegasus Market Expansion Index
Fund are reflected under "Other Expenses."
(4) Without the fee waiver, Other Expenses for the One Group Market
Expansion Index Fund and Combined Fund would be .52% for all classes of
shares.
(5) The Investment Adviser of the Pegasus Market Expansion Index Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .82%,
1.57% and .57%, respectively, for the Class A, Class B and Class I
shares.
(6) Without the voluntary reduction of Investment Advisory fees and Other
Expenses, Total Fund Operating Expenses would be 1.17% for Class A
shares, 1.92% for Class B shares, and .92% for Class I shares of the
Pegasus Market Expansion Index Fund and 1.22% for Class A shares, 1.87%
for Class B shares and .87% for Class I shares of the One Group Market
Expansion Index Fund and Combined Fund.
-23-
130
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Market Expansion Index Fund
Class A Shares $38 $55 N/A N/A
Class B Shares $46/$16* $70/$50* N/A N/A
Class I Shares $ 6 $18 N/A N/A
One Group Market Expansion Index Fund
Class A Shares $60 $77 $96 $149
Class A Shares (without fee waivers) $64 $89 $116 $192
Class B Shares $46/$16* $70/$50* $86* $148*
Class B Shares (without fee waivers) $49/$19* $79/$59* $101* $187*
Class I Shares $ 6 $18 $32 $71
Class I Shares (without fee waivers) $ 9 $28 $48 $107
Combined Fund Pro Forma
Class A Shares $60 $77 $96 $149
Class A Shares (without fee waivers) $64 $89 $116 $192
Class B Shares $46/$16* $70/$50* $86* $148*
Class B Shares (without fee waivers) $49/$19* $79/$59* $101* $187*
Class I Shares $ 6 $18 $32 $71
Class I Shares (without fee waivers) $ 9 $28 $48 $107
* Assuming no redemption of Class B shares
-24-
131
Pegasus One Group
International Diversified Combined
Equity Fund International Fund* Fund Pro Forma
----------- ------------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 5.00% None None 5.25% None None 5.25% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees .80% .80% .80% .80% .80% .80% .80% .80% .80%
12b-1 Fees (after fee waivers)(1) None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses(2) .52% .52% .27% .22% .22% .22% .22% .22% .22%
Total Fund Operating Expenses
(after fee waivers)(3) 1.32% 2.07% 1.07% 1.27% 2.02% 1.02% 1.27% 2.02% 1.02%
- --------------------------
* The One Group Diversified International Fund has not yet commenced
investment operations. The One Group Diversified International Fund
will continue the operations of the Pegasus International Equity Fund
upon consummation of the Reorganization relating to that Fund.
** If shares of the One Group Diversified International Fund or Combined
Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the
Shareholder Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charged is deducted from the redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
International Equity Fund and long-term Class A and Class B
shareholders of the One Group Diversified International Fund and
Combined Fund may pay more than the equivalent of the maximum front-end
sales charges permitted by the rules of the National Association of
Securities Dealers. Without the voluntary waiver, 12b-1 Fees would be
.35% for Class A shares for the One Group Diversified International
Fund and Combined Fund. The amount of 12b-1 Fees shown for the One
Group Diversified International Fund and Combined Fund includes fees
for shareholder servicing and distribution. Shareholder servicing fees
payable by the Class A and Class B Shareholders of the Pegasus
International Equity Fund are reflected under "Other Expenses."
(2) Other Expenses for the One Group Diversified International Fund and
Combined Fund are based on estimated amounts for the current fiscal
year. Without the fee waiver, Other Expenses for the One Group
Diversified International Fund and Combined Fund would be .23% for all
classes of shares.
(3) The Investment Adviser of the Pegasus International Equity Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.44%,
2.19% and 1.19%, respectively, for the Class A, Class B and Class I
shares. Without the voluntary reduction of 12b-1 Fees, Total Fund
Operating Expenses for One Group Diversified International Fund and
Combined Fund would be 1.38% for Class A shares, 2.03% for Class B
shares and 1.03% for Class I shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus International Equity Fund
Class A Shares $63 $90 $119 $202
Class B Shares $71/$21* $96/$66* $132/$112* $213+
Class I Shares $11 $34 $59 $131
One Group Diversified International Fund
Class A Shares $65 $91 $119 $198
Class A Shares (without fee waivers) $66 $94 $124 $210
Class B Shares $71/$21* $93/$63* $129/$109* $216**
Class B Shares (without fee waivers) $71/$21* $94/$64* $129/$109* $219**
Class I Shares $10 $32 $56 $125
Class I Shares (without fee waivers) $11 $33 $57 $126
Combined Fund Pro Forma
Class A Shares $65 $91 $119 $198
Class A Shares (without fee waivers) $66 $94 $124 $210
Class B Shares $71/$21* $93/$63* $129/$109* $216**
Class B Shares (without fee waivers) $71/$21* $94/$64* $129/$109* $219**
Class I Shares $10 $32 $56 $125
Class I Shares (without fee waivers) $11 $33 $57 $126
* Assuming no redemption of Class B shares
** Class B shares of the One Group Diversified International Fund and Combined
Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-25-
132
Pegasus One Group
Intermediate Intermediate Combined
Bond Fund Bond Fund(1) Fund Pro Forma
--------- ------------ --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 3.00% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(2) .40% .40% .40% .40% .40% .40% .36% .36% .36%
12b-1 Fees (after fee waivers)(3) None .75% None .25% .90% None .25% .90% None
Other Expenses .50% .50% .25% .22% .22% .22% .22% .22% .22%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(4,5) .90% 1.65% .65% .87% 1.52% .62% .83% 1.48% .58%
- --------------------------
* If shares of the One Group Intermediate Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group Intermediate
Bond Fund and Combined Fund would be .60% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Intermediate Bond Fund and Class A and Class B shareholders of the One
Group Intermediate Bond Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares and 1.00%
for Class B shares of the One Group Intermediate Bond Fund and Combined
Fund. The amount of 12b-1 Fees shown for the One Group Intermediate
Bond Fund and Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A and
Class B shareholders of the Pegasus Intermediate Bond Fund are
reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Intermediate Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.04%,
1.79% and .79%, respectively, for the Class A, Class B and Class I
shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees,
Total Fund Operating Expenses would be 1.17% for Class A shares, 1.82%
for Class B shares, and .82% for Class I shares of the One Group
Intermediate Bond Fund and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Intermediate Bond Fund
Class A Shares $39 $58 $79 $138
Class B Shares $47/$17* $72/$52* $100/$90* $158+
Class I Shares $ 7 $21 $36 $81
One Group Intermediate Bond Fund
Class A Shares $53 $72 $91 $147
Class A Shares (without fee waivers) $56 $80 $106 $181
Class B Shares $65/$15* $78/$48* $103/$83* $164**
Class B Shares (without fee waivers) $68/$18* $87/$57* $119/$99* $197**
Class I Shares $ 6 $20 $35 $77
Class I Shares (without fee waivers) $ 8 $26 $46 $101
Combined Fund Pro Forma
Class A Shares $53 $70 $89 $143
Class A Shares (without fee waivers) $56 $80 $106 $181
Class B Shares $65/$15* $77/$47* $101/$81* $159**
Class B Shares (without fee waivers) $68/$18* $87/$57* $119/$99* $197**
Class I Shares $ 6 $19 $32 $73
Class I Shares (without fee waivers) $ 8 $26 $46 $101
* Assuming no redemption of Class B shares
** Class B shares of the One Group Intermediate Bond Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore,
the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-26-
133
Pegasus One Group Combined
Bond Fund Bond Fund* Fund Pro Forma
--------- ---------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds,
as applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES(1)
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(2) .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees (after fee waivers)(3) None .75% None .25% .90% None .25% .90% None
Other Expenses(4) .48% .48% .23% .20% .20% .20% .20% .20% .20%
Total Fund Operating Expenses
(after fee waivers)(5,6) .88% 1.63% .63% .85% 1.50% .60% .85% 1.50% .60%
- --------------------------
* The One Group Bond Fund has not yet commenced operations. The One Group
Bond Fund will continue the operations of the Pegasus Bond Fund upon
consummation of the Reorganization relating to that Fund.
** If shares of the One Group Bond Fund or Combined Fund are purchased or
sold through an account with a Shareholder Servicing Agent, separate
transaction fees may be charged by the Shareholder Servicing Agent. In
addition, a $10.00 sub-minimum account fee may be applicable and a
$7.00 charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the Combined Fund would be
.60% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Bond
Fund and Class A and Class B shareholders of the One Group Bond Fund
and the Combined Fund may pay more than the equivalent of the maximum
front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1
Fees would be .35% for Class A shares and 1.00% for Class B shares of
the One Group Bond Fund and Combined Fund. The amount of 12b-1 Fees
shown for the One Group Bond Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees
payable by the Class A and Class B shareholders of the Pegasus Bond
Fund are reflected under "Other Expenses."
(4) Other Expenses for the One Group Bond Fund and Combined Fund are based
on estimated amounts for the current fiscal year. Without the fee
waiver, Other Expenses for the One Group Bond Fund and Combined Fund
would be .21% for all classes of shares.
(5) The Investment Adviser of the Pegasus Bond Fund has voluntarily agreed
to limit the Total Fund Operating Expenses to .99%, 1.74% and 0.74%,
respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees,
Total Fund Operating Expenses would be 1.16% for Class A Shares, 1.81%
for Class B shares and .81% for Class I shares of the One Group Bond
Fund and the Combined Fund.
-27-
134
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Bond Fund
Class A Shares $54 $72 $92 $149
Class B Shares $67/$17* $82/$52* $109/$89* $165+
Class I Shares $ 6 $20 $35 $79
One Group Bond Fund
Class A Shares $53 $71 $90 $145
Class A Shares (without fee waivers) $56 $80 $106 $180
Class B Shares $65/$15* $77/$47* $102/$82* $161**
Class B Shares (without fee waivers) $68/$18* $87/$57* $118/$98* $196**
Class I Shares $ 6 $19 $33 $75
Class I Shares (without fee waivers) $ 8 $26 $45 $100
Combined Fund Pro Forma
Class A Shares $53 $71 $90 $145
Class A Shares (without fee waivers) $56 $80 $106 $180
Class B Shares $65/$15* $77/$47* $102/$82* $161**
Class B Shares (without fee waivers) $68/$18* $87/$57* $118/$98* $196**
Class I Shares $ 6 $19 $33 $75
Class I Shares (without fee waivers) $ 8 $26 $45 $100
* Assuming no redemption of Class B shares
** Class B shares of the One Group Bond Fund and Combined Fund automatically
convert to Class A shares after eight (8) years. Therefore, the "10 Years"
example above reflects this conversion.
+ Assumes conversion to Class A shares
-28-
135
Pegasus One Group
Short Bond Short-Term Bond Combined
Fund Fund(1) Fund Pro Forma
---- ------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 1.00% None None 3.00% None None 3.00% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a
percentage of original purchase
price or redemption proceeds,
as applicable) None+ 1.00% None None+ 3.00% None None+ 3.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(2) .35% .35% .35% .40% .40% .40% .32% .32% .32%
12b-1 Fees (after fee waivers)(3) None .75% None .25% .75% None .25% .75% None
Other Expenses .49% .49% .24% .22% .22% .22% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(4,5) .84% 1.59% .59% .87% 1.37% .62% .78% 1.28% .53%
- --------------------------
* If shares of the One Group Short-Term Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group Short-Term
Bond Fund and Combined Fund would be .60% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Short
Bond Fund and Class A and Class B Shareholders of the One Group
Short-Term Bond Fund and Combined Fund may pay more than the equivalent
of the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares and 1.00% for Class
B shares of the One Group Short-Term Bond Fund and Combined Fund. The
amount of 12b-1 Fees shown for the One Group Short-Term Bond Fund and
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Short Bond Fund are reflected under "Other
Expenses."
(4) The Investment Adviser of the Pegasus Short Bond Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to .86%, 1.61% and
.61%, respectively, for the Class A, Class B and Class I shares.
(5) Without the voluntary reduction of Investment advisory and 12b-1 Fees,
Total Fund Operating Expenses would be 1.17% for Class A shares, 1.82%
for Class B shares, and .82% for Class I shares of the One Group
Short-Term Bond Fund and 1.16% for Class A shares, 1.81% for Class B
shares and .81% for Class I shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Short Bond Fund
Class A Shares $19 $37 $56 $113
Class B Shares $26/$16* $42+ $62+ $118+
Class I Shares $ 6 $19 $33 $ 74
One Group Short-Term Bond Fund
Class A Shares $39 $57 $77 $134
Class A Shares (without fee waivers) $42 $66 $92 $168
Class B Shares $44/$14* $63/$43* $75 $138**
Class B Shares (without fee waivers) $48/$18* $77/$57* $99 $181**
Class I Shares $ 6 $20 $35 $ 77
Class I Shares (without fee waivers) $ 8 $26 $46 $101
Combined Fund Pro Forma
Class A Shares $38 $54 $72 $124
Class A Shares (without fee waivers) $41 $66 $92 $167
Class B Shares $43/$13* $61/$41* $70* $128**
Class B Shares (without fee waivers) $48/$18* $77/$57* $98* $180**
Class I Shares $ 5 $17 $30 $66
Class I Shares (without fee waivers) $ 8 $26 $45 $100
* Assuming no redemption of Class B shares
** Class B shares of the One Group Short-Term Bond Fund and the Combined Fund
automatically convert to Class A shares after six (6) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-29-
136
Pegasus One Group
Multi Sector Bond Income Bond Combined
Fund Fund(1) Fund Pro Forma
---- ------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 3.00% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds,
as applicable) None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(2) .40% .40% .40% .40% .40% .40% .41% .41% .41%
12b-1 Fees (after fee waivers)(3) None .75% None .25% .90% None .25% .90% None
Other Expenses .50% .50% .25% .22% .22% .22% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(4,5) .90% 1.65% .65% .87% 1.52% .62% .87% 1.52% .62%
- --------------------------
* If shares of the One Group Income Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group Income Bond
Fund and Combined Fund would be .60% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Multi
Sector Bond Fund and Class A and Class B shareholders of the One Group
Income Bond Fund and Combined Fund may pay more than the equivalent of
the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares and 1.00% for Class
B shares of the One Group Income Bond Fund and Combined Fund. The
amount of 12b-1 Fees shown for the One Group Income Bond Fund and
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Multi Sector Bond Fund are reflected under
"Other Expenses."
(4) The Investment Adviser of the Pegasus Multi Sector Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .92%,
1.67% and .67%, respectively, for the Class A, Class B and Class I
shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees,
Total Fund Operating Expenses would be 1.17% for Class A shares, 1.82%
for Class B shares and .82% for Class I shares of the One Group Income
Bond Fund and 1.16% for Class A shares, 1.81% for Class B shares and
.81% for Class I shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Multi Sector Bond Fund
Class A Shares $39 $58 $79 $138
Class B Shares $47/$17* $72/$52* $100/$90* $158+
Class I Shares $ 7 $21 $36 $ 81
One Group Income Bond Fund
Class A Shares $53 $72 $91 $147
Class A Shares (without fee waivers) $56 $80 $106 $181
Class B Shares $65/$15* $78/$48* $103/$83* $164**
Class B Shares (without fee waivers) $68/$18* $87/$57* $119/$99* $197**
Class I Shares $ 6 $20 $35 $ 77
Class I Shares (without fee waivers) $ 8 $26 $46 $101
Combined Fund Pro Forma
Class A Shares $53 $72 $91 $147
Class A Shares (without fee waivers) $56 $80 $106 $180
Class B Shares $65/$15* $78/$48* $103/$83* $164**
Class B Shares (without fee waivers) $68/$18* $87/$57* $118/$98* $196**
Class I Shares $ 6 $20 $35 $ 77
Class I Shares (without fee waivers) $ 8 $26 $45 $100
* Assuming no redemption of Class B shares
** Class B shares of the One Group Income Bond Fund automatically convert to
Class A shares after eight (8) years. Therefore, the "10 Years" example
above reflects this conversion.
+ Assumes conversion to Class A shares
-30-
137
Pegasus One Group
High Yield Bond High Yield Bond Combined
Fund(1) Fund(1) Fund Pro Forma
------- ------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds,
as applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee waivers)(2) .60% .60% .60% .60% .60% .60% .60% .60% .60%
12b-1 Fees (after fee waivers)(3) None .75% None .25% .90% None .25% .90% None
Other Expenses(4) .54% .54% .29% .35% .35% .35% .27% .27% .27%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)(5,6) 1.14% 1.89% .89% 1.20% 1.85% .95% 1.12% 1.77% .87%
- --------------------------
* If shares of the One Group High Yield Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the Pegasus High Yield Bond
Fund would be .70% for all classes of shares. Without the fee waivers,
Advisory Fees for the One Group High Yield Bond Fund and Combined Fund
would be .75% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus High
Yield Bond Fund and Class A and Class B shareholders of the One Group
High Yield Bond Fund and Combined Fund may pay more than the equivalent
of the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares and 1.00% for Class
B shares of the One Group High Yield Bond Fund and Combined Fund. The
amount of 12b-1 Fees shown for the Class A and Class B Shareholders of
the One Group High Yield Bond Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees
payable by the Pegasus High Yield Bond Fund are reflected under "Other
Expenses."
(4) Other Expenses are based on estimated amounts for the current fiscal
year.
(5) The Investment Adviser of the Pegasus High Yield Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.14%,
1.89% and .89%, respectively, for the Class A, Class B and Class I
shares.
(6) Without the voluntary reduction of Investment Advisory and/or expense
reimbursements, Total Fund Operating Expenses would be 1.24% for Class
A shares, 1.99% for Class B shares, and .99% for Class I shares of the
Pegasus High Yield Bond Fund. Without the voluntary reduction of
Investment Advisory and 12b-1 Fees, Total Fund Operating Expenses would
be 1.45% for Class A shares, 2.10% for Class B shares, and 1.10% for
Class I shares of the One Group High Yield Bond Fund and 1.37% for
Class A shares, 2.02% for Class B shares and 1.02% for Class I shares
of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus High Yield Bond Fund
Class A Shares $61 $85 $110 $182
Class B Shares $69/$19* $90/$60* $123/$103* $194+
Class I Shares $ 9 $29 $ 50 $110
One Group High Yield Bond Fund
Class A Shares $57 $81 N/A N/A
Class A Shares (without fee waivers) $59 $89 N/A N/A
Class B Shares $69/$19* $88/$58* N/A N/A
Class B Shares (without fee waivers) $71/$21* $96/$66* N/A N/A
Class I Shares $10 $30 N/A N/A
Class I Shares (without fee waivers) $11 $35 N/A N/A
Combined Fund Pro Forma
Class A Shares $56 $79 $104 $175
Class A Shares (without fee waivers) $58 $86 $117 $202
Class B Shares $68/$18* $86/$56* $116/$96* $191*
Class B Shares (without fee waivers) $71/$21* $93/$63* $129/$109* $218*
Class I Shares $ 9 $28 $48 $107
Class I Shares (without fee waivers) $10 $32 $56 $125
* Assuming no redemption of Class B shares
+ Assumes conversion to Class A shares
-31-
138
Pegasus One Group
Municipal Bond Tax-Free Bond Combined
Fund Fund* Fund Pro Forma
-------------- ------------- --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee waivers)(1) .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees (after fee waivers)(2) None .75% None .25% .90% None .25% .90% None
Other Expenses(3) .48% .48% .23% .22% .22% .22% .22% .22% .22%
Total Fund Operating Expenses
(after fee waivers)(4,5) .88% 1.63% .63% .87% 1.52% .62% .87% 1.52% .62%
- --------------------------
* The One Group Tax-Free Bond Fund has not yet commenced operations. The
One Group Tax-Free Bond Fund will continue the operations of the
Pegasus Municipal Bond Fund upon consummation of the Reorganization
relating to that Fund.
** If shares of the One Group Tax-Free Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts
paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Without the fee waivers, Advisory Fees for the One Group Tax-Free Bond
Fund and Combined Fund would be .45% for all classes of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Municipal Bond Fund and Class A and Class B shareholders of the One
Group Tax-Free Bond Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares and 1.00%
for Class B shares of the One Group Tax-Free Bond Fund and the Combined
Fund. The amount of 12b-1 Fees shown for the One Group Tax-Free Bond
Fund and the Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A and
Class B shareholders of the Pegasus Municipal Bond Fund are reflected
under "Other Expenses."
(3) Other Expenses for the One Group Tax-Free Bond Fund and Combined Fund
are based on estimated amounts for the current fiscal year. Without the
fee waiver, Other Expenses for the One Group Tax-Free Bond Fund and
Combined Fund would be .23% for all classes of shares.
(4) The Investment Adviser of the Pegasus Municipal Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .98%,
1.73% and .73%, respectively, for the Class A, Class B and Class I
shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 fees,
Total Fund Operating Expenses would be 1.03% for Class A shares, 1.68%
for Class B shares, and .68% for Class I shares of the One Group
Tax-Free Bond Fund and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Municipal Bond Fund
Class A Shares $54 $72 $92 $149
Class B Shares $67/$17* $82/$52* $109/$89* $165+
Class I Shares $ 6 $20 $35 $79
One Group Tax-Free Bond Fund
Class A Shares $53 $72 $91 $147
Class A Shares (without fee waivers) $55 $76 $99 $165
Class B Shares $65/$15* $78/$48* $103/$83* $164**
Class B Shares (without fee waivers) $67/$17* $83/$53* $111/$91* $181**
Class I Shares $ 6 $20 $35 $77
Class I Shares (without fee waivers) $11 $33 $57 $126
Combined Fund Pro Forma
Class A Shares $53 $72 $91 $147
Class A Shares (without fee waivers) $55 $76 $99 $165
Class B Shares $65/$15* $78/$48* $103/$83* $164**
Class B Shares (without fee waivers) $67/$17* $83/$53* $111/$91* $181**
Class I Shares $ 6 $20 $35 $77
Class I Shares (without fee waivers) $11 $33 $57 $126
* Assuming no redemption of Class B shares
** Class B shares of the One Group Tax-Free Bond Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-32-
139
One Group
Pegasus Short-Term
Short Municipal Municipal Combined
Bond Fund Bond Fund Fund Pro Forma
--------------- ------------ --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 1.00% None None 3.00% None None 3.00% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 1.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES(1)
(as a percentage of average
daily net assets)
Advisory Fees (after fee waivers)(2) .33% .33% .33% .35% .35% .35% .35% .35% .35%
12b-1 Fees (after fee waivers)(3) None .75% None .25% .90% None .25% .90% None
Other Expenses(4) .54% .54% .29% .27% .27% .27% .27% .27% .27%
Total Fund Operating Expenses
(after fee waivers)(5,6) .87% 1.62% .62% .87% 1.52% .62% .87% 1.52% .62%
- --------------------------
* The One Group Short-Term Municipal Bond Fund has not yet commenced
operations. The One Group Short-Term Municipal Bond Fund will continue
the operations of the Pegasus Short Municipal Bond Fund upon
consummation of the Reorganization relating to that Fund.
** If shares of the One Group Short-Term Municipal Bond Fund or Combined
Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the
Shareholder Servicing Agent. In addition, a $10.00 sub-minimum account
fee may be applicable and a $7.00 charge will be deducted from
redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees would be .40% for the Pegasus
Short Municipal Bond Fund and .60% for the One Group Short-Term
Municipal Bond Fund and Combined Fund for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Short
Municipal Bond Fund and Class A and Class B shares of the One Group
Short-Term Municipal Bond Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waivers, 12b-1 Fees would be .35% for Class A shares and
1.00% for Class B shares of the One Group Short-Term Municipal Bond
Fund and Combined Fund. The amount of 12b-1 Fees shown for the One
Group Short-Term Municipal Bond Fund and the Combined Fund includes
fees for shareholder servicing and distribution. Shareholder servicing
fees payable by the Class A and Class B shareholders of the Pegasus
Short Municipal Bond Fund are reflected under "Other Expenses."
(4) Other Expenses for the One Group Short-Term Municipal Bond Fund and
Combined Fund are based on estimated amounts for the current fiscal
year. Without the fee waiver, Other Expenses for the One Group
Short-Term Municipal Bond Fund and Combined Fund would be .29% for all
classes of shares.
(5) The Investment Adviser of the Pegasus Short Municipal Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .87%,
1.62% and .62%, respectively, for the Class A, Class B and Class I
shares.
(6) Without the voluntary reduction of Investment Advisory fees and other
expenses, Total Fund Operating Expenses would be .94% for Class A
shares, 1.69% for Class B shares, and .69% for Class I shares of the
Pegasus Short Municipal Bond Fund. Without the voluntary reduction of
Investment Advisory and 12b-1 Fees, Total Fund Operating Expenses would
be 1.24% for Class A shares, 1.89% for Class B shares, and .89% for
Class I shares of the One Group Short-Term Municipal Bond Fund and
Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Short Municipal Bond Fund
Class A Shares $19 $38 N/A N/A
Class B Shares $26/$17* $43+ N/A N/A
Class I Shares $ 6 $20 N/A N/A
One Group Short-Term Municipal Bond Fund
Class A Shares $54 $72 $92 $149
Class A Shares (without fee waivers) $57 $83 $110 $188
Class B Shares $46/$16* $68/$48* $83* $149**
Class B Shares (without fee waivers) $49/$19* $79/$59* $102* $189**
Class I Shares $ 6 $20 $35 $79
Class I Shares (without fee waivers) $ 9 $28 $49 $116
Combined Fund Pro Forma
Class A Shares $54 $72 $92 $149
Class A Shares (without fee waivers) $57 $83 $110 $188
Class B Shares $46/$16* $68/$48* $83* $149**
Class B Shares (without fee waivers) $49/$19* $79/$59* $102* $189**
Class I Shares $ 6 $20 $35 $79
Class I Shares (without fee waivers) $ 9 $28 $49 $116
* Assuming no redemption of Class B shares
** Class B shares of the One Group Short-Term Bond Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore,
the "10 years" examples above reflect this conversion.
+ Assumes conversion to Class A shares
-33-
140
Pegasus One Group
Intermediate Intermediate
Municipal Tax-Free Combined
Bond Fund Bond Fund(1) Fund Pro Forma
--------------- ------------ --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 3.00% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2) .40% .40% .40% .42% .42% .42% .39% .39% .39%
12b-1 Fees (after fee waivers)(3) None .75% None .25% .90% None .25% .90% None
Other Expenses .45% .45% .20% .24% .24% .24% .19% .19% .19%
Total Fund Operating Expenses
(after fee waivers)(4,5) .85% 1.60% .60% .91% 1.56% .66% .83% 1.48% .58%
- --------------------------
* If shares of the One Group Intermediate Tax-Free Bond Fund or Combined
Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the
Shareholder Servicing Agent. In addition, a $10.00 sub-minimum account
fee may be applicable and a $7.00 charge will be deducted from
redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group Intermediate
Tax-Free Bond Fund and Combined Fund would be .60% for all classes of
shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Intermediate Municipal Bond Fund and Class A and Class B shareholders
of the One Group Intermediate Tax-Free Bond Fund and Combined Fund may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. Without the voluntary waiver, 12b-1 Fees would be .35% for
Class A shares and 1.00% for Class B shares of the One Group
Intermediate Tax-Free Bond Fund and Combined Fund. The amount of 12b-1
Fees shown for the One Group Intermediate Tax-Free Bond Fund and
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Intermediate Municipal Bond Fund are
reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Intermediate Municipal Bond Fund
has voluntarily agreed to limit the Total Fund Operating Expenses to
.93%, 1.68% and .68%, respectively, for the Class A, Class B and Class
I shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees,
Total Fund Operating Expenses would be 1.19% for Class A shares, 1.84%
for Class B shares, and .84% for Class I shares of the One Group
Intermediate Tax-Free Bond Fund and 1.14% for Class A shares, 1.79% for
Class B shares and .79% for Class I shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Intermediate Municipal Bond Fund
Class A Shares $38 $56 $76 $132
Class B Shares $46/$16* $71/$51* $98/$88* $152+
Class I Shares $ 6 $19 $34 $75
One Group Intermediate Tax-Free Bond Fund
Class A Shares $ 54 $73 $93 $152
Class A Shares (without fee waivers) $ 57 $81 $107 $185
Class B Shares $66/$16* $79/$49* $105/$85* $168**
Class B Shares (without fee waivers) $69/$19* $88/$58* $120/$101* $199**
Class I Shares $ 7 $21 $37 $82
Class I Shares (without fee waivers) $ 9 $27 $47 $104
Combined Fund Pro Forma
Class A Shares $53 $70 $89 $143
Class A Shares (without fee waivers) $56 $80 $105 $177
Class B Shares $65/$15* $77/$47* $101/$81* $159**
Class B Shares (without fee waivers) $68/$18* $86/$56* $117/$97* $193**
Class I Shares $ 6 $19 $32 $73
Class I Shares (without fee waivers) $ 8 $25 $44 $98
* Assuming no redemption of Class B shares
** Class B shares of the One Group Intermediate Tax-Free Bond Fund and the
Combined Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-34-
141
Pegasus One Group
Michigan Municipal Michigan Municipal Combined
Bond Fund Bond Fund Fund Pro Forma
------------------ ------------------ --------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
Shares Shares Shares Shares Shares Shares Shares Shares Shares
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable) None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee waivers)(1) .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees (after fee waivers)(2) None .75% None .25% .90% None .25% .90% None
Other Expenses(3) .51% .51% .26% .25% .25% .25% .25% .25% .25%
Total Fund Operating Expenses
(after fee waivers)(4) .91% 1.66% .66% .90% 1.55% .65% .90% 1.55% .65%
- --------------------------
* The One Group Michigan Municipal Bond Fund has not yet commenced
operations. The One Group Michigan Municipal Bond Fund will continue
the operations of the Pegasus Michigan Municipal Bond Fund upon
consummation of the Reorganization relating to that Fund.
** If shares of the One Group Michigan Municipal Bond Fund or Combined
Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the
Shareholder Servicing Agent. In addition, a $10.00 sub-minimum account
fee may be applicable and a $7.00 charge will be deducted from the
redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial
sales charge as part of an investment of $1 million or more.
(1) Without the fee waiver, Investment Advisory Fees for the One Group
Michigan Municipal Bond Fund and Combined Fund would be .45% for all
classes of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Michigan Municipal Bond Fund and Class A and Class B shareholders of
the One Group Michigan Municipal Bond Fund and Combined Fund may pay
more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities
Dealers. Without the voluntary waivers, 12b-1 Fees would be .35% for
Class A shares and 1.00% for Class B shares of the One Group Michigan
Municipal Bond Fund and the Combined Fund. The amount of 12b-1 Fees
shown for the One Group Michigan Municipal Bond and Combined Fund
includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Michigan Municipal Bond Fund are reflected under "Other
Expenses."
(3) Other Expenses for the One Group Michigan Municipal Bond Fund and
Combined Fund are based on estimated amounts for the current fiscal
year. Without the fee waiver, Other Expenses for the One Group Michigan
Municipal Bond Fund and Combined Fund would be .26% for all classes of
shares.
(4) The Investment Adviser of the Pegasus Michigan Municipal Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 0.98%,
1.73% and 0.73%, respectively, for the Class A, Class B and Class I
shares. Without the voluntary reduction of Investment Advisory and
12b-1 Fees, Total Fund Operating Expenses would be 1.06% for Class A
shares, 1.71% for Class B shares, and .71% for Class I shares of the
One Group Michigan Municipal Bond Fund and Combined Fund.
-35-
142
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (2)
redemption at the end of the following periods:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Pegasus Michigan Municipal Bond Fund
Class A Shares $54 $73 $93 $152
Class B Shares $67/$17* $83/$53* $111/$91* $168+
Class I Shares $ 7 $21 $37 $82
One Group Michigan Municipal Bond Fund
Class A Shares $54 $72 $93 $151
Class A Shares (without fee waivers) $55 $77 $101 $169
Class B Shares $66/$16* $79/$49* $104/$84* $167**
Class B Shares (without fee waivers) $67/$17* $84/$54* $113/$93* $185**
Class I Shares $ 7 $21 $36 $81
Class I Shares (without fee waivers) $ 7 $23 $40 $88
Combined Fund Pro Forma
Class A Shares $54 $72 $93 $151
Class A Shares (without fee waivers) $55 $77 $101 $169
Class B Shares $66/$16* $79/$49* $104/$84* $167**
Class B Shares (without fee waivers) $67/$17* $84/$54* $113/$93* $185**
Class I Shares $ 7 $21 $36 $81
Class I Shares (without fee waivers) $ 7 $23 $40 $88
* Assuming no redemption of Class B shares
** Class B shares of the One Group Michigan Municipal Bond Fund and Combined
Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
-36-
143
APPENDIX III
COMPARISON OF INVESTMENT
OBJECTIVES AND CERTAIN SIGNIFICANT POLICIES
This Appendix sets forth the investment objectives and certain
significant investment policies of the Pegasus Portfolios and The One Group
Funds. The investment objective and certain investment policies of each of the
Pegasus Portfolios and One Group Funds are fundamental. This means that they may
not be changed without a vote of the holders of a majority of a fund's
outstanding shares, as defined by the 1940 Act. Investment policies of the
Pegasus Portfolios and One Group Funds that are not fundamental may be changed
by the respective Board of Trustees. The following is qualified in its entirety
by the more detailed information included in the prospectuses and statements of
additional information for the Reorganizing Pegasus Portfolios and the
corresponding Existing One Group Funds which are incorporated by reference in
this Combined Prospectus/Proxy Statement.
PEGASUS MONEY MARKET FUND AND THE ONE GROUP PRIME MONEY MARKET FUND.
The Pegasus Money Market Fund's investment objective is to seek to
provide a high level of current income consistent with the preservation of
capital and liquidity. The One Group Prime Money Market Fund seeks current
income with liquidity and stability of principal. Each Fund pursues its
investment objective by investing in a diversified portfolio of high quality
money market instruments.
PEGASUS TREASURY MONEY MARKET FUND AND THE ONE GROUP U.S. TREASURY
SECURITIES MONEY MARKET FUND.
The Pegasus Treasury Money Market Fund's investment objective is to
seek to provide a high level of current income consistent with the preservation
of capital and liquidity. The One Group U.S. Treasury Securities Money Market
Fund seeks current income with liquidity and stability of principal. Each Fund
invests exclusively in short-term U.S. Treasury obligations, including
repurchase agreements collateralized by such Treasury obligations and
when-issued securities.
The One Group U.S. Treasury Securities Money Market Fund has a
fundamental policy that says the Fund will invest only in U.S. Treasury
obligations and repurchase agreements collateralized by such obligations. The
Pegasus Treasury Money Market Fund has a similar investment policy, but it is
not fundamental.
III-1
144
PEGASUS MUNICIPAL MONEY MARKET FUND AND ONE GROUP MUNICIPAL MONEY
MARKET FUND.
The Pegasus Municipal Money Market Fund's investment objective is to
seek to provide a high level of current interest income that is exempt from
Federal income taxes consistent with the preservation of capital and liquidity.
The One Group Municipal Money Market Fund seeks as high a level of current
interest income exempt from Federal income tax as is consistent with capital
preservation and stability of principal. Under normal market conditions, both
Funds invest at least 80% of their assets in high quality obligations issued by
or on behalf of the states, territories and possessions of the United States,
including the District of Columbia, and their respective political subdivisions,
agencies, instrumentalities and authorities, the interest on which is exempt
from regular Federal income tax ("Municipal Securities"). The Funds have no
limitation on investments in Municipal Securities that produce income that is
subject to the Federal alternative minimum tax.
PEGASUS MICHIGAN MUNICIPAL MONEY MARKET FUND AND THE ONE GROUP MICHIGAN
MUNICIPAL MONEY MARKET FUND.
The investment objective of both Funds is to seek as high a level of
current interest income exempt from Federal income tax and Michigan personal
income tax as is consistent with capital preservation and stability of
principal. The Pegasus Michigan Municipal Money Market Fund, under normal market
conditions will invest at least 65% of its assets in high quality debt
obligations issued by the State of Michigan, its political subdivisions,
municipalities, corporation and authorities, the interest on which, in the
opinion of bond counsel, is exempt from regular Federal income tax and Michigan
personal income tax ("Michigan Municipal Securities"). The One Group Michigan
Municipal Money Market Fund, as a matter of fundamental policy, must invest at
least 80% of its assets in Michigan Municipal Securities. The One Group Michigan
Municipal Money Market Fund was created to continue the business of the Pegasus
Michigan Municipal Money Market Fund.
PEGASUS CASH MANAGEMENT FUND AND THE ONE GROUP CASH MANAGEMENT MONEY
MARKET FUND.
The Pegasus Cash Management Fund's investment objective is to provide
investors with as high a level of current income as is consistent with the
preservation of capital and maintenance of liquidity. The One Group Cash
Management Money Market Fund seeks high current income with liquidity and
stability of principal. The One Group Cash Management Money Market Fund was
created to continue the business of the Pegasus Cash Management Fund.
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The Pegasus Cash Management Fund invests in short-term money market
obligations, including securities that are issued or guaranteed by the U.S.
government or its agencies, certificates of deposit, time deposits, bankers'
acceptances and other short-term obligations issued by domestic banks, foreign
subsidiaries of domestic banks and foreign banks and thrift institutions,
guaranteed investment contracts, repurchase agreements, and high quality
domestic and foreign commercial paper and other eligible short-term obligations.
During normal market conditions, at least 25% of the Fund's total assets will be
invested in bank obligations or instruments secured by such obligations.
The One Group Cash Management Money Market Fund invests in short-term
money market obligations, including securities that are issued or guaranteed by
the U.S. government or by select U.S. government agencies and instrumentalities,
some of which are subject to repurchase agreements, certificates of deposit,
variable and floating rate instruments, mortgage-backed securities, puts and
other short-term obligations. The Fund may also invest in other money market
funds if those funds have similar investment policies and objectives. At least
25% of the Fund's total assets will be invested in bank obligations. The Fund
also engages in securities lending. Both Funds will only acquire securities with
a maturity of 397 days or less.
It is a fundamental policy of The One Group Cash Management Money
Market Fund to maintain a constant net asset value of $1 per share, although
there is no guarantee that the Fund will be able to do so. The Pegasus Cash
Management Fund has a similar investment policy, but it is not fundamental.
PEGASUS TREASURY CASH MANAGEMENT FUND AND THE ONE GROUP TREASURY CASH
MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus Treasury Cash
Management Fund are substantially the same as those of the corresponding One
Group Treasury Cash Management Money Market Fund. The Pegasus Treasury Cash
Management Fund seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity. The One Group Treasury Cash Management Money Market Fund seeks high
current income with liquidity and stability of principal.
The Pegasus Treasury Cash Management Fund invests in U.S. Treasury
bills, notes, and direct U.S. Treasury obligations having remaining maturities
at 397 days or less. The Fund also invests in repurchase agreements relating to
U.S. Treasury obligations. The One Group Treasury Cash Management Money Market
Fund invests exclusively in U.S. Treasury bills, notes, bonds and other U.S.
obligations issued or guaranteed by the U.S. Treasury, some of which are subject
to repurchase agreements. The Fund also engages in securities lending. Both
Funds will only acquire securities with a maturity at 397 days or less.
It is a fundamental policy of The One Group Treasury Cash Management
Money Market Fund to maintain a constant net asset value of $1 per share,
although there is no guarantee that the Fund will be able to do so. The Pegasus
Treasury Cash Management Fund has a similar investment policy, but it is not
fundamental.
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The One Group Treasury Cash Management Money Market Fund was created to
continue the business of the Pegasus Treasury Cash Management Fund.
PEGASUS TREASURY PRIME CASH MANAGEMENT FUND AND THE ONE GROUP TREASURY
PRIME CASH MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus Treasury Prime
Cash Management Fund are substantially the same as those of the corresponding
One Group Treasury Prime Cash Management Money Market Fund. The Pegasus Treasury
Prime Cash Management Fund seeks to provide investors with as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. The One Group Treasury Prime Cash Management Money
Market Fund seeks high current income with liquidity and stability of principal.
The Pegasus Treasury Prime Cash Management Fund invests in U.S.
Treasury bills, notes, and direct U.S. Treasury obligations having remaining
maturities at 397 days or less. The One Group Treasury Prime Cash Management
Money Market Fund invests in U.S. Treasury bills, notes, bonds and other U.S.
obligations issued or guaranteed by the U.S. Treasury having remaining
maturities of 397 days or less. The Fund also engages in securities lending.
Neither Fund invests in repurchase agreements.
It is a fundamental policy of The One Group Treasury Prime Cash
Management Money Market Fund to maintain a constant net asset value of $1 per
share, although there is no guarantee that the Fund will be able to do so. The
Pegasus Treasury Prime Cash Management Fund has a similar investment policy, but
it is not fundamental.
The One Group Treasury Prime Cash Management Money Market Fund was
created to continue the business of the Pegasus Treasury Prime Cash Management
Fund.
PEGASUS U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND AND THE ONE
GROUP U.S. GOVERNMENT SECURITIES CASH MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus U.S. Government
Securities Cash Management Fund are substantially the same as those of the
corresponding One Group U.S. Government Securities Cash Management Money Market
Fund. The Pegasus U.S. Government Securities Cash Management Fund seeks to
provide investors with as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. The One Group U.S.
Government Securities Cash Management Money Market Fund seeks high income with
liquidity and stability of principal. Each pursues its investment objective by
investing only in short-term securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; and repurchase agreements
relating to such securities. The One Group U.S. Government Securities Cash
Management Money Market Fund also engages in securities lending. Both Funds will
only acquire securities with a maturity of 397 days or less.
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It is a fundamental policy of The One Group U.S. Government Securities
Cash Management Money Market Fund to maintain a constant net asset value of $1
per share, although there is no guarantee that the Fund will be able to do so.
The Pegasus U.S. Government Securities Cash Management Fund has a similar
investment policy, but it is not fundamental.
The One Group U.S. Government Securities Cash Management Money Market
Fund was created to continue the business of the Pegasus U.S. Government
Securities Cash Management Fund.
PEGASUS MUNICIPAL CASH MANAGEMENT FUND AND THE ONE GROUP MUNICIPAL CASH
MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus Municipal Cash
Management Fund are substantially the same as those of the corresponding One
Group Municipal Cash Management Money Market Fund. The Pegasus Municipal Cash
Management Fund seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity. The One Group Municipal Cash Management Money Market Fund seeks high
current income exempt from Federal Income tax with liquidity and stability or
principal.
Each Fund invests at least 80% of its assets in the same types of
municipal securities, that, in the opinion of bond counsel for the issuer, are
exempt from Federal income tax. The investments are in high quality debt
obligations issued by or on behalf of states, territories and possessions of the
United States, including the District of Columbia, and their respective
political subdivisions and authorities. However, under extraordinary
circumstances, both Funds may adopt a temporary defensive position by holding
uninvested cash or investing in taxable short-term securities. Both Funds will
only acquire securities with a maturity of 397 days or less.
The Funds may engage in repurchase agreements and lend their
securities. Each Fund may also invest as much as 100% of its assets in municipal
securities that produce income that is subject to the Federal alternative
minimum tax.
It is a fundamental policy of The One Group Municipal Cash Management
Money Market Fund to maintain a constant net asset value of $1 per share,
although there is no guarantee that the Fund will be able to do so. The Pegasus
Municipal Cash Management Fund has a similar investment policy, but it is not
fundamental.
The One Group Municipal Cash Management Money Market Fund was created
to continue the business of the Pegasus Municipal Cash Management Fund.
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PEGASUS MANAGED ASSETS CONSERVATIVE FUND AND THE ONE GROUP INVESTOR
BALANCED FUND.
The Pegasus Managed Assets Conservative Fund's investment objective is
to seek to provide long-term total return; capital appreciation is a secondary
consideration. The Fund invests primarily in various equity, fixed income and
money market funds of Pegasus. The One Group Investor Balanced Fund's investment
objective is to seek high total return consistent with the preservation of
capital by investing primarily in a diversified group of The One Group mutual
funds which invest primarily in equity and fixed income securities.
While the range of underlying funds in which each of the Pegasus
Managed Assets Conservative Fund and The One Group Investor Balanced Fund
invests have similar investment objectives and policies, the Funds differ in
their target asset allocations. The Pegasus Managed Assets Conservative Fund
seeks to achieve a target asset allocation consisting of 30%-50% in equity
exposure, 50%-70% in debt exposure, and 0%-20% in cash equivalents. The Fund
achieves the target allocation by investing in up to eight Pegasus equity funds
to provide the desired equity exposure, up to six Pegasus fixed income funds to
provide the desired debt exposure, and the Pegasus Money Market Fund to provide
the desired cash equivalency. In order to meet liquidity needs and for temporary
defensive purposes, the Pegasus Managed Assets Conservative Fund also may invest
directly in short-term U.S. Government obligations and high quality money market
instruments. The One Group Investor Balanced Fund invests 40%-60% of its total
assets in twelve mutual funds of The One Group which invest primarily in equity
securities, 40%-60% of its total assets in six mutual funds of The One Group
that invest primarily in fixed income securities, and up to 10% of its assets in
one money market fund of The One Group. The One Group Investor Balanced Fund may
also hold cash and cash equivalents.
PEGASUS MANAGED ASSETS BALANCED FUND AND THE ONE GROUP INVESTOR GROWTH
& INCOME FUND.
The Pegasus Managed Assets Balanced Fund's investment objective is to
achieve long-term total return through a combination of capital appreciation and
current income. The Fund invests primarily in various equity, fixed income and
money market funds of Pegasus. The One Group Investor Growth & Income Fund's
investment objective is to seek long-term capital appreciation and growth of
income by investing primarily in a diversified group of The One Group mutual
funds which invest primarily in equity securities.
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While the range of underlying funds in which each of the Pegasus
Managed Assets Balanced Fund and The One Group Investor Growth & Income Fund
invests have similar investment objectives and policies, the Funds differ in
their target asset allocations. The Pegasus Managed Assets Balanced Fund seeks
to achieve a target asset allocation consisting of 50%-70% in equity exposure,
30%-50% in debt exposure, and 0%-20% in cash equivalents. The Fund achieves the
target allocation by investing in up to eight Pegasus equity funds to provide
the desired equity exposure, up to six Pegasus fixed income funds to provide the
desired debt exposure, and the Pegasus Money Market Fund to provide the desired
cash equivalency. In order to meet liquidity needs and for temporary defensive
purposes, the Pegasus Managed Assets Balanced Fund also may invest directly in
short-term U.S. Government obligations and high quality money market
instruments. The One Group Investor Growth & Income Fund invests 60%-80% of its
total assets in twelve mutual funds of The One Group which invest primarily in
equity securities, 20%-40% of its total assets in eight mutual funds of The One
Group that invest primarily in fixed income securities, and up to 10% of its
assets in one money market fund of The One Group. The One Group Investor Growth
& Income Fund also may hold cash and cash equivalents.
PEGASUS MANAGED ASSETS GROWTH FUND AND THE ONE GROUP INVESTOR GROWTH
FUND.
The Pegasus Managed Assets Growth Fund's investment objective is to
achieve long-term total return; current income is a secondary consideration. The
Fund invests primarily in various equity, fixed income and money market funds of
Pegasus. The One Group Investor Growth Fund's investment objective is to seek
long-term capital appreciation by investing primarily in a diversified group of
The One Group mutual funds which invest primarily in equity securities.
While the range of underlying funds in which each of the Pegasus
Managed Assets Growth Fund and The One Group Investor Growth Fund invests have
similar investment objectives and policies, the Funds differ in their target
asset allocations. The Pegasus Managed Assets Growth Fund seeks to achieve a
target asset allocation consisting of 70%-90% in equity exposure, 10%-30% in
debt exposure, and 0%-20% in cash equivalents. The Fund achieves the target
allocation by investing in up to eight Pegasus equity funds to provide the
desired equity exposure, up to six Pegasus fixed income funds to provide the
desired debt exposure, and the Pegasus Money Market Fund to provide the desired
cash equivalency. In order to meet liquidity needs and for temporary defensive
purposes, the Pegasus Managed Assets Growth Fund may invest directly in
short-term U.S. Government obligations and high quality money market
instruments. The One Group Investor Growth Fund invests 80%-100% of its total
assets in twelve mutual funds of The One Group which invest primarily in equity
securities, up to 20% of its total assets in seven mutual funds of The One Group
that invest primarily in fixed income securities, and up to 10% of its assets in
one money market fund of The One Group. The One Group Investor Growth Fund also
may hold cash and cash equivalents.
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PEGASUS SHORT BOND FUND AND THE ONE GROUP LIMITED VOLATILITY BOND FUND.
The Pegasus Short Bond Fund's investment objective is to maximize total
rate of return while providing relative stability of principal. The One Group
Limited Volatility Bond Fund's investment objective is to seek current income
consistent with preservation of capital through investment in high and
medium-grade fixed-income securities.
The Pegasus Short Bond Fund normally invests at least 65% of the value
of its total assets in various types of debt securities. It invests in a
portfolio of U.S. dollar denominated investment grade debt securities of
domestic and foreign issuers which have maturities or average lives of up to ten
years. Under normal market conditions, the Fund's average weighted maturity is
limited to a maximum of three years. The One Group Limited Volatility Bond Fund
invests at least 80% of its total assets in debt securities with short to
intermediate maturities. At least 65% of the Fund's total assets consist of
bonds and at least 65% of its total assets consists of obligations issued by the
U.S. Government, its agencies, or instrumentalities some of which may be subject
to repurchase agreements. The Fund's average weighted maturity ordinarily ranges
between one and five years, but the Fund may shorten the weighted average
maturity to as little as ninety days for temporary defensive purposes.
In connection with the Reorganization, The One Group Limited Volatility
Bond Fund is expected to change its name to The One Group Short-Term Bond Fund.
PEGASUS INTERMEDIATE BOND FUND AND THE ONE GROUP INTERMEDIATE BOND
FUND.
The Pegasus Intermediate Bond Fund's investment objective is to seek to
maximize total rate of return while providing relative stability of principal by
investing predominantly in intermediate-term debt securities. The One Group
Intermediate Bond Fund's investment objective is to seek current income
consistent with the preservation of capital by investing in high and
medium-grade fixed income securities with intermediate maturities.
Under normal market conditions, the Pegasus Intermediate Bond Fund
invests at least 65% of the value of its total assets in debt securities. The
Fund invests primarily in a portfolio of investment grade U.S. dollar
denominated debt securities of domestic and foreign issuers. The One Group
Intermediate Bond Fund normally invests at least 80% of its total assets in debt
securities of all types, including bonds, notes, U.S. Government obligations,
and taxable and tax-exempt municipal securities, rated as investment grade at
the time of investment or, if unrated, determined to be of comparable quality by
the Fund's investment adviser. As a matter of fundamental policy, at least 65%
of the Fund's total assets must consist of bonds and at least 50% of total
assets must consist of obligations issued by the U.S. Government, or its
agencies and instrumentalities, some of which may be subject to repurchase
agreements. The Pegasus Intermediate Bond Fund invests in securities which have
maturities or average lives of up to 15 years. During normal market conditions,
the Fund's average portfolio maturity is expected to be between three and six
years. The One Group Intermediate Bond Fund's average weighted maturity will
ordinarily range between three and ten years, although the Fund may shorten the
weighted average maturity to as little as one year for temporary defensive
purposes.
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PEGASUS MULTI SECTOR BOND FUND AND THE ONE GROUP INCOME BOND FUND.
The Pegasus Multi Sector Bond Fund's investment objective is to seek to
provide as high a level of current income as is consistent with relative
stability of principal. The One Group Income Bond Fund's investment objective is
to seek a high level of current income by investing primarily in a diversified
portfolio of high, medium and low grade debt securities.
Under normal market conditions, the Pegasus Multi Sector Bond Fund
invests at least 65% of the value of its total assets in debt securities. The
Fund invests primarily in a portfolio of U.S. dollar denominated investment
grade debt securities of domestic and foreign issuers. The One Group Income Bond
Fund invests at least 70% of its total assets in debt securities of all types
rated as investment grade at the time of investment or, if unrated, determined
to be of comparable quality by the Fund's investment adviser. Up to 30% of the
Fund's total assets may be invested in convertible securities, preferred stock,
loan participations and debt securities rated below investment grade or, if
unrated, determined to be of comparable quality by the Fund's investment
adviser. However, the Fund will not invest more than 20% of its total assets
below the fifth highest rating category. Securities rated below investment grade
are called "high yield bonds," and "junk bonds" and are considered to be
speculative. As a matter of fundamental policy, at least 65% of the Fund's total
assets must consist of bonds. The Fund may also purchase taxable or tax exempt
municipal securities.
Under normal market conditions, the Pegasus Multi Sector Bond Fund's
average weighted maturity is expected to range between three years and ten
years. The average weighted maturity of The One Group Income Bond Fund normally
ranges between five years and twenty years. The Pegasus Multi Sector Bond Fund
may invest in cash equivalent securities for temporary defensive purposes. The
One Group Income Bond Fund may shorten its weighted maturity to as little as two
years for temporary defensive purposes.
PEGASUS BOND FUND AND ONE GROUP BOND FUND.
The investment objectives of the Pegasus Bond Fund and The One Group Bond Fund
are substantively identical. Each Fund seeks to maximize total rate of return by
investing primarily in a diversified portfolio of intermediate and long-term
debt securities.
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Under normal market conditions, the Pegasus Bond Fund invests at least
65% of its total assets in debt securities. The Fund invests in a portfolio of
U.S. dollar denominated investment grade debt securities of domestic and foreign
issuers. The Fund may invest in cash equivalent securities for temporary
defensive purposes. The One Group Bond Fund invests in all types of debt
securities rated as investment grade, as well as convertible securities,
preferred stock, and loan participations. The Fund invests at least 65% of its
total assets in debt securities with intermediate to long maturities. The Fund
may also purchase taxable and tax-exempt securities. As a matter of fundamental
policy, at least 65% of the Fund's total assets must consist of bonds. The
Pegasus Bond Fund's average weighted maturity normally ranges between six years
and twelve years. The One Group Bond Fund's average maturity is between four and
twelve years. The One Group Bond Fund may shorten its weighted average maturity
for temporary defensive purposes.
The One Group Bond Fund was created to continue the business of the
Pegasus Bond Fund.
PEGASUS HIGH YIELD BOND FUND AND THE ONE GROUP HIGH YIELD BOND FUND.
The Pegasus High Yield Bond Fund's investment objective is to seek high
current income. It invests primarily in a diversified portfolio of U.S. dollar
denominated debt securities of domestic and foreign issuers which, under normal
market conditions, are expected to be lower-rated corporate debt obligations or
unrated obligations of comparable quality. The One Group High Yield Bond Fund's
investment objective is to seek a high level of current income by investing
primarily in a diversified portfolio of debt securities which are rated below
investment grade or unrated. Capital appreciation is a secondary objective.
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Both Funds invest primarily in junk bonds. Under normal market
conditions, the Pegasus High Yield Bond Fund invests at least 65% of its total
assets in debt securities. The Fund invests primarily in debt securities rated
in the fourth or lower rating categories, i.e., Baa or lower by Moody's Investor
Services, Inc. ("Moody's") or BBB or lower by Standard & Poor's Ratings Group
("S&P"), Fitch IBCA, Inc. ("Fitch"), or Duff & Phelps Credit Rating Co.
("Duff"), or in unrated securities of comparable quality. The Fund may invest up
to 10% of its total assets in equity securities, however, preferred and
convertible securities are not subject to this limitation. The Fund may also
invest up to 10% of its total assets in foreign securities which are not
publicly traded in the United States. The One Group High Yield Bond Fund
normally invests at least 80% of its total assets in debt securities, loan
participations, convertible securities and preferred stock which are rated below
investment grade or unrated securities of comparable quality. These securities
are generally rated in the fifth or lower rating categories (e.g., BB or lower
by S&P and Ba or lower by Moody's). The Fund may invest up to 100% of its assets
in such securities. The Fund may invest up to 20% of its assets in other
securities, including investment grade debt securities. As a matter of
fundamental policy, at least 65% of the Fund's total assets will consist of
bonds. The Fund's weighted average maturity will normally range between five and
ten years, although it may shorten its weighted average maturity to as little as
two years for temporary defensive purposes. The Pegasus High Yield Bond Fund has
no stated weighted average maturity target range. Securities rated below
investment grade are called "high yield bonds," and "junk bonds" and are
considered to be speculative.
PEGASUS INTERMEDIATE MUNICIPAL BOND FUND AND THE ONE GROUP INTERMEDIATE
TAX-FREE BOND FUND.
The Pegasus Intermediate Municipal Bond Fund's investment objective is
to seek to provide as high a level of current income exempt from Federal income
tax as is consistent with relative stability of principal. The One Group
Intermediate Tax-Free Bond Fund's investment objective is to seek current income
exempt from Federal income taxes consistent with prudent investment management
and the preservation of capital.
As a fundamental investment policy, the Pegasus Intermediate Municipal
Bond Fund must invest at least 80% of the value of its net assets in Municipal
Securities. The One Group Intermediate Tax-Free Bond Fund has a similar policy,
although it is not fundamental. As a fundamental policy, this Fund must invest
at least 65% of its total assets in bonds. Under normal market conditions, the
average weighted maturity is expected to range between three and ten years for
both funds.
As a fundamental investment policy, The One Group Intermediate Tax-Free
Bond Fund invests in a diversified portfolio. The Pegasus Intermediate Municipal
Bond Fund is not diversified.
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PEGASUS MUNICIPAL BOND FUND AND THE ONE GROUP TAX-FREE BOND FUND.
The investment objectives of the Pegasus Municipal Bond Fund and The
One Group Tax-Free Bond Fund are identical. The Pegasus Municipal Bond Fund
seeks to provide as high a level of current income exempt from Federal income
tax as is consistent with relative stability of principal. The One Group
Tax-Free Bond Fund seeks current income exempt from Federal income taxes
consistent with prudent investment management and the preservation of capital.
The One Group Tax-Free Bond Fund was created to continue the business of the
Pegasus Municipal Bond Fund.
As a fundamental investment policy, the Pegasus Municipal Bond Fund
must invest at least 80% of the value of its net assets in Municipal Securities.
The One Group Tax-Free Bond Fund has a similar policy, although it is not
fundamental. As a fundamental policy, this Fund invests at least 65% of its
total assets in bonds. Each Fund invests in Municipal Securities without regard
to maturity.
Up to 20% of The One Group Tax-Free Bond Fund's total assets may be
held in cash or cash equivalents. The Fund will, from time to time, invest more
than 25% of its net assets in municipal housing authority obligations and single
family mortgage revenue bonds. The Fund also may invest in mortgage backed
securities, restricted securities, and mortgage dollar rolls. The securities in
which the Fund invests may have fixed rates of return or floating or variable
rates.
PEGASUS MICHIGAN MUNICIPAL BOND FUND AND THE ONE GROUP MICHIGAN
MUNICIPAL BOND FUND.
The Pegasus Michigan Municipal Bond Fund's investment objective is to
seek to provide as high a level of current income exempt from Federal, and to
the extent possible, from State of Michigan income taxes as is consistent with
relative stability of principal. The One Group Michigan Municipal Bond Fund's
investment objective is to seek current income exempt from Federal income tax
and Michigan personal income tax, consistent with the preservation of principal.
The One Group Michigan Municipal Bond Fund was created to continue the business
of the Pegasus Michigan Municipal Bond Fund.
As a fundamental investment policy, the Pegasus Michigan Municipal Bond
Fund must invest at least 80% of the value of its net assets in Municipal
Securities. Under normal market conditions, the Fund invests at least 65% of its
total assets in investment grade Municipal Securities the interest on which is
exempt from both Federal and Michigan income taxes. The One Group Michigan
Municipal Bond Fund has a fundamental policy that requires 80% of its total
assets to be invested in Michigan Municipal Securities. The Fund also may invest
up to 20% of its total assets in Municipal Securities other than Michigan
Municipal Securities.
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PEGASUS SHORT MUNICIPAL BOND FUND AND ONE GROUP SHORT-TERM MUNICIPAL
BOND FUND.
The investment objectives of the Pegasus Short Municipal Bond Fund and
The One Group Short-Term Municipal Bond Fund are identical. Each Fund seeks to
provide as high a level of current income exempt from Federal income tax as is
consistent with relative stability of principal.
The Pegasus Short Municipal Bond Fund invests in a portfolio of
investment grade municipal obligations, the interest on which is exempt from
Federal income tax. As a fundamental investment policy, the Fund must invest at
least 80% of the value of its net assets in municipal obligations. The Fund may
invest up 20% (and, for temporary defensive purposes, up to 100%) of its assets
in taxable cash equivalent securities. Under normal market conditions, the
Fund's average weighted maturity ranges between one year and three years. The
One Group Short-Term Municipal Bond Fund invests at least 80% of its net assets
in municipal securities, the interest on which is exempt from Federal income
tax. As a fundamental policy, the Fund invests at least 65% of its total assets
in bonds. Up to 20% of the Fund's total assets may be held in cash and cash
equivalents. From time to time, the Fund invests more than 25% of its net assets
in municipal housing authority obligations and single-family mortgage revenue
bonds. The Fund may also invest in mortgage-backed securities, restricted
securities, and mortgage dollar rolls. The securities in which the Fund invests
may have fixed rates of return or floating or variable rates. The Fund's average
weighted maturity ranges between one year and three years.
The One Group Short-Term Municipal Bond Fund was created to continue
the business of the Pegasus Short Municipal Bond Fund.
PEGASUS EQUITY INCOME FUND AND THE ONE GROUP INCOME EQUITY FUND.
The Pegasus Equity Income Fund's investment objective is to seek to
provide income; capital appreciation and growth of earnings are secondary, but
nonetheless important, goals. The One Group Income Equity Fund's investment
objective is to seek current income through regular payment of dividends with
the secondary goal of achieving capital appreciation by investing primarily in
equity securities. Under normal market conditions, the Pegasus Equity Income
Fund invests at least 65% of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States.
The One Group Income Equity Fund normally invests at least 65% of its assets in
the common stocks, debt securities, and preferred stocks that are convertible
into common stocks of corporations which regularly pay dividends, as well as
stocks with favorable long-term fundamental characteristics.
In connection with the Reorganization, The One Group Income Equity Fund
is expected to change its name to The One Group Equity Income Fund.
PEGASUS EQUITY INDEX FUND AND THE ONE GROUP EQUITY INDEX FUND.
The investment objectives of the Pegasus Equity Index Fund and The One
Group Equity Index Fund are substantively identical. Each Fund seeks investment
results that correspond to the aggregate price and dividend performance of
securities in the S&P 500 Index.
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While each of the Funds seeks to achieve a 95% correlation coefficient
between its performance and that of the S&P 500 Index, their stated investment
programs are somewhat different. The Pegasus Equity Index Fund uses a sampling
methodology to determine which stocks to purchase or sell in order to closely
replicate the performance of the S&P 500 Index. Stocks are selected based on
both capitalization weighting in the S&P 500 Index and industry representation.
The Pegasus Equity Index Fund may also invest up to 5% of its total assets in
futures contracts and related options in an effort to maintain exposure to price
movements in the S&P 500 Index pending investment of funds or while maintaining
liquidity to meet potential shareholder redemptions. The One Group Equity Index
Fund invests primarily in a representative sampling of stocks included in the
S&P 500 Index and, secondarily, in stock index futures. The stocks are selected
in the order of their weightings in the Standard & Poor's 500 Index beginning
with the heaviest weighted stocks. The Fund is not authorized to invest in
foreign securities. Pending investment of funds and to meet redemption requests,
the Pegasus Equity Index Fund and The One Group Equity Index Fund may hold up to
5% and 10% of their respective assets in cash equivalents.
PEGASUS GROWTH AND VALUE FUND AND THE ONE GROUP VALUE GROWTH FUND.
The Pegasus Growth and Value Fund's investment objective is to seek to
achieve long-term capital growth, with income a secondary consideration. The One
Group Value Growth Fund's investment objective is to seek long term capital
growth and growth of income with a secondary objective of providing a moderate
level of current income.
Under normal market conditions, the Pegasus Growth and Value Fund
invests at least 65% of the value of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States.
The Fund invests in equity securities of companies believed by the Fund's
investment adviser to represent a value or potential worth which is not fully
recognized by prevailing market prices and which have earnings growth
expectations that exceed those implied by the market's current valuation. The
Fund seeks to invest in companies whose earnings will increase at a faster rate
than those within the general equity market. The One Group Value Growth Fund
normally invests at least 65% of its total assets in common stocks, debt
securities, preferred stocks, convertible securities, warrants and other equity
securities of overlooked or undervalued companies that have the potential for
earnings growth over time. The Fund invests across capitalization levels
targeting both value and growth oriented companies.
The One Group Value Growth Fund will changed its name to The One Group
Diversified Equity Fund.
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PEGASUS INTRINSIC VALUE FUND AND THE ONE GROUP DISCIPLINED VALUE FUND.
The Pegasus Intrinsic Value Fund's investment objective is to seek to
provide long-term capital appreciation. The One Group Disciplined Value Fund's
investment objective is to seek capital appreciation with the secondary goal of
achieving current income by investing primarily in equity securities.
Under normal market conditions, the Pegasus Intrinsic Value Fund
invests at least 65% of the value of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States.
The One Group Disciplined Value Fund 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. Both Funds primarily invest in equity
securities of companies with below-market average price-to-earnings and
price-to-book value ratios.
In connection with the Reorganization, The One Group Disciplined Value
Fund is expected to change its name to The One Group Mid Cap Value Fund.
PEGASUS GROWTH FUND AND THE ONE GROUP LARGE COMPANY GROWTH FUND.
The investment objective of the Pegasus Growth Fund is to seek
long-term capital appreciation. The One Group Large Company Growth Fund's
investment objective is to seek long-term capital appreciation and growth of
income by investing primarily in equity securities.
Under normal market conditions, the Pegasus Growth Fund invests at
least 65% of the value of its total assets in publicly traded income-producing
common stocks of companies incorporated in the United States. The Fund invests
primarily in equity securities of domestic issuers believed by the Fund's
investment adviser to have above-average growth characteristics. The One Group
Large Company Growth Fund normally invests at least 65% of its total assets in
equity securities of large, well-established companies, whose weighted average
capitalization will normally exceed the market median capitalization of the S&P
500 Index.
In connection with the Reorganization, The One Group Large Company
Growth Fund is expected to change its name to The One Group Large Cap Growth
Fund.
PEGASUS MID-CAP OPPORTUNITY FUND AND THE ONE GROUP DIVERSIFIED MID CAP
FUND.
The investment objective of the Pegasus Mid-Cap Opportunity Fund is to
achieve long-term capital appreciation. The investment objective of The One
Group Diversified Mid Cap Fund is to seek long-term capital growth by investing
primarily in equity securities of companies with intermediate market
capitalizations. The One Group Diversified Mid Cap Fund was created to continue
the business of the Pegasus Mid-Cap Opportunity Fund.
III-15
158
Under normal market conditions, the Pegasus Mid-Cap Opportunity Fund
invests at least 65% of the value of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States
with market capitalizations of $500 million to $3 billion. The One Group
Diversified Mid Cap Fund normally invests at least 65% of its total assets in
common and preferred stock, rights, warrants, convertible securities and other
equity securities. The Fund invests primarily in equity securities of companies
with market capitalizations of $500 million to $5 billion. While each Fund
invests primarily in securities of U.S. companies, up to 25% of each Fund's
total assets may be invested in equity securities of foreign issuers.
Additionally, up to 20% and 35% of The One Group Diversified Mid Cap Fund and
the Pegasus Mid-Cap Opportunity Fund, respectively, may be invested in U.S.
government securities, other investment grade fixed income securities, cash and
cash equivalents.
PEGASUS SMALL-CAP OPPORTUNITY FUND AND THE ONE GROUP SMALL CAP VALUE
FUND.
The investment objective of the Pegasus Small-Cap Opportunity Fund is
to seek long-term capital appreciation. The One Group Small Cap Value Fund's
investment objective is seek long-term capital growth by investing primarily in
equity securities of companies with small capitalizations. The One Group Small
Cap Value Fund was created to continue the business of the Pegasus Small-Cap
Opportunity Fund.
Under normal market conditions, the Pegasus Small-Cap Opportunity Fund
invests at least 65% of the value of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States.
The Fund will normally invest at least 65% of the value of its total assets in
equity securities of small domestic issuers with market capitalizations of $100
million to $1 billion. The One Group Small Cap Value Fund normally invests at
least 80% of its total assets in common and preferred stocks, debt securities,
warrants, convertible securities, and other equity securities of small
capitalization domestic issuers with market capitalizations of $100 million to
$2 billion. While each Fund invests primarily in securities of U.S. companies,
up to 25% of each Fund's total assets may be invested in equity securities of
foreign issuers. Up to 20% of The One Group Small Cap Value Fund's total assets
may be invested in U.S. government securities, other investment grade debt
securities, cash and cash equivalents.
PEGASUS INTERNATIONAL EQUITY FUND AND THE ONE GROUP DIVERSIFIED
INTERNATIONAL FUND.
The investment objective of the Pegasus International Equity Fund is to
seek to achieve long-term capital appreciation. In seeking to achieve its
objective, the Fund invests primarily in equity securities of foreign issuers.
The One Group Diversified International Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of foreign
issuers. The One Group Diversified International Fund was created to continue
the business of the Pegasus International Equity Fund.
III-16
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Under normal market conditions, the Pegasus International Equity Fund
invests at least 65% of the value of its total assets in equity securities. The
One Group Diversified International Fund invests at least 65% of its total
assets in foreign equity securities, consisting of common stocks, preferred
stocks, rights, warrants, convertible securities, foreign currencies and options
on foreign currency, and other equity securities. Each Fund invests primarily in
equity securities of foreign issuers located in but not limited to the United
Kingdom and European continent, Japan, other Far East areas and Latin America.
Each Fund may also invest in other regions seeking to capitalize on investment
opportunities in other parts of the world including developing countries.
Investments in a particular country may exceed 25% of each Fund's total assets.
Up to 20% of The One Group Diversified International Fund's total assets may be
invested in U.S. government securities, other investment grade fixed income
securities, cash and cash equivalents.
As a matter of fundamental policy, The One Group Diversified
International Fund invests in a diversified portfolio. The Pegasus International
Equity Fund is a "non-diversified" fund.
PEGASUS MARKET EXPANSION INDEX FUND AND THE ONE GROUP MARKET EXPANSION
INDEX FUND.
Each Fund's investment objective is to seek to provide a return which
substantially duplicates the price and yield performance of domestically traded
common stocks in the small and mid capitalization equity markets, as represented
by a market capitalization weighted combination of the Standard & Poor's
SmallCap 600 Index and the Standard & Poor's MidCap 400 Index. The Funds use a
sampling methodology to determine which stocks to purchase or sell in order to
closely replicate the performance of the combined indices. Stocks are selected
based on both capitalization weighting in the combined indices and industry
representation. The One Group Market Expansion Index Fund was created to
continue the business of Pegasus Market Expansion Index Fund.
Under normal market conditions, each Fund invests at least 65% of the
value of its total assets in publicly traded common stocks of companies
incorporated in the United States. Pending investment of funds and to meet
redemption requests, each Fund may hold up to 5% of its total assets in cash
equivalents. The Funds may also invest up to 5% of their total assets in futures
contracts and related options in an effort to maintain exposure to price
movements in the combined indices pending investment of funds or while
maintaining liquidity to meet potential shareholder redemptions. Each Fund seeks
to achieve a 95% correlation coefficient to its benchmark combined indices.
III-17
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APPENDIX IV
SHAREHOLDER TRANSACTIONS AND SERVICES
This Appendix compares certain shareholder transactions and services of
the Pegasus Portfolios and The One Group Funds which will be affected by the
Reorganization. Throughout this Appendix, the Pegasus Money Market, Treasury
Money Market, Municipal Money Market and Michigan Municipal Money Market Funds
are collectively referred to as the "Pegasus Money Market Funds; "the Pegasus
Cash Management, Treasury Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management and Municipal Cash Management Funds are
collectively referred to as the "Pegasus Cash Management Funds;" and the
remaining Pegasus Portfolios are collectively referred to as the "Pegasus
Non-Money Market Funds." Occasionally, the Pegasus Managed Assets Conservative,
Managed Assets Balanced and Managed Assets Growth Funds are referred to as the
"Pegasus Asset Allocation Funds;" otherwise, they are among the Pegasus
Non-Money Market Funds.
The One Group Cash Management Money Market, Treasury Cash Management
Money Market, Treasury Prime Cash Management Money Market, U.S. Government Cash
Management Money Market and Municipal Cash Management Money Market Funds are
collectively referred to as the "One Group Cash Management Funds" throughout
this Appendix. These Funds have not yet commenced operations and will continue
the operations of the Pegasus Cash Management Funds after the Reorganization.
The One Group Prime Money Market, U.S. Treasury Securities Money Market,
Municipal Money Market and Michigan Municipal Money Market Funds are
collectively referred to as the "One Group Money Market Funds." All remaining
One Group Funds are collectively referred to as the "One Group Non-Money Market
Funds."
The Pegasus Non-Money Market Funds currently offer three share classes:
Class A, Class B, and Institutional Class ("Class I"). The Pegasus Money Market
Fund offers Class A, Class B and Class I shares, but B shares are only offered
through an exchange from a Non-Money Market Fund. The Treasury Money Market,
Municipal Money Market and Michigan Municipal Money Market Funds offer Class A
and Class I shares. The Pegasus Cash Management Funds offer Class I and Service
Class ("Class S") Shares. Class A and Class B shares may be purchased through a
number of institutions including First Chicago NBD Investment Management Company
("FCNIMCO") or (the "Investment Adviser"), First National Bank of Chicago
("FNBC") American National Bank and Trust Company ("ANB") and their affiliates,
including First NBD Investment Services, Inc., a registered broker-dealer, BISYS
which serves the Trust as its Distributor and certain banks, securities dealers
and other industry professionals such as investment advisers, accountants and
estate planning firms. Class I and Class S shares of the Cash Management Funds
are sold to institutional investors, including banks (such as FNBC, NBD Bank
("NBD"), and ANB or their affiliates), acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity, public agencies and
municipalities, employee benefit plans or other programs, registered investment
advisers and other financial institutions. For more information, see the section
entitled "Description of Classes" in the Pegasus Prospectuses incorporated by
reference into this Combined Prospectus/Proxy Statement.
161
The One Group Funds currently offer five classes of shares: Class A,
Class B, Class C, Class I and Service Class Shares. Class A, Class B and Class C
shares are offered to the general public. The Institutional Money Market Funds
offer Class I shares only. The One Group Prime and U.S. Treasury Securities
Money Market Funds offer Class A, Class B, Class C, Class I and Class S shares.
The One Group Ohio Municipal, Municipal and Michigan Municipal Money Market
Funds offer Class A, Class C, Class I and Service Class shares. Class I shares
are offered to institutional investors, including affiliates of Bank One
Corporation and any bank, depository institution, insurance company, pension
plan or other organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities. Class S Shares are offered to entities
purchasing such shares on behalf of investors requiring additional
administrative or accounting services such as sweep processing. For more
information, see the section entitled "How To Do Business With The One Group" in
the One Group Prospectuses incorporated by reference into the Combined
Prospectus/Proxy Statement.
The One Group also maintains a Web site (www.onegroup.com) where
shareholders may purchase or exchange shares, check account balances, or find
information about The One Group.
A. PURCHASE POLICIES
The following chart compares the existing purchase policies of the
Pegasus Portfolios and the One Group Funds.
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON- CLASS I AND S SHARES OF THE
MONEY MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------ --------------------- ---------------
Minimum Initial $1,000 for Class A and B shares $1,000,000.(2) $1,000 ($100 for employees of
Investment of Non-Money Market Funds; $2,500 Bank One Corporation and its
for Class A and B shares of Money affiliates); $250 for an IRA.
Market Funds(1); $1,000,000 for Investors may purchase up to a
Class I shares; $250 for an maximum of $250,000 of Class B
IRA.(2) shares per individual purchase
order.(3,4)
Minimum Subsequent $100. Subsequent Investments may No minimum. $100 ($25 for employees of Bank
Investment be made through the Automatic One Corporation and its
Investment Plan.(2) affiliates); $25 under the
Systematic Investment Plan.(3)
Purchase Methods Shares may be purchased by wire, Shares may be purchased by wire, Shares may be purchased directly
telephone or with compatible telephone or with compatible from OGSC by mail, telephone,
computer facilities. Class A and computer facilities. Class I wire, or through The One Group's
B shares may be purchased through shares may be purchased through Web site. Shares may also be
a number of institutions, fiduciary accounts at the purchased through investment
including the Investment Adviser, Investment Adviser, NBD, FNBC advisors, brokers, financial
NBD, FNBC, ANB and their and ANB or their affiliates. planners, banks, insurance
affiliates, including First Share certificates will not be companies, retirement or 401(k)
Chicago NBD issued. plan sponsors, or other
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162
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON- CLASS I AND S SHARES OF THE
MONEY MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------ --------------------- ---------------
Investment Services, Inc., the intermediaries. Class I shares
Distributor, and certain banks, may be purchased through
securities dealers and other fiduciary accounts at Bank One
industry professionals such as Trust Company, N.A. or its
investment advisors, accountants affiliates. Shares may also be
and estate planning firms. purchased through a "mutual fund
Class I shares may be purchased supermarket." Shares are
through fiduciary accounts at the electronically recorded.
Investment Adviser, NBD, FNBC and Therefore, certificates will not
ANB or their affiliates. Shares be issued.
may also be purchased through a
"mutual fund supermarket." If an
investor does not specify a class
of shares at the time of
purchase, Class A shares will be
purchased. Share certificates
will not be issued.
Checkwriting Option Class A. Shareholders of Money None. Class A shareholders of Money
Market Funds may write checks for Market Funds may write checks
$500 or more. for $250 or more.
(1) Pegasus may charge a fee of $2 per month for accounts with balances of
less than $2,500. Pegasus will notify shareholders prior to the
assessment of such fees.
(2) Pegasus reserves the right to offer Fund shares without regard to the
minimum purchase requirements to qualified or non-qualified employee
benefit plans. The investment adviser and service agents may impose
initial or subsequent investment minimums which are higher or lower
than those specified above and may impose different minimums for
different types of accounts or purchase arrangements. Pegasus reserves
the right to reject any purchase order.
(3) OGSC may waive these minimums.
(4) OGSC can reject a purchase order if it does not think that it is in the
best interests of a Fund and/or its shareholders to accept the order.
B. PRICING OF SHARES
As to each Pegasus Portfolio and One Group Fund, the net asset value
("NAV") per share of each class is computed by dividing the value of a Fund's
net assets represented by that class by the number of outstanding shares of that
class. A Fund's NAV is subject to change every day. The Pegasus Money Market
Funds and the One Group Money Market Funds calculate NAV at different times
during the business day, as shown in the following table. All other funds
calculate NAV at the same time
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TIME OF CALCULATION PEGASUS PORTFOLIOS ONE GROUP FUNDS
------------------- ------------------ ---------------
12:00 noon EST/ Municipal Money Market, Municipal Municipal Money Market Fund
11:00 a.m. CST Cash Management and Michigan
AND Municipal Money Market Funds
4:00 p.m. EST*/
3:00 p.m. CST
2:00 p.m. EST/ Prime Money Market and U.S.
1:00 p.m. CST Treasury Securities Money
AND Market Funds
4:00 p.m. EST*/
3:00 p.m. CST
1:00 p.m. EST/ Treasury Prime Cash Management Fund
12:00 noon CST
3:00 p.m. EST/ Money Market, Treasury Money
2:00 p.m. CST Market, Cash Management, U.S.
Government Securities Cash
Management and Treasury Cash
Management Funds
4:00 p.m. EST*/ All other funds All other funds
3:00 p.m. CST
* Normal close of the New York Stock Exchange ("NYSE"). On
occasion, the NYSE may close before 4:00 p.m. ET. When that
happens, NAV will be calculated as of the time the NYSE
closes.
Shares of the Pegasus and One Group Money Market Funds will not be
priced on those days the Funds are closed, the NYSE is closed, and the following
holidays: New Year's Day, Dr. Martin Luther King Jr., Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day, and Christmas Day. The Non-Money Market Funds will be closed
on the same holidays with the exception of Columbus Day and Veterans' Day.
DEADLINE FOR RECEIPT OF
DEADLINE FOR RECEIPT OF RELATED PAYMENT BY THE
PURCHASE ORDER CUSTODIAN PEGASUS PORTFOLIOS ONE GROUP FUNDS
-------------- --------- ------------------ ---------------
12:00 noon, EST/ 4:00 p.m., EST/ Municipal Money Market Fund
11:00 a.m., CST 3:00 p.m., CST
4:00 p.m., EST*/ 4:00 p.m., EST/ Prime Money Market and U.S.
3:00 p.m., CST 3:00 p.m., CST Treasury Securities Money
Market Funds
4:00 p.m., EST*/ 4:00 p.m., EST on (i) the Non-Money Market Funds
3:00 p.m., CST business day after the
order is placed for Class I
shares and (ii) the third
business day after the
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DEADLINE FOR RECEIPT OF
DEADLINE FOR RECEIPT OF RELATED PAYMENT BY THE
PURCHASE ORDER CUSTODIAN PEGASUS PORTFOLIOS ONE GROUP FUNDS
-------------- --------- ------------------ ---------------
order is placed for a
purchase of Class A, Class
B, and Class C shares
Purchase requests will be Purchase requests will be Money Market Funds
effective after an order in effective after an order
proper form and federal funds in proper form and
are received by the Transfer federal funds are
Agent. received by the Transfer
Agent.
4:00 p.m., EST/ Non-Money Market Funds
3:00 p.m. CST
* Normal close of the New York Stock Exchange ("NYSE"). On
occasion, the NYSE may close before 4:00 p.m. ET. When that
happens, NAV will be calculated as of the time the NYSE
closes.
The assets of each Pegasus and One Group Money Market Fund are valued
based on the amortized cost method. Although each fund seeks to maintain a $1.00
net asset value per share, there can be no assurance that net asset value will
not vary.
C. SALES CHARGES AND EXEMPTIONS.
CLASS A AND CLASS B SHARES
Initial Sales Charge and Contingent Deferred Sales Charge ("CDSC")
a. Class A Shares of the Pegasus Money Market Funds and the
corresponding One Group Money Market Funds are offered to the
general public at net asset value without an initial sales
charge.
b. Class A Shares of the Pegasus Portfolios and the corresponding
One Group Non-Money Market Funds are offered to the general
public at their public offering price (which is a Fund's net
asset value per share, plus an applicable sales charge).
c. Class B Shares of the Pegasus Portfolios and One Group Funds
are sold to the general public at net asset value, without an
initial sales charge. However, Class B Shares of the One Group
Prime Money Market and U.S. Treasury Securities Money Market
Funds and the Pegasus and One Group Non-Money Market Funds
will be assessed a CDSC.
d. The following chart summarizes the maximum sales charges
applicable to Class A and Class B shares with respect to each
Pegasus Portfolio and the corresponding One Group Fund.
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- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
MAXIMUM INITIAL SALES MAXIMUM
REORGANIZING PEGASUS PORTFOLIOS EXISTING ONE GROUP FUNDS CHARGE - CLASS A CDSC - CLASS B
------------------------------- ------------------------ ---------------- --------------
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Managed Assets Conservative Fund The One Group Investor Balanced Fund 5.00%/5.25% 5.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Managed Assets Balanced Fund The One Group Investor Growth & Income 5.00%/5.25% 5.00%/5.00%
Fund
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Managed Assets Balanced Fund The One Group Investor Growth Fund 5.00%/5.25% 5.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Equity Income Fund The One Group Income Equity Fund (to be 5.00%/5.25% 5.00%/5.00%
renamed Equity Income Fund upon
Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Growth Fund The One Group Large Company Growth Fund 5.00%/5.25% 5.00%/5.00%
(to be renamed Large-Cap Growth Fund
upon Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Intrinsic Value Fund The One Group Disciplined Value Fund 5.00%/5.25% 5.00%/5.00%
(to be renamed Mid-Cap Value Fund upon
Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Growth and Value Fund The One Group Value Growth Fund (to be 5.00%/5.25% 5.00%/5.00%
renamed Diversified Equity Fund upon
Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Equity Index Fund The One Group Equity Index Fund 3.00%/5.25% 3.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Intermediate Bond Fund The One Group Intermediate Bond Fund 3.00%/4.50% 3.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Short Bond Fund The One Group Limited Volatility Bond 1.00%/3.00% 1.00%/3.00%
Fund (to be renamed Short-Term Bond
Fund upon Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Multi Sector Bond Fund The One Group Income Bond Fund 3.00%/4.50% 3.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus High Yield Bond Fund The One Group High Yield Bond Fund 4.50%/4.50% 5.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Intermediate Municipal Bond Fund The One Group Intermediate Tax-Free 3.00%/4.50% 3.00%/5.00%
Bond Fund
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Mid-Cap Opportunity Fund The One Group Mid-Cap Opportunities 5.00%/5.25% 5.00%/5.00%
Fund (to be renamed Diversified Mid-Cap
Fund upon Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Small-Cap Opportunity Fund The One Group Small-Cap Value Fund 5.00%/5.25% 5.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Market Expansion Index Fund The One Group Market Expansion Index 3.00%/5.25% 3.00%/5.00%
Fund (to be renamed Small-Cap Index
Fund upon Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus International Equity Fund The One Group International 5.00%/5.25% 5.00%/5.00%
Opportunities Fund (to be renamed
Diversified International Fund upon
Reorganization)
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Bond Fund The One Group Bond Fund 4.50%/4.50% 5.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Municipal Bond Fund The One Group Tax-Free Bond Fund 4.50%/4.50% 5.00%/5.00%
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Short Municipal Bond Fund The One Group Short-Term Municipal Bond 1.00%/4.50% 1.00%/3.00%
Fund
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Pegasus Michigan Municipal Bond Fund The One Group Michigan Municipal Bond 4.50%/4.50% 5.00%/5.00%
Fund
- ------------------------------------------ ----------------------------------------- ------------------------- ---------------------
Each One Group Fund currently imposes a CDSC equal to 1% of the
purchase price on any or all Class A Shares redeemed within one year of purchase
which were purchases as part of an investment of $1,000,000 or more and not
assessed a sales charge at the time of purchase.
With respect to Class A shares of the Pegasus Portfolios purchased
without an initial sales charge as part of an investment of at least $1,000,000
and where such shares are redeemed within two years after purchase, a CDSC of 1%
or .50% will be imposed at the time of redemption if shares are redeemed within
the first or second year, respectively, after purchase unless the investor
qualifies for a waiver of the CDSC as described below under "Class B Shares -
Waiver of CDSC."
The Pegasus Market Expansion Index Fund requires the payment of a
transaction fee on purchases of shares of the Fund equal to 0.50% of the dollar
amount invested.
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166
The CDSC charged with respect to the (i) Pegasus Bond and Short
Municipal Bond Funds; (ii) the Pegasus Equity Index, Market Expansion Index,
Multi Sector Bond, Intermediate Bond and Intermediate Municipal Bond Funds and
(iii) all other Pegasus Funds decline over time so that no CDSC is charged on
redemptions made more than one, five and six years from the date of purchase,
respectively. Class B shares of the Pegasus Short Bond and Short Municipal Bond
Funds convert to Class A shares after two years. Class B shares of the Pegasus
Equity Index, Market Expansion Index, Multi Sector Bond, Intermediate Bond and
Intermediate Municipal Bond Funds convert to Class A shares after six years. All
other Class B shares of Pegasus Funds convert to Class A Shares after seven
years. Class B shares of the Pegasus Money Market Fund are available only to the
holders of Class B shares in Pegasus' non-money market funds who wish to
exchange their shares in such funds for shares in the Money Market Fund. Class B
shares of the Money Market Fund will automatically convert to Class A shares at
the time the exchanged shares would have converted.
The CDSC charged with respect to the Class B shares of each One Group
Fund (except the Limited Volatility Bond Fund) declines over time so that no
CDSC is charged on redemptions made more than six years from the date of
purchase (four years with respect to the Limited Volatility Bond Fund). Class B
shares of the One Group Funds automatically convert to Class A shares after
eight years, except with respect to Class B shares of the Limited Volatility
Bond Fund which automatically convert to Class A shares after six years.
Class A shares - Sales Load Waivers - Pegasus Portfolios
Class A Shares of the Pegasus Non-Money Market Funds may be purchased
at net asset value and without an initial sales charge by: (a) full-time
employees of NASD member firms which have entered into an agreement with the
Distributor pertaining to the sale of Fund shares (or which otherwise have a
brokerage-related or clearing arrangement with an NASD member firm with respect
to sales of Fund shares), their spouses and minor children; (b) accounts opened
by a bank, trust company or thrift institution, acting as a fiduciary or
custodian (other than 401(k) and other defined contribution or other retirement
plan accounts), provided that they have furnished the Distributor appropriate
notification of such status at the time of the investment and such other
information as it may request from time to time in order to verify eligibility
for this privilege; (c) purchases for accounts registered under the Uniform
Gifts to Minor Act or Uniform Transfers to Minors Act which are opened through
First Chicago NBD Investment Services, Inc. ("FCNIS") and 401(k) and other
defined contribution of other retirement plan accounts for which The First
National Bank of Chicago ("FNBC") or its subsidiaries or affiliates have served
as custodian or trustee since at least June 1, 1995 or NBD Bank ("NBD") or its
subsidiaries or affiliates, other than FNBC or American National Bank and Trust
Company ("ANB"), have served as administrator or Trustee since January 1, 1996;
(d) directors and full-time or part-time employees of FCN, or any of its
affiliates or subsidiaries, retired employees of FCN, or any of its affiliates
and subsidiaries, Board members of a fund advised by the investment advisers,
including members of the Funds' Board of Trustees, or the spouses, children,
grandchildren, siblings, parents, grandparents and in-laws of any of the
foregoing individuals; (e) purchases through certain broker-dealers, registered
investment advisers and other financial institutions which have entered into an
agreement with a "mutual fund supermarket" or with the Distributor,
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167
which includes a requirement that such shares be purchased for the benefit of
clients participating in a "wrap account" or a similar program under which such
clients pay a fee to such broker-dealer, registered investment adviser or other
financial institution; (f) employees participating in accounts such as
retirement, 401(k), profit sharing and other employee benefit plan or program
accounts where (i) the employers or affiliated employers maintaining such plans
or programs have a minimum of 200 employees eligible for participation in such
plans or programs or (ii) such plan's or program's assets exceed one million
dollars; (g) individuals participating in a qualified retirement, profit
sharing, 401(k) or other employee benefit plan which is eligible to purchase
Class A shares or Class I shares without a sales charge and rolls Fund shares
into a qualified IRA, then that IRA may purchase Class A shares without a sales
charge; (h) current shareholders of the Equity Index Fund who owned shares of
the Fund prior to August 26, 1996 and have held all or a portion of such shares
thereafter.
Class A shares also may be purchased at net asset value, without an
initial sales charge, with the proceeds from the redemption of shares of an
investment company sold with a sales charge or commission or annuity contract or
guaranteed investment contract subject to a surrender charge. This also includes
shares of an investment company that were or would be subject to a contingent
deferred sales charge upon redemption. The purchase must be made within 60 days
of the redemption, and the Transfer Agent must be notified in writing by the
investor at the time the purchase is made.
The One Group Funds and Pegasus Portfolios also offer rights of
accumulation and letter of intent programs that can reduce the sales charge
payable on shares purchases.
Class A shares - Sales Load Waivers - One Group Funds
Class A shares of the One Group Non-Money Market Funds may be purchased
at net asset value and without an initial sales charge if the shares were: (a)
bought with the reinvestment of dividends and capital gains distributions; (b)
acquired in exchange for other One Group Fund shares if a comparable sales
charge has been paid for the exchanged shares; (c) bought by officers,
directors, or trustees, retirees and employees (and their spouses and immediate
family members) of: (i) The One Group, (ii) Bank One Corporation and its
subsidiaries and affiliates, (iii) The One Group Services Company ("OGSC") and
its subsidiaries and affiliates, (iv) State Street Bank and Trust Company and
its subsidiaries and affiliates; (v) broker/dealers who have entered into dealer
agreements with The One Group and their subsidiaries and affiliates, (vi) an
investment sub-adviser of a fund of The One Group and such sub-adviser's
subsidiaries and affiliates; (d) bought by (i) affiliates of Bank One
Corporation and certain accounts (other than IRA accounts) for which an
intermediary acts in a fiduciary, advisory, agency, custodial or similar
capacity; (ii) accounts as to which a bank or broker-dealer charges an asset
allocation fee, provided the bank or broker/dealer has an agreement with the
(OGSC); (iii) accounts which participate in select affinity programs with Bank
One Corporation and its affiliates and subsidiaries; (iv) retirement and
deferred compensation plans and trusts used to fund those plans, including, but
not limited to, those defined in sections 401(a), 403(b) or 457 of the Internal
Revenue Code and "rabbi trusts"; (v) Shareholder Servicing Agents who have a
dealer arrangement with the (OGSC), who place trades for their own accounts or
for the accounts of their clients and who charge a management, consulting or
other fee for their services, as well
-8-
168
as clients of such shareholder servicing agents who place trades for their own
accounts if the accounts are linked to the master account of such shareholder
servicing agent; (e) bought with proceeds from the sale of Class I shares of a
fund of The One Group or acquired in an exchange of Class I shares of a fund for
Class A shares of the same fund, but only if the purchase is made within 60 days
of the sale or distribution; (f) bought with proceeds from the sale of shares of
a mutual fund (including a fund of The One Group) for which a sales charge was
paid, but only if the purchase is made within 60 days of the sale or
distribution; (g) bought in an IRA with the proceeds of a distribution from an
employee benefit plan, but only if the purchase is made within 60 days of the
sale or distribution and, at the time of the distribution, the employee benefit
plan had plan assets invested in a fund of The One Group; (h) bought with assets
of The One Group; (i) bought in connection with plans of reorganization of a
fund, such as mergers, asset acquisitions and exchange offers to which a fund is
a party.
The waivers described in (e), (f) and (g) above will not continue
indefinitely and may be discontinued at any time without notice.
Class B shares - Waiver of CDSC - Pegasus Portfolios
No CDSC is charged on redemptions of Class B shares of the Pegasus
Portfolios in connection with: (a) redemptions made within one year after the
death of the shareholder; (b) redemptions by shareholders after age 70-1/2 for
purposes of the minimum required distribution from an IRA, Keogh plan or
custodial account pursuant to Section 403(b) of the Code; (c) distributions from
a qualified plan upon retirement or termination of employment; (d) redemption of
shares acquired through a contribution in excess of permitted amounts; (e)
in-service withdrawals from tax qualified plans by participants; (f) redemptions
initiated by a Fund of accounts with net assets of less than $1,000; (g)
redemptions by Eligible Financial Intermediaries who have purchased Class A
shares at net asset value as part of a "wrap account" or similar program; (h)
redemptions of up to 10% of the value of shares during a 12 month period as part
of a Systematic Withdrawal Plan.
Class B Shares - Waiver of CDSC - One Group Funds
No CDSC is imposed on redemptions of Class B shares of the One Group
Funds: (a) provided that a shareholder withdraws no more than 10% of the account
value annually; (b) if a shareholder buys the shares in connection with certain
retirement plans, such as 401(k) and similar qualified plans; (c) if a
shareholder is a participant or beneficiary of certain retirement plans and dies
or becomes disabled (as defined in the Tax Code), but only if the redemption is
made within one year of such death or disability; (d) that represent minimum
required distributions from an IRA Account or other qualifying retirement plan,
but only if a shareholder is at least age 70-1/2; (e) exchanged in connection
with plans of reorganizations of a Fund, such as mergers, asset acquisitions and
exchange offers to which a Fund is a party; (f) acquired in exchange for Class B
shares of other Funds of The One Group.
-9-
169
CLASS I SHARES OF THE PEGASUS PORTFOLIOS AND ONE GROUP FUNDS
a. Class I shares of the Pegasus Money Market Funds are offered
with no initial sales charge or CDSC to institutional
investors, including banks (such as FNBC and NBD), acting for
themselves or in a fiduciary, advisory, agency, custodial or
similar capacity and to public agencies and municipalities.
Class I shares may not be purchased directly by individuals,
although institutions may purchase shares for accounts
maintained by individuals.
b. Class I shares of the Pegasus Non-Money Market Funds are
offered at net asset value with no initial sales charge or
CDSC (although the Market Expansion Index Fund imposes a
transaction fee) exclusively to Fiduciary Accounts, Eligible
Retirement Plans, Eligible Financial Intermediaries (as each
item is defined in the prospectus), and the Pegasus Asset
Allocation Funds.
c. Class S shares of the Pegasus Cash Management Funds are
offered at net asset value with no initial sales charge or
CDSC to the same investors who are eligible to purchase Class
I shares of the Pegasus Money Market Funds.
d. Class I and Class A shares of the One Group Cash Management
Funds are offered at net asset value with no initial sales
charge or CDSC to certain institutional investors and high net
worth individuals. Class I shares of the remaining One Group
Funds are offered at net asset value with no initial sales
charge or CDSC to certain institutional investors.
Conversion Feature for Class I shares of the Pegasus Portfolios
Class I shares of each Pegasus Portfolio (other than the Cash
Management Funds) held by investors who, after purchasing Class I shares for
their Fiduciary Accounts, withdraw from such Accounts will convert to Class A
shares upon such withdrawal, based upon the relative net asset values for shares
of each such Class.
D. SHARE EXCHANGES
Class I shares of a One Group Fund may be exchanged for Class A shares
of that Fund or for Class A or Class I shares of another One Group Fund. Class A
shares of a One Group Fund may be exchanged for Class I shares of that Fund or
for Class A or Class I shares of another One Group Fund, but only if you are
eligible to purchase those shares. Class B shares of a One Group Fund may be
exchanged for Class B shares of another One Group Fund. The One Group does not
charge a fee for this privilege. The One Group reserves the right to reject any
exchange request if the Fund reasonably believes that the exchange will result
in excessive transaction costs or otherwise adversely affect other shareholders.
The Pegasus Portfolios permit investors to purchase, in exchange for
shares of a Fund which have been owned for at least 30 days, shares of the same
Class of the other Pegasus Funds. The Class I and S shares of the Cash
Management Funds do not offer an exchange privilege.
-10-
170
The exchange privilege may be modified or terminated at any time upon notice to
shareholders. The exchange privilege with respect to the post-Reorganization
Funds is substantially similar to the exchange privilege applicable to the One
Group Funds.
The following chart compares the existing exchange policies of the
Pegasus Portfolios and the One Group Funds.
PEGASUS PORTFOLIOS ONE GROUP FUNDS
------------------ ---------------
Mail Yes. Yes.
Telephone Yes. Yes.
Web site No. Yes.
Sales Charges Shares of the same Class of Funds purchased by Generally, a sales charge will not be
exchange will be purchased on the basis of incurred on an exchange. However, a sales
relative net asset value per share as follows: charge will be incurred on Class I Shares
(i) shares of Funds purchased with or without exchanged for Class A shares, unless
a sales load may be exchanged without a sales shareholder qualifies for a sales charge
load for shares of other Funds sold without a waiver; on Class A shares of a Fund with no
sales load; (ii) shares of Funds purchased sales charge exchanged for shares of a Fund
without a sales load may be exchanged for with a sales charge, and on shares of a Fund
shares of other Funds sold with a sales load, with a sales charge exchanged for shares of a
and the applicable sales load will be fund with a higher sales charge, in which
deducted; (iii) "Purchased Shares"(1) may be case the shareholder would pay the difference
exchanged for "Offered Shares"(1) of other between that Fund's sales charge and all
Funds, provided that, if the sales load other sales charges already paid by the
applicable to the Offered Shares exceeds the shareholder.(4)
maximum sales load that could have been
imposed in connection with the Purchased
Shares (at the time the Purchased Shares were
acquired), without giving effect to any
reduced loads, the difference will be
deducted; (iv) shares of Funds subject to a
CDSC that are exchanged for shares of another
Fund or the Pegasus Money Market Fund will be
subject to the higher applicable CDSC of the
two Funds(2); (v) shares of the Money Market
Fund acquired through an exchange of Class B
shares of the Pegasus Non-Money Market Funds
are subject to a CDSC upon redemption of the
shares in accordance with the prospectus of
the exchanged shares(2); and (vi) a qualified
or non-qualified employee benefit plan with
assets of at least $1 million or 200 eligible
lives may be exchanged from Class B shares to
Class A shares on or after January 1 of the
year following the year of the plan's
eligibility, provided that the sponsor of the
plan has so notified the service agent of its
eligibility and in turn, the service agent has
notified Pegasus of such eligibility.(3)
-11-
171
(1) "Purchased Shares" are shares of Funds purchased with a sales load,
shares of Funds acquired by a previous exchange from shares purchased
with a sales load and additional shares acquired through reinvestment
of dividends or distributions of any such Funds. "Offered Shares" are
shares of Funds sold with a sales load.
(2) For purposes of calculating CDSC rates and conversion periods, if any,
shares will be deemed to have been held since the date the shares being
exchanged were initially purchased.
(3) No fees currently will be charged shareholders directly in connection
with exchanges although Pegasus reserves the right, upon not less than
60 days' written notice, to charge shareholders a nominal fee in
accordance with rules promulgated by the SEC. Exchanges made into the
Market Expansion Index Fund will be charged a transaction fee.
(4) If a shareholder exchanged Class B shares of a Fund, the shareholder
will not pay a sales charge at the time of the exchange, however: (1)
the new Class B shares will be subject to the higher CDSC of either the
Fund from which the shareholder exchanged, the Fund into which the
shareholder exchanged, or any Fund from which the shareholder
previously exchanged, (2) the current holding period for the
shareholder's exchanged Class B shares is carried over to the new
shares.
E. REDEMPTION POLICIES
The following chart compares the existing redemption policies of the
Pegasus Portfolios and the One Group Funds.
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON- CLASS I AND S SHARES OF THE
MONEY MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------ --------------------- ---------------
Redemption Methods By telephone or mail. By telephone and compatible By telephone or mail (except for
computer facilities. IRA accounts whose redemption
requests must be made in
writing).
Payment Methods By check, by wire (within one By mail or by wire (on the same By mail or by wire (paid within
business day) or Automated day).(1) seven days after receipt but
Clearing House (within five next day and two business day
business days). payments on redemptions are
available(2); State Street Bank &
Trust Company currently charges a
$7.00 wire redemption fee).
Systematic Yes ($15,000 minimum account No. Yes ($10,000 minimum account
Withdrawal Plan balance with respect to Class A balance/$100 minimum per
or B shares; $10,000 with respect transaction); Class A
to Money Market Funds). shareholders should consider the
initial sales charge and Class B
shareholders' payments are limited
to no more than 10% of the account
value annually measured from the
date the
-12-
172
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON- CLASS I AND S SHARES OF THE
MONEY MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------ --------------------- ---------------
redemption request is received; IRA
account payments must not exceed the
minimum required distribution amount.
Reinstatement Yes (Class A or B redemptions may No. No.
Privilege purchase, within 120 days, Class
A shares without a sales load in
an amount not to exceed
the redemption proceeds).
Additional Information Regarding Redemptions:
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON- CLASS I AND S SHARES OF THE
MONEY MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------ --------------------- ---------------
Automatic Upon 60 days written notice, if Upon 60 days written notice if No. Accounts less than $1,000
Redemption of net asset value in account is (i) net asset value in account that are not participating in a
Investor's Account $2,500 or less for Class A or B decreases to $1,000,000 or less. Systematic Investment Plan will
shares of the Money Market Funds; be charged an annual fee
of (ii) $1,000,000 or less for $10.00. This sub-minimum
Class I shares of the Money Market account fee does not apply to
Funds, and (iii) less than $1,000 IRA accounts and the accounts of
for Class A, B and I shares of employees of Bank One each
other Pegasus portfolios. Corporation and its affiliates. The
sub-minimum account fee also does
not apply to Institutional Money
Market Funds.
Proceeds of Cash Paid in federal funds on the Cash
Redemption business day the redemption is
effected.
Acting on Telephone Requires form of identification Requires form of identification Recording telephone
Instructions instructions; requesting
personal identification
(1) If the request is received before 12:00 noon, Eastern time, for the
Municipal Cash Management Fund; 1:00 p.m. Eastern time, for the
Treasury Prime Cash Management Fund, and 3:00 p.m. Eastern time, for
the Cash Management Fund, Treasury Cash Management Fund and U.S.
Government Securities Cash Management Fund.
(2) Requests for same day payment will be honored if the request is
received before 12:00 noon, Eastern time, for the Municipal Money
Market Fund, and 4:00 p.m., Eastern time, for the Prime Money Market
Fund and
-13-
173
the U.S. Treasury Securities Money Market Fund. The Funds also will
attempt to honor requests for payments by the next business day, if the
redemption request is received after the times mentioned above.
F. DIVIDENDS AND DISTRIBUTIONS
Each existing One Group Fund and Pegasus Portfolio distributes its net
capital gains to shareholders at least annually. The table below shows the
policies concerning the declaration and payment of dividends from net investment
income. Pegasus makes available to investors of Class A and Class B shares a
Cross Reinvestment of Dividend Plan. Investors who own shares of any Fund with a
minimum value of $10,000 at the time he or she elects may have dividends paid by
such Fund automatically reinvested into shares of another Pegasus Fund in which
he or she has invested a minimum of $1,000. A transaction fee will be charged to
all investors who elect to have dividends from other Funds reinvested in the
Market Expansion Index Fund.
========================= =============== ==================== ================ ==================== ================
Current Current Dividend to
Pegasus Dividend One Group Dividend Post-Reorganization be
Portfolio Declared/Paid Fund Declared/Paid Fund Declared/Paid
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Money Market Fund D/M Prime Money Market D/M The One Group D/M
Fund Prime Money Market
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Treasury Money Market D/M U. S. Treasury D/M The One Group U.S. D/M
Fund Securities Money Treasury
Market Fund Securities Money
Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Municipal Money Market D/M Municipal Money D/M The One Group D/M
Fund Market Fund Municipal Money
Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Michigan Municipal D/M Michigan Municipal D/M The One Group D/M
Money Market Fund Money Market Fund Michigan Municipal
Money Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Cash Management Fund D/M Cash Management D/M The One Group Cash D/M
Money Market Fund Management Money
Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Treasury Prime Cash D/M Treasury Prime D/M The One Group D/M
Management Fund Cash Management Treasury Prime
Money Market Fund Cash Management
Money Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
U.S. Government D/M U. S. Government D/M The One Group D/M
Securities Cash Securities Cash U.S. Government
Management Fund Management Money Securities Cash
Market Fund Management Money
Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Municipal Cash D/M Municipal Cash D/M The One Group D/M
Management Fund Management Money Municipal Cash
Market Fund Management Money
Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Treasury Cash D/M Treasury Cash D/M The One Group D/M
Management Fund Management Money Treasury Cash
Market Fund Management Money
Market Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Short Bond Fund M/M Limited Volatility D/M The One Group D/M
Bond Fund Short-Term Bond
-14-
174
========================= =============== ==================== ================ ==================== ================
Current Current Dividend to
Pegasus Dividend One Group Dividend Post-Reorganization be
Portfolio Declared/Paid Fund Declared/Paid Fund Declared/Paid
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Intermediate Bond Fund M/M Intermediate Bond D/M The One Group D/M
Fund Intermediate Bond
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Multi Sector Bond Fund M/M Income Bond Fund D/M The One Group D/M
Income Bond Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Bond Fund M/M Bond Fund D/M The One Group Bond D/M
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
High Yield Bond Fund M/M High Yield Bond D/M The One Group High D/M
Fund Yield Bond Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Intermediate Municipal M/M Intermediate D/M The One Group D/M
Bond Fund Tax-Free Bond Fund Intermediate
Tax-Free Bond Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Municipal Bond Fund M/M Municipal Bond Fund D/M The One Group D/M
Tax-Free Bond Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Michigan Municipal Bond M/M Michigan Municipal D/M The One Group D/M
Fund Bond Fund Michigan Municipal
Bond Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Short Municipal Bond M/M Short Municipal D/M The One Group D/M
Fund Bond Fund Short-Term
Municipal Bond Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Equity Income Fund M/M Income Equity Fund M/M The One Group M/M
Equity Income Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Equity Index Fund Q/Q Equity Index Fund M/M The One Group M/M
Equity Index Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Growth and Value Fund Q/Q Value Growth Fund M/M The One Group M/M
Diversified Equity
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Intrinsic Value Fund Q/Q Disciplined Value M/M The One Group M/M
Fund Mid Cap Value Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Growth Fund Q/Q Large Company M/M The One Group M/M
Growth Fund Large Cap Growth
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Mid-Cap Opportunity Fund Q/Q Diversified Mid M/M The One Group M/M
Cap Fund Diversified
Mid Cap Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Small-Cap Opportunity Q/Q Small Cap Value M/M The One Group M/M
Fund Fund Small Cap Value
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
International Equity Q/Q Diversified M/M The One Group M/M
Fund International Fund Diversified
International Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Market Expansion Index Q/Q Market Expansion M/M The One Group M/M
Fund Index Fund Market Expansion
Index Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Managed Assets Growth Q/Q Investor Growth M/M The One Group M/M
Fund Fund Investor Growth
-15-
175
========================= =============== ==================== ================ ==================== ================
Current Current Dividend to
Pegasus Dividend One Group Dividend Post-Reorganization be
Portfolio Declared/Paid Fund Declared/Paid Fund Declared/Paid
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Managed Assets Balanced Q/Q Investor Growth & M/M The One Group M/M
Fund Income Fund Investor Growth &
Income Fund
- ------------------------- --------------- -------------------- ---------------- -------------------- ----------------
Managed Assets M/M Investor Balanced M/M The One Group M/M
Conservative Fund Fund Investor Balanced
Fund
========================= =============== ==================== ================ ==================== ================
D/M = Daily/Monthly
M/M = Monthly/Monthly
Q/Q = Quarterly/Quarterly
-16-
176
APPENDIX V
The One Group U.S. Treasury Securities Money Market Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The seven-day yield on The One Group U.S. Treasury Securities Money Market Fund
Fiduciary share class was 5.12% on June 30, 1998, up slightly from 5.03% on June
30, 1997.
WHAT CONTRIBUTED TO THE FUND'S FAIRLY STABLE YIELDS?
The Fund's yield reflects the relative stability in interest rates brought on by
the Federal Reserve's unchanged monetary policy. Rate movements throughout the
year were fairly moderate. They reflected changing views on economic strength
and whether that strength would lead to inflationary pressures requiring Federal
Reserve action.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our primary strategy during the period was to maintain a "barbell" maturity
structure, meaning that we focused on securities at the extremes of the
short-term maturity range. As such, the Fund emphasized securities with
maturities between six months and one year along with overnight repurchase
agreements.
The money market yield curve during the fiscal year remained fairly steep,
meaning that securities with longer maturities paid relatively higher yields.
The Fund's "longer" securities-those maturing in six months to one year-enabled
the Fund to increase its yield. At the same time, the repurchase agreements,
which matured overnight, allowed the Fund to retain a high level of liquidity.
This strategy led to an average maturity of 37 days on June 30, 1998, enabling
the Fund to maintain its "AAA" average quality rating-the best possible-from
Standard & Poor's and Moody's Investors Service. This rating indicates that the
Fund's securities are of the highest quality and offer the lowest risk. In order
to receive this rating, a fund must have an average maturity no greater than 60
days.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Economic activity and its influences on Federal Reserve policies will have a
direct effect on the Fund over the next year. Over the near term, strong
domestic demand is likely to be offset by the Asian crisis. This will require
the Federal Reserve to be diligent in directing monetary policy. This outlook
warrants continued caution so the Fund can be positioned to benefit from any
action the Federal Reserve may take.
/s/ Andrew T. Linton
Andrew T. Linton
Fund Manager
/s/ Gary J. Madich
Gary J. Madich, CFA
Senior Managing Director of Fixed Income Securities
AVERAGE ANNUAL
TOTAL RETURN
CLASS OF SHARES 7 DAY YIELD 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
Fiduciary 5.12% 5.19% 4.73% 5.39% 5.48%
Class A 4.87% 4.92% 4.47% NA 4.10%
Class B 4.12% 4.14% NA NA 4.11%
Class C 4.08% NA NA NA 1.47%
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
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177
The One Group Prime Money Market Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The seven-day yield on The One Group Prime Money Market Fund Fiduciary share
class was 5.22% on June 30, 1998, down slightly from 5.25% on June 30, 1997.
WHAT CONTRIBUTED TO THE FUND'S FAIRLY STABLE YIELD?
The relative stability of the Fund's yield reflects the fact that the Federal
Reserve left monetary policy unchanged throughout the fiscal year. Interim rate
movements were fairly moderate and reflected market participants' changing views
on how the problems in Asia would affect the domestic economy. Some believed
that the seriousness of the situation would lead to a significant slowdown of
the U.S. economy, causing the Federal Reserve to cut interest rates. Others
believed that the underlying strength of the domestic economy would overwhelm
any Asian impact, and that the Federal Reserve would be forced to hike interest
rates in anticipation of higher inflation.
WHICH VIEWPOINT DID YOU FAVOR?
Our stance was that the Federal Reserve would leave interest rates unchanged. We
believed that cheaper imports resulting from the Asian crisis would help keep
the U.S. inflation rate low, as U.S. producers would be compelled to keep prices
down in order to compete. Also encouraging the Federal Reserve to leave rates
alone was the federal budget surplus. With Congress apparently gridlocked on how
to spend it, fiscal stimulus was not a problem facing monetary policy makers.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
With Federal Reserve monetary policy on hold, the Fund's weighted average
maturity stayed in a range of 60 days to 85 days-slightly higher than usual.
When interest rates climbed, we extended the weighted average maturity to the
higher end of the range to capture better yields. And, when rates drifted
downward, we shortened the weighted average maturity until we perceived better
value in the market.
On June 30, 1998, the Fund's weighted average maturity was 71 days, compared to
68 days on June 30, 1997.
WHAT IS YOUR OUTLOOK FOR THE FUND?
As long as the Federal Reserve maintains a gradual, modest approach to
regulating monetary supply, we will continue to pursue yield advantages from a
weighted average maturity range that is slightly longer than average.
/s/ Roger C. Hale
Roger C. Hale, CFA, CFP
Fund Manager
/s/ Gary J. Madich
Gary J. Madich, CFA
Senior Managing Director of Fixed Income Securities
AVERAGE ANNUAL
TOTAL RETURN
CLASS OF SHARES 7 DAY YIELD 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
Fiduciary 5.22% 5.39% 4.92% 5.63% 5.76%
Class A 4.97% 5.13% 4.66% NA 4.29%
Class B 4.22% 4.35% NA NA 4.36%
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
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178
The One Group Municipal Money Market Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The seven-day yield on The One Group Municipal Money Market Fund Fiduciary share
class was 3.15% on June 30, 1998, compared to 3.63% on June 30, 1997. (For
investors in the 39.6% federal income tax bracket, the June 30, 1998, tax-exempt
yield translates into a tax-equivalent yield of 5.16%.)
The Fund also experienced a significant increase in assets during the year to
$613.9 million from $524.5 million.
DID YIELDS FLUCTUATE MUCH DURING THE YEAR?
Yields in the variable-rate sector experienced the most volatility of any
sector, moving within a trading range of 2.75% to 4.50%. Rates reached their
peak in April and their low point in February. This volatility was due primarily
to changing technical supply and demand factors combined with inconsistent
market cash flows. In comparison, the one-year fixed-rate sector traded within a
narrower range of 3.55% to 3.85%.
HOW DID ECONOMIC EVENTS INFLUENCE MARKET PERFORMANCE?
Short-term tax-exempt rates moved moderately lower during the year. With the
Federal Reserve's monetary policy remaining unchanged, the market reacted
positively to moderate economic output and a low-inflation environment.
Many short-term municipal issuers have continued to benefit significantly from
the ongoing economic expansion. This favorable environment has allowed many
borrowers to either reduce their outstanding deficits or increase their cash
surplus, which resulted in reduced issuance compared to previous years. Lower
financing needs coupled with steady demand supported the downward trend in
rates.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our primary strategy continues to involve adjusting the mix of variable-rate and
fixed-rate obligations based on changing market conditions. We also incorporate
a quality-oriented investment selection process to help ensure that all issues
selected for the Fund represent minimal credit risk. Because of this process,
the Fund did not experience any adverse impact or credit downgrades from the
Asian bank and credit crisis that began to unfold in October.
As the yield curve shifted during the year, we maintained the Fund's average
maturity in a range of 34 days to 61 days. This enabled us to take advantage of
changing market conditions and to accommodate the Fund's liquidity needs. At
year-end, the average maturity was 46 days, compared to 37 days a year ago.
WHAT IS YOUR OUTLOOK FOR THE FUND?
The outlook for the municipal money market continues to look positive. While
demand for short-term products should continue to exceed available market
supply, we plan to focus on longer-term issues and rely on our investment
process in an attempt to provide competitive returns.
/s/ Thomas W. Cary
Thomas W. Cary
Fund Manager
/s/ Gary J. Madich
Gary J. Madich, CFA
Senior Managing Director of Fixed Income Securities
AVERAGE ANNUAL
TOTAL RETURN
CLASS OF SHARES 7 DAY YIELD 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
Fiduciary 3.15% 3.27% 3.05% 3.77% 3.84%
Class A 2.90% 3.01% 2.81% NA 2.64%
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
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179
The One Group Investor Funds
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUNDS PERFORM?
For the year ended June 30, 1998, The One Group Investor Funds posted the
following total returns for their respective Fiduciary share class:
- - The One Group Investor Growth Fund, 23.81%
- - The One Group Investor Growth and Income Fund, 20.34%
- - The One Group Investor Balanced Fund, 17.02%
- - The One Group Investor Conservative Growth Fund, 12.73%
For information on other share classes and performance comparisons to indexes,
please see pages 4-7.
HOW DID THE BOND AND STOCK MARKETS PERFORM?
The bond market continued to benefit from low inflation, which helped push
interest rates down and bond prices up. Furthermore, events in Asia contributed
to a weakening global economy, which in turn helped support favorable bond
market conditions in the United States.
The stock market continued to provide better-than-average investment returns,
thanks to low inflation, moderate economic growth and strong corporate earnings
growth. In addition, a favorable bond market contributed to the stock market's
strength by allowing price/earnings (P/E) multiple expansion. That is, the
declining interest rate environment allowed companies to realize greater
profits, and stock prices increased on these favorable earnings results.
For more than four years, large-capitalization growth stocks have led the
domestic market surge, outperforming smaller-company stocks and value-oriented
stocks. Investors continued to favor larger companies due to their earnings
reliability and stock liquidity.
DID THE SITUATION IN ASIA INFLUENCE STOCK RETURNS?
Beginning in late 1997, many larger, multinational companies, particularly in
the semiconductor, energy and commodities sectors, felt the effects of the Asian
markets' meltdown. With too much capital and investment generating excess
capacity, lower prices led to insufficient profits. As a result, currencies
declined and market returns plummeted for most Asian markets.
WERE THERE ANY OTHER NOTABLE PERFORMANCES OVERSEAS?
Many European markets experienced a comeback, with strong one-year performance
from Italy, up 63%; Spain up 50%; Germany, up 46%; and France, up 43%.
WHAT WAS YOUR OVERALL ASSET ALLOCATION STRATEGY?
Each of the Investor Funds maintained relatively strong exposure to equity funds
(depending, of course, on each fund's overall investment objective and asset
allocation parameters), which enabled the funds to participate in the ongoing
stock market rally and post attractive overall returns. In addition, each Fund's
allocation toward the bond market was slightly greater than what we consider to
be average exposure.
WHY WAS THAT?
We implemented this strategy based on our ongoing research efforts, which showed
that stocks, on a valuation basis, continued to be more expensive than bonds. We
felt that this presented some additional risks for stocks. At the same time,
earnings momentum remained strong. We therefore made only a slight shift toward
fixed income funds in order to gain some downside protection from the stock
market's high valuations. The average fund allocations during the period were as
follows:
- - The One Group Investor Growth Fund: 86% equity funds; 13% fixed income funds;
1% money market funds
- - The One Group Investor Growth and Income Fund: 66% equity funds; 33% fixed
income funds; 1% money market funds
- - The One Group Investor Balanced Fund: 46% equity funds; 53% fixed income
funds; 1% money market funds
- - The One Group Conservative Growth Fund: 26% equity funds; 72% fixed income
funds; 2% money market funds
WHAT WERE YOUR KEY STRATEGIES IN THE EQUITY ARENA?
The Investor Funds enjoyed varying exposure, depending on the overall investment
objective, to the following equity styles: large capitalization,
mid-capitalization, small capitalization and international. Within each style,
individual stock selection remains the core of our management process. We
modestly adjusted our asset allocations to include in-
2
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The One Group Investor Funds
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
ternational stocks, giving the funds an opportunity to take advantage of lower
valuations in Asia and continued economic recovery in Europe. Our international
exposure is now between 5% and 11%, with the greatest exposure in The One Group
Investor Growth Fund. This ongoing approach toward diversification helped limit
risk while offering return opportunities from different market segments.
WHAT WERE YOUR KEY STRATEGIES WITHIN THE FIXED INCOME MARKET?
Within the fixed income funds, our efforts centered on maintaining a low-risk
profile by keeping durations at or near their average levels. (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.)
Instead of making "bets" on interest rate movements by significantly altering
duration, we prefer to concentrate on the yield component of total return.
Over the past year, our fund managers focused on select investments in the
corporate, asset-backed and mortgage-backed sectors. This allowed the funds to
capture the yield advantages that these securities generally offered compared to
Treasury securities. At the same time, they focused on maintaining portfolios
with good average credit quality.
WHAT IS YOUR OUTLOOK FOR THE FUNDS?
Economic activity is critical to the funds' performance because the economy
drives earnings. The current economic expansion, now in its eighth year, is one
of the longest in history. Looking ahead to fiscal 1999, we expect U.S. economic
growth to remain positive, but to slow down from recent levels. Corporate
earnings should continue to grow, but perhaps not at the pace we've seen
recently.
We also believe that inflation will remain low, leading to a stable or lower
interest rate environment. As such, we believe there will be little opportunity
for price volatility to significantly influence bond market returns.
Asia remains the one wild card. An unforeseen depression in any of these
countries could spill over and put a squeeze on U.S. growth. We believe that a
depression is unlikely, however, because Japan's economic package should provide
guidance for the country and establish an outline for deregulation. These moves
should bring Japan closer to financial reform and improve the banking system.
Given the extraordinary equity gains of the last several years, it is not
realistic to expect this pace to continue. Going forward, we think the equity
market will be a bit more selective, which would make individual security
selection even more important.
We currently don't anticipate making any significant changes to our asset
allocation strategies. But we will continue to monitor the economic climate for
inflationary pressures and valuation levels in the financial markets. We also
will keep close tabs on the situation in Asia and how events there may affect
the funds' investments.
/s/ Richard R. Jandrain III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
Director, Asset Allocation Committee
Please refer to the prospectus and the accompanying financial statements for
more information about your Fund.
3
181
The One Group Investor Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Fiduciary 23.81% 24.49%
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Fiduciary
12/96 10000 10000 10000
6/97 11945 10680 11350
6/98 15462 12724 14053
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Class A 23.44% 23.78%
Class A* 17.87% 20.17%
* Reflects 4.50% Sales Charge.
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class A* Class A
6/98 15462 12724 13303 13929
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Class B 22.52% 23.91%
Class B** 18.52% 21.61%
** Reflects Applicable Contingent Deferred Sales Charge.
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class B** Class B
6/98 15462 12724 13552 13952
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (7/1/97)
Class C 22.42% 22.42%
Class C** 21.42% 21.42%
** Reflects Applicable Contingent Deferred Sales Charge.
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class C** Class C
6/98 12944 11914 12141 12241
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth Fund is measured against the S&P 1500
Index, an unmanaged index generally representative of the performance of large
and small companies in the US stock market. Investors are unable to purchase the
index directly, although they can invest in the underlying securities. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management. By contrast, the performance
of the fund reflects the deduction of these value-added services as well as the
deduction of sales charges on Class A Shares and applicable contingent deferred
sales charges on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (75%), the Lipper International Funds
Universe (10%), and the Lipper Intermediate US Government Bond Funds Universe
(15%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
6/97 11945 10680 10776 11284
12/96 10000 10000 9550 10000
6/97 11945 10680 11388 11388
12/96 10000 10000 10000 10000
7/97 10000 10000 10000 10000
4
182
The One Group Investor Growth & Income Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Fiduciary 20.34% 20.40%
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Fiduciary
12/96 10000 10000 10000
6/97 11945 10535 11087
6/98 15462 12342 13342
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Class A 20.18% 20.73%
Class A* 14.76% 17.21%
* Reflects 4.50% Sales Charge.
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class A* Class A
6/98 15462 12342 12797 13399
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Class B 19.13% 19.72%
Class B** 15.13% 17.38%
** Reflects Applicable Contingent Deferred Sales Charge.
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class B** Class B
6/98 15462 12342 12825 13225
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (7/1/97)
Class C 19.08% 19.08%
Class C** 18.08% 18.08%
** Reflects Applicable Contingent Deferred Sales Charge.
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class C** Class C
6/98 12944 11715 11808 11908
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth & Income Fund is measured against the S&P
1500 Index, an unmanaged index generally representative of the performance of
large and small companies in the US stock market. Investors are unable to
purchase the index directly, although they can invest in the underlying
securities. The performance of the index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management. By
contrast, the performance of the fund reflects the deduction of these
value-added services as well as the deduction of sales charges on Class A Shares
and applicable contingent deferred sales charges on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (60%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(35%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
6/97 11945 10535 10648 11150
12/96 10000 10000 9550 10000
6/97 11945 10535 11102 11102
12/96 10000 10000 10000 10000
7/97 10000 10000 10000 10000
5
183
The One Group Investor Balanced Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Fiduciary 17.02% 16.60%
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Aggregate Bond Lipper Mix Fiduciary
6/98 11219 11890 12694
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Class A 16.62% 16.29%
Class A* 11.39% 12.90%
* Reflects 4.50% Sales Charge.
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class A* Class A
6/98 11219 11890 12074 12641
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (12/10/96)
Class B 15.85% 15.67%
Class B** 11.85% 13.28%
** Reflects Applicable Contingent Deferred Sales Charge.
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class B** Class B
6/98 11219 11890 12136 12536
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (7/1/97)
Class C 15.66% 15.66%
Class C** 14.66% 14.66%
** Reflects Applicable Contingent Deferred Sales Charge.
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class C** Class C
6/98 10868 11444 11466 11566
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Balanced Fund is measured against the Lehman
Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised of US
Government, mortgage, corporate and asset-backed securities with maturities of
one to ten years. Investors are unable to purchase the index directly, although
they can invest in the underlying securities. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management. By contrast, the performance of the fund reflects the
deduction of these value-added services as well as the deduction of sales
charges on Class A Shares and applicable contingent deferred sales charges on
Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (40%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(55%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
6/97 10323 10390 10848
12/96 10000 10000 10000
6/97 10323 10390 10353 10841
12/96 10000 10000 9550 10000
6/97 10323 10390 10822 10822
12/96 10000 10000 10000 10000
7/97 10000 10000 10000 10000
6
184
The One Group Intermediate Tax-Free Bond Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group Intermediate Tax-Free Bond Fund Fiduciary share class offered a
total return of 7.74% for the year ended June 30, 1998. (For information on
other share classes and performance comparisons to indexes, please see page 4.)
Overall, interest rates declined during the year, and the Fund's 30-day SEC
yield (Fiduciary share class) fell to 4.15% at year-end, compared to 4.57% on
June 30, 1997. (For investors in the 39.6% federal income tax bracket, the June
30, 1998, yield translates into a taxable-equivalent yield of 6.87%.)
HOW DID YOU MANAGE INTEREST RATE VOLATILITY?
We generated the Fund's total return by continually realigning the portfolio
through one of the most volatile market environments in recent history. With
worries of inflation-induced Federal Reserve intervention and fallout from the
Asian situation, we witnessed significant market moves on a regular basis. With
limited cash flow in the Fund, we sought to add value for shareholders by taking
advantage of this volatility. By investing in discount coupon bonds, we could
buy when the market fell off and let the bonds run up in price when the markets
recovered from the many sell-offs during the year.
With an eye on after-tax total return, we remain conscious of capital gains. As
such, we will take losses on bonds when the market declines, which helps offset
the gains the Fund realizes when the market rallies. Our intent is to generate
tax-free income, but we also want to enhance total return by realigning the
portfolio to react to market conditions.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our belief during the year was that the market would be volatile, but that
interest rates would head lower. As such, we maintained an average duration near
the six-year mark, added yield to the portfolio, and traded securities to take
advantage of market volatility. (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.)
In keeping with our strategy, when rates moved up, and prices fell, we sold
certain issues and captured losses (see above). Then, we replaced those issues
with bonds of similar structure--positive convexity, discount coupons and high
liquidity--which increased the portfolio's yield. (Convexity is a secondary
measure of a fund's price sensitivity to interest rate changes. Generally, bonds
with positive convexity perform better than those with negative convexity in
periods of high interest rate volatility.) Our strategy was to restructure a
portion of the portfolio with blocks of desirable bonds, so as to sell them at a
profit if our outlook changed during the year. Given the volatility in the
market from repeated economic data suggesting the death of inflation, to the
Asian turmoil that sent the markets reeling in the fourth quarter of 1997, our
tactics were sound.
DID THE FUND'S OVERALL QUALITY CHANGE?
The Fund's overall credit quality remained high, largely because an increasing
number of bonds coming to market are insured. At year-end, 73.9% of the Fund's
assets were invested in securities rated AAA and AA. We continue to look in the
lower-investment-grade areas for bonds with higher yields. But, this has been
somewhat challenging because the spread, or difference in yield, between
medium-grade bonds (those rated A and BBB) and AAA-rated bonds has been
compressed over the last 18 months, meaning that there is little yield advantage
to moving into the medium-quality area.
2
185
The One Group Intermediate Tax-Free Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
WHAT IS YOUR OUTLOOK FOR THE FUND?
We have no real evidence that market volatility will subside in the near future,
so we anticipate trading in the range we have seen over the past year. We remain
vigilant in our inflation watch, because any sign of an overheating economy
should lead the Federal Reserve to raise rates and, therefore, erode the value
of bonds. Nevertheless, we expect inflation to remain under control for the near
term, as a slower-growth economy should keep interest rates low and may even
force the Fed to ease monetary policy.
/s/ Patrick M. Morrissey
Patrick M. Morrissey
Fund Manager
/s/ Gary J. Madich, CFA
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
3
186
The One Group Intermediate Tax-Free Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (9/4/90)
Fiduciary 7.74% 5.46% 6.95%
VALUE OF $10,000 INVESTMENT
Lipper
Lehman Intermediate
Measurement Period Brothers 7 Year Municipal Bond
(Fiscal Year Covered) Municipal Bond Funds Index Fiduciary
9/90 $10,000 $10,000 $10,000
6/91 10,814 10,749 10,777
6/92 11,996 11,854 11,805
6/93 13,285 13,026 12,961
6/94 13,453 13,156 12,946
6/95 14,560 14,046 13,820
6/96 15,366 14,764 14,564
6/97 16,446 15,715 15,694
6/98 $17,653 $16,807 $16,908
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (2/18/92)
Class A 7.50% 5.22% 6.08%
Class A* 2.70% 4.26% 5.32%
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
Lipper
Lehman Intermediate
Measurement Period Brothers 7 Year Municipal Bond
(Fiscal Year Covered) Municipal Bond Funds Index Class A* Class A
2/92 $10,000 $10,000 $ 9,550 $10,000
6/92 10,319 10,311 9,850 10,314
6/93 11,428 11,331 10,783 11,291
6/94 11,572 11,443 10,747 11,253
6/95 12,525 12,218 11,444 11,983
6/96 13,218 12,842 12,046 12,616
6/97 14,147 13,669 12,933 13,547
6/98 $15,185 $14,619 $13,904 $14,561
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (1/14/94)
Class B 6.81% 4.28%
Class B** 2.81% 3.89%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Lipper
Lehman Intermediate
Measurement Period Brothers 7 Year Municipal Bond
(Fiscal Year Covered) Municipal Bond Funds Index Class B** Class B
1/94 $10,000 $10,000 $10,000 $10,000
6/94 9,622 9,601 9,552 9,552
6/95 10,413 10,251 10,115 10,115
6/96 10,990 10,775 10,568 10,568
6/97 11,762 11,469 11,289 11,289
6/98 $12,625 $12,266 $11,856 $12,056
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The fund's income may be subject to the federal alternative minimum tax.
The performance of the Intermediate Tax-Free Bond Fund is measured against the
Lehman Brothers 7 Year Municipal Bond Index, an unmanaged index comprised of
investment grade municipal bonds with maturities close to seven years. Investors
are unable to purchase the index directly, although they can invest in the
underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management. By contrast, the performance of the fund reflects the deduction of
these value-added services as well as the deduction of sales charges on Class A
Shares and applicable contingent deferred sales charges on Class B Shares.
The Lipper Intermediate Municipal Bond Funds Index consists of the equally
weighted average monthly return of the largest funds within the universe of all
funds in the category.
4
187
The One Group Income Equity Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group Income Equity Fund Fiduciary share class posted a total return of
23.18% for the year ended June 30, 1998. (For information on other share classes
and performance comparisons to the Fund's benchmark index, please see page 7.)
With inflation, unemployment and federal fiscal balances at their best levels in
a generation, the equity market offered strong double-digit returns for the
fourth consecutive year.
TO WHAT DO YOU ATTRIBUTE SUCH STRONG PERFORMANCE?
The Fund continued to benefit from its concentration in the types of companies
investors have preferred-large-capitalization, high-quality, consistent-growth
companies. At the same time, the Fund was rewarded for not owning companies with
severe earnings problems, such as those with significant exposure to Asia.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our portfolio strategies during the year focused on maintaining strong
performance measures while positioning the portfolio for a more challenging
market environment we think may be in store. As such, we sold and took profits
on certain issues that have been the best performers over the last several
years. We also eliminated some disappointing holdings and established new
positions in securities that we think are likely to be future market leaders.
We also have been improving the Fund's current income by reducing
lower-dividend-yielding issues and building positions in higher-yielding
securities. We also cut in half the Fund's position in convertible securities
and used the proceeds to invest in real estate investment trusts (REITs). In
addition to enhancing the Fund's diversification, we believe the REITs offer
good value and add important defensive characteristics to the Fund due to their
attractive yields.
On average, the Fund held 89% of its assets in common stocks, 5% in convertible
securities, 5% in REITs and 1% in cash during the year.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
The Fund enjoyed strong fiscal-year performance from several sectors in which
certain companies consistently achieved superior earnings growth or benefited
from major restructuring:
- - Health care (Schering-Plough, Pfizer and Warner-Lambert were up 65% or more)
- - Finance (American Express, Chase Manhattan, U.S. Bancorp, Lincoln National,
FNMA and National City were up 35% or more)
- - Telephone utilities (AT&T, BellSouth and Sprint were up 30% or more)
- - Selected industrials (Ford was up 55%).
WERE THERE ANY DISAPPOINTING HOLDINGS?*
Disappointing performers were concentrated in more volatile sectors, including
transportation (Union Pacific declined 37% for the fiscal year), energy and
mining (Amoco was off 4%, Cyprus-Amax down 46%) and manufacturing (Corning,
Boeing and Deere declined in price). Our policy in handling such "problem"
issues is to reduce the position size when earnings expectations are not being
met and sell out completely if a turnaround is unlikely, as we did with Union
Pacific and Cyprus-Amax. To help avoid problem situations, we concentrate on
favorable growth areas and look to fundamental research conducted by our
in-house analysts.
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE?*
Two new issues moved into the top 10 holdings-American Home Products, 2.1%
(health care) and Schering-Plough, 1.9% replaced Mobil (energy) and Philip
Morris (consumer non-durables). The remaining top 10 holdings were unchanged
from last year and included General Electric, 3.4% (capital goods), American
Express, 2.5%, Bristol-Myers Squibb, 2.4% (health care), Exxon, 2.2% (energy),
BankAmerica, 2.1% (financial services), Warner-Lambert, 2.1%, Coca-Cola, 2.1%
(consumer non-durable), and Royal Dutch Petroleum, 2.0% (energy).
5
188
The One Group Income Equity Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
WHAT IS YOUR OUTLOOK FOR THE FUND?
We are pleased with the current composition of the portfolio and the fundamental
progress of the companies the Fund owns. Nevertheless, the financial markets
have been highly volatile. Many of the uncertainties confronting investors
today-Asian problems, nuclear proliferation, historically high stock
valuations-have no quick-fix solutions. Furthermore, corporate earnings gains
aren't as good as they have been in recent years. This would suggest that we
should lower our return expectations and become more focused and selective.
Perhaps the best plan is to remain flexible and vigilant in order to take
advantage of opportunities when they arise. If a more challenging market
develops, we believe the Fund is well positioned, given its defensive
characteristics, higher-than-average income, holdings in predictable growth
companies and exposure to real estate.
/s/ R. Lynn Yturri
- ---------------------------
R. Lynn Yturri
Fund Manager
/s/ Richard R. Jandrain III
- ---------------------------
Richard R. Jandrain III
Senior Managing Director of Fixed Income Securities
* Holdings are subject to change.
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
6
189
The One Group Income Equity Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year 10 Year (7/2/87)
Fiduciary 23.18% 20.21% 16.29% 13.99%
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Fiduciary
6/88 $10,000 $10,000
6/89 12,055 11,858
6/90 14,044 13,375
6/91 15,082 14,376
6/92 17,104 16,153
6/93 19,436 18,020
6/94 19,709 18,609
6/95 24,847 22,526
6/96 31,307 28,053
6/97 42,170 36,720
6/98 $54,889 $45,230
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (2/18/92)
Class A 22.91% 19.89% 17.43%
Class A* 17.39% 18.79% 16.59%
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Class A* Class A
2/92 $10,000 $ 9,550 $10,000
6/92 9,992 9,625 10,079
6/93 11,354 10,721 11,226
6/94 11,514 11,037 11,557
6/95 14,515 13,301 13,961
6/96 18,289 16,569 17,353
6/97 24,635 21,602 22,625
6/98 $32,065 $26,558 $27,806
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (1/14/94)
Class B 21.97% 20.06%
Class B** 17.97% 19.82%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Class B** Class B
1/94 $10,000 $10,000 $10,000
6/94 9,344 9,663 9,663
6/95 11,779 11,587 11,587
6/96 14,842 14,300 14,300
6/97 19,992 18,515 18,515
6/98 $26,022 $22,387 $22,587
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
(11/4/97)
Class C 16.57%
Class C** 15.57%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Class C** Class C
11/97 $10,000 $10,000 $10,000
6/98 $11,973 $11,556 $11,656
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Income Equity Fund is measured against the S&P 500 Index,
an unmanaged index generally representative of the performance of large
companies in the US stock market. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management. By contrast, the performance of the fund
reflects the deduction of these value-added services as well as the deduction of
sales charges on Class A Shares and applicable contingent deferred sales charges
on Class B and Class C Shares.
7
190
The One Group Equity Index Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
For the year ended June 30, 1998, The One Group Equity Index Fund Fiduciary
share class posted a total return of 29.73%. (For information on other share
classes and a performance comparison to the index, please see page 9.)
As it is designed to do, the Fund offered a return that nearly matched that of
the S&P 500 Index, the unmanaged group of stocks the Fund seeks to track with
little or no excess risk. The S&P 500 Index returned 30.16% for the year. The
slight difference in returns between the Fund and the Index is due to fees and
transaction costs charged to the Fund but not to the Index.
WHAT CONTRIBUTED TO SUCH A STRONG RETURN?
A strong economy, low inflation, declining interest rates and favorable
corporate earnings growth led to attractive stock market returns for yet another
year. Once again, large-capitalization growth companies, the type represented in
the S&P 500 Index, outperformed other types of U.S. stocks.
WHICH MARKET SECTORS OFFERED NOTABLE PERFORMANCE?
The Fund offered exposure to 15 market sectors. Among those sectors, retail and
telephone utilities offered the strongest performance. The retail sector
benefited from lower costs on Asian imports, while telephone utilities advanced
due to acquisition activity.
The weakest-performing sectors included technology, energy and industrial
commodities. The technology sector suffered somewhat from the economic and
market crisis that swept through Asia, while energy stocks declined due to lower
oil prices. In the industrial commodities sector (chemical, paper and metal
companies), stocks suffered from the sector's lack of pricing power.
WHAT WERE SOME OF THE STRONGEST AND WEAKEST STOCKS?*
The Fund enjoyed outstanding performance from a handful of stocks, including
technology provider Unisys, up 270% for the fiscal year due to strong earnings;
computer manufacturer Dell Computer, up 216% on strong earnings; cable
television company Tele-Communications, up 159% and acquired by AT&T; financial
service provider Providian Financial, up 145% on strong earnings; and auto
manufacturer Ford Motor, up 55% due to strong earnings.
Weak earnings contributed to poor performance from certain holdings, including
diversified mining company Freeport-McMoran Copper and Gold, down 51% for the
fiscal year; technology company Advanced Micro Devices, down 52%; and technology
provider Cabletron Systems, down 53%.
WHAT WERE THE FUND'S TOP 10 HOLDINGS?*
Most of the Fund's top 10 holdings retained their spots during the past year.
The only changes to the group were the addition of Pfizer, 1.5% (health care
sector) and Wal-Mart, 1.5% (retail), which replaced Philip Morris (consumer
non-durables) and IBM (technology). The remaining top 10 included General
Electric, 3.2% (capital goods), Microsoft, 2.9% (technology), Coca-Cola, 2.3%
(consumer non-durables), Exxon, 1.9% (energy), Merck, 1.7% (health care), Intel,
1.4% (technology), Proctor & Gamble, 1.3% (consumer non-durables) and Royal
Dutch Petroleum, 1.3% (energy).
WHAT IS YOUR OUTLOOK FOR THE STOCK MARKET?
The environment for stocks should remain favorable over the coming year. We
expect economic growth to continue, but at a slower pace. We also expect
interest rates and inflation to remain low. Corporate earnings and stock prices
should continue to grow, but earnings are likely to come under increasing
pressure. Nevertheless, it's important to remember that returns of the last few
years have been unusually strong, and they probably are not sustainable. We
expect to see stock returns revert to more "normal" levels.
/s/ Richard R. Jandrain III
- ---------------------------
Richard R. Jandrain III
Senior Managing Director of Equity Securities
* Holdings subject to change.
Please refer to the prospectus and the accompanying financial statements for
more information about your Fund.
The S&P 500 Index is an unmanaged group of stocks generally representative of
the performance of large U.S.-based companies. Investors cannot purchase the
index directly, but they can invest in the underlying securities.
8
191
The One Group Equity Index Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (7/2/91)
Fiduciary 29.73% 22.58% 19.64%
VALUE OF $10,000 INVESTMENT
Measurement Period Dollars
(Fiscal Year Covered) S&P 500 Fiduciary
7/91 $10,000 $10,000
6/92 10,836 11,211
6/93 12,313 12,673
6/94 12,486 12,753
6/95 15,741 16,043
6/96 19,834 20,129
6/97 26,717 27,033
6/98 $34,775 $35,070
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (2/18/92)
Class A 29.33% 22.29% 19.44%
Class A* 23.49% 21.17% 18.58%
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
Measurement Period Dollars
(Fiscal Year Covered) S&P 500 Class A* Class A
2/92 $10,000 $ 9,550 $10,000
6/92 9,992 9,595 9,992
6/93 11,354 10,818 11,354
6/94 11,514 10,879 11,514
6/95 14,515 13,644 14,515
6/96 18,289 17,075 18,289
6/97 24,635 22,869 24,635
6/98 $32,066 $29,574 $30,976
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (1/14/94)
Class B 28.47% 22.74%
Class B** 24.47% 22.51%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Measurement Period Dollars
(Fiscal Year Covered) S&P 500 Class B** Class B
1/94 $10,000 $10,000 $10,000
6/94 9,344 9,443 9,443
6/95 11,779 11,765 11,765
6/96 14,842 14,595 14,595
6/97 19,992 19,400 19,400
6/98 $26,022 $24,721 $24,921
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
(11/4/97)
Class C 21.07%
Class C** 20.07%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Measurement Period Dollars
(Fiscal Year Covered) S&P 500 Class C** Class C
11/97 $10,000 $10,000 $10,000
6/98 $11,973 $12,006 412,106
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Equity Index Fund is measured against the S&P 500 Index,
an unmanaged index generally representative of the performance of large
companies in the US stock market. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management. By contrast, the performance of the fund
reflects the deduction of these value-added services as well as the deduction of
sales charges on Class A Shares and applicable contingent deferred sales charges
on Class B and Class C Shares.
9
192
The One Group Value Growth Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group Value Growth Fund Fiduciary share class posted a total return of
32.26% for the year ended June 30, 1998. (For information on other share classes
and performance comparisons to indexes, please see page 12.)
TO WHAT DO YOU ATTRIBUTE THE FUND'S SOLID RETURN?
Domestic stocks of all styles enjoyed another strong year, as low inflation,
declining interest rates and better-than-expected corporate earnings contributed
to the gains.
Rather than emphasizing particular market sectors or trying to time the market's
next moves, we research, evaluate and select stocks on an individual basis to
build a diversified portfolio. We don't consciously overweight a single sector
or a single style of stock. Instead, we invest in stocks from the four major
equity styles -- large capitalization growth, large capitalization value, medium
capitalization growth and medium capitalization value -- and look for stocks
that we believe offer the best return potential relative to their level of risk.
Over the past year, for example, we saw some vicious swings among sectors,
creating a momentum market that saw investors attempting to pick the "right"
sector at the right time. But, our emphasis on individual stock selection paid
off, as that process gave the Fund exposure to many different industries and
contributed to the Fund's strong return.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
The Fund owned more stocks than usual and was more diverse than usual in an
active attempt to be less exposed to any single momentum play. Momentum markets
tend to last longer than investors expect, and stocks that are not participating
tend to lose their value quickly.
Events in Asia played an interesting role in the Fund's performance. After the
domino effect, which started in Thailand, hit U.S. shores in October 1997, we
avoided the stocks of companies that we thought would be most negatively
affected by the malaise -- namely, commodity cyclical companies. By steering
away from that group, the Fund became more growth-oriented than usual.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
Industry positions such as the pharmaceutical area of health care
(Schering-Plough, up 91% for the fiscal year, and Bristol-Myers Squibb, up 42%);
the software and PC areas of technology (Microsoft, up 71%; BMC Software, up
88%; Dell Computer, up 216%); and the long distance segment of
telecommunications (Century Telephone, up 104%; Sprint, up 35%) added to the
Fund's strong performance.
The Fund also benefited from strong performance from Cisco Systems (technology),
up 106% for the year; Equitable Co. (financial services), up 125%; Morgan
Stanley Dean Witter (financial services), up 112%; Lucent Technologies
(technology), up 131%; and Energy East (utility), up 99%.
At the same time, a few Fund holdings realized poor performance, namely Callaway
Golf (consumer services), down 45% for the year; Toys R Us (retail), down 33%;
BetzDearborn (raw materials), down 37%; Columbia/HCA Healthcare (health care),
down 26%; and Phycor (health care), down 52%.
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE?*
More than half of the Fund's top 10 holdings were among the leading holdings one
year ago: Microsoft, 3.3% (technology), General Electric, 2.9% (capital goods),
Exxon, 2.1% (energy), Wal-Mart, 1.8% (retail), Bristol Myers, 1.8% (health care)
and Intel, 1.7% (technology). The remaining members of the top 10 on June 30,
1998, included NationsBank, 1.8% (financial services), Cisco Systems, 1.8%, Dell
Computer, 1.7% and Coca-Cola, 1.5% (consumer non-durables).
10
193
The One Group Value Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
WHAT IS YOUR OUTLOOK FOR THE FUND?
We anticipate corporate earnings to revert to more normal levels, and we believe
volatility will continue. We plan to maintain the Fund's style diversity in
similar proportion as last year to address this market.
/s/ Michael D. Weiner
- ---------------------
Michael D. Weiner
Fund Manager
/s/ Richard R. Jandrain III
- ---------------------------
Richard R. Jandrain III
Senior Managing Director of Equity Securities
* Holdings are subject to change.
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
11
194
The One Group Value Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (12/29/89)
Fiduciary 32.26% 19.63% 17.91%
Measurement Period VALUE OF $10,000 INVESTMENT
(Fiscal Year Covered) S&P 1500 Fiduciary
12/89 $10,000 $10,000
6/90 10,309 10,657
6/91 11,072 11,631
6/92 12,557 13,847
6/93 14,268 16,554
6/94 14,469 16,496
6/95 18,241 19,198
6/96 22,959 23,242
6/97 30,524 30,673
6/98 $39,510 $40,584
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (12/29/89)
Class A 31.96% 19.48% 17.82%
Class A* 26.04% 18.38% 17.19%
* Reflects 4.50% Sales Charge.
Measurement Period VALUE OF $10,000 INVESTMENT
(Fiscal Year Covered) S&P 1500 Class A* Class A
12/89 $10,000 $ 9,550 $10,000
6/90 10,309 10,178 10,657
6/91 11,072 11,107 11,631
6/92 12,557 13,224 13,847
6/93 14,268 15,809 16,554
6/94 14,469 15,754 16,496
6/95 18,241 18,334 19,198
6/96 22,959 22,178 23,225
6/97 30,524 29,171 30,548
6/98 $39,510 $38,504 $40,326
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (9/9/94)
Class B 30.89% 23.28%
Class B** 26.89% 22.84%
** Reflects Applicable Contingent Deferred Sales Charge.
Measurement Period VALUE OF $10,000 INVESTMENT
(Fiscal Year Covered) S&P 1500 Class B** Class B
9/94 $10,000 $10,000 $10,000
6/95 12,019 10,806 10,806
6/96 15,129 12,981 12,981
6/97 20,113 16,942 16,942
6/98 $26,034 $21,873 $22,173
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
(11/4/97)
Class C 20.87%
Class C** 19.87%
** Reflects Applicable Contingent Deferred Sales Charge.
Measurement Period VALUE OF $10,000 INVESTMENT
(Fiscal Year Covered) S&P 1500 Class C** Class C
11/97 $10,000 $10,000 $10,000
6/98 $11,858 $11,987 $12,087
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The above-quoted performance data includes the performance of the Paragon Value
Equity Income Fund for the period prior to the commencement of operations of The
One Group Value Growth Fund on March 26, 1996. Performance for the Fiduciary
Shares is based on Class A Share performance adjusted to reflect the absence of
sales charges.
The performance of the Value Growth Fund is measured against the S&P 1500 Index,
an unmanaged index generally representative of the performance of large and
small companies in the US stock market. Investors are unable to purchase the
index directly, although they can invest in the underlying securities. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management. By contrast, the performance
of the fund reflects the deduction of these value-added services as well as the
deduction of sales charges on Class A Shares and applicable contingent deferred
sales charges on Class B and Class C Shares.
The S&P 1500 Index for all classes consists of the average monthly returns of
the S&P 500 Index from December 1989 through December 1994. Thereafter, the data
are from the S&P 1500 Index which corresponds with the initiation of the S&P
1500 Index on January 1, 1995.
12
195
The One Group Disciplined Value Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group Disciplined Value Fund Fiduciary share class posted a total return
of 28.27% for the year ended June 30, 1998. (For information on other share
classes and performance comparisons to the index, please see page 18.)
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Interest rates ended the year lower, but experienced volatility throughout the
12-month period. To avoid some of the stock price volatility associated with
interest rate swings, we maintained a diversified portfolio with exposure to a
variety of economic sectors. Within this framework, we emphasized in-depth
analysis and individual stock selection, and we continued to rebalance the
portfolio in order to improve structure and upgrade holdings as market
conditions changed.
Because of the Fund's value orientation, we emphasized the sectors that offered
the greatest perceived value. As a result, almost half of the Fund's assets were
in the electric utility, financial, industrial, commodity and banking sectors.
These were the areas that contained the largest number of equity securities with
below-market-average price-to-earnings and price-to-book ratios.
Given the continued strength of the market, certain stocks reached their target
prices quicker than we had anticipated, prompting the sale of those securities
and the purchase of new ones. In addition, as certain stocks increased in
valuation, they became more growth-like and were no longer appropriate for this
value-oriented fund. For example, in the second half of 1997 prices on bank
stocks soared, and the resulting valuations converted many of these stocks to
growth stocks. As a result, remaining sectors that were relatively undervalued
became more influential, and their weightings within the Fund increased.
Specifically, we increased the Fund's holdings within the capital equipment,
financial, industrial commodity and consumer durable sectors to make up for the
gap caused by the decline in bank holdings.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
Outstanding performance from several individual stocks during the fiscal year
was driven largely by takeovers. For example, in the technology sector Qwest
Communications acquired LCI International, in which the Fund had a large
exposure; National City Bank acquired First of America, a Fund holding; and
Williams Companies acquired the energy company Mapco, another Fund holding. In
addition, the Fund's holding of Century Telephone nearly doubled in value over
the year, as analysts projected superior earnings growth for the combined
Century Telephone/Pacific Telesis company. Indeed, the merged company
experienced revenue growth and margin expansion after joining forces, as it cut
costs and expanded its territory.
Another merger, between cement manufacturers Southdown and Medusa, also
contributed to the Fund's solid return. But, price gains on these stocks
primarily were driven by excellent fundamentals within the industry. The
supply/demand equation favored the manufacturers, given the steadily increasing
demand for cement from the housing and infrastructure sectors, while the supply
of cement has been virtually unchanged in the last decade. In addition, U.S.
government restrictions on the amount of cement that can be imported helped the
U.S. manufacturers.
DID EVENTS IN ASIA INFLUENCE ANY OF THE FUND'S HOLDINGS?*
On the downside, events in Asia caused certain Fund holdings to decline. As
Asian currency values plummeted, it appears Asian customers chose to curtail
their gaming excursions to the United States. As a result, the Fund's holdings
in Circus Circus and MGM declined for the fiscal year. In addition, CompUSA lost
half of its value due to the unanticipated sharp declines in computer prices.
Lower demand from Asia contributed to the price declines, as did the lack of new
memory-consuming software applications, which prompted revenue declines and
margin contraction.
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE DURING THE FISCAL YEAR?*
Only two of the Fund's top 10 holdings remained from last year -- CMS Energy,
1.6% (utilities) and Southtrust Corp., 1.6% (financial services). Rounding out
the top 10 were utilities companies New Century Enterprises, 1.5%, Allegheny
Energy, 1.3%, Century Telephone, 1.5%, El Paso Natural Gas, 1.6% and Teco
Energy, 1.2%; financial companies Bear Stearns,
16
196
The One Group Disciplined Value Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
1.6% and Paine Webber, 1.2%; and Tyson Foods, 1.1%, a member of the consumer
non-durable sector.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Looking ahead, we plan to maintain our current strategy of broad sector
diversification, stringent in-house research and individual stock selection.
Within each sector, we will continue to look for the best values among medium
capitalization stocks, or those issues with low price/earnings and price/book
ratios.
/s/ Edmund M. Cowart
- --------------------
Edmund M. Cowart
Managing Director, Value Growth Team
/s/ Richard R. Jandrain III
- ---------------------------
Richard R. Jandrain III
Senior Managing Director of Equity Securities
* Holdings subject to change.
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
17
197
The One Group Disciplined Value Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Dollars
Since
Inception
1 Year 5 Year (3/2/89)
Fiduciary 28.27% 17.52 14.11%
Fiduciary
VALUE OF $10,000 INVESTMENT Dollars
S&P
Measurement Period BARRA/Midcap
(Fiscal Year Covered) 400/Value Fiduciary
3/89 10,000 10,000
6/89 10,883 10,989
6/90 12,677 11,372
6/91 13,615 11,572
6/92 15,441 13,451
6/93 17,545 15,278
6/94 17,792 15,895
6/95 22,430 18,443
6/96 27,627 22,150
6/97 34,233 26,704
6/98 43,366 34,253
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Dollars
Since
Inception
1 Year 5 Year (2/18/92)
Class A 27.90% 17.27% 15.79%
Class A* 22.13% 16.19% 14.96%
Class A
Class A*
* Reflects 4.50% Sales Charge
VALUE OF $10,000 INVESTMENT
S&P
Measurement Period BARRA/Midcap
(Fiscal Year Covered) 400/Value Class A* Class A
2/92 10,000 9,550 10,000
6/92 9,992 9,666 10,121
6/93 11,354 10,948 11,464
6/94 11,514 11,418 11,956
6/95 14,515 13,179 13,801
6/96 17,879 15,788 16,534
6/97 22,153 18,977 19,875
6/98 28,063 24,279 25,419
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Dollars
Since
Inception
1 Year (1/14/94)
Class B 26.97% 16.38%
Class B** 22.97% 16.12%
** Reflects Applicable Contingent Deferred Sales Charge
VALUE OF $10,000 INVESTMENT
Measurement Period S&P
(Fiscal Year Covered) BARRA/Midcap Class B** Class B
1/94 10,000 10,000 10,000
6/94 9,344 9,500 9,500
6/95 11,779 10,918 10,918
6/96 14,509 12,985 12,985
6/97 17,978 15,476 15,476
6/98 22,775 19,465 19,665
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Disciplined Value Fund is measured against the S&P/BARRA
Midcap 400 Value Index, an unmanaged index representing the performance of the
lowest price to book securities in the S&P Midcap 400 Index. Investors are
unable to purchase the index directly, although they can invest in the
underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management. By contrast, the performance of the fund reflects the deduction of
these value-added services as well as the deduction of sales charges on Class A
Shares and applicable contingent deferred sales charges on Class B Shares.
The S&P/BARRA Midcap 400 Value Index consists of the average monthly returns of
the S&P 500 Index for periods prior to June 1991. Thereafter, the data are from
the S&P/BARRA Midcap 400 Value Index which corresponds with the initiation of
the S&P/BARRA Midcap 400 Value Index on June 30, 1991.
18
198
The One Group Large Company Growth Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group Large Company Growth Fund Fiduciary share class posted a total
return of 35.75% for the year ended June 30, 1998. (For information on other
share classes and performance comparisons to indexes, please see page 20.)
TO WHAT DO YOU ATTRIBUTE THE FUND'S SOLID RETURN?
A strong domestic economy, low inflation and declining interest rates all worked
together to maintain a favorable equity environment. Once again, the market
favored the largest growth-oriented companies because of their earnings
reliability and stock liquidity.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our primary investment strategy during this market climate has been to find good
companies within industries that are growing at a faster rate than the economy.
These are companies that we believe have the ability to exhibit sustained growth
at some multiple of their underlying industry growth rate. In addition, we
search for strong management teams and superior product positioning.
After evaluating the impact of the Asian crisis on the Fund's stocks, we cut the
portfolio's technology holdings because much of these companies' exports went to
Asia. We also increased our retail holdings, as many of these companies purchase
their materials from Asia and thus benefit from lower costs.
This strategy worked well, because the technology sector, as a whole, has
underperformed the market, while the retail sector has outperformed.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
The Fund enjoyed outstanding performance from computer manufacturer Dell
Computer, up 216% for the fiscal year; software giant Microsoft, up 71% and
online service provider America Online, up 278%.
On the other hand, there were a few disappointing performances from the
technology sector. For example, Applied Materials was off 17% and Oracle Corp.
declined 27%.
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE?*
Most of the Fund's top 10 holdings remained unchanged during the year. The only
newcomers were Dell Computer, 2.6% (technology) and Lucent Technologies, 2.3%
(technology). The remaining members included General Electric, 6.8% (capital
goods), Microsoft, 6.4% (technology), Coca-Cola, 4.3% (consumer non-durable),
Wal-Mart, 3.2% (retail), Merck, 3.0% (health care), Bristol-Myers Squibb, 3.0%
(health care), Pfizer, 2.9% (health care) and Proctor & Gamble, 2.6% (consumer
non-durable).
WHAT IS YOUR OUTLOOK FOR THE FUND?
Looking ahead, we remain optimistic about continued U.S. economic growth and low
inflation. We believe that interest rates may continue to decline, which would
support ongoing stock market growth, but perhaps not at the unusually strong
pace we've seen over the last several years. As such, it seems prudent to lower
our expectations somewhat for the next year.
Our overall strategy remains intact -- to search for companies with strong
fundamentals, effective management teams and favorable long-term outlooks.
Because the Asian situation remains unresolved, we will continue to monitor its
effects on the Fund's holdings.
/s/ Ashi Parikh
Ashi Parikh
Managing Director, Growth Equity Team
/s/ Richard R. Jandrain III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
* Holdings are subject to change.
Please refer to the prospectus and the accompanying financial statements for
more information about your fund.
19
199
The One Group Large Company Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
VALUE OF $10,000 INVESTMENT DOLLARS
Since
Inception
1 Year 5 Year (2/28/92)
Fiduciary 35.75% 22.79% 19.88%
Fiduciary
Measurement Period S&P/BARRA
(Fiscal Year Covered) 500 Growth Fiduciary
2/92 10,000 10,000
6/92 9,743 9,920
6/93 10,550 11,301
6/94 10,522 12,210
6/95 13,755 14,878
6/96 17,505 17,461
6/97 24,215 23,243
6/98 32,661 31,553
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
VALUE OF $10,000 INVESTMENT DOLLARS
Since
Inception
1 Year (2/22/94)
Class A 35.43% 23.70%
Class A* 29.33% 22.39%
* Reflects 4.50% Sales Charge.
Measurement Period S&P/BARRA
(Fiscal Year Covered) 500 Growth Class A* Class A
2/94 10,000 9,550 10,000
6/94 9,530 9,453 9,898
6/95 12,458 11,486 12,028
6/96 15,854 13,420 14,054
6/97 21,931 17,790 18,631
6/98 29,581 24,085 25,230
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
VALUE OF $10,000 INVESTMENT DOLLARS
Since
Inception
1 Year (1/14/94)
Class B 34.39% 22.49%
Class B** 30.39% 22.26%
** Reflects Applicable Contingent Deferred Sales Charge.
Measurement Period S&P/BARRA
(Fiscal Year Covered) 500 Growth Class B** Class B
1/94 10,000 10,000 10,000
6/94 9,539 9,934 9,934
6/95 12,235 11,831 11,831
6/96 15,570 13,952 13,952
6/97 21,539 18,381 18,381
6/98 29,052 24,496 24,696
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
DOLLARS
Since
Inception
(11/4/97)
Class C 27.63%
Class C** 26.63%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Measurement Period S&P/BARRA
(Fiscal Year Covered) 500 Growth Class C** Class C
11/97 10,000 10,000 10,000
6/98 12,458 12,663 12,763
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Large Company Growth Fund is measured against the
S&P/BARRA 500 Growth Index, an unmanaged index representing the performance of
the highest price to book securities in the S&P 500. Investors are unable to
purchase the index directly, although they can invest in the underlying
securities. The performance of the index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management. By
contrast, the performance of the fund reflects the deduction of these
value-added services as well as the deduction of sales charges on Class A Shares
and applicable contingent deferred sales charges on Class B and Class C Shares.
20
200
The One Group Limited Volatility Bond Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
For the year ended June 30, 1998, The One Group Limited Volatility Bond Fund
Fiduciary share class posted a total return of 6.59%. (For information on other
share classes and performance comparisons to indexes, please see page 5.)
HOW DID INTEREST RATES INFLUENCE PERFORMANCE?
Interest rates among five-year securities (the area of the yield curve where the
Fund is most heavily invested) declined 0.91 percentage points during the fiscal
year. The Fund's Fiduciary share class 30-day SEC yield also declined, dropping
from 6.18% on June 30, 1997, to 5.75% on June 30, 1998.
Because interest rates declined during the year, prices on most of the Fund's
bonds appreciated and, therefore, added to the Fund's total return. (Bond prices
and interest rates move inversely of each other. When rates fall, bond prices
rise, and vice versa.) The only exceptions were the few Asian bonds in the
Fund's portfolio, which declined in value when the Asian market crisis hit in
1997.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
The Fund's strategy included investing in securities that offered attractive
yields within our maturity and high credit-quality guidelines. As such, we
continued to emphasize government agency mortgage pass-through securities
because they offered yield advantages over other government securities. And, we
focused on 15-year, current coupon issues because they are less likely to be
refinanced even if interest rates fall further. We also invested in asset-backed
securities and high-grade corporate bonds, which provided an excellent
combination of yield, total return and relative safety.
With interest rates declining, we maintained the Fund's duration in a range of
2.3 years to 2.5 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, coupled with the Fund's emphasis on
yield, contributed to the Fund's solid return.
DID THE FUND'S OVERALL QUALITY CHANGE DURING THE YEAR?
Because the majority of the Fund's assets always are invested in U.S.
government-related securities (69% of the portfolio at year-end), the Fund's
average quality remains high. On June 30, 1998, 80% of the Fund's securities
were rated AAA (the highest rating), 18% were rated A, and 2% were rated Baa,
giving the Fund an overall quality rating of AA.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We expect positive economic growth to continue, but at a slower pace. This
should help keep inflation low for the near-term, which should perpetuate the
current interest-rate trading range and market status quo. In the corporate
sector, though, a potential negative influence is the steady slowdown in
corporate earnings growth, which could cause corporate yield spreads to widen.
(Corporate spreads refer to the difference in yield between corporate bonds and
comparable-maturity Treasury bonds. When spreads widen, prices on corporate
bonds decline, and vice versa.) We believe a strong offset to this, though, is
the healthy economy, which gives us reason not to abandon the corporate sector.
As a precaution, we will focus on corporate bonds with maturities of five years
or less.
/s/ Roger Craig
Roger Craig
Fund Manager
/s/ Gary J. Madich
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
4
201
The One Group Limited Volatility Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (9/4/90)
Fiduciary 6.59% 5.41% 7.03%
VALUE OF $10,000 INVESTMENT
Lehman
Brothers 1-3 Lipper Short US
Year Government
Measurement Period Government Bond Funds
(Fiscal Year Covered) Index Index Fiduciary
9/90 $10,000 $10,000 $10,000
6/91 10,768 10,710 10,799
6/92 11,881 11,730 12,068
6/93 12,659 12,515 13,066
6/94 12,852 12,668 13,170
6/95 13,837 13,604 14,218
6/96 14,595 14,309 14,947
6/97 15,554 15,153 15,957
6/98 $16,609 $16,136 $17,008
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (2/18/92)
Class A 6.32% 5.13% 5.86%
Class A* 3.16% 4.49% 5.35%
* Reflects 3.00% Sales Charge.
VALUE OF $10,000 INVESTMENT
Lehman
Brothers 1-3 Lipper Short US
Year Government
Measurement Period Government Bond Funds
(Fiscal Year Covered) Index Index Class A* Class A
2/92 $10,000 $10,000 $ 9,700 $10,000
6/92 10,284 10,274 10,045 10,356
6/93 10,957 10,962 10,853 11,188
6/94 11,123 11,096 10,906 11,243
6/95 11,976 11,916 11,742 12,105
6/96 12,632 12,534 12,314 12,694
6/97 13,462 13,273 13,110 13,515
6/98 $14,375 $14,134 $13,935 $14,368
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (1/14/94)
Class B 5.98% 4.75%
Class B** 2.98% 4.75%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Lehman
Brothers 1-3 Lipper Short US
Year Government
Measurement Period Government Bond Funds
(Fiscal Year Covered) Index Index Class B** Class B
1/94 $10,000 $10,000 $10,000 $10,000
6/94 9,889 9,874 9,819 9,819
6/95 10,648 10,603 10,524 10,524
6/96 11,231 11,153 10,974 10,974
6/97 11,969 11,811 11,604 11,604
6/98 $12,780 $12,578 $12,297 $12,297
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Limited Volatility Bond Fund is measured against the
Lehman Brothers 1 to 3 Year Government Index, an unmanaged index comprised of US
Government and agency securities with maturities of one to three years.
Investors are unable to purchase the index directly, although they can invest in
the underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management. By contrast, the performance of the fund reflects the deduction of
these value-added services as well as the deduction of sales charges on Class A
Shares and applicable contingent deferred sales charges on Class B Shares.
The Lipper Short US Government Bond Funds Index consists of the equally weighted
average monthly return of the largest funds within the universe of all funds in
the category.
5
202
The One Group Intermediate Bond Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group Intermediate Bond Fund Fiduciary share class offered a total
return of 8.71% for the year ended June 30, 1998. (For information on other
share classes and performance comparisons to indexes, please see page 7.)
HOW DID MARKET DEVELOPMENTS INFLUENCE PERFORMANCE?
Throughout the year, three key trends developed in the bond market:
1. Interest rates, in general, declined, resulting in gains for most bonds and
an overall increase in the Fund's net asset value (NAV).
2. Lower interest rates led to a rise in homeowner refinancing activity, which
caused the performance on many higher-rate mortgage-backed bonds to suffer.
3. Many foreign economies, especially those in Asia, fell into recession, and
prices declined on many Yankee bonds (U.S. dollar-denominated foreign bonds)
associated with these markets.
Overall, the positive influence from the drop in interest rates had a greater
impact on the Fund's performance than the negative influence from holding select
mortgage and Yankee bonds.
While the Fund enjoyed a solid total return and an approximately 2.0% gain in
NAV for the one year period, the declining interest rate environment pushed the
Fund's yield slightly lower-from 6.35% on June 30, 1997, to 5.90% on June 30,
1998.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Once again, duration management remained a key strategy in generating return and
controlling risk. (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.) We managed the Fund's duration within a tight,
shorter-than-market-average range during the year, which limited some of the
price gains that occurred mid-year when interest rates fell. While we do manage
the Fund's exposure to changes in interest rates, we also purposely limit the
degree to which we alter duration. We believe these risk-control guidelines
protect us from making ill-timed "bets" on the magnitude and direction of
possible interest rate movements.
Nevertheless, the Fund's strong yield helped make up for the effects of our
shorter duration. Furthermore, the Fund's holdings in long-duration U.S.
Treasury and corporate bonds and select commercial mortgage-backed securities
helped overall performance during the year.
Another key move during the Fund's fiscal year occurred in early 1998, when we
reduced the Fund's small exposure to Asian Yankee bonds, which deteriorated
along with many Asian economies. By fiscal year-end, the Fund held about 1.5% of
its assets in Asian-based Yankee bonds, all of which maintained investment-grade
quality ratings (rated BBB or better).
WHAT IS YOUR OUTLOOK FOR THE FUND?
Our forecast calls for the U.S. economy to maintain its steady, albeit slower,
growth pattern over the next year. As a result, inflation should remain tame and
interest rates stable to lower.
At the same time, the prospect for unfavorable developments has risen. For
example, the economy is operating at employment levels that typically lead to
increasing rates of inflation. This, however, is being offset by economic
recession in many Asian countries. While we remain optimistic, unexpected
changes in these or other important economic dynamics could lead to
greater-than-expected volatility in the U.S. financial markets.
/s/ James A. Sexton
James A. Sexton, CFA
Fund Manager
/s/ Gary J. Madich
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
6
203
The One Group Intermediate Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (2/29/92)
Fiduciary 8.71% 6.08% 6.96%
VALUE OF $10,000 INVESTMENT
Lehman Lipper
Brothers Inertmediate US
Intermediate Government
Measurement Period Government/Corporate Bond Funds
(Fiscal Year Covered) Bond Index Index Fiduciary
2/92 $10,000 $10,000 $10,000
6/92 10,355 10,307 10,300
6/93 11,442 11,357 11,400
6/94 11,413 11,162 11,315
6/95 12,597 12,260 12,463
6/96 13,228 12,786 13,080
6/97 14,182 13,670 14,084
6/98 $15,394 $14,959 $15,310
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (11/30/94)
Class A 8.47% 8.66%
Class A* 3.58% 7.26%
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
Lehman Lipper
Brothers Intermediate US
Intermediate Government
Measurement Period Government/Corporate Bond Funds
(Fiscal Year Covered) Bond Index Index Class A* Class A
11/94 $10,000 $10,000 $ 9,550 $10,000
6/95 10,999 10,984 10,533 11,029
6/96 11,550 11,480 11,036 11,556
6/97 12,383 12,274 11,853 12,411
6/98 $13,441 $13,431 $12,850 $13,462
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (11/30/94)
Class B 7.78% 7.59%
Class B** 3.78% 6.90%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Lehman Lipper
Brothers Intermediate US
Intermediate Government
Measurement Period Government/Corporate Bond Funds
(Fiscal Year Covered) Bond Index Class B** Class B
11/94 $10,000 $10,000 $10,000 $10,000
6/95 10,999 10,984 10,845 10,845
6/96 11,550 11,480 11,290 11,290
6/97 12,383 12,274 12,061 12,061
6/98 $13,441 $13,431 $12,699 $12,999
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
(11/4/97)
Class C 8.20%
Class C** 7.20%
** Reflects Applicable Contingent Deferred Sales Charge.
Lehman Lipper
Brothers Intermediate US
Intermediate Government
Measurement Period Government/Corporate Bond Funds
(Fiscal Year Covered) Bond Index Class C** Class C
11/97 $10,000 $10,000 $10,000 $10,000
6/98 $10,430 $10,455 $10,719 $10,819
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Intermediate Bond Fund is measured against the Lehman
Brothers Intermediate Government/Corporate Bond Index, an unmanaged index
comprised of US Government agency and Treasury securities and investment grade
corporate bonds. Investors are unable to purchase the index directly, although
they can invest in the underlying securities. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management. By contrast, the performance of the fund reflects the
deduction of these value-added services as well as the deduction of sales
charges on Class A Shares and applicable contingent deferred sales charges on
Class B and Class C Shares.
The Lipper Intermediate US Government Bond Funds Index consists of the equally
weighted average monthly return of the largest funds within the universe of all
funds in the category.
7
204
The One Group Income Bond Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
For the year ended June 30, 1998, The One Group Income Bond Fund Fiduciary share
class posted a total return of 7.97%. (For information on other share classes
and performance comparisons to indexes, please see page 11.)
In general, interest rates declined by approximately one percentage point during
the fiscal year. The Fund's Fiduciary share class 30-day SEC yield also
declined, dropping from 6.70% on June 30, 1997, to 6.13% on June 30, 1998.
WAS THERE A PARTICULAR TYPE OF SECURITY THAT AFFECTED PERFORMANCE?
Even though the Fund's yield fell, it remained attractive due to the Fund's
emphasis on higher-yielding investment-grade securities. Included among those
securities are Yankee bonds (U.S. dollar-denominated foreign bonds), which
performed well and contributed greatly to the Fund's total return until the
fourth quarter of 1997. As the financial crisis overtook Asia, the value of the
Fund's Asian Yankee bonds declined rapidly and, at 10% of Fund assets, caused
significant underperformance. Once prices stabilized and began to improve, we
implemented a control strategy for these bonds, reducing them to only 1.5% of
Fund assets. This measured reduction caused the Fund's performance to return to
above-average.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
The Fund's strategy is to try to maintain a relatively stable duration of
approximately 4.6 years and to enhance yield through a widely diversified
portfolio of corporate bonds and mortgage securities. (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.) We purposely avoid
making significant changes to the Fund's duration, because we manage the Fund
primarily to maximize income, rather than to seek capital gains by making "bets"
on interest rate movements. We try to maintain a neutral duration and position
the Fund to earn a relatively good rate of interest income.
This strategy has worked well, as the Fund has been able to generate incremental
returns without incurring additional interest rate risk. At the same time, the
strategy involves some exposure to credit risk, which, for short periods of
time, may adversely affect returns, as witnessed in late-1997. But, over full
interest rate and credit cycles, the strategy has proven successful to date.
DID THE FUND'S OVERALL QUALITY CHANGE DURING THE YEAR?
In April 1997, shareholders approved a measure that allows the Fund to invest up
to 30% of its assets in high-yield securities, or those rated BB or B. As
outlined at that time, the Fund's entry into this sector will be slow and
measured. Since then, we have added a 4% exposure to BB-rated bonds.
The Fund maintained a good quality profile during the fiscal year, with 52% of
its assets invested in securities rated AAA; 5% in those rated AA; 16% in
A-rated; 23% in BBB-rated; and 4% in BB-rated. The Fund's overall quality rating
was A+ at the end of the year.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Moving forward, we expect economic growth to continue, but at a slower pace. We
also expect inflation to remain low for the near term. The bond market
environment is likely to be characterized as a "trading range," which is a
market that doesn't change much. In such a climate, higher-yielding securities
typically produce better results.
In the corporate sector, a potential negative influence is the steady decline in
corporate earnings growth, which could cause corporate yield spreads to widen.
(Corporate spreads refer to the difference in yield between corporate bonds and
comparable-maturity Treasury bonds. When spreads widen, prices on corporate
bonds decline, and vice versa.) A strong offset to this, though, is the healthy
economy, which gives us reason not to abandon this sector. As a precaution, we
will focus on corporate bonds with maturities of five years or less. In the
mortgage market, most of the Fund's recent purchases have been 15-year, current
coupon issues, which we believe are less likely to be refinanced even if
interest rates fall further.
/s/ Roger Craig
Roger Craig
Fund Manager
/s/ Gary J. Madich
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
10
205
The One Group Income Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year 10 Year (7/2/87)
Fiduciary 7.97% 5.85% 7.63% 7.30%
VALUE OF $10,000 INVESTMENT
Lipper
Lehman Inertmediate
Brothers Investment
Measurement Period Aggregate Bond Grade Bond
(Fiscal Year Covered) Index Funds Index Fiduciary
6/88 $10,000 $10,000 $10,000
6/89 11,222 11,005 10,732
6/90 12,103 11,632 11,417
6/91 13,397 12,632 12,467
6/92 15,278 14,394 14,193
6/93 17,079 16,087 15,701
6/94 16,857 15,872 15,352
6/95 18,972 17,634 17,086
6/96 19,923 18,492 17,876
6/97 21,547 19,901 19,324
6/98 $23,818 $21,817 $20,864
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year 5 Year (2/18/92)
Class A 7.82% 5.60% 6.64%
Class A* 3.00% 4.63% 5.87%
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
Lipper
Lehman Intermediate
Brothers Investment
Measurement Period Aggregate Bond Grade Bond
(Fiscal Year Covered) Index Funds Index Class A* Class A
2/92 $10,000 $10,000 $ 9,550 $10,000
6/92 10,345 10,356 9,901 10,368
6/93 11,564 11,574 10,948 11,464
6/94 11,413 11,420 10,693 11,197
6/95 12,845 12,688 11,859 12,418
6/96 13,490 13,305 12,365 12,947
6/97 14,589 14,319 13,335 13,964
6/98 $16,127 $15,702 $14,381 $15,052
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
Since
Inception
1 Year (1/14/94)
Class B 7.13% 5.07%
Class B** 3.13% 4.70%
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
Lipper
Lehman Intermediate
Brothers Investment
Measurement Period Aggregate Bond Grade Bond
(Fiscal Year Covered) Index Funds Index Class B** Class B
1/94 $10,000 $10,000 $10,000 $10,000
6/94 9,485 9,488 9,471 9,471
6/95 10,675 10,542 10,478 10,478
6/96 11,211 11,055 10,860 10,860
6/97 12,124 11,897 11,637 11,637
6/98 $13,402 $13,046 $12,274 $12,466
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Income Bond Fund is measured against the Lehman Brothers
Aggregate Bond Index, an unmanaged index comprised of US Government, mortgage,
corporate and asset-backed securities. Investors are unable to purchase the
index directly, although they can invest in the underlying securities. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management. By contrast, the performance
of the fund reflects the deduction of these value-added services as well as the
deduction of sales charges on Class A Shares and applicable contingent deferred
sales charges on Class B Shares.
The Lipper Intermediate Investment Grade Bond Funds Index consists of the
equally weighted average monthly return of the largest funds within the universe
of all funds in the category.
11
206
PEGASUS FUNDS
P.O. BOX 5142
WESTBOROUGH, MASSACHUSETTS 015181
THE ONE GROUP (R)
1111 POLARIS PARKWAY
P.O. BOX 710211
COLUMBUS, OHIO 43271-0211
STATEMENT OF ADDITIONAL INFORMATION
(1999 SPECIAL MEETING OF SHAREHOLDERS OF THE PEGASUS FUNDS)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Prospectus/Proxy Statement dated
December ___, 1998 for the Special Meeting of Shareholders of Pegasus Funds
("Pegasus"), to be held on March 17, 1999. Copies of the Combined
Prospectus/Proxy Statement may be obtained at no charge by calling Pegasus at
1-800-688-3350.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Prospectus/Proxy Statement.
Further information about the Class A, Class B and Class I Shares of
the Existing One Group Funds is contained in and incorporated by reference to
One Group's Statement of Additional Information dated November 1, 1998. The
audited financial statements and related independent accountant's report for the
Existing One Group Funds contained in the Annual Report dated June 30, 1998, are
hereby incorporated herein by reference. No other parts of the Annual Reports
are incorporated by reference herein.
Further information about the Institutional Class and Service Class of
the Pegasus Cash Management Funds and Class A, Class B and Class I of the other
Pegasus Portfolios is contained in and incorporated by reference to Pegasus'
Statement of Additional Information dated April 30, 1998, a copy of which is
included herewith. The audited financial statements and related independent
accountant's report for Pegasus contained in the Annual Reports dated February
24, 1998 are incorporated herein by reference. No other parts of the Annual
Report are incorporated by reference herein. The unaudited financial statements
for Pegasus contained in the Semi-Annual Reports dated June 30, 1998 are also
incorporated herein by reference.
The date of this Statement of Additional Information is December ___,
1998.
207
TABLE OF CONTENTS
Page
----
General Information .................................................. B-3
Pro Forma Financial Statements ....................................... B-
-B-2-
208
GENERAL INFORMATION
The Shareholders of Pegasus are being asked to approve or disapprove an
Agreement and Plan of Reorganization (the "Reorganization Agreement") dated as
of _____, 1998 between Pegasus and the One Group, and the transactions
contemplated thereby. The Reorganization Agreement contemplates the transfer of
all of the assets and liabilities of the Pegasus Money Market, Treasury Money
Market, Municipal Money Market, Michigan Municipal Money Market, Cash
Management, Treasury Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management, Municipal Cash Management, Managed Assets
Conservative, Managed Assets Balanced, Managed Assets Growth, Equity Income,
Growth, Mid-Cap Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and
Value, Equity Index, Market Expansion Index, International Equity, Intermediate
Bond, Bond, Short Bond, Multi Sector Bond, High Yield Bond, Municipal Bond,
Short Municipal Bond, Intermediate Municipal Bond and Michigan Municipal Bond
Funds to corresponding One Group Funds in exchange for full and fractional
shares representing interests in such corresponding One Group Funds. The shares
issued by One Group will have an aggregate net asset value equal to the
aggregate net asset value of the shares of the respective Pegasus Portfolios
that are outstanding immediately before the effective time of the
Reorganization.
Following the exchange, the Pegasus Portfolios will make a liquidating
distribution of corresponding One Group shares to their shareholders. Each
shareholder owning shares of a particular Pegasus Portfolio at the effective
time of the Reorganization will receive shares of the corresponding One Group
Fund of equal value, plus the right to receive any unpaid dividends and
distributions that were declared before the effective time of the Reorganization
on Pegasus Portfolio shares. Upon completion of the Reorganization, Pegasus will
be terminated under state law and deregistered under the Investment Company Act
of 1940.
The Special Meeting of Shareholders of Pegasus to consider the
Reorganization Agreement and the related transactions will be held at 10:00 a.m.
(Eastern time) on March 17, 1999 at the offices of BISYS Fund Services, 3435
Stelzer Road, Columbus, Ohio. For further information about the transaction, see
the Combined Prospectus/Proxy Statement.
Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliated thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of shares, and prohibit banks generally
from issuing, underwriting, selling, or distributing securities such as shares
of the One Group Funds, but do not prohibit such a bank holding company or its
affiliates or banks generally from acting as investment adviser, transfer agent,
administrator or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of customers. Banc One
Investment Advisors, One Group Services Company and financial intermediaries
which agree to provide shareholder support services that are banks or bank
affiliates are subject to such banking laws and regulations. Should legislative,
judicial, or administrative action prohibit or restrict the activities of such
companies in connection with their services to the One Group Funds, One Group
might be required to alter materially or discontinue its arrangement with such
companies and change its method of operation. It is anticipated,
-B-3-
209
however, that any resulting change in One Group's method of operation would not
affect a One Group Fund's net asset value per share or result in financial loss
to any shareholder.
The following tables convey Pegasus Funds Compounded and Actual Rates
of Return for the periods ended June 30, 1998:
Pegasus One Group Prime
Money Market Fund Money Market Fund
-------------------------------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 6/30/98 2.50% 2.11% 2.63% 2.50% 2.12% 2.63%
1 Year Annualized - 6/30/98 5.09% 4.31% 5.36% 5.13% 4.35% 5.39%
3 Year Annualized - 6/30/98 5.12% 4.68% 5.29% 5.10% -- 5.36%
5 Year Annualized - 6/30/98 4.69% 4.42% 4.79% 4.66% -- 4.92%
10 Year Annualized -6/30/98 5.56% 5.43% 5.61% -- -- 5.63%
Pegasus Treasury One Group U.S. Treasury
Money Market Fund Money Market Fund
-------------------------------------------------------------------
Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- -------
YTD Ending 6/30/98 2.44% -- 2.57% 2.41% 2.03% 2.54%
1 Year Annualized - 6/30/98 5.00% -- 5.26% 4.92% 4.14% 5.19%
3 Year Annualized - 6/30/98 5.01% -- 5.17% 4.94% -- 5.20%
5 Year Annualized - 6/30/98 4.59% -- 4.68% 4.47% -- 4.73%
10 Year Annualized -6/30/98 -- -- -- -- -- 5.39%
Pegasus Municipal One Group Municipal
Money Market Fund Money Market Fund
-------------------------------------------------------------------
Class A Class I Class A Class I
------- ------- ------- -------
YTD Ending 6/30/98 1.44% 1.56% 1.45% 1.57%
1 Year Annualized - 6/30/98 3.00% 3.25% 3.01% 3.27%
3 Year Annualized - 6/30/98 3.05% 3.21% 3.02% 3.27%
5 Year Annualized - 6/30/98 2.86% 2.96% 2.81% 3.05%
10 Year Annualized - 6/30/98 3.67% 3.72% -- 3.77%
Pegasus Michigan Municipal
Money Market Fund
-----------------------------------
Class A Class I
------- -------
YTD Ending 6/30/98 1.40% 1.53%
1 Year Annualized - 6/30/98 2.94% 3.19%
3 Year Annualized - 6/30/98 2.99% 3.14%
5 Year Annualized - 6/30/98 2.78% 2.87%
10 Year Annualized - 6/30/98 -- --
Pegasus Municipal Cash
Management Fund
-----------------------------------
Service Institutional
------- -------------
YTD Ending 6/30/98 1.50% 1.63%
1 Year Annualized - 6/30/98 -- --
3 Year Annualized - 6/30/98 -- --
5 Year Annualized - 6/30/98 -- --
10 Year Annualized - 6/30/98 -- --
-B-4-
210
Pegasus Cash
Management Fund
-----------------------------------
Service Institutional
------- -------------
YTD Ending 6/30/98 2.55% 2.68%
1 Year Annualized - 6/30/98 5.22% 5.48%
3 Year Annualized - 6/30/98 5.14% 5.40%
5 Year Annualized - 6/30/98 -- 4.95%
10 Year Annualized - 6/30/98 -- --
Pegasus Treasury Cash
Management Fund
-----------------------------------
Service Institutional
------- -------------
YTD Ending 6/30/98 2.50% 2.62%
1 Year Annualized - 6/30/98 -- --
3 Year Annualized - 6/30/98 -- --
5 Year Annualized - 6/30/98 -- --
10 Year Annualized - 6/30/98 -- --
Pegasus Treasury Prime
Cash Management Fund
-----------------------------------
Service Institutional
------- -------------
YTD Ending 6/30/98 2.33% 2.46%
1 Year Annualized - 6/30/98 4.73% 4.99%
3 Year Annualized - 6/30/98 4.69% 4.95%
5 Year Annualized - 6/30/98 -- --
10 Year Annualized - 6/30/98 -- --
Pegasus U.S. Government
Cash Management Fund
-----------------------------------
Service Institutional
------- -------------
YTD Ending 6/30/98 2.52% 2.65%
1 Year Annualized - 6/30/98 5.16% 5.42%
3 Year Annualized - 6/30/98 5.06% 5.32%
5 Year Annualized - 6/30/98 -- 4.85%
10 Year Annualized - 6/30/98 -- --
-B-5-
211
Pegasus Managed Assets One Group Investor
Conservative Fund Balanced Fund
-------------------------------------------------------------------
Class A with 5% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 5.26% 0.00% 8.86% 3.95%
1 Year Annualized - 6/30/98 11.44% 5.87% 16.62% 11.39%
3 Year Annualized - 6/30/98 13.54% 11.62% -- --
5 Year Annualized - 6/30/98 10.99% 9.85% -- --
10 Year Annualized - 6/30/98 12.02% 11.45% -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 4.86% -0.07% 5.39% 8.40% 3.40% 9.00%
1 Year Annualized - 6/30/98 10.60% 6.93% 11.68% 15.85% 11.85% 17.02%
3 Year Annualized - 6/30/98 12.71% 11.92% 13.82% -- -- --
5 Year Annualized - 6/30/98 -- -- 11.20% -- -- --
10 Year Annualized - 6/30/98 -- -- 12.27% -- -- --
Pegasus Managed Assets One Group Investor
Balanced Fund Growth & Income Fund
---------------------- --------------------
Class A with 5% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 6.28% 0.97% 10.81%% 5.87%
1 Year Annualized - 6/30/98 12.72% 7.08% 20.18% 14.76%
3 Year Annualized - 6/30/98 14.66% 12.72% -- --
5 Year Annualized - 6/30/98 -- -- -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 5.87% 0.88% 6.35% 10.19% 5.19% 10.86%
1 Year Annualized - 6/30/98 11.93% 8.09% 12.93% 19.13% 15.13% 20.34%
3 Year Annualized - 6/30/98 12.62% 11.83% 14.87% -- -- --
5 Year Annualized - 6/30/98 -- -- -- -- -- --
Pegasus Managed Assets One Group Investor
Growth Fund Growth Fund
--------------------------------- ---------------
Class A with 5% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 7.09% 1.74% 12.75% 7.66%
1 Year Annualized - 6/30/98 13.57% 7.89% 23.44 17.87%
3 Year Annualized - 6/30/98 -- -- -- --
5 Year Annualized - 6/30/98 -- -- -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 6.69% 1.69 7.22% 12.37% 7.37% 12.90%
1 Year Annualized - 6/30/98 12.73% 8.73% 13.86% 22.52% 18.52% 23.81%
3 Year Annualized - 6/30/98 -- -- -- -- -- --
5 Year Annualized - 6/30/98 -- -- -- -- -- --
-B-6-
212
Pegasus Equity One Group Income
Income Fund Equity Fund
-----------------------------------------------------------------------------
Class A with 5% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 3.49% -1.68% 12.52% 7.46%
1 Year Annualized - 6/30/98 14.13% 8.43% 22.91% 17.39%
3 Year Annualized - 6/30/98 20.05% 18.02% 25.82% 23.91%
5 Year Annualized - 6/30/98 14.77% 13.60% 19.89% 18.79%
10 Year Annualized - 6/30/98 13.47% 12.89% -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 3.21% -1.57% 3.67% 12.18% 7.18% 12.69%
1 Year Annualized - 6/30/98 13.42% 9.96% 14.50% 21.97% 17.97% 23.18%
3 Year Annualized - 6/30/98 19.20% 18.49% 20.47% 24.92% 24.28% 26.16%
5 Year Annualized - 6/30/98 14.21% 14.10% 15.22% -- -- 20.21%
10 Year Annualized - 6/30/98 13.19% 13.19% 13.99% -- -- 16.29
Pegasus One Group Large
Growth Fund Company Growth Fund
-----------------------------------------------------------------------------
Class A with 5% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 20.40% 14.39% 24.37% 18.80%
1 Year Annualized - 6/30/98 31.35% 24.79% 35.43% 29.33%
3 Year Annualized - 6/30/98 28.17% 26.00% 28.01% 26.07%
5 Year Annualized - 6/30/98 20.20% 18.97% -- --
10 Year Annualized - 6/30/98 17.07% 16.47% -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 19.92% 14.92% 20.47% 23.87% 18.87% 24.51%
1 Year Annualized - 6/30/98 30.33% 26.33% 31.59% 34.39% 30.39% 35.75%
3 Year Annualized - 6/30/98 27.24% 26.62% 28.53% 27.25% 26.63% 28.48%
5 Year Annualized - 6/30/98 19.57% 19.48% 20.61% -- -- 22.79%
10 Year Annualized - 6/30/98 16.76% 16.76% 17.57% -- -- --
Pegasus Mid-Cap
Opportunity Fund
--------------------------------
Class A with 5% Load
------- ------------
YTD Ending 6/30/98 7.27% 1.91%
1 Year Annualized - 6/30/98 20.03% 14.03%
3 Year Annualized - 6/30/98 21.86% 19.80%
5 Year Annualized - 6/30/98 17.40% 16.20%
10 Year Annualized - 6/30/98 16.36% 15.77%
Class B with CDSC Class I
------- --------- -------
YTD Ending 6/30/98 7.09% 3.22% 7.41%
1 Year Annualized - 6/30/98 19.76% 15.95% 20.29%
3 Year Annualized - 6/30/98 21.64% 20.96% 22.07%
5 Year Annualized - 6/30/98 17.26% 17.16% 17.51%
10 Year Annualized - 6/30/98 16.30% 16.30% 16.42%
-B-7-
213
Pegasus Small-Cap
Opportunity Fund
--------------------------------
Class A with 5% Load
------- ------------
YTD Ending 6/30/98 5.45% 0.18%
1 Year Annualized - 6/30/98 19.25% 13.29%
3 Year Annualized - 6/30/98 26.09% 23.95%
5 Year Annualized - 6/30/98 15.86% 14.68%
10 Year Annualized - 6/30/98 16.64% 16.05%
Class B with CDSC Class I
------- --------- -------
YTD Ending 6/30/98 5.07% 0.07% 5.58%
1 Year Annualized - 6/30/98 18.41% 14.41% 19.65%
3 Year Annualized - 6/30/98 25.39% 24.75% 26.75%
5 Year Annualized - 6/30/98 15.38% 15.27% 16.42%
10 Year Annualized - 6/30/98 16.40% 16.40% 17.23%
Pegasus Intrinsic One Group Disciplined
Value Fund Value Fund
----------------------------------------
Class A with 5% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 4.56% -0.66% 5.30% 0.56%
1 Year Annualized - 6/30/98 15.23% 9.47% 27.90% 22.13%
3 Year Annualized - 6/30/98 20.79% 18.74% 22.58% 20.72%
5 Year Annualized - 6/30/98 16.52% 15.33% 17.27% 16.19%
10 Year Annualized - 6/30/98 14.60% 14.01% -- --
Pegasus Intrinsic One Group Disciplined
Value Fund Value Fund
----------------------------------------
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 4.17% -0.83% 4.68% 4.92% -.08% 5.50%
1 Year Annualized - 6/30/98 14.35% 10.36% 15.49% 26.97% 22.97% 28.27%
3 Year Annualized - 6/30/98 20.20% 19.51% 20.97% 21.67% 20.99% 22.92%
5 Year Annualized - 6/30/98 16.18% 16.07% 16.63% -- -- 17.52%
10 Year Annualized - 6/30/98 14.43% 14.43% 14.65% -- -- --
Pegasus One Group
Growth and Value Fund Value Growth Fund
----------------------------------------
Class A with 5% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 8.22% 2.82% 17.16% 11.92%
1 Year Annualized - 6/30/98 18.52% 12.60% 31.96% 26.04%
3 Year Annualized - 6/30/98 23.04% 20.96% 28.05% 26.11%
5 Year Annualized - 6/30/98 17.80% 16.60% 19.48% 18.38%
10 Year Annualized - 6/30/98 14.66% 14.07% -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 7.91% 2.91% 8.33% 16.63% 11.63% 17.28%
1 Year Annualized - 6/30/98 17.76% 13.90% 18.79% 30.89% 26.89% 32.26%
3 Year Annualized - 6/30/98 22.12% 21.44% 23.23% 27.05% 26.43% 28.33%
5 Year Annualized - 6/30/98 17.27% 17.16% 17.91% -- -- 19.63%
10 Year Annualized - 6/30/98 14.40% 14.40% 14.71% -- -- --
-B-8-
214
Pegasus Equity One Group Equity
Index Fund Index Fund
----------------------------------------------------------------------------
Class A with 3% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 17.30% 13.78% 17.28% 11.98%
1 Year Annualized - 6/30/98 29.46% 25.58% 29.33% 23.49%
3 Year Annualized - 6/30/98 29.68% 28.37% 29.42% 27.45%
5 Year Annualized - 6/30/98 22.62% 21.87% 22.29% 21.17%
10 Year Annualized - 6/30/98 18.14% 17.78% -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 16.89% 13.89% 17.46% 16.85% 11.85% 17.46%
1 Year Annualized - 6/30/98 28.54% 25.54% 29.81% 28.47% 24.47% 29.73%
3 Year Annualized - 6/30/98 28.43% 28.02% 29.86% 28.43% 27.82% 29.79%
5 Year Annualized - 6/30/98 21.91% 21.91% 22.72% -- -- 22.58%
10 Year Annualized - 6/30/98 17.80% 17.80% 18.19% -- -- --
Pegasus International
Equity Fund
--------------------------------
Class A with 5% Load
------- ------------
YTD Ending 6/30/98 13.50% 7.83%
1 Year Annualized - 6/30/98 7.03% 1.68%
3 Year Annualized - 6/30/98 10.24% 8.38%
5 Year Annualized - 6/30/98 10.17% 9.04%
10 Year Annualized - 6/30/98 7.14% 6.60%
Class B with CDSC Class I
------- --------- -------
YTD Ending 6/30/98 12.52% 7.52% 13.60%
1 Year Annualized - 6/30/98 5.89% 1.89% 7.27%
3 Year Annualized - 6/30/98 9.31% 8.47% 10.48%
5 Year Annualized - 6/30/98 9.61% 9.47% 10.31%
10 Year Annualized - 6/30/98 6.87% 6.87% 7.21%
Pegasus One Group Intermediate
Intermediate Bond Fund Bond Fund
---------------------- -----------------------------
Class A with 3% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 3.24% 0.15% 3.65% -1.06%
1 Year Annualized - 6/30/98 8.23% 4.99% 8.47% 3.58%
3 Year Annualized - 6/30/98 7.82% 6.74% 6.87% 5.25%
5 Year Annualized - 6/30/98 6.14% 5.50% -- --
10 Year Annualized - 6/30/98 8.06% 7.73% -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 2.90% -0.10% 3.37% 3.32% -1.68% 3.76%
1 Year Annualized - 6/30/98 7.50% 4.50% 8.50% 7.78% 3.78% 8.71%
3 Year Annualized - 6/30/98 7.44% 6.86% 8.02% 6.23% 5.33% 7.10%
5 Year Annualized - 6/30/98 5.92% 5.92% 6.26% -- -- 6.08%
10 Year Annualized - 6/30/98 7.94% 7.94% 8.12% -- -- --
-B-9-
215
Pegasus
Bond Fund
--------------------------------
Class A with 5% Load
------- ------------
YTD Ending 6/30/98 3.72% -0.95%
1 Year Annualized - 6/30/98 10.35% 5.38%
3 Year Annualized - 6/30/98 8.79% 7.13%
5 Year Annualized - 6/30/98 7.13% 6.15%
10 Year Annualized - 6/30/98 9.13% 8.63%
Class B with CDSC Class I
------- --------- -------
YTD Ending 6/30/98 3.33% -1.67% 3.84%
1 Year Annualized - 6/30/98 9.54% 5.54% 10.63%
3 Year Annualized - 6/30/98 8.42% 7.56% 8.97%
5 Year Annualized - 6/30/98 6.91% 6.76% 7.24%
10 Year Annualized - 6/30/98 9.02% 9.02% 9.19%
Pegasus Short One Group Limited
Bond Fund Volatility Bond Fund
---------------------- -----------------------------
Class A with 1% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 2.70% 1.68% 3.16% 0.10%
1 Year Annualized - 6/30/98 6.02% 4.96% 6.32% 3.16%
3 Year Annualized - 6/30/98 5.66% 5.31% 5.88% 4.80%
5 Year Annualized - 6/30/98 5.07% 4.86% 5.13% 4.49%
10 Year Annualized - 6/30/98 6.79% 6.69% -- --
--------------------------------------------------------------------------------
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 2.33% 1.33% 2.83% 2.91% -0.09% 3.29%
1 Year Annualized - 6/30/98 5.25% 4.25% 6.28% 5.98% 2.98% 6.59%
3 Year Annualized - 6/30/98 5.14% 5.14% 5.83% 5.33% 5.03% 6.16%
5 Year Annualized - 6/30/98 4.76% 4.76% 5.17% -- -- 5.41%
10 Year Annualized - 6/30/98 6.64% 6.64% 6.85% -- -- --
Pegasus Multi Sector One Group Income
Bond Fund Bond Fund
---------------------- -----------------------------
Class A with 3% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 3.86% 0.74% 3.65% -1.05%
1 Year Annualized - 6/30/98 10.19% 6.89% 7.82% 3.00%
3 Year Annualized - 6/30/98 7.16% 6.08% 6.63% 5.00%
5 Year Annualized - 6/30/98 6.58% 5.93% 5.60% 4.63%
10 Year Annualized - 6/30/98 -- -- -- --
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 3.53% 0.53% 4.02% 3.32% -1.68% 3.67%
1 Year Annualized - 6/30/98 9.43% 6.43% 10.50% 7.13% 3.13% 7.97%
3 Year Annualized - 6/30/98 6.41% 5.82% 7.48% 5.96% 5.07% 6.89%
5 Year Annualized - 6/30/98 6.11% 6.11% 6.80% -- -- 5.85%
10 Year Annualized - 6/30/98 -- -- -- -- -- 7.63%
-B-10-
216
Pegasus High Yield
Bond Fund
--------------------------------
Class A with 4.5% Load
------- --------------
YTD Ending 6/30/98 3.88% -0.80%
1 Year Annualized - 6/30/98 8.23% 3.36%
3 Year Annualized - 6/30/98 -- --
5 Year Annualized - 6/30/98 -- --
10 Year Annualized - 6/30/98 -- --
Class B with CDSC Class I
------- --------- -------
YTD Ending 6/30/98 3.86% -1.14% 4.08%
1 Year Annualized - 6/30/98 7.95% 3.95% 10.70%
3 Year Annualized - 6/30/98 -- -- --
5 Year Annualized - 6/30/98 -- -- --
10 Year Annualized - 6/30/98 -- -- --
Pegasus Municipal Bond
Fund
--------------------------------
Class A with 4.5% Load
------- --------------
YTD Ending 6/30/98 2.19% -2.41%
1 Year Annualized - 6/30/98 8.26% 3.39%
3 Year Annualized - 6/30/98 6.99% 5.36%
5 Year Annualized - 6/30/98 6.59% 5.62%
10 Year Annualized - 6/30/98 8.54% 8.04%
Pegasus Municipal Bond Fund
--------------------------------
Class B with CDSC Class I
------- --------- -------
YTD Ending 6/30/98 1.82% -3.17% 2.33%
1 Year Annualized - 6/30/98 7.47% 3.47% 8.54%
3 Year Annualized - 6/30/98 6.16% 5.27% 7.32%
5 Year Annualized - 6/30/98 -- -- 6.88%
10 Year Annualized - 6/30/98 -- -- 8.82%
-B-11-
217
Pegasus Intermediate One Group Intermediate
Municipal Bond Fund Tax-Free Bond Fund
------------------------------- ------------------------------------
Class A with 3% Load Class A with Sales Charge
------- ------------ ------- -----------------
YTD Ending 6/30/98 1.95% -1.10% 2.32% -2.24%
1 Year Annualized - 6/30/98 6.64% 3.44% 7.50% 2.70%
3 Year Annualized - 6/30/98 5.78% 4.71% 6.71% 5.09%
5 Year Annualized - 6/30/98 5.35% 4.71% 5.22% 4.26%
10 Year Annualized - 6/30/98 7.25% 6.92% -- --
--------------------------------------------------------------------------------
Class B with CDSC Class I Class B with Sales Charge Class I
------- --------- ------- ------- ----------------- -------
YTD Ending 6/30/98 1.58% -1.42% 2.08% 1.99% -3.01% 2.43%
1 Year Annualized - 6/30/98 5.84% 2.84% 6.90% 6.81% 2.81% 7.74%
3 Year Annualized - 6/30/98 4.92% 4.31% 6.06% 6.03% 5.13% 6.96%
5 Year Annualized - 6/30/98 4.79% 4.79% 5.69% -- -- 5.46%
10 Year Annualized - 6/30/98 6.96% 6.96% 7.55% -- -- --
Pegasus Michigan Municipal One Group Intermediate
Bond Fund Bond Fund
------------------------------------ --------------------------------------
Class A with 4.5% Load Class B with CDSC Class I
------- -------------- ------- --------- -------
YTD Ending 6/30/98 2.47% -2.14% 2.15% -2.85% 2.59%
1 Year Annualized - 6/30/98 8.44% 3.57% 7.70% 3.70% 8.71%
3 Year Annualized - 6/30/98 7.28% 5.64% 6.74% 5.85% 7.45%
5 Year Annualized - 6/30/98 5.97% 5.00% 5.65% 5.49% 6.07%
10 Year Annualized - 6/30/98 -- -- -- -- --
Class B With CDSC Class I
------- --------- -------
YTD Ending 6/30/98 2.15% -2.85% 2.59%
1 Year Annualized - 6/30/98 7.70% 3.70% 8.71%
3 Year Annualized - 6/30/98 6.74% 5.85% 7.45%
5 Year Annualized - 6/30/98 5.65% 5.49% 6.07%
10 Year Annualized - 6/30/98 -- -- --
The Pegasus Market Expansion Index Fund and the Pegasus Short Municipal
Bond Fund have been excluded from the tables because they have recently
commenced investment operations. Although performance numbers are provided for
the Pegasus Intermediate Bond Fund and Pegasus Multi-Sector Bond Fund, and the
corresponding One Group Funds, Pegasus's performance history for these funds
survives the Reorganization.
-B-12-
218
The One Group U.S. Treasury Securities Money Market Fund / Pegasus Treasury Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
---------- --------- --------- ------------------------------------------------------------ ---------- ----------- ------------
U.S. Treasury Obligations (21.4%):
U.S. Treasury Bills (2.0%):
$ 100,000 $ $100,000 11/12/98 $ $ 98,042 $ 98,042
---------- ----------- -----------
0 98,042 98,042
---------- ----------- -----------
U.S. Treasury Notes (19.4%):
120,000 120,000 5.25%, 7/31/98 (b) 119,966 119,966
20,000 20,000 6.25%, 7/31/98 20,009 20,009
95,000 95,000 6.13%, 8/31/98 (b) 95,058 95,058
10,000 10,000 4.75%, 9/30/98 9,976 9,976
50,000 50,000 5.88%, 10/31/98 50,046 50,046
40,000 40,000 5.13%, 11/30/98 39,907 39,907
40,000 40,000 8.88%, 2/15/99 40,799 40,799
50,000 50,000 8.88%, 2/15/99 (b) 51,003 51,003
50,000 50,000 5.88%, 2/28/99 50,102 50,102
50,000 50,000 6.25%, 3/31/99 (b) 50,264 50,264
140,000 140,000 7.00%, 4/15/99 141,518 141,518
40,000 40,000 6.50%, 4/30/99 40,303 40,303
100,000 100,000 6.38%, 5/15/99 100,588 100,588
50,000 50,000 6.00%, 6/30/99 50,246 50,246
---------- ----------- -----------
201,240 658,545 859,785
---------- ----------- -----------
Total U.S. Treasury Obligations 201,240 756,587 957,827
---------- ----------- -----------
Repurchase Agreements (80.1%):
30,000 30,000 Aubrey Langston, 5.50%, 7/1/98 (Collateralized by various
U.S. Treasury Notes, 5.38% - 7.75%, 1/31/00 - 10/31/00) 30,000 30,000
150,000 150,000 Barclays De Zoette Wedd, 5.80% 7/1/98 (Collateralized by
$182,288 various U.S. Treasury Securities, 0.00% - 12.50%,
10/29/98 - 4/15/28, market value $153,000) 150,000 150,000
30,000 30,000 Barclays Inc., 5.50%, 7/1/98 (Collateralized by various U.S.
Treasury Notes, 6.13% - 6.75%, 6/30/99 - 7/31/00) 30,000 30,000
168,000 168,000 Bear Stearns & Co., Inc., 5.90%, 7/1/98 (Collateralized by
various U.S. Treasury Obligations, 0.00% - 8.88%, 8/15/98 -
5/15/08) 168,000 168,000
150,000 150,000 Deutche Morgan Grenfell, 6.00%, 7/1/98 (Collateralized by
$145,118 various U.S. Treasury Securities, 5.00% - 14.00%,
2/15/99 - 11/15/11, market value $153,001) 150,000 150,000
30,000 30,000 Deutche Morgan Grenfell, 5.50%, 7/1/98 (Collateralized by
$29,024 various U.S. Treasury Securities, 5.00% - 14.00%,
2/15/99 - 11/15/11, market value $30,600) 30,000 30,000
36,000 36,000 Dresdner Inc., 5.40%, 7/1/98 (Collateralized by U.S. Treasury
Note, 4.75%, 9/30/98) 36,000 36,000
47,000 47,000 First Union Capital Markets, 6.00%, 7/1/98 (Collateralized by
various U.S. Treasury Notes, 5.75% - 6.25%, 12/31/98 - 2/15/07) 47,000 47,000
47,000 47,000 Goldman Sachs Agency, 5.50%, 7/1/98 (Collateralized by
U.S. Treasury Notes, 5.63%, 5/15/03) 47,000 47,000
901,953 901,953 Goldman Sachs, 5.80%, 7/1/98 (Collateralized by $1,051,085
various U.S. Treasury Securities, 0.00% - 7.13%, 12/3/98 -
11/15/27, market value $919,992) 901,953 901,953
50,000 50,000 Goldman Sachs, 5.50%, 7/1/98 (Collateralized by $58,267
various U.S. Treasury Securities, 0.00% - 7.13%, 12/3/98 -
11/15/27, market value $51,000) 50,000 50,000
150,000 150,000 Greenwich Capital Inc., 5.75%, 7/1/98 (Collateralized by
$148,673 various U.S. Treasury Securities, 3.38% - 6.50%,
7/15/02 - 4/15/28, market value $153,002) 150,000 150,000
48,000 48,000 Greenwich Capital Markets, Inc., 5.80%, 7/1/98 (Collateralized by
various U.S. Treasury Obligations, 0.00%, 8/15/98 - 2/15/98) 48,000 48,000
241,000 241,000 H.S.B.C. Treasury, 5.70%, 7/1/98 (Collateralized by U.S.
Treasury Notes, 5.88% - 6.88%, 8/31/98 - 3/31/00) 241,000 241,000
150,000 150,000 HSBC Securities, 5.80%, 7/1/98 (Collateralized by $108,107
various U.S. Treasury Securities, 9.00% - 9.25%, 2/15/16 -
11/15/18, market value $153,001) 150,000 150,000
150,000 150,000 J.P. Morgan Securities, 5.80%, 7/1/98 (Collateralized by
$140,384 various U.S. Treasury Securities, 5.50% - 8.13%,
219
The One Group U.S. Treasury Securities Money Market Fund / Pegasus Treasury Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
---------- --------- --------- ------------------------------------------------------------ ---------- ----------- ------------
7/31/99 - 8/15/19, market value $153,001) 150,000 150,000
25,000 25,000 J.P. Morgan Securities, 5.40%, 7/1/98 (Collateralized by
$24,750 U.S. Treasury Notes, 6.25%, 10/31/01, market value
$25,501) 25,000 25,000
24,000 24,000 Morgan Stanley Government Collateralized, 5.70%, 7/1/98
(Collateralized by U.S. Treasury Bill, 0.00%, 12/10/98) 24,000 24,000
900,000 900,000 Morgan Stanley, 5.73%, 7/1/98 (Collateralized by $856,187
various U.S. Treasury Securities, 0.00% - 10.38%, 8/15/98 -
8/15/23, market value $918,036) 900,000 900,000
47,000 47,000 NationsBank Capital Markets, Inc., 5.90%, 7/1/98
(Collateralized by various U.S. Treasury Obligations, 0.00% -
12.00%, 8/15/03 - 5/15/08) 47,000 47,000
47,000 47,000 Nomura, 6.00%, 7/1/98 (Collateralized by U.S. Treasury
Obligations, 0.00% - 6.25%, 2/15/00 - 2/15/08) 47,000 47,000
2,085 2,085 Prudential, 5.45%, 7/1/98 (Collateralized by U.S. Treasury
Note, 7.88%, 8/15/01) 2,085 2,085
150,000 150,000 Prudential Securities, 5.65%, 7/1/98 (Collateralized by
$141,514 various U.S. Treasury Securities, 0.00% - 13.38%,
7/31/98 - 2/15/25, market value $153,001) 150,000 150,000
47,000 47,000 Salomon Brothers, Inc., 5.95%, 7/1/98 (Collateralized by
various U.S. Treasury Obligations, 0.00% - 12.00%, 8/15/98 -
5/15/08) 47,000 47,000
45,000 45,000 Societe Generale Treasury, 6.00%, 7/1/98 (Collateralized by
various U.S. Treasury Obligations, 0.00% - 9.05%, 7/1/98 -
5/12/04) 45,000 45,000
150,000 150,000 Societe Generale, 6.00%, 7/1/98 (Collateralized by $149,146
various U.S. Treasury Securities, 5.88% - 11.75%, 4/30/99 -
2/15/15, market value $153,021) 150,000 150,000
150,000 150,000 Westdeutsche Landesbank, 5.70%, 7/1/98 (Collateralized by
$108,800 various U.S. Treasury Securities, 5.38% - 14.00%,
2/15/01 - 11/15/11, market value $153,001) 150,000 150,000
30,000 30,000 Westdeutsche Landesbank, 5.50%, 7/1/98 (Collateralized by
$21,760 various U.S. Treasury Securities, 5.38% - 14.00%,
2/15/01 - 11/15/11, market value $30,616) 30,000 30,000
---------- ----------- -----------
Total Repurchase Agreements 859,085 3,136,953 3,996,038
---------- ----------- -----------
Short-Term Securities Held as Collateral (5.2%):
Repurchase Agreements
203,538 203,538 Goldman Sachs, 5.80%, 7/1/98 (Collateralized by $205,585
U.S. Treasury Notes, 5.63%, 5/15/01, market value
$207,609) 203,538 203,538
52,125 52,125 Goldman Sachs, 5.20%, 7/1/98 (Collateralized by $48,403
U.S. Treasury Notes, 5.63%, 5/15/01, market value $53,168) 52,125 52,125
---------- ----------- -----------
Total Short-Term Securities Held as Collateral - 255,663 255,663
---------- ----------- -----------
Total (Amortized Cost $5,209,528) (a) $1,060,325 $ 4,149,203 $ 5,209,528
========== =========== ===========
____________
Percentages indicated are based on net assets of $4,949,726.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) A portion of this security was loaned as of June 30, 1998.
220
The One Group Prime Money Market Fund / Pegasus Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
- --------- --------- --------- ------------------------------------------------------- ----------- ----------- ----------
Bankers Acceptance Notes (0.3%)
$ 8,000 $ $ 8,000 Abbey National Treasury, 5.72%, 6/11/99 $ 7,994 $ $ 7,994
12,200 12,200 National Australia, 6.00%, 3/26/99 12,222 12,222
--------- -------- --------
Total Bankers Acceptance Notes 20,216 - 20,216
--------- -------- --------
Certificates of Deposit (10.0%):
Banking (10.0%):
25,000 25,000 Bankers Trust New York Corp., 6.00%, 7/7/98 25,000 25,000
25,000 25,000 Bankers Trust New York Corp., 5.88%, 7/14/98 25,000 25,000
20,000 20,000 Bankers Trust New York Corp., 5.92%, 7/17/98 20,000 20,000
25,000 25,000 Bankers Trust New York Corp., 5.91%, 8/7/98 24,999 24,999
25,000 25,000 Bankers Trust New York Corp., 5.77%, 5/21/99 24,989 24,989
15,500 15,500 Banque Nationale De Paris, 5.82%, 10/5/98 15,495 15,495
27,000 27,000 Banque Nationale De Paris, 5.65%, 2/26/99 26,991 26,991
20,000 20,000 Bayerische Wechsel Bank, 5.94%, 10/22/98 19,996 19,996
18,000 18,000 Canadian Imperial Bank of Commerce, 5.94%, 10/21/98 17,997 17,997
27,000 27,000 Commerzbank AG, 5.89, 7/9/98 27,000 27,000
14,000 14,000 Commerzbank AG, 5.94, 10/23/98 13,997 13,997
7,000 7,000 Commerzbank AG, 5.65, 2/26/99 6,998 6,998
15,000 15,000 Commerzbank AG, 5.67, 3/5/99 14,994 14,994
30,000 30,000 Credit Agricole Indosuez, 5.75%, 4/26/99 29,988 29,988
10,000 10,000 Crestar Bank, 5.55%, 7/8/98 10,000 10,000
22,000 22,000 Deutsche Bank, 5.80%, 8/5/98 21,999 21,999
15,000 15,000 Deutsche Bank, 5.66%, 4/14/99 14,988 14,988
38,500 38,500 Generale Bank, 6.02%, 12/16/98 38,503 38,503
26,000 26,000 Norddeutsche Landesbank Girozentrale, 5.92%, 10/21/98 25,996 25,996
23,000 23,000 Norddeutsche Landesbank Girozentrale, 5.72%, 4/16/99 22,985 22,985
14,000 14,000 Royal Bank of Canada, 5.96%, 8/13/98 13,999 13,999
19,000 19,000 Societe Generale, 5.95%, 8/28/98 18,998 18,998
20,000 20,000 Societe Generale, 5.92%, 10/21/98 19,997 19,997
10,000 10,000 Societe Generale, 5.58%, 1/22/99 9,992 9,992
25,000 25,000 Standard Charter Bank, 5.58%, 7/10/98 25,000 25,000
32,000 32,000 Swiss Bank Corp., 5.88%, 11/19/98 31,998 31,998
19,000 19,000 Swiss Bank Corp., 5.74%, 6/11/99 18,990 18,990
23,000 23,000 Westpac Banking Corp., 5.73%, 4/16/99 22,994 22,994
--------- -------- --------
Total Certificates of Deposit 469,895 119,988 589,883
--------- -------- --------
Commercial Paper (49.7%):
Automotive (3.4%):
30,000 30,000 American Honda Finance Corp., 5.49%, 7/22/98 29,903 29,903
23,400 23,400 Harley-Davidson Funding, 5.53%, 7/9/98 23,371 23,371
10,000 10,000 Harley-Davidson Funding, 5.55%, 7/10/98 9,986 9,986
12,320 12,320 Harley-Davidson Funding, 5.54%, 7/13/98 12,297 12,297
10,445 10,445 Harley-Davidson Funding, 5.54%, 7/16/98 10,421 10,421
15,450 15,450 Harley-Davidson Funding, 5.56%, 7/23/98 15,398 15,398
17,600 17,600 Harley-Davidson Funding, 5.55%, 7/24/98 17,538 17,538
8,300 8,300 Harley-Davidson Funding, 5.56%, 8/13/98 8,245 8,245
14,300 14,300 Harley-Davidson Funding, 5.58%, 8/18/98 14,194 14,194
22,500 22,500 Harley-Davidson Funding, 5.55%, 9/16/98 22,233 22,233
20,000 20,000 Volkswagen of America, 5.53%, 7/14/98 19,960 19,960
20,000 20,000 Volkswagen of America, 5.55%, 7/16/98 19,954 19,954
--------- -------- --------
39,914 163,586 203,500
--------- -------- --------
Banking (7.4%):
50,000 50,000 AB Spintab, 5.55%, 8/20/98 49,615 49,615
25,000 25,000 AB Spintab, 5.53%, 12/2/98 24,409 24,409
50,000 50,000 AB Spintab, 5.52%, 12/10/98 48,758 48,758
25,000 25,000 AB Spintab, 5.55%, 12/28/98 24,306 24,306
30,000 30,000 Banca Serfin S.A., 5.65%, 8/31/98 29,713 29,713
13,150 13,150 Banco Buenos Aires S.A., 5.47%, 9/17/98 12,994 12,994
12,500 12,500 Banco Real S.A., 5.54%, 8/14/98 12,415 12,415
50,000 50,000 Banco Rio de la Plata S.A., 5.47%, 12/7/98 48,794 48,794
48,500 48,500 Banco Rio de la Plata S.A., 5.46%, 12/8/98 47,323 47,323
25,573 25,573 Barton Capital Corp., 5.55%, 7/17/98 25,510 25,510
See notes to financial statements.
221
The One Group Prime Money Market Fund / Pegasus Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
- --------- --------- --------- ------------------------------------------------------- ----------- ----------- ----------
22,107 22,107 KZH Holding Corp., 5.65%, 7/17/98 22,051 22,051
24,054 24,054 KZH Holding Corp., 5.58%, 8/18/98 23,875 23,875
15,986 15,986 KZH Holding Corp., 5.56%, 9/1/98 15,833 15,833
50,000 50,000 Norwest Corp., 6.25%, 7/1/98 49,999 49,999
--------- -------- --------
142,391 293,204 435,595
--------- -------- --------
Brokerage Services (2.5%):
50,000 50,000 Lehman Brothers Holdings, Inc., 5.52%, 7/15/98 49,892 49,892
50,000 50,000 Lehman Brothers Holdings, Inc., 5.45%, 8/19/98 49,629 49,629
50,000 50,000 Salomon Smith Barney Holdings, 5.52%, 8/11/98 49,686 49,686
--------- -------- --------
- 149,207 149,207
--------- -------- --------
Construction (0.6%):
34,000 34,000 Cemex, S.A. de CV, 5.42%, 7/30/98 33,852 33,852
--------- -------- --------
- 33,852 33,852
--------- -------- --------
Energy (0.6%)
15,000 15,000 Atlantic Richfield Corp., 5.55%, 9/14/98 14,827 14,827
20,000 20,000 Explorer Pipeline Co., 5.55%, 7/22/98 19,935 19,935
--------- -------- --------
34,762 - 34,762
--------- -------- --------
Financial Services (19.8%):
17,550 17,550 Ace Overseas Corp., 5.60%, 7/10/98 17,525 17,525
32,000 32,000 Ace Overseas Corp., 5.62%, 7/17/98 31,920 31,920
10,000 10,000 Aesop Funding Corp., 5.60%, 8/20/98 9,922 9,922
110,000 110,000 Aspen Funding Corp., 6.50%, 7/1/98 110,000 110,000
5,000 5,000 Avnet Inc., 5.50%, 7/24/98 4,982 4,982
16,762 16,762 Block Financial Corp., 5.53%, 7/22/98 16,708 16,708
14,000 14,000 Block Financial Corp., 5.53%, 8/27/98 13,877 13,877
50,000 50,000 Cargill Inc., 6.10%, 7/1/98 50,000 50,000
36,000 36,000 Cassie Des Depots Et Cosignations, 6.25%, 7/1/98 36,000 36,000
25,000 25,000 Cendant Residential Inc., 5.60%, 7/27/98 24,899 24,899
19,595 19,595 Centre Square Funding Corp., 5.65%, 7/27/98 19,515 19,515
32,242 32,242 Centric Capital Corp., 5.55%, 7/20/98 32,148 32,148
13,000 13,000 Centric Capital Corp., 5.71%, 9/2/98 12,870 12,870
15,000 15,000 Commercial Credit Co., 5.56%, 7/21/98 14,954 14,954
15,000 15,000 Commercial Credit Co., 5.56%, 7/24/98 14,947 14,947
47,550 47,550 Corporate Receivables Corp., 5.55%, 7/17/98 47,433 47,433
10,000 10,000 Dairy Investments LTD., 5.55%, 7/29/98 9,957 9,957
10,000 10,000 Dairy Investments LTD., 5.55%, 8/11/98 9,937 9,937
10,000 10,000 Equipment Funding Inc., 5.56%, 7/2/98 9,998 9,998
12,000 12,000 Equipment Funding Inc., 5.56%, 7/7/98 11,989 11,989
18,000 18,000 Glencore Asset Funding, 5.65%, 7/23/98 17,938 17,938
9,000 9,000 Glencore Asset Funding, 5.70%, 7/24/98 8,967 8,967
10,000 10,000 Greenwich Funding Corp., 5.50%, 7/15/98 9,979 9,979
40,000 40,000 Greyhawk Funding LLC., 5.75%, 7/23/98 39,859 39,859
23,000 23,000 Mont Blanc Capital Corp., 5.60%, 7/30/98 22,896 22,896
10,000 10,000 Monte Rose Capital Corp., 5.59%, 8/14/98 9,932 9,932
11,500 11,500 Old Line Funding Corp., 5.60%, 7/14/98 11,477 11,477
39,450 39,450 Old Line Funding Corp., 5.60%, 7/15/98 39,364 39,364
10,053 10,053 Old Line Funding Corp., 5.60%, 7/16/98 10,030 10,030
95,000 95,000 Prudential Funding Corp., 6.00%, 7/1/98 95,000 95,000
17,000 17,000 Sheffield Receivables Corp., 5.56%, 8/25/98 16,856 16,856
25,000 25,000 Siebe PLC, 5.55%, 7/23/98 24,915 24,915
22,000 22,000 Siebe PLC, 5.54%, 7/28/98 21,909 21,909
23,000 23,000 Sigma Finance Inc., 5.56%, 8/13/98 22,847 22,847
29,000 29,000 Special Purpose Account Receivable Coop Corp., 5.50%,
7/8/98 28,969 28,969
21,000 21,000 Special Purpose Account Receivable Coop Corp., 5.55%,
7/16/98 20,951 20,951
10,400 10,400 Sun Belt Dix, Inc., 5.55%, 7/21/98 10,368 10,368
27,000 27,000 Sun Belt Dix, Inc., 5.55%, 8/25/98 26,771 26,771
20,000 20,000 Sun Belt Dix, Inc., 5.55%, 9/1/98 19,809 19,809
13,000 13,000 TI Group, Inc., 5.45%, 7/7/98 12,988 12,988
18,186 18,186 Twin Towers, Inc., 5.55%, 7/20/98 18,133 18,133
9,000 9,000 UNUM Corp., 5.60%, 7/21/98 8,972 8,972
38,766 38,766 Variable Funding Capital Corp., 5.57%, 8/18/98 38,478 38,478
See notes to financial statements.
222
The One Group Prime Money Market Fund / Pegasus Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
- --------- --------- --------- ------------------------------------------------------- ----------- ----------- ----------
15,000 15,000 WCP Funding, Inc., 5.53%, 7/7/98 14,986 14,986
25,000 25,000 WCP Funding, Inc., 5.50%, 7/14/98 24,950 24,950
25,000 25,000 WCP Funding, Inc., 5.53%, 7/23/98 24,916 24,916
25,000 25,000 WCP Funding, Inc., 5.53%, 7/29/98 24,892 24,892
20,000 20,000 Windmill Funding Corp., 5.50%, 7/13/98 19,963 19,963
14,000 14,000 Wood Street Funding Inc., 5.57%, 7/6/98 13,989 13,989
16,000 16,000 Wood Street Funding Inc., 5.56%, 7/13/98 15,970 15,970
--------- -------- --------
890,684 285,971 1,176,655
--------- -------- --------
Gas & Electric Utility (1.5%):
53,897 53,897 Cogentrix of Richmond, 5.65%, 7/23/98 53,711 53,711
13,000 13,000 Duke Capital Corp., 5.54%, 7/2/98 12,998 12,998
21,000 21,000 Duke Capital Corp., 5.54%, 7/16/98 20,952 20,952
--------- -------- --------
- 87,661 87,661
--------- -------- --------
Industrial Goods & Services (0.3%):
15,000 15,000 Akzo Nobel, Inc., 5.49%, 7/6/98 14,989 14,989
--------- -------- --------
- 14,989 14,989
--------- -------- --------
Insurance (2.5%):
68,100 68,100 Safeco Credit Co., 5.56%, 7/8/98 68,026 68,026
20,000 20,000 Safeco Credit Co., 5.54%, 7/13/98 19,963 19,963
20,000 20,000 Safeco Credit Co., 5.55%, 7/23/98 19,932 19,932
25,000 25,000 Safeco Credit Co., 5.55%, 8/3/98 24,873 24,873
15,350 15,350 Safeco Credit Co., 5.58%, 9/21/98 15,155 15,155
--------- -------- --------
- 147,949 147,949
--------- -------- --------
Office Equipment & Services (2.1%):
37,000 37,000 Xerox Mexico SA de CV, 5.55%, 7/6/98 36,971 36,971
49,500 49,500 Xerox Mexico SA de CV, 5.63%, 7/29/98 49,283 49,283
36,500 36,500 Xerox Mexico SA de CV, 5.56%, 8/5/98 36,303 36,303
--------- -------- --------
- 122,557 122,557
--------- -------- --------
Oil & Gas Exploration (2.1%):
50,000 50,000 Pemex Capital, Inc., 5.54%, 8/20/98 49,615 49,615
16,000 16,000 Petroleo Brasileiro SA, 5.52%, 8/26/98 15,863 15,863
30,000 30,000 Petroleo Brasileiro SA, 5.43%, 9/29/98 29,593 29,593
30,000 30,000 Petroleo Brasileiro SA, 5.40%, 11/30/98 29,316 29,316
--------- -------- --------
- 124,387 124,387
--------- -------- --------
Raw Materials (0.4%)
10,000 10,000 Akzo Nobel, Inc., 5.50%, 7/9/98 9,988 9,988
15,000 15,000 Great Lakes Chemical Corp., 5.53%, 8/14/98 14,899 14,899
--------- -------- --------
24,887 - 24,887
--------- -------- --------
Real Estate (4.6%):
46,385 46,385 75 State Street Capital Corp., 5.56%, 7/9/98 46,328 46,328
55,801 55,801 75 State Street Capital Corp., 5.57%, 7/10/98 55,724 55,724
24,654 24,654 75 State Street Capital Corp., 5.56%, 7/14/98 24,605 24,605
31,302 31,302 75 State Street Capital Corp., 5.58%, 7/16/98 31,229 31,229
18,500 18,500 Countrywide Home Loans, 5.55%, 7/16/98 18,457 18,457
25,000 25,000 Countrywide Home Loans, 5.54%, 8/12/98 24,838 24,838
40,000 40,000 Countrywide Home Loans, 5.54%, 8/26/98 39,655 39,655
35,000 35,000 Countrywide Home Loans, 5.53%, 9/2/98 34,661 34,661
--------- -------- --------
- 275,497 275,497
--------- -------- --------
Retail (1.9%):
25,000 25,000 Sotheby's, Inc., 5.55%, 7/1/98 25,000 25,000
25,000 25,000 Sotheby's, Inc., 5.56%, 7/13/98 24,954 24,954
25,000 25,000 Sotheby's, Inc., 5.56%, 7/20/98 24,927 24,927
10,000 10,000 Sotheby's, Inc., 5.56%, 8/3/98 9,949 9,949
See notes to financial statements.
223
The One Group Prime Money Market Fund / Pegasus Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
- --------- --------- --------- ------------------------------------------------------- ----------- ----------- ----------
15,000 15,000 Sotheby's, Inc., 5.55%, 8/14/98 14,898 14,898
15,000 15,000 Sotheby's, Inc., 5.58%, 8/21/98 14,881 14,881
--------- --------- ---------
- 114,609 114,609
--------- --------- ---------
Total Commercial Paper 1,132,638 1,813,469 2,946,107
--------- --------- ---------
Corporate Notes & Bonds (9.3%):
Banking (2.2%):
25,000 25,000 Abbey National, 5.88%, 12/22/98 24,994 24,994
26,000 26,000 Abbey National, 5.72%, 6/11/99 25,981 25,981
30,000 30,000 CIT Group Holdings, Medium Term Note, 5.88%, 12/15/98 30,028 30,028
17,208 17,208 GE Engine Receivables Trust, (A/R), 5.73%, 2/14/00 17,208 17,208
20,000 20,000 Morgan Guaranty Trust Co., 5.93%, 8/31/98 20,002 20,002
7,000 7,000 Key Bank, Senior Note, 5.63%, 2/24/99 6,997 6,997
--------- --------- ---------
74,235 50,975 125,210
--------- --------- ---------
Brokerage Services (0.8%):
50,000 50,000 Bear Stearns Co., Inc., 5.63%, 5/14/99* 50,000 50,000
--------- --------- ---------
- 50,000 50,000
--------- --------- ---------
Computer Hardware (0.8%):
50,000 50,000 IBM Credit Corp., 5.45%, 2/18/99 49,962 49,962
--------- --------- ---------
- 49,962 49,962
--------- --------- ---------
Financial Services (5.5%)
4,613 4,613 Key Auto Finance, 5.84%, 1/5/99 4,613 4,613
125,000 125,000 Merrill Lynch Inc., (A/R), 6.85%, 7/1/98 125,000 125,000
20,000 20,000 Sigma Finance, Medium Term Note, 5.84%, 8/4/98 20,000 20,000
15,000 15,000 Sigma Finance, Medium Term Note, 5.95%, 10/20/98 15,000 15,000
35,000 35,000 Stats Trust 1998-C, (A/R), 5.77%, 4/13/99 35,000 35,000
10,000 10,000 Wachovia Bank, Medium Term Note, (A/R), 5.99%, 10/2/98 9,998 9,998
75,000 75,000 Wheels, Inc., Master Note, (A/R), 5.78%, 8/15/98 75,000 75,000
8,592 8,592 Wilmington Trust Co., Amtrak 93-A, (A/R), 1/1/11 8,592 8,592
10,102 10,102 Wilmington Trust Co., Amtrak 93-I, (A/R), 1/1/11 10,102 10,102
22,978 22,978 Wilmington Trust Co., Amtrak 93-B, (A/R), 1/1/13 22,978 22,978
--------- --------- ---------
326,283 - 326,283
--------- --------- ---------
Total Corporate Notes & Bonds 400,518 150,937 551,455
--------- --------- ---------
Funding Agreements (8.8%):
50,000 50,000 Allstate Life Insurance Co., 5.82%, 8/31/98* 50,000 50,000
160,000 160,000 General American Life Insurance Co., 5.85%, 12/21/98* 160,000 160,000
60,000 60,000 Peoples Security Life Insurance Co., 5.82%, 10/1/98* 60,000 60,000
60,000 60,000 Providian Life & Health Insurance Co., 5.82%, 11/1/98* 60,000 60,000
50,000 50,000 Providian Life & Health Insurance Co., 5.76%, 2/12/99* 50,000 50,000
40,000 40,000 Providian Life & Health Insurance Co., 5.89%, 7/1/98 40,000 40,000
50,000 50,000 Transamerica Life Insurance Co., 5.85, 12/9/02 50,000 50,000
25,000 25,000 Travelers Life Ins & Annuity Co., 5.85%, 11/6/98 25,000 25,000
25,000 25,000 Western & Southern Insurance Co., (A/R), 1/29/03 25,000 25,000
--------- --------- ---------
Total Funding Agreements 140,000 380,000 520,000
--------- --------- ---------
Master Notes (1.9%)
10,000 10,000 Allstate Life Insurance Co., 5.87%, 7/1/98 10,000 10,000
5,000 5,000 Commonwealth Life Insurance Co., 5.86%, 7/1/98 5,000 5,000
35,500 35,500 General American Life Funding Agr., 5.85%, 7/1/98 35,500 35,500
15,000 15,000 Paccar Leasing, 5.93%, 7/1/98 15,000 15,000
10,000 10,000 Peoples Security Life Insurance Co., 5.86%, 7/1/98 10,000 10,000
14,000 14,000 Sunamerica Life Insuarance co., 5.83%, 7/1/98 14,000 14,000
25,000 25,000 Sun Life Insurance Co. of America, 5.79%, 7/1/98 25,000 25,000
--------- --------- ---------
Total Master Notes 114,500 - 114,500
--------- --------- ---------
Time Deposits (4.9%)
40,000 40,000 ABN-Amro Bank N.V., 6.38%, 7/1/98 40,000 40,000
40,000 40,000 Bank of Tokyo - Mitsubishi, 6.75%, 7/1/98 40,000 40,000
100,000 100,000 BHF Bank AG, 6.25%, 7/1/98 100,000 100,000
25,000 25,000 National Australia Bank, 5.81%, 7/2/98 25,000 25,000
20,000 20,000 Norddeutsche Girozentrale Bank, 6.25%, 7/1/98 20,000 20,000
See notes to financial statements.
224
The One Group Prime Money Market Fund / Pegasus Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
- --------- --------- --------- ------------------------------------------------------- ----------- ----------- ----------
65,000 65,000 Republic National Bank NY, 6.50%, 7/1/98 65,000 65,000
----------- --------- ---------
Total Time Deposits 290,000 - 290,000
----------- --------- ---------
U.S. Government Agency Securities (0.8%):
Student Loan Marketing Assoc. (0.8%):
50,000 50,000 5.32%, 9/28/98* 50,000 50,000
----------- --------- ---------
Total U.S. Government Agency Securities - 50,000 50,000
----------- --------- ---------
Yankee & Eurodollar (10.0%):
Banking (10.0%):
15,000 15,000 Bank of Montreal, 5.81%, 11/9/98 15,007 15,007
50,000 50,000 Bank of Nova Scotia, 5.89%, 12/15/98 50,002 50,002
25,000 25,000 Bayerische Landesbank, 5.81%, 12/17/98 24,992 24,992
30,000 30,000 Bayerische Verinsbank AG, 5.70%, 10/6/98 29,995 29,995
25,000 25,000 Canadian Imperial Bank of Commerce, 5.94%, 10/21/98 24,996 24,996
25,000 25,000 Canadian Imperial Bank of Commerce, 5.64%, 3/2/99 24,990 24,990
25,000 25,000 Canadian Imperial Bank of Commerce, 5.69%, 3/10/99 24,995 24,995
15,000 15,000 Den Danske Bank, 5.72%, 11/30/98 15,001 15,001
30,000 30,000 Deutsche Bank A.G., 5.66%, 3/26/99 29,988 29,988
25,000 25,000 Deutsche Bank A.G., 5.70%, 6/7/99 24,987 24,987
25,000 25,000 National Australia Bank, 5.74%, 10/13/98 24,997 24,997
27,000 27,000 National Westminster Bank, 5.71%, 4/16/99 26,991 26,991
26,000 26,000 Societe Generale, 5.86%, 7/21/98 25,998 25,998
25,000 25,000 Societe Generale, 5.97%, 9/15/98 24,998 24,998
25,000 25,000 Societe Generale, 5.86%, 11/18/98 25,008 25,008
25,000 25,000 Societe Generale, 5.88%, 12/16/98 24,997 24,997
25,000 25,000 Societe Generale, 5.73%, 3/29/99 24,991 24,991
25,000 25,000 Swiss Bank Corp., 5.90%, 8/28/98 24,998 24,998
75,000 75,000 Swiss Bank Corp., 5.83%, 12/16/98 75,018 75,018
25,000 25,000 Swiss Bank Corp., 5.64%, 2/26/99 24,992 24,992
25,000 25,000 Swiss Bank Corp., 5.81%, 4/29/99 24,988 24,988
----------- ---------- ---------
Total Yankee & Eurodollar - 592,929 592,929
----------- ---------- ---------
Repurchase Agreements (3.7%):
102,434 102,434 Prudential Securities, 6.10%, 7/1/98 (Collateralized by
$101,841 various U.S. Government Securities, 0.00% -
7.25%, 7/1/98 - 8/15/04, market value $104,484) 102,434 102,434
36,075 36,075 Lehman Brothers, 6.10%, 7/1/98 (Collateralized by various
U.S. Obligations, 0.00% - 9.00%, 7/1/98 - 5/12/04) 36,075 36,075
82,382 82,382 Smith Barney, Inc., 6.10%, 7/1/98 (Collateralized by U.S.
Treasury & Agency Obligations, 0.00% - 9.00%, 7/7/98 -
4/25/08) 82,382 82,382
----------- ---------- ---------
Total Repurchase Agreements 118,457 102,434 220,891
----------- ---------- ----------
Total (Amortized Cost $5,895,981) (a) $ 2,686,224 $3,209,757 $5,895,891
=========== ========== ==========
- ------------
Percentages indicated are based on net assets of $5,932,453.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities. The interest rate, which will change
periodically, is based upon an index of market rates the Schedule of
Portfolio Investments is the rate in effect at June 30, 1998.
A/R Adjustable Rate
See notes to financial statements.
225
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ ------ ------ ---------------------------------------------------- ----------- ----------- ----------
Daily Demand Notes (9.8%):
Alabama (0.4%):
$ $ 1,300 $ 1,300 Phenix City, IDR for Mead, AMT, 4.05%, 3/1/31, LOC:
Bayerische Landesbank* $ $ 1,300 $ 1,300
3,600 3,600 Phenix City, IDR for Mead, Series 93-A, AMT, 4.05%,
6/1/28, LOC: Toronto Dominion Bank* 3,600 3,600
---------- ---------- ---------
- 4,900 4,900
---------- ---------- ---------
Georgia (0.5%)
6,295 6,295 Burke County Development Authority, PCR, 3.75%, 7/1/24 6,295 - 6,295
---------- ---------- ---------
Idaho (1.1%):
7,915 7,915 Health Facility Authority Revenue, St. Lukes Regional
Medical Center Project, 3.75%, 5/1/22, LOC: Bayerische
Landesbank* 7,915 7,915
6,900 6,900 Health Facility Authority Revenue, St. Lukes Regional
Medical Center Project, 3.75%, 5/1/22, LOC: Bayerische
Landesbank* 6,900 6,900
---------- ---------- ---------
6,900 7,915 14,815
---------- ---------- ---------
Illinois (0.1%)
1,500 1,500 Southwestern Development Authority, AMT, 3.90%, 4/1/22 1,500 - 1,500
---------- ----------- ----------
Kansas (0.1%)
1,700 1,700 Butler County Solid Waste Disposal, 4.00%, 8/1/24, AMT 1,700 - 1,700
---------- ---------- ---------
Kentucky (0.7%):
5,200 5,200 Lexington Fayette Urban County Airport Revenue, AMT,
4.10%, 4/1/24, LOC: Credit Local De France* 5,200 5,200
4,900 4,900 Lexington Fayette Urban County Airport Revenue, 4.10%,
7/1/28, MBIA* 4,900 4,900
---------- ---------- ---------
- 10,100 10,100
Louisiana (0.4%)
2,900 2,900 Plaquemines Parish, Environmental Rev, AMT, 3.95%, 5/1/25 2,900 2,900
2,800 2,800 St. Charles Pollution Control Revenue, AMT, 3.90%, 11/1/21 2,800 2,800
---------- ---------- ---------
5,700 - 5,700
---------- ---------- ---------
Michigan (0.2%):
2,500 2,500 State Strategic Fund, Detroit Edison Project, 3.80%,
9/1/30, LOC: Barclay's Bank Plc* 0 2,500 2,500
---------- ---------- ---------
Nevada (0.9%)
8,700 8,700 Clark County Industrial Revenue, AMT, 3.95%, 12/1/22 8,700 8,700
3,000 3,000 Washoe County Water Facilities Revenue, AMT,
3.90%, 12/1/20 3,000 3,000
---------- ---------- ---------
11,700 - 11,700
---------- ---------- ---------
New York (0.0%):
500 500 New York, GO, Series B, 4.10%, 10/1/21, FGIC* - 500 500
---------- ---------- ---------
North Carolina (1.5%):
21,100 21,100 Person County Industrial and Pollution Control
Revenue, AMT, 3.95%, 11/1/16, LOC: Suntrust Bank* - 21,100 21,100
---------- ---------- ---------
Ohio (0.0%):
200 200 State Air Quality Development Authority, Cincinnati Gas &
Electric, 3.80%, 12/1/15, LOC: J.P. Morgan* - 200 200
---------- ---------- ---------
Oregon (0.3%)
4,100 4,100 Port Morrow Environmental Revenue, AMT, 4.00%, 12/1/31 4,100 - 4,100
---------- ---------- ---------
South Carolina (0.4%)
3,000 3,000 Berkley County Industrial Development Revenue,
AMT, 3.90%, 4/1/28 3,000 3,000
3,100 3,100 Florence County Solid Waste Disposal Revenue, 3.90%, 4/1/28 3,100 3,100
---------- ---------- ---------
6,100 - 6,100
---------- ---------- ---------
Texas (2.1%):
3,300 3,300 Brazos River Authority, PCR, Texas Utilities Electric Co.
Project, AMT, 3.90%, 6/1/30, AMBAC 3,300 3,300
9,000 9,000 Brazos River Revenue, AMT, 4.30%, 4/1/32 9,000 9,000
1,400 1,400 Gulf Coast Waste Disposal Authority, AMT, 3.90%, 5/1/23 1,400 1,400
See notes to financial statements.
226
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ ------ ------ --------------------------------------------------------- ---------- --------- -----------
10,700 10,700 Gulf Coast, IDA, AMT, 4.00%, 5/1/25 10,700 10,700
4,475 4,475 Sabine River Authority, PCR, Texas Utilities Electric Co.
Project, Series C, 3.90%, 6/1/30, LOC: UBS* 4,475 4,475
---------- ---------- ---------
21,100 7,775 28,875
---------- ---------- ---------
Virginia (0.8%)
6,700 6,700 King George County Individual Development Authority, AMT,
3.95%, 11/1/25 6,700 6,700
4,750 4,750 Roanoke Memorial Hospital, IDA, Series C, 3.50%, 7/1/19 4,750 4,750
---------- ---------- ---------
11,450 - 11,450
---------- ---------- ---------
Washington (0.1%):
800 800 Health Care Facilities, Fred Hutchinson, Series A, 3.75%,
1/1/18, LOC: Morgan Guaranty* 0 800 800
---------- ---------- ---------
Wyoming (0.2%):
1,500 1,500 Converse County Environment Revenue, 4.15%, 11/1/25 1,500 1,500
800 800 Sublette County, PCR, Series B, 3.80%, 7/1/17, GTY: Exxon* 800 800
---------- ---------- ---------
1,500 800 2,300
---------- ---------- ---------
Total Daily Demand Notes 78,045 56,590 134,635
---------- ---------- ---------
Monthly Demand Notes (3.3%):
Arizona (0.3%)
4,500 4,500 Chandler IDR - Parsons Municipal Services, 3.70%, 12/15/09 4,500 - 4,500
---------- ---------- ---------
California (0.6%)
7,625 7,625 California State Veterans Revenue, Series A, AMT, 8.30%, 8/1/98 7,689 - 7,689
---------- ---------- ---------
Indiana (1.1%):
14,800 14,800 Gary Environmental Improvement Revenue, U.S. Steel Corp.
Project, 3.70%, 7/15/02, LOC: Bank of Nova Scotia* - 14,800 14,800
Kentucky (0.3%) ---------- ---------- ---------
3,800 3,800 Carroll County Solid Waste Disposal Rev, AMT, 3.95%, 11/2/24 3,800 - 3,800
---------- ---------- ---------
Michigan (0.3%)
3,000 3,000 Meridian Limited Obligation, EDC, 3.70%, 11/15/14 3,000 3,000
700 700 Michigan State Strategic Fund Limited Obligation,
Saginaw Products Corp., AMT, 3.70%, 9/1/17 700 700
---------- ---------- ---------
3,700 - 3,700
---------- ---------- ---------
Vermont (0.7%)
6,000 6,000 Vermont Educational Health Building Agency Revenue, 3.85%,
11/1/98 6,000 6,000
3,900 3,900 Vermont Student Assistance Revenue, 3.70%, 1/1/04 3,900 3,900
---------- ---------- ---------
9,900 - 9,900
---------- ---------- ---------
Total Monthly Demand Notes 29,589 14,800 44,389
---------- ---------- ---------
Municipal Notes (21.6%):
Alabama (0.3%)
4,500 4,500 Decatur Industrial Development Revenue, AMT, 3.65%, 1/1/27 4,500 - 4,500
---------- ---------- ---------
Arizona (0.1%)
1,500 1,500 Farmington PCR, Arizona Public Services, AMT, 4.30%, 9/1/24 1,500 - 1,500
---------- ---------- ---------
California (0.7%):
10,000 10,000 Los Angeles County Tax & Revenue Anticipation Notes
Series A, 4.50%, 6/30/99 - * 10,080 10,080
---------- ---------- ---------
Colorado (0.4%):
5,000 5,000 State of Colorado Transportation, 4.00%, 6/25/99 - 5,020 5,020
---------- ---------- ---------
District of Columbia (1.6%)
12,000 12,000 District of Columbia TRANS, Series B, 4.50%, 9/30/98 12,018 12,018
9,500 9,500 District of Columbia TRANS, Series C, 5.00%, 9/30/98 9,526 9,526
---------- ---------- ---------
21,544 - 21,544
---------- ---------- ---------
Illinois (1.5%)
20,000 20,000 Chicago General Obligation, 3.55%, 2/4/99 20,000 20,000
---------- ---------- ---------
20,000 - 20,000
---------- ---------- ---------
Indiana (0.8%)
11,100 11,100 Indiana Development Finance Authority, PCR, AMT, 3.70%, 3/1/99 11,100 - 11,100
---------- ---------- ---------
Kentucky (3.1%):
7,000 7,000 Asset Liability Commission General Fund, Trans 98-A,
4.50%, 6/25/99 7,061 7,061
See notes to financial statements.
227
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ ------ ------ ------------------------------------------------------- ----------- ----------- ----------
35,088 35,088 Kentucky Interlocal School Transportation, TRANS, 3.90%,
6/30/99 35,088 35,088
---------- ---------- ---------
35,088 7,061 42,149
---------- ---------- ---------
Michigan (1.4%)
15,000 15,000 Michigan State General Obligation Notes, 4.50%, 9/30/98 15,036 15,036
4,200 4,200 Michigan State Housing Development Authority,
Series A, AMT, 3.80%, 2/25/99 4,200 4,200
---------- ---------- ---------
19,236 - 19,236
---------- ---------- ---------
Missouri (0.9%)
4,900 4,900 Missouri State Health & Educational Facilities, 3.85%, 8/17/98 4,900 4,900
8,000 8,000 Missouri State Development Finance Board, 3.80%, 12/1/98 8,000 8,000
---------- ---------- ---------
12,900 - 12,900
---------- ---------- ---------
Nebraska (1.1%)
15,500 15,500 Nebraska Investment Finance Authority Revenue,
Series C, AMT, 3.95%, 7/1/98 15,500 - 15,500
---------- ---------- ---------
Nevada (0.6%)
8,500 8,500 Clark County Airport Revenue, Series B, AMT, 3.88%, 7/8/98 8,500 - 8,500
---------- ---------- ---------
New York (0.8%)
11,000 11,000 New York State Electric & Gas Revenue, 3.80%, 12/1/98 11,000 - 11,000
---------- ---------- ---------
Ohio (0.4%):
5,900 5,900 Dublin Transportation System, GO, 3.62%, 12/17/98 - 5,902 5,902
---------- ---------- ---------
Oregon (1.5%):
6,000 6,000 State Housing & Community Services, 3.75%, 5/13/99 6,000 6,000
15,000 15,000 State Housing & Community Services, 3.75%, 5/13/99 15,000 15,000
---------- ---------- ---------
15,000 6,000 21,000
---------- ---------- ---------
Pennsylvania (0.4%):
5,000 5,000 Pennsylvania State University, Series A, 4.50%, 3/30/99 - 5,034 5,034
---------- ---------- ---------
Puerto Rico (1.8%)
25,000 25,000 Puerto Rico Commonwealth, TRANS, Series A, 4.50%, 7/30/98 25,015 - 25,015
---------- ---------- ---------
Tennessee (0.4%):
5,000 5,000 State Local Development Authority, 4.00%, 5/19/99 - 5,013 5,013
---------- ---------- ---------
Texas (1.2%):
3,500 3,500 State Tax & Revenue Anticipation Notes, Series 97A,
4.75%, 8/31/98 3,505 3,505
6,000 6,000 State Tax & Revenue Anticipation Notes, Series 97A,
4.75%, 8/31/98 6,010 6,010
6,200 6,200 Texas Higher Education Authority, MBIA, AMT, 3.55%, 12/1/27 6,200 6,200
---------- ---------- ---------
12,210 3,505 15,715
---------- ---------- ---------
Utah (0.9%)
12,000 12,000 Intermountain Power Agency Revenue, Series E, 3.45%, 9/15/98 12,000 - 12,000
---------- ---------- ---------
Vermont (0.4%)
5,500 5,500 Educational Health Building Agency Revenue, 3.75%, 5/1/99 5,500 - 5,500
---------- ---------- ---------
Virginia (0.2%)
2,200 2,200 King George County Individual Development Authority, 3.95%, 2,200 - 2,200
3/1/27, AMT ---------- ---------- ---------
Wisconsin (1.1%):
15,000 15,000 State Operating Notes, 4.50%, 6/15/99 15,132 15,132
---------- ---------- ---------
Total Municipal Notes 232,793 62,747 295,540
Put Bonds (1.3%):
Arizona (0.7%):
9,000 9,000 Cochise County, PCR, Arizona Electric Power Corp., Series
A, AMT, 3.55%, 9/1/24 - 9,000 9,000
---------- ---------- ---------
Florida (0.4%):
6,000 6,000 Putnam County Development Authority, Seminole Electric
Co., 3.65%, 12/15/09 - 6,000 6,000
---------- ---------- ---------
North Dakota (0.2%):
See notes to financial statements.
228
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ -------- ------ ------------------------------------------------------- ----------- ----------- ----------
2,600 2,600 Mercer County, Solid Waste Disposal Revenue, National
Rural Utility Power Project, Series U, 3.80%, 12/1/18 2,600 2,600
---------- ---------- ---------
Total Put Bonds - 17,600 17,600
---------- ---------- ---------
Tax Free Commercial Paper (23.0%):
Alabama (1.8%):
9,600 9,600 Chatam Air Pollution Control, IDB, AMT, 3.65%, 10/9/98 9,600 9,600
1,500 1,500 Phenix IDR, Mead Paper, AMT, 3.77%, 7/7/98, LOC: ABN
AMRO* 1,500 1,500
2,000 2,000 Phenix IDR, Mead Paper, AMT, 3.70%, 7/15/98, LOC: ABN
AMRO* 2,000 2,000
5,600 5,600 Phenix IDR, Mead Paper, AMT, 3.45%, 7/31/98, LOC: ABN
AMRO* 5,600 5,600
3,000 3,000 Phenix IDR, Mead Paper, AMT, 3.65%, 8/18/98, LOC: ABN
AMRO* 3,000 3,000
2,400 2,400 Phenix IDR, Mead Paper, AMT, 3.80%, 8/24/98, LOC: ABN
AMRO* 2,400 2,400
---------- ---------- ---------
9,600 14,500 24,100
---------- ---------- ---------
Alaska (1.9%)
14,000 14,000 Valdez Marine Revenue, Series C, 3.70%, 7/9/98 14,000 14,000
11,900 11,900 Valdez Marine Revenue, 3.65%, 9/11/98 11,900 11,900
---------- ---------- ---------
25,900 - 25,900
---------- ---------- ---------
Arizona (0.6%):
4,000 4,000 Mesa Municipal Development Corp., 3.45%, 7/8/98, LOC:
Westdeutsche Landesbank* 4,000 4,000
4,770 4,770 Mesa Municipal Development Corp., 3.55%, 7/14/98, LOC:
Westdeutshce Landesbank* 4,770 4,770
---------- ---------- ---------
- 8,770 8,770
---------- ---------- ---------
Colorado (0.6%):
1,400 1,400 Platte River Electric Revenue, 3.45%, 7/6/98, LOC: J.P.
Morgan* 1,400 1,400
2,000 2,000 Platte River Electric Revenue, 3.40%, 7/6/98, LOC: J.P.
Morgan* 2,000 2,000
4,400 4,400 Platte River Electric Revenue, 3.60%, 8/13/98, LOC: J.P.
Morgan* 4,400 4,400
---------- ---------- ---------
0 7,800 7,800
---------- ---------- ---------
Florida (1.1%)
10,000 10,000 St. Lucie County Power and Light, 3.60%, 8/13/98 10,000 10,000
45,000 45,000 Sarasota Public Hospital, Series A, 3.65%, 10/8/98 4,500 4,500
---------- ---------- ---------
14,500 - 14,500
---------- ---------- ---------
Indiana (1.1%)
15,000 15,000 Indiana DFA Solid Waste, AMT, 3.60%, 7/10/98 15,000 - 15,000
---------- ---------- ---------
Kansas (0.3%)
4,000 4,000 Burlington PCR, AMT, 3.60%, 8/12/98 4,000 - 4,000
---------- ---------- ---------
Louisiana (0.5%)
7,500 7,500 Louisiana State General Obligation, 3.45%, 8/10/98 7,500 - 7,500
---------- ---------- ---------
Michigan (0.2%)
3,400 3,400 Regents of University of Michigan, 3.60%, 9/9/98 3,400 - 3,400
---------- ---------- ---------
Minnesota (0.2%):
1,000 1,000 Rochester Healthcare Facility Revenue, 3.65%, 7/13/98 1,000 1,000
1,700 1,700 Rochester Healthcare Facility Revenue, 3.45%, 7/13/98 1,700 1,700
---------- ---------- ---------
- 2,700 2,700
---------- ---------- ---------
Mississippi (1.0%)
13,000 13,000 Claiborne County Pollution Control Revenue, 3.55%, 8/7/98 13,000 - 13,000
---------- ---------- ---------
Missouri (0.2%):
2,500 2,500 State Environmental Authority, Union Electric Co., 3.63%,
7/10/98, LOC: UBS - 2,500 2,500
---------- ---------- ---------
New York (2.0%)
20,000 20,000 New York City Municipal Water Authority, 3.90%, 7/10/98 20,000 20,000
7,000 7,000 New York City Water, 3.60%, 7/15/98 7,000 7,000
See notes to financial statements.
229
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ -------- ------ ------------------------------------------------------- ----------- ----------- ----------
---------- ---------- ---------
27,000 - 27,000
---------- ---------- ---------
North Carolina (0.7%):
8,300 8,300 Eastern Municipal Power, 3.40%, 7/21/98, LOC: CIBC - 8,300 8,300
---------- ---------- ---------
Ohio (0.5%)
6,850 6,850 Ohio Water Development Authority, AMT, 8/11/98 6,850 - 6,850
---------- ---------- ---------
Pennsylvania (2.3%):
5,000 5,000 Carbon County, AMT, 3.60%, 8/6/98 5,000 5,000
8,285 8,285 Carbon County, Panther Creek, IDA, 3.55%, 10/9/98 8,285 8,285
1,500 1,500 Delaware County, Philadelphia Electric Co., 3.45%, 9/3/98,
FGIC 1,500 1,500
3,300 3,300 Delaware County, Philadelphia Electric Co., 3.40%, 9/3/98,
FGIC 3,300 3,300
14,050 14,050 Venango Individual Development Authority, AMT, 3.60%, 8/7/98 14,050 14,050
---------- ---------- ---------
27,335 4,800 32,135
---------- ---------- ---------
Texas (5.2%):
10,000 10,000 Austin Combined Utilities, Series A, 3.50%, 7/14/98 10,000 10,000
8,700 8,700 Austin Utilities, 3.55%, 7/14/98 8,700 8,700
4,075 4,075 Austin Utility Systems, 3.65%, 9/3/98 4,075 4,075
20,000 20,000 Brazos River Authority, Texas Utilities Co., 3.50%, 8/7/98,
LOC: CIBC 20,000 20,000
5,000 5,000 Brazos River Utilities, Texas Utilities Co., 3.55%, 9/8/98,
LOC: CIBC 5,000 5,000
5,150 5,150 North Central Health Facility Revenue, 3.90%, 6/1/21 5,150 5,150
10,000 10,000 Public Finance Authority, 3.40%, 9/9/98, LOC: UBS 10,000 10,000
5,000 5,000 Public Finance Authority, GO, Series 93A, 3.65%, 9/9/98,
LOC: UBS 5,000 5,000
3,400 3,400 Texas A&M, 3.40%, 7/9/98, LOC: UBS 3,400 3,400
---------- ---------- ---------
27,925 43,400 71,325
---------- ---------- ---------
Utah (0.6%)
8,300 8,300 Intermountain Power Agency, 3.45%, 9/11/98 8,300 - 8,300
---------- ---------- ---------
Washington (0.6%)
7,900 7,900 Seattle Municipal Light & Power Revenue, 3.45%, 8/21/98 7,900 - 7,900
---------- ---------- ---------
West Virginia (0.8%):
4,500 4,500 State Public Authority Energy Revenue, Morgantown Assoc.
Project, AMT, 3.65%, 7/17/98, LOC: Swiss Bank* 4,500 4,500
6,000 6,000 West Virginia Public Energy, 3.65%, 7/8/98 6,000 6,000
---------- ---------- ---------
6,000 4,500 10,500
---------- ---------- ---------
Wisconsin (0.3%):
5,015 5,015 GO Series 97, 3.60%, 8/18/98 - 5,015 5,015
---------- ---------- ---------
Wyoming (0.5%):
2,000 2,000 Gillette Pollution Control Revenue, AMT, 3.65%, 8/6/98,
LOC: ABN AMBRO* 2,000 2,000
5,400 5,400 Sweetwater County, PCR, Series 88-A, 3.65%, 7/1/98, LOC:
UBS* 5,400 5,400
---------- ---------- ---------
- 7,400 7,400
---------- ---------- ---------
Total Tax Free Commercial Paper 204,210 109,685 313,895
---------- ---------- ---------
Weekly Demand Notes (44.2%):
Arkansas (0.8%):
8,100 8,100 Clark County, Solid Waste Disposal Revenue, Reynolds
Metals Co. Project, AMT, 3.65%, 8/1/22, LOC: Trust Co.
Bank* 8,100 8,100
2,900 2,900 Clark County, Solid Waste Disposal Revenue, AMT, 3.65%,
8/1/22, LOC: SunTrust Bank* 2,900 2,900
---------- ---------- ---------
- 11,000 11,000
---------- ---------- ---------
Alaska (0.6%)
8,000 8,000 Valdez Marine Revenue, Series B, 3.60%, 5/1/31 8,000 - 8,000
---------- ---------- ---------
Colorado (2.1%):
7,000 7,000 Fayette County Development Authority, IDR, 4.15%, 8/15/07 7,000 7,000
2,900 2,900 Housing Finance Authority, Pool I, Series B, Coventry
Village, 3.55%, 10/15/16, FNMA* 2,900 2,900
5,600 5,600 Student Obligation Bond Authority, AMT, 3.50%, 7/1/20,
SLMA* 5,600 5,600
See notes to financial statements.
230
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ -------- ------ ------------------------------------------------------- ----------- ----------- ----------
13,900 13,900 Student Obligation Bond Authority, Series 90-A, AMT,
3.50%, 9/1/24, SLMA* 13,900 13,900
---------- ---------- ---------
7,000 22,400 29,400
---------- ---------- ---------
Delaware (1.7%)
23,200 23,200 Delaware State Economic Development, AMT, 3.65%, 8/1/29 23,200 - 23,200
---------- ---------- ---------
District of Columbia (1.0%):
3,500 3,500 District of Columbia, American University, 3.60%, 10/1/15 3,500 3,500
9,705 9,705 Metro Washington D.C. Airports Authority Trust Receipts,
3.75%, 10/1/16, LIQ: Societe General* 9,705 9,705
---------- ---------- ---------
3,500 9,705 13,205
---------- ---------- ---------
Florida (0.2%)
2,750 2,750 Orange County Health Facilities Revenue, 3.50%, 11/15/26 2,750 - 2,750
---------- ---------- ---------
Georgia (2.1%):
13,000 13,000 De Kalb Private Hospital Authority Revenue, Egleston
Children's Hospital, Series A, 3.45%, 3/1/24, LOC: SunTrust 13,000 13,000
Bank*
2,300 2,300 Georgia Municipal Gas, Series A, AMT, 3.40%, 11/1/06 2,300 2,300
5,000 5,000 Gwinnett County Hospital Authority, 3.55%, 9/1/27 5,000 5,000
3,735 3,735 Gwinnett County Housing Authority, Herrington Woods Apts.,
Series 96A, AMT, 3.65%, 9/15/26, LOC: KeyBank* 3,735 3,735
4,550 4,550 Macon-Bibb County Hospital Revenue, 3.60%, 8/1/18 4,550 4,550
---------- ---------- ---------
11,850 16,735 28,585
---------- ---------- ---------
Illinois (6.6%):
5,000 5,000 Carol Stream Multi-Family Revenue, AMT, 3.65%, 3/15/27 5,000 5,000
11,100 11,100 Chicago O'Hare International Airport Revenue, Second Lien,
Series B, AMT, 3.65%, 1/1/18, LOC: Societe Generale* 11,100 11,100
10,000 10,000 Chicago School Board Of Education, Series 3, 3.70%,
12/1/27, AMBAC* 10,000 10,000
5,200 5,200 Development Finance Authority Revenue, Aurora Central
Catholic High School, 3.55%, 4/1/24, LOC: Northern Trust 5,200 5,200
3,700 3,700 Development Finance Authority Revenue, Presbyterian Home
Lake Forrest Place Project, 3.55%, 9/1/31, LOC: LaSalle
National Bank* 3,700 3,700
4,500 4,500 Development Finance Authority Revenue, Roosevelt
University Project, 3.55%, 4/1/25, LOC: American National
Bank* 4,500 4,500
5,800 5,800 Development Finance Authority Revenue, Special Facility,
Little City Foundation, 3.55%, 2/1/19, LOC: LaSalle National
Bank* 5,800 5,800
1,620 1,620 Development Finance Authority Revenue, St. Paul's House
Project, 3.55%, 2/1/25, LOC: LaSalle National Bank* 1,620 1,620
3,000 3,000 Health Facility Authority Revenue, Washington & Jane Smith
Home, 3.55%, 7/1/26, LOC: Comerica Bank* 3,000 3,000
15,000 15,000 Illinois Development Authority Revenue, MBIA, 3.55%, 11/15/27 15,000 15,000
14,325 14,325 Illinois Development Authority Environment, AMT, 3.65%, 5/1/32 14,325 14,325
7,640 7,640 Jacksonville Industrial Project Revenue, AGI, Inc. Project,
AMT, 3.80%, 2/1/26, LOC: Bank of America* 7,640 7,640
1,100 1,100 Lombard IDR, Chicago Roll Co. Project, 3.90%, 2/1/10, LOC:
American National Bank* 1,100 1,100
2,000 2,000 Orland Hills, Mulit-Family Mortgage Revenue, 88th Avenue
Project, 3.55%, 12/1/04, LOC: LaSalle National Bank* 2,000 2,000
---------- ---------- ---------
34,325 55,660 89,985
---------- ---------- ---------
Indiana (4.5%):
9,000 9,000 Burns Harbor IDR, AMT, 3.70%, 3/1/16 9,000 9,000
14,600 14,600 Health Facility Financing Authority, Rehabilitation Hospital,
Inc., 3.50%, 11/1/20, LOC: National Bank of Detroit* 14,600 14,600
5,600 5,600 Indianapolis Economic Development Revenue, Children's
Museum Project, 3.55%, 10/1/25, LOC: National Bank of
Detroit* 5,600 5,600
3,300 3,300 Jasper Economic Development Revenue, Best Chairs, Inc.
Project, AMT, 3.75%, 3/1/19, LOC: PNC Bank* 3,300 3,300
16,200 16,200 Rockport, PCR, Indiana & Michigan Electric Co., Series A,
3.65%, 8/1/14, LOC: Swiss Bank* 16,200 16,200
13,000 13,000 State Educational Authority Revenue, Wesleyan University,
3.50%, 6/1/28, LOC: NBD Bank* 13,000 13,000
---------- ---------- ---------
9,000 52,700 61,700
Iowa (0.6%) ---------- ---------- ---------
7,960 7,960 Iowa Finance Authority Revenue, 3.65%, 6/1/19 7,960 - 7,960
---------- ---------- ---------
See notes to financial statements.
231
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ -------- ------ ------------------------------------------------------- ----------- ----------- ----------
Kentucky (0.9%):
9,000 9,000 Henderson Co. Solid Waste Disposal Rev, AMT, 3.60%, 3/1/15 9,000 9,000
3,500 3,500 Mayfield, League of Cities Lease Finance Program 96,
3.70%, 7/1/26, LOC: PNC Bank* 3,500 3,500
---------- ---------- ---------
9,000 3,500 12,500
---------- ---------- ---------
Louisiana (0.8%)
3,770 3,770 Calcasieu Parish Sales Tax Revenue, 3.50%, 9/1/98 3,770 3,770
6,900 6,900 South Louisiana Port Revenue, 3.65%, 1/1/27 6,900 6,900
---------- ---------- ---------
10,670 - 10,670
---------- ---------- ---------
Michigan (4.7%):
1,350 1,350 Grand Rapids Water Supply Revenue, 3.30%, 1/1/20 1,350 1,350
20,500 20,500 Higher Education Student Loan, Series B, AMT, 3.55%,
10/1/13, AMBAC* 20,500 20,500
100 100 Higher Education Student Loan Revenue, AMT, 3.55%, 10/1/15 100 100
100 100 Jackson Co. Economic Development Corp.,
Limited Obligation Revenue, 3.70%, 6/1/17 100 100
10,000 10,000 Kent Hospital Authority Revenue, Spectrum Health, Series
B, 3.45%, 1/15/26, MBIA* 10,000 10,000
400 400 Kent Hospital Finance Authority Revenue, Series A, 3.50%, 1/15/20 400 400
700 700 State Hospital Finance Authority, 3.45%, 6/1/01 700 700
3,300 3,300 State Hospital Finance Authority, 3.40%, 11/1/11 3,300 3,300
800 800 State Hospital Finance Authority, 3.60%, 12/1/23 800 800
1,000 1,000 State Job Authority Revenue, 3.50%, 8/1/15, LOC: Rabo
Bank* 1,000 1,000
2,200 2,200 State Strategic Fund Limited Obligation, AMT, 3.70%, 12/1/22 2,200 2,200
3,000 3,000 State Strategic Fund Limited Obligation, Autocam Corp.,
AMT, 3.70%, 12/1/17 3,000 3,000
2,100 2,100 State Strategic Fund Limited Obligation, Petoskey Plastics, Inc.,
AMT, 3.70%, 8/1/16 2,100 2,100
1,560 1,560 State Strategic Fund, Limited Obligation, Wayne Disposal
Oakland Project, AMT, 3.70%, 3/1/05, LOC: Credit
Suisse-First Boston* 1,560 1,560
3,150 3,150 Wayne Charter County Airport Revenue, AMT, 3.60%, 12/1/16 3,150 3,150
500 500 Wayne County Airport Revenue (Detroit Airport), Series B, 500 500
AMT, 3.50%, 12/1/16, LOC: Bayerische Landesbank*
13,940 13,940 Wayne County Airport Revenue (Detroit Airport), Series B,
AMT, 3.50%, 12/1/16, LOC: Bayerische Landesbank* 13,940 13,940
---------- ---------- ---------
17,700 47,000 64,700
---------- ---------- ---------
Minnesota (0.3%)
4,750 4,750 Minneapolis General Obligation, 3.40%, 12/1/27 4,750 - 4,750
---------- ---------- ---------
New York (0.7%):
10,000 10,000 Long Island Power Authority, Electric System Revenue,
Series 1, 3.50%, 5/1/33, LOC: Westduetsche and
Bayerische Landesbank* - 10,000 10,000
---------- ---------- ---------
North Carolina (1.6%):
7,000 7,000 Charlotte Airport Revenue, MBIA, 3.50%, 7/1/17 7,000 7,000
3,085 3,085 Charlotte Mecklenburg Hospital Authority, 3.50%, 1/15/26 3,085 3,085
6,500 6,500 Community Hospital Revenue, 3.50%, 8/15/18 6,500 6,500
5,000 5,000 Mecklenburg County, Series C, 3.50%, 2/1/17, LOC: First
Union Bank* 5,000 5,000
---------- ---------- ---------
16,585 5,000 21,585
---------- ---------- ---------
Ohio (3.5%):
8,600 8,600 Butler County Multi-Family Revenue, 3.50%, 11/15/30, FNMA* 8,600 8,600
8,800 8,800 State Air Quality Development Authority Revenue, JMG
Funding Ltd. Partnership, Series A, AMT, 3.60%, 4/1/28,
LOC: Societe Generale* 8,800 8,800
3,700 3,700 State Air Quality Development Authority, JMG Funding Ltd.
Partnership, AMT, 3.60%, 4/1/29, LOC: Societe Generale* 3,700 3,700
6,200 6,200 State Air Quality Development Authority Revenue, JMG 6,200 6,200
Funding Ltd. Partnership, Series A, AMT, 3.60%, 4/1/28,
LOC: Societe Generale*
20,000 20,000 Student Loan Funding Corp., Cincinnati, Series 98-A2, AMT,
3.60%, 8/1/10, LOC: Bank of America* 20,000 20,000
---------- ---------- ---------
6,200 41,100 47,300
---------- ---------- ---------
Pennsylvania (3.3%):
1,600 1,600 Allegheny Co. IDR, VRDB, United Jewish Federation,
3.60%, 10/1/25 1,600 1,600
See notes to financial statements.
232
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ -------- ------ ------------------------------------------------------- ----------- ----------- ----------
25,000 25,000 Indiana County Individual Development Authority,
PCR, AMT, 3.65%, 6/1/27 25,000 25,000
2,500 2,500 Philadelphia Redevelopment Authority Revenue, 3.65%,
12/1/03, LOC: PNC Bank* 2,500 2,500
6,300 6,300 State Economic Development Finance Authority Revenue,
Series 98D, 3.75%, 6/1/10, LOC: PNC Bank* 6,300 6,300
4,800 4,800 State Higher Education Authority Revenue, 3.50%, 3/1/26
LOC: First Union National* 4,800 4,800
200 200 State Higher Educational Facilities, 3.60%, 4/1/17 200 200
4,500 4,500 Temple University Obligation, Series A, 3.78%, 5/14/99 4,500 4,500
---------- ---------- ---------
31,300 13,600 44,900
South Carolina (1.2%):
1,700 1,700 Cherokee County, Industrial Revenue, Oshkosh Truck Corp.
Project, AMT, 3.80%, 8/1/19, LOC: Bank of Nova Scotia* 1,700 1,700
3,000 3,000 Piedmont Municipal Power Agency Revenue, 3.50%, 1/1/19 3,000 3,000
12,000 12,000 Spartanburg County Health Services Revenue, 3.65%, 4/15/23 12,000 12,000
---------- ---------- ---------
15,000 1,700 16,700
---------- ---------- ---------
South Dakota (0.7%)
9,500 9,500 South Dakota Housing Development Authority,
Revenue, Series E, AMT, 3.80%, 12/14/00 9,500 - 9,500
---------- ---------- ---------
Tennessee (2.3%):
7,000 7,000 Marion County Environmental Authority, AMT, 3.65%, 8/1/98 7,000 7,000
10,500 10,500 Montgomery County Public Building, 3.60%, 7/1/19, LOC:
NationsBank* 10,500 10,500
10,000 10,000 Oak Ridge Industrial Development Revenue, AMT, 3.70%, 1/1/06 10,000 10,000
3,800 3,800 Oak Ridge Industrial Development Board, Economic
Development Revenue, Limited Obligation, 3.60%, 5/1/09,
LOC: ABN AMRO* 3,800 3,800
---------- ---------- ---------
17,000 14,300 31,300
---------- ---------- ---------
Texas (3.5%):
14,100 14,100 Capital Health Facilities Development Corp., Island on Lake
Travis Ltd. Project, AMT, 3.55%, 12/1/16, LOC: Credit
Suisse* 14,100 14,100
6,000 6,000 Panhandle Plains Higher Education Inc., Student Loan
Revenue, Series A, AMT, 3.50% 6/1/21, SLMA* 6,000 6,000
17,800 17,800 Panhandle Plains Higher Education Inc., Student Loan
Revenue, Series A, AMT, 3.50% 6/1/21, SLMA* 17,800 17,800
9,400 9,400 Panhandle Plains Higher Education Inc., Student Loan
Revenue, Series A, AMT, 3.50%, 6/1/23, SLMA* 9,400 9,400
---------- ---------- ---------
6,000 41,300 47,300
---------- ---------- ---------
Washington (0.0%)
1,100 1,100 Port Seattle Revenue, AMT, 3.65%, 9/1/22 1,100 - 1,100
---------- ---------- ---------
West Virginia (0.5%):
2,300 2,300 Marion County Community Solid Waste Disposal Facility
Revenue, Grant Town, AMT, 3.65%, 10/1/17, LOC: National
Westminister* 2,300 2,300
4,500 4,500 Marion County Community Solid Waste Disposal Facility
Revenue, Grant Town, AMT, 3.50%, 10/1/17, LOC: National
Westminister* 4,500 4,500
---------- ---------- ---------
- 6,800 6,800
---------- ---------- ---------
Total Weekly Demand Notes 252,390 352,500 604,890
---------- ---------- ---------
Total (Amortized Cost $1,410,949) (a) $ 797,027 $ 613,922 $1,410,949
========== ========== ===========
<FN>
Percentages indicated are based on net assets of $1,367,601.
(a) Cost and value for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity agreements. The interest rate, which will change periodically, is based
upon an index of market rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1998.
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIGI Bond Investors Guaranty Insurance Co.
CP Commercial Paper
EDC Economic Development Corp.
FGIC Insured by Financial Guaranty Insurance Corp.
FNMA Federal National Mortgage Association
FSA Insured by Financial Security Assurance
See notes to financial statements.
233
The One Group Municipal Money Market Fund / Pegasus Municipal Money Market Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma Proforma
Pegasus One Group Combined Pegasus One Group Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Security Description Cost Cost Cost
------ -------- ------ ------------------------------------------------------- ----------- ----------- ----------
GO General Obligation
GTY Guaranty
HCF Health Care Facilities
HR Housing Revenue
HDA Housing Development Authority
HFA Housing Finance Authority
IDA Industrial Development & Export Authority
IDR Industrial Development Revenue
LIQ Liquidity Agreement
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
PFA Public Facilities Authority
SLMA Student Loan Marketing Association
TAN Tax Anticipation Note
TRAN Tax Revenue Anticipation Note
UPDATE Unit Priced Daily Adjustable Tax Exempt Securities
VRDB Variable Rate Demand Bond
VRDN Variable Rate Demand Note
See notes to financial statements.
234
The One Group Limited Volatility Fund / Pegasus Short Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ----------- ---------- ----------------------------------------------------------- ----------- ----------- -----------
Asset Backed Securities (15.0%):
$ 600 $ $ 600 Arcadia Automobile Receivable Trust,
6.50%, 6/17/02 $ 608 $ $ 608
1,488 1,488 Bay View Auto Trust, Series 97-RA1, Class A1, 6.29%,
12/15/01 1,488 1,488
1,600 1,600 BM Mortgage Securities Inc. Mortgage Backed Pass Thru Ctf.,
Series 1998-2, Class 1A10, 6.60%, 6/25/28 1,611 1,611
238 238 Case Equipment Loan Trust Asset Backed Pass Thru Ctf.,
Series 1994-C, Class A2, 8.10%, 6/15/01 239 239
132 132 Case Equipment Loan Trust Asset Backed Pass Thru Ctf.,
Series 1995-A, Class A, 7.30%, 3/15/02 133 133
425 425 Case Equipment Loan Trust Asset Backed Pass Thru Ctf.,
Series 1996-B, Class A3, 6.65%, 9/15/03 428 428
2,985 2,985 Case Equipment Loan Trust, Series 96-A, Class A2, 5.50%,
02/15/03 2,981 2,981
1,880 1,880 Chase Credit Card Trust, 6.30%, 4/15/03 1,902 1,902
375 375 Chase Manhattan Auto Owner Trust, 6.50%, 12/17/01 381 381
1,000 1,000 Chevy Chase Auto Receivable Trust, 5.91%, 4/15/00 998 998
752 752 Chevy Chase Auto Receivable Trust, 6.20%, 3/20/04 755 755
5,000 5,000 CIT RV Trust, Series 1998-A, Class B, 6.29%, 1/15/17 5,003 5,003
5,000 5,000 Citibank Credit Card Master Trust, Series 1998-1, Class B, 0
5.88%, 1/15/03 4,987 4,987
7,750 7,750 Citibank, Master Trust, Series 97-9, Class A, 0.00%, 8/15/06 5,370 5,370
174 174 Citicorp Mortgage Securities, Inc. Remic Pass Thru Ctf., 0
Series 89-16, Class A-1, AR, 4/1/19 173 173
2,040 2,040 Citicorp Mortgage Securities, Inc. Remic Pass Thru Ctf.,
Series 94-9, Class A-3, 5.75%, 6/25/09 2,024 2,024
116 116 Collaterized Mortgage Obligations Trust CMO,
Trust 12, Class D, 9.50%, 2/1/17 117 117
3,700 3,700 Consumer Portfolio Services, Series 1997-2 A, 6.65%,
10/15/02 3,730 3,730
2,073 2,073 Countrywide Asset-Backed Certificate, 6.53%, 2/25/14 2,077 2,077
5,045 5,045 DVI Equipment Receivables Trust, Series 1997-A, Class A,
6.45%, 1/15/04 5,069 5,069
550 550 Discover Card Master Trust, Series 95-2 Class A, 6.55%, 2/15/03 558 558
700 700 Discover Card Trust,
Series 93-B Class A, 6.75%, 2/16/02 708 708
3,909 3,909 Fifth Third Auto Grantor Trust, 1996-A, Class A, 6.20%,
09/15/01 3,923 3,923
3,320 3,320 Fifth Third Auto Grantor Trust, 1996-B, Class A, 6.45%
03/15/02 3,338 3,338
917 917 First Security
Series 98-A Class A, 5.97%, 4/15/04 919 919
5,000 5,000 Ford Motor Credit Auto Loan Master, Series 1995-1, Class A,
6.50%, 8/15/02 5,061 5,061
161 161 Ford Motor Credit Auto Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-A, Class A3, 6.50%, 11/15/99 161 161
607 607 Ford Motor Credit Auto Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-A, Class A4, 6.75%, 9/15/00 612 612
5,000 5,000 Ford Motor Credit Auto Owner Trust, Series 1998-B, Class B,
6.15%, 9/15/02 5,024 5,024
2,223 2,223 Greentree Collateralized Mortgage Obligation,
Series 1997-3, Class A2, 6.49%, 7/15/28 2,230 2,230
256 256 Key Auto Finance Trust,
5.85%, 3/15/03 256 256
593 593 MBNA Master Credit Card Trust Asset Backed Ctf.,
Trust 93-3, Series 1993-3A, 5.40%, 9/15/00 591 591
341 341 Merrill Lynch Home Equity Loan Asset Backed Pass Thru Ctf.,
Series 1992-1, Class A, IF, 7/15/22 341 341
6,500 6,500 Metris Mastertrust, 7.11%, 10/1/05 6,764 6,764
61 61 Morgan Stanley Mortgage Trust, CMO, Series 38-4, 0
PO, 11/20/21 51 51
477 477 Navistar Financial Corp. Owner Trust Asset Backed Pass Thru Ctf.,
Series 1995-A, Class A2, 6.55%, 11/20/01 478 478
500 500 Navistar Financial Corp. Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-A, Class A3, 6.75%, 3/15/02 507 507
1,400 1,400 Newcourt Receivables Asset Trust,
Series 1997-1, Class A, 6.04%, 6/20/00 1,403 1,403
7,569 7,569 Newcourt Receivables Trust, Series 1996-3, Class A,
6.24%, 12/20/04 7,572 7,572
511 511 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
See notes to financial statements.
235
The One Group Limited Volatility Fund / Pegasus Short Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ----------- ---------- ----------------------------------------------------------- ----------- ----------- -----------
Series 1996-B Class A3, 6.5%, 12/15/00 513 513
1,200 1,200 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
Series 1996-D Class A3, 5.95%, 6/15/01 1,202 1,202
731 731 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
Series 1995-C Class A2, 6.20%, 1/15/02 734 734
2,000 2,000 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
Series 1996-B Class A4, 6.70%, 3/15/02 2,020 2,020
2,750 2,750 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
Series 1996-C Class A4, 6.80%, 3/15/02 2,787 2,787
500 500 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
Series 1996-D Class A4, 6.05%, 8/15/02 502 502
1,435 1,435 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
Series 1997-A Class A4, 6.63%, 12/15/02 1,458 1,458
1,150 1,150 Olympic Automobile Rec. Trust Asset Backed Pass Thru Ctf.,
Series 1996-C Class A5, 7.00%, 3/15/04 1,181 1,181
1,067 1,067 Olympic Automobile Receivables Trust, Series 1996-D,
Class A2, 5.75%, 4/15/00 1,066 1,066
4,425 4,425 Olympic Automobile Receivables Trust, Series 1996-D,
Class A3, 5.95%, 6/15/01 4,428 4,428
1,498 1,498 Onyx Acceptance Trust Auto Loan Backed Pass Thru Ctf.,
Series 1997-3 Class A, 6.35%, 1/15/04 1,507 1,507
375 375 Onyx Acceptance Trust Auto Loan Backed Pass Thru Ctf.,
Series 1997-3 Class A, 6.30%, 5/15/04 377 377
445 445 Premier Auto Trust Asset Backed Pass Thru Ctf.,
Series 1997-2 Class A3, 6.13%, 9/6/00 446 446
775 775 Premier Auto Trust Asset Backed Pass Thru Ctf.,
Series 1996-4 Class A3, 6.20%, 11/6/00 777 777
7,000 7,000 Proffitt's Credit Card Master Trust, Series 1997-2, Class B,
6.69%, 12/15/05 7,172 7,172
5,000 5,000 Ryder Vehicle Lease, Series 1998-A, Class A, 6.10%, 5,009 5,009
122 122 Ryland Acceptance Corp. Four, CMO, Series 78, 0
Class 78-B, 9.55%, 3/1/16 123 123
1,467 1,467 Sears Credit Account Master Trust,
Series 1995-4 Class A, 6.25%, 1/15/03 1,470 1,470
1,000 1,000 Sears Credit Account Master Trust,
Series 1996-1 Class A, 6.20%, 2/16/06 1,012 1,012
790 790 Sears Credit Account Master Trust,
Series 1996-4 Class A, 6.45%, 10/16/06 803 803
2,110 2,110 Standard Credit Card Master Trust Asset Backed Ctf.,
Series 1993-3, Class A, 5.50%, 2/7/00 2,108 2,108
450 450 Standard Credit Card Master Trust Asset Backed Ctf.,
Series 1995-10, Class A, 5.90%, 2/7/01 451 451
796 796 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1995-2 Class A1, 7.1%, 7/1/00 802 802
2,840 2,840 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-B, Class A4, 6.95%, 11/20/03 2,882 2,882
255 255 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-B, Class A3, 6.65%, 8/20/00 255 255
842 842 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-D, Class A3, 6.05%, 7/20/01 844 844
1,000 1,000 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-D, Class A3, 6.25%, 3/20/02 1,007 1,007
500 500 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-D, Class A2, 6.20%, 9/20/00 501 501
1,450 1,450 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-B, Class A4, 6.40%, 7/20/02 1,469 1,469
4,000 4,000 Western Financial Asset Backed Pass Thru Ctf.,
Series 1996-C, Class A4, 6.80%, 12/20/03 4,055 4,055
52 52 Western Financial Grantor Trust Auto Receivable P/T Ctf:
1993-4, Class A1, 4.60%, 4/1/99 52 52
88 88 Western Financial Grantor Trust Auto Receivable P/T Ctf:
1994-3, Class A, 6.65%, 12/1/99 88 88
500 500 Western Financial Grantor Trust Auto Receivable P/T Ctf:
1998-B, Class A4, 6.05%, 4/20/03 500 500
398 398 World Omni Automobile LSE SEC Trust Asset Backed Pass Thru Cft.,
Series 1995-A, Class A, 6.05%, 11/25/01 398 398
---------- ---------- ----------
Total Asset Backed Securities 50,508 80,062 130,570
---------- ---------- ----------
Commercial Mortgage Backed Securities (0.6%):
5,281 5,281 CMC Securities Corp. III, Series 1994-D, Class M, 6.00%,
03/25/24 5,217 5,217
See notes to financial statements.
236
The One Group Limited Volatility Fund / Pegasus Short Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ----------- ---------- ----------------------------------------------------------- ----------- ----------- -----------
---------- ---------- ----------
Total Commercial Mortgage Backed Securities - 5,217 5,217
---------- ---------- ----------
Corporate Bonds (15.7%):
Banking, Finance & Insurance (13.7%):
295 295 American Express Credit Corp, 7.38%, 2/1/99 298 298
1,904 1,904 Associates Corp. of North America, 9.13%, 4/1/00 2,002 2,002
1,015 1,015 Associates Corp. of North America, 6.63%, 5/15/01 1,032 1,032
3,240 3,240 Association Corp. of North America, 8.25%, 12/1/99 3,339 3,339
2,654 2,654 Association Corp. of North America, 5.25%, 3/30/00 2,625 2,625
270 270 Association Corp of North America MTN, Series G, 5.49%, 1/28/99 270 270
1,025 1,025 Association Corp of North America MTN, 8.50%, 1/10/00 1,063 1,063
250 250 Association Corp of North America MTN, 7.55%, 8/23/01 261 261
300 300 Association Corp of North America MTN,G485 Tranche #00455,
7.48%, 7/27/02 315 315
1,090 1,090 Association Corp of North America Senior Term Note, 6.25%,
9/15/00 1,098 1,098
3,000 3,000 Avco Financial Services, 7.25%, 7/15/99 3,045 3,045
5,000 5,000 Bear Stearns, 6.13%, 2/1/03 4,950 4,950
200 200 Beneficial Finance Corp. Medium Term Note, 7.34%, 11/26/99 203 203
1,000 1,000 Caterpillar Financial Services, 6.35%, 4/1/99 1,004 1,004
3,000 3,000 Citicorp, 8.00%, 2/1/03 3,221 3,221
1,000 1,000 Dean Witter Discover & Co., 6.25%, 3/15/00 1,006 1,006
825 825 Du Pont E I De Nemours & Co., 9.15%, 4/15/00 870 870
4,115 4,115 Ford Holdings Inc., 9.25%, 3/1/00 4,329 4,329
1,460 1,460 Ford Motor Credit Co., 8.88%, 6/15/99 1,498 1,498
7,000 7,000 Ford Motor Credit Co., 8.38%, 1/15/00 7,254 7,254
1,850 1,850 Ford Motor Credit Co., 7.45%, 4/13/00 1,899 1,899
1,415 1,415 Ford Motor Credit Co., 9.50%, 4/15/00 1,497 1,497
1,192 1,192 Ford Motor Credit Co., 9.00%, 9/15/01 1,291 1,291
219 219 Ford Motor Credit Co., 8.00%, 6/15/02 234 234
1,200 1,200 Ford Motor Credit Co. Medium Term Note, Tranche #00281, 7.47% 1,218 1,218
300 300 Ford Motor Credit Co. Medium Term Note, Tranche #00442, 7.59% 308 308
500 500 General Motors Acceptance Corp., 9.38%, 4/1/00 528 528
2,650 2,650 General Motors Acceptance Corp., 7.13%, 5/10/00 2,703 2,703
856 856 General Motors Acceptance Corp., 9.63%, 5/15/00 910 910
250 250 General Motors Acceptance Corp., 9.63%, 12/1/00 271 271
5,000 5,000 General Motors Acceptance Corp., 6.75%, 2/7/02 5,106 5,106
1,275 1,275 Goldman Sachs Group, 6.88%, 9/15/99 1,287 1,287
7,000 7,000 Goldman Sachs Group, 7.80%, 7/15/02, 144A 7,420 7,420
5,000 5,000 Goldman Sachs Group, 6.65%, 8/1/03, 144A 5,088 5,088
1,500 1,500 Goldman Sachs Group, Private Placement Note 144A, 6.20%, 2/15/01 1,503 1,503
10,000 10,000 Greenwich Capital, 7.04%, 12/13/99, 144A 9,997 9,997
3,250 3,250 HSBC Financial, 7.40%, 4/15/03 3,372 3,372
4,871 4,871 J.P. Morgan Commercial Mortgage Financial Corp., 6.37%, 1/15/30 4,916 4,916
5,000 5,000 Lehman Brothers Holdings, Inc., 7.63%, 8/1/98 5,005 5,005
532 4,500 5,032 Lehman Brothers Holdings, Inc., 8.88%, 11/1/98 537 4,540 5,077
1,790 3,000 4,790 Lehman Brothers Holdings, Inc., 10.00%, 5/15/99 1,848 3,100 4,948
365 365 Lehman Brothers Holdings, Inc., 7.63%, 7/15/99 370 370
1,063 1,063 Lehman Brothers Holdings, Inc., 7.11%, 9/27/99 1,075 1,075
360 360 Lehman Brothers Holdings, Inc., 6.33%, 8/1/00 362 362
4,000 4,000 Lehman Brothers Holdings, Inc., 9.88%, 10/15/00 4,320 4,320
280 280 Northwest Corporation, 6.00%, 3/15/00 281 281
500 500 Sears Roebuck Acceptance, 6.73%, 8/29/00 507 507
1,750 1,750 Union Acceptance Corp., Series 1997-D, Class A3, 6.26%, 2/8/02 1,760 1,760
1,422 1,422 Union Acceptance Corp., Series 1997-D, Class A2, 6.38%, 10/8/03 1,431 1,431
5,000 5,000 Visa International, 6.72%, 2/4/02, 144A 5,059 5,059
---------- ---------- ----------
36,421 83,005 119,426
---------- ---------- ----------
Foreign (0.2%):
1,290 1,290 Republic NY Corp., 9.75%, 12/1/00 1,401 - 1,401
---------- ---------- ----------
Industrial Goods & Services (1.9%):
5,000 5,000 Avon Products, 6.25%, 5/1/03, 144A 5,038 5,038
5,000 5,000 Carpenter Technology, 6.28%, 4/7/03 5,019 5,019
649 649 Sears Roebuck & Co., 9.50%, 6/1/99 668 668
5,000 5,000 Sears Roebuck & Co., 6.69%, 8/13/01 5,087 5,087
600 600 Texaco Capital, Inc., 9.00%, 12/15/99 626 626
---------- ---------- ----------
1,294 15,144 16,438
---------- ---------- ----------
Total Corporate Bonds 39,116 98,149 137,265
---------- ---------- ----------
Other Mortgage Backed Securities (1.1%):
5,150 5,150 Evans Withycombe Finance Trust, Series 1, Class A1,
7.98%, 8/1/01 5,423 5,423
See notes to financial statements.
237
The One Group Limited Volatility Fund / Pegasus Short Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ----------- ---------- ----------------------------------------------------------- ----------- ----------- -----------
3,987 3,987 Nomura Mortgage Capital Corp., Series 90-1, Class H,
7.00%, 6/17/20 4,052 4,052
---------- ---------- ----------
Total Other Mortgage Backed Securities - 9,475 9,475
---------- ---------- ----------
U.S. Government Agency Mortgages (27.8%):
Federal Home Loan Mortgage Corp. (10.9%):
1,628 1,628 6.50%, 1/1/01, Pool #M8038 1,644 1,644
8,348 8,348 7.00%, 1/1/02, Pool #G50415 8,481 8,481
9,026 9,026 6.50%, 5/1/02, Pool #G50444 9,116 9,116
289 289 9.00%, 12/1/05, Pool #G00005 302 302
281 281 9.00%, 1/1/06, Pool #G00012 294 294
559 559 8.00%, 10/1/06, Pool #G00052 577 577
1,807 1,807 7.00%, 3/1/07, Pool #G34594 1,847 1,847
1,665 1,665 7.00%, 4/1/07, Pool #G00087 1,701 1,701
2,162 2,162 7.50%, 4/1/07, Pool #G00084 2,229 2,229
2,667 2,667 7.50%, 11/1/07, Pool #E00165 2,749 2,749
3,519 3,519 8.50%, 2/1/08, Gold Pool #10133 3,667 3,667
1,852 1,852 7.00%, 12/1/08, Pool #E20065 1,895 1,895
1,900 1,900 8.00%, 1/1/10, Pool #G00355 1,960 1,960
5,766 5,766 8.00%, 2/1/10, Pool #G10328 5,950 5,950
8,236 8,236 7.00%, 10/1/10, Gold Pool #E61709 8,416 8,416
11,633 11,633 7.00%, 5/1/11, Pool #E20241 11,898 11,898
9,967 9,967 6.50%, 5/1/13, Pool #E70383 10,036 10,036
5,404 5,404 5.25%, 9/15/15, REMIC/CMO, Series 1638, Class BC 5,392 5,392
13,209 13,209 8.25%, 12/15/16, REMIC/CMO, Series 1770, Class PD 13,455 13,455
3,780 3,780 6.68%, 10/1/26, Pool #785652 3,860 3,860
---------- ---------- ----------
- 95,469 95,469
---------- ---------- ----------
Federal National Mortgage Assoc. (12.6%):
167 167 1/25/99, 1992 Class 13-S, HB, IF, REMIC 5 5
8,390 8,390 6.50%, 8/1/01, Pool #190976 8,463 8,463
489 489 6.00%, 1/25/02, 1994 Class 23-PJ, REMIC 488 488
320 320 1/17/03, 1997 Class A, IF, REMIC 324 324
40 40 5.50%, 7/25/03, 1993 Class 85-PD, REMIC 39 39
492 492 5.50%, 7/25/04, 1994 Class 12-PD, REMIC 490 490
14,156 14,156 7.00%, 7/17/05, Series 97-26 Gd 14,521 14,521
166 166 9.00%, 9/1/05, Pool #50340 174 174
20,079 20,079 6.60%, 10/18/05, Series 97-26 B 20,340 20,340
171 171 9.00%, 11/1/05, Pool #50361 179 179
172 172 8.50%, 4/1/06, Pool #116875 179 179
256 256 9.00%, 8/25/06, 1991 Class 41-O, REMIC 260 260
13,804 13,804 7.42%, 9/1/06, Pool #73618 14,978 14,978
1,900 1,900 6.50%, 12/25/06, 1993 Class 107-D, REMIC 1,922 1,922
1,334 1,334 6.00%, 1/25/07, 1993 Class 86-E, REMIC 1,332 1,332
425 425 6.00%, 2/25/07, 1994 Class 17-E, REMIC 425 425
175 175 6.25%, 4/25/07, 1993 Class 93-E, REMIC 176 176
125 125 5.50%, 11/25/07, 1994 Class 33-E, REMIC 124 124
6,150 6,150 7.00%, 6/1/10, Pool #315928 6,282 6,282
5,542 5,542 6.50%, 9/1/10, Pool #325479 5,598 5,598
4,422 4,422 6.50%, 10/1/10, Pool #250377 4,466 4,466
2,692 2,692 7.00%, 11/1/10, Pool #250387 2,750 2,750
2,947 2,947 7.50%, 2/1/11, Pool #303755 3,037 3,037
1,204 1,204 6.35%, 3/15/11, 1995 Class PK, REMIC 1,209 1,209
5,000 5,000 6.50%, 6/25/13, Series 94-1 K 5,064 5,064
9,732 9,732 6.50%, 4/1/13, Pool #425396 9,790 9,790
482 482 5.90%, 7/25/15, 1993 Class 26-PE, REMIC 481 481
475 475 6.00%, 10/25/16, 1993 Class 127-E, REMIC 474 474
41 41 3.50%, 1/25/17, 1992 Class 137-BA, REMIC 41 41
10 10 9.40%, 10/25/17, 1988 Class 17-B, REMIC 10 10
475 475 9.25%, 4/25/18, 1988 Class 7-Z, REMIC 500 500
98 98 9.00%, 6/25/18, 1988 Class 15-A, REMIC 103 103
595 595 9.50%, 6/25/18, 1988 Class 16-B, REMIC 640 640
10 10 9.15%, 8/25/18, 1989 Class 31-D, REMIC 10 10
264 264 1/1/19, Pool #070226, AR 262 262
568 568 3/1/19, Pool #116612, AR 587 587
278 278 8/1/19,Pool #111366, AR 290 290
116 116 10/25/19, 1989 Class 73-C, PO, REMIC 108 108
786 786 5.50%, 2/25/19, 1994 Class 15- E, REMIC 780 780
130 130 9.00%, 7/25/19, 1990 Class 77-C, REMIC 133 133
1,157 1,157 9.00%, 11/25/19, 1989 Class 89-H, REMIC 1,213 1,213
83 83 8.60%, 2/25/20, 1991 Class 56-K, REMIC 83 83
See notes to financial statements.
238
The One Group Limited Volatility Fund / Pegasus Short Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ----------- ---------- ----------------------------------------------------------- ----------- ----------- -----------
500 500 6.50%, 2/25/20, 1994 Class 36-GA, REMIC 507 507
700 700 10/25/21, 1997 32C, Class GP, P/O, REMIC 626 626
151 151 9.00%, 12/25/21, Stripped Trust 268, Class 2, IO 34 34
---------- ---------- ----------
13,676 95,821 109,497
---------- ---------- ----------
Government National Mortgage Assoc. (1.9%):
2 2 8.00%, 2/15/02, Pool #192917 2 2
17 17 8.00%, 3/15/02, Pool #209172 18 18
3 3 9.00%, 6/15/02, Pool #229311 3 3
43 43 9.00%, 10/15/02, Pool #229569 45 45
12 12 8.00%, 6/15/05, Pool #28827 12 12
9 9 9.00%, 9/15/05, Pool #292569 9 9
53 53 9.00%, 10/15/05, Pool #292589 56 56
14 14 8.00%, 5/15/06, Pool #303851 14 14
5 5 8.00%, 7/15/06, Pool #307231 5 5
38 38 8.00%, 8/15/06, Pool #311166 39 39
36 36 8.00%, 9/15/06, Pool #311301 37 37
272 272 8.00%, 10/15/06, Pool #316915 282 282
77 77 8.00%, 11/15/06, Pool #315078 80 80
224 224 8.00%, 11/15/06, Pool #313528 233 233
97 97 8.00%, 11/15/06, Pool #316671 101 101
41 41 8.00%, 11/15/06, Pool #311131 42 42
353 353 8.00%, 11/15/06, Pool# 312210 366 366
143 143 8.00%, 12/15/06, Pool #311384 149 149
97 97 8.00%, 1/15/07, Pool #317663 100 100
258 258 8.00%, 2/15/07, Pool #316086 268 268
68 68 8.00%, 3/15/07, Pool #178684 71 71
164 164 8.00%, 3/15/07, Pool #318825 170 170
128 128 8.00%, 4/15/07, Pool #316441 133 133
3,714 3,714 6.00%, 1/16/20, 1997 Class 13-PA, REMIC 3,716 3,716
7,567 7,567 6.88%, 11/20/25, Pool #8746 ARM 7,723 7,723
3,013 3,013 7.00%, 1/20/26, Pool #8790 3,073 3,073
---------- ---------- ----------
3,716 13,031 16,747
---------- ---------- ----------
U.S. Government Agencies (2.4%):
20,000 20,000 Tennessee Valley Authority, 8.38%, 10/1/99 20,600 20,600
---------- ---------- ----------
Total U.S. Government Agency Mortgages 17,392 224,921 242,313
---------- ---------- ----------
U.S. Government Agency Securities (12.3%):
Federal Home Loan Bank (6.0%):
750 750 5.99%, 8/27/98 750 750
1,000 1,000 5.97%, 8/27/98 1,001 1,001
500 500 4.83%, 9/21/98, Series GI98 499 499
2,000 2,000 5.64%, 11/9/98 2,000 2,000
4,000 4,000 6.60%, 4/13/99 (b) 4,030 4,030
17,000 17,000 5.58%, 2/23/01 (b) 16,900 16,900
10,000 10,000 7.78%, 10/19/01 (b) 10,619 10,619
250 250 6.00%, 11/15/05, Series 1698 Class PE 250 250
543 543 9.00%, 1/1/06, Series 1807 Class G 576 576
214 214 5.75%, 7/15/06, Series 1490 Class PE 214 214
345 345 5.25%, 9/15/06, Series 1679 Class A 342 342
500 500 6/15/07, Series 1561 Class EA, IF 505 505
2,000 2,000 7.00%, 7/15/07, Seriec 1555 Class PK 2,029 2,029
260 260 5.75%, 1/15/08, Series 1606 Class G 259 259
241 241 6.25%, 6/15/08, Series 1544 Class E 242 242
422 422 5.50%, 7/15/14, Series 1497 Class CC 421 421
1,002 1,002 6.00%, 11/15/16, Series 1560 Class X, Accrual Bond 1,002 1,002
157 157 5.75%, 11/15/16, Series 1671 Class D 157 157
500 500 6.00%, 12/15/16, Series 1541 Class EA 500 500
1,000 1,000 4.00%, 12/15/16, Series 1541 Class EA 981 981
1,000 1,000 6.50%, 4/15/18, Series 1727 Class E 1,010 1,010
300 300 6.65%, 5/15/18, Series 1477 Class F 305 305
1,100 1,100 5.80%, 2/15/19, Series 1614 Class G 1,098 1,098
762 762 9.30%, 3/15/19, Series 2 Class Z 802 802
199 199 9.50%, 4/15/19 , Series 11 Class C 202 202
553 553 6.00%, 6/15/19, Series 1552 Class F 553 553
997 997 9.50%, 2/15/20, Series 26 Class F 1,070 1,070
500 500 6.25%, 2/15/20, Series 1559 Class VF 504 504
154 154 7/15/20, Series 1570 Class D, P/O 147 147
251 251 8.13%, 11/15/20 , Series 81 Class A 259 259
596 596 8.60%, 1/15/21, Series 85 Class C 625 625
See notes to financial statements.
239
The One Group Limited Volatility Fund / Pegasus Short Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ----------- ---------- ----------------------------------------------------------- ----------- ----------- -----------
1,147 1,147 9.50%, 1/15/21, Series 99 Class Z 1,233 1,233
140 140 1066.21%, 2/15/21 , Series 1045 Class G, HB 39 39
57 57 9.00%, 7/15/21, Series 192 Class H 57 57
1,088 1,088 9.00%, 11/15/22, Series 1424 Class IF 1,067 1,067
---------- ---------- ----------
16,948 35,300 52,248
---------- ---------- ----------
Federal National Mortgage Assoc. (6.4%):
1,000 1,000 4.70%, 9/10/98 998 998
2,000 2,000 5.55%, 3/12/99 1,999 1,999
4,000 4,000 6.35%, 4/8/99 4,022 4,022
22,000 22,000 5.72%, 3/8/01 (b) 22,014 22,014
10,000 10,000 6.16%, 3/29/01 (b) 10,117 10,117
15,000 15,000 6.50%, 7/16/07 15,687 15,687
610 610 5.75%, 11/25/16 608 608
---------- ---------- ----------
1,606 53,839 55,445
---------- ---------- ----------
Total U.S. Government Agency Securities 18,554 89,139 107,693
---------- ---------- ----------
U.S. Treasury Obligations (24.8%):
U.S. Treasury Notes (20.0%):
1,500 1,500 6.38%, 1/15/99 (b) 1,506 1,506
1,000 1,000 8.88%, 2/15/99 1,020 1,020
1,000 1,000 7.00%, 4/15/99 1,011 1,011
3,000 3,000 6.50%, 4/30/99 (b) 3,025 3,025
14,645 14,645 6.38%, 4/30/99 14,748 14,748
6,000 6,000 6.38%, 5/15/99 6,043 6,043
3,000 3,000 6.25%, 5/31/99 3,019 3,019
2,200 2,200 6.75%, 5/31/99 2,224 2,224
1,000 1,000 6.88%, 7/31/99 1,014 1,014
6,300 6,300 5.88%, 8/31/99 6,325 6,325
2,000 2,000 6.88%, 8/31/99 2,030 2,030
4,000 4,000 7.13%, 9/30/99 4,076 4,076
2,935 2,935 7.50%, 10/31/99 3,008 3,008
1,000 1,000 7.88%, 11/15/99 1,031 1,031
16,300 16,300 5.88%, 11/15/99 (b) 16,377 16,377
9,750 9,750 7.75%, 11/30/99 10,041 10,041
2,000 2,000 5.63%, 11/30/99 2,003 2,003
1,000 1,000 7.75%, 12/31/99 1,032 1,032
700 700 7.75%, 1/31/00 698 698
9,100 9,100 7.75%, 1/31/00 9,401 9,401
960 3,500 4,460 8.50%, 2/15/00 (b) 1,004 3,660 4,664
7,000 7,000 7.13%, 2/29/00 7,175 7,175
500 500 6.88%, 3/31/00 511 511
1,700 1,700 6.75%, 4/30/00 1,736 1,736
4,000 4,000 8.88%, 5/15/00 (b) 4,239 4,239
1,250 1,250 6.13%, 9/30/00 (b) 1,266 1,266
21,200 21,200 6.25%, 4/30/01 21,594 21,594
3,000 3,000 6.50%, 5/31/01 3,077 3,077
2,000 2,000 6.63%, 6/30/01 2,058 2,058
3,900 3,900 7.88%, 8/15/01 4,156 4,156
15,000 15,000 6.38%, 9/30/01 (b) 15,361 15,361
1,500 1,500 6.25%, 10/31/01 1,531 1,531
3,000 3,000 7.50%, 11/15/01 3,178 3,178
2,000 2,000 5.875, 11/30/01 2,021 2,021
5,900 5,900 6.25%, 2/28/02 6,036 6,036
1,015 1,015 3.63%, 7/15/02 1,004 1,004
5,000 5,000 6.25%, 8/31/02 (b) 5,130 5,130
---------- ---------- ----------
123,805 50,564 174,369
---------- ---------- ----------
U.S. Treasury STRIPS (4.8%):
17,500 17,500 2/15/00 (b) 16,040 16,040
18,500 18,500 11/15/01 (b) 15,422 15,422
15,500 15,500 07/15/05 10,486 10,486
---------- ---------- ----------
- 41,948 41,948
---------- ---------- ----------
Total U.S. Treasury Obligations 123,805 92,512 216,317
---------- ---------- ----------
Yankee & Eurodollar (0.6%):
5,000 5,000 Peoples Republic of China, 7.38%, 7/3/01 (b) 5,031 5,031
---------- ---------- ----------
Total Yankee & Eurodollar - 5,031 5,031
---------- ---------- ----------
Investment Companies (0.6%):
4,842 4,842 Pegasus Cash Management Fund, Class I 4,842 4,842
See notes to financial statements.
240
The One Group Limited Volatility Fund / Pegasus Short Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ----------- ---------- ----------------------------------------------------------- ----------- ----------- -----------
---------- ---------- ----------
Total Investment Companies 4,842 - 4,842
---------- ---------- ----------
Repurchase Agreements (0.5%):
4,688 4,688 Prudential Securities, 6.10%, 7/1/98, (Collateralized by
$4,825 U.S. Treasury Bills, 9/3/98, market value $4,782) 4,688 4,688
---------- ---------- ----------
Total Repurchase Agreements - 4,688 4,688
---------- ---------- ----------
Short-Term Securities Held as Collateral (6.3%):
Master Notes (1.0%):
2,527 2,527 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 2,527 2,527
1,684 1,684 Danaher Corp., 6.68%, 10/9/98* 1,684 1,684
2,527 2,527 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 2,527 2,527
2,274 2,274 NationsBanc Capital Markets, 6.70%, 7/1/98* 2,274 2,274
---------- ---------- ----------
- 9,012 9,012
---------- ---------- ----------
Put Bonds (0.7%):
2,527 2,527 Citicorp, 5.94%, 8/3/98* 2,527 2,527
1,684 1,684 GMAC, 5.85%, 11/10/99* 1,687 1,687
1,684 1,684 Greenwich Capital, 6.11%, 12/13/99* 1,684 1,684
---------- ---------- ----------
- 5,898 5,898
---------- ---------- ----------
Repurchase Agreements (4.6%):
9,264 9,264 Donaldson, Lufkin & Jenrette, 6.65%, 7/1/98 (Collateralized
by $9,472 various Corporate and Government Securities,
0.00% - 17.25%, 10/15/02 - 4/15/35, market value $9,621) 9,264 9,264
8,422 8,422 Goldman Sachs, 6.65%, 7/1/98 (Collateralized by $8,977
various Corporate Bonds, 0.00%, 7/7/98 - 9/18/98, market
value $8,944) 8,422 8,422
18,529 18,529 Lehman Brothers, 6.65%, 7/1/98 (Collateralized by $18,993
various Corporate Bonds, 0.00% - 10.13%, 9/15/99 -
10/17/96, market value $19,880) 18,530 18,530
1,735 1,735 Lehman Brothers, 6.47%, 7/1/98 (Collateralized by $1,822
Media One Group Bonds, 0.00%, 10/5/98, market value
$1,822) 1,735 1,735
2,190 2,190 Lehman Brothers, 6.00%, 7/1/98 (Collateralized by $13,709
various Government Securities, 0.00% - 7.50%, 12/1/18 -
5/1/24, market value $2,254) 2,190 2,190
---------- ---------- ----------
- 40,141 40,141
---------- ---------- ----------
Total Short-Term Securities Held as Collateral - 55,051 55,051
---------- ---------- ----------
Total (Cost $908,012) (a) $ 254,217 $ 664,245 $ 918,462
========== ========== ==========
------------
Percentages indicated are based on net assets of $872,151.
(a) Represents cost for financial reporting purposes and differs from value
by net unrealized appreciation of securities as follo thousands):
Unrealized appreciation...............................................$ 10,916
Unrealized depreciation................................................ (466)
-----------
Net unrealized appreciation...........................................$ 10,450
===========
(b) A portion of this security was loaned as of June 30, 1998.
* The interest rate, for this variable rate note, which will change
periodically, is based upon prime rates or an index of market reflected on
the Schedule of Portfolio of Investments is the rate in effect at June 30,
1998.
AR Adjustable Rate
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
HB High Coupon Bond
IF Inverse Floater
IO Interest Only
MTN Medium Term Note
PO Principal Only
See notes to financial statements.
241
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
Asset Backed Securities (11.9%):
$ $ 1,000 $ 1,000 Advanta Credit Card Master Trust, Series 96-A, 6.00%,
11/15/05 $ $ 1,025 $ 1,025
37 37 Advanta Mortgage Loan Trust Asset Backed Certificate:
1994 Series, Class A2, 7.60%, 7/25/10 37 37
309 309 Advanta Mortgage Loan Trust, Series 94-4, Class A1, 8.55%,
11/25/12 314 314
5,000 5,000 Aesop Funding II, Series 97-1, Class A2, 6.40%, 10/20/03
2,622 2,622 Aircraft Lease Portfolio Securitization Ltd., Series 94-1, 5,041 5,041
Class A2, 7.15%, 9/15/04 2,639 2,639
781 781 Arcadia Automobile Receivables Trust Asset Backed Pass Thru Ctfs.,
1997 Series C, Class A2, 6.05%, 11/15/00 783 783
2,000 2,000 Arcadia Automobile Receivables Trust Asset Backed Pass Thru Ctfs.,
1997 Series B, Class A3, 6.30%, 7/16/01 2,009 2,009
2,400 2,400 Arcadia Automobile Receivables Trust Asset Backed Pass Thru Ctfs.,
1998 Series B, Class A3, 5.95%, 11/15/02 2,401 2,401
2,000 2,000 Arcadia Automobile Receivables Trust Asset Backed Pass Thru Ctfs.,
1998 Series A, Class AY, 6.00%, 11/15/03 2,001 2,001
3,000 3,000 Arcadia Automobile Receivables Trust Asset Backed Pass Thru Ctfs.,
1998 Series B, Class A4, 6.00%, 11/15/03 3,002 3,002
645 645 Case Equipment Loan Trust Asset Backed Ctf.,
1994 Series C, Class A2, 8.10%, 6/15/01 647 647
960 960 Case Equipment Loan Trust Asset Backed Ctf.,
1995 Series B, Class A3, 6.15%, 9/15/02 964 964
4,031 4,031 Case Equipment Loan Trust Asset Backed Ctf.,
1996 Series A, Class A2, 5.50%, 2/15/03 4,025 4,025
294 294 Chase Manhattan Guarantor Trust Automobile Loan Pass Thru Ctfs.,
Series 1995-B, Class A, 5.90%, 11/15/01 295 295
552 552 Chase Manhattan Guarantor Trust, Series 96-A, Class A,
5.20%, 2/15/02 550 550
250 250 Chemical Master Credit Card Asset Backed Certificate:
Series 1995, Class A, 6.23%, 8/15/02 254 254
1,254 1,254 Chevy Chase Auto Receivable Trust Asset Backed Pass Thru Ctf.,
Series 1997-4, Class A, 6.25%, 6/15/04 1,258 1,258
5,440 5,440 Circuit City Credit Card Master Trust, Series 95-1, Class A,
6.38%, 8/15/05 5,505 5,505
231 231 Collaterized Mortgage Obligation Trust CMO,
Series 12, Class D, 9.50%, 2/1/17 234 234
152 152 Collaterized Mortgage Obligation Trust CMO,
Series 16, Class Q, IF, 3/20/18 162 162
308 308 Collaterized Mortgage Securities Corp. CMO,
Series 88-2 Class B, 8.80%, 4/20/19 323 323
2,291 2,291 CPS Auto Trust Asset Backed Pass Thru Ctf.,
Series 1997-4, Class A1, 6.07%, 3/15/03 2,294 2,294
6,000 6,000 EQCC Home Equity Loan Trust, Series 96-4, Class A6,
6.88%, 7/15/14 6,180 6,180
2,000 2,000 First Bank Corporate Card Master Trust, Series 97-1, Class
B, 6.55%, 2/15/03 2,054 2,054
2,000 2,000 First USA Credit Card Master Trust Asset Backed Pass Thru Ctf.,
Series 1995-1, Class A, AR, 10/15/01 2,002 2,002
1,700 1,700 Ford Credit Auto Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-B, Class A2, 5.95%, 1/15/00 1,702 1,702
79 79 Greentree Financial Corp. Loan Trust Asset Backed Ctf.,
Series 1994-B1, Class A!, 7.15%, 7/15/14 80 80
4,000 4,000 Greentree Financial Corp., Series 93-2, Class B, 8.00%,
07/15/18 4,200 4,200
1,101 1,101 Greentree Financial Corp. Loan Trust Asset Backed Ctf.,
Series 1993-4, Class A2, 5.85%, 1/15/19 1,101 1,101
61 61 Greentree Financial Corp. Loan Trust Asset Backed Ctf.,
Series 1994-B, Class A2, 7.30%, 11/15/19 61 61
3,000 3,000 Greentree Financial Home Improvement Corp., Series 97-D,
Class HIA2, 6.45%, 10/15/23 3,030 3,030
5,000 5,000 Greentree Home Improvement Loan Trust, Series 95-D,
6.95%, 9/15/25 5,075 5,075
10,000 Keycorp Auto, Series 97-2A4, 6.15%, 10/15/01 10,041 10,041
345 345 MBNA Master Credit Card Trust Asset Backed Ctf.,
Series 1994-C, Class A, Flt Rate, 3/15/04 347 347
1,700 1,700 Merrill Lynch Trust 43-E CMO,:
Series 43, Class E, 6.50%, 8/27/15 1,699 1,699
818 818 Merrill Lynch Home Equity Loan Asset Backed Pass Thru Ctf.,
Series 1992-1, Class A, AR, 7/15/22 819 819
534 534 Merrill Lynch MBS Inc. Project Pass Thru Ctf.,
Series 144-S, 7.43%, 7/25/24 545 545
204 204 Morgan Stanley Mortgage Trust, CMO,
Series 35-2, HB, IF, 4/20/21 315 315
199 199 Morgan Stanley Mortgage Trust, CMO,
Series 37-2, HB, IF, 7/20/21 428 428
382 382 Morgan Stanley Mortgage Trust, CMO,
See notes to financial statements.
242
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
Series 39-3, PO, 12/20/21 316 316
175 National Rural Collateral Trust, 7.30%, 9/15/06 188 188
578 578 Navistar Financial Corp. Owner Trust Asset Backed Pass Thru Ctf.,
Series 1995-A, Class A2, 6.55%, 11/20/01 579 579
2,000 2,000 Newcourt Receivables Trust Asset Backed Pass Thru Ctf.,
Series 1997-1, Class A2, 6.04%, 6/20/00 2,004 2,004
3,120 3,120 Olympic Automobile Receivables Trust Asset Backed Pass Thru Ctf.,
Series 1995-E, Class 4, 5.85%, 3/15/01 3,123 3,123
577 577 Olympic Automobile Receivables Trust Asset Backed Pass Thru Ctf.,
Series 1995-B, Class A2, 7.35%, 10/15/01 582 582
3,239 3,239 Olympic Automobile Receivables Trust Asset Backed Pass Thru Ctf.,
Series 1995-C, Class A2, 6.20%, 1/15/02 3,249 3,249
4,500 4,500 Olympic Automobile Receivables Trust Asset Backed Pass Thru Ctf.,
Series 1996-C, Class A4, 6.80%, 3/15/02 4,560 4,560
2,650 2,650 Olympic Automobile Receivables Trust Asset Backed Pass Thru Ctf.,
Series 1996-C, Class A5, 7.00%, 3/15/04 2,722 2,722
1,962 1,962 Onyx Acceptance Grantor Trust Auto Loan Pass Thru Ctf.,
Series 1996-1, Class A, 5.40%, 5/15/01 1,956 1,956
1,612 1,612 Onyx Acceptance Grantor Trust Auto Loan Pass Thru Ctf.,
Series 1997-1, Class A, 6.55%, 9/15/03 1,625 1,625
750 750 Prime Credit Card Master Trust, Series 96-1, 6.70%, 7/15/04
5,000 Rental Car Finance, Series 97-1, Class A2, 6.45%, 8/25/04 767 767
342 342 Rural Housing Trust 1987-1, Senior Mortgage Pass Thru Ctf.,
Sub Class 3-B, 7.33%, 4/1/26 351 351
467 467 Sears Credit Account Master Trust, Series 95-4, Class A, 5,063 5,063
6.25%, 1/15/03 468 468
300 300 Sears Credit Account Master Trust Asset Backed Ctf.,
Series 1995-3, Class A, 7.00%, 10/15/04 307 307
1,000 1,000 Sears Credit Account Master Trust Asset Backed Ctf.,
Series 1998-1A, 5.80%, 8/15/05 998 998
1,000 1,000 Standard Credit Card Master Trust Asset Backed Ctf.,
Series 1991-6, Class A, 7.875%, 1/7/00 1,008 1,008
2,520 2,520 Standard Credit Card Master Trust Asset Backed Ctf.,
Series 1995-10, Class A, 5.90%, 2/7/01 2,524 2,524
2,200 2,200 Superior Wholesale Inventory Fing Trust Asset Backed Ctf.,
Series 1996-A, Class A, AR, 3/15/01 2,200 2,200
4,000 4,000 Team Fleet Financing Corp., Series 97-1, Class A, 7.35%,
05/15/03 4,139 4,139
175 175 Toyota Auto Receivable Grantor Trust Asset Backed Ctf.,
Series 1995-A, Class A, 5.85%, 3/15/01 175 175
350 350 UFSB, Series 94-B, Class B, 6.43%, 7/10/00
2,296 Union Acceptance Corp., Series 95-D, 6.03%, 1/7/03 350 350
279 279 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-A, Class A3, 6.05%, 6/01/00 279 279
3,017 3,017 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-C, Class A2, 5.95%, 6/20/00 3,018 3,018
2,856 2,856 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-B, Class A2, 6.05%, 7/20/00 2,860 2,860
2,000 2,000 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-D, Class A2, 6.20%, 9/20/00 2,003 2,003
3,685 3,685 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-A, Class A4, 6.15%, 6/01/01 3,697 3,697
4,000 4,000 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1997-B, Class A3, 6.30%, 7/20/01 4,038 4,038
2,526 2,526 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-D, Class A3, 6.05%, 7/20/01 2,533 2,533
1,068 1,068 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1995-4, Class A1, 6.20%, 2/01/02 1,071 1,071
6,000 6,000 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1996-C, Class A4, 6.80%, 12/20/03 6,083 6,083
2,900 2,900 Western Financial Owner Trust Asset Backed Pass Thru Ctf.,
Series 1998-B, Class A4, 6.05%, 4/20/03 2,899 2,899
6,000 6,000 World Financial Network Credit Card, Series 96-1, Class A, 2,296 2,296
6.70%, 2/15/04 6,138 6,138
1,303 1,303 World Omni Automobile LSE SEC Trust Asset Backed Ctf.,
Series 1995-A, Class A, 6.05%, 11/25/01 1,303 1,303
4,298 4,298 World Omni Automobile Asset Backed Ctf.,
Series 1997-A, Class A4, 6.90%, 6/25/03 4,369 4,369
2,500 2,500 World Omni Automobile LSE SEC Trust Asset Backed Ctf.,
Series 1997-B, Class A1, 6.07%, 11/25/03 2,505 2,505
--------- -------- --------
Total Asset Backed Securities 94,913 64,875 159,788
--------- -------- --------
Corporate Bonds (12.7%):
Banking, Finance & Insurance (5.7%):
200 200 ABN Amro Bank NV Chicago, 7.25%, 5/31/05 212 212
300 300 American Express Credit Corp., 8.50%, 6/15/99 307 307
1,675 1,675 Associates Corp. of North America, 9.13%, 4/1/00 1,761 1,761
300 300 Associates Corp. of North America, 6.63%, 6/15/05 306 306
See notes to financial statements.
243
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
3,625 3,625 Associates Corp. of North America, 8.15%, 8/1/09 4,161 4,161
1,750 1,750 Associates Corp. of North America, 5.96%, 5/15/37 1,772 1,772
5,000 5,000 Bankers' Trust, 7.25%, 1/15/03 5,206 5,206
4,000 4,000 Capital One Bank, 6.61%, 6/22/99 4,010 4,010
200 200 Cit Group Holdings, 8.38%, 11/1/01 214 214
250 250 Citicorp Subordinated Notes, 6.75%, 8/15/05 257 257
200 200 Commercial Credit Group Inc., 9.60%, 5/15/99 207 207
3,000 3,000 First Hawaiian, Inc., 6.25%, 8/15/00 3,008 3,008
1,000 1,000 Ford Motor Credit Corp., 6.63%, 6/30/03 1,023 1,023
2,000 2,000 Ford Motor Credit Corp., 8.20%, 2/15/02 2,136 2,136
4,000 4,000 General Motors Acceptance Corp., 5.88%, 1/22/03 3,940 3,940
10,000 10,000 Goldman Sachs Group, 6.38%, 6/15/00 10,074 10,074
5,000 5,000 Greenwich Capital, 7.04%, 12/13/99, Private Placement 4,999 4,999
5,000 5,000 International Lease, 6.38%, 8/1/02 5,063 5,063
3,000 3,000 Lehman Brothers Holdings, Inc., 7.25%, 4/15/03 3,124 3,124
5,000 5,000 Lehman Brothers Holdings, Inc., 8.88%, 3/1/02 5,431 5,431
3,000 3,000 Lehman Brothers Holdings, Inc., 9.88%, 10/15/00 3,240 3,240
6,000 6,000 Liberty Mutual Insurance, 8.20%, 5/4/07 6,697 6,697
5,000 5,000 MBNA Corp., 6.29%, 5/23/03* 5,015 5,015
200 200 Mellon Financial Corporation Note, 7.63%, 11/15/99 205 205
4,000 4,000 Metropolitan Life, 7.00%, 11/1/05 4,130 4,130
170 170 Midland Bank, 8.63%, 12/15/04 191 191
100 100 Norwest Financial Incorporated Senior Note, 7.00%, 1/15/03 104 104
--------- -------- --------
11,833 64,960 76,793
--------- -------- --------
Gas & Electric Utility (0.8%):
2,500 2,500 Duke Power Co., 7.00%, 6/1/00 2,550 2,550
1,931 1,931 Kern River Fund, 6.42%, 3/31/01 (b) 1,942 1,942
6,000 6,000 Ohio Power, 6.73%, 11/1/04 6,172 6,172
--------- -------- --------
- 10,664 10,664
--------- -------- --------
Industrial Goods & Services (3.0%):
5,000 5,000 Atlas Copco AB, 6.50%, 4/1/08 5,025 5,025
1,900 1,900 Bellsouth Telecommunications Put Notes, 6.00%, 6/15/02 1,905 1,905
5,000 5,000 Cox Radio, Inc., 6.38%, 5/15/05, Series 144A 5,038 5,038
200 200 Dillard Investment Company, 9.25%, 2/1/01 215 215
5,000 5,000 Excel Paralubes Funding, 7.13%, 11/1/11 5,255 5,255
2,000 2,000 Limited, Inc., 8.88%, 8/15/99 2,055 2,055
600 600 Lockheed Martin Corp., 9.38%, 10/15/99 625 625
4,000 4,000 Oracle Corp., 6.72%, 2/15/04 4,105 4,105
200 200 Rockwell International Corp., 8.88%, 9/15/99 207 207
5,000 5,000 Sears Roebuck Acceptance, Series MTN3, 7.07%, 9/18/01 5,143 5,143
5,000 5,000 Thomas & Betts, Series MTN, 6.29%, 2/13/03 5,000 5,000
5,000 5,000 Tyco International Group SA, 6.25%, 6/15/03 4,988 4,988
650 650 VF Corp., 6.63%, 3/15/03 663 663
150 150 Wal Mart Stores Inc., 8.63%, 4/1/01 161 161
--------- -------- --------
2,488 37,897 40,385
--------- -------- --------
Real Estate (0.7%):
5,000 5,000 Meditrust, 7.60%, 7/15/01 5,150 5,150
4,000 4,000 Prime Properties Funding, 6.80%, 8/15/02 4,080 4,080
--------- -------- --------
- 9,230 9,230
--------- -------- --------
Telecommunications (0.3%):
4,000 4,000 Cable & Wire Communications, 6.63%, 3/6/05 4,045 4,045
--------- -------- --------
- 4,045 4,045
--------- -------- --------
Yankee & Eurodollar (2.2%):
983 983 African Development Bank Note, 9.30%, 7/1/00 1,044 1,044
5,000 5,000 Avon Energy Partners, 7.05%, 12/11/07, Series 144A 5,200 5,200
3,000 3,000 D.R. Investments, 7.10%, 5/15/02 3,090 3,090
4,000 4,000 Dao Heng Bank, 7.75%, 1/24/07 3,245 3,245
2,000 2,000 Kingdom of Thailand, 7.75%, 4/15/07 (b) 1,788 1,788
1,500 1,500 Metropolis of Tokyo, 8.70%, 10/5/99 1,554 1,554
400 400 National Australia Bank Ltd., 9.70%, 10/15/98 404 404
500 500 Nippon Telephone & Telegraph, 9.50%, 7/27/98 501 501
3,500 3,500 Ontario Province of Canada Senior Unsubordinated Debenture, 7.38%,
1/27/03 3,694 3,694
6,225 6,225 Petronas, 6.88%, 7/1/03 (b) 5,517 5,517
3,000 3,000 Ras Laffan Gas, 7.63%, 9/15/06 2,906 2,906
--------- -------- --------
6,696 22,247 28,943
--------- -------- --------
Total Corporate Bonds 21,017 149,043 170,060
--------- -------- --------
Other Mortgage Backed Securities (2.0%):
1,657 1,657 BHN, Series 97-1, Class A2, 7.92%, 7/25/09 1,641 1,641
4,000 4,000 Equitable, Series 174, Class A1, 7.24%, 5/15/06, Private Placement 4,258 4,258
2,000 2,000 J.P. Morgan & Co., Inc., Series 97, Class C4, 7.47%, 12/26/28 2,134 2,134
See notes to financial statements.
244
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
5,000 5,000 JPMC, Series 96-C2, Class B, 6.80%, 11/25/27 5,113 5,113
5,000 5,000 MLMI, Series 97-C2 A2, 6.54%, 12/10/29 5,140 5,140
4,000 4,000 Mortgage Capital Funding Inc., Series 96-MC2, Class A3, 7.08%, 9/20/06 4,188 4,188
1,740 1,740 Prudential Home Mortgage Securities, 6.50%, 5/25/00 1,737 1,737
3,022 3,022 Wells Fargo Capital Markets, Series 96-1, Class A1, 6.56%, 12/29/05 3,056 3,056
--------- -------- --------
Total Other Mortgage Backed Securities - 27,267 27,267
--------- -------- --------
U.S. Government Agency Mortgages (39.0%):
Federal Home Loan Mortgage Corp. (15.3%):
2,318 2,318 8/15/99, Series 1329 Class S, IO, IF 66 66
145 145 8.00%, 6/1/01, #252601 148 148
9,294 9,294 6.50%, 10/1/04, Gold Pool #M80495 9,384 9,384
815 815 9.00%, 1/1/06, Series 1807 Class G 865 865
12 12 1008.50%, 5/15/06, Series 1072 Class A, HB 241 241
1 1 10.08%, 6/15/06, Series 1098 Class M, HB 37 37
2,000 2,000 7.00%, 6/15/06, Series #1457-PH, CMO 2,035 2,035
1,500 1,500 4.50%, 3/15/07, Series 1295 Class JB 1,426 1,426
49 49 8.00%, 4/1/07, Pool #160022 51 51
6 6 981.86%, 6/15/07, Series 1298 Class L, HB 172 172
403 403 10/15/07, Series 1389 Class SA, IF 374 374
1,214 1,214 5.50%, 10/15/07, Series 1640 Class A 1,199 1,199
920 920 11/15/07, Series 1414 Class LB, IF 925 925
583 583 12/15/07, Series 1450 Class F 583 583
11,501 11,501 2/15/08, Series 1465 Class SA, IO, IF 476 476
460 460 5.50%, 4/15/08, Series 1489 Class L 455 455
874 874 6.00%, 4/15/08, Series 1531 Class K 859 859
1,335 1,335 5/15/08, Series 1506 Class F, AR 1,347 1,347
7,063 7,063 5/15/08, Series 1506 Class SD, IO, IF 362 362
228 228 5/15/08, Series 1506 Class S, IF 227 227
1,447 1,447 5/15/08, Series 1513 Class TA, V/R 1,439 1,439
806 806 7.50%, 8/1/08, Gold Pool #G10117 831 831
828 828 8/15/08, Series 1565 Class K 719 719
171 171 7.50%, 9/1/08, #252600 174 174
1,048 1,048 6.00%, 9/15/08, Series 1586 Class A 1,044 1,044
850 850 10/15/08, Series 1600 Class SC, V/R 915 915
898 898 10/15/08, Series 1900 Class I, P/O 715 715
2,208 2,208 12/15/08, Series 1635 Class O, FLT 2,228 2,228
604 604 12/15/08, Series 1647 Class FB, AR 599 599
1,127 1,127 12/15/08, Series 1647 Class SB, IF 1,124 1,124
1,798 1,798 12/15/08, Series 1655 Class F, AR 1,831 1,831
217 217 12/15/08, Series 1655 Class SA, IF 200 200
1,000 1,000 12/15/08, Series 1849 Class A, P/O 681 681
3,500 3,500 10/15/08, Series 1967, P/O 2,851 2,851
890 890 12/15/08, Series 2017 Class SE, V/R 826 826
9,622 9,622 6.00%, 12/15/08, Series #1624, CMO 9,595 9,595
1,392 1,392 2/15/09, Series 1796-A, Class S, IF 1,300 1,300
3,000 3,000 3/15/09, Series 1900 Class FA, FLT 3,021 3,021
2,897 2,897 8.50%, 1/1/10, Gold Pool #G10305 3,019 3,019
1,450 1,450 8.50%, 1/1/10, Gold Pool #E00356 1,511 1,511
203 203 7.00%, 8/1/10, Gold Pool #E20187 208 208
3,165 3,165 7.00%, 9/1/10, Gold Pool #E00393 3,237 3,237
2,873 2,873 7.50%, 7/1/11, Gold Pool #E20253 2,964 2,964
5,610 5,610 3/15/12, Series 1993 Class SJ, IF, IO 461 461
8,733 8,733 7.00%, 9/1/12, Gold Pool #E00506 8,896 8,896
6,753 6,753 6.50%, 1/1/13, Pool #E68904 6,799 6,799
9,798 9,798 6.50%, 4/1/13, Gold Pool #E69986 9,865 9,865
5,029 5,029 6.50%, 4/1/13, Pool #E00542 5,064 5,064
12,157 12,157 10/15/13, Series 1595 Class S, IO, IF 505 505
827 827 12.00%, 8/1/15, #170269 934 934
362 362 12.00%, 7/1/19, #555238 409 409
1,300 1,300 9.50%, 7/15/19, Series 11 Class D 1,402 1,402
124 124 9.40%, 8/15/19, Series 23 Class E 125 125
1,250 1,250 6.50%, 11/15/19, Series 1418 Class B 1,256 1,256
250 250 6.00%, 12/15/19, Series 1666 Class E 250 250
1,618 1,618 5.50%, 12/15/19, Series 1709 Class C 1,606 1,606
4,500 4,500 7.15%, 2/15/20, Series 1446 Class G 4,604 4,604
8,000 8,000 8.00%, 2/15/20, Gold Series #1770-PE, CMO 8,185 8,185
3,000 3,000 6.00%, 4/15/20, Series #1534-F, CMO 2,970 2,970
54 54 84.00%, 5/15/20, Series 41 Class I, HB 169 169
485 485 10.00%, 6/15/20, Series 47 Class F 522 522
540 540 8.00%, 7/1/20, Gold Pool #A01047 564 564
1,186 1,186 7.80%, 9/15/20, Series 46 Class B 1,225 1,225
1,147 1,147 9.50%, 1/15/21, Series 99 Class Z 1,233 1,233
557 557 5/15/21, Series 1079 Class S, IF 657 657
399 399 5/15/21, Series 1084 Class F, AR 407 407
279 279 5/15/21, Series 1084 Class S, IF 370 370
2,250 2,250 8.50%, 9/15/21, Series 1144 Class KB 2,350 2,350
9,440 9,440 6.50%, 10/15/21, Series #1590-GA, CMO 9,596 9,596
See notes to financial statements.
245
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
11 11 1167.776%, 11/15/21, Series 1172 Class L, HB 296 296
1,000 1,000 7.75%, 12/15/21, Series 1347 Class BH 1,042 1,042
1,296 1,296 7.00%, 12/20/21, Series 1956 Class A 1,306 1,306
32 32 1/15/22, Series 1196 Class B, HB, IF 432 432
25 25 7.00%, 4/1/22, Pool #D17544 26 26
1,100 1,100 7.00%, 5/15/22, Series 1250 Class J 1,117 1,117
523 523 9/15/22, Series 1543 Class KC, V/R 518 518
2,238 2,238 10/15/22, Series 1646 Class MB, FLT 2,222 2,222
952 952 10/15/22, Series 1646 Class MD, V/R 976 976
3,500 3,500 11/15/22, Series 2002 Class A, P/O 2,506 2,506
2,491 2,491 12/15/22, Series 1483 Class FB, AR 2,515 2,515
3,000 3,000 1/15/23, Series 1603 Class IF, AR 3,064 3,064
677 677 2/15/23, Series 1470 Class F, AR 672 672
767 767 3/15/23, Series 1487 Class IB, V/R 743 743
729 729 6.00%, 4/15/23, Series 1484 Class O 718 718
6 6 5/15/23, Series 204 Class E, HB, IF 146 146
1,149 1,149 5/15/23, Series 1694 Class SE, IF 1,140 1,140
867 867 9/15/23, Series 1583 Class NS, IF 812 812
6,723 6,723 6.25%, 9/15/23, Series 1589 Class Z 6,413 6,413
1,500 1,500 10/15/23, Series 1689 Class SD, IF 1,543 1,543
6,341 6,341 10/15/23, Series 1859 Class SB, AR 1,091 1,091
2,492 2,492 10/15/23, Series 1927 Class F, AR 2,507 2,507
1,112 1,112 11/15/23, Series 1619 Class CS, FLT 1,137 1,137
800 800 11/25/23, Series 24-Z 6025 789 789
518 518 6.00%, 11/25/23, Series 1685 Class Z 484 484
2,500 2,500 12/15/23, Series 1628 Class S, IF 1,960 1,960
2,500 2,500 12/15/23, Series 1854 Class SE, IO, IF 527 527
2,274 2,274 2/15/24, Series 1700 Class GA, P/O 1,548 1,548
7,666 7,666 4/25/24, Series G-29 Class SD, IF, IO 259 259
2,187 2,187 8.00%, 8/1/24, Pool #G00245 2,270 2,270
1,934 1,934 8.00%, 11/1/24, Gold Pool #C00376 2,007 2,007
3,206 3,206 7.50%, 8/1/25, Gold Pool #C00414 3,297 3,297
3,362 3,362 7.00%, 4/1/26, Pool #C00452 3,423 3,423
3,107 3,107 6.98%, 7/1/26, Pool #785618 3,127 3,127
7,038 7,038 7.50%, 1/15/27, Series 1927, CMO 7,544 7,544
9,968 9,968 6.50%, 3/1/28, Pool #D87734 9,938 9,938
7,921 7,921 7.00%, 3/15/28, Series 2023 Class PN 1,963 1,963
--------- -------- --------
88,360 116,406 204,766
--------- -------- --------
Federal National Mortgage Assoc. (16.0%):
4 4 1/25/99, 1992 Class 13-S, HB, IF 12 12
2,294 2,294 6.35%, 3/1/99, #160330 2,295 2,295
591 591 6/25/99, 1992 Class 85S, IF 617 617
4,693 4,693 11/25/99, 1992 Class 199-S, IO, IF 141 141
2 2 6.50%, 12/1/02, Pool #6345 2 2
1,882 1,882 1/17/03, 1997 Class MI, A, IF 1,903 1,903
6,097 6,097 3/17/04, 1997-M4 Class A, AR 6,189 6,189
444 444 10.00%, 5/25/04, 1989 Class 26-D 463 463
1,511 1,511 8.00%, 9/25/04, Series 91-155G 1,544 1,544
1,504 1,504 6.75%, 12/25/04, Series 93-6C, CMO 1,511 1,511
10,944 10,944 6.88%, 9/1/05, Pool #73192 11,408 11,408
2 2 758.75%, 1/25/06, 1991 Class 4-N, HB 28 28
1 1 908.75%, 3/25/06, 1991 Class 20-M, HB 17 17
7,613 7,613 6.95%, 4/1/06, Pool #73429 8,013 8,013
2 2 1008.25%, 4/25/06, 1991 Class 33-J, HB 47 47
1,500 1,500 7.05%, 6/25/06, Series 93-11, Class G 1,516 1,516
5,980 5,980 8/25/06, 1993 Class 8-SB, IO, IF 234 234
515 515 7.00%, 1/1/07, Pool #145771 526 526
2,500 2,500 7.50%, 8/25/07, Series G92-48, Class H, CMO 2,553 2,553
1,394 1,394 11/25/07, 1993 Class 174-SB, IF 1,394 1,394
1,900 1,900 2/25/08, 1996 Class 24-K, PO 1,575 1,575
2,488 2,488 2/25/08, Series X-188A, Class F, AR 2,521 2,521
6,750 6,750 5/25/08, 1993 Class 55-FA, IF, 5/25/08 6,861 6,861
2,935 2,935 5.66%, 8/25/08, 1993 Class 209-KB 2,859 2,859
557 557 9/25/08, 1993 Class 170-FA, VR 550 550
1,655 1,655 9/25/08, 1996 Class 20-L, PO 1,231 1,231
1,750 1,750 9/25/08, 1996 Class 39, P/O 1,257 1,257
970 970 6.00%, 12/25/08, 1993 Class 214-L 955 955
1,742 1,742 1/25/09, 1994 Class 12SB, IF 1,703 1,703
802 802 6.50%, 2/25/09, 1994 Class 30-LA 805 805
1,090 1,090 5.00%, 2/25/09, 1996 Class 46-A 1,069 1,069
2,090 2,090 6.50%, 3/25/09, 1995 Class 13-B 2,099 2,099
745 745 9/25/09, 1993 Class 22-SA, V/R 749 749
1,415 1,415 9/25/06, 1996 Class 46-PE, P/O 1,224 1,224
189 189 7.50%, 11/1/09, Pool #158 195 195
2,152 2,152 7.00%, 6/1/10, Pool #312903 2,198 2,198
3,741 3,741 6.50%, 12/1/10, Pool #322598 3,778 3,778
1,481 1,481 6.50%, 4/1/11, Pool #337903 1,496 1,496
See notes to financial statements.
246
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
1,243 1,243 11/25/13, 1993 Class 220-SD, IF 1,110 1,110
199 199 7.50%, 5/1/14, Pool #57930 207 207
1,634 1,634 7.20%, 1/25/15, 1992 Class 210-D 1,651 1,651
741 741 12.50%, 1/1/16, #303306 864 864
2,094 2,094 5/25/16, 1993 Class 156-FA, AR 2,098 2,098
513 513 5.70%, 8/25/16, Series G93-39, Class A, CMO 508 508
1,180 1,180 11/25/16, 1993 Class 187-FE, AR 1,169 1,169
1,235 1,235 6.00%, 12/25/16, Series G-22 Class G 1,220 1,220
246 246 3.50%, 1/25/17, 1992 Class 137-BA 244 244
1,833 1,833 3/25/17, 1996 Class 27-FA, AR 1,848 1,848
91 91 7.00%, 4/1/17, Pool #44696 93 93
19 19 9.40%, 10/25/17, 1988 Class 17-B 19 19
437 437 9.25%, 4/25/18, 1988 Class 7-Z 460 460
1,250 1,250 6/25/18, 1992 Class 206-FA, IF 1,204 1,204
1,000 1,000 6.50%, 7/25/18, 1993 Class 8-PG 1,002 1,002
1,017 1,017 3/1/19, Adjustable Rate, #116612 1,051 1,051
153 153 10.50%, 3/25/19, Stripped Trust 50, Class 2, IO 42 42
3,530 3,530 5.00%, 5/25/19, 1993 Class 19-G 3,445 3,445
1,522 1,522 6.50%, 6/25/19, 1993 Class 19-K 1,524 1,524
344 344 8/1/19, Adjustable Rate, #111366 359 359
459 459 7.95%, 8/25/19, Series 90-14, CMO 468 468
2,000 2,000 8.00%, 10/25/19, 1989 Class 70-G 2,088 2,088
151 151 10/25/19, 1989 Class 73-C, PO 140 140
1,000 1,000 10/25/19, 1993 Class 156-SD, IF 896 896
500 500 6.25%, 11/25/19, Series G93-32, Class PG 501 501
1,750 1,750 9.40%, 11/25/19, 1989 Class 78-H 1,906 1,906
1,216 1,216 8.50%, 11/25/19, 1989 Class 83 1,265 1,265
1,389 1,389 9.00%, 11/25/19, 1989 Class 89-H 1,455 1,455
614 614 8.80%, 1/25/20, 1990 Class 1-D 649 649
1,869 1,869 5.00%, 4/25/20, 1993 Class 10-G 1,854 1,854
878 878 5.50%, 6/25/20, 1990 Class 60-K 848 848
755 755 9.50%, 6/25/20, 1990 Class 63-H 806 806
1,000 1,000 4.00%, 6/25/20, 1992 Class 66-HB 941 941
1,000 1,000 6.00%, 6/25/20, 1993 Class 13-G 997 997
857 857 5.50%, 8/25/20, 1990 Class 93-G 838 838
13 13 5.05%, 8/25/20, 1990 Class 94-H, HB 187 187
6 6 1118.04%, 8/25/20, 1990 Class 95-J, HB 225 225
3,041 3,041 6.50%, 8/25/20, 1990 Class 102-J 3,049 3,049
1,000 1,000 9.00%, 10/25/20, 1990 Class 120-H 1,094 1,094
2,000 2,000 6.00%, 10/25/20, 1992 Class 204-B 1,990 1,990
376 376 11/25/20, 1990 Class 134-SC, IF 438 438
13 13 652.145%, 12/25/20, 1990 Class 140-K, HB 341 341
5,255 5,255 6.50%, 12/25/20, 1997 Class 97-85L 661 661
1 1 908.75%, 2/25/21, 1991 Class 7-K, HB 25 25
165 165 7.50%, 2/25/21, 1991 Class 161-H 166 166
87 87 8.00%, 3/1/21, Pool #70825 91 91
1,800 1,800 10/25/21, 1997 Class 32C, P/O 1,610 1,610
2,800 2,800 5.00%, 11/25/21, 1992 Class 66-JB 2,560 2,560
1,200 1,200 7.88%, 11/25/21, Series 215PM 1,279 1,279
2,000 2,000 5.00%, 5/25/22, Series G93-10, Class G, CMO 1,911 1,911
220 220 5/25/22, 1992 Class 27-G, AR 336 336
756 756 7.00%, 7/25/22, 1992 Class 42-Z 769 769
700 700 5.50%, 9/25/22, 1992 Class 142 651 651
2,000 2,000 9/25/22, 1997 Class 70, P/O 1,428 1,428
2,721 2,721 7.50%, 11/1/22, Pool #189190 2,807 2,807
2,728 2,728 5.52%, 11/25/22, 1993 Class 38-S, IO, IF 20 20
2,000 2,000 12/25/22, Series X, Class VO, IF 2,044 2,044
989 989 6.50%, 2/25/23, 1993 Class 5-Z 978 978
2,745 2,745 2/25/23, 1993 Class 12-C, P/O 2,561 2,561
2,335 2,335 6.25%, 2/25/23, 1993 Class 12-S 117 117
25 25 2/25/23, 1993 Class 12-SB, HB, IF 185 185
9,700 9,700 6.00%, 3/25/23, Series 93-41 9,736 9,736
379 379 5.50%, 4/25/23, 1993 Class 58-J 374 374
242 242 6.75%, 5/25/23, 1993 Class 94-K 243 243
500 500 6.50%, 5/25/23, 1993 Class 155-LA 501 501
12,034 12,034 5/25/23, 1994 Class 82-SA, IO, IF 386 386
4,878 4,878 7/25/23, 1993 Class 113-S, IO, IF 248 248
1,536 1,536 8/25/23, 1993 Class 27-SE, V/R 1,146 1,146
2,597 2,597 8/25/23, 1993 Class 139-S, IF 2,305 2,305
672 672 8/25/23, 1993 Class 152-D, PO 655 655
3,480 3,480 8/25/23, 1994 Class 36-SG, IO, IF 203 203
2,035 2,035 3.00%, 9/25/23, 1993 Class 3-B 1,812 1,812
4,259 4,259 9/25/23, 1993 Class 155-SB, IO, IF 222 222
558 558 10/18/23, 1996 Class 69-FA, AR 560 560
2,206 2,206 11/25/23, 1993 Class 207-SC, IF 1,955 1,955
721 721 12/25/23, 1993 Class 223-FB, AR 716 716
651 651 12/25/23, 1993 Class 223-SB, IF 645 645
1,336 1,336 5.00%, 1/25/24, 1994 Class 19-C 1,307 1,307
See notes to financial statements.
247
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
2,199 2,199 2/25/24, 1994 Class 26-G, PO 1,867 1,867
863 863 3/25/24, 1994 Class 39-F, AR 865 865
332 332 3/25/24, 1994 Class 39-S, IF 331 331
375 375 3/25/24, 1994 Class 41, V/R 373 373
1,756 1,756 8.00%, 5/1/24, Pool #250066 1,825 1,825
3,232 3,232 8.50%, 7/1/24, Pool #250103 3,386 3,386
2,245 2,245 7.50%, 10/1/24, Pool #303031 2,312 2,312
2,825 2,825 7.00%, 11/17/24, 1994 Class 13-ZB 2,822 2,822
901 901 8.80%, 1/25/25, Series X-G1C, Class C 1,026 1,026
4,109 4,109 6.75%, 3/25/25, 1997 Class 59-FA 4,114 4,114
754 754 8.50%, 5/1/25, Pool #308499 791 791
153 153 7.50%, 5/1/25, Pool #293928 158 158
664 664 7.50%, 5/1/25, Pool #311810 684 684
930 930 8.50%, 6/1/25, Pool #315277 976 976
2,763 2,763 7.00%, 7/1/25, Pool #290387 2,812 2,812
3,263 3,263 7.00%, 7/1/25, Pool #312931 3,321 3,321
3,931 3,931 7.13%, 6/1/26, Pool #341503 4,012 4,012
1,700 1,700 7.50%, 8/18/26, 1997 Class 29PL, IO 554 554
892 892 8.50%, 11/1/26, #411183 946 946
14,362 14,362 3/25/27, 1997 Class 20, IO, IF 763 763
701 701 8.75%, 4/18/27, 1997 Class 50FD6 702 702
4,611 4,611 7.00%, 9/1/27, Pool #313687 4,698 4,698
9,000 9,000 6.00%, 11/1/27, Series 97-79, Class PE 8,806 8,806
1,638 1,638 9/1/27, Adjustable Rate, #54844 1,649 1,649
10,030 10,030 7.00%, 12/18/27, 1997 Class 81-PI 2,622 2,622
1,827 1,827 3/1/29, Adjustable Rate, #303532 1,840 1,840
--------- -------- --------
129,257 84,843 214,100
--------- -------- --------
Government National Mortgage Assoc. (7.7%):
3 3 11.00%, 6/15/99, Pool #110948 3 3
4 4 11.00%, 3/15/00, Pool #123750 4 4
5 5 10.00%, 12/15/00, Pool #136214 5 5
44 44 10.00%, 1/15/01, Pool #145167 46 46
33 33 10.00%, 1/15/01, Pool #145328 34 34
7 7 9.00%, 6/15/01, Pool #166985 7 7
1 1 9.00%, 6/15/01, Pool #164431 1 1
4 4 9.00%, 6/15/01, Pool #161443 4 4
3 3 8.50%, 6/15/01, Pool #162447 4 4
32 32 8.50%, 6/15/01, Pool #137056 33 33
57 57 6.50%, 6/15/01, Pool #1305 57 57
7 7 9.00%, 7/15/01, Pool #155822 7 7
36 36 9.00%, 8/15/01, Pool #173460 37 37
49 49 8.50%, 8/15/01, Pool #164207 52 52
5 5 9.00%, 9/15/01, Pool #177121 5 5
48 48 9.00%, 10/15/01, Pool #179852 51 51
6 6 9.00%, 10/15/01, Pool #185596 6 6
3 3 9.00%, 10/15/01, Pool #177634 4 4
69 69 9.00%, 11/15/01, Pool #191819 72 72
8 8 9.00%, 11/15/01, Pool #174365 9 9
3 3 8.50%, 11/15/01, Pool #183462 3 3
43 43 8.50%, 12/15/01, Pool #199182 45 45
35 35 8.50%, 12/15/01, Pool #199837 37 37
9 9 8.50%, 12/15/01, Pool #182959 10 10
7 7 9.00%, 1/15/02, Pool #205001 8 8
40 40 8.00%, 3/15/02, Pool #210065 42 42
56 56 8.00%, 3/15/02, Pool #205933 59 59
39 39 8.50%, 5/15/02, Pool #213776 41 41
23 23 8.00%, 5/15/02, Pool #203042 24 24
51 51 8.00%, 5/15/02, Pool #180296 53 53
68 68 8.50%, 6/15/02, Pool #2297 71 71
30 30 9.00%, 8/15/02, Pool #232424 31 31
36 36 9.00%, 10/15/02, Pool #246307 38 38
9 9 9.00%, 11/15/02, Pool #235553 9 9
3 3 9.00%, 6/15/03, Pool #247863 3 3
31 31 8.50%, 9/15/04, Pool #274390 32 32
74 74 9.00%, 10/15/04, Pool #281655 77 77
47 47 9.00%, 10/15/04, Pool #229506 49 49
45 45 8.50%, 10/15/04, Pool #277469 47 47
90 90 8.50%, 11/15/04, Pool #253471 94 94
70 70 9.00%, 5/15/05, Pool #288771 74 74
26 26 9.00%, 6/15/05, Pool #283904 27 27
36 36 9.00%, 8/15/05, Pool #297031 38 38
29 29 9.50%, 10/15/05, Pool #291846 31 31
12 12 9.00%, 10/15/05, Pool #292589 12 12
75 75 9.00%, 11/15/05, Pool #292610 79 79
33 33 9.00%, 11/15/05, Pool #299161 35 35
30 30 9.00%, 12/15/05, Pool #299569 32 32
61 61 7.50%, 2/15/06, Pool #7855 64 64
See notes to financial statements.
248
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
70 70 8.50%, 4/15/06, Pool #307487 73 73
46 46 7.50%, 6/15/06, Pool #7855 48 48
29 29 8.00%, 10/15/06, Pool #11503 30 30
55 55 8.00%, 1/15/07, Pool #14709 58 58
25 25 7.50%, 4/15/07, Pool #16991 26 26
222 222 7.50%, 5/15/07, Pool #329528 230 230
62 62 7.50%, 7/15/07, Pool #17316 64 64
119 119 7.50%, 8/15/07, Pool #19015 124 124
21 21 9.00%, 1/15/09, Pool #26076 23 23
111 111 9.00%, 4/15/09, Pool #30352 120 120
72 72 8.00%, 5/15/09, Pool #385676 74 74
4,030 4,030 6.50%, 7/15/09, Pool #780316 4,097 4,097
19 19 8.00%, 8/15/09, Pool #372143 20 20
37 37 9.50%, 10/15/09, Pool #36582 40 40
543 543 8.00%, 10/15/09, Pool #380639 563 563
1,249 1,249 7.50%, 2/15/12, Pool #393363 1,291 1,291
1,875 1,875 7.50%, 3/15/12, Pool #399163 1,938 1,938
1,217 1,217 7.50%, 3/15/12, Pool #441145 1,258 1,258
39 39 10.50%, 2/15/13, Pool #6507 43 43
2 2 12.00%, 1/15/15, Pool #112920 2 2
61 61 9.00%, 8/15/16, Pool #164502 66 66
36 36 9.50%, 9/15/16, Pool #158201 40 40
15 15 9.00%, 9/15/16, Pool #168987 16 16
15 15 9.00%, 9/15/16, Pool #175362 16 16
46 46 9.00%, 9/15/16, Pool #179044 50 50
57 57 9.00%, 12/15/16, Pool #198652 62 62
44 44 9.50%, 1/15/17, Pool #185619 48 48
114 114 8.50%, 1/15/17, Pool #203625 122 122
23 23 9.00%, 3/15/17, Pool #180330 25 25
8 8 8.50%, 3/15/17, Pool #196700 8 8
190 190 8.50%, 5/15/17, Pool #217536 203 203
9 9 8.50%, 6/15/17, Pool #188545 10 10
2,179 2,179 8.50%, 11/15/17, Pool #780086 2,340 2,340
141 141 9.00%, 7/15/18, Pool #226769 153 153
7 7 9.50%, 9/15/18, Pool #258627 8 8
37 37 9.50%, 12/15/18, Pool #229531 40 40
27 27 9.50%, 10/15/19, Pool # 279630 29 29
60 60 9.00%, 11/15/19, Pool #279649 65 65
129 129 9.50%, 2/15/20, Pool #281655 140 140
36 36 9.00%, 2/15/20, Pool #286315 39 39
46 46 9.50%, 9/15/20, Pool #292918 51 51
37 37 9.00%, 7/15/21, Pool #311256 40 40
145 145 8.00%, 4/15/22, Pool #325461 151 151
226 226 8.00%, 5/15/22, Pool #317346 237 237
77 77 8.00%, 5/15/22, Pool #320675 80 80
11 11 8.00%, 5/15/22, Pool #317358 12 12
2,300 2,300 8.00%, 7/15/22, Pool #426612 2,390 2,390
366 366 8.00%, 7/15/22, Pool #183670 382 382
451 451 7.50%, 8/15/22, Pool #333881 467 467
1,491 1,491 8.00%, 9/15/22, Pool #297628 1,554 1,554
1,325 1,325 7.50%, 11/15/22, Pool #313110 1,366 1,366
1,592 1,592 7.00%, 8/15/23, Pool #352108 1,625 1,625
6,595 6,595 7.00%, 9/15/23, Pool #363030 6,735 6,735
2,240 2,240 7.00%, 11/15/23, Pool #352022 2,288 2,288
8,362 8,362 6.50%, 1/15/24, Pool #366706 8,406 8,406
10,346 10,346 7.00%, 2/15/24, Pool #371281 10,562 10,562
2,917 2,917 9.00% 11/15/24, Pool #780029 3,170 3,170
1,722 1,722 7.50%, 1/15/26, Pool #416874 1,778 1,778
1,655 1,655 7.50%, 3/15/26, Pool #422292 1,708 1,708
2,487 2,487 7.50%, 4/15/26, Pool #426059 2,565 2,565
1,587 1,587 8.00%, 7/15/26, Pool #428509 1,649 1,649
2,644 2,644 7.50%, 11/15/26, Pool #442119 2,723 2,723
9,615 9,615 7.00%, 6/15/27, Pool #780584 9,804 9,804
3,768 3,768 7.50%, 7/15/27, Pool #442119 3,876 3,876
4,793 4,793 7.50%, 7/15/27, Pool #411829 4,931 4,931
9,975 9,975 6.00%, 3/20/28, Pool #2562 9,700 9,700
10,000 10,000 7.00%, 4/15/28, Pool # 426691 10,158 10,158
--------- -------- --------
2,920 100,696 103,616
--------- -------- --------
Total U.S. Government Agency Mortgages 220,537 301,945 522,482
--------- -------- --------
U.S. Government Agency Securities (0.3%):
Federal Home Loan Bank (0.1%):
800 800 7.06%, 2/12/99 807 807
--------- -------- --------
- 807 807
--------- -------- --------
Federal Housing Administration (0.2%):
966 966 7.43%, 1/1/22, Project #07335307 984 984
1,897 1,897 7.43%, 11/1/22, Greystone 1996-2 1,945 1,945
See notes to financial statements.
249
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
--------- -------- --------
2,929 - 2,929
--------- -------- --------
Total U.S. Government Agency Securities 2,929 807 3,736
--------- -------- --------
U.S. Treasury Obligations (31.3%):
U.S. Treasury Bonds (9.6%):
3,000 3,000 10.75%, 5/15/03 (b) 3,656 3,656
2,700 2,700 10.38% 11/15/09 3,378 3,378
39,926 39,926 12.75%, 11/15/10 56,863 56,863
14,045 14,045 10.38%, 11/15/12 18,807 18,807
1,000 1,000 12.50%, 8/15/14 1,558 1,558
13,000 13,000 7.50%, 11/15/16 (b) 15,608 15,608
3,000 3,000 8.75%, 5/15/17 (b) 4,041 4,041
11,000 11,000 8.13%, 8/15/19 (b) 14,186 14,186
10,000 10,000 6.25%, 8/15/23 (b) 10,715 10,715
--------- -------- --------
80,606 48,206 128,812
--------- -------- --------
U.S. Treasury Inflation Protected Bonds (1.2%):
4,664 4,664 3.63%, 7/15/02 4,613 4,613
1,224 10,256 11,480 3.38%, 1/15/07 (b) 1,185 9,935 11,120
--------- -------- --------
5,798 9,935 15,733
--------- -------- --------
U.S. Treasury Notes (18.0%):
5,000 5,000 8.25%, 7/15/98 (b) 5,006 5,006
4,000 4,000 4.75%, 8/31/98 (b) 3,998 3,998
3,000 3,000 8.88%, 11/15/98 (b) 3,038 3,038
3,000 3,000 5.88%, 3/31/99 3,009 3,009
1,000 1,000 7.00%, 4/15/99 1,011 1,011
8,700 8,700 9.125%, 5/15/99 8,964 8,964
8,000 8,000 6.875%, 7/31/99 8,111 8,111
6,000 6,000 8.00%, 8/15/99 (b) 6,163 6,163
10,000 10,000 7.50%, 10/31/99 (b) 10,250 10,250
1,000 1,000 7.88%, 11/15/99 (b) 1,031 1,031
31,000 31,000 7.75%, 11/30/99 31,925 31,925
16,000 16,000 5.63%, 11/30/99 (b) 16,027 16,027
3,000 5,000 8,000 7.75%, 1/31/00 (b) 3,099 5,167 8,266
35,900 35,900 7.125%, 2/29/00 36,797 36,797
3,000 3,000 6.75%, 4/30/00 (b) 3,064 3,064
2,900 2,900 6.25%, 5/31/00 2,938 2,938
6,000 6,000 5.88%, 6/30/00 (b) 6,044 6,044
3,000 3,000 6.13%, 7/31/00 (b) 3,036 3,036
21,350 1,000 22,350 8.75%, 8/15/00 22,711 1,064 23,775
5,000 5,000 7.75%, 2/15/01 (b) 5,268 5,268
2,500 2,500 8.00%, 5/15/01 2,662 2,662
5,000 5,000 6.25%, 10/31/01 (b) 5,105 5,105
7,000 7,000 7.50%, 11/15/01 (b) 7,414 7,414
7,000 7,000 6.25%, 2/28/02 (b) 7,159 7,159
360 360 6.625%, 3/31/02 373 373
11,000 11,000 5.75%, 8/15/03 (b) 11,121 11,121
1,000 6,000 7,000 7.25%, 5/15/04 (b) 1,085 6,511 7,596
340 5,000 5,340 7.25%, 8/15/04 (b) 370 5,438 5,808
385 4,000 4,385 7.88%, 11/15/04 (b) 432 4,493 4,925
600 600 6.875%, 5/15/06 650 650
350 350 6.50%, 10/15/06 372 372
--------- -------- --------
121,500 119,406 240,906
--------- -------- --------
U.S. Treasury STRIPS (2.5%):
7,600 7,600 11/15/98 7,454 7,454
7,660 7,660 2/15/99 7,409 7,409
3,300 3,300 2/15/01 2,860 2,860
2,250 2,250 8/15/01 1,896 1,896
5,350 5,350 8/15/08 3,045 3,045
5,000 5,000 11/15/10 2,494 2,494
2,250 2,250 11/15/11 1,058 1,058
1,000 1,000 2/15/13 437 437
20,000 20,000 05/15/16 7,249 7,249
--------- -------- --------
26,653 7,249 33,902
--------- -------- --------
Total U.S. Treasury Obligations 234,557 184,796 419,353
--------- -------- --------
Investment Companies (1.1%):
14,368 14,368 Pegasus Cash Management Fund, Class I 14,368 14,368
--------- -------- --------
Total Investment Companies 14,368 - 14,368
--------- -------- --------
Repurchase Agreements (0.8%):
10,855 10,855 Prudential Securities, 6.10%, 7/1/98 (Collateralized by
$11,011 various U.S. Government Securities, 5.63%-6.10%,
11/30/99-6/26/03, market value $11,073) 10,855 10,855
--------- -------- --------
Total Repurchase Agreements - 10,855 10,855
--------- -------- --------
See notes to financial statements.
250
The One Group Intermediate Bond Fund / Pegasus Intermediate Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ------- --------- ---------- ------------------------------------------------------------------- ---------- ---------- -----------
Short-Term Securities Held as Collateral (9.2%):
Master Notes (1.5%):
5,638 5,638 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 5,638 5,638
3,759 3,759 Danaher Corp., 6.68%, 10/9/98* 3,759 3,759
5,638 5,638 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 5,639 5,639
5,075 5,075 NationsBanc Capital Markets, 6.70%, 7/1/98* 5,075 5,075
--------- -------- --------
- 20,111 20,111
--------- -------- --------
Put Bonds (1.0%):
5,639 5,639 Citicorp, 5.94%, 8/3/98* 5,639 5,639
3,759 3,759 GMAC, 5.85%, 11/10/99* 3,764 3,764
3,759 3,759 Greenwich Capital, 6.11%, 12/13/99* 3,759 3,759
--------- -------- --------
- 13,162 13,162
--------- -------- --------
Repurchase Agreements (6.7%):
20,674 20,674 Donaldson, Lufkin & Jenrette, 6.65%, 7/1/98
(Collateralized by $21,137 various Corporate and
Government Securities, 0.00% - 17.25%, 10/15/02 - 4/15/35,
market value $21,470) 20,674 20,674
18,795 18,795 Goldman Sachs, 6.65%, 7/1/98 (Collateralized by $20,032
various Corporate Bonds, 0.00%, 7/7/98 - 9/18/98, market
value $19,960) 18,795 18,795
41,349 41,349 Lehman Brothers, 6.65%, 7/1/98 (Collateralized by $42,384
various Corporate Bonds, 0.00% - 10.13%, 9/15/99 -
10/17/96, market value $44,363) 41,349 41,349
3,872 3,872 Lehman Brothers, 6.47%, 7/1/98 (Collateralized by $4,067
Media One Group Bonds, 0.00%, 10/5/98, market value
$4,067) 3,872 3,872
4,887 4,887 Lehman Brothers, 6.00%, 7/1/98 (Collateralized by $30,592
various Government Securities, 0.00% - 7.50%, 12/1/18 -
5/1/24, market value $5,030) 4,887 4,887
--------- -------- --------
- 89,577 89,577
--------- -------- --------
Total Short-Term Securities Held as Collateral - 122,850 122,850
--------- -------- --------
Total (Cost $1,421,675) (a) $ 588,321 $ 862,438 $1,450,759
========= ======== =========
- ------------
Percentages indicated are based on net assets of $1,339,839.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losse recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $2,516. Cost for federal tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
Unrealized appreciation........................................................... $ 60,020
Unrealized depreciation........................................................... (33,452)
----------
Net unrealized appreciation....................................................... $ 26,568
==========
(b) A portion of this security was loaned as of June 30, 1998.
* The interest rate, for this variable rate note, which will change
periodically, is based upon prime rates or an index of market rates reflected
on the Schedule of Portfolio of Investments is the rate in effect at June 30,
1998.
AR Adjustable Rate
CMO Collaterallized Mortgage Obligation
HB High Coupon Bonds
IF Inverse Floaters
IO Interest Only
PO Principal Only
251
The One Group Income Bond Fund / Pegasus Multi-Sector Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ --------------------------------------------------------- --------- ---------- -----------
Asset Backed Securities (8.2%):
$ 204 $ $ 204 Advanta Mortgage Loan Trust Asset Backed Ctf.,
Series 1994-3, Class A2, 7.60%, 7/25/10 $ 203 $ $ 203
4,927 4,927 Advanta Mortgage Loan Trust, Series 1995-1, Class A5,
8.32%, 12/25/19 5,201 5,201
5,000 5,000 Advanta Mortgage Loan Trust, Series 1997-2, Class A4,
7.60%, 6/25/27 5,280 5,280
4,195 4,195 Aircraft Lease Portfolio Securitization Ltd.,
Series 1994-1, Class A2, 7.15%, 9/15/04 4,222 4,222
1,796 1,796 Auto Finance Group, Inc., Series 1997-B, Class C, 7.00%,
02/15/03 1,772 1,772
2,000 2,000 BA Mortgage Securities Inc Mortgage Pass Thru Ctf.,
Series 1998-2, Class 1A10, 6.60%, 6/25/28 2,014 2,014
2,500 2,500 Chemical Master Credit Card Trust 1 Asset Backed Ctf.,
Series 1995-3, Class A, 6.23%, 8/15/02 2,543 2,543
727 727 Chevy Chase Auto Receivables Trust Asset Backed
Pass Thru Ctf., Series 1995-2, Class A, 5.80%, 6/15/02 727 727
2,500 2,500 Citicorp Mortgage Securities Pass Thru Ctf.,
Series 1994-9, Class A3, 5.75%, 6/25/09 2,481 2,481
2,500 2,500 Dayton Hudson Credit Card Master Trust Asset Backed Ctf.,
Series 1995-1, Class A, 6.10%, 2/25/02 2,504 2,504
5,000 5,000 EQCC Home Loan Trust, Series 1998-2, Class A3F, 6.23%,
03/15/13 5,001 5,001
237 237 Greentree Financial Corp. Asset Backed Pass Thru Ctf.,
Series 1994-B1, Class A1, 7.15%, 7/15/14 241 241
5,000 5,000 Greentree Financial Corp., Series 1993-2, Class B, 8.00%,
07/15/18 5,249 5,249
5,000 5,000 Greentree Financial Corp., Series 1995-2, Class B1, 8.60%%,
05/15/26 4,961 4,961
4,350 4,350 Greentree Financial Corp., Series 1995-10, Class B1, 7.05%,
02/15/27 4,535 4,535
5,000 5,000 Greentree Home Improvement Loan Trust, Series 1995-D,
Class M1, 6.95%, 9/15/25 5,075 5,075
2,256 2,256 Key Auto Finance Trust Asset Backed Pass Thru Ctf.,
Series 1997-1, Class A1, 5.85%, 3/15/03 2,417 2,417
1,655 1,655 MBNA Master Credit Card Trust Asset Backed Pass Thru Ctf.,
Series 1994-C, Class A, Adjustable Rate, 3/15/04 1,665 1,665
3,000 3,000 MBNA, Series 1998-C, 6.35%, 11/15/05 3,000 3,000
500 500 Newcourt Receivables Asset Trust Pass Thru Ctf.,
Series 1997-1, Class A, 6.04%, 6/20/00 501 501
3,073 3,073 Olympic Automobile Receivables Trust, Series 1994-B,
Class A2, 6.85%, 6/15/01 3,132 3,132
2,300 2,300 Olympic Automobile Receivables Trust Asset Backed
Pass Thru Ctf. Series 1995-D, Class A5, 6.15%, 7/15/01 2,308 2,308
3,919 3,919 Olympic Automobile Receivables Trust, Series 1995-B,
Class A2, 7.35%, 10/15/01 3,958 3,958
3,000 3,000 Olympic Automobile Receivables Trust Asset Backed
Pass Thru Ctf. Series 1996-C, Class A5, 7.00%, 12/15/01 3,082 3,082
382 382 PNC Student Loan Trust Asset Backed Pass Thru Ctf.
Series 1997-2, Class A6, 6.572%, 1/25/04 395 395
2,000 2,000 Security Pacific Acceptance Corp. Asset Backed
Pass Thru Ctf., Series 1995-1, Class A3, 7.25%, 4/10/20 2,093 2,093
3,000 3,000 Team Fleet Financial Corp., Series 1998-2A, Class C,
6.53%, 7/25/02 2,998 2,998
574 574 Union Federal Savings Bank Trust Auto Receivables
Pass Thru Ctf., Series 1994-D, Class A, 7.65%, 1/10/01 577 577
4,000 4,000 Western Financial Asset Backed Pass Thru Ctf.,
Series 1996-C, Class A4, 6.80%, 12/20/03 4,055 4,055
5,000 5,000 World Omni, Series 1997, Class A7, 6.48%, 12/12/08 5,017 5,017
----------- ---------- ----------
Total Asset Backed Securities 27,806 59,401 87,207
----------- ---------- ----------
Collateralized Bond Obligation (0.5%):
5,000 5,000 Merrill Lynch, 1996 PM1, 7.87%, 12/17/06 5,167 5,167
----------- ---------- ----------
Total Collateralized Bond Obligation - 5,167 5,167
----------- ---------- ----------
Corporate Bonds (41.2%):
Banking, Finance & Insurance (17.3%):
4,800 4,800 ABN AMRO Bank N.V., 7.25%, 5/31/05 5,076 5,076
2,000 2,000 American Express Credit Card Note, 6.13% 11/15/01 2,018 2,018
2,000 2,000 American Health Properties, 7.50%, 1/15/07 2,143 2,143
See notes to financial statements.
252
The One Group Income Bond Fund / Pegasus Multi-Sector Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ --------------------------------------------------------- --------- ---------- -----------
6,000 6,000 American RE Corp., 7.45%, 12/15/26 6,678 6,678
9,000 9,000 Associates Corp., 8.34%, 11/25/99 9,292 9,292
6,000 6,000 Associates Corp., 8.15%, 8/1/09 6,878 6,878
2,000 2,000 Baltimore Gas & Electric Co. Mortgage, 6.60%, 6/25/28 2,042 2,042
5,000 5,000 BankAmerica Corp., 9.50%, 4/1/01 5,431 5,431
5,000 5,000 Bear Stearns Co., Inc., 8.25%, 2/1/02 5,338 5,338
5,000 5,000 Bradley Operating, 7.20%, 1/15/08 5,038 5,038
6,500 6,500 Corestates Capital, 8.00%, 12/15/26 7,141 7,141
5,000 5,000 Cullen Frost Bank Capital Trust, 8.42%, 2/1/27 5,638 5,638
1,000 1,000 Donaldson Lufkin Senior Note, 6.50%,6/1/08 1,005 1,005
2,000 2,000 Eli Lilly & Company Debenture, 8.38%, 12/1/06 2,297 2,297
5,000 5,000 First Chicago Capital Trust, 7.95%, 12/1/26 5,500 5,500
2,000 2,000 Fleet Financial Group, Inc., 8.13%, 7/1/04 2,190 2,190
3,500 3,500 Ford Capital BV, 10.13%, 11/15/00 3,815 3,815
1,500 1,500 Ford Motor Credit Corp., 6.38%, 10/6/00 1,515 1,515
3,500 3,500 General Electric Capital Corp., 8.85%, 4/1/05 4,047 4,047
3,000 3,000 General Motors Acceptance Corp., 8.40%, 10/15/99 3,094 3,094
8,000 8,000 General Motors Acceptance Corp., 7.00%, 3/1/00 8,129 8,129
2,000 2,000 General Motors Acceptance Corp., 7.13%, 5/1/03 2,087 2,087
4,500 4,500 Grand Metro Investment Corp. Guaranteed Note, 7.45%, 4/15/35 5,222 5,222
2,500 2,500 Hertz Corporation Senior Note, 6.63%, 5/15/08 2,530 2,530
2,000 2,000 Household Finance Co. Note, 7.25%, 7/15/03 2,091 2,091
10,000 10,000 Lehman Brothers Holdings, Inc., 8.88%, 3/1/02 10,862 10,862
5,000 5,000 Lehman Brothers Holdings, Inc., 11.63%, 5/15/05 6,450 6,450
5,000 5,000 Lehman Brothers Holdings, Inc., 8.80%, 3/1/15 5,969 5,969
6,000 6,000 Massachusetts Mutual Life Insurance, 7.50%, 3/1/24, 144A 6,563 6,563
2,310 2,310 Mellon Financial Corp., 7.63%, 11/15/99 2,362 2,362
5,000 5,000 MIC Financial Trust, 8.38%, 2/1/27 5,525 5,525
6,000 6,000 Morgan Stanley Dean Witter & Co., 6.13%, 10/1/03 5,993 5,993
4,290 4,290 National Rural Utilities Coop Financial Corp., 6.75%, 9/1/01 4,386 4,386
1,500 1,500 Norwest Corp., Senior Medium Term Note, 7.75%, 3/1/02 1,590 1,590
5,000 5,000 Principal Mutual, 7.88%, 3/1/24 5,381 5,381
2,000 2,000 Republic New York Corp., 7.25%, 7/15/02 2,090 2,090
5,000 5,000 Royal Caribbean Cruises Note, 6.75%, 3/15/08 5,063 5,063
3,700 3,700 Salomon Inc., 6.70%, 12/1/98 3,713 3,713
3,055 3,055 Societe General Estate, LLCSeries 144A,
Perpetual Maturity, 7.64%, 3,041 3,041
5,000 5,000 Sun Life Capital Trust, 8.53%, 5/29/49 5,706 5,706
2,000 2,000 Travelers Group Note, 6.25%, 12/1/05 2,023 2,023
----------- ---------- ----------
59,361 123,591 182,952
----------- ---------- ----------
Food Products & Services (0.3%):
2,500 2,500 RJR Nabisco Corp., 8.75%, 8/15/05 2,666 2,666
----------- ---------- ----------
- 2,666 2,666
----------- ---------- ----------
Industrial Goods & Services (8.8%):
1,500 1,500 Advanced Micro Devices, Inc., 11.00%, 8/1/03 (b) 1,594 1,594
5,000 5,000 Atlas Copco AB, 6.50%, 4/1/08 5,025 5,025
5,000 5,000 Avon Products Inc., Series 144A, 6.25%, 5/1/03 5,038 5,038
3,000 3,000 Beckman Instruments, 7.05%, 6/1/26 3,026 3,026
3,000 3,000 Boise Cascade Co., 9.45%, 11/1/09 3,630 3,630
4,000 4,000 Comcast Cable, 8.38%, 5/1/07, 144A 4,490 4,490
1,500 1,500 Comcast Cellular Holdings, 9.50%, 5/1/07 1,569 1,569
1,500 1,500 D.R. Horton, Inc., 8.38%, 6/15/04 1,511 1,511
2,500 2,500 Fred Meyer, Inc., 7.38%, 3/1/05 2,519 2,519
2,000 2,000 Freeport McMoran, Copper & Gold, 7.50%, 11/15/06 1,628 1,628
5,000 5,000 General Motors Corp., 9.13%, 7/15/01 5,424 5,424
3,000 3,000 Golden State Petroleum, 8.04%, 2/1/19, 144A 3,191 3,191
5,000 5,000 Hilton Hotels Corp., 7.95%, 4/15/07 5,231 5,231
2,500 2,500 Loewen Group, Inc., 8.25%, 4/15/03, Callable 4/15/00 2,591 2,591
2,500 2,500 Mississippi Chemical Corp., 7.25%, 11/15/17 2,538 2,538
4,640 4,640 Newmont Gold Co., 8.91%, 1/5/09 5,185 5,185
1,500 1,500 Nine West Group, Inc., 8.38%, 8/15/05 1,474 1,474
2,500 2,500 Northrop-Grumman Corp., 7.00%, 3/1/06 2,594 2,594
4,604 4,604 Oslo Seismic Service, 8.28%, 6/1/11, 144A 5,027 5,027
2,500 2,500 Owens-Illinois, Inc., 7.15%, 5/15/05 2,528 2,528
9,000 9,000 Penske Truck Leasing, 8.25%, 11/1/99 9,269 9,269
1,500 1,500 Pride Petroleum Services, Inc., 9.38%, 5/1/07 1,584 1,584
5,000 5,000 Tele-Commun, Inc., 7.38%, 2/15/00 5,100 5,100
1,500 1,500 Tenet Healthcare Corp., 8.00%, 1/15/05 1,560 1,560
1,500 1,500 Terra Industries, 10.50%, 6/15/05, Callable 6/15/00 1,622 1,622
See notes to financial statements.
253
The One Group Income Bond Fund / Pegasus Multi-Sector Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ --------------------------------------------------------- --------- ---------- -----------
1,500 1,500 Trico Marine Services, Inc., 8.50%, 8/1/05 1,470 1,470
5,000 5,000 U.S. Filter Corp., 6.38%, 5/15/01 5,006 5,006
2,000 2,000 Wyman-Gordon Co., 8.00%, 12/15/07 2,050 2,050
----------- ---------- ----------
3,026 90,448 93,474
----------- ---------- ----------
Real Estate (5.2%):
2,000 2,000 Avalon Properties, Inc., 7.38%, 9/15/02 2,070 2,070
1,500 1,500 Dynex Capital, Inc., 7.88%, 7/15/02 1,524 1,524
4,750 4,750 Meditrust, Inc., 7.77%, 8/16/02 4,952 4,952
3,000 3,000 Meditrust, Inc., 7.82%, 9/10/26 3,431 3,431
3,500 3,500 MEPC Finance, Inc., 7.50%, 5/1/03 3,745 3,745
5,000 5,000 Security Capital Pacific Trust, 6.95%, 10/15/02 5,113 5,113
2,500 2,500 Security Capital Pacific Trust, 7.15%, 10/15/03 2,566 2,566
5,000 5,000 Security Pacific Corp., 11.00%, 3/1/01 5,600 5,600
5,000 5,000 Spieker Properties, Inc., 6.65%, 12/15/00 5,044 5,044
4,000 4,000 Spieker Properties, Inc., 8.00%, 7/19/05 4,300 4,300
8,000 8,000 Taubman Realty Group, 7.00%, 10/1/03 8,109 8,109
3,000 3,000 Wellsford Residential Property, 7.25%, 8/15/00 3,064 3,064
5,000 5,000 Western Banktrust REIT, 7.88%, 2/15/04 5,300 5,300
----------- ---------- ----------
- 54,818 54,818
----------- ---------- ----------
Transportation & Shipping (1.2%):
5,000 5,000 Enterprise Rental-A-Car, 6.38%, 5/15/03 5,000 5,000
5,000 5,000 Union Pacific Co., 9.63%, 12/15/02 5,638 5,638
1,500 1,500 Viking Star Shipping, 9.63%, 7/15/03 1,571 1,571
----------- ---------- ----------
- 12,209 12,209
----------- ---------- ----------
Utilities (1.8%):
4,000 4,000 Bell Telephone Co. Pennsylvania, 8.35%, 12/15/30 5,083 5,083
2,000 2,000 New York Telephone Note, 5.63%, 11/1/03 1,964 1,964
7,000 7,000 NRG Energy Corp., 7.63%, 2/1/06 7,411 7,411
2,000 2,000 Pacific Bell Senior Note, 6.88%, 8/15/06 2,100 2,100
2,819 2,819 Salton Sea Funding Corp., 6.69%, 5/30/00 2,847 2,847
----------- ---------- ----------
9,147 10,258 19,405
----------- ---------- ----------
Yankee & Eurodollar (6.7%):
5,000 5,000 BCH Cayman Islands, 8.25%, 6/15/04 (b) 5,456 5,456
4,000 4,000 BCH Cayman Islands, 7.50%, 6/15/05 4,240 4,240
5,000 5,000 Celulosa Arauco, 6.75%, 12/15/03 4,869 4,869
12,302 12,302 Centra Gas, 10.65%, 12/1/10, 144A 12,702 12,702
5,000 5,000 China International Trust & Investing, 9.00%, 10/15/06 (b) 5,056 5,056
5,000 5,000 China Light & Power Ltd., 7.50%, 4/15/06 4,906 4,906
5,000 5,000 Coca Cola Femsa, 8.95%, 11/1/06 5,056 5,056
2,000 2,000 Kansalis-Osake Pankki, 9.75%, 12/15/98 2,030 2,030
2,000 2,000 Petroleos Mexicanos, 8.85%, 9/15/07 1,973 1,973
2,500 2,500 Petroliam Nasional Berhad, 7.13%, 10/18/06 (b) 2,122 2,122
4,250 4,250 Ras Laffan Gas, 7.63%, 9/15/06, 144A 4,117 4,117
5,000 5,000 Scotland International Finance, 8.80%, 1/27/04, 144A 5,588 5,588
4,000 4,000 Scotland International Finance, 8.85%, 11/1/06, 144A 4,630 4,630
4,000 4,000 Termoemcali Funding Corp., 10.13%, 12/15/14, 144A 3,770 3,770
2,400 2,400 Yanacocha, 8.40%, 6/15/04 2,381 2,381
2,426 2,426 Ypf Sociedad Anomima, 7.00%, 10/26/02 2,435 2,435
----------- ---------- ----------
- 71,331 71,331
----------- ---------- ----------
Total Corporate Bonds 71,534 365,321 436,855
----------- ---------- ----------
Equipment Trust Certificates (2.3%):
4,886 4,886 Federal Express, Series A-1, 7.85%,1/30/15 5,313 5,313
10,966 10,966 Northwest Air Trust, Series 2, Class A, 9.25%, 12/21/12 13,064 13,064
4,569 4,569 Northwest Air Trust, Series B, 10.23%, 12/21/12 5,523 5,523
----------- ---------- ----------
Total Equipment Trust Certificates - 23,900 23,900
----------- ---------- ----------
Other Mortgage Backed Securities (1.0%):
2,485 2,485 BHN, Series 1997-1, Class A2, 7.92%, 7/25/09 2,462 2,462
2,750 2,750 BHN, Series 1997-2, Class A2, 7.54%, 5/31/17 2,742 2,742
5,000 5,000 Residential Funding Corp., Series 1996-HS2,
Class A4, 7.55%, 9/25/12 5,210 5,210
----------- ---------- ----------
Total Other Mortgage Backed Securities - 10,414 10,414
----------- ---------- ----------
U.S. Government Agency Mortgages (21.7%):
Federal Home Loan Mortgage Corp. (12.0%):
5,000 5,000 7.13%, 7/21/99 5,074 5,074
See notes to financial statements.
254
The One Group Income Bond Fund / Pegasus Multi-Sector Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ --------------------------------------------------------- --------- ---------- -----------
18,000 18,000 0.00%, 8/15/02 (b) 14,277 14,277
100 100 6.75%, 12/15/05, Series 1507 Class JC 103 103
3,684 3,684 7.00%, 6/1/09, Pool #E00313 3,765 3,765
6,722 6,722 7.50%, 5/1/11, Pool #E00438 6,934 6,934
6,853 6,853 7.00%, 5/1/11, Pool #E00434 7,003 7,003
6,423 6,423 7.00%, 6/1/11, Pool #E64220 6,563 6,563
1,044 1,044 6.38%, 8/15/11, Series 1995 Class EM 1,049 1,049
19,794 19,794 6.50%, 4/1/13, Gold Pool #E69986 19,931 19,931
9,969 9,969 6.50%, 5/1/13, Gold Pool #E70312 10,037 10,037
9,967 9,967 6.50%, 5/1/13, Pool #E70383 10,036 10,036
115 115 6.50%, 8/15/13, Series 1556 Class H 117 117
345 345 5.50%, 1/15/19, Series 1590 Class FA 340 340
289 289 6.50%, 12/15/21, Series 1552 Class GB 294 294
250 250 6.25%, 3/15/22, Series 1671 Class F 252 252
562 562 6.50%, 11/15/22, Series 1552 Class HB 571 571
802 802 6.00%, 5/15/23, Series 1630 Class PJ 798 798
9,506 9,506 6.50%, 1/1/24, Gold Pool #C80091 9,518 9,518
965 965 7.50%, 6/1/24, Pool #C80161 993 993
13,594 13,594 7.00%, 9/1/24, Pool #G00271 13,849 13,849
5,472 5,472 7.50%, 10/1/24, Pool #C80245 5,627 5,627
8,284 8,284 7.00%, 11/1/24, Pool #G00278 8,439 8,439
1,443 1,443 7.00%, 8/1/27, Gold Pool #D81734 1,466 1,466
----------- ---------- ----------
4,990 122,046 127,036
----------- ---------- ----------
Federal National Mortgage Assoc. (6.9%):
6,494 6,494 7.00%, 4/1/03, Pool #303865 6,585 6,585
243 243 6.90%, 12/25/03, Series 1993-70 Class D 248 248
490 490 6.50%, 5/25/08, Series 1993-55 Class K 503 503
615 615 6.00%, 12/25/08, Series 1993-231 Class M 615 615
15,747 15,747 8.00%, 12/1/09, Pool #250168 16,294 16,294
300 300 6.50%, 3/25/13, Series 1993-140 Class H 305 305
9,903 9,903 6.50%, 5/1/13, Pool #251700 9,961 9,961
15,000 15,000 6.00%, 6/1/13, Pool #423196 14,841 14,841
2,000 2,000 8.20%, 3/10/16 (b) 2,488 2,488
200 200 5.70%, 6/25/17, Series X-225C Class PD 199 199
311 311 6.00%, 10/25/20, Series 1994-40, Class, H 311 311
155 155 7.50%, 3/25/23, Series 1993-23 Class PZ 171 171
449 449 7.00%, 5/25/23, Series 1993-56 Class PZ 477 477
1,500 1,500 7.00%, 7/18/24, Series 1997-12 Class G 1,514 1,514
8,871 8,871 7.50%, 9/1/25, Pool #324179 9,137 9,137
9,972 9,972 6.50%, 4/1/28, Pool #420165 9,931 9,931
----------- ---------- ----------
4,343 69,237 73,580
----------- ---------- ----------
Government National Mortgage Assoc. (2.8%):
2,552 2,552 9.00%, 11/15/24, Pool #780029 2,773 2,773
7,780 7,780 7.50%, 7/15/26, Pool #430999 8,018 8,018
8,543 8,543 7.50%, 7/20/27, Pool #2457 8,751 8,751
9,860 9,860 6.50%, 2/15/28, Pool #460759 9,839 9,839
----------- ---------- ----------
-- 29,381 29,381
----------- ---------- ----------
Total U.S. Government Agency Mortgages 9,333 220,664 229,997
----------- ---------- ----------
U.S. Government Agency Securities (0.5%):
Government Trust Certificate (0.2%):
1,768 1,768 Israel, 9.40%, 5/15/02 -- 1,830 1,830
----------- ---------- ----------
Tennessee Valley Authority (0.3%):
3,200 3,200 8.63%, 11/15/29 3,536 3,536
----------- ---------- ----------
Total U.S. Government Agency Securities -- 5,366 5,366
----------- ---------- ----------
U.S. Treasury Obligations (22.7%):
U.S. Treasury Bonds (8.8%):
2,250 2,250 13.38%, 8/15/01 (b) 2,751 2,751
9,600 9,600 11.88%, 11/15/03 (b) 12,376 12,376
5,740 5,740 12.75%, 11/15/10 8,175 8,175
500 500 7.50%, 11/15/16 600 600
14,000 14,000 9.00%, 11/15/18 19,460 19,460
2,820 2,820 8.13%, 5/15/21 3,672 3,672
1,000 11,250 12,250 8.13%, 8/15/21 (b) 1,303 14,660 15,963
7,125 7,125 8.00%, 11/15/21 (b) 9,182 9,182
17,600 17,600 7.13%, 2/15/23 (b) 20,817 20,817
See notes to financial statements.
255
The One Group Income Bond Fund / Pegasus Multi-Sector Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ --------------------------------------------------------- --------- ---------- -----------
----------- ---------- ----------
13,750 79,246 92,996
----------- ---------- ----------
U.S. Treasury Inflation Protected Bonds (0.2%):
2,651 2,651 3.38%, 1/15/07 2,568 -- 2,568
----------- ---------- ----------
U.S. Treasury Notes (11.4%):
560 560 8.50%, 2/15/00 585 585
15,000 15,000 6.25%, 8/31/00 (b) 15,222 15,222
34,800 34,800 6.63%, 6/30/01 (b) 35,819 35,819
15,000 15,000 6.25%, 6/30/02 (b) 15,377 15,377
30,000 30,000 6.25%, 2/15/03 (b) 30,880 30,880
11,500 11,500 6.25%, 2/15/07 (b) 12,045 12,045
10,000 10,000 6.63%, 5/15/07 (b) 10,737 10,737
----------- ---------- ----------
585 120,080 120,665
----------- ---------- ----------
U.S. Treasury STRIPS (2.3%):
85,000 85,000 10/15/19 24,496 24,496
----------- ---------- ----------
Total U.S. Treasury Obligations 16,903 223,822 240,725
----------- ---------- ----------
Investment Companies (0.4%):
4,338 4,338 Pegasus Cash Management Fund, Class I 4,338 4,338
----------- ---------- ----------
Total Investment Companies 4,338 -- 4,338
----------- ---------- ----------
Repurchase Agreements (0.3%):
3,102 3,102 Prudential Securities, 6.10%, 7/1/98 (Collateralized by
$3,193 U.S. Treasury Bills, 9/3/98, market value $3,165) 3,102 3,102
----------- ---------- ----------
Total Repurchase Agreements -- 3,102 3,102
----------- ---------- ----------
Short-Term Securities Held as Collateral (14.1%):
Master Notes (2.3%):
6,835 6,835 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 6,835 6,835
4,557 4,557 Danaher Corp., 6.68%, 10/9/98* 4,557 4,557
6,835 6,835 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 6,835 6,835
6,151 6,151 NationsBanc Capital Markets, 6.70%, 7/1/98* 6,151 6,151
----------- ---------- ----------
-- 24,378 24,378
Put Bonds (1.5%): ----------- ---------- ----------
6,835 6,835 Citicorp, 5.94%, 8/3/98* 6,835 6,835
4,557 4,557 GMAC, 5.85%, 11/10/99* 4,563 4,563
4,557 4,557 Greenwich Capital, 6.11%, 12/13/99* 4,557 4,557
----------- ---------- ----------
-- 15,955 15,955
----------- ---------- ----------
Repurchase Agreements (10.2%):
25,061 25,061 Donaldson, Lufkin & Jenrette, 6.65%, 7/1/98 (Collateralized
by $25,622 various Corporate and Government Securities,
0.00% - 17.25%, 10/15/02 - 4/15/35, market value $26,025) 25,061 25,061
22,783 22,783 Goldman Sachs, 6.65%, 7/1/98 (Collateralized by $24,283
various Corporate Bonds, 0.00%, 7/7/98 - 9/18/98, market
value $24,195) 22,783 22,783
50,122 50,122 Lehman Brothers, 6.65%, 7/1/98 (Collateralized by $51,377
various Corporate Bonds, 0.00% - 10.13%, 9/15/99 -
10/17/96, market value $53,776) 50,121 50,121
4,694 4,694 Lehman Brothers, 6.47%, 7/1/98 (Collateralized by $4,929
Media One Group Bonds, 0.00%, 10/5/98, market value
$4,929) 4,694 4,694
5,924 5,924 Lehman Brothers, 6.00%, 7/1/98 (Collateralized by $37,083
various Government Securities, 0.00% - 7.50%, 12/1/18 -
5/1/24, market value $6,098) 5,924 5,924
----------- ---------- ----------
-- 108,583 108,583
----------- ---------- ----------
Total Short-Term Securities Held as Collateral -- 148,916 148,916
----------- ---------- ----------
Total (Cost $1,146,495) (a) $ 129,914 $ 1,066,073 $ 1,195,987
=========== ========== ==========
See notes to financial statements.
256
The One Group Income Bond Fund / Pegasus Multi-sector Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- -------- -------------------------------------------- ------- --------- --------
- ----------
Percentages indicated are based on net assets of $1,059,758.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $79. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
Unrealized appreciation............................. $ 51,457
Unrealized depreciation............................. (2,044)
--------
Net unrealized appreciation......................... $ 49,413
========
(b) A portion of this security was loaned as of June 30, 1998.
* The interest rate for this variable rate note, which will change
periodically, is based upon an index of market rates. The rate reflected on
the Schedule of Portfolio Investments is the rate in effect at June 30,
1998.
REIT Real Estate Investment Trust
See notes to financial statements.
257
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
Municipal Bonds (98.9%):
Alabama (0.6%):
$ 2,000 $ $ 2,000 Public Schools , 5.25%, 11/1/05 $ 2,115 $ $ 2,115
3,500 3,500 Courtland Industrial Development Board Solid Waste Disposal
Revenue, Series A, 6.50%, 9/1/25 3,811 3,811
------- ------ --------
5,926 - 5,926
------- ------ --------
Alaska (0.7%):
1,000 1,000 Anchorage, GO, 6.00%, 10/1/10, FGIC 1,130 1,130
7,000 7,000 North Slope Boro, Capital Appreciation, Unlimited Tax,
GO, Series A, 0.00%, 6/30/08, MBIA 4,407 4,407
1,000 1,000 Student Loan Revenue State Assisted Series A, 5.50%, 7/1/04 1,042 1,042
------- ------ --------
5,449 1,130 6,579
------- ------ --------
Arizona (1.8%):
1,000 1,000 Educational Loan Marketing Corp., AMT, 7.30%, 9/1/03,
Callable 9/1/99 @ 102, MBIA 1,053 1,053
1,000 1,000 Educational Loan Marketing Corp., AMT, 7.35%, 9/1/04,
Callable 9/1/99 @ 102, MBIA 1,054 1,054
775 775 Educational Loan Marketing Corp., AMT, 7.38%, 9/1/05,
Callable 9/1/99 @ 102, MBIA 817 817
1,385 1,385 Maricopa City Industrial Development Revenue, Coral
Apartments Project Bg, AMT, 5.10%, 3/1/28, Callable
3/1/06 @ 101 1,379 1,379
1,105 1,105 Maricopa County Development Authority, Multi-Family
Housing, 5.65%, 1/1/09, Callable 1/1/07 @ 101 1,136 1,136
1,280 1,280 Maricopa County Development Authority, Multi-Family
Housing, 6.05%, 7/1/17, Callable 1/1/07 @ 101 1,325 1,325
2,000 2,000 Maricopa County, School District # 41, Series C,
6.10%, 7/1/14, FGIC 2,199 2,199
2,835 2,835 Phoenix Airport Revenue, AMT, Series D, 6.00%, 7/1/06, MBIA 3,101 3,101
700 700 Phoenix Industrial Development Authority, 6.00%, 12/1/10,
Callable 12/1/03 @ 102 738 738
2,060 2,060 Pima County, Industrial Development Authority, 5.45%,
4/1/10, Callable 4/1/07 @ 102, MBIA 2,188 2,188
2,215 2,215 University of Arizona, Revenue, 5.25%, 06/01/14 2,264 2,264
------- ------ --------
4,463 12,791 17,254
------- ------ --------
Arkansas (0.3%):
1,000 1,000 Jefferson County, Pollution Control Revenue, 5.60%,
10/1/17, Callable 12/1/02 @ 102 1,012 1,012
1,060 1,060 Sebastian County, Community Junior College, 5.35%,
4/1/10, Callable 4/1/07 @ 101, AMBAC 1,117 1,117
1,000 1,000 State Capital Appreciation, Series 97A, 0.00%, 6/1/14 447 447
300 300 State Development Authority, Single Family Mortgage
Revenue, Series G, 5.50%, 1/1/10 310 310
------- ------ --------
- 2,886 2,886
------- ------ --------
California (6.9%):
2,000 2,000 ABAG Finance Authority for Nonprofit Corp., 5.75%,
10/1/17, Callable 10/1/07 @ 102 2,067 2,067
2,000 2,000 ABAG Finance Authority for Nonprofit Corp., Multi-Family
Housing Revenue, AMT, 5.70%, 11/1/26, Callable 11/1/06
@ 100 2,114 2,114
1,945 1,945 ABAG Finance Authority, Multi-Family Housing Revenue,
AMT, 6.75%, 4/20/07, GNMA 2,135 2,135
500 500 Castaic Lake Water Agency, Certificates Partnership,
Water System Improvement Project, 7.00%, 8/1/04, Callable
8/1/00 @ 102, MBIA 541 541
3,500 3,500 Long Beach Harbor, Series A, AMT, 6.00%, 5/15/12, FGIC 3,922 3,922
1,615 1,615 MSR Public Power Agency, San Juan Project Revenue Refunding,
Series F, 5.55%, 7/1/02, AMBAC 1,705 1,705
4,000 4,000 Orange County, Recovery, Certificates of Participation,
Series A, 0.00%, 2/15/22, MBIA 4,396 4,396
4,000 4,000 Orange County, Recovery, Certificates of Participation,
Series A, 5.70%, 7/1/10, MBIA 4,336 4,336
1,750 1,750 Riverside County, 5.75%, 6/1/09
3,300 3,300 Sacramento Cogeneration Authority Revenue, 5.60%, 7/1/99 3,358 3,358
1,300 1,300 Sacramento Cogeneration Authority Revenue, 5.80%, 7/1/01 1,359 1,359
1,000 1,000 Sacramento Cogeneration Authority Revenue, 5.90%, 7/1/02 1,059 1,059
3,000 3,000 Sacramento Municipal Utility District, 5.40%, 11/15/06, 1,939 1,939
Callable 11/15/03 @ 102, FSA 3,192 3,192
1,000 1,000 San Francisco City & County Airports, Common International
Airport Revenue, 6.30%, 5/1/11, Callable 5/1/02 @ 102, AMBAC 1,084 1,084
1,000 1,000 Southern Public Power Authority, Transmission Project,
Revenue, 0.00%, 7/1/15, MBIA 424 424
7,000 7,000 State, 0.00%, 5/17/10, GO 5,037 5,037
See notes to financial statements.
258
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
State, 0.00%, 7/1/10, GO 7,500 7,500
1,000 1,000 State, 7.00%, 10/1/07, GO 1,194 1,194
1,400 1,400 State Wide Community Development, 2.40%, 1/1/09,
Callable 1/1/04 @ 102, AMBAC 1,389 1,389
1,270 1,270 Statewide Community Development Authority, Multi-Family
Revenue, Cudahy Gardens Project, Series I, AMT, 5.10%,
10/1/12, Callable 4/1/03 @ 102, Swiss Bank 1,275 1,275
2,100 2,100 Statewide Community Development Authority, Multi-Family
Revenue, Riverside Gardens Project, Series J, AMT, 5.10%,
10/1/12, Callable 4/1/03 @ 102, Swiss Bank 2,108 2,108
4,390 4,390 Statewide Community Development Authority, Series A-2,
Revenue, 4.90%, 5/15/25, GO 4,418 4,418
2,000 2,000 Statewide Community Development Authority, Seriese A-3,
Revenue, 5.10%, 5/15/25, Callable 7/1/08 @ 101, GO 2,015 2,015
8,100 8,100 University of California, Revenue Refunding, Multiple
Purpose, 6.20%, 9/1/01, MBIA 8,636 8,636
------- ------ --------
37,386 29,817 67,203
------- ------ --------
Colorado (9.3%):
1,230 1,230 Adams County, Single Family Mortgage Revenue, Series A,
8.88%, 8/1/03 1,490 1,490
3,290 3,290 Arapahoe County, Capital Improvements, Project E-470,
0.00%, 8/31/03 2,638 2,638
20,000 20,000 Arapahoe County, Capital improvements Revenue Refunding,
Capital Appreciation, 0.00%, 8/31/05 7,083 7,083
1,135 1,135 Arapahoe County, School District #001 Englewood, 0.00%, 11/1/09 677 677
885 885 Denver City & County, Airport Revenue, AMT, 6.75%,
11/15/13, Callable 11/15/02 @ 102, MBIA-IBC 971 971
1,000 1,000 Denver City & County, Airport Revenue, Series A, AMT,
8.00%, 11/15/25 1,100 1,100
2,000 2,000 Denver City & County, Airport Revenue, Series A, 6.90%, 11/15/98 2,024 2,024
1,000 1,000 Denver City & County, Airport Revenue, Series A, 7.00%, 11/15/99 1,041 1,041
1,830 1,830 Denver City & County, Airport Revenue, Series A, 8.50%, 11/15/07,
MBIA 2,041 2,041
2,000 2,000 Denver City & County, Airport Revenue, Series B, AMT,
5.75%, 11/15/09, Callable 11/15/06 @ 102, MBIA 2,166 2,166
2,000 2,000 Denver City & County, Airport Revenue, Series B, 7.25%, 11/15/05 2,243 2,243
1,145 1,145 Denver City & County, Airport Revenue, Series C, 6.55%, 11/15/03 1,260 1,260
2,900 2,900 Denver City & County, Airport Revenue, Series D, 7.30%, 11/15/00 3,105 3,105
8,665 8,665 Denver City & County, Refunding Water Unlimited Tax, GO,
7.00%, 10/1/99 9,014 9,014
9,750 9,750 Denver City & County, School District #1, GO, 0.00%, 12/1/06 6,693 6,693
1,000 1,000 Denver City & County, School District, #001, GO Refunding,
6.50%, 12/1/10 1,182 1,182
3,000 3,000 El Paso County, School District, 7.13%, 12/1/19, Callable
12/1/07 @ 125 3,844 3,844
1,135 1,135 Health Facilities Authority Revenue, 6.40%, 1/1/10, Callable
1/1/07 @ 101 1,193 1,193
4,255 4,255 Highlands Ranch Metro District #004, GO, 5.25%, 12/1/15,
Callable 12/1/08 @ 101, AMBAC 4,322 4,322
1,320 1,320 Housing Finance Authority Single Family Program, Series
C-2, Revenue, 5.15%, 11/1/16, Callable 5/1/08 @ 102 1,320 1,320
240 240 Housing Finance Authority, AMT, 5.63%, 5/1/04 250 250
3,220 3,220 Housing Finance Authority, GO, Series A, 6.40%, 8/1/06,
Callable 8/1/02 @ 102, MBIA 3,418 3,418
4,000 4,000 Housing Finance Authority, Multi-Family Program, 5.65%, 10/1/15 4,103 4,103
565 565 Housing Finance Authority, Refunding, Single Family, Series
D, 5.65%, 12/1/04, Callable 5/1/03 @ 100 585 585
3,250 3,250 Housing Finance Authority, Series 97 B-3, 6.80%, 11/1/28,
Callable 5/1/07 @ 105 3,647 3,647
505 505 Housing Finance Authority, Single Family Program, Series F,
AMT, 6.75%, 12/1/04 526 526
500 500 Jefferson County, Partnership, 6.45%, 12/1/04, Callable
12/1/02 @ 102, MBIA 554 554
3,500 3,500 Jefferson County, School District # R-001, GO,
5.90%, 12/15/05, AMBAC 3,790 3,790
4,000 4,000 Meridian Metropolitan District, 7.50%, 12/1/11, Callable
12/1/01 @ 101 4,365 4,365
325 325 Mountain Village Metropolitan District, San Miguel County,
8.10%, 12/1/11, Callable 12/1/02 @ 101 372 372
675 675 Mountain Village Metropolitan District, San Miguel County,
8.10%, 12/1/11, Prerefunded 12/1/02 @ 101 787 787
See notes to financial statements.
259
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
5,000 5,000 Poudre Valley, Hospital Revenue, 6.63%, 12/1/11, AMBAC 5,460 5,460
980 980 Pueblo County, Single Family Mortgage Revenue, 6.40%,
11/1/13, Callable 11/1/04 @ 102 1,026 1,026
1,250 1,250 Summit County, School District #1, Refunding, 6.75%,
12/1/04, FGIC 1,422 1,422
3,410 3,410 Water Power Development Authority Revenue,
Revolving Fund, Series A, 6.00%, 9/1/10, AMBAC 3,863 3,863
------- ------ --------
43,514 46,061 89,575
------- ------ --------
District of Columbia (0.4%):
2,000 2,000 GO, 5.50%, 10/01/12 2,082 2,082
2,000 2,000 GO, Series B-3 , 5.20%, 6/1/04, MBIA 2,137 2,137
------- ------ --------
4,219 - 4,219
------- ------ --------
Connecticut (0.9%):
1,000 1,000 Bridgeport, Refunding, 6.50%, 9/1/08, AMBAC 1,167 1,167
1,015 1,015 State Health & Educational Facilities, Series 97E, 5.50%,
7/1/09, Callable 7/1/07 @ 102 1,074 1,074
1,695 1,695 State Housing Finance Authority, 6.70%, 11/15/12, Callable
11/15/02 @ 102 1,833 1,833
1,575 1,575 State, GO, Series A, 5.30%, 5/15/10, Callable 5/15/06 @ 101 1,655 1,655
2,475 2,475 State, GO, Series B, 6.00%, 10/1/05 2,737 2,737
------- ------ --------
- 8,466 8,466
------- ------ --------
Florida (4.8%):
1,220 1,220 Broward County, Housing Authority, 5.55%, 7/1/09, Callable
7/1/06 @ 102 1,269 1,269
1,500 1,500 Cape Coral, Special Obligation Revenue, Water
Improvements, Special Assessment - Water Utility, 6.38%,
6/1/09, Callable 6/1/02 @ 102, FSA 1,645 1,645
1,270 1,270 Clay County, Housing Finance Authority Revenue, Single
Family Mortgage, AMT, 6.20%, 9/1/11, Callable 3/1/05 @ 102 1,342 1,342
990 990 Clay County, Housing Finance Authority Revenue, Single
Family Mortgage, AMT, 6.25%, 9/1/13, Callable 3/1/05 @ 102 1,047 1,047
1,750 1,750 Clay County, Housing Financial Authority, AMT, 5.25%,
10/1/07, Callable 4/1/07 @102 1,806 1,806
1,000 1,000 Dade County, Aviation Revenue, Series A, 6.00%, 10/1/08,
Callable 10/1/05 @ 102, AMBAC 1,112 1,112
1,155 1,155 Department of Corrections, Okeechobee Correctional
Facilities, 6.00%, 3/1/06, Callable 3/1/05 @ 102, AMBAC 1,279 1,279
2,000 2,000 Escambia County, Housing Finance Authority, Multi-Family
Housing Revenue, 5.75%, 4/1/04, Callable 12/30/03 @ 100, GNMA 2,053 2,053
3,635 3,635 Hialeah Housing Authority Revenue, 5.80%, 6/20/33,
Callable 6/20/08 @ 105, GNMA 3,819 3,819
1,185 1,185 Indian River County, Hospital Revenue, 5.95%, 10/1/09,
Callable 1/1/07 @ 102, FSA 1,317 1,317
1,285 1,285 Indian River County, Hospital Revenue, 6.00%, 10/1/10,
Callable 1/1/07 @ 102, FSA 1,415 1,415
5,170 5,170 Lakeland Electric & Water Revenue, Series B, 6.00%, 10/1/10,
FGIC 5,870 5,870
180 180 Manatee County, Housing Finance Authority, Mortgage
Revenue, 6.38%, 11/1/05 185 185
3,000 3,000 Miami-Dade County Housing Finance Authority Single Family
Revenue, 5.90%, 6/1/25, Callable 6/1/08 @ 103, FHLMC 3,150 3,150
4,850 4,850 Miami-Dade County Housing, Revenue, 5.80%, 10/1/12 5,171 5,171
1,000 1,000 Orlando Water & Electricity Revenue, 8.00%, 4/1/03 1,165 1,165
2,830 2,830 Pinellas County Housing Authority, Revenue, AMT, 6.30%,
3/1/29, Callable 9/1/07 @ 102,GNMA/FNMA 3,036 3,036
1,060 1,060 Santa Rosa Bay Bridge Authority, Revenue, 0.00%, 7/1/16 405 405
4,270 4,270 Santa Rosa Bay Bridge Authority, Revenue, 0.00%, 7/1/19 1,369 1,369
2,255 2,255 Santa Rosa Bay Bridge Authority, Revenue, 0.00%, 7/1/20 685 685
4,265 4,265 Santa Rosa Bay Bridge Authority, Revenue, 0.00%, 7/1/22 1,154 1,154
4,000 4,000 Tampa, GO, 5.50%, 11/15/12 4,301 4,301
2,920 2,920 Tampa Water & Sewer Revenue, ETM, 0.00%, 10/1/05 2,232 2,232
------- ------ --------
10,171 36,656 46,827
------- ------ --------
Georgia (0.6%):
1,500 1,500 Atlanta Airport Facilities, 6.50%, 1/1/08, AMBAC 1,736 1,736
1,000 1,000 Atlanta Airport Facilities Revenue, Series A, 6.50%, 1/1/07,
AMBAC 1,145 1,145
2,000 2,000 Burke County Development Authority, Revenue, 3.95%,
7/01/24, Georgia Power Company 2,000 2,000
1,215 1,215 Columbus Water & Sewer Revenue, 6.30%, 5/1/06, Callable
11/1/02 @ 102, FGIC 1,333 1,333
------- ------ --------
- 6,214 6,214
------- ------ --------
Hawaii (1.9%):
1,000 1,000 Honolulu City & County, GO, Series A, 5.60%, 4/1/07, FSA 1,083 1,083
See notes to financial statements.
260
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
3,500 3,500 Honolulu City & County, GO, Series A, 7.35%, 7/1/08 4,276 4,276
10,000 10,000 State Airports System Revenue, Series II, 7.00%, 7/1/18 10,819 10,819
2,065 2,065 State Department of Budget & Finance Revenue, 5.60%, 7/1/02 2,156 2,156
------- ------ -------
12,975 5,359 18,334
------- ------ -------
Idaho (1.4%):
2,200 2,200 Health Facilities Authority Holy Cross Health System,
Revenue, 5.00%, 12/1/18, Callable 6/1/08 @ 101, MBIA 2,154 2,154
1,600 1,600 Southern Idaho Regional Solid Waste District, 5.45%,
11/1/13, Callable 11/1/03 @ 101, Credit Local de France 1,660 1,660
1,285 1,285 Student Loan Fund Marketing Association, Inc., 6.40%,
10/1/99, GSL 1,313 1,313
1,000 1,000 Student Loan Fund Marketing Association, Inc., AMT, 5.10%,
4/1/02, GSL 1,009 1,009
4,500 4,500 Student Loan Fund Marketing Association, Inc., Series C,
AMT, 5.60%, 4/01/07, Callable, 10/01/03 @ 102, GSL 4,708 4,708
1,300 1,300 University Revenue, 5.75%, 4/1/06, FSA 1,415 1,415
1,060 1,060 University Revenue, 5.50%, 4/1/13, Callable 4/1/07 @ 101, MBIA 1,115 1,115
------- ------ -------
- 13,374 13,374
------- ------ -------
Illinois (6.9%):
4,000 4,000 Chicago, GO, 5.60%, 01/01/04, AMBAC 4,253 4,253
1,000 1,000 Chicago Metro Water Reclamation District - Greater Chicago
Capital Improvements, GO, Pre-Refunded, 7.25%, 12/1/12 1,256 1,256
4,245 4,245 Chicago Metro Water Reclamation District - Greater Chicago
Capital Improvements, GO, Pre-Refunded, 6.25%, 12/1/14,
Callable 12/1/05 @ 100 4,780 4,780
4,500 4,500 Chicago Metro Water Unlimited Tax Refunding, GO, 5.00%, 12/1/02 4,661 4,661
5,000 5,000 Chicago O'Hare International Airport Revenue, Series A,
5.625%, 1/1/13, AMBAC 5,271 5,271
3,045 3,045 Chicago Park District, GO, 6.35%, 11/15/08, Callable
11/15/05 @ 102, MBIA 3,429 3,429
2,585 2,585 Chicago Water Revenue, 6.50%, 11/1/10, FGIC 3,039 3,039
1,450 1,450 Chicago, Single Family Mortgage Revenue, 0.00%, 10/1/09,
Callable 10/1/05 @ 78.60, MBIA 729 729
1,380 1,380 Chicago, Single Family Mortgage Revenue, 0.00%, 10/1/09, MBIA 641 641
705 705 Decatur Economic Development, 7.75%, 6/1/07, Callable
6/1/02 @ 102 794 794
7,225 7,225 Development Finance Authority, Pollution Control Revenue,
7.25%, 6/1/11, Callable 6/1/01 @ 102 7,832 7,832
810 810 Evanston Residential Mortgage, 6.38%, 1/1/09, Callable
7/1/02 @ 102, AMBAC 858 858
1,645 1,645 Health Facilities Authority Revenue, 6.13%, 11/15/07,
Callable 11/15/04 @ 102, MBIA 1,840 1,840
1,500 1,500 Health Facilities Authority Revenue, 6.75%, 1/1/10, Callable
1/1/00 @ 102, FGIC 1,582 1,582
600 600 Madison County, Series A, 0.00%, 03/01/33 600 600
1,280 1,280 McHenry County, High School #157, GO, 0.00%, 12/1/11, FSA 668 668
1,370 1,370 McHenry County, High School #157, GO, 0.00%, 12/1/12, FSA 666 666
1,620 1,620 McHenry County, High School #157, GO, 0.00%, 12/1/13, FSA 743 743
2,960 2,960 Metro Pier & Exposition Authority, Dedicated State Tax Revenue,
6.50%, 6/1/05 3,321 3,321
8,330 8,330 Metro Pier & Exposition Authority, Dedicated State Tax Revenue,
Capital Appreciation, Series A, 0.00%, 12/15/16, MBIA 3,224 3,224
2,250 2,250 Metro Pier & Exposition Authority, Dedicated State Tax Revenue,
Capital Appreciation, Series A, 6.40%, 6/1/03, MBIA 2,461 2,461
2,500 2,500 Metro Pier & Exposition Authority, Dedicated State Tax Revenue,
Capital Appreciation, Series A, 6.50%, 6/1/04, MBIA 2,776 2,776
2,785 2,785 Regional Transit Authority, Series A, 8.00%, 6/1/03, AMBAC 3,242 3,242
2,500 2,500 Student Assistance, Student Loan Revenue, Series M, AMT,
6.60%, 3/1/07, Callable 3/1/02 @ 102 2,669 2,669
1,500 1,500 Winnebago County, School District #122, GO, 0.00%, 1/1/13, FSA 727 727
2,500 2,500 Winnebago County, School District #122, GO, 0.00%, 1/1/15, FSA 1,078 1,078
2,500 2,500 Winnebago County, School District #122, GO, 0.00%, 1/1/16, FSA 1,016 1,016
3,500 3,500 Winnebago County, School District #122, GO, 0.00%, 1/1/17, FSA 1,344 1,344
1,350 1,350 Winnebago County, School District #122, Harlem-Loves
Park, Refunding, 6.35%, 6/1/07, FGIC 1,539 1,539
------- ------ -------
29,809 37,230 67,039
------- ------ -------
Indiana (2.8%):
3,670 3,670 Bond Bank Revenue, 6.00%, 2/1/04 3,980 3,980
2,150 2,150 Brownsburg Industrial Building Corp., Revenue, 5.50%,
2/1/15, Callable 2/1/07 @ 102, MBIA 2,226 2,226
1,000 1,000 Fort Wayne Hospital Authority, Parkview Memorial Hospital
See notes to financial statements.
261
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
Project, Series A, 7.50%, 11/15/11, Callable 11/15/99 @
102, FGIC 1,061 1,061
3,260 3,260 Health Facilities Financing Authority, Hospital Revenue,
6.00%, 8/15/10, Callable 8/15/06 @ 102 3,489 3,489
6,900 6,900 Indianapolis Airport Authority Revenue, 7.10%, 1/15/17 7,781 7,781
2,820 2,820 Indianapolis Economic Development Revenue,
Knob-in-the-Woods Project, 6.38%, 12/1/04, Mandatory Put
12/1/04 @ 100 3,120 3,120
500 500 Lawrence Township School District, 6.75%, 1/5/05 564 564
1,500 1,500 New Albany Floyd County, School Building, 6.20%, 7/1/03 1,634 1,634
1,500 1,500 New Albany Floyd County, School Building, 6.20%, 7/1/04 1,650 1,650
1,000 1,000 State Vocational Technical College Building Facilities Fee,
6.50%, 7/1/07, Callable 1/1/05 @ 102, AMBAC 1,136 1,136
------- ------ -------
11,761 14,880 26,641
------- ------ -------
Iowa (0.4%):
700 700 Des Moines Water Revenue, Series B, 5.50%, 12/1/04,
Callable 12/1/01 @ 100 726 726
1,550 1,550 Finance Authority, 6.35%, 7/1/09, Callable 1/1/03 @ 102, AMBAC 1,639 1,639
1,000 1,000 Finance Authority, Private College Revenue, 5.75%, 12/1/08, MBIA 1,107 1,107
795 795 Finance Authority, Single Family Mortgage Revenue, Series
F, 6.15%, 7/1/04, Callable 1/1/03 @ 102, AMBAC 822 822
------- ------ -------
- 4,294 4,294
------- ------ -------
Kansas (1.1%):
5,000 5,000 Kansas City Utility System Revenue, 6.38%, 9/1/23, FGIC 5,584 5,584
2,220 2,220 Sedgwick & Shawnee, Single Family Revenue, 5.50%,
6/1/29, Step Coupon, 6.70% after 10/1/98 2,493 2,493
850 850 Sedgwick County, Family Mortgage Revenue, Series A-1,
6.50%, 12/1/16, Callable 12/1/07 @ 105, GNMA 918 918
1,750 1,750 Wichita Hospital Revenue, St. Francis Regional Hospital,
6.25%, 10/1/10, Callable 10/1/02 @ 102, MBIA 1,904 1,904
------- ------ -------
5,584 5,315 10,899
------- ------ -------
Kentucky (0.8%):
800 800 Campbell & Kenton Counties, Sanitation District #1, 6.50%,
8/1/05, ETM 884 884
3,000 3,000 Economic Development Financial Authority, Revenue,
5.00%, 12/1/18, Callable 6/1/08 @ 101 2,946 2,946
1,000 1,000 Kenton County, Public Properties Corp., 5.63%, 12/1/12,
Callable 12/1/06 @ 101 1,057 1,057
1,000 1,000 Martin County Mortgage Section 8, Revenue, 6.25%, 7/1/23, FHA 1,039 1,039
1,310 1,310 Owensboro Electric Light & Power Revenue, 0.00%, 1/1/09, BIG 471 471
1,000 1,000 Winchester Industrial Building, 7.75%, 7/1/12, Callable
7/1/02 @ 102 1,128 1,128
------- ------ -------
- 7,525 7,525
------- ------ -------
Louisiana (0.5%):
233 233 Housing Agency Mortgage Revenue, 7.80%, 12/1/09,
Callable 6/1/04 @ 105, GNMA 261 261
915 915 Housing Agency Mortgage Revenue, Single Family, Series
D-2, AMT, 8.00%, 6/1/27, Callable 12/1/06 @ 102,
GNMA/FNMA 1,008 1,008
1,550 1,550 Public Facilities Authority Revenue, AMT, 6.75%, 9/1/06,
Callable 9/1/02 @ 102 1,638 1,638
2,000 2,000 St. Charles Parish Pollution Control, 8.25%, 6/1/14, Callable
6/1/99 @ 103 2,125 2,125
------- ------ -------
- 5,032 5,032
------- ------ -------
Maryland (2.0%):
1,150 1,150 Anne Arundel County, GO, Series B, AMT, 7.70%, 3/15/06,
Callable 3/15/99 @ 102 1,203 1,203
4,000 4,000 Montgomery County, Public Improvement, Series A, 5.20%, 10/1/01 4,153 4,153
2,000 2,000 State Community Development Administration Department,
Housing & MNTY Single Family, 4.90%, 04/01/06 2,039 2,039
2,950 2,950 State Community Development Administration Department,
Revenue, Fifth Series, 5.95%, 4/1/16 3,122 3,122
2,500 2,500 State Public Improvement, GO, Second Series,
5.25%, 6/15/02 2,610 2,610
5,510 5,510 State Unlimited Tax, GO, 5.00%, 3/1/08 5,760 5,760
------- ------ -------
17,684 1,203 18,887
------- ------ -------
Massachusetts (3.0%):
1,650 1,650 Beverly, 6.60%, 3/15/09, Callable 3/15/04 @ 102, FSA 1,863 1,863
20 20 Education Loan Authority, AMT, 7.25%, 1/1/09, Callable
1/1/01 @ 102 21 21
2,000 2,000 Federal Highway, 5.25%, 06/15/12 2,067 2,067
See notes to financial statements.
262
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
5,250 5,250 New England, Educational Loan Refunding, Series A, 6.50%, 9/1/02 5,685 5,685
5,000 5,000 Refunding, GO, Series A, 5.00%, 8/1/07, FGIC 5,217 5,217
2,400 2,400 State, GO, Series C, 6.00%, 8/1/09 2,715 2,715
5,000 5,000 Unlimited Tax, GO, Series A, 5.50%, 3/1/11 5,400 5,400
4,500 4,500 Unlimited Tax, GO, Series A, 6.25%, 7/1/02 4,855 4,855
1,465 1,465 Worcester, GO, Series A, 6.10%, 5/1/08, Callable 5/1/05 @
102, MBIA 1,645 1,645
------- ------ -------
23,224 6,244 29,468
------- ------ -------
Michigan (4.0%):
2,845 2,845 Lapeer Tax Increment Finance Authority, Revenue, 5.50%,
6/1/12, Callable 6/1/08 @ 100 2,889 2,889
4,000 4,000 Pittsfield Township Housing Corp Revenue, Series A,
6.00%, 1/1/22, Callable 7/1/04 @ 103 4,190 4,190
5,445 5,445 Royal Oak Hospital Financing Authority Revenue Refunding,
Wm. Beaumont Hospital, 6.25%, 1/1/11 6,178 6,178
6,850 6,850 Royal Oak Hospital Financing Authority Revenue Refunding,
Wm. Beaumont Hospital, 6.25%, 1/1/12 7,789 7,789
5,575 5,575 State Building Authority Revenue Refunding, Series I, 6.75%,
10/1/1 6,066 6,066
6,750 6,750 State Hospital Financing Authority Revenue Refunding,
Detroit Medical Center Obligation, Group A, 6.25%, 10/1/11 7,316 7,316
2,000 2,000 State Hospital Finance Authority Revenue, Mercy Mount
Clemens Corp., 6.25%, 5/15/11, Callable 5/15/01 @ 102 2,127 2,127
1,500 1,500 State Hospital Finance Authority, Series A, 8.10%, 10/1/13,
Callable 10/1/05 @ 102 1,871 1,871
------- ------ -------
27,349 11,077 38,426
------- ------ -------
Minnesota (2.2%):
2,225 2,225 Housing Finance Agency Revenue, Series D, 5.90%, 8/1/15 2,324 2,324
3,270 3,270 Housing Finance Agency Revenue, Series G, 6.25%, 7/1/26 3,444 3,444
12,910 12,910 Housing Finance Agency Revenue, Series L, 6.25%, 7/1/26 13,534 13,534
1,500 1,500 Northern Municipal Power Agency, Minnesota Electric,
Series A, 5.90%, 1/1/07, Callable 1/1/03 @ 102, AMBAC 1,633 1,633
------- ------ -------
19,302 1,633 20,935
------- ------ -------
Mississippi (0.2%):
1,475 1,475 Home Corp., Single Family, Series D, 5.25%, 7/1/12,
Callable 7/1/07 @ 105, FNMA/GNMA - 1,607 1,607
------- ------ -------
Missouri (1.5%):
1,895 1,895 Carthage Waterworks & Wastewater Treatment Systems,
6.30%, 7/1/09, Callable 7/1/04 @ 101, MBIA 2,118 2,118
1,520 1,520 Fort Zumwalt School District, 5.20%, 3/1/09, Callable 3/1/07
@ 100, AMBAC 1,585 1,585
1,735 1,735 Fort Zumwalt School District, 5.30%, 3/1/10, Callable 3/1/07
@ 100, AMBAC 1,810 1,810
1,345 1,345 Kansas City Industrial Development Authority, Multi-Family
Housing Revenue , Series A, AMT, 5.63%, 7/1/05 1,415 1,415
1,430 1,430 Kansas City Municipal Corp. Revenue, 5.40%, 1/15/08,
Callable 1/15/06 @ 101, AMBAC 1,521 1,521
2,500 2,500 St. Louis Convention & Sports Complex, 5.50%, 8/15/13,
Callable 8/15/03 @ 102, MBIA 2,582 2,582
2,955 2,955 St. Louis Land Clearance Redevelopment Authority Housing
Revenue, 5.95%, 7/1/22, Mandatory Put 4/1/07 @ 100, FNMA 3,179 3,179
------- ------ -------
- 14,210 14,210
------- ------ -------
Montana (0.6%):
1,000 1,000 Health Facilities Authority Revenue, 5.00%, 12/1/13,
Callable 6/1/08 @ 101, MBIA 998 998
1,500 1,500 University Revenue, Facilities Improvement, Series E,
5.00%, 5/15/21, Callable 5/15/08 @ 102, MBIA 1,485 1,485
1,000 1,000 University Revenue, Facilities Improvement, Series F, 4.15%,
11/15/03, AMBAC 999 999
1,075 1,075 University Revenue, Facilities Improvement, Series F,
4.20%, 11/15/04, AMBAC 1,073 1,073
1,020 1,020 University Revenue, Facilities Improvement, Series F,
4.30%, 11/15/05, AMBAC 1,019 1,019
------- ------ -------
- 5,574 5,574
------- ------ -------
Nebraska (0.3%):
2,500 2,500 University Revenue, 5.28%, 07/15/11 2,597 - 2,597
------- ------ -------
Nevada (2.6%):
600 600 Clark County, Industrial Revenue, 0.00%, 12/1/22, LOC: Swiss
Bank 600 600
6,705 6,705 Clark County, Limited Tax, GO, 7.00%, 9/1/00 7,124 7,124
5,000 5,000 Clark County, Pollution Control Revenue, 5.30%, 10/1/11,
See notes to financial statements.
263
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
Callable 1/1/03 @ 102, ACA-CBI 5,105 5,105
1,025 1,025 Douglas County, School District, Series A, 5.90%, 6/1/08,
Callable 6/1/02 @ 101, FGIC 1,100 1,100
2,250 2,250 Las Vegas, Refunding, Limited Tax, GO, 6.40%, 10/1/03 2,456 2,456
2,000 2,000 Las Vegas, Sewer Revenue, 6.60%, 10/1/12, Callable 4/1/02
@ 102, FGIC 2,208 2,208
1,000 1,000 Limited Tax, GO, Series A, 6.00%, 5/1/02 1,059 1,059
1,000 1,000 Limited Tax, GO, Series C, 5.90%, 4/1/01 1,049 1,049
1,000 1,000 Municipal Bond Bank Project #20-23A, 7.00%, 7/1/01, ETM 1,039 1,039
3,010 3,010 Washoe County, School District, GO, 6.13%, 8/1/07,
Callable 8/1/02 @ 101, MBIA 3,247 3,247
------- ------ -------
12,288 12,699 24,987
------- ------ -------
New Hampshire (0.1%):
1,225 1,225 Higher Education & Health Facilities Authority Revenue,
6.25%, 1/1/06, Callable 7/1/04 @ 102 - 1,351 1,351
------- ------ -------
New Jersey (1.3%):
3,500 3,500 Sayreville Housing Development Corp., Revenue, 6.00%,
2/1/23, Callable 8/1/03 @ 100, FHA 3,679 3,679
1,630 1,630 South Brunswick Township, 6.40%, 8/1/07, Callable 8/1/05
@ 100, FGIC 1,841 1,841
7,090 7,090 State Transit Fund Authority, 5.00%, 6/15/04 7,361 7,361
------- ------ -------
7,361 5,520 12,881
------- ------ -------
New Mexico (0.7%):
30 30 Albuquerque, 7.65%, 8/15/07, FGIC 32 32
1,000 1,000 Albuquerque Airport Revenue, AMT, 6.50%, 7/1/11, Callable
7/1/00 @ 105, AMBAC 1,088 1,088
5,455 5,455 Educational Assistance Foundation, Student Loan Revenue,
Series A, AMT, 6.85%, 4/1/05, Callable 4/1/02 @ 102, AMBAC 5,947 5,947
------- ------ -------
- 7,067 7,067
------- ------ -------
New York (6.0%):
3,100 3,100 Long Island Power Agency Authority, Revenue, 5.13%,
12/1/22, Callable 6/1/08 @ 101, FSA 3,066 3,066
1,500 1,500 Metropolitan Transportation Authority, 6.38%, 7/1/10,
Callable 7/1/02 @ 102, FGIC 1,655 1,655
1,395 1,395 Nassau County, 5.63%, 8/1/03, FGIC 1,486 1,486
1,230 1,230 New York City, Municipal Water Authority, Series C,
7.00%, 6/15/16, FGIC 1,350 1,350
6,500 6,500 New York City, Unlimited Tax Refunding, GO,
Series I, 5.75%, 3/15/07 6,999 6,999
5,000 5,000 New York City, Unlimited Tax, GO, Series A,
6.00%, 8/1/06 5,470 5,470
1,980 1,980 Radisson Senior Citizens Housing Corp. Revenue, Series A,
5.63%, 8/1/11 2,059 2,059
4,300 4,300 State Dorm Authority, Series A, 5.20%, 5/15/05 4,463 4,463
1,500 1,500 State Dorm Authority, Series A, 5.50%, 7/1/04 1,579 1,579
2,950 2,950 State Dorm Authority, Series A, 5.50%, 7/1/05 3,111 3,111
1,500 1,500 State Dorm Authority, Series A, 5.50%, 7/1/06 1,583 1,583
6,740 6,740 State Environment Pollution Control Facilities, 6.50%, 6/15/14 7,331 7,331
3,000 3,000 State, GO, Series B, 5.25%, 8/1/12, Callable 8/1/07 @ 101 3,054 3,054
5,000 5,000 State, GO, Series F, 5.13%, 8/1/11, Callable 2/1/08 @ 101 5,066 5,066
9,000 9,000 Tri-Borough Bridge & Tunnel Authority Revenue, General Purpose,
Series Y, 5.90%, 1/1/08 9,999 9,999
------- ------ -------
35,612 22,659 58,271
------- ------ -------
North Carolina (0.9%):
2,500 2,500 Educational Facilities, Wake Forest, 5.00%, 11/1/12,
Callable 11/1/07 @ 102 2,529 2,529
2,500 2,500 Municipal Power Agency, 7.25%, 1/1/07, MBIA 2,968 2,968
2,000 2,000 Raleigh Durham Airport, Series A, 0.00%, 11/01/15 2,000 2,000
1,535 1,535 University and College Improvements, Unlimited
Tax, GO, 5.00%, 6/1/01 1,582 1,582
------- ------ -------
6,550 2,529 9,079
------- ------ -------
North Dakota (1.3%):
3,050 3,050 Grand Forks Sales Tax Revenue Bond, 5.10%, 12/15/10,
Callable 12/15/07 @ 100 3,154 3,154
160 160 Housing Finance Agency, AMT, 6.25%, 7/1/09, Callable
7/1/04 @ 102 166 166
3,500 3,500 Mercer County, Pollution Control Revenue, 6.65%, 6/1/22,
Callable 6/1/02 @ 102, FGIC 3,829 3,829
2,910 2,910 State Building Authority Lease Revenue, Series A, 5.13%,
12/1/18, Callable 12/1/08 @ 100, AMBAC 2,888 2,888
See notes to financial statements.
264
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
1,505 1,505 State Building Authority Revenue, Series B, 5.00%, 12/1/10,
Callable 12/1/08 @ 100, AMBAC 1,535 1,535
1,270 1,270 Water Development, 5.70%, 7/1/17, Callable 7/1/07 @ 100, AMBAC 1,342 1,342
------- ------ -------
- 12,914 12,914
------- ------ -------
Ohio (2.0%):
2,000 2,000 Butler County Sewer Systems Revenue, 4.70%, 12/1/11,
Callable 12/1/08 @ 101, AMBAC 1,984 1,984
2,000 2,000 Butler County Sewer Systems Revenue, 4.80%, 12/1/12,
Callable 12/1/08 @ 101, AMBAC 1,982 1,982
2,100 2,100 Mount Vernon, Industrial Development Revenue, 5.90%, 3/1/03 2,105 2,105
2,500 2,500 Northeast Regional Sewer District, 5.60%, 11/15/13,
Callable 11/15/05 @ 101, AMBAC 2,645 2,645
2,470 2,470 State, Economic Development, 7.50%, 9/1/10, Callable
9/1/02 @ 102 2,772 2,772
2,500 2,500 State, Higher Educational Facilities, 0.00%, 7/1/07 2,531 2,531
4,000 4,000 State Highway Capital Improvements, Unlimited Tax, GO,
Series B, 5.00%, 5/1/05 4,182 4,182
1,000 1,000 Housing, 4.90%, 9/1/06 1,018 1,018
------- ------ -------
5,200 14,019 19,219
------- ------ -------
Oklahoma (1.0%):
2,500 2,500 Baptist Health Center, IDR, 6.25%, 8/15/12, Callable 8/15/05
@ 102, AMBAC 2,797 2,797
1,000 1,000 Housing Finance Agency, PG-B-1, 5.60%, 3/1/28, Callable
9/1/07 @ 102 1,021 1,021
5,500 5,500 Water Reservoir Bridge State Loan Program Revenue, Series
A-Conv, 5.00%, 9/1/17, Callable 9/1/08 @ 102 5,443 5,443
------- ------ -------
- 9,261 9,261
------- ------ -------
Oregon (1.5%):
2,350 2,350 Jackson County, School District #5 Ashland, GO, 5.70%,
6/1/07, FSA 2,576 2,576
2,580 2,580 Lane County, School District #019, 6.00%, 10/15/11, FGIC 2,924 2,924
1,000 1,000 Lane County, School District #52 Bethel, GO, 6.00%, 6/1/06, FSA 1,111 1,111
3,630 3,630 Marion County, Oregon, 5.50%, 10/1/05, AMBAC 3,892 3,892
1,435 1,435 Port of Portland Airport Revenue, Series 7-A, 6.75%, 7/1/09,
Callable 7/1/01 @ 101, MBIA 1,555 1,555
2,075 2,075 Washington County, School District #88, GO, 6.10%, 6/1/05,
Callable 12/15/04 @ 100, FSA 2,298 2,298
------- ------ -------
- 14,356 14,356
------- ------ -------
Pennsylvania (4.6%):
3,200 3,200 Dauphin County, Industrial Development Authority, Pollution
Control Revenue, 6.00%, 1/1/08, MBIA 3,205 3,205
1,085 1,085 Delaware County, Hospital Authority, 6.00%, 12/15/20,
Callable 12/1/03@ 102 1,144 1,144
4,440 4,440 Delaware County, Series A, 5.50%, 12/01/13 4,791 4,791
2,895 2,895 Geisinger Authority Health System Revenue, Series A, 5.50%,
7/1/03 3,049 3,049
1,500 1,500 Hospital Revenue Bond, 6.40%, 1/1/06, Callable 1/1/05 @
102, AMBAC 1,682 1,682
2,750 2,750 Indiana County, Industrial Development Authority, Pollution
Control Revenue, 6.00%, 6/1/06, MBIA 3,040 3,040
7,000 7,000 Intergovernmental Coop Authority, Special Tax Revenue,
6.00%, 6/15/00, FGIC 7,280 7,280
2,350 2,350 Philadelphia Airport Revenue, Series A, AMT, 5.50%,
6/15/05, AMBAC 2,484 2,484
12,090 12,090 Philadelphia Gas Works Revenue, Fourteenth Series,
7.00%, 7/1/02, CAPMAC 13,327 13,327
2,500 2,500 Philadelphia Water & Waste, 5.65%, 6/15/12, Callable
6/15/03 @ 102, FGIC 2,612 2,612
2,000 2,000 State Financial Authority Revenue, 6.60%, 11/1/09, Callable
11/1/03 @ 102, Societe Generale 2,218 2,218
------- ------ -------
28,447 16,385 44,832
------- ------ -------
Puerto Rico (0.6%):
5,000 5,000 Commonwealth Infrastructure, Series A, 5.25%, 7/1/10,
Callable 7/1/08 @ 101, AMBAC - 5,292 5,292
------- ------ -------
Rhode Island (0.1%):
1,000 1,000 Housing & Mortgage Financial Corp., Series 15-B, 6.20%,
10/1/06, Callable 4/1/04 @ 102, MBIA - 1,069 1,069
------- ------ -------
South Carolina (1.8%):
2,800 2,800 Beaufort County School District Unlimited Tax, GO,
Series B, 4.75%, 3/1/03, MBIA 2,867 2,867
See notes to financial statements.
265
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
2,840 2,840 Greenville Hospital, Series A, 5.00%, 05/01/04 2,932 2,932
1,760 1,760 Greenville School Public Facilities, 5.60%, 3/1/10 1,885 1,885
1,045 1,045 Hilton Head Island, GO, 5.50%, 8/1/09, MBIA 1,137 1,137
20 20 Jobs Economic Development Authority Hospital Facilities
Revenue, 5.00%, 11/1/18, Callable 5/1/08 @ 101, AMBAC 20 20
250 250 Piedmont, Municipal Power Agency, Electric Revenue,
Series A, 6.55%, 1/1/16 250 250
2,300 2,300 State, GO, 5.75%, 08/01/05 2,514 2,514
5,000 5,000 State Public Service Authority Revenue, Refunding,
Series A, 5.00%, 7/1/01 5,134 5,134
1,000 1,000 York County, School District #3, GO, 5.40%, 3/1/08, Callable
3/1/06 @ 101, FSA 1,064 1,064
------- ------ -------
13,447 4,356 17,803
------- ------ -------
South Dakota (0.4%):
3,675 3,675 Health & Educational Facilities Authority Revenue, St.
Luke's, 6.63%, 7/1/11, Callable 7/1/01 @ 102, MBIA - 3,968 3,968
------- ------ -------
Tennessee (1.2%):
1,050 1,050 Chattanooga-Hamilton County, Hospital Authority, Hospital
Revenue, 5.63%, 10/1/09, FSA 1,153 1,153
1,460 1,460 Dyer County, Industrial Development Revenue, 6.00%,
2/1/07, Callable 2/1/04 @ 102 1,560 1,560
3,370 3,370 Hamilton County, Unlimited Tax, GO,
Series A, 5.00%, 5/1/09 3,512 3,512
2,000 2,000 Housing Development, 6.20%, 7/1/18, Callable 7/1/05 @ 102 2,123 2,123
1,000 1,000 Trenton Industrial Development Revenue, Series A, 5.40%,
10/1/02 1,002 1,002
2,000 2,000 Memphis-Shelby County Airport Authority Revenue, Refunding,
6.75%, 9/1/12 2,190 2,190
------- ------ -------
5,702 5,838 11,540
------- ------ -------
Texas (6.5%):
2,800 2,800 Austin Housing Finance Corp., Single Family Mortgage
Revenue, AMT, ETM, 0.00%, 12/1/11 1,379 1,379
1,000 1,000 Austin Utility Systems Revenue, 0.00%, 5/15/08, MBIA 634 634
1,130 1,130 Carroll Independent School District, GO, 0.00%, 2/15/11,
PSFG 604 604
1,365 1,365 Carroll Independent School District, GO, 0.00%, 2/15/12,
Callable 2/15/08 @ 82.259, PSFG 683 683
1,420 1,420 Carroll Independent School District, GO, 0.00%, 2/15/13,
PSFG 667 667
1,435 1,435 Carroll Independent School District, GO, 0.00%, 2/15/14,
PSFG 633 633
5,125 5,125 Cass County, Industrial Development Revenue, Series A,
5.30%, 7/1/09 5,372 5,372
1,215 1,215 Castleberry Independent School District, Public Facilities
Corp., 5.00%, 8/15/08 1,220 1,220
5,000 5,000 Coastal Bend Health Facilities, Incarnate Word Health
Services, 5.93%, 11/15/13, Callable 11/15/02 @ 102, AMBAC 5,357 5,357
1,000 1,000 Dallas Independent School District, Unlimited Tax, GO,
8.70%, 8/1/00 1,095 1,095
2,955 2,955 Dallas Revenue Tax, Series A, 5.25%, 08/15/12 3,058 3,058
1,165 1,165 Department, Series E, 4.80%, 09/01/01 1,186 1,186
920 920 Department, Series E, 4.90%, 09/01/02 941 941
3,600 3,600 Grand Prairie Health Facilities Refunding, Dallas/Fort Worth
Medical Center Project, 6.50%, 11/1/04, AMBAC 4,017 4,017
3,300 3,300 Grand Prairie Health Facilities Refunding, Dallas/Fort Worth
Medical Center Project, 6.88%, 11/1/10, AMBAC 3,750 3,750
7,500 7,500 Harris County, Capital Appreciation, 0.00%, 8/15/18, AMBAC 2,416 2,416
5,000 5,000 Harris County, Capital Appreciation, Toll Road, Sub-Lien A,
GO, 0.00%, 8/15/03, MBIA 4,002 4,002
3,700 3,700 Harris County, Capital Appreciation, Toll Road, Sub-Lien A,
GO, 0.00%, 8/15/05, MBIA 2,695 2,695
1,455 1,455 Health Facilities Development Corp., Hospital Revenue, All
Saints Episcopal Hospital, 6.25%, 8/15/12, Callable 8/15/03
@ 102, MBIA 1,594 1,594
1,000 1,000 Housing Agency Residential Development Revenue, Series
D, AMT, 8.40%, 1/1/21, Callable 7/1/99 @ 102 1,039 1,039
990 990 Housing Department, 4.80%, 03/01/01 1,005 1,005
2,035 2,035 Humble Independent School District, Unlimited Tax
Refunding, GO, 6.00%, 2/15/04 2,180 2,180
1,000 1,000 San Antonio Electric & Gas, Series B, 7.00%, 2/1/09,
Callable 2/1/99 @ 101.5 1,034 1,034
See notes to financial statements.
266
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
1,145 1,145 State Higher Education Coordinating Board, Student Loan,
AMT, 7.45%, 10/1/06, Callable 10/1/01 @ 102 1,233 1,233
5,000 5,000 State, Unlimited Tax Refunding, Series B, 5.63%, 10/1/11 5,329 5,329
1,020 1,020 Texas Tech University Revenues, 5.95%, 2/15/13, Callable 2/15/05
@ 100, AMBAC 1,087 1,087
1,000 1,000 Texas A&M University, 7.50%, 07/01/02 1,123 1,123
5,000 5,000 Texas A&M University, Permanent Fund Revenue, 5.60%, 7/1/05 5,397 5,397
2,200 2,200 United Independent School District, 5.25%, 8/15/14,
Callable 8/15/06 @ 100 2,240 2,240
------- ------ -------
23,730 39,240 62,970
------- ------ -------
Utah (0.6%):
2,095 2,095 Clearfield City, GO, 5.13%, 2/1/18, Callable 2/1/08 @ 100, MBIA 2,080 2,080
2,000 2,000 Intermountain Power Agency, Power Supply Revenue, Series
B, 6.50%, 7/1/09, MBIA 2,333 2,333
1,280 1,280 State Housing Finance Authority, AMT, 6.35%, 7/1/12,
Callable 1/1/05 @ 102 1,356 1,356
------- ------ --------
- 5,769 5,769
------- ------ --------
Vermont (0.2%):
1,430 1,430 University & State Agricultural College, Series 73 A, 5.80%,
7/1/13 - 1,445 1,445
------- ------ -------
Virginia (0.8%):
4,000 4,000 Loudoun County, Sanitation Authority Water and Sewer Refunding,
6.25%, 1/1/16 4,367 4,367
1,340 1,340 State Housing Development Authority, Commonwealth
Mortgage, Series J, 6.65%, 7/1/10, Callable 1/1/05 @ 102 1,435 1,435
2,000 2,000 State Housing Development Authority, Series B Sub B2,
6.70%, 1/1/15, Callable 1/1/06 @ 102 2,143 2,143
------- ------ -------
4,367 3,578 7,945
------- ------ -------
Washington (3.3%):
1,830 1,830 Chelan County, Public Utilities Revenue, 5.90%, 7/1/13,
Mandatory Put 7/1/03 @ 102 1,926 1,926
1,360 1,360 King County, School District #400, GO, 6.50%, 12/1/08 1,596 1,596
1,084 1,084 Kitsap County, Consolidated Housing, 7.00%, 8/20/08 1,216 1,216
1,000 1,000 Seattle Light & Power Revenue, 6.00%, 8/1/13, Callable
8/1/02 @ 102 1,072 1,072
10,000 10,000 Seattle Limited Tax, GO, Series A, 5.75%, 1/15/17 10,521 10,521
1,000 1,000 Seattle Solid Waste, Series B, 7.00%, 5/1/03, Callable
5/1/99 @ 102, BIG 1,046 1,046
5,140 5,140 Snohomish County, Mukilteo Refunding, GO,
5.70%, 12/1/12 5,656 5,656
3,000 3,000 Snohomish County, Public Utility District #001, Electric
Revenue, 6.00%, 1/1/13, Callable 1/1/03 @ 102, FGIC 3,224 3,224
3,500 3,500 State Nuclear Project #1, Series A, 6.00%, 7/1/08, AMBAC 3,891 3,891
2,000 2,000 State, Series C, 7.63%, 07/01/10 2,206 2,206
------- ------ -------
18,383 13,971 32,354
------- ------ -------
West Virginia (1.5%):
1,320 1,320 Board of Regents Revenue, Series A, 5.90%, 4/1/04, ETM 1,386 1,386
2,495 2,495 Harrison County, Community Split Obligation, Series A,
6.25%, 5/15/10 2,870 2,870
3,630 3,630 Randolph County Community Health, Revenue, 5.20%,
11/1/21, Callable 11/1/13 @ 100, FSA 3,617 3,617
3,500 3,500 School Building Authority, Series B, 5.40%, 7/1/17, Callable
7/1/07 @ 102, FSA 3,599 3,599
1,150 1,150 State College Revenue, 6.00%, 4/1/12, Callable 4/1/03 @
102, AMBAC 1,239 1,239
1,960 1,960 State Housing Development Fund, Housing Finance, AMT,
7.20%, 11/1/20, Callable 5/1/02 @ 102 2,114 2,114
------- ------ -------
- 14,825 14,825
------- ------ -------
Wisconsin (3.3%):
2,500 2,500 Clean Water Revenue, Series 2, 6.00%, 6/1/07 2,782 2,782
5,735 5,735 Durand Hospital Facilities Revenue, Chippewa Valley Hospital
and Nursing Project, 7.10%, 9/1/12 6,759 6,759
500 500 Mukwonago School District, 5.80%, 3/1/07, Prerefunded
3/1/02 @100, AMBAC 529 529
5,000 5,000 Southeast Professional Revenue, Capital Appreciation,
0.00%, 12/15/07, MBIA 3,276 3,276
5,000 5,000 Southeast Professional Revenue, Capital Appreciation,
0.00%, 12/15/09, MBIA 2,949 2,949
3,000 3,000 State Health & Educational Facilities Authority Revenue,
5.10%, 8/15/05, MBIA 3,108 3,108
1,000 1,000 State, Series A, 6.30%, 5/1/07, Prerefunded 5/1/02 @ 100 1,078 1,078
See notes to financial statements.
267
The One Group Intermediate Tax Free Bond Fund / Pegasus Intermediate Municipal Bond Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ----------- --------- --------- -------------------------------------------------------------- ------- --------- --------
4,155 4,155 Unlimited Tax, GO, Series B, 7.00%, 5/1/02 4,574 4,574
5,830 5,830 Unlimited Tax, GO, Series B, 7.00%, 5/1/03 6,536 6,536
------- ------ -------
29,984 1,607 31,591
------- ------ -------
Wyoming (0.7%):
875 875 Community Development Authority Single Family Mortgage,
Series A, 7.25%, 6/1/07, Callable 6/1/01 @ 102 915 915
2,000 2,000 Lincoln County, 0.00%, 08/01/15 2,000 2,000
2,000 2,000 Sweetwater County Solid Waste Disposal Revenue, Series
A, AMT, 7.00%, 6/1/24 2,231 2,231
1,395 1,395 Sweetwater County, School District #2, Green River, GO,
7.00%, 6/1/04, MBIA 1,589 1,589
------- ------ -------
2,000 4,735 6,735
------- ------ -------
Total Municipal Bonds 454,484 503,031 957,515
------- ------ -------
Daily Demand Notes (0.1%):
New York (0.1%):
1,000 1,000 Long Island Power Authority Electric Revenue, Series 6,
3.75%, 5/1/33 1,000 1,000
------- ------ -------
Total Daily Demand Notes - 1,000 1,000
------- ------ -------
Monthly Demand Notes (0.8%):
California (0.2%):
2,000 2,000 Education Loan Marketing Corp., Revenue, Series IV-C-1,
4.00%, 1/1/33 - 2,000 2,000
------- ------ -------
Florida (0.6%):
5,800 5,800 Educational Loan Marketing Corp., Revenue, Series A,
4.00%, 12/1/18 - 5,800 5,800
------- ------ -------
Total Monthly Demand Notes - 7,800 7,800
------- ------ -------
Total (Cost $923,467) (a) $ 454,484 $ 511,831 $ 966,315
======= ====== =======
- ----------
Percentages indicated are based on net assets of $968,623.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
Unrealized appreciation.................. $ 43,041
Unrealized depreciation.................. (193)
-------
Net unrealized appreciation.............. $ 42,848
=======
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments
is the rate in effect at June 30, 1998.
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
CAPMAC Insured by CapMAC Holdings Inc.
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
GSL Guaranteed Student Loans
IDR Industrial Development Revenue
MBIA Insured by Municipal Bond Insurance Association
PSFG Permanent School Funding Guarantee
See notes to financial statements.
268
The One Group Income Equity Fund / Pegasus Equity Income Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- --------- ---------- -------------- ------------------------------------------------------- -------------- ----------- -----------
Common Stocks (91.4%):
Business Equipment & Services (1.5%):
63 63 Automatic Data Processing, Inc. $ $ 4,591 $ 4,591
180 180 Browning-Ferris Industries, Inc. (b) 6,255 6,255
225 225 Dun & Bradstreet Corp. (b) 8,128 8,128
------------- ---------- ---------
- 18,974 18,974
------------- ---------- ---------
Capital Goods (4.6%):
215 215 Cooper Industries, Inc. 11,812 11,812
87 87 Deere & Co. 4,600 4,600
80 80 Emerson Electric Co. 4,825 4,825
365 365 General Electric Co. 33,215 33,215
100 100 Johnson Controls, Inc. 5,706 5,706
------------- ---------- ---------
- 60,158 60,158
------------- ---------- ---------
Consumer Durable (2.2%):
161 161 Bandag, Inc., Class A 5,558 5,558
75 75 Chrysler Corp. 4,228 4,228
250 250 Ford Motor Co. 14,750 14,750
95 95 National Presto Industries, Inc. 3,715 3,715
------------- ---------- ---------
9,273 18,978 28,251
------------- ---------- ---------
Consumer Non-Durable (14.7%):
120 120 American Greetings Corp., Class A 6,113 6,113
254 254 Campbell Soup Co. 13,473 13,473
100 100 Clorox Co. 9,538 9,538
242 242 Coca-Cola Co. 20,690 20,690
450 450 ConAgra, Inc. 14,259 14,259
259 259 Diageo PLC 12,485 12,485
110 110 Eastman Kodak Co. 8,037 8,037
150 150 H.J. Heinz Co. 8,419 8,419
120 120 International Flavors & Fragrances, Inc. (b) 5,213 5,213
108 108 Loews Corp. 9,383 9,383
354 354 Luby's Cafeterias, Inc. 6,213 6,213
150 150 McCormick & Co., Inc. 5,358 5,358
60 60 Newell Co., Inc. 2,989 2,989
165 165 PepsiCo, Inc. 6,796 6,796
133 325 458 Philip Morris Co., Inc. 5,229 12,797 18,026
165 165 Procter & Gamble Co. 15,024 15,024
104 104 Quaker Oats Co. 5,714 5,714
292 292 Sbarro, Inc. 7,915 7,915
304 304 Tate & Lyle PLC Sponsored 9,640 9,640
186 186 UST, Inc. 5,012 5,012
------------- ---------- ---------
55,877 134,420 190,297
------------- ---------- ---------
Consumer Services (0.8%):
120 120 McGraw-Hill Co., Inc. - 9,788 9,788
------------- ---------- ---------
Energy (9.1%):
164 265 429 Amoco Corp. 6,827 11,031 17,858
100 100 200 Atlantic Richfield Co. 7,828 7,813 15,641
100 100 Dresser Industries, Inc. (b) 4,406 4,406
300 300 Exxon Corp. 21,394 21,394
100 100 Halliburton Co. (b) 4,456 4,456
109 210 319 Mobil Corp. 8,322 16,091 24,413
350 350 Royal Dutch Petroleum Co. (b) 19,184 19,184
135 135 Texaco, Inc. 8,028 8,028
75 75 USX-Marathon Group 2,573 2,573
------------- ---------- ---------
31,005 86,948 117,953
------------- ---------- ---------
Financial Services (20.0%):
115 115 Allstate Corp. 10,530 10,530
210 210 American Express Co. 23,941 23,941
120 120 American National Insurance Co. 12,672 12,672
170 170 Amli Residential Properties Trust 3,644 3,644
160 160 Associated Estates Realty 2,988 2,988
72 72 Associates First Capital, Class A 5,541 5,541
240 240 BankAmerica Corp. 20,745 20,745
146 146 Chase Manhattan Corp. 11,027 11,027
See notes to financial statements.
269
The One Group Income Equity Fund / Pegasus Equity Income Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- --------- ---------- -------------- ------------------------------------------------------- -------------- ----------- -----------
65 65 Citicorp 9,701 9,701
275 216 491 Federal National Mortgage Assoc. 16,682 13,122 29,804
240 240 First Tennessee National Corp. 7,575 7,575
100 100 First Union Corp. 5,825 5,825
95 95 J.P. Morgan & Co., Inc. 11,127 11,127
155 155 Lincoln National Corp. 14,163 14,163
125 125 National City Corp. 8,875 8,875
110 110 Norwest Corp. 4,111 4,111
217 217 Ohio Casualty Corp. 9,585 9,585
519 519 Old Republic International Corp. 15,203 15,203
342 342 Pacific Century Financial Corp. 8,208 8,208
173 173 PXRE Corp. 5,178 5,178
200 200 Reliastar Financial Corp. 9,600 9,600
44 44 RLI Corp. 1,790 1,790
80 80 SAFECO Corp. 3,617 3,617
98 98 Southtrust Corp. 4,241 4,241
80 80 TransAmerica Corp. 9,210 9,210
240 240 U.S. Bancorp 10,320 10,320
------------- ---------- ---------
79,567 179,654 259,221
------------- ---------- ---------
Health Care (10.7%):
126 126 Abbott Labs 5,150 5,150
400 400 American Home Products Co. 20,700 20,700
250 250 Baxter International, Inc. 13,453 13,453
62 62 Block Drug Inc., Class A 2,367 2,367
200 200 Bristol Myers Squibb Co. 22,987 22,987
125 125 Merck & Co., Inc. 16,719 16,719
53 53 Mid Ocean LTD 4,161 4,161
125 125 Pfizer, Inc. 13,586 13,586
200 200 Schering Plough Corp. 18,325 18,325
300 300 Warner Lambert Co. 20,813 20,813
------------- ---------- ---------
6,528 131,733 138,261
------------- ---------- ---------
Multi-Industry (0.4%):
70 70 Minnesota Mining & Manufacturing Co. - 5,753 5,753
------------- ---------- ---------
Raw Materials (3.8%):
5 5 De Beers Consolidated Mines Ltd 86 86
150 150 Dow Chemical Co. (b) 14,502 14,502
140 140 Du Pont (EI) de Nemours & Co. 10,448 10,448
150 150 Nalco Chemical Co. 5,269 5,269
128 128 NCH Corp. 8,187 8,187
83 83 Olin Corp. 3,460 3,460
160 160 Pall Corp. (b) 3,280 3,280
60 60 Phelps Dodge Corp. 3,431 3,431
------------- ---------- ---------
11,704 36,959 48,663
------------- ---------- ---------
Retail (3.5%):
178 178 Albertsons, Inc. 9,223 9,223
235 235 Enesco Group, Inc. 7,220 7,220
163 163 May Department Stores Co. 10,680 10,680
121 121 Unifi, Inc. 4,137 4,137
185 185 Wal-Mart Stores, Inc. (b) 11,238 11,238
80 80 Walgreen Co. (b) 3,305 3,305
------------- ---------- ---------
11,357 34,446 45,803
------------- ---------- ---------
Shelter (5.3%):
24 24 Avalon Bay Communities, Inc. 891 891
66 66 Boston Properties, Inc. 2,280 2,280
45 45 Camden Property Trust 1,348 1,348
56 56 CBL & Associates Properties 1,353 1,353
35 35 Chelsea GCA Realty, Inc., (b) 1,416 1,416
44 44 Colonial Properties Trust 1,364 1,364
138 138 Equity Office Properties Trust 3,902 3,902
35 35 Equity Residential Properties Trust 1,651 1,651
73 73 Federal Realty Trust 1,747 1,747
32 32 Gables Residential Trust 857 857
120 120 Kimberly Clark Corp. 5,505 5,505
See notes to financial statements.
270
The One Group Income Equity Fund / Pegasus Equity Income Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- --------- ---------- -------------- ------------------------------------------------------- -------------- ----------- -----------
66 66 Liberty Property Trust 1,685 1,685
31 31 Macerich Co. 912 912
58 58 Mack Cali Realty Corp. 1,980 1,980
142 142 Masco Corp. 8,585 8,585
61 61 Merry Land & Investment Co. 1,283 1,283
55 55 Mills Corp. 1,327 1,327
73 73 Patriot American Hospitality 1,747 1,747
66 66 Prentiss Properties Trust 1,614 1,614
47 47 Public Storage, Inc. 1,313 1,313
49 49 Shurgard Storage Centers 1,349 1,349
29 29 Simon Debartolo Group, Inc. 943 943
270 270 Sonoco Products Co. 8,151 8,151
43 43 Spieker Properties, Inc. 1,682 1,682
95 95 Starwood Hotels & Resorts (b) 4,599 4,599
68 68 Summit Properties, Inc. 1,292 1,292
74 74 Taubman Centers, Inc. 1,059 1,059
48 48 Vornado Realty Trust 1,917 1,917
28 28 Weeks Corp. 898 898
80 80 Weyerhaeuser Co. 3,695 3,695
------------- ---------- ---------
- 68,345 68,345
------------- ---------- ---------
Technology (5.0%):
60 60 AMP, Inc. (b) 2,063 2,063
100 100 Boeing Co. 4,456 4,456
127 127 Hewlett Packard Co. 7,604 7,604
105 105 International Business Machines 12,055 12,055
107 60 167 Lockheed Martin Corp. (b) 11,276 6,353 17,629
60 60 United Technologies Corp. (b) 5,550 5,550
150 150 Xerox Corp. 15,243 15,243
------------- ---------- ---------
11,276 53,324 64,600
------------- ---------- ---------
Transportation (1.6%):
317 317 Alexander & Baldwin, Inc. 9,233 9,233
183 183 Canadian National Railway Co. 9,745 9,745
70 70 Norfolk Southern Corp. 2,087 2,087
------------- ---------- ---------
18,978 2,087 21,065
------------- ---------- ---------
Utilities (8.2%):
181 181 AT&T Corp. (b) 10,332 10,332
180 180 BellSouth Corp. 12,083 12,083
147 147 Central & South West Corp. 3,951 3,951
135 135 Connecticut Energy Corp. 3,749 3,749
49 49 El Paso Energy Corp. (c) 2,597 2,597
50 50 El Paso Natural Gas Co. 1,913 1,913
5 5 Empire District Electric 102 102
160 160 Entergy Corp. 4,600 4,600
230 230 GTE Corp. 12,793 12,793
200 200 L G & E Energy Corp. 5,423 5,423
80 80 New Century Energies, Inc. 3,635 3,635
140 140 Northern States Power Co. 4,008 4,008
400 400 SBC Communications, Inc. 15,999 15,999
104 104 Sierra Pacific Resources 3,777 3,777
12 12 SJW Corp. 686 686
179 179 Southwest Gas Corp. 4,374 4,374
90 90 Sprint Corp. 6,345 6,345
437 437 Washington Water Power Co. 9,794 9,794
------------- ---------- ---------
22,482 83,679 106,161
------------- ---------- ---------
Total Common Stocks 258,047 925,246 1,183,293
------------- ---------- ---------
Convertible Bonds (4.5%):
Financial Services (1.4%):
$ 3,095 $ $ 3,095 NAC RE Corp., 5.25%, 12/15/02 3,443 3,443
30,100 30,100 Roche Holding Inc., Zero Coupon, 5/6/12 14,542 14,542
------------- ---------- ---------
17,985 - 17,985
------------- ---------- ---------
Health Care (0.8%):
See notes to financial statements.
271
The One Group Income Equity Fund / Pegasus Equity Income Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- --------- ---------- -------------- ------------------------------------------------------- -------------- ----------- -----------
5,000 5,000 Alza Corp., 5.00%, 5/1/06 6,350 6,350
3,500 3,500 Athena Neurosciences, 4.75%, 11/15/04, Callable 11/15/00
@ 102.7 (b) 4,051 4,051
------------- ---------- ---------
- 10,401 10,401
------------- ---------- ---------
Retail (0.4%):
9,400 9,400 Pep Boys, Zero Coupon, 9/20/11 5,158 - 5,158
------------- ---------- ---------
Shelter (0.8%):
6,500 6,500 Hilton Hotels Corp., 5.00%, 5/15/06 6,752 6,752
4,500 4,500 Medical Care International, 6.75%, 10/1/06 4,123 4,123
------------- ---------- ---------
- 10,875 10,875
------------- ---------- ---------
Utilities (1.1%):
11,544 11,544 Potomac Electric Power, 5.00%, 9/1/02 11,255 11,255
2,500 2,500 U.S. Filter Corp., 4.50% 12/15/01 2,547 2,547
------------- ---------- ---------
11,255 2,547 13,802
------------- ---------- ---------
Total Convertible Bonds 34,398 23,823 58,221
------------- ---------- ---------
Preferred Stocks (3.2%):
Capital Goods (0.2%):
125 125 Ingersoll-Rand Co. (c) - 3,000 3,000
------------- ---------- ---------
Computer Software (0.4%):
55 55 Microsoft Corp.(c) - 5,225 5,225
------------- ---------- ---------
Financial Services (2.0%):
60 60 Newell Financial Trust (c) 3,458 3,458
391 391 Salomon, Inc., 7.63% 18,626 18,626
45 45 St. Paul Capital (c) 3,204 3,204
------------- ---------- ---------
18,626 6,662 25,288
------------- ---------- ---------
Industrial Goods & Services (0.6%):
50 50 Corning Delaware (c) 2,825 2,825
120 120 Crown Cork & Seal Co. (c) 5,370 5,370
------------- ---------- ---------
- 8,195 8,195
------------- ---------- ---------
Total Preferred Stocks 18,626 23,082 41,708
------------- ---------- ---------
Investment Companies (1.1%):
14,672 14,672 Pegasus Cash Management Fund Class I (in shares) 14,672 14,672
------------- ---------- ---------
Total Investment Companies 14,672 - 14,672
------------- ---------- ---------
Repurchase Agreements (0.3%):
$ $ 3,405 $ 3,405 Prudential Securities, 6.10%, 7/1/98 (Collateralized by
$3,505 U.S. Treasury Bills, 9/3/98, market value $3,474) 3,405 3,405
------------- ---------- ---------
Total Repurchase Agreements - 3,405 3,405
------------- ---------- ---------
Short-Term Securities Held as Collateral (4.0%):
Master Notes (0.7%):
2,021 2,021 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 2,021 2,021
1,684 1,684 Danaher Corp., 6.68%, 10/9/98* 1,684 1,684
1,011 1,011 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 1,011 1,011
2,291 2,291 Morgan Stanley Mortgage Capital, 5.76%, 7/21/98* 2,292 2,292
606 606 NationsBanc Capital Markets, 6.70%, 7/1/98* 606 606
2,021 2,021 Williamette Industries, Inc., 5.85%, 7/23/98* 2,021 2,021
------------- ---------- ---------
- 9,635 9,635
------------- ---------- ---------
Put Bonds (1.1%):
1,684 1,684 Associates Corp. N.A., 5.79%, 1/4/99* 1,683 1,683
1,347 1,347 Branch Banking & Trust, 5.92%, 12/10/99* 1,347 1,347
674 674 Citicorp, 5.94%, 8/3/98* 674 674
1,550 1,550 Evangelical Lutheran, 5.74%, 4/28/00* 1,547 1,547
2,021 2,021 GMAC, 5.85%, 11/10/99* 2,025 2,025
1,684 1,684 Goldman Sachs, 6.06%, 11/21/00* 1,684 1,684
1,684 1,684 Greenwich Capital, 6.11%, 12/13/99* 1,684 1,684
1,684 1,684 Lehman Brothers Holdings, 5.85%, 8/18/99* 1,685 1,685
674 674 Merrill Lynch, 6.07%, 11/13/98* 674 674
See notes to financial statements.
272
The One Group Income Equity Fund / Pegasus Equity Income Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- --------- ---------- -------------- ------------------------------------------------------- -------------- ----------- -----------
1,684 1,684 PNC Bank, 5.74%, 10/2/98* 1,683 1,683
------------- ---------- ---------
- 14,686 14,686
------------- ---------- ---------
Repurchase Agreements (2.2%):
6,737 6,737 Donaldson, Lufkin & Jenrette, 6.65%, 7/1/98 (Collateralized
by $6,888 various Corporate and Government Securities,
0.00% - 17.25%, 10/15/02 - 4/15/35, market value $6,996) 6,737 6,737
3,369 3,369 Goldman Sachs, 6.65%, 7/1/98 (Collateralized by $3,590
various Corporate Bonds, 0.00%, 7/7/98 - 9/18/98, market
value $3,577) 3,369 3,369
17,315 17,315 Lehman Brothers, 6.65%, 7/1/98 (Collateralized by $17,748
various Corporate Bonds, 0.00% - 10.13%, 9/15/99 -
10/17/96, market value $18,576) 17,315 17,315
12 12 Lehman Brothers, 6.47%, 7/1/98 (Collateralized by $12 Media
One Group Bonds, 0.00%, 10/5/98, market value $12) 12 12
539 539 Lehman Brothers, 6.00%, 7/1/98 (Collateralized by $3,374
various Government Securities, 0.00% - 7.50%, 12/1/18 -
5/1/24, market value $555) 539 539
674 674 Paine Webber, 6.40%, 7/1/98 (Collateralized by $672 various
Corporate Bonds, 4.00% - 9.75%, 7/15/98 - 9/01/23, market
value $707) 674 674
------------- ---------- ---------
- 28,646 28,646
------------- ---------- ---------
Total Short-Term Securities Held as Collateral - 52,967 52,967
------------- ---------- ---------
Total (Cost $818,363) (a) $ 325,743 $ 1,028,523 $1,354,266
============= ========== =========
-------------
Percentages indicated are based on net assets of $1,304,466.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax
reporting of approximately $4. Cost for federal income tax purposes
differs from value by net unrealized appreciation of securities as
follows (amounts in thousands):
Unrealized appreciation.........................................$ 547,955
Unrealized depreciation.......................................... (12,056)
--------------
Net unrealized appreciation.....................................$ 535,899
==============
(b) A portion of this security was loaned as of June 30, 1998.
(c) Non-income producing securities.
* The interest rate for this variable rate note, which will change
periodically, is based upon an index of market rates. The rate reflected
on the Schedule of Portfolio Investments is the rate in effect at June 30,
1998.
273
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
Commercial Paper (0.4%):
Financial Services (0.4%):
$ $ 9,000 $ $9,000 Merrill Lynch, 5.56%, 9/9/98 $ - $ 8,904 $ 8,904
---------- ----------- --------------
Total Commercial Paper - 8,904 8,904
---------- ----------- --------------
Common Stocks (98.9%):
Business Equipment & Services (1.8%):
32 40 72 Automatic Data Processing, Inc. 2,316 2,946 5,262
22 25 47 Browning-Ferris Industries, Inc. 752 868 1,620
10 12 22 Canadian Moore Corp., Ltd. 135 160 295
7 10 17 Ceridian Corp. (b) 432 613 1,045
18 23 41 Cognizant Corp. 1,144 1,449 2,593
15 20 35 Computer Sciences Corp. (b) 983 1,311 2,294
12 12 Deluxe Corp. 415 415
18 23 41 Dun & Bradstreet Corp. 607 839 1,446
22 18 40 Ecolab, Inc. 694 554 1,248
17 21 38 Equifax, Inc. (c) 603 750 1,353
49 61 110 First Data Corp. 1,617 2,038 3,655
16 14 30 H & R Block 693 592 1,285
18 18 Ikon Office Solutions (c) 256 256
12 17 29 Interpublic Group Co., Inc. 736 1,018 1,754
34 42 76 Laidlaw, Inc. 415 511 926
7 7 National Service Industries, Inc. 345 345
18 21 39 Omnicom Group, Inc. (c) 883 1,057 1,940
37 37 74 Pitney Bowes, Inc. 1,776 1,793 3,569
14 21 35 R.R. Donnelley & Sons Co. 657 957 1,614
11 11 Ryder Systems, Inc. (c) 344 344
32 34 66 Service Corp. International 1,363 1,478 2,841
62 62 WMX Technologies, Inc. 2,176 2,176
50 50 Waste Management, Inc. 1,760 1,760
---------- ----------- --------------
17,566 22,470 40,036
---------- ----------- --------------
Capital Goods (5.7%):
3 3 Aeroquip-Vickers, Inc. 202 202
11 12 23 Black & Decker Corp. 667 730 1,397
6 10 16 Case Corp. 302 472 774
43 50 93 Caterpillar, Inc. 2,260 2,634 4,894
5 5 Cincinnati Milacron, Inc. 131 131
12 16 28 Cooper Industries, Inc. 687 901 1,588
6 6 Crane Co. 293 293
7 6 13 Cummins Engine, Inc. 354 288 642
29 35 64 Deere & Co. 1,539 1,842 3,381
24 31 55 Dover Corp. 827 1,051 1,878
51 61 112 Emerson Electric Co. 3,068 3,686 6,754
8 12 20 Fluor Corp. 432 597 1,029
5 5 Foster Wheeler Corp. 116 116
359 444 803 General Electric Co. 32,681 40,386 73,067
8 7 15 General Signal Corp. 292 252 544
9 15 24 Grainger W.W., Inc. 481 739 1,220
7 7 Harnischfeger Industries, Inc. 193 193
14 17 31 Honeywell, Inc. 1,178 1,452 2,630
29 33 62 Illinois Tool Works 1,902 2,203 4,105
16 22 38 Ingersoll Rand Co. 688 953 1,641
10 11 21 Johnson Controls, Inc. 561 650 1,211
3 1 4 Nacco Industries, Inc., Class A 336 144 480
11 11 Navistar International Corp. 303 303
7 7 Owens-Corning Fiberglass Corp. 287 287
12 10 22 Paccar, Inc. 616 537 1,153
13 15 28 Parker-Hannifin Corp. 495 589 1,084
See notes to financial statements.
274
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
20 25 45 PPG Industries, Inc. 1,401 1,737 3,138
15 24 39 Sherwin-Williams Co. 511 795 1,306
8 9 17 Snap-On, Inc. 283 322 605
7 12 19 Stanley Works 296 503 799
17 20 37 Thermo Electron Corp. (b) 574 701 1,275
8 8 Timken Co. 240 240
64 78 142 Tyco International, Ltd. 4,009 4,923 8,932
---------- ----------- --------------
56,440 70,852 127,292
---------- ----------- --------------
Consumer Durable (2.3%):
17 21 38 Autozone, Inc. (b) (c) 538 666 1,204
3 3 Briggs & Stratton Corp. 103 103
72 89 161 Chrysler Corp. 4,065 4,996 9,061
13 11 24 Cooper Tire & Rubber Co. 262 235 497
12 14 26 Dana Corp. (c) 637 737 1,374
8 11 19 Eaton Corp. 646 830 1,476
9 9 Echlin, Inc. 430 430
137 165 302 Ford Motor Co. 8,092 9,748 17,840
80 91 171 General Motors Corp. 5,357 6,093 11,450
18 25 43 Genuine Parts Co. (c) 628 863 1,491
17 21 38 Goodyear Tire & Rubber Co. (b) 1,069 1,354 2,423
17 16 33 ITT Industries, Inc. 642 594 1,236
12 14 26 Maytag Corp. 583 682 1,265
8 10 18 Whirlpool Corp. 574 714 1,288
---------- ----------- --------------
23,093 28,045 51,138
---------- ----------- --------------
Consumer Non-Durable (11.2%):
15 7 22 Alberto Culver Co., Class B 432 205 637
8 10 18 American Greetings Corp., Class A 429 529 958
54 68 122 Anheuser Busch Co., Inc. (c) 2,559 3,192 5,751
65 79 144 Archer-Daniels-Midland Co. 1,260 1,538 2,798
12 18 30 Avon Products, Inc. 953 1,433 2,386
3 4 7 Ball Corp. 139 143 282
4 8 12 Bemis Co. 171 307 478
31 40 71 Bestfoods 1,813 2,321 4,134
11 10 21 Brown-Forman Corp., Class B 692 620 1,312
52 64 116 Campbell Soup Co. 2,762 3,395 6,157
10 15 25 Clorox Co. 913 1,387 2,300
271 338 609 Coca-Cola Co. 23,206 28,913 52,119
33 40 73 Colgate Palmolive Co. 2,893 3,531 6,424
52 66 118 ConAgra, Inc. 1,653 2,080 3,733
5 5 Coors Adolph Co., Class B 176 176
13 17 30 Crown Cork & Seal Co. 624 815 1,439
39 44 83 Eastman Kodak Co. 2,822 3,237 6,059
21 28 49 Fort James Corp. 935 1,267 2,202
19 24 43 Fortune Brands Inc. 719 914 1,633
8 11 19 Fruit of The Loom, Inc., Class A (b) 282 351 633
17 22 39 General Mills, Inc. 1,165 1,495 2,660
128 153 281 Gillette Co. 7,259 8,648 15,907
39 50 89 H.J. Heinz Co. 2,205 2,833 5,038
17 21 38 Hershey Foods Corp. 1,163 1,447 2,610
11 15 26 International Flavors & Fragrances, Inc. 464 653 1,117
6 6 Jostens, Inc. 135 135
47 57 104 Kellogg Co. 1,771 2,135 3,906
6 10 16 Liz Claiborne, Inc. (c) 290 545 835
16 22 38 Newell Co. 805 1,097 1,902
33 40 73 Nike, Inc., Class B (c) 1,596 1,927 3,523
172 203 375 PepsiCo, Inc. 7,094 8,358 15,452
266 333 599 Philip Morris Co., Inc. 10,477 13,098 23,575
See notes to financial statements.
275
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
34 33 67 Pioneer Hi-Bred International, Inc. 1,415 1,378 2,793
7 7 Polaroid Corp. 233 233
147 183 330 Procter & Gamble Co. 13,413 16,706 30,119
14 18 32 Quaker Oats Co. 758 1,012 1,770
12 14 26 Ralston Purina Group 1,352 1,687 3,039
6 8 14 Reebok International Ltd. (b) 171 218 389
16 21 37 Rubbermaid, Inc. 546 705 1,251
11 5 16 Russell Corp. 329 163 492
49 64 113 Sara Lee, Corp. 2,747 3,554 6,301
39 47 86 Seagram Co., Ltd. 1,614 1,929 3,543
2 2 Springs Industries, Inc., Class A 98 98
10 10 Supervalu, Inc. 427 427
33 49 82 Sysco Corp. 858 1,257 2,115
9 9 Tupperware Corp. 249 249
70 87 157 Unilever N V 5,497 6,888 12,385
22 27 49 UST, Inc. 584 721 1,305
12 18 30 V.F. Corp. 641 925 1,566
12 16 28 Wrigley (Wm.) Junior Co. (c) 1,182 1,554 2,736
---------- ----------- --------------
110,653 138,429 249,082
---------- ----------- --------------
Consumer Services (4.0%):
11 13 24 Brunswick Corp. 277 331 608
77 97 174 CBS Corp. (c) 2,436 3,068 5,504
86 116 202 Cendant Corp. 1,805 2,425 4,230
14 17 31 Clear Channel Communications (b) (c) 1,517 1,840 3,357
39 50 89 Comcast Corp., Class A 1,583 2,040 3,623
11 13 24 Dow Jones & Co., Inc. 588 740 1,328
30 38 68 Gannett, Inc. 2,116 2,736 4,852
14 14 Harrah's Entertainment, Inc. (b) (c) 320 320
12 18 30 Hasbro, Inc. 453 697 1,150
29 34 63 Hilton Hotels Corp. 821 975 1,796
10 10 King World Productions, Inc. (b) 255 255
13 11 24 Knight-Ridder, Inc. 692 631 1,323
27 35 62 Marriott International, Class A 887 1,130 2,017
29 38 67 Mattel, Inc. 1,206 1,613 2,819
10 14 24 McGraw-Hill Co., Inc. 808 1,136 1,944
69 85 154 Media One Group, Inc. (b) (c) 3,038 3,721 6,759
13 7 20 Meredith Corp. 605 325 930
20 24 44 Mirage Resorts, Inc. (b) (c) 418 513 931
14 13 27 New York Times Co., Class A 1,103 1,066 2,169
54 69 123 Tele-Communications, Inc., Class A (b) (c) 2,070 2,648 4,718
62 78 140 Time Warner, Inc. 5,271 6,647 11,918
11 12 23 Times Mirror Co., Class A 689 758 1,447
12 18 30 Tribune Co. 858 1,224 2,082
40 49 89 Viacom, Inc., Class B (b) 2,308 2,850 5,158
76 93 169 Walt Disney Co. 8,018 9,734 17,752
---------- ----------- --------------
39,567 49,423 88,990
---------- ----------- --------------
Energy (7.3%):
9 13 22 Amerada Hess Corp. 465 680 1,145
107 131 238 Amoco Corp. 4,447 5,437 9,884
7 8 15 Anadarko Petroleum Corp. (c) 443 546 989
10 12 22 Apache Corp. 315 389 704
8 9 17 Ashland, Inc. 425 469 894
35 44 79 Atlantic Richfield Co. 2,731 3,456 6,187
15 22 37 Baker Hughes, Inc. 534 777 1,311
24 24 Burlington Northern 1,029 1,029
19 19 Burlington Resources, Inc. 803 803
77 89 166 Chevron Corp. (c) 6,364 7,390 13,754
See notes to financial statements.
276
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
19 24 43 Dresser Industries, Inc. 858 1,065 1,923
16 16 DTE Energy, Inc. 629 629
271 333 604 Exxon Corp. 19,300 23,763 43,063
28 34 62 Halliburton Co. 1,253 1,537 2,790
8 5 13 Helmerich & Payne, Inc. 175 119 294
7 7 Kerr McGee Corp. 423 423
9 8 17 McDermott International, Inc. 324 274 598
85 108 193 Mobil Corp. 6,484 8,245 14,729
38 50 88 Occidental Petroleums Corp. 1,013 1,351 2,364
12 14 26 Oryx Energy Co. (b) 254 305 559
7 7 14 Pennzoil Co. 358 335 693
29 36 65 Phillips Petroleum Co. 1,410 1,731 3,141
12 12 Rowan Cos., Inc. 230 230
235 293 528 Royal Dutch Petroleum Co. (c) 12,900 16,043 28,943
55 68 123 Schlumberger Ltd. (c) 3,755 4,631 8,386
10 10 20 Sun, Inc. 396 396 792
19 24 43 Tenneco, Inc. 708 908 1,616
58 75 133 Texaco, Inc. 3,437 4,466 7,903
40 34 74 Union Pacific Resources Group, Inc. 699 600 1,299
30 34 64 Unocal Corp. (c) 1,072 1,201 2,273
32 40 72 USX-Marathon Group 1,086 1,358 2,444
6 8 14 Western Atlas, Inc. (b) 486 662 1,148
---------- ----------- --------------
73,124 89,816 162,940
---------- ----------- --------------
Financial Services (17.5%):
48 57 105 Allstate Corp. 4,396 5,239 9,635
51 63 114 American Express Co. 5,816 7,220 13,036
27 33 60 American General Corp. 1,923 2,354 4,277
77 96 173 American International Group, Inc. 11,235 14,005 25,240
18 22 40 Aon Corp. 1,282 1,533 2,815
39 47 86 Associates First Capital, Class A 2,997 3,642 6,639
77 96 173 Banc One Corp. (c) 4,303 5,332 9,635
41 52 93 Bank of New York Co., Inc. (c) 2,515 3,150 5,665
76 93 169 BankAmerica Corp. 6,533 8,032 14,565
34 40 74 BankBoston Corp. 1,869 2,248 4,117
11 13 24 Bankers Trust New York Corp. 1,272 1,549 2,821
15 19 34 BB&T Corp. 1,021 1,253 2,274
16 16 Bear Stearns Co., Inc. 882 882
6 8 14 Beneficial Corp. 882 1,151 2,033
9 9 Capital One Financial Corp. 1,118 1,118
29 36 65 Charles Schwab Corp. 941 1,174 2,115
92 116 208 Chase Manhattan Corp. 6,931 8,748 15,679
23 24 47 Chubb Corp. 1,811 1,905 3,716
23 29 52 Cigna Corp. 1,618 2,017 3,635
18 22 40 Cincinnati Financial Corp. 691 852 1,543
50 61 111 Citicorp 7,486 9,169 16,655
17 23 40 Comerica, Inc. 1,152 1,496 2,648
21 25 46 Conseco, Inc. (c) 982 1,155 2,137
12 14 26 Country Wide Credit 584 721 1,305
78 92 170 Federal Home Loan Mortgage Corp. 3,655 4,352 8,007
116 141 257 Federal National Mortgage Assoc. 7,076 8,590 15,666
24 33 57 Fifth Third Bancorp (c) 1,522 2,050 3,572
33 40 73 First Chicago NBD Corp. 2,889 3,578 6,467
106 132 238 First Union Corp. 6,182 7,699 13,881
28 39 67 Fleet Financial Group, Inc. 2,359 3,240 5,599
28 34 62 Franklin Resources, Inc. 1,534 1,860 3,394
8 10 18 General Re Corp. 2,128 2,656 4,784
7 8 15 Golden West Financial Corp. 705 885 1,590
15 19 34 Greentrree Financial Corp. 629 801 1,430
See notes to financial statements.
277
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
10 15 25 H.F. Ahmanson & Co. 700 1,061 1,761
12 16 28 Hartford Financial Services Group 1,384 1,805 3,189
35 44 79 Household International, Inc. (c) 1,758 2,192 3,950
21 26 47 Huntington Bancshares 707 875 1,582
20 24 44 J.P. Morgan & Co., Inc. 2,363 2,846 5,209
10 15 25 Jefferson Pilot Corp. 562 875 1,437
48 60 108 KeyCorp 1,724 2,121 3,845
11 16 27 Lehman Brothers Holding, Inc. 869 1,255 2,124
11 14 25 Lincoln National Corp. 1,051 1,285 2,336
27 34 61 Marsh & McLennan Co. 1,625 2,034 3,659
10 13 23 MBIA, Inc. 755 1,001 1,756
55 69 124 MBNA Corp. 1,811 2,262 4,073
30 34 64 Mellon Bank Corp. 2,061 2,397 4,458
14 18 32 Mercantile Bancorporation 725 886 1,611
36 47 83 Merrill Lynch & Co. (c) 3,344 4,351 7,695
12 16 28 MGIC Investment Corp. (c) 707 931 1,638
65 82 147 Morgan Stanley Dean Witter Discover 5,939 7,484 13,423
37 45 82 National City Corp. 2,613 3,182 5,795
103 131 234 NationsBank Corp. 7,896 9,987 17,883
12 15 27 Northern Trust Corp 945 1,175 2,120
81 101 182 Norwest Corp. 3,044 3,787 6,831
31 42 73 PNC Bank Corp. 1,691 2,259 3,950
8 9 17 Progressive Corp., Ohio 1,114 1,335 2,449
11 13 24 Providian Financial 882 1,017 1,899
13 15 28 Republic N Y Corp. 842 944 1,786
20 19 39 SAFECO Corp. 888 875 1,763
23 23 SLM Holding Corp. 1,142 1,142
22 32 54 St. Paul Co., Inc. 929 1,361 2,290
18 22 40 State Street Corp. 1,237 1,529 2,766
19 24 43 Summit Bancorp 921 1,133 2,054
22 25 47 Sunamerica, Inc. 1,241 1,446 2,687
24 29 53 SunTrust Banks, Inc. 1,992 2,386 4,378
29 34 63 Synovus Financial Corp. (c) 688 810 1,498
15 20 35 Torchmark Corp. 707 915 1,622
7 9 16 TransAmerica Corp. 785 1,040 1,825
125 156 281 Travelers Group, Inc. 7,602 9,439 17,041
81 102 183 U.S. Bancorp 3,491 4,391 7,882
19 21 40 UNUM Corp. 1,071 1,150 2,221
22 28 50 Wachovia Corp. 1,897 2,355 4,252
41 51 92 Washington Mutual, Inc. (c) 1,794 2,234 4,028
9 12 21 Wells Fargo & Co. 3,266 4,272 7,538
---------- ----------- --------------
172,540 217,481 390,021
---------- ----------- --------------
Health Care (12.0%):
171 209 380 Abbott Labs 6,998 8,537 15,535
16 20 36 Aetna 1,242 1,543 2,785
9 9 Allergan, Inc. 419 419
10 12 22 Alza Corp. (b) 441 507 948
143 179 322 American Home Products Co. 7,381 9,264 16,645
29 36 65 Amgen, Inc. (b) 1,882 2,372 4,254
8 8 Bard C.R., Inc. 295 295
8 8 Bausch & Lomb, Inc. 402 402
31 38 69 Baxter International, Inc. 1,689 2,026 3,715
14 18 32 Becton Dickinson & Co. (c) 1,115 1,368 2,483
13 16 29 Biomet, Inc. (b) 436 521 957
22 27 49 Boston Scientific Corp. (b) (c) 1,552 1,900 3,452
109 137 246 Bristol Myers Squibb Co. 12,541 15,701 28,242
12 15 27 Cardinal Health, Inc. 1,134 1,398 2,532
78 91 169 Columbia/HCA Healthcare Corp. (c) 2,267 2,643 4,910
See notes to financial statements.
278
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
125 152 277 Eli Lilly & Co. 8,243 10,052 18,295
16 20 36 Guidant Corp. 1,171 1,423 2,594
56 59 115 HBO & Co. 1,960 2,068 4,028
42 54 96 Healthsouth Corp. (b) 1,125 1,432 2,557
17 22 39 Humana, Inc. (b) 534 693 1,227
152 184 336 Johnson & Johnson 11,226 13,538 24,764
10 10 Mallinckrodt Group, Inc. 311 311
9 9 Manor Care, Inc. 343 343
54 65 119 Medtronic, Inc. 3,436 4,166 7,602
131 164 295 Merck & Co., Inc. 17,585 21,871 39,456
11 6 17 Millipore Corp. 302 176 478
142 176 318 Pfizer, Inc. 15,431 19,137 34,568
60 69 129 Pharmacia & Upjohn, Inc. 2,754 3,195 5,949
83 100 183 Schering Plough Corp. 7,588 9,186 16,774
3 3 Shared Medical Systems Corp. 194 194
12 12 St. Jude Medical Center, Inc. (b) 435 435
33 40 73 Tenet Healthcare Corp. (b) 1,046 1,239 2,285
9 9 U.S. Surgical, Corp. 401 401
25 25 50 United Healthcare Corp. 1,602 1,593 3,195
93 111 204 Warner Lambert Co. 6,423 7,730 14,153
---------- ----------- --------------
119,104 148,079 267,183
---------- ----------- --------------
Multi-Industry (1.2%):
65 77 142 Allied Signal, Inc. 2,865 3,419 6,284
28 32 60 Corning, Inc. (c) 977 1,095 2,072
5 5 10 FMC Corp. (b) 341 333 674
7 10 17 Harcourt General, Inc. 423 613 1,036
41 16 57 Loews Corp. 1,106 1,396 2,502
47 56 103 Minnesota Mining & Manufacturing Co. 3,854 4,587 8,441
2 2 Octel Corp. (b) 43 43
18 22 40 Textron, Inc. 1,294 1,612 2,906
16 17 33 TRW, Inc. 871 950 1,821
---------- ----------- --------------
11,731 14,048 25,779
---------- ----------- --------------
Raw Materials (3.0%):
27 31 58 Air Products & Chemical, Inc. 1,079 1,231 2,310
22 31 53 Alcan Aluminum Ltd. 613 848 1,461
19 24 43 Allegheny Teledyne, Inc. 431 551 982
19 24 43 Aluminum Co. of America (c) 1,251 1,577 2,828
85 14 99 Armco, Inc. (b) 544 90 634
10 6 16 ASARCO, Inc. 224 133 357
12 15 27 Avery Dennison Corp. 640 817 1,457
8 10 18 B. F. Goodrich Co. 397 482 879
38 49 87 Barrick Gold Corp. 734 946 1,680
31 31 Battle Mountain Gold Co. 184 184
15 15 Bethlehem Steel Corp. 186 186
24 13 37 Cyprus Amax Minerals Co. 315 174 489
26 32 58 Dow Chemical Co. (c) 2,506 3,077 5,583
124 155 279 Du Pont (EI) de Nemours & Co. 9,267 11,541 20,808
8 11 19 Eastman Chemical Co. 514 693 1,207
18 20 38 Engelhard Corp. 364 401 765
24 27 51 Freeport-McMoran Copper & Gold, Class B 363 416 779
9 9 Great Lakes Chemical Corp. 352 352
9 14 23 Hercules, Inc. 354 594 948
48 20 68 Homestake Mining Co. (c) 497 207 704
23 23 Inco Ltd. 309 309
68 80 148 Monsanto Co. (c) 3,772 4,490 8,262
14 20 34 Morton International, Inc. 341 492 833
9 10 19 Nalco Chemical Co. 302 335 637
See notes to financial statements.
279
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
19 21 40 Newmont Mining Corp. 445 501 946
8 12 20 Nucor Corp. 376 556 932
16 16 32 Pall Corp. 322 329 651
7 9 16 Phelps Dodge Corp. 385 505 890
33 33 Placer Dome, Inc. 383 383
17 21 38 Praxair, Inc. 796 979 1,775
7 9 16 Reynolds Metals Co. 401 508 909
6 9 15 Rohm & Haas Co. 638 917 1,555
11 14 25 Sigma-Aldrich Corp. 387 491 878
16 18 34 Union Carbide Corp. 856 971 1,827
12 12 USX - U.S. Steel Group, Inc. 384 384
10 10 W.R. Grace & Co. 168 168
30 13 43 Worthington Industries, Inc. 452 190 642
---------- ----------- --------------
29,566 37,008 66,574
---------- ----------- --------------
Retail (6.1%):
1 1 Abercrombie & Fitch Co. (b) 44 44
27 34 61 Albertsons, Inc. 1,398 1,774 3,172
32 39 71 American Stores Co. 786 947 1,733
15 13 28 Circuit City Stores, Inc. 684 621 1,305
12 15 27 Consolidated Stores Co. (b) 431 529 960
25 29 54 Costco Companies, Inc. (c) 1,603 1,855 3,458
43 52 95 CVS Corp. 1,670 2,030 3,700
38 22 60 Darden Restaurants, Inc. 596 346 942
48 59 107 Dayton Hudson Corp. 2,345 2,877 5,222
11 15 26 Dillard Department Stores, Inc., Class A 451 636 1,087
24 28 52 Federated Department Stores, Inc. (b) (c) 1,303 1,511 2,814
43 55 98 Gap, Inc. 2,668 3,412 6,080
8 8 Giant Food Inc., Class A 359 359
5 5 Great Atlantic & Pacific Tea, Inc. 175 175
79 100 179 Home Depot, Inc. 6,561 8,298 14,859
29 35 64 J.C. Penney, Inc. (c) 2,071 2,503 4,574
54 64 118 K Mart, Inc. (b) (c) 1,034 1,233 2,267
28 34 62 Kroger Co. (b) 1,194 1,450 2,644
31 31 62 Limited, Inc. 1,011 1,024 2,035
8 4 12 Longs Drug Stores, Inc. 234 121 355
41 47 88 Lowe's Co. 1,681 1,900 3,581
28 32 60 May Department Stores Co. 1,814 2,097 3,911
78 95 173 McDonald's Corp. 5,355 6,567 11,922
5 5 Mercantile Stores Co., Inc. 385 385
7 11 18 Nordstrom, Inc. 578 879 1,457
9 9 Pep Boys-Manny, Moe & Jack 166 166
27 32 59 Rite Aid Corp. (c) 1,025 1,218 2,243
45 53 98 Sears Roebuck & Co. 2,736 3,260 5,996
13 14 27 Tandy Corp. 698 741 1,439
34 42 76 TJX Co., Inc. 827 1,023 1,850
29 38 67 Toys R Us, Inc. (b) 673 905 1,578
17 21 38 Tricon Global Restaurants (b) 546 672 1,218
18 18 Venator Group, Inc. 346 346
247 307 554 Wal-Mart Stores, Inc. (c) 14,976 18,638 33,614
62 68 130 Walgreen Co. 2,563 2,807 5,370
15 17 32 Wendy's International, Inc. 341 410 751
18 21 39 Winn Dixie Stores, Inc. (c) 935 1,051 1,986
---------- ----------- --------------
60,788 74,810 135,598
---------- ----------- --------------
Shelter (1.2%):
5 5 10 Armstrong World Industries, Inc. 310 351 661
11 7 18 Boise Cascade Corp. 364 232 596
13 7 20 Centex Corp. (w/ warrants to purchase interest in CDC LP. 499 274 773
See notes to financial statements.
280
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
Class B units and shares of 3333 Holdings Corp)
11 13 24 Champion International Co. 530 631 1,161
5 5 Fleetwood Enterprises, Inc. 187 187
10 12 22 Georgia Pacific Corp. 612 733 1,345
32 41 73 International Paper Co. 1,392 1,762 3,154
20 5 25 Kaufman & Broad Home Corp. 642 169 811
63 77 140 Kimberly Clark Corp. 2,895 3,514 6,409
15 15 Louisiana Pacific Corp. 268 268
19 22 41 Masco Corp. 1,125 1,326 2,451
16 16 32 Mead Corp. 498 499 997
15 21 36 Owens-Illinois, Inc. (b) 685 943 1,628
3 3 Potlatch Corp. 146 146
6 6 Pulte Corp. 183 183
10 11 21 Sealed Air Corp. (b) 351 415 766
18 13 31 Stone Container Corp. 274 203 477
8 8 16 Temple Inland, Inc. 416 430 846
7 10 17 Union Camp Corp. 328 482 810
12 14 26 Westvaco Corp. 336 390 726
22 27 49 Weyerhaeuser Co. 1,006 1,269 2,275
14 16 30 Williamette Industries, Inc. 447 516 963
---------- ----------- --------------
12,710 14,923 27,633
---------- ----------- --------------
Technology (14.9%):
37 46 83 3Com Corp. (b) 1,126 1,406 2,532
9 10 19 Adobe Systems, Inc. 395 410 805
16 19 35 Advanced Micro Devices, Inc. (b) 273 319 592
23 29 52 AMP, Inc. 799 1,012 1,811
12 12 24 Andrew Corp. (b) 217 223 440
15 17 32 Apple Computer, Inc. (b) (c) 427 480 907
39 49 88 Applied Materials, Inc. (b) 1,141 1,433 2,574
21 26 47 Ascend Communications, Inc. (b) (c) 1,051 1,303 2,354
7 7 Auto Desk, Inc. 263 263
18 30 48 Bay Networks, Inc. (b) 594 978 1,572
110 137 247 Boeing Co. 4,887 6,103 10,990
21 21 Cabletron Systems, Inc. (b) 281 281
116 139 255 Cisco Systems, Inc. (b) 10,708 12,800 23,508
189 227 416 Compaq Computer Corp. (b) 5,366 6,433 11,799
61 75 136 Computer Associates International, Inc. 3,409 4,164 7,573
5 5 Data General Corp. (b) 74 74
73 89 162 Dell Computer Corp. (b) 6,817 8,272 15,089
16 16 DSC Communications Corp. (b) (c) 467 467
12 7 19 EG&G, Inc. 369 219 588
56 67 123 EMC Corp. (b) (c) 2,504 3,022 5,526
17 21 38 Gateway 2000, Inc. (b) 881 1,072 1,953
11 18 29 General Dynamics Corp. 515 825 1,340
17 17 General Instrument Corp. (b) 472 472
11 10 21 Harris Corp. 483 465 948
117 142 259 Hewlett Packard Co. 7,003 8,514 15,517
180 231 411 Intel Corp. 13,312 17,104 30,416
107 129 236 International Business Machines 12,247 14,768 27,015
9 11 20 KLA-Tencor Corp. (b) (c) 260 313 573
21 26 47 Lockheed Martin Corp. 2,250 2,797 5,047
18 18 LSI Logic Corp. (b) 413 413
143 179 322 Lucent Technologies, Inc. 11,881 14,893 26,774
24 28 52 Micron Technology, Inc. (b) (c) 589 704 1,293
267 335 602 Microsoft Corp. (b) 28,956 36,354 65,310
66 81 147 Motorola, Inc. 3,474 4,246 7,720
15 22 37 National Semiconductor Corp. (b) (c) 200 294 494
62 72 134 Northern Telecom, Ltd. 3,572 4,083 7,655
See notes to financial statements.
281
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
7 9 16 Northrop Grumman Corp. 760 931 1,691
47 49 96 Novell, Inc. (b) 598 626 1,224
114 134 248 Oracle Corp. (b) (c) 2,800 3,300 6,100
28 35 63 Parametric Technology Corp. (b) 759 940 1,699
5 6 11 Perkin-Elmer Corp. 298 382 680
11 12 23 Raychem Corp. 331 359 690
5 5 Raytheon Co., Class A 295 295
32 46 78 Raytheon Co., Class B (c) 1,891 2,732 4,623
25 28 53 Rockwell International Corp. (c) 1,196 1,323 2,519
11 11 Scientific-Atlanta, Inc. 271 271
28 34 62 Seagate Technology, Inc. (b) 664 810 1,474
23 23 Silicon Graphics, Inc. (b) 281 281
39 51 90 Sun Microsystems, Inc. (b) 1,706 2,215 3,921
8 6 14 Tektronix, Inc. 272 229 501
20 24 44 Tellabs, Inc. (b) (c) 1,439 1,739 3,178
43 52 95 Texas Instruments, Inc. 2,530 3,022 5,552
7 7 Thomas & Betts Corp. 347 347
25 34 59 Unisys Corp. 695 962 1,657
25 31 56 United Technologies Corp. 2,328 2,888 5,216
36 44 80 Xerox Corp. (c) 3,693 4,515 8,208
---------- ----------- --------------
147,961 184,851 332,812
---------- ----------- --------------
Transportation (1.0%):
21 25 46 AMR Corp. (b) 1,740 2,054 3,794
18 21 39 Burlington Northern Santa Fe Corp. 1,734 2,060 3,794
23 29 52 CSX Corp. 1,057 1,312 2,369
9 10 19 Delta Air Lines, Inc. 1,155 1,280 2,435
17 20 37 FDX Corp. (b) 1,094 1,279 2,373
40 52 92 Norfolk Southern Corp. 1,184 1,564 2,748
18 30 48 Southwest Airlines Co. 543 885 1,428
27 33 60 Union Pacific Corp. (c) 1,193 1,475 2,668
12 12 US Air Group 981 981
25 25 US Airways Group, Inc. 721 721
---------- ----------- --------------
10,421 12,890 23,311
---------- ----------- --------------
Utilities (9.7%):
64 77 141 Airtouch Communications, Inc. (b) 3,712 4,508 8,220
16 26 42 Alltel Corp. (c) 749 1,213 1,962
13 19 32 Ameren Corp. 510 744 1,254
20 26 46 American Electric Power, Inc. 920 1,168 2,088
123 151 274 Ameritech Corp. 5,526 6,798 12,324
178 221 399 AT&T Corp. (c) 10,183 12,627 22,810
18 20 38 Baltimore Gas & Electric Co. 549 624 1,173
169 213 382 Bell Atlantic Corp. 7,731 9,727 17,458
107 136 243 BellSouth Corp. 7,155 9,098 16,253
17 21 38 Carolina Power & Light Co. 725 925 1,650
20 29 49 Central & South West Corp. 545 778 1,323
15 21 36 Cinergy Corp. 538 744 1,282
10 14 24 Coastal Corp. 738 981 1,719
12 12 24 Columbia Gas System, Inc. 667 645 1,312
27 32 59 Consolidated Edison, Inc. 1,238 1,481 2,719
10 13 23 Consolidated Natural Gas Co. 565 744 1,309
20 20 Detroit Edison Co. 805 805
20 24 44 Dominion Resources, Inc. of Virginia 832 978 1,810
39 49 88 Duke Power Co., Inc. 2,322 2,893 5,215
5 2 7 Eastern Enterprises 210 92 302
47 49 96 Edison International 1,402 1,458 2,860
41 45 86 Enron Corp. (c) 2,243 2,424 4,667
30 32 62 Entergy Corp. 860 913 1,773
25 31 56 First Energy Corp. 781 964 1,745
See notes to financial statements.
282
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
21 25 46 Florida Power & Light Group, Inc. (c) 1,341 1,598 2,939
18 22 40 Frontier Corp. 578 700 1,278
14 16 30 General Public Utilities Corp. 516 608 1,124
108 132 240 GTE Corp. 5,993 7,323 13,316
33 38 71 Houston Industries 1,016 1,173 2,189
74 99 173 MCI Communications Corp. 4,301 5,735 10,036
29 33 62 Nextel Communications, Inc., Class A (b) 731 830 1,561
20 20 Niagara Mohawk Power Corp. (b) 294 294
7 7 NICOR, Inc. 297 297
15 19 34 Northern States Power Co. 427 549 976
4 3 7 Oneok, Inc. 171 133 304
32 40 72 Pacificorp 721 897 1,618
24 31 55 Peco Energy Corp. (c) 695 891 1,586
4 4 8 Peoples Energy Corp. 139 173 312
52 52 104 PG & E Corp. (c) 1,646 1,639 3,285
22 22 44 PP&L Resources, Inc. 493 497 990
24 33 57 Public Service Enterprise Group 813 1,139 1,952
201 252 453 SBC Communications, Inc. 8,048 10,080 18,128
18 18 Sempra Energy (b) 492 492
11 15 26 Sonat, Inc. 413 579 992
79 92 171 Southern Co. 2,199 2,547 4,746
50 59 109 Sprint Corp. 3,521 4,166 7,687
28 33 61 Texas Utilities (c) 1,151 1,364 2,515
46 56 102 The Williams Companies, Inc. (c) 1,554 1,896 3,450
23 29 52 Unicom Corp. 807 1,028 1,835
57 71 128 US West, Inc. (b) 2,682 3,321 6,003
111 139 250 WorldCom, Inc. (b) (c) 5,385 6,717 12,102
---------- ----------- --------------
96,042 119,998 216,040
---------- ----------- --------------
Total Common Stocks 981,306 1,223,123 2,204,429
---------- ----------- --------------
U.S. Treasury Obligations (0.1%):
U.S. Treasury Bills (0.1%):
$ $ 220 $ 220 7/16/98 (d) 220 220
885 885 7/23/98 (d) 882 882
15 15 8/20/98 (d) 15 15
520 520 8/27/98 (d) 516 516
---------- ----------- --------------
- 1,633 1,633
---------- ----------- --------------
Total U.S. Treasury Obligations
Repurchase Agreements (0.4%):
9,880 9,880 Prudential Securities, 6.10%, 7/1/98 (Collateralized by
$9,880 various U.S Government Securities, 6.10% - 6.25%,
4/30/01 - 6/26/03, market value $9,976) 9,880 9,880
---------- ----------- --------------
Total Repurchase Agreements - 9,880 9,880
---------- ----------- --------------
Short-Term Securities Held as Collateral (5.2%):
Master Notes (1.0%):
4,384 4,384 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 4,384 4,384
3,653 3,653 Danaher Corp., 6.68%, 10/9/98* 3,653 3,653
2,192 2,192 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 2,192 2,192
4,968 4,968 Morgan Stanley Mortgage Capital, 5.76%, 7/21/98* 4,969 4,969
1,315 1,315 NationsBanc Capital Markets, 6.70%, 7/1/98* 1,315 1,315
4,384 4,384 Williamette Industries, Inc., 5.85%, 7/23/98* 4,384 4,384
---------- ----------- --------------
- 20,897 20,897
---------- ----------- --------------
Put Bonds (1.4%):
3,653 3,653 Associates Corp. N.A., 5.79%, 1/4/99* 3,651 3,651
2,923 2,923 Branch Banking & Trust, 5.92%, 12/10/99* 2,923 2,923
1,461 1,461 Citicorp, 5.94%, 8/3/98* 1,461 1,461
3,361 3,361 Evangelical Lutheran, 5.74%, 4/28/00* 3,355 3,355
See notes to financial statements.
283
The One Group Equity Index Fund / Pegasus Equity Index Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- --------- --------- ------------------------------------------------------- ----------- ------------ ---------------
4,384 4,384 GMAC, 5.85%, 11/10/99* 4,392 4,392
3,653 3,653 Goldman Sachs, 6.06%, 11/21/00* 3,653 3,653
3,653 3,653 Greenwich Capital, 6.11%, 12/13/99* 3,653 3,653
3,653 3,653 Lehman Brothers Holdings, 5.85%, 8/18/99* 3,653 3,653
1,461 1,461 Merrill Lynch, 6.07%, 11/13/98* 1,461 1,461
3,653 3,653 PNC Bank, 5.74%, 10/2/98* 3,651 3,651
---------- ----------- --------------
- 31,853 31,853
---------- ----------- --------------
Repurchase Agreements (2.8%):
14,613 14,613 Donaldson, Lufkin & Jenrette, 6.65%,
7/1/98 (Collateralized by $14,940 various
Corporate and Government Securities,
0.00% - 17.25%, 10/15/02 - 4/15/35, market value $15,175) 14,613 14,613
7,307 7,307 Goldman Sachs, 6.65%, 7/1/98 (Collateralized by $7,788
various Corporate Bonds, 0.00%, 7/7/98 - 9/18/98, market
value $7,759) 7,307 7,307
37,556 37,556 Lehman Brothers, 6.65%, 7/1/98 (Collateralized by $38,496
various Corporate Bonds, 0.00% - 10.13%, 9/15/99 -
10/17/96, market value $40,293) 37,556 37,556
25 25 Lehman Brothers, 6.47%, 7/1/98 (Collateralized by $27 Media
One Group Bonds, 0.00%, 10/5/98, market value $27) 25 25
1,169 1,169 Lehman Brothers, 6.00%, 7/1/98 (Collateralized by $7,318
various Government Securities, 0.00% - 7.50%, 12/1/18 -
5/1/24, market value $1,203) 1,169 1,169
1,461 1,461 Paine Webber, 6.40%, 7/1/98 (Collateralized by $1,459
various Corporate Bonds, 4.00% - 9.75%, 7/15/98 - 12/31/49,
market value $1,534) 1,461 1,461
---------- ----------- --------------
- 62,131 62,131
---------- ----------- --------------
Total Short-Term Securities Held as Collateral - 114,881 114,881
---------- ----------- --------------
Total (Cost $1,452,803) (a) $ 981,306 $1,358,421 $ 2,339,727
========== =========== ==============
------------
Percentages indicated are based on net assets of $2,226,068.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax
reporting of approximately $4,279. Cost for federal income tax purposes
differs from value by net unrealized appreciation of securities as
follows (amounts in thousands):
Unrealized appreciation..............................$ 912,740
Unrealized depreciation............................... (30,095)
-------------
Net unrealized appreciation..........................$ 882,645
=============
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1998.
(d) Serves as collateral for futures contracts.
Current
Number Opening Market
of Positions Value
Contracts Contract Type (000) (000)
-------- ------------- --------- --------
74 Long S&P 500, September 1998 Futures $20,861 $21,146
* The interest rate for this variable rate note, which will change
periodically, is based upon an index of market rates. The rate
reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1998.
284
The One Group Value Growth Fund / Pegasus Growth and Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ---------- --------- ----------------------------------------------------------- ------------- ------------ -------------
Commercial Paper (1.7%):
Financial Services (1.7%):
$ $ 12,800 $ 12,800 Merrill Lynch, 5.59%, 9/19/98 $ $ 12,646 $ 12,646
------------- ------------ -----------
Total Commercial Paper - 12,646 12,646
------------- ------------ -----------
Common Stocks (96.9%):
Business Equipment & Services (3.9%):
416 416 Automatic Data Processing, Inc. 30,316 30,316
578 578 Cognizant Corp. 36,414 36,414
67 67 Miller (Herman), Inc. 1,617 1,617
123 123 Service Corp. International 5,256 5,256
52 52 U.S.A. Waste Services, Inc. (b)(c) 2,553 2,553
------------- ------------ -----------
66,730 9,426 76,156
------------- ------------ -----------
Capital Goods (4.1%):
43 43 Cooper Industries, Inc. 2,368 2,368
825 825 Dover Corp. 28,256 28,256
89 89 Emerson Electric Co. 5,356 5,356
243 243 General Electric Co. 22,112 22,112
78 78 Harsco Corp. 3,569 3,569
39 39 Hubbell, Inc., Class B 1,640 1,640
62 62 Johnson Controls, Inc. 3,521 3,521
30 30 Medusa Corp. 1,883 1,883
120 120 Teleflex, Inc. 4,560 4,560
107 107 Tyco International Ltd. 6,747 6,747
------------- ------------ -----------
28,256 51,756 80,012
------------- ------------ -----------
Consumer Durable (0.5%):
121 121 Autozone, Inc. (b)(c) 3,874 3,874
104 104 Chrysler Corp. 5,852 5,852
------------- ------------ -----------
- 9,726 9,726
------------- ------------ -----------
Consumer Non-Durable (12.5%):
613 613 Anheuser-Busch Companies, Inc. 28,926 28,926
572 572 Bestfoods 33,212 33,212
134 134 Coca-Cola Co. 11,474 11,474
1,086 120 1,206 Conagra, Inc. 34,413 3,790 38,203
416 416 Crown Cork & Seal Co., Inc. 19,760 19,760
69 69 Interstate Bakeries Corp.(c) 2,277 2,277
120 120 Intimate Brands, Inc. 3,302 3,302
47 47 Lancaster Colony Corp. 1,788 1,788
90 90 McCormick & Co., Inc. 3,225 3,225
628 114 742 Newell Cos., Inc. 31,282 5,689 36,971
898 898 PepsiCo, Inc. 36,986 36,986
208 208 Philip Morris Co., Inc. 8,186 8,186
48 48 Procter & Gamble Co. 4,407 4,407
83 83 Quaker Oats Co. 4,560 4,560
72 72 Revlon, Inc., Class A (b)(c) 3,673 3,673
104 104 Rubbermaid, Inc. 3,458 3,458
90 90 Sara Lee Corp. 5,023 5,023
------------- ------------ -----------
184,579 60,852 245,431
------------- ------------ -----------
Consumer Services (5.1%):
123 123 Belo (A.H.) Corp., Series A 3,003 3,003
397 397 Gannett Co., Inc. 28,212 28,212
115 115 Hasbro, Inc. 4,505 4,505
143 143 Hilton Hotels Corp. 4,084 4,084
64 64 MGM Grand, Inc. (b) (c) 2,014 2,014
110 110 Tele-Communications, Inc., Class A (b)(c) 4,211 4,211
94 94 Time Warner, Inc. (c) 8,065 8,065
83 83 Viacom, Inc., Class B (b) 4,841 4,841
41 41 Walt Disney Co. 4,308 4,308
66 66 Washington Post Co. Class B 38,016 38,016
------------- ------------ -----------
66,228 35,031 101,259
------------- ------------ -----------
Energy (4.8%):
See notes to financial statements.
285
The One Group Value Growth Fund / Pegasus Growth and Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ---------- --------- ----------------------------------------------------------- ------------- ------------ -------------
58 58 Ashland, Inc. 2,984 2,984
302 302 British Petroleum PLC ADR 26,673 26,673
52 52 Devon Energy Corp. (c) 1,803 1,803
47 47 Dresser Industries, Inc. (c) 2,080 2,080
467 467 Enron Corp. 25,247 25,247
222 222 Exxon Corp. 15,845 15,845
217 217 Mobil Corp. 16,628 16,628
151 151 Royal Dutch Petroleum Co. (c) 8,259 8,259
131 131 Texaco, Inc. 7,813 7,813
79 79 Tosco Corp. (c) 2,324 2,324
48 48 Transocean Offshore, Inc. 2,114 2,114
81 81 Ultramar Diamond Shamrock Corp. 2,541 2,541
158 158 USX-Marathon Group 5,408 5,408
------------- ------------ -----------
68,548 51,171 119,719
------------- ------------ -----------
Financial Services (14.4%):
55 55 Allstate Corp. 5,008 5,008
187 45 232 American International Group, Inc. 27,229 6,526 33,755
29 29 Associates First Capital, Class A 2,260 2,260
311 311 BankAmerica Corp. 26,882 26,882
53 53 Bear Stearns Cos., Inc. 2,986 2,986
117 117 Charter One Financial, Inc. 3,925 3,925
116 116 Chase Manhattan Corp. 8,773 8,773
324 324 Chubb Corp. 26,042 26,042
63 63 Cigna Corp. 4,326 4,326
53 53 Equitable Co., Inc. 3,934 3,934
445 445 Federal Home Loan Mortgage Corp. 20,943 20,943
130 130 Federal National Mortgage Assoc. 7,916 7,916
113 113 First Tennessee National Corp. 3,560 3,560
86 86 First Union Corp. 5,021 5,021
51 51 Hartford Financial Services Group 5,833 5,833
102 102 MBNA Corp. 3,356 3,356
69 69 Mercantile Bankshares Corp. 2,409 2,409
98 98 Morgan Stanley Dean Witter Discover 8,918 8,918
79 79 National City Corp. 5,623 5,623
175 175 NationsBank Corp. 13,418 13,418
998 998 Norwest Corp. 37,300 37,300
282 31 313 PMI Group, Inc. 20,692 2,238 22,930
128 128 Southtrust Corp. 5,566 5,566
59 59 State Street Corp. 4,087 4,087
187 187 Travelers Group, Inc. 11,307 11,307
17 17 Wells Fargo & Co. 6,384 6,384
------------- ------------ -----------
159,088 123,374 282,462
------------- ------------ -----------
Health Care (11.0%):
654 654 Abbott Laboratories Corp. 26,732 26,732
630 162 792 American Home Products Corp. 32,602 8,389 40,991
58 58 Bausch & Lomb, Inc. 2,907 2,907
79 79 Baxter International, Inc. 4,240 4,240
50 50 Boston Scientific Corp. (b)(c) 3,553 3,553
352 115 467 Bristol Myers Squibb Co. 40,458 13,159 53,617
36 36 Cardinal Health, Inc. 3,394 3,394
90 90 Idexx Laboratories, Inc. (b) 2,229 2,229
42 42 Johnson & Johnson 3,112 3,112
98 98 Medtronic, Inc. 6,248 6,248
57 57 Merck & Co., Inc. 7,624 7,624
38 38 Pfizer, Inc. 4,152 4,152
423 77 500 Schering Plough Corp. 38,757 7,018 45,775
31 31 Sofamor Danek Group, Inc. (b) 2,649 2,649
130 130 Warner-Lambert Co. 8,991 8,991
------------- ------------ -----------
138,549 77,665 216,214
------------- ------------ -----------
Raw Materials (4.2%):
58 58 Betzdearborn, Inc. 2,430 2,430
See notes to financial statements.
286
The One Group Value Growth Fund / Pegasus Growth and Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ---------- --------- ----------------------------------------------------------- ------------- ------------ -------------
90 90 Crompton & Knowles Corp. 2,254 2,254
89 89 Du Pont (EI) de Nemours & Co. 6,627 6,627
106 106 Ferro Corp. 2,695 2,695
118 118 Morton International, Inc. 2,943 2,943
81 81 Nalco Chemical Co. 2,831 2,831
77 77 Olin Corp. 3,197 3,197
88 88 Praxair, Inc. 4,105 4,105
747 747 Sigma-Aldrich Corp. 26,238 26,238
425 425 Schlumberger Ltd. 29,033 29,033
------------- ------------ -----------
55,271 27,082 82,353
------------- ------------ -----------
Retail (4.2%):
113 113 Dayton Hudson Corp. 5,461 5,461
175 175 Just For Feet, Inc. (b)(c) 4,988 4,988
100 100 Kohl's Corp. (b) 5,167 5,167
143 143 Kroger Co. (b) 6,114 6,114
1,984 204 2,188 Officemax, Inc. (b) 32,736 3,371 36,107
60 60 Outback Steakhouse, Inc. (b)(c) 2,340 2,340
77 77 Safeway, Inc. (b) 3,141 3,141
226 226 Wal-Mart Stores, Inc. (c) 13,705 13,705
118 118 Williams Sonoma, Inc. (b) 3,744 3,744
------------- ------------ -----------
32,736 48,031 80,767
------------- ------------ -----------
Shelter (4.7%):
30 30 Armstrong World Industries, Inc. 2,035 2,035
626 112 738 Kimberly Clark Corp. 28,718 5,156 33,874
138 138 Leggett & Platt, Inc. 3,440 3,440
555 81 636 Masco Corp. 33,577 4,888 38,465
88 88 Pentair, Inc. 3,736 3,736
230 230 York International Corp. 10,020 10,020
------------- ------------ -----------
72,315 19,255 91,570
------------- ------------ -----------
Technology (14.9%):
782 782 AMP, Inc 26,881 26,881
88 88 American Power Conversion (b) 2,643 2,643
581 581 Andrew Corp. 10,487 10,487
63 63 Applied Materials, Inc. (b) 1,850 1,850
87 87 BMC Software, Inc. (b) 4,508 4,508
388 388 Boeing Co. 17,290 17,290
106 106 Cadence Design Systems, Inc (b)(c) 3,309 3,309
145 145 Cisco Systems, Inc. (b) 13,317 13,317
464 464 Compaq Computer Corp. 13,166 13,166
140 140 Dell Computer Corp. (b) 12,984 12,984
659 659 Electronic Data Systems Corp. 26,360 26,360
895 895 First Data Corp. 29,815 29,815
289 62 351 Gateway 2000, Inc. (b) 14,631 3,119 17,750
204 122 326 Hewlett Packard Co. 12,215 7,317 19,532
366 169 535 Intel Corp. 27,130 12,535 39,665
92 92 International Business Machines 10,609 10,609
38 38 Lockheed Martin Corp. 3,981 3,981
92 92 LSI Logic Corp. (b) 2,117 2,117
99 99 Lucent Technologies, Inc. 8,269 8,269
79 79 Maxim Integrated Products, Inc. (b) 2,487 2,487
230 230 Microsoft Corp. (b) 24,958 24,958
------------- ------------ -----------
177,975 114,003 291,978
------------- ------------ -----------
Telecommunications (0.3%):
193 193 Qwest Communications International (b) 6,743 6,743
------------- ------------ -----------
- 6,743 6,743
------------- ------------ -----------
Utilities (12.5%):
88 88 AES Corp. (b) 4,641 4,641
106 106 Baltimore Gas & Electric Co. 3,296 3,296
534 534 Bell Atlantic Corp. 24,364 24,364
See notes to financial statements.
287
The One Group Value Growth Fund / Pegasus Growth and Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ---------- --------- ----------------------------------------------------------- ------------- ------------ -------------
814 93 907 Century Telephone Enterprises 37,342 4,262 41,604
98 98 Cinergy Corp. 3,437 3,437
82 82 El Paso Natural Gas 3,137 3,137
135 135 Energy East Corp. 5,607 5,607
501 501 FPL Group, Inc. 31,563 31,563
118 118 General Public Utilities Corp. 4,462 4,462
147 147 GTE Corp. 8,155 8,155
62 62 L G & E Energy Corp. 1,678 1,678
925 61 986 MCN Corp. (c) 23,009 1,515 24,524
737 737 Pinnacle West Capital Corp. 33,165 33,165
248 248 SBC Communications, Inc. 9,915 9,915
120 120 Sprint Corp. 8,431 8,431
114 114 Williams Co. (c) 3,861 3,861
165 165 Worldcom, Inc. (b)(c) 7,983 7,983
------------- ------------ -----------
149,443 70,380 219,823
------------- ------------ -----------
Total Common Stocks 1,199,718 704,495 1,904,213
------------- ------------ -----------
Investment Companies - (1.6%)
29,334 29,334 Pegasus Cash Management Fund Class I (in shares) 29,234 29,234
------------- ------------ -----------
Total Investment Companies 29,234 - 29,234
------------- ------------ -----------
U.S. Treasury Obligations (0.3%):
U.S. Treasury Bills (0.3%):
$ $ 485 $ 485 8/20/98 (d) 482 482
2,250 2,250 9/17/98 (d) 2,197 2,197
55 55 9/24/98 (d) 54 54
------------- ------------ -----------
Total U.S. Treasury Obligations 2,197 536 2,733
------------- ------------ -----------
Repurchase Agreements (1.0%):
19,589 19,589 Prudential Securities, 6.10%, 7/1/98 (Collateralized by
$14,752 U.S. Government Securities, 6.10%- 8.75%, 6/26/03-
5/15/17, market value $19,981) 19,589 19,589
------------- ------------ -----------
Total Repurchase Agreements - 19,589 19,589
------------- ------------ -----------
Short-Term Securities Held as Collateral (2.6%):
Master Notes (0.5%):
1,875 1,875 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 1,875 1,875
1,563 1,563 Danaher Corp., 6.68%, 10/9/98* 1,563 1,563
938 938 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 938 938
2,125 2,125 Morgan Stanley Mortgage Capital, 5.76%, 7/21/98* 2,124 2,124
563 563 NationsBanc Capital Markets, 6.70%, 7/1/98* 563 563
1,875 1,875 Williamette Industries, Inc., 5.85%, 7/23/98* 1,875 1,875
------------- ------------ -----------
- 8,938 8,938
------------- ------------ -----------
Put Bonds (0.7%):
1,563 1,563 Associates Corp. N.A., 5.79%, 1/4/99* 1,562 1,562
1,250 1,250 Branch Banking & Trust, 5.92%, 12/10/99* 1,250 1,250
625 625 Citicorp, 5.94%, 8/3/98* 625 625
1,438 1,438 Evangelical Lutheran, 5.74%, 4/28/00* 1,435 1,435
1,875 1,875 GMAC, 5.85%, 11/10/99* 1,877 1,877
1,563 1,563 Goldman Sachs, 6.06%, 11/21/00* 1,563 1,563
1,563 1,563 Greenwich Capital, 6.11%, 12/13/99* 1,563 1,563
1,563 1,563 Lehman Brothers Holdings, 5.85%, 8/18/99* 1,563 1,563
625 625 Merrill Lynch, 6.07%, 11/13/98* 625 625
1,563 1,563 PNC Bank, 5.74%, 10/2/98* 1,562 1,562
------------- ------------ -----------
- 13,625 13,625
------------- ------------ -----------
Repurchase Agreements (1.4%):
6,251 6,251 Donaldson, Lufkin & Jenrette, 6.65%, 7/1/98 (Collateralized
by $6,391 various Corporate and Government Securities,
0.00% - 17.25%, 10/15/02 - 4/15/35, market value $6,491) 6,251 6,251
3,125 3,125 Goldman Sachs, 6.65%, 7/1/98 (Collateralized by $3,331
various Corporate Bonds, 0.00%, 7/7/98 - 9/18/98, market
value $3,319) 3,125 3,125
16,064 16,064 Lehman Brothers, 6.65%, 7/1/98 (Collateralized by $16,466
various Corporate Bonds, 0.00% - 10.13%, 9/15/99 -
10/17/96, market value $17,235) 16,065 16,065
See notes to financial statements.
288
The One Group Value Growth Fund / Pegasus Growth and Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------- ---------- --------- ----------------------------------------------------------- ------------- ------------ -------------
11 11 Lehman Brothers, 6.47%, 7/1/98 (Collateralized by $11 Media
One Group Bonds, 0.00%, 10/5/98, market value $11) 11 11
500 500 Lehman Brothers, 6.00%, 7/1/98 (Collateralized by $3,130
various Government Securities, 0.00% - 7.50%, 12/1/18 -
5/1/24, market value $515) 500 500
625 625 Paine Webber, 6.40%, 7/1/98 (Collateralized by $624 various
Corporate Bonds, 4.00% - 9.75%, 7/15/98 - 12/31/49, market
value $656) 625 625
------------- ------------ -----------
Total Short-Term Securities Held as Collateral - 26,577 26,577
------------- ------------ -----------
Total (Cost $1,480,823) (a) - 49,140 49,140
------------- ------------ -----------
____________ $1,231,149 $786,406 $2,017,555
============= ============ ===========
Percentages indicated are based on net assets of $1,964,946.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
approximately $145. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
Unrealized appreciation......................................................... $ 566,603
Unrealized depreciation......................................................... (30,016)
-------------
Net unrealized appreciation.................................................... $ 536,587
=============
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1998.
(d) Serves as collateral for futures contracts.
Current
Number Opening Market
of Positions Value
Contracts Contract Type (000) (000)
--------- ------------- --------- -------
146 Long S&P 500, September 1998 Futures $40,802 $41,719
* The interest rate for this variable rate note, which will change
periodically, is based upon an index of market rates. The rate reflected on
the Schedule of Portfolio Investments is the rate in effect at June 30, 1998.
See notes to financial statements.
289
The One Group Disciplined Value Fund / Pegasus Intrinsic Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------------- ---------- --------- ---------------------------------------- ------- --------- ----------
Common Stocks (92.7%):
Business Equipment & Services (3.3%):
65 65 A.C. Nielson Corp. (b) $ $ 1,641 $ 1,641
24 24 America Online, Inc. (b) 2,544 2,544
35 35 Grey Advertising, Inc. 13,911 13,911
85 85 Jacobs Engineering Group, Inc. (b) 2,724 2,724
37 37 Kelly Services Inc., Class A 1,309 1,309
222 222 Office Depot, Inc. (b) (c) 7,006 7,006
48 48 Ogden Corp. 1,329 1,329
64 64 Olsten Corp. 716 716
40 40 Pittston Co. 1,475 1,475
90 90 Sensormatic Electronics Corp. (b) 1,260 1,260
53 53 Service Corp. International 2,272 2,272
60 60 Sotheby's Holdings, Class A 1,343 1,343
20 20 Standard Register Co. 708 708
126 126 Stewart Enterprises Corp., Class A 3,355 3,355
70 70 Sungard Data Systems, Inc. (b) (c) 2,686 2,686
36 36 U.S.A. Waste Services, Inc. (b) (c) 1,778 1,778
-------- ------- --------
13,911 32,146 46,057
-------- ------- --------
Capital Goods (3.5%):
128 128 Harsco Corp. 5,855 5,855
153 153 Hubbell, Inc., Class B 6,384 6,384
33 33 Johnson Controls, Inc. 1,883 1,883
36 36 Kennametal, Inc. 1,503 1,503
82 82 Mark IV Industries, Inc. 1,763 1,763
78 78 Medusa Corp. 4,895 4,895
139 139 Molex, Inc. 3,470 3,470
87 87 Southdown, Inc. 6,210 6,210
84 84 Teleflex, Inc. 3,200 3,200
81 81 Tennant Co. 3,588 3,588
116 116 Trinity Industries, Inc. 4,814 4,814
111 111 United States Filter Corp. (b) (c) 3,115 3,115
33 33 York International Corp. 1,438 1,438
-------- ------- --------
3,588 44,530 48,118
-------- ------- --------
Consumer Durable (1.5%):
42 42 Autozone, Inc. (b) (c) 1,341 1,341
390 390 Bandag, Inc. Class A 13,448 13,448
139 139 National Presto Industries, Inc. 5,428 5,428
-------- ------- --------
18,876 1,341 20,217
-------- ------- --------
Consumer Non-Durable (8.2%):
364 364 Diageo PLC 17,551 17,551
75 75 Farmer Brothers Co. 17,834 17,834
80 80 First Brands Corp. 2,050 2,050
82 82 Hormel Foods Corp. (c) 2,834 2,834
93 93 IBP, Inc. 1,686 1,686
335 335 Loews Corp. 29,213 29,213
98 98 McCormick & Co., Inc. 3,500 3,500
73 73 Newell Co. 3,636 3,636
441 441 Tate & Lyle PLC Sponsored 13,996 13,996
346 346 Tyson Foods, Inc., Class A 7,504 7,504
60 60 U.S. Foodservice (b) 2,104 2,104
236 236 UST, Inc. 6,383 6,383
46 46 Universal Corp. 1,719 1,719
75 75 Warnaco Group, Inc., Class A 3,183 3,183
-------- ------- --------
84,977 28,216 113,193
-------- ------- --------
Consumer Services (1.4%)
43 43 Banta Corp. 1,328 1,328
256 256 Belo (A.H.) Corp., Series A 6,244 6,244
36 36 Chris-Craft Industries, Inc. (b) 1,969 1,969
65 65 Hasbro, Inc. 2,555 2,555
20 20 Houghton Mifflin Co. 635 635
51 51 Lee Enterprises, Inc. 1,562 1,562
35 35 MGM Grand, Inc. (b) (c) 1,105 1,105
See notes to financial statements.
290
The One Group Disciplined Value Fund / Pegasus Intrinsic Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------------- ---------- --------- ---------------------------------------- ------- --------- ----------
95 95 Promus Hotel Corp. (b) 3,658 3,658
14 14 Scholastic Corp. (b) 558 558
-------- ------- --------
- 19,614 19,614
-------- ------- --------
Energy (4.3%):
95 95 Amoco Corp. 3,938 3,938
36 36 Ashland, Inc. 1,859 1,859
71 71 Atlantic Richfield Co. 5,549 5,549
148 148 BJ Services Co. (b) (c) 4,301 4,301
145 145 ENSCO International, Inc. 2,519 2,519
53 53 Murphy Oil Corp. (c) 2,686 2,686
100 100 Nabors Industries, Inc. (b) 1,981 1,981
63 63 Noble Affiliates, Inc. 2,394 2,394
175 175 Noble Drilling Corp. (b) 4,211 4,211
102 102 Pioneer Natural Resources Co. 2,435 2,435
60 60 Tidewater, Inc. 1,980 1,980
293 293 Tosco Corp. (c) 8,607 8,607
194 194 Transocean Offshore, Inc. 8,633 8,633
172 172 Ultramar Diamond Shamrock Corp. 5,429 5,429
93 93 Valero Energy Corp. 3,103 3,103
-------- ------- --------
9,487 50,138 59,625
-------- ------- --------
Financial Services (28.5%):
126 126 A.G. Edwards, Inc. 5,379 5,379
105 105 Ambac Financial Group, Inc. 6,143 6,143
40 40 American Financial Group, Inc. 1,733 1,733
228 228 American National Insurance Co. 23,964 23,964
80 80 Associated Banc-Corp. 3,010 3,010
173 173 Associated Estates Realty 3,227 3,227
195 195 Bear Stearns Co., Inc. 11,090 11,090
29 29 Capital One Financial Corp. 3,601 3,601
234 234 Charter One Financial, Inc. 7,886 7,886
573 573 Citizens Corp. 17,958 17,958
21 21 CMAC Investment Corp. 1,292 1,292
134 134 Crestar Financial Corp. 7,311 7,311
188 188 Dime Bancorp, Inc. 5,628 5,628
437 437 Federal National Mortgage Association 26,566 26,566
226 226 Financial Security Assurance Holdings 13,306 13,306
51 51 Finova Group, Inc. 2,888 2,888
225 225 First Security Corp. 4,816 4,816
47 47 First Virginia Banks, Inc. 2,398 2,398
170 170 Firstar Corp. 6,460 6,460
263 263 Fund American Enterprises Holdings, Inc. 38,997 38,997
50 50 GATX Corp. 2,194 2,194
112 112 Hibernia Corp., Class A 2,261 2,261
18 18 HSB Group, Inc. 987 987
848 848 Leucadia National Corp. 28,023 28,023
187 187 Marshall & Ilsley Corp. 9,549 9,549
45 45 MBNA Corp. 1,485 1,485
103 103 Mercantile Bankshares Corp. 3,568 3,568
23 23 Northern Trust Corp 1,754 1,754
190 190 Ohio Casualty Corp. 8,403 8,403
137 137 Old Kent Financial Corp. 4,910 4,910
833 217 1,050 Old Republic International Corp. 24,429 6,346 30,775
628 86 714 Pacific Century Financial Corp. 15,065 2,064 17,129
201 201 Paine Webber Group, Inc. 8,596 8,596
54 54 PMI Group, Inc. 3,962 3,962
182 182 Provident Co., Inc. 6,279 6,279
670 670 PXRE Corp. 20,098 20,098
185 185 Regions Financial Corp. 7,597 7,597
116 116 Reliastar Financial Corp. 5,568 5,568
207 207 Safeco Corp. 9,426 9,426
249 249 Southtrust Corp. 10,847 10,847
30 30 State Street Corp. 2,085 2,085
123 123 TCF Financial Corp. 3,629 3,629
36 36 Transatlantic Holdings, Inc. 2,814 2,814
112 112 Union Planters Corp. 6,587 6,587
-------- ------- --------
229,462 162,717 392,179
-------- ------- --------
See notes to financial statements.
291
The One Group Disciplined Value Fund / Pegasus Intrinsic Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------------- ---------- --------- ---------------------------------------- ------- --------- ----------
Health Care (3.8%):
87 87 Allegiance Corp. 4,433 4,433
610 610 Arch Coal, Inc. 15,182 15,182
21 21 ATL Ultrasound, Inc. (b) 958 958
55 55 Bergen Brunswig Corp., Class A 2,551 2,551
147 147 Beverly Enterprises, Inc. (b) (c) 2,030 2,030
154 154 Block Drug, Inc., Class A 5,856 5,856
200 200 Chiron Corp. (b) 3,138 3,138
95 95 Genzyme Corp. (b) (c) 2,428 2,428
80 80 HBO & Co. 2,820 2,820
112 112 IDEXX Laboratories, Inc. (b) 2,786 2,786
43 43 NovaCare, Inc. (b) 505 505
57 57 PacifiCare Health Systems, Inc., Class B (b) 5,038 5,038
22 22 Sofamor Danek Group, Inc. (b) 1,904 1,904
46 46 Watson Pharmaceuticals, Inc. (b) 2,148 2,148
-------- ------- --------
21,038 30,739 51,777
-------- ------- --------
Multi-Industry (0.1%):
61 61 Gencorp, Inc. 1,540 1,540
-------- ------- --------
- 1,540 1,540
-------- ------- --------
Raw Materials (4.6%):
47 47 A. Schulman, Inc. 919 919
96 96 Airgas, Inc. (b) (c) 1,380 1,380
35 35 AK Steel Holding Corp. 626 626
28 28 Albemarle Corp. 618 618
28 28 Aluminum Co. of America (c) 1,820 1,820
43 43 B. F. Goodrich Co. 2,134 2,134
109 109 Cabot Corp. 3,522 3,522
12 12 Cleveland Cliffs, Inc. 644 644
38 38 Crompton & Knowles Corp. 957 957
590 590 DeBeers Consolidated Mines Ltd 10,325 10,325
33 33 Dexter Corp. 1,050 1,050
23 23 Fuller (H. B.) Co. 1,247 1,247
70 70 Hanna (M.A.) Co. 1,286 1,286
164 164 IMC Global, Inc. 4,940 4,940
83 83 Lubrizol Corp. 2,511 2,511
33 33 Minerals Technologies, Inc. 1,679 1,679
229 229 NCH Corp. 14,652 14,652
102 102 Olin Corp. 4,252 4,252
22 22 Praxair, Inc. 1,030 1,030
200 200 RPM, Inc. 3,400 3,400
37 37 Sigma-Aldrich Corp. 1,300 1,300
53 53 Wellman, Inc. 1,202 1,202
68 68 Witco Corp. 1,989 1,989
-------- ------- --------
24,977 38,506 63,483
-------- ------- --------
Retail (8.8%):
55 55 BJ's Wholesale Club, Inc. (b) 2,234 2,234
32 32 Bob Evans Farms, Inc. 678 678
88 88 Borders Group, Inc. (b) 3,256 3,256
98 98 Brinker International, Inc. (b) 1,887 1,887
43 43 Buffets, Inc. (b) 675 675
50 50 Claire's Stores, Inc. 1,034 1,034
105 105 CompUSA, Inc. (b) 1,897 1,897
82 82 Cracker Barrel 2,604 2,604
386 386 Enesco Group, Inc. 11,860 11,860
73 73 Fingerhut Companies, Inc. 2,409 2,409
58 58 Fred Meyer, Inc. (b) (c) 2,482 2,482
66 66 Hannaford Brothers Co. 2,900 2,900
100 100 Just For Feet, Inc. (b) 2,850 2,850
40 40 Kohl's Corp. (b) 2,075 2,075
470 470 Lubys Cafeterias, Inc. 8,256 8,256
85 85 OfficeMax, Inc. (b) 1,403 1,403
96 96 Outback Steakhouse, Inc. (b) (c) 3,743 3,743
299 48 347 Payless Shoesource, Inc. (b) 22,025 3,537 25,562
115 115 Proffitts, Inc. (b) 4,642 4,642
See notes to financial statements.
292
The One Group Disciplined Value Fund / Pegasus Intrinsic Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------------- ---------- --------- ---------------------------------------- ------- --------- ----------
42 42 Saks Holdings, Inc. (b) 1,160 1,160
600 600 Sbarro, Inc. 16,287 16,287
552 552 Unifi, Inc. 18,916 18,916
70 70 Williams Sonoma, Inc. (b) 2,227 2,227
-------- ------- --------
77,344 43,693 121,037
-------- ------- --------
Shelter (1.9%):
59 59 Bowater, Inc. 2,788 2,788
19 19 Chesapeake Corp. 740 740
73 73 Clayton Homes, Inc. 1,387 1,387
116 116 Consolidated Papers, Inc. 3,161 3,161
108 108 Georgia Pacific Timber Corp. 2,484 2,484
134 134 Leggett & Platt, Inc. 3,350 3,350
35 35 Masco Corp. 2,118 2,118
148 148 Pentair, Inc. 6,289 6,289
69 69 Rayonier, Inc. 3,165 3,165
-------- ------- --------
- 25,482 25,482
-------- ------- --------
Technology (5.4%):
114 114 American Power Conversion (b) 3,420 3,420
77 77 Arrow Electronics, Inc. (b) 1,679 1,679
68 68 ATMEL Corp. (b) 927 927
35 35 Avnet, Inc. 1,887 1,887
100 100 Cirrus Logic, Inc. (b) 1,113 1,113
84 84 Cordant Technology, Inc. 3,874 3,874
38 38 Dell Computer Corp. (b) 3,527 3,527
22 22 Litton Industries, Inc. (b) 1,298 1,298
289 289 Lockheed Martin Corp. 30,598 30,598
130 130 LSI Logic Corp. (b) 2,998 2,998
47 47 NCR Corp. (b) 1,528 1,528
96 96 Qualcomm, Inc. (b) (c) 5,393 5,393
137 137 Quantum Corp. (b) 2,849 2,849
94 94 SCI Systems, Inc. (b) (c) 3,537 3,537
109 109 Sterling Software, Inc. (b) 3,222 3,222
88 88 Storage Technology Corp. (b) 3,816 3,816
33 33 Stratus Computer, Inc. (b) 825 825
46 46 Teradyne, Inc. (b) (c) 1,231 1,231
67 67 Vishay Intertechnology, Inc. (b) 1,202 1,202
-------- ------- --------
30,598 44,326 74,924
-------- ------- --------
Transportation (2.9%):
12 12 Alaska Air Group, Inc. (b) 655 655
451 58 509 Alexander & Baldwin, Inc. 13,122 1,689 14,811
43 43 ASA Holdings, Inc. 2,134 2,134
329 329 Canadian National Railway Co. 17,460 17,460
65 65 CNF Transportation, Inc. 2,762 2,762
75 75 Wisconsin Central Transportation Corp. (b) 1,641 1,641
57 57 Yellow Corp. (b) 1,058 1,058
-------- ------- --------
30,582 9,939 40,521
-------- ------- --------
Utilities (14.5%):
102 102 AES Corp. (b) 5,361 5,361
307 307 Allegheny Energy, Inc. 9,248 9,248
70 70 American Water Works, Inc. (c) 2,170 2,170
105 105 Baltimore Gas & Electric Co. 3,262 3,262
48 48 Calenergy, Inc. (b) 1,443 1,443
222 222 Century Telephone Enterprises 10,184 10,184
102 102 Cinergy Corp. 3,570 3,570
253 253 CMS Energy Corp. (c) 11,133 11,133
63 63 Conectiv, Inc. (b) 1,292 1,292
290 290 El Paso Natural Gas Co. 11,093 11,093
151 151 Energy East Corp. 6,285 6,285
83 83 Florida Progress Corp. 3,413 3,413
85 85 General Public Utilities Corp. 3,214 3,214
100 100 L G & E Energy Corp. 2,706 2,706
170 170 Marketspan Corporation 5,089 5,089
70 70 MCN Energy Group, Inc. 1,741 1,741
200 200 Montana Power Co. 6,943 6,943
See notes to financial statements.
293
The One Group Disciplined Value Fund / Pegasus Intrinsic Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------------- ---------- --------- ---------------------------------------- ------- --------- ----------
236 236 New Century Energies, Inc. 10,702 10,702
39 39 New England Electric System 1,687 1,687
171 171 Nipsco Industries, Inc. (c) 4,788 4,788
80 80 Northeast Utilities (b) 1,355 1,355
122 122 OGE Energy Corp. 3,294 3,294
160 160 Pinnacle West Capital Corp. 7,182 7,182
166 166 Potomac Electric Power Co. 4,160 4,160
140 140 Qwest Communications International, Inc. (b) 4,880 4,880
251 251 SCANA Corp. (c) 7,483 7,483
342 342 Sierra Pacific Resources 12,422 12,422
112 112 SJW Corp. 6,584 6,584
509 509 Southwest Gas Corp. 12,444 12,444
393 393 St. Joseph Light & Power Co. 7,328 7,328
322 322 TECO Energy, Inc. 8,634 8,634
565 565 Washington Water Power Co. 12,680 12,680
130 130 The Williams Companies, Inc. (c) 4,381 4,381
36 36 UtiliCorp United, Inc. 1,357 1,357
------- ------- ---------
51,458 148,050 199,508
------- ------- ---------
Total Common Stocks 596,298 680,977 1,277,275
------- ------- ---------
Convertible Bonds (5.0%)
Financial Services (3.3%)
$ 16,385 $ $ 16,385 Nac Re Corp., 5.25%, 12/15/02 18,228 18,228
55,270 55,270 Roche Holding, Inc. Zero Coupon, 5/6/12 26,703 26,703
------- ------- ---------
44,931 - 44,931
------- ------- ---------
Retail (0.6%)
16,100 16,100 Pep Boys, Zero Coupon, 9/20/11 8,835 - 8,835
------- ------- ---------
Utilities (1.1%):
15,264 15,264 Potomac Electric Power Co., 5.00%, 9/1/02 14,882 14,882
------- ------- ---------
Total Convertible Bonds 68,648 - 68,648
------- ------- ---------
Preferred Stock (0.6%)
Financial Services (0.6%)
181 181 Salomon, Inc., 7.63% 8,632 8,632
------- ------- ---------
Total Preferred Stock 8,632 - 8,632
------- ------- ---------
U.S. Treasury Obligations (0.1%):
U.S. Treasury Bills (0.1%):
$ 700 $ $ 700 9/24/98 (d) 692 692
------- ------- ---------
Total U.S. Treasury Obligations 692 - 692
------- ------- ---------
Investment Companies (0.7%)
9,266 9,266 Pegasus Cash Management, Class I 9,266 9,266
------- ------- ---------
Total Investment Companies 9,266 - 9,266
------- ------- ---------
Repurchase Agreements (1.3%):
$ $ 18,245 $ 18,245 Prudential Securities, 6.10%, 7/1/98
(Collateralized by $18,437 various U.S
Government Securities, 5.25% - 6.10%,
11/30/99 - 6/26/03, market value $18,611) 18,245 18,245
------- ------- ---------
Total Repurchase Agreements - 18,245 18,245
------- ------- ---------
See notes to financial statements.
294
The One Group Disciplined Value Fund / Pegasus Intrinsic Value Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- ---------------- ---------- --------- ---------------------------------------- ------- --------- ----------
Short-Term Securities Held as Collateral (4.3%):
Master Notes (0.8%):
2,270 2,270 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 2,270 2,270
1,892 1,892 Danaher Corp., 6.68%, 10/9/98* 1,892 1,892
1,135 1,135 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 1,135 1,135
2,573 2,573 Morgan Stanley Mortgage Capital, 5.76%, 7/21/98* 2,572 2,572
681 681 NationsBanc Capital Markets, 6.70%, 7/1/98* 681 681
2,270 2,270 Williamette Industries, Inc., 5.85%, 7/23/98* 2,270 2,270
-------- -------- ----------
- 10,820 10,820
-------- -------- ----------
Put Bonds (1.2%):
1,892 1,892 Associates Corp. N.A., 5.79%, 1/4/99* 1,891 1,891
1,513 1,513 Branch Banking & Trust, 5.92%, 12/10/99* 1,513 1,513
757 757 Citicorp, 5.94%, 8/3/98* 757 757
1,740 1,740 Evangelical Lutheran, 5.74%, 4/28/00* 1,737 1,737
2,270 2,270 GMAC, 5.85%, 11/10/99* 2,273 2,273
1,892 1,892 Goldman Sachs, 6.06%, 11/21/00* 1,892 1,892
1,892 1,892 Greenwich Capital, 6.11%, 12/13/99* 1,892 1,892
1,892 1,892 Lehman Brothers Holdings, 5.85%, 8/18/99* 1,892 1,892
757 757 Merrill Lynch, 6.07%, 11/13/98* 757 757
1,892 1,892 PNC Bank, 5.74%, 10/2/98* 1,890 1,890
-------- -------- ----------
- 16,494 16,494
-------- -------- ----------
Repurchase Agreements (2.3%):
7,567 7,567 Donaldson, Lufkin & Jenrette, 6.65%, 7/1/98
(Collateralized by $7,736 various Corporate and
Government Securities, 2.85% - 17.25%,
10/15/02 - 4/15/35, market value $7,858) 7,567 7,567
3,783 3,783 Goldman Sachs, 6.65%, 7/1/98 (Collateralized
by $4,032 various Corporate Bonds, 0.00%,
7/7/98 - 9/18/98, market value $4,018) 3,783 3,783
19,447 19,447 Lehman Brothers, 6.65%, 7/1/98 (Collateralized
by $19,933 various Corporate Bonds, 0.00% - 10.13%,
9/15/99 - 10/17/96, market value $20,864) 19,447 19,447
13 13 Lehman Brothers, 6.47%, 7/1/98 (Collateralized by
$14 Media One Group Bonds, 0.00%, 10/5/98, market
value $14) 13 13
605 605 Lehman Brothers, 6.00%, 7/1/98 (Collateralized by
$3,790 various Government Securities, 0.00% - 10.00%,
12/1/18 - 5/1/24, market value $623) 605 605
757 757 Paine Webber, 6.40%, 7/1/98 (Collateralized by $755
various Corporate Bonds, 4.00% - 9.75%, 7/15/98 -
12/31/49, market value $795) 757 757
-------- -------- ----------
- 32,172 32,172
-------- -------- ----------
Total Short-Term Securities Held as Collateral - 59,486 59,486
-------- -------- ----------
Total (Cost $1,209,164)(a) $683,536 $758,708 $1,442,244
======== ======== ==========
- ----------
Percentages indicated are based on net assets of $1,377,220.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $161. Cost for federal income tax purposes from vale by
net unrealized appreciation of securities as follows (amounts in
thousands):
Unrealized appreciation............................ $ 260,505
Unrealized depreciation............................ (27,586)
---------
Net unrealized appreciation ....................... $ 232,919
=========
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1998.
(d) Serves as collateral for futures contracts.
Current
Number Opening Market
of Positions Value
Contracts Contract Type (000) (000)
--------- ------------- --------- --------
5 Long S & P 500, September 1998 Futures $9,982 $10,287
* The interest rate for this variable rate note, which will change
periodically, is based upon an index of market rates. The rate reflected on
Schedule of Portfolio Investments is the rate in effect at June 30, 1998.
See notes to financial statements.
295
The One Group Large Company Growth Fund / Pegasus Growth Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- -------------- --------- --------- ------------------------------------------ ------- --------- --------
Common Stocks (99.6%):
Business Equipment & Services (7.6%):
55 55 America Online (b) $ $ 5,830 $ 5,830
130 130 Automatic Data Processing, Inc. 9,474 9,474
455 455 Cendant Corp. (b) 9,498 9,498
360 360 Computer Associates International, Inc. 20,003 20,003
281 281 Interpublic Group of Companies, Inc. 17,023 17,023
60 60 Omnicom Group, Inc. (c) 2,993 2,993
535 535 Service Corp. International 22,938 22,938
538 538 Silicon Graphics (b) 6,523 6,523
340 340 Sun Microsystems, Inc. 14,769 14,769
358 358 U.S.A. Waste Services, Inc.(b) (c) 17,695 17,695
--------- --------- ---------
90,754 35,992 126,746
--------- --------- ---------
Capital Goods (8.2%):
405 405 Elan PLC ADR (b) 26,047 26,047
209 1,474 1,683 General Electric Co. 19,019 134,134 153,153
261 261 Illinois Tool Works, Inc. 17,405 17,405
225 345 570 Tyco International, Ltd (c) 14,175 21,741 35,916
--------- --------- ---------
76,646 155,875 232,521
--------- --------- ---------
Consumer Non-Durable (13.9%):
155 155 Anheuser Busch Co., Inc. 7,324 7,324
40 40 Avon Products, Inc. 3,100 3,100
110 110 Bestfoods 6,387 6,387
200 200 Campbell Soup Co. 10,636 10,636
1,008 1,008 Coca-Cola Co. 86,188 86,188
140 140 Colgate Palmolive Co. 12,320 12,320
151 151 Conagra, Inc. 4,791 4,791
447 447 Gillette Co. 25,351 25,351
65 65 H.J. Heinz Co. 3,654 3,654
210 210 Kellogg Co. 7,896 7,896
70 170 240 Newell Co. 3,487 8,483 11,970
400 582 982 PepsiCo, Inc. 16,475 23,958 40,433
343 1,101 1,444 Philip Morris Co., Inc. 13,506 43,356 56,862
149 568 717 Procter & Gamble Co. 13,568 51,740 65,308
75 75 Quaker Oats Co. 4,120 4,120
30 30 Ralston- Ralston Purina Group 3,504 3,504
190 190 Sara Lee, Corp. 10,634 10,634
250 250 Unilever N V 19,750 19,750
100 100 UST, Inc. 2,700 2,700
--------- --------- ---------
47,036 335,892 382,928
--------- --------- ---------
Consumer Services (2.7%):
740 740 Carnival Corp., Class A 29,323 29,323
165 165 Comcast Corp., Class A (c) 6,698 6,698
113 113 Disney (Walt) Co. 11,872 11,872
115 115 Gannett, Inc. 8,179 8,179
200 200 Hilton Hotels Corp. (c) 5,700 5,700
95 95 Mattel, Inc. (c) 4,024 4,024
190 190 Tele-Communications, Inc. (b) (c) 7,307 7,307
60 60 Tribune Co. 4,129 4,129
--------- --------- ---------
41,195 36,037 77,232
--------- --------- ---------
Energy (1.8%):
225 225 Baker Hughes, Inc. 7,776 7,776
90 90 Halliburton Co. (c) 4,015 4,015
90 230 320 Schlumberger Ltd. (c) 6,148 15,732 21,880
210 210 Western Atlas, Inc. (b) 17,824 17,824
--------- --------- ---------
31,748 19,747 51,495
--------- --------- ---------
Financial Services (10.8%):
294 294 AFLAC, Inc. 8,912 8,912
205 205 American Express Co. 23,370 23,370
See notes to financial statements.
296
The One Group Large Company Growth Fund / Pegasus Growth Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- -------------- --------- --------- ------------------------------------------ ------- --------- --------
279 279 American International Group, Inc. (c) 40,686 40,686
115 115 Associates First Capital Corp. 8,841 8,841
73 73 Capital One Financial Corp. 9,066 9,066
171 171 Charles Schwab Corp. (c) 5,541 5,541
360 360 Chase Manhattan Corp. 27,210 27,210
227 227 Federal Home Loan Mortgage Corp. 10,683 10,683
320 320 Federal National Mortgage Assoc. 19,417 19,417
25 25 Fifth Third Bancorp 1,575 1,575
94 94 First Virginia Banks, Inc. 4,796 4,796
101 101 Franklin Resources, Inc. 5,476 5,476
200 200 Household International 9,950 9,950
69 69 Marsh & McLennan Co. (c) 4,170 4,170
444 210 654 MBNA Corp. (c) 14,652 6,933 21,585
182 40 222 MGIC Investment Group (c) 10,385 2,288 12,673
130 130 Morgan Stanley Dean Witter Discover (c) 11,906 11,906
100 100 National City Corp. 7,100 7,100
438 438 Norwest Corp. 16,370 16,370
210 59 269 State Street Corp. 14,595 4,094 18,689
20 20 T. Rowe Price Associates, Inc. 751 751
324 324 U.S. Bancorp 13,938 13,938
324 324 Unum Corp. 17,999 17,999
150 150 Washington Mutual, Inc. (c) 6,522 6,522
--------- --------- ---------
102,437 204,789 307,226
--------- --------- ---------
Health Care (19.4%):
471 471 Abbott Labs 19,236 19,236
344 539 883 American Home Products Co. 17,802 27,914 45,716
270 270 Amgen, Inc. (b) 17,651 17,651
90 90 Baxter International, Inc. 4,854 4,854
85 85 Boston Scientific Corp. (b) (c) 6,088 6,088
511 511 Bristol Myers Squibb Co. 58,676 58,676
75 75 Cardinal Health, Inc. (c) 7,031 7,031
450 450 Eli Lilly & Co. 29,755 29,755
194 50 244 Guidant Corp. 13,835 3,566 17,401
170 170 HBO & Co. 6,000 6,000
170 500 670 Johnson & Johnson 12,538 36,859 49,397
155 155 Medtronic, Inc. (c) 9,881 9,881
446 446 Merck & Co., Inc. 59,619 59,619
450 450 Mylan Laboratories, Inc. 13,528 13,528
204 531 735 Pfizer, Inc. 22,172 57,710 79,882
393 393 Schering Plough Corp. 36,013 36,013
456 456 Smithkline Beecham PLC ADR 27,588 27,588
206 206 Stryker Corp. 7,905 7,905
265 265 United Healthcare Corp. 16,828 16,828
550 550 Warner Lambert Co. 38,177 38,177
--------- --------- ---------
149,847 401,379 551,226
--------- --------- ---------
Multi-Industry (0.4%):
150 150 Minnesota Mining & Manufacturing Co. - 12,328 12,328
--------- --------- ---------
Raw Materials (2.1%):
488 488 Du Pont (EI) de Nemours & Co. 36,453 36,453
260 260 Monsanto Co. 14,523 14,523
186 186 Praxair, Inc. 8,707 8,707
--------- --------- ---------
8,707 50,976 59,683
--------- --------- ---------
Retail (8.1%):
120 120 Consolidated Stores Corp. (b) 4,350 4,350
85 85 Costco Cos., Inc.(b) (c) 5,360 5,360
160 160 CVS Corp. 6,238 6,238
189 189 Dayton Hudson Corp. (c) 9,186 9,186
425 425 Dollar General Corp. 16,814 16,814
See notes to financial statements.
297
The One Group Large Company Growth Fund / Pegasus Growth Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- -------------- --------- --------- ------------------------------------------ ------- --------- --------
165 165 Gap, Inc. (c) 10,174 10,174
300 292 592 Home Depot, Inc. 24,919 24,257 49,176
808 808 Just For Feet, Inc. (b) (c) 23,025 23,025
125 125 Kroger Co. (b) 5,368 5,368
570 570 Officemax, Inc.(b) 9,405 9,405
413 413 Staples, Inc. 11,942 11,942
162 162 TJX Cos., Inc. 3,899 3,899
1,036 1,036 Wal-Mart Stores, Inc. (c) 62,949 62,949
343 215 558 Walgreen Co. 14,170 8,895 23,065
--------- --------- ---------
77,250 163,701 240,951
--------- --------- ---------
Shelter (0.4%):
239 239 Kimberly Clark Corp. - 10,963 10,963
--------- --------- ---------
Technology (17.0%):
365 365 Altera Corp.(b) 10,790 10,790
185 185 Applied Materials, Inc. (b) 5,460 5,460
125 125 Ascend Communications, Inc. (b) 6,195 6,195
293 453 746 Cisco Systems, Inc. (b) 26,928 41,679 68,607
204 204 Computer Associates International, Inc. (c) 11,313 11,313
0 0 Compuware Corp. (d) 5 5
147 565 712 Dell Computer Corp. (b) 13,643 52,476 66,119
255 255 EMC Corp. (b) (c) 11,436 11,436
50 50 Gateway 2000, Inc. (b) (c) 2,536 2,536
16 16 Hewlett Packard Co. 930 930
341 549 890 Intel Corp. 25,277 40,673 65,950
325 325 International Business Machines 37,314 37,314
160 551 711 Lucent Technologies, Inc. 13,310 45,795 59,105
436 1,177 1,613 Microsoft Corp. (b) 47,252 127,514 174,766
251 251 Northern Telecom, Ltd. 14,244 14,244
250 250 Oracle Corp.(b) (c) 6,146 6,146
85 85 Tellabs, Inc. (b) (c) 6,088 6,088
100 100 United Technologies Corp. 9,250 9,250
140 140 Xerox Corp. 14,258 14,258
--------- --------- ---------
137,200 433,312 570,512
--------- --------- ---------
Transportation (0.1%):
50 50 Southwest Airlines Company 1,481 1,481
30 30 US Airways Group, Inc. (b) 2,378 2,378
--------- --------- ---------
- 3,859 3,859
--------- --------- ---------
Utilities (6.9%):
355 355 AES Corp. (b) 18,660 18,660
528 230 758 Airtouch Communications, Inc. (b) 30,855 13,446 44,301
451 451 Ameritech Corp. 20,216 20,216
623 623 Bell Atlantic Corp. (c) 28,443 28,443
370 370 GTE Corp. 20,604 20,604
781 781 SBC Communications, Inc. 31,232 31,232
136 136 Tellabs, Inc. 9,741 9,741
380 100 480 WorldCom, Inc. (b) 18,406 4,844 23,250
--------- --------- ---------
77,662 118,785 196,447
--------- --------- ---------
Total Common Stocks 840,482 1,983,635 2,824,117
--------- --------- ---------
U.S. Treasury Obligations (0.0%)
U.S. Treasury Bills (0.0%)
$ 350 $ $ 350 9/17/98 (e) 346 346
--------- --------- ---------
Total U.S. Treasury Obligations 346 - 346
--------- --------- ---------
Investment Companies (0.2%)
5,421 5,421 Pegasus Cash Management Fund Class I (in shares) 5,421 5,421
--------- --------- ---------
Total Investment Companies 5,421 - 5,421
--------- --------- ---------
See notes to financial statements.
298
The One Group Large Company Growth Fund / Pegasus Growth Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- -------------- --------- --------- ------------------------------------------ -------- --------- ---------
Repurchase Agreements (0.1%):
$ $ 1,891 $ 1,891 Prudential Securities, 6.10%, 7/1/98
(Collateralized by $1,947 U.S. Treasury
Bills, 0.00%, 9/3/98, market value $1,929) 1,891 1,891
--------- ---------- ----------
Total Repurchase Agreements - 1,891 1,891
--------- ---------- ----------
Short-Term Securities Held as Collateral (9.2%):
Master Notes (2.3%):
6,760 6,760 Bear Stearns Mortgage Capital, 6.77%, 10/9/98* 6,760 6,760
5,633 5,633 Danaher Corp., 6.68%, 10/9/98* 5,633 5,633
3,380 3,380 Merrill Lynch Mortgage Capital, 6.75%, 7/23/98* 3,380 3,380
7,661 7,661 Morgan Stanley Mortgage Capital, 5.76%, 7/21/98* 7,662 7,662
2,028 2,028 NationsBanc Capital Markets, 6.70%, 7/1/98* 2,028 2,028
6,760 6,760 Williamette Industries, Inc., 5.85%, 7/23/98* 6,760 6,760
--------- ---------- ----------
- 32,223 32,223
--------- ---------- ----------
Put Bonds (3.5%):
5,633 5,633 Associates Corp. N.A., 5.79%, 1/4/99* 5,630 5,630
4,507 4,507 Branch Banking & Trust, 5.92%, 12/10/99* 4,507 4,507
2,253 2,253 Citicorp, 5.94%, 8/3/98* 2,253 2,253
5,183 5,183 Evangelical Lutheran, 5.74%, 4/28/00* 5,174 5,174
6,760 6,760 GMAC, 5.85%, 11/10/99* 6,771 6,771
5,633 5,633 Goldman Sachs, 6.06%, 11/21/00* 5,633 5,633
5,633 5,633 Greenwich Capital, 6.11%, 12/13/99* 5,633 5,633
5,633 5,633 Lehman Brothers Holdings, 5.85%, 8/18/99* 5,634 5,634
2,253 2,253 Merrill Lynch, 6.07%, 11/13/98* 2,253 2,253
5,633 5,633 PNC Bank, 5.74%, 10/2/98* 5,630 5,630
--------- ---------- ----------
- 49,118 49,118
--------- ---------- ----------
Repurchase Agreements (3.4%):
22,534 22,534 Donaldson, Lufkin & Jenrette, 6.65%, 7/1/98
(Collateralized by $23,038 various Corporate
and Government Securities, 0.00% - 17.25%,
10/15/02 - 4/15/35, market value $23,400) 22,534 22,534
11,267 11,267 Goldman Sachs, 6.65%, 7/1/98 (Collateralized
by $12,009 various Corporate Bonds, 0.00%,
7/7/98 - 9/18/98, market value $11,965) 11,267 11,267
57,911 57,911 Lehman Brothers, 6.65%, 7/1/98 (Collateralized
by $59,361 various Corporate Bonds, 0.00% - 10.13%,
9/15/99 - 10/17/96, market value $62,133) 57,910 57,910
39 39 Lehman Brothers, 6.47%, 7/1/98 (Collateralized
by $41 Media One Group Bonds, 0.00%, 10/5/98,
market value $41) 39 39
1,803 1,803 Lehman Brothers, 6.00%, 7/1/98 (Collateralized
by $11,285 various Government Securities, 0.00%
- 7.50%, 12/1/18 - 5/1/24, market value $1,856) 1,803 1,803
2,253 2,253 Paine Webber, 6.40%, 7/1/98 (Collateralized by
$2,249 various Corporate Bonds, 4.00% - 9.75%,
7/15/98 - 12/31/49, market value $2,366) 2,253 2,253
--------- --------- ---------
- 95,806 95,806
--------- ---------- ----------
Total Short-Term Securities Held as Collateral - 177,147 177,147
--------- ---------- ----------
Total (Cost $1,927,578) (a) $846,249 $2,162,673 $3,008,922
========= ========== ==========
See notes to financial statements.
299
The One Group Large Company Growth Fund / Pegasus Growth Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Pegasus One Group Combined Proforma
Shares or Shares or Shares or Pegasus One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
- -------------- --------- --------- ------------------------------------------ -------- --------- ---------
Percentages are based on net assets of $2,838,316.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $3,503. Cost for federal i purposes differs from value by
net unrealized appreciation of securities as follows (amounts in
thousands):
Unrealized appreciation......................... $ 1,108,405
Unrealized depreciation......................... (30,564)
-----------
Net unrealized appreciation..................... $ 1,077,841
===========
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1998.
(d) Rounds to less than 1,000.
(e) Serves as margin deposit for futures contracts.
Current
Number Opening Market
of Positions Value
Contracts Contract Type (000) (000)
--------- ------------- --------- -------
22 Long S&P 500, September 1998 Futures $6,312 $6,286
* The interest rate for this variable rate note, which will change
periodically, is based upon an index of market rates. The rate reflected on
the Schedule of Portfolio Investments is the rate in effect at June 30,
1998.
See notes to financial statements.
300
The One Group Investor Growth Fund / Pegasus Managed Assets Growth Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Proforma Pegasus One Group Combined
Pegasus One Group Combined Market Market Market
Shares Shares Shares Security Description Value Value Value
- ----------- ---------- -------- ---------------------------------------------------------- -------- --------- --------
Investment Companies (98.6%):
1,853 1,853 The One Group Disciplined Value Fund Fiduciary Class $ $ 31,315 $ 31,315
840 840 The One Group Government Bond Fund Fiduciary Class 8,489 8,489
1,473 1,473 The One Group Growth Opportunities Fund Fiduciary Class 33,163 33,163
890 890 The One Group Income Bond Fund Fiduciary Class 8,464 8,464
417 417 The One Group Intermediate Bond Fund Fiduciary Class 4,219 4,219
1,352 1,352 The One Group International Equity Index Fund Fiduciary Class 24,301 24,301
1,437 1,437 The One Group Large Company Growth Fund Fiduciary Class 32,631 32,631
1,812 1,812 The One Group Large Company Value Fund Fiduciary Class 30,264 30,264
402 402 The One Group Limited Volatility Fund Fiduciary Class 4,223 4,223
614 614 The One Group Prime Money Market Fund Fiduciary Class 614 614
688 688 The One Group Small Capitalization Fund Fiduciary Class 8,296 8,296
2,315 2,315 The One Group Value Growth Fund Fiduciary Class 31,278 31,278
287 287 Pegasus Bond Fund 3,061 3,061
51 51 Pegasus Growth Fund 873 873
361 361 Pegasus Growth and Value Fund 6,124 6,124
64 64 Pegasus High-Yield Bond Fund 655 655
66 66 Pegasus International Bond Fund 656 656
256 256 Pegasus International Equity Fund 3,500 3,500
273 273 Pegasus Intrinsic Value Fund 4,374 4,374
83 83 Pegasus Mid-Cap Opportunity Fund 1,751 1,751
52 52 Pegasus Small-Cap Opportunity Fund 885 885
------- -------- --------
Total Investment Companies 21,878 217,257 239,135
------- -------- --------
Total (Cost $220,706) (a) $21,878 $217,257 $239,135
======= ======== ========
- ----------
Percentages indicated are based on net assets of $242,599.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $124. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
Unrealized appreciation........................ $19,315
Unrealized depreciation........................ (1,010)
-------
Net unrealized appreciation.................... $18,305
=======
See notes to financial statements.
301
THE ONE GROUP INVESTOR GROWTH & INCOME FUND / PEGASUS MANAGED ASSETS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Proforma Pegasus One Group Combined
Pegasus One Group Combined Market Market Market
Shares Shares Shares Security Description Value Value Value
- ------------- ------------ ------- ------------------------------------------------------------- ------- --------- --------
Investment Companies (99.4%):
1,426 1,426 The One Group Disciplined Value Fund Fiduciary Class $ $ 24,091 $ 24,091
2,202 2,202 The One Group Government Bond Fund Fiduciary Class 22,263 22,263
1,133 1,133 The One Group Growth Opportunities Fund Fiduciary Class 25,514 25,514
2,334 2,334 The One Group Income Bond Fund Fiduciary Class 22,199 22,199
1,311 1,311 The One Group Intermediate Bond Fund Fiduciary Class 13,269 13,269
1,161 1,161 The One Group International Equity Index Fund Fiduciary Class 20,855 20,855
1,184 1,184 The One Group Large Company Growth Fund Fiduciary Class 26,899 26,899
1,494 1,494 The One Group Large Company Value Fund Fiduciary Class 24,945 24,945
843 843 The One Group Limited Volatility Fund Fiduciary Class 8,861 8,861
718 718 The One Group Prime Money Market Fund Fiduciary Class 718 718
361 361 The One Group Small Capitalization Fund 4,351 4,351
449 449 The One Group Ultra Short-Term Income Fund Fiduciary Class 4,430 4,430
2,082 2,082 The One Group Value Growth Fund Fiduciary Class 28,127 28,127
7,272 7,272 Pegasus Bond Fund 77,587 77,587
490 490 Pegasus Growth Fund 8,312 8,312
3,430 3,430 Pegasus Growth and Value Find 58,176 58,176
1,608 1,608 Pegasus High-Yield Bond Fund 16,579 16,579
1,683 1,683 Pegasus International Bond Fund 16,591 16,591
2,441 2,441 Pegasus International Equity Fund 33,369 33,369
2,591 2,591 Pegasus Intrinsic Value Fund 41,537 41,537
789 789 Pegasus Mid-Cap Opportunity 16,703 16,703
500 500 Pegasus Small-Cap Opportunity Fund 8,458 8,458
-------- -------- --------
Total Investment Companies $277,312 226,522 503,834
-------- -------- --------
Total (Cost $478,319) (a) $277,312 $226,522 $503,834
======== ======== ========
- ------------
Percentages indicated are based on net assets of $507,055.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax
reporting of approximately $440. Cost for federal income tax purposes
differs from value by net unrealized appreciation of securities as
follows (amounts in thousands):
Unrealized appreciation.................... $ 27,884
Unrealized depreciation.................... (2,809)
--------
Net unrealized appreciation................ $ 25,075
=========
See notes to financial statements.
302
The One Group Investor Balanced Fund / Pegasus Managed Assets Conservative Fund
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1998
(Amounts in thousands)
(Unaudited)
Proforma
Proforma Pegasus One Group Combined
Pegasus One Group Combined Market Market Market
Shares Shares Shares Security Description Value Value Value
- --------- --------- -------- --------------------------------------------------------- --------- --------- ---------
Investment Companies (98.7%):
800 800 The One Group Disciplined Value Fund Fiduciary Class $ $ 13,523 $ 13,523
3,302 3,302 The One Group Government Bond Fund Fiduciary Class 33,384 33,384
636 636 The One Group Growth Opportunities Fund Fiduciary Class 14,321 14,321
3,294 3,294 The One Group Income Bond Fund Fiduciary Class 31,328 31,328
1,734 1,734 The One Group Intermediate Bond Fund Fiduciary Class 17,544 17,544
796 796 The One Group International Equity Index Fund Fiduciary Class 14,306 14,306
760 760 The One Group Large Company Growth Fund Fiduciary Class 17,256 17,256
958 958 The One Group Large Company Value Fund Fiduciary Class 16,002 16,002
1,116 1,116 The One Group Limited Volatility Fund Fiduciary Class 11,724 11,724
956 956 The One Group Prime Money Market Fund Fiduciary Class 956 956
792 792 The One Group Ultra Short-Term Income Fund Fiduciary Class 7,816 7,816
1,530 1,530 The One Group Value Growth Fund Fiduciary Class 20,675 20,675
5,317 5,317 Pegasus Bond Fund 56,732 56,732
1,231 1,231 Pegasus International Bond Fund 12,138 12,138
1,177 1,177 Pegasus High Yield Bond Fund 12,132 12,132
160 160 Pegasus Growth Fund 2,717 2,717
1,114 1,114 Pegasus Growth and Value Fund 18,890 18,890
794 794 Pegasus International Equity Fund 10,857 10,857
841 841 Pegasus Intrinsic Value Fund 13,484 13,484
257 257 Pegasus Mid-Cap Opportunity Fund 5,446 5,446
163 163 Pegasus Small-Cap Opportunity Fund 2,757 2,757
-------- -------- --------
Total Investment Companies 135,153 198,835 333,988
-------- -------- --------
Total (Cost $315,556) (a) $135,153 $198,835 $333,988
======== ======== ========
- ----------
Percentages indicated are based on net assets of $338,233.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $256. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
Unrealized appreciation................... $19,317
Unrealized depreciation................... (1,141)
-------
Net unrealized appreciation............... $18,176
=======
See notes to financial statements.
303
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
U.S. Treasury Pegasus
Securities Treasury
Money Market Money Market Proforma
Fund Fund Adjustments Combined
ASSETS:
Investments, at amortized cost $ 756,587 $ 201,240 $ $ 957,827
Repurchase agreements, at cost 3,392,616 859,085 4,251,701
-------------- -------------- -------------- --------------
Total 4,149,203 1,060,325 5,209,528
Cash - 1 1
Interest receivable 11,892 5,754 17,646
Receivable for capital shares issued - - -
Prepaid expenses and other assets 60 17 77
-------------- -------------- -------------- --------------
Total Assets 4,161,155 1,066,097 - 5,227,252
-------------- -------------- -------------- --------------
LIABILITIES:
Dividends payable 15,780 3,001 18,781
Payable for capital shares redeemed - - -
Payable for return of collateral received for securities on loan 255,663 - 255,663
Accrued expenses and other payables:
Investment advisory fees 1,008 247 1,255
Administration fees 466 124 590
12b-1 fees 180 138 318
Other 918 1 919
-------------- -------------- -------------- --------------
Total Liabilities 274,015 3,511 - 277,526
-------------- -------------- -------------- --------------
NET ASSETS:
Capital 3,886,907 1,062,603 4,949,510
Undistributed (distributions in excess of)
net investment income 193 - 193
Accumulated undistributed net realized
gains (losses) from investment transactions 40 (17) 23
-------------- -------------- -------------- --------------
Net Assets $ 3,887,140 $ 1,062,586 $ - $ 4,949,726
============== ============== ============== ==============
Net Assets
Fiduciary/Class I $ 3,025,608 $ 843,484 $ $ 3,869,092
Class A 861,350 219,102 1,080,452
Class B 181 - 181
Class C 1 - 1
-------------- -------------- -------------- --------------
Total $ 3,887,140 $ 1,062,586 $ - $ 4,949,726
============== ============== ============== ==============
Outstanding units of beneficial interest
Fiduciary/Class I $ 3,025,409 $ 843,485 $ $ 3,868,894
Class A 861,313 219,118 1,080,431
Class B 181 - 181
Class C 1 - 1
-------------- -------------- -------------- --------------
Total 3,886,904 1,062,603 - 4,949,507
============== ============== ============== ==============
Net Asset Value:
Offering and redemption price per share, all classes $ 1.00 $ 1.00 $ $ 1.00
============== ============== ==============
Prime Pegasus
Money Market Money Market Proforma
Fund Fund Adjustments Combined
ASSETS:
Investments, at amortized cost $ 3,107,323 $ 2,567,767 $ $ 5,675,090
Repurchase agreements, at cost 102,434 118,457 220,891
-------------- -------------- -------------- --------------
Total 3,209,757 2,686,224 5,895,981
Cash 1 149 150
Interest receivable 30,105 21,421 51,526
Receivable for capital shares issued - 8,068 8,068
Prepaid expenses and other assets 18 347 365
-------------- -------------- -------------- --------------
Total Assets 3,239,881 2,716,209 - 5,956,090
-------------- -------------- -------------- --------------
LIABILITIES:
Dividends payable 13,774 5,238 19,012
Payable for capital shares redeemed - 674 674
Payable for return of collateral received for securities on loan - - 0
Accrued expenses and other payables:
Investment advisory fees 842 619 1,461
Administration fees 416 335 751
12b-1 fees 126 709 835
Other 822 82 904
-------------- -------------- -------------- --------------
Total Liabilities 15,980 7,657 - 23,637
-------------- -------------- -------------- --------------
NET ASSETS:
Capital 3,223,805 2,708,549 5,932,354
Undistributed (distributions in excess of)
net investment income 7 - 7
Accumulated undistributed net realized
gains (losses) from investment transactions 89 3 92
-------------- -------------- -------------- --------------
Net Assets $ 3,223,901 $ 2,708,552 $ - $ 5,932,453
============== ============== ============== ==============
Net Assets
Fiduciary/Class I $ 2,616,698 $ 1,540,126 $ $ 4,156,824
Class A 605,291 1,167,246 1,772,537
Class B 1,912 1,180 3,092
Class C - - 0
-------------- -------------- -------------- --------------
Total $ 3,223,901 $ 2,708,552 $ - $ 5,932,453
============== ============== ============== ==============
Outstanding units of beneficial interest
Fiduciary/Class I $ 2,616,620 $ 1,540,126 $ 4,156,746
Class A 605,275 1,167,243 1,772,518
Class B 1,912 1,180 3,092
Class C - - 0
-------------- -------------- -------------- --------------
Total 3,223,807 2,708,549 - 5,932,356
============== ============== ============== ==============
Net Asset Value:
Offering and redemption price per share, all classes $ 1.00 $ 1.00 $ 1.00
============== ============== ==============
304
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
Pegasus
Municipal Municipal
Money Market Money Market Proforma
Fund Fund Adjustments Combined
ASSETS:
Investments, at amortized cost $ 613,922 $ 797,027 $ $ 1,410,949
Cash 4,548 340 4,888
Interest receivable 2,781 5,624 8,405
Receivable from brokers for investments sold 20,790 -- 20,790
Prepaid expenses and other assets 3 -- 3
----------- ----------- ------- -----------
Total Assets 642,044 802,991 -- 1,445,035
----------- ----------- ------- -----------
LIABILITIES:
Dividends payable 1,562 1,485 3,047
Payable to brokers for investments purchased 37,293 35,088 72,381
Payable for capital shares redeemed -- 1,282 1,282
Accrued expenses and other payables:
Investment advisory fees 126 199 325
Administration fees 78 100 178
12b-1 fees 22 127 149
Other 27 45 72
----------- ----------- ------- -----------
Total Liabilities 39,108 38,326 -- 77,434
----------- ----------- ------- -----------
NET ASSETS:
Capital 603,068 764,721 1,367,789
Undistributed (distributions in excess of)
net investment income (130) -- (130)
Accumulated undistributed net realized
gains (losses) from investment transactions (2) (56) (58)
----------- ----------- ------- -----------
Net Assets $ 602,936 $ 764,665 $ -- $ 1,367,601
=========== =========== ======= ===========
Net Assets
Fiduciary/Class I $ 498,127 $ 555,369 $ $ 1,053,496
Class A 104,809 209,296 314,105
----------- ----------- ------- -----------
Total $ 602,936 $ 764,665 $ -- $ 1,367,601
=========== =========== ======= ===========
Outstanding units of beneficial interest
Fiduciary/Class I 498,245 555,370 1,053,615
Class A 104,822 209,350 314,172
----------- ----------- ------- -----------
Total 603,067 764,720 -- 1,367,787
=========== =========== ======= ===========
Net Asset Value:
Offering and redemption price per share, all classes $ 1.00 $ 1.00 $ 1.00
=========== =========== ===========
305
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
Limited
Volatility Pegasus Short
Bond Fund Bond Fund Adjustments
ASSETS:
Investments, at value $ 619,416 $ 254,217 $
Repurchase agreements, at cost 44,829 -
------------- -------------- ------------
Total (cost $908,012; $1,421,675, respectively) 664,245 254,217 -
Cash - -
Interest receivable 6,935 2,861
Receivable from brokers for investments sold 290 2,014
Receivable for capital shares issued 37 -
Deferred organization costs - 9 (9)
Prepaid expenses and other assets 4 84
------------- -------------- ------------
Total Assets 671,511 259,185 (9)
------------- -------------- ------------
LIABILITIES:
Dividends payable 2,991 -
Payable to brokers for investments purchased - -
Payable for capital shares redeemed 24 -
Payable for return of collateral received for securities on loan 55,051 -
Accrued expenses and other payables:
Investment advisory fees 162 76
Administration fees 87 33
12b-1 fees 7 9
Other 87 9
------------- -------------- ------------
Total Liabilities 58,409 127 -
------------- -------------- ------------
NET ASSETS:
Capital 617,555 257,919 (9)
Undistributed (distributions in excess of)
net investment income (194) (116)
Accumulated undistributed net realized gains (losses)
from investment transactions (13,659) 205
Net unrealized appreciation (depreciation) from
investments 9,400 1,050
------------- -------------- ------------
Net Assets $ 613,102 $ 259,058 $ (9)
============= ============== ============
Net Assets
Fiduciary/Class I $ 592,669 $ 244,702 $ (9)
Class A 15,582 14,082
Class B 4,851 274
Class C - -
------------- -------------- ------------
Total $ 613,102 $ 259,058 $ (9)
============= ============== ============
Outstanding units of beneficial interest
Fiduciary/Class I 56,405 24,120 (838)
Class A 1,484 1,387 (46)
Class B 459 27 (1)
Class C - - -
------------- -------------- ------------
Total 58,348 25,534 (885)
============= ============== ============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 10.51 $ 10.15
============= ==============
Class A
Redemption price per share $ 10.50 $ 10.15
============= ==============
Maximum sales charge 3.00% 1.00%
============= ==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 10.82 $ 10.25
============= ==============
Class B offering price per share $ 10.57 $ 10.06
============= ==============
Class C offering price per share $ - $ -
============= ==============
Pegasus
Proforma Intermediate Intermediate
Combined Bond Fund Bond Fund
ASSETS:
Investments, at value $ 873,633 $ 762,006 $ 588,321
Repurchase agreements, at cost 44,829 100,432 -
------------- -------------- --------------
Total (cost $908,012; $1,421,675, respectively) 918,462 862,438 588,321
Cash - - 3
Interest receivable 9,796 7,536 5,494
Receivable from brokers for investments sold 2,304 3,001 -
Receivable for capital shares issued 37 311 95
Deferred organization costs - - -
Prepaid expenses and other assets 88 3 200
------------- -------------- --------------
Total Assets 930,687 873,289 594,113
------------- -------------- --------------
LIABILITIES:
Dividends payable 2,991 3,821 12
Payable to brokers for investments purchased - - 60
Payable for capital shares redeemed 24 11 4
Payable for return of collateral received for securities on loan 55,051 122,850 -
Accrued expenses and other payables:
Investment advisory fees 238 209 194
Administration fees 120 104 82
12b-1 fees 16 24 54
Other 96 111 27
------------- -------------- --------------
Total Liabilities 58,536 127,130 433
------------- -------------- --------------
NET ASSETS:
Capital 875,465 736,895 587,405
Undistributed (distributions in excess of)
net investment income (310) 76 (346)
Accumulated undistributed net realized gains (losses)
from investment transactions (13,454) (4,821) (8,454)
Net unrealized appreciation (depreciation) from
investments 10,450 14,009 15,075
------------- -------------- --------------
Net Assets $ 872,151 $ 746,159 $ 593,680
============= ============== ==============
Net Assets
Fiduciary/Class I $ 837,362 $ 680,800 $ 506,611
Class A 29,664 44,567 86,341
Class B 5,125 19,924 728
Class C - 868 -
------------- -------------- --------------
Total $ 872,151 $ 746,159 $ 593,680
============= ============== ==============
Outstanding units of beneficial interest
Fiduciary/Class I 79,687 67,295 48,224
Class A 2,825 4,392 8,222
Class B 485 1,970 70
Class C - 86 -
------------- -------------- --------------
Total 82,997 73,743 56,516
============= ============== ==============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 10.51 $ 10.12 $ 10.51
============= ============== ==============
Class A
Redemption price per share $ 10.50 $ 10.15 $ 10.50
============= ============== ==============
Maximum sales charge 3.00% 4.50% 3.00%
============= ============== ==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 10.82 $ 10.63 $ 10.82
============= ============== ==============
Class B offering price per share $ 10.57 $ 10.12 $ 10.41
============= ============== ==============
Class C offering price per share $ - $ 10.14 $ -
============= ============== ==============
Proforma
Adjustments Combined
ASSETS:
Investments, at value $ $ 1,350,327
Repurchase agreements, at cost 100,432
------------ ----------------
Total (cost $908,012; $1,421,675, respectively) - 1,450,759
Cash 3
Interest receivable 13,030
Receivable from brokers for investments sold 3,001
Receivable for capital shares issued 406
Deferred organization costs 0
Prepaid expenses and other assets 203
------------ ----------------
Total Assets - 1,467,402
------------ ----------------
LIABILITIES:
Dividends payable 3,833
Payable to brokers for investments purchased 60
Payable for capital shares redeemed 15
Payable for return of collateral received for securities on loan 122,850
Accrued expenses and other payables:
Investment advisory fees 403
Administration fees 186
12b-1 fees 78
Other 138
------------ ----------------
Total Liabilities - 127,563
------------ ----------------
NET ASSETS:
Capital 1,324,300
Undistributed (distributions in excess of)
net investment income (270)
Accumulated undistributed net realized gains (losses)
from investment transactions (13,275)
Net unrealized appreciation (depreciation) from
investments 29,084
------------ ----------------
Net Assets $ - $ 1,339,839
============ ================
Net Assets
Fiduciary/Class I $ $ 1,187,411
Class A 130,908
Class B 20,652
Class C 868
------------ ----------------
Total $ - $ 1,339,839
============ ================
Outstanding units of beneficial interest
Fiduciary/Class I (2,519) 113,000
Class A (147) 12,467
Class B (56) 1,984
Class C (3) 83
------------ ----------------
Total (2,725) 127,534
============ ================
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 10.51
================
Class A
Redemption price per share $ 10.50
================
Maximum sales charge 4.50%
================
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 10.99
================
Class B offering price per share $ 10.41
================
Class C offering price per share $ 10.41
================
306
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
Pegasus
Income Multi-Sector Proforma
Bond Fund Bond Fund Adjustments Combined
ASSETS:
Investments, at value $ 954,388 $ 129,914 $ $ 1,084,302
Repurchase agreements, at cost 111,685 - 111,685
----------- ----------- ----------- -----------
Total (cost $1,146,495; $923,467, respectively) 1,066,073 129,914 - 1,195,987
Cash - 2 2
Interest receivable 11,508 1,327 12,835
Receivable from brokers for investments sold 5,340 - 5,340
Receivable for capital shares issued 23 6 29
Deferred organization cost - 15 (15) -
Prepaid expenses and other assets 5 107 112
----------- ----------- ----------- -----------
Total Assets 1,082,949 131,371 (15) 1,214,305
----------- ----------- ----------- -----------
LIABILITIES:
Dividends payable 4,852 2 4,854
Payable to brokers for investment purchased - 30 30
Payable for capital shares redeemed 65 - 65
Payable for return of collateral received for securities on loan 148,916 - 148,916
Accrued expenses and other payables:
Investment advisory fees 305 41 346
Administration fees 130 15 145
12b-1 fees 14 9 23
Other 155 13 168
----------- ----------- ----------- -----------
Total Liabilities 154,437 110 - 154,547
----------- ----------- ----------- -----------
NET ASSETS:
Capital 951,477 125,111 (15) 1,076,573
Undistributed (distributions in excess of)
net investment income 296 29 325
Accumulated undistributed net realized gains (losses)
from investment transactions (68,302) 1,670 (66,632)
Net unrealized appreciation (depreciation) from
investments 45,041 4,451 49,492
----------- ----------- ----------- -----------
Net Assets $ 928,512 $ 131,261 $ (15) $ 1,059,758
=========== =========== =========== ===========
Net Assets
Fiduciary/Class I $ 898,263 $ 118,498 $ (15) $ 1,016,746
Class A 14,738 12,159 26,897
Class B 15,511 604 16,115
----------- ----------- ----------- -----------
Total $ 928,512 $ 131,261 $ (15) $ 1,059,758
=========== =========== =========== ===========
Outstanding units of beneficial interest
Fiduciary/Class I 94,421 14,643 16,611 125,675
Class A 1,550 1,504 271 3,325
Class B 1,617 74 294 1,985
----------- ----------- ----------- -----------
Total 97,588 16,221 17,176 130,985
=========== =========== =========== ===========
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 9.51 $ 8.09 $ 8.09
=========== =========== ===========
Class A
Redemption price per share $ 9.51 $ 8.09 $ 8.09
=========== =========== ===========
Maximum sales charge 4.50% 3.00% 4.50%
=========== =========== ===========
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent) $ 9.96 $ 8.34 $ 8.47
=========== =========== ===========
Class B offering price per share $ 9.59 $ 8.12 $ 8.12
=========== =========== ===========
Pegasus
Intermediate Intermediate
Tax-Free Municipal Proforma
Bond Fund Bond Fund Adjustments Combined
ASSETS:
Investments, at value $ 511,831 $ 454,484 $ $ 966,315
Repurchase agreements, at cost - - -
----------- ----------- ----------- -----------
Total (cost $1,146,495; $923,467, respectively) 511,831 454,484 - 966,315
Cash 5 - 5
Interest receivable 6,855 7,459 14,314
Receivable from brokers for investments sold 9,946 - 9,946
Receivable for capital shares issued 12 2 14
Deferred organization cost - 16 (16) -
Prepaid expenses and other assets 3 49 52
----------- ----------- ----------- -----------
Total Assets 528,652 462,010 (16) 990,646
----------- ----------- ----------- -----------
LIABILITIES:
Dividends payable 1,942 20 1,962
Payable to brokers for investment purchased 12,545 6,968 19,513
Payable for capital shares redeemed - - -
Payable for return of collateral received for securities on loan - - -
Accrued expenses and other payables:
Investment advisory fees 162 146 308
Administration fees 71 54 125
12b-1 fees 7 14 21
Other 65 29 94
----------- ----------- ----------- -----------
Total Liabilities 14,792 7,231 - 22,023
----------- ----------- ----------- -----------
NET ASSETS:
Capital 486,040 435,465 (16) 921,489
Undistributed (distributions in excess of)
net investment income 233 65 298
Accumulated undistributed net realized gains (losses)
from investment transactions 3,710 278 3,988
Net unrealized appreciation (depreciation) from
investments 23,877 18,971 42,848
----------- ----------- ----------- -----------
Net Assets $ 513,860 $ 454,779 $ (16) $ 968,623
=========== =========== =========== ===========
Net Assets
Fiduciary/Class I $ 493,686 $ 433,801 $ (16) $ 927,471
Class A 14,515 20,177 34,692
Class B 5,659 801 6,460
----------- ----------- ----------- -----------
Total $ 513,860 $ 454,779 $ (16) $ 968,623
=========== =========== =========== ===========
Outstanding units of beneficial interest
Fiduciary/Class I 44,291 35,261 3,643 83,195
Class A 1,303 1,640 171 3,114
Class B 507 65 7 579
----------- ----------- ----------- -----------
Total 46,101 36,966 3,821 86,888
=========== =========== =========== ===========
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 11.15 $ 12.30 $ 11.15
=========== =========== ===========
Class A
Redemption price per share $ 11.14 $ 12.30 $ 11.14
=========== =========== ===========
Maximum sales charge 4.50% 3.00% 4.50%
=========== =========== ===========
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent) $ 11.66 $ 12.68 $ 11.66
=========== =========== ===========
Class B offering price per share $ 11.16 $ 12.29 $ 11.16
=========== =========== ===========
307
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
Pegasus
Income Equity Equity Income
Fund Fund Adjustments
ASSETS:
Investments, at value $ 996,472 $ 325,743 $
Repurchase agreements, at cost 32,051 -
-------------- -------------- --------------
Total (cost $818,363; $1,452,803, respectively) 1,028,523 325,743 -
Cash 1 -
Interest & dividends receivable 1,983 554
Receivable from brokers for investments sold 1,408 2,129
Receivable for capital shares issued 640 6
Deferred organization cost - 23 (23)
Prepaid expenses and other assets 5 113
-------------- -------------- --------------
Total Assets 1,032,560 328,568 (23)
-------------- -------------- --------------
LIABILITIES:
Dividends payable 789 11
Payable for capital shares redeemed 175 4
Payable for return of collateral received for securities on loan 52,967 -
Payable to brokers for investments purchased 1,351 28
Net payable for variation margin on futures contracts - -
Accrued expenses and other payables:
Investment advisory fees 588 129
Administration fees 135 39
12b-1 fees 157 18
Other 230 18
-------------- -------------- --------------
Total Liabilities 56,392 247 -
-------------- -------------- --------------
NET ASSETS:
Capital 447,045 267,637 (23)
Undistributed (distributions in excess of)
net investment income 162 105
Accumulated undistributed net realized gains (losses)
from investment and futures transactions 50,125 3,512
Net unrealized appreciation (depreciation) from
investments and futures 478,836 57,067
-------------- -------------- --------------
Net Assets $ 976,168 $ 328,321 $ (23)
============== ============== ==============
Net Assets
Fiduciary/Class I $ 691,878 $ 311,286 $ (23)
Class A 117,682 13,397
Class B 165,813 3,638
Class C 795 -
-------------- -------------- --------------
Total $ 976,168 $ 328,321 $ (23)
============== ============== ==============
Outstanding units of beneficial interest
Fiduciary/Class I 28,742 25,036 (12,104)
Class A 4,895 1,075 (518)
Class B 6,886 292 (141)
Class C 33 - -
-------------- -------------- --------------
Total 40,556 26,403 (12,763)
============== ============== ==============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 24.07 $ 12.43
============== ==============
Class A
Redemption price per share $ 24.04 $ 12.47
============== ==============
Maximum sales charge 4.50% 5.00%
============== ==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent) $ 25.17 $ 13.13
============== ==============
Class B offering price per share $ 24.08 $ 12.47
============== ==============
Class C offering price per share $ 24.08 $ -
============== ==============
Pegasus
Proforma Equity Index Equity Index
Combined Fund Fund
ASSETS:
Investments, at value $ 1,322,215 $ 1,286,410 $ 981,306
Repurchase agreements, at cost 32,051 72,011 -
-------------- -------------- --------------
Total (cost $818,363; $1,452,803, respectively) 1,354,266 1,358,421 981,306
Cash 1 - -
Interest & dividends receivable 2,537 1,250 1,033
Receivable from brokers for investments sold 3,537 1,775 -
Receivable for capital shares issued 646 4,686 224
Deferred organization cost - - -
Prepaid expenses and other assets 118 4 245
-------------- -------------- --------------
Total Assets 1,361,105 1,366,136 982,808
-------------- -------------- --------------
LIABILITIES:
Dividends payable 800 707 2
Payable for capital shares redeemed 179 183 13
Payable for return of collateral received for securities on loan 52,967 114,880 -
Payable to brokers for investments purchased 1,379 4,321 1,104
Net payable for variation margin on futures contracts - 158 -
Accrued expenses and other payables:
Investment advisory fees 717 99 81
Administration fees 174 119 121
12b-1 fees 175 323 169
Other 248 568 28
-------------- -------------- --------------
Total Liabilities 56,639 121,358 1,518
-------------- -------------- --------------
NET ASSETS:
Capital 714,659 780,024 521,392
Undistributed (distributions in excess of)
net investment income 267 88 208
Accumulated undistributed net realized gains (losses)
from investment and futures transactions 53,637 20,942 16,205
Net unrealized appreciation (depreciation) from
investments and futures 535,903 443,724 443,485
-------------- -------------- --------------
Net Assets $ 1,304,466 $ 1,244,778 $ 981,290
============== ============== ==============
Net Assets
Fiduciary/Class I $ 1,003,141 $ 671,422 $ 697,422
Class A 131,079 218,518 281,046
Class B 169,451 351,624 2,822
Class C 795 3,214 -
-------------- -------------- --------------
Total $ 1,304,466 $ 1,244,778 $ 981,290
============== ============== ==============
Outstanding units of beneficial interest
Fiduciary/Class I 41,674 24,719 28,109
Class A 5,452 8,049 11,333
Class B 7,037 12,959 188
Class C 33 118 -
-------------- -------------- --------------
Total 54,196 45,845 39,630
============== ============== ==============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 24.07 $ 27.16 $ 24.81
============== ============== ==============
Class A
Redemption price per share $ 24.04 $ 27.15 $ 24.80
============== ============== ==============
Maximum sales charge 4.50% 4.50% 3.00%
============== ============== ==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent) $ 25.17 $ 28.43 $ 25.57
============== ============== ==============
Class B offering price per share $ 24.08 $ 27.13 $ 14.99
============== ============== ==============
Class C offering price per share $ 24.08 $ 27.14 $ -
============== ============== ==============
Proforma
Adjustments Combined
ASSETS:
Investments, at value $ $ 2,267,716
Repurchase agreements, at cost 72,011
-------------- --------------
Total (cost $818,363; $1,452,803, respectively) - 2,339,727
Cash -
Interest & dividends receivable 2,283
Receivable from brokers for investments sold 1,775
Receivable for capital shares issued 4,910
Deferred organization cost -
Prepaid expenses and other assets 249
-------------- --------------
Total Assets - 2,348,944
-------------- --------------
LIABILITIES:
Dividends payable 709
Payable for capital shares redeemed 196
Payable for return of collateral received for securities on loan 114,880
Payable to brokers for investments purchased 5,425
Net payable for variation margin on futures contracts 158
Accrued expenses and other payables:
Investment advisory fees 180
Administration fees 240
12b-1 fees 492
Other 596
-------------- --------------
Total Liabilities - 122,876
-------------- --------------
NET ASSETS:
Capital 1,301,416
Undistributed (distributions in excess of)
net investment income 296
Accumulated undistributed net realized gains (losses)
from investment and futures transactions 37,147
Net unrealized appreciation (depreciation) from
investments and futures 887,209
-------------- --------------
Net Assets $ - $ 2,226,068
============== ==============
Net Assets
Fiduciary/Class I $ $ 1,368,844
Class A 499,564
Class B 354,446
Class C 3,214
-------------- --------------
Total $ - $ 2,226,068
============== ==============
Outstanding units of beneficial interest
Fiduciary/Class I (2,431) 50,397
Class A (981) 18,401
Class B (84) 13,063
Class C - 118
-------------- --------------
Total (3,496) 81,979
============== ==============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 27.16
==============
Class A
Redemption price per share $ 27.15
==============
Maximum sales charge 4.50%
==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 28.43
==============
Class B offering price per share $ 27.13
==============
Class C offering price per share $ 27.14
==============
308
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
Pegasus
Value Growth Growth & Value
Fund Fund Adjustments
ASSETS:
Investments, at value $ 740,240 $ 1,231,149 $
Repurchase agreements, at cost 46,166 -
--------------- ---------------- ------------
Total (cost $1,480,823; $1,209,164, respectively) 786,406 1,231,149 -
Cash 1 -
Interest & dividends receivable 713 888
Receivable from brokers for investments sold - -
Receivable for capital shares issued 637 554
Prepaid expenses and other assets 3 226
--------------- ---------------- ------------
Total Assets 787,760 1,232,817 -
--------------- ---------------- ------------
LIABILITIES:
Dividends payable 179 7
Payable for capital shares redeemed 7 151
Payable for return of collateral received for securities on loan 49,140 -
Payable to brokers for investments purchased - 4,130
Net payable for variation margin on futures contracts 106 204
Accrued expenses and other payables:
Investment advisory fees 435 590
Administration fees 99 148
12b-1 fees 36 185
Other 183 31
--------------- ---------------- ------------
Total Liabilities 50,185 5,446 -
--------------- ---------------- ------------
NET ASSETS:
Capital 525,615 827,813
Undistributed (distributions in excess of)
net investment income 53 171
Accumulated undistributed net realized gains (losses)
from investment and futures transactions 42,561 31,084
Net unrealized appreciation (depreciation) from
investments and futures 169,346 368,303
--------------- ---------------- ------------
Net Assets $ 737,575 $ 1,227,371 $ -
=============== ================ ============
Net Assets
Fiduciary/Class I $ 630,340 $ 953,308 $
Class A 80,500 264,450
Class B 25,501 9,613
Class C 1,234 -
--------------- ---------------- ------------
Total $ 737,575 $ 1,227,371 $ -
=============== ================ ============
Outstanding units of beneficial interest
Fiduciary/Class I 46,646 56,216 14,347
Class A 5,964 15,605 3,984
Class B 1,902 939 (222)
Class C 92 - -
--------------- ---------------- ------------
Total 54,604 72,760 18,109
=============== ================ ============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 13.51 $ 16.96
=============== ================
Class A
Redemption price per share $ 13.50 $ 16.95
=============== ================
Maximum sales charge 4.50% 5.00%
=============== ================
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted
to nearest cent $ 14.14 $ 17.84
=============== ================
Class B offering price per share $ 13.40 $ 10.24
=============== ================
Class C offering price per share $ 13.47 $ -
=============== ================
Disciplined Intrinsic
Proforma Value Value
Combined Fund Fund
ASSETS:
Investments, at value $ 1,971,389 $ 708,291 $ 683,536
Repurchase agreements, at cost 46,166 50,417 -
---------------- --------------- ---------------
Total (cost $1,480,823; $1,209,164, respectively) 2,017,555 758,708 683,536
Cash 1 203 4
Interest & dividends receivable 1,601 672 755
Receivable from brokers for investments sold - 75,046 -
Receivable for capital shares issued 1,191 75 205
Prepaid expenses and other assets 229 4 90
---------------- --------------- ---------------
Total Assets 2,020,577 834,708 684,590
---------------- --------------- ---------------
LIABILITIES:
Dividends payable 186 499 12
Payable for capital shares redeemed 158 25 22
Payable for return of collateral received for securities on loan 49,140 59,486 -
Payable to brokers for investments purchased 4,130 79,792 936
Net payable for variation margin on futures contracts 310 - 79
Accrued expenses and other payables:
Investment advisory fees 1,025 415 337
Administration fees 247 96 84
12b-1 fees 221 30 93
Other 214 156 16
---------------- --------------- ---------------
Total Liabilities 55,631 140,499 1,579
---------------- --------------- ---------------
NET ASSETS:
Capital 1,353,428 501,412 540,750
Undistributed (distributions in excess of)
net investment income 224 1 (50)
Accumulated undistributed net realized gains (losses)
from investment and futures transactions 73,645 84,723 16,999
Net unrealized appreciation (depreciation) from
investments and futures 537,649 108,073 125,312
---------------- --------------- ---------------
Net Assets $ 1,964,946 $ 694,209 $ 683,011
================ =============== ===============
Net Assets
Fiduciary/Class I $ 1,583,648 $ 634,671 $ 545,391
Class A 344,950 29,443 132,278
Class B 35,114 30,095 5,342
Class C 1,234 - -
---------------- --------------- ---------------
Total $ 1,964,946 $ 694,209 $ 683,011
================ =============== ===============
Outstanding units of beneficial interest
Fiduciary/Class I 117,209 37,560 34,019
Class A 25,553 1,739 8,255
Class B 2,619 1,786 470
Class C 92 - -
---------------- --------------- ---------------
Total 145,473 41,085 42,744
================ =============== ===============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 13.51 $ 16.90 $ 16.03
================ =============== ===============
Class A
Redemption price per share $ 13.50 $ 16.93 $ 16.02
================ =============== ===============
Maximum sales charge 4.50% 4.50% 5.00%
================ =============== ===============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted
to nearest cent $ 14.14 $ 17.73 $ 16.86
================ =============== ===============
Class B offering price per share $ 13.40 $ 16.85 $ 11.37
================ =============== ===============
Class C offering price per share $ 13.47 $ - $ -
================ =============== ===============
Proforma
Adjustments Combined
ASSETS:
Investments, at value $ $ 1,391,827
Repurchase agreements, at cost 50,417
------------ ---------------
Total (cost $1,480,823; $1,209,164, respectively) - 1,442,244
Cash 207
Interest & dividends receivable 1,427
Receivable from brokers for investments sold 75,046
Receivable for capital shares issued 280
Prepaid expenses and other assets 94
------------ ---------------
Total Assets - 1,519,298
------------ ---------------
LIABILITIES:
Dividends payable 511
Payable for capital shares redeemed 47
Payable for return of collateral received for securities on loan 59,486
Payable to brokers for investments purchased 80,728
Net payable for variation margin on futures contracts 79
Accrued expenses and other payables:
Investment advisory fees 752
Administration fees 180
12b-1 fees 123
Other 172
------------ ---------------
Total Liabilities - 142,078
------------ ---------------
NET ASSETS:
Capital 1,042,162
Undistributed (distributions in excess of)
net investment income (49)
Accumulated undistributed net realized gains (losses)
from investment and futures transactions 101,722
Net unrealized appreciation (depreciation) from
investments and futures 233,385
------------ ---------------
Net Assets $ - $ 1,377,220
============ ===============
Net Assets
Fiduciary/Class I $ $ 1,180,062
Class A 161,721
Class B 35,437
Class C -
------------ ---------------
Total $ - $ 1,377,220
============ ===============
Outstanding units of beneficial interest
Fiduciary/Class I (1,747) 69,832
Class A (442) 9,552
Class B (153) 2,103
Class C - -
------------ ---------------
Total (2,342) 81,487
============ ===============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 16.90
===============
Class A
Redemption price per share $ 16.93
===============
Maximum sales charge 4.50%
===============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted
to nearest cent $ 17.73
===============
Class B offering price per share $ 16.85
===============
Class C offering price per share $ -
===============
309
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
Large Company Pegasus
Growth Growth Proforma
Fund Fund Adjustments Combined
ASSETS:
Investments, at value $ 2,064,976 $ 846,249 $ $ 2,911,225
Repurchase agreements, at cost 97,697 - 97,697
------------- -------------- ------------ -------------
Total (cost $1,927,578) 2,162,673 846,249 - 3,008,922
Cash 1 - 1
Interest & dividends receivable 1,975 360 2,335
Receivable from brokers for investments sold 86,533 1,461 87,994
Receivable for capital shares issued 882 235 1,117
Net receivable for variation margin on futures contracts - - -
Deferred organization cost - 27 (27) -
Prepaid expenses and other assets 8 156 164
------------- -------------- ------------ -------------
Total Assets 2,252,072 848,488 (27) 3,100,533
------------- -------------- ------------ -------------
LIABILITIES:
Payable for capital shares redeemed 213 51 264
Payable for return of collateral received for securities on loan 177,147 - 177,147
Payable to brokers for investments purchased 81,870 145 82,015
Net payable for variation margin on futures contracts - 43 43
Accrued expenses and other payables:
Investment advisory fees 1,160 349 1,509
Administration fees 265 87 352
12b-1 fees 257 80 337
Other 532 18 550
------------- -------------- ------------ -------------
Total Liabilities 261,444 773 - 262,217
------------- -------------- ------------ -------------
NET ASSETS:
Capital 1,095,916 481,208 (27) 1,577,097
Undistributed (distributions in excess of)
net investment income - (644) (644)
Accumulated undistributed net realized gains (losses)
from investment, futures and options transactions 175,943 4,602 180,545
Net unrealized appreciation (depreciation) from
investments, futures and options transactions 718,769 362,549 1,081,318
------------- -------------- ------------ -------------
Net Assets $ 1,990,628 $ 847,715 $ (27) $ 2,838,316
============= ============== ============ =============
Net Assets
Fiduciary/Class I $ 1,510,521 $ 733,610 $ (27) $ 2,244,104
Class A 199,051 109,752 308,803
Class B 280,564 4,353 284,917
Class C 492 - 492
------------- -------------- ------------ -------------
Total $ 1,990,628 $ 847,715 $ (27) $ 2,838,316
============= ============== ============ =============
Outstanding units of beneficial interest
Fiduciary/Class I 66,523 43,204 (10,902) 98,825
Class A 8,534 6,472 (1,766) 13,240
Class B 12,341 262 (70) 12,533
Class C 22 - - 22
------------- -------------- ------------ -------------
Total 87,420 49,938 (12,738) 124,620
============= ============== ============ =============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 22.71 $ 16.98 $ 22.71
============= ============== =============
Class A
Redemption price per share $ 23.32 $ 16.96 $ 23.32
============= ============== =============
Maximum sales charge 4.50% 5.00% 4.50%
============= ============== =============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted
to nearest cent $ 24.42 $ 17.85 $ 24.42
============= ============== =============
Class B offering price per share $ 22.73 $ 16.64 $ 22.73
============= ============== =============
Class C offering price per share $ 22.57 $ - $ 22.57
============= ============== =============
310
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited) Pegasus
Investor Managed Assets
Growth Growth
Fund Fund Adjustments
ASSETS:
Investments, at value (cost $220,706; 478,319, respectively) $ 217,257 $ 21,878 $
Cash 1,265 -
Interest & dividends receivable 188 -
Receivable from brokers for investments sold 1,500 -
Receivable for capital shares issued 735 101
Receivable from advisor 31 -
Deferred organization cost - -
Prepaid expenses and other assets 1 44
------------- -------------- ------------
Total Assets 220,977 22,023 -
------------- -------------- ------------
LIABILITIES:
Dividends payable 84 1
Payable for capital shares redeemed 42 13
Payable to brokers for investments purchased - 59
Accrued expenses and other payables:
Investment advisory fees 9 11
Administration fees - 3
12b-1 fees 70 30
Other 73 6
------------- -------------- ------------
Total Liabilities 278 123 -
------------- -------------- ------------
NET ASSETS:
Capital 197,904 21,075
Undistributed (distributions in excess of)
net investment income 2,138 (7)
Accumulated undistributed net realized gains (losses)
from investment transactions 2,515 545
Net unrealized appreciation (depreciation) from
investments 18,142 287
------------- -------------- ------------
Net Assets $ 220,699 $ 21,900 $ -
============= ============== ============
Net Assets
Fiduciary/Class I $ 86,355 $ 1,583 $
Class A 55,057 9,404
Class B 70,515 10,913
Class C 8,772 -
------------- -------------- ------------
Total $ 220,699 $ 21,900 $ -
============= ============== ============
Outstanding units of beneficial interest
Fiduciary/Class I 6,451 132 (14)
Class A 4,131 788 (83)
Class B 5,236 928 (118)
Class C 658 - -
------------- -------------- ------------
Total 16,476 1,848 (215)
============= ============== ============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 13.39 $ 12.00
============= ==============
Class A
Redemption price per share $ 13.33 $ 11.94
============= ==============
Maximum sales charge 4.50% 5.00%
============= ==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 13.96 $ 12.57
============= ==============
Class B offering price per share $ 13.47 $ 11.76
============= ==============
Class C offering price per share $ 13.34 $ -
============= ==============
Pegasus
Investor Growth Managed Assets
Proforma & Income Balanced
Combined Fund Fund
ASSETS:
Investments, at value (cost $220,706; 478,319, respectively) $ 239,135 $ 226,522 $ 277,312
Cash 1,265 819 -
Interest & dividends receivable 188 400 -
Receivable from brokers for investments sold 1,500 1,500 -
Receivable for capital shares issued 836 1,099 297
Receivable from advisor 31 9 -
Deferred organization cost - - 5
Prepaid expenses and other assets 45 1 155
------------- -------------- --------------
Total Assets 243,000 230,350 277,769
------------- -------------- --------------
LIABILITIES:
Dividends payable 85 300 6
Payable for capital shares redeemed 55 33 51
Payable to brokers for investments purchased 59 - 137
Accrued expenses and other payables: - -
Investment advisory fees 20 9 146
Administration fees 3 - 33
12b-1 fees 100 78 136
Other 79 99 31
------------- -------------- --------------
Total Liabilities 401 519 540
------------- -------------- --------------
NET ASSETS:
Capital 218,979 207,764 260,561
Undistributed (distributions in excess of)
net investment income 2,131 2,062 (67)
Accumulated undistributed net realized gains (losses)
from investment transactions 3,060 2,135 9,090
Net unrealized appreciation (depreciation) from
investments 18,429 17,870 7,645
------------- -------------- --------------
Net Assets $ 242,599 $ 229,831 $ 277,229
============= ============== ==============
Net Assets
Fiduciary/Class I $ 87,938 $ 98,060 $ 92,326
Class A 64,461 39,874 169,028
Class B 81,428 85,468 15,875
Class C 8,772 6,429 -
------------- -------------- --------------
Total $ 242,599 $ 229,831 $ 277,229
============= ============== ==============
Outstanding units of beneficial interest
Fiduciary/Class I 6,569 7,803 7,824
Class A 4,836 3,142 14,299
Class B 6,046 6,761 1,198
Class C 658 513 -
------------- -------------- --------------
Total 18,109 18,219 23,321
============= ============== ==============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 13.39 $ 12.57 $ 11.80
============= ============== ==============
Class A
Redemption price per share $ 13.33 $ 12.69 $ 11.82
============= ============== ==============
Maximum sales charge 4.50% 4.50% 5.00%
============= ============== ==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 13.96 $ 13.29 $ 12.44
============= ============== ==============
Class B offering price per share $ 13.47 $ 12.64 $ 13.25
============= ============== ==============
Class C offering price per share $ 13.34 $ 12.54 $ -
============= ============== ==============
Proforma
Adjustments Combined
ASSETS:
Investments, at value (cost $220,706; 478,319, respectively) $ $ 503,834
Cash 819
Interest & dividends receivable 400
Receivable from brokers for investments sold 1,500
Receivable for capital shares issued 1,396
Receivable from advisor 9
Deferred organization cost (5) -
Prepaid expenses and other assets 156
------------ ----------------
Total Assets (5) 508,114
------------ ----------------
LIABILITIES:
Dividends payable 306
Payable for capital shares redeemed 84
Payable to brokers for investments purchased 137
Accrued expenses and other payables: -
Investment advisory fees 155
Administration fees 33
12b-1 fees 214
Other 130
------------ ----------------
Total Liabilities - 1,059
------------ ----------------
NET ASSETS:
Capital (5) 468,320
Undistributed (distributions in excess of)
net investment income 1,995
Accumulated undistributed net realized gains (losses)
from investment transactions 11,225
Net unrealized appreciation (depreciation) from
investments 25,515
------------ ----------------
Net Assets $ (5) $ 507,055
============ ================
Net Assets
Fiduciary/Class I $ (5) $ 190,381
Class A 208,902
Class B 101,343
Class C 6,429
------------ ----------------
Total $ (5) $ 507,055
============ ================
Outstanding units of beneficial interest
Fiduciary/Class I (479) 15,148
Class A (979) 16,462
Class B 58 8,017
Class C - 513
------------ ----------------
Total (1,400) 40,140
============ ================
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 12.57
================
Class A
Redemption price per share $ 12.69
================
Maximum sales charge 4.50%
================
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 13.29
================
Class B offering price per share $ 12.64
================
Class C offering price per share $ 12.54
================
311
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
June 30, 1998
(Amounts in Thousands, except per share amounts)
(Unaudited)
Pegasus
Investor Managed Assets
Balanced Conservative
Fund Fund Adjustments
ASSETS:
Investments, at value (cost $315,556) $ 198,835 $ 135,153 $
Cash 2,113 -
Interest & dividends receivable 535 -
Receivable from brokers for investments sold 1,000 -
Receivable for capital shares issued 1,472 230
Deferred organization cost - 31 (31)
Prepaid expenses and other assets 1 59
------------- -------------- ------------
Total Assets 203,956 135,473 (31)
------------- -------------- ------------
LIABILITIES:
Dividends payable 463 19
Payable for capital shares redeemed 55 135
Payable to brokers for investments purchased - 117
Accrued expenses and other payables:
Investment advisory fees 8 71
Administration fees - 16
12b-1 fees 64 108
Other 88 21
------------- -------------- ------------
Total Liabilities 678 487 -
------------- -------------- ------------
NET ASSETS:
Capital 185,728 128,626 (31)
Undistributed (distributions in excess of)
net investment income 1,413 (50)
Accumulated undistributed net realized gains (losses)
from investment transactions 1,624 2,491
Net unrealized appreciation (depreciation) from
investments 14,513 3,919
------------- -------------- ------------
Net Assets $ 203,278 $ 134,986 (31)
============= ============== ============
Net Assets
Fiduciary/Class I $ 93,557 $ 12,255 $ (31)
Class A 32,605 100,508
Class B 70,463 22,223
Class C 6,653 -
------------- -------------- ------------
Total $ 203,278 $ 134,986 $ (31)
============= ============== ============
Outstanding units of beneficial interest
Fiduciary/Class I 7,925 828 207
Class A 2,755 6,814 1,682
Class B 5,963 1,506 374
Class C 565 - -
------------- -------------- ------------
Total 17,208 9,148 2,263
============= ============== ============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 11.81 $ 14.81
============= ==============
Class A
Redemption price per share $ 11.83 $ 14.75
============= ==============
Maximum sales charge 4.50% 5.00%
============= ==============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 12.39 $ 15.53
============= ==============
Class B offering price per share $ 11.82 $ 14.76
============= ==============
Class C offering price per share $ 11.77 $ -
============= ==============
Proforma
Combined
ASSETS:
Investments, at value (cost $315,556) $ 333,988
Cash 2,113
Interest & dividends receivable 535
Receivable from brokers for investments sold 1,000
Receivable for capital shares issued 1,702
Deferred organization cost -
Prepaid expenses and other assets 60
-------------
Total Assets 339,398
=============
LIABILITIES:
Dividends payable 482
Payable for capital shares redeemed 190
Payable to brokers for investments purchased 117
Accrued expenses and other payables:
Investment advisory fees 79
Administration fees 16
12b-1 fees 172
Other 109
-------------
Total Liabilities 1,165
-------------
NET ASSETS:
Capital 314,323
Undistributed (distributions in excess of)
net investment income 1,363
Accumulated undistributed net realized gains (losses)
from investment transactions 4,115
Net unrealized appreciation (depreciation) from
investments 18,432
-------------
Net Assets $ 338,233
-------------
Net Assets
Fiduciary/Class I $ 105,781
Class A 133,113
Class B 92,686
Class C 6,653
-------------
Total $ 338,233
=============
Outstanding units of beneficial interest
Fiduciary/Class I 8,960
Class A 11,251
Class B 7,843
Class C 565
-------------
Total 28,619
=============
Net Asset Value:
Fiduciary/Class I offering and redemption price per share $ 11.81
=============
Class A
Redemption price per share $ 11.83
=============
Maximum sales charge 4.50%
=============
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest cent) $ 12.39
=============
Class B offering price per share $ 11.82
=============
Class C offering price per share $ 11.77
=============
312
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
U.S. Treasury Pegasus
Securities Treasury
Money Market Money Market Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 184,497 $ 55,183 $ - $ 239,680
Income from securities lending 150 - - 150
-------------- -------------- -------------- --------------
Total Income 184,647 55,183 - 239,830
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 11,575 2,614 845 15,034
Administration fees 5,416 1,483 135 7,034
12b-1 fees (Class A) 1,955 513 23 2,491
12b-1 fees (Class B) 1 - - 1
Custodian and accounting fees 355 11 16 382
Legal and audit fees 176 53 (30) 199
Transfer agent fees 638 89 (58) 669
Registration, filing fees and other expenses 1,708 188 (17) 1,879
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 21,824 4,951 914 27,689
Less waivers and reimbursements (2,892) - (862) (3,754)
-------------- -------------- -------------- --------------
Net Expenses 18,932 4,951 52 23,935
-------------- -------------- -------------- --------------
Net Investment Income 165,715 50,232 (52) 215,935
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments Transactions:
Net realized gains (losses) from investment transactions 40 - - 40
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 165,755 $ 50,232 $ (52) $ 215,935
============== ============== ============== ==============
Prime Pegasus
Money Market Money Market Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 189,463 $ 139,797 $ - $ 329,260
Income from securities lending - - - 0
-------------- -------------- -------------- --------------
Total Income 189,463 139,797 - 329,260
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 11,482 6,847 1,689 20,018
Administration fees 5,374 3,659 336 9,369
12b-1 fees (Class A) 1,399 2,473 114 3,986
12b-1 fees (Class B) 10 5 - 15
Custodian and accounting fees 292 41 43 376
Legal and audit fees 148 101 (39) 210
Transfer agent fees 391 1,367 (321) 1,437
Registration, filing fees and other expenses 1,263 474 (22) 1,715
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 20,359 14,967 1,800 37,126
Less waivers and reimbursements (2,237) (295) (1,437) (3,969)
-------------- -------------- -------------- --------------
Net Expenses 18,122 14,672 363 33,157
-------------- -------------- -------------- --------------
Net Investment Income 171,341 125,125 (363) 296,103
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments Transactions:
Net realized gains (losses) from investment transactions 89 - - 89
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 171,430 $ 125,125 $ (363) $ 296,192
============== ============== ============== ==============
313
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
Pegasus
Municipal Municipal
Money Market Money Market Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 21,708 $ 29,815 $ - $ 51,523
Dividend income 165 - - 165
---------------- ---------------- ---------------- ----------------
Total Income 21,873 29,815 - 51,688
---------------- ---------------- ---------------- ----------------
Expenses:
Investment advisory fees 2,087 2,436 406 4,929
Administration fees 977 1,218 112 2,307
12b-1 fees (Class A) 258 492 27 777
Custodian and accounting fees 51 32 9 92
Legal and audit fees 22 49 (27) 44
Transfer agent fees 33 77 (60) 50
Registration, filing fees and other expenses 163 19 (6) 176
---------------- ---------------- ---------------- ----------------
Total expenses before waivers 3,591 4,323 461 8,375
Less waivers (677) - (931) (1,608)
---------------- ---------------- ---------------- ----------------
Net Expenses 2,914 4,323 (470) 6,767
---------------- ---------------- ---------------- ----------------
Net Investment Income 18,959 25,492 470 44,921
================ ================ ================ ================
Realized / Unrealized Gains (Losses) from
Investments:
Net realized gains (losses) from investment transactions 11 - - 11
---------------- ---------------- ---------------- ----------------
Change in net assets resulting from operations $ 18,970 $ 25,492 $ 470 $ 44,932
================ ================ ================ ================
314
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
Limited Pegasus
Volatility Short Proforma Proforma
Bond Fund Bond Fund Adjustments Combined
Investment Income:
Interest income $ 38,915 $ 14,738 $ - $ 53,653
Income from securities lending 144 - - 144
-------------- -------------- -------------- --------------
Total Income 39,059 14,738 - 53,797
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 3,580 847 604 5,031
Administration fees 977 363 33 1,373
12b-1 fees (Class A) 63 19 7 89
12b-1 fees (Class B) 49 2 - 51
12b-1 fees (Class C) - - - -
Custodian and accounting fees 74 44 (33) 85
Legal and audit fees 24 33 (28) 29
Organization costs - 7 (7) -
Transfer agent fees 88 50 (25) 113
Registration, filing fees and other expenses 120 80 (4) 196
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 4,975 1,445 547 6,967
Less waivers and reimbursements (1,730) (38) (659) (2,427)
-------------- -------------- -------------- --------------
Net Expenses 3,245 1,407 (112) 4,540
-------------- -------------- -------------- --------------
Net Investment Income 35,814 13,331 112 49,257
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments:
Net realized gains (losses) from investment transactions (2,526) 353 - (2,173)
Net change in unrealized appreciation (depreciation)
from investments 4,699 794 - 5,493
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments 2,173 1,147 - 3,320
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 37,987 $ 14,478 $ 112 $ 52,577
============== ============== ============== ==============
Pegasus
Intermediate Intermediate Proforma Proforma
Bond Fund Bond Fund Adjustments Combined
Investment Income:
Interest income $ 45,357 $ 35,438 $ - $ 80,795
Income from securities lending 287 - - 287
-------------- -------------- -------------- --------------
Total Income 45,644 35,438 - 81,082
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 3,951 2,127 1,062 7,140
Administration fees 1,078 798 72 1,948
12b-1 fees (Class A) 110 138 54 302
12b-1 fees (Class B) 147 4 - 151
12b-1 fees (Class C) 3 - - 3
Custodian and accounting fees 96 79 (60) 115
Legal and audit fees 21 48 (36) 33
Transfer agent fees 78 235 (73) 240
Registration, filing fees and other expenses 209 99 (5) 303
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 5,693 3,528 1,014 10,235
Less waivers and reimbursements (1,773) - (1,448) (3,221)
-------------- -------------- -------------- --------------
Net Expenses 3,920 3,528 (434) 7,014
-------------- -------------- -------------- --------------
Net Investment Income 41,724 31,910 434 74,068
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments:
Net realized gains (losses) from investment transactions 467 451 - 918
Net change in unrealized appreciation (depreciation)
from investments 11,026 10,157 - 21,183
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments 11,493 10,608 - 22,101
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 53,217 $ 42,518 $ 434 $ 96,169
============== ============== ============== ==============
315
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
Pegasus
Income Multi-Sector Proforma Proforma
Bond Fund Bond Fund Adjustments Combined
Investment Income:
Interest income $ 61,807 $ 8,277 $ - 70,084
Dividend income - - - -
Income from securities lending 280 - - 280
-------------- -------------- -------------- --------------
Total Income 62,087 8,277 - 70,364
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 5,074 501 257 5,832
Administration fees 1,385 188 19 1,592
12b-1 fees (Class A) 51 24 10 85
12b-1 fees (Class B) 138 5 - 143
Custodian and accounting fees 74 23 (15) 82
Legal and audit fees 27 30 (23) 34
Organization costs - 10 (10) -
Transfer agent fees 80 49 (27) 102
Registration, filing fees and other expenses 206 - - 206
-------------- -------------- -------------- --------------
Total expenses before waivers 7,035 830 211 8,076
Less waivers (1,720) - (274) (1,994)
-------------- -------------- -------------- --------------
Net Expenses 5,315 830 (63) 6,082
-------------- -------------- -------------- --------------
Net Investment Income 56,772 7,447 63 64,282
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments:
Net realized gains (losses) from investment transactions (13,587) 2,217 - (11,370)
Net change in unrealized appreciation (depreciation)
from investments 21,151 2,448 - 23,599
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments 7,564 4,665 - 12,229
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 64,336 $ 12,112 $ 63 $ 76,511
============== ============== ============== ==============
Pegasus
Intermediate Intermediate
Tax-Free Municipal Proforma Proforma
Bond Fund Bond Fund Adjustments Combined
Investment Income:
Interest income $ 25,820 $ 20,657 $ - 46,477
Dividend income 85 - - 85
Income from securities lending - - - -
-------------- -------------- -------------- --------------
Total Income 25,905 20,657 - 46,562
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 2,931 1,618 807 5,356
Administration fees 800 607 55 1,462
12b-1 fees (Class A) 38 48 20 106
12b-1 fees (Class B) 46 7 - 53
Custodian and accounting fees 54 46 (42) 58
Legal and audit fees 14 39 (26) 27
Organization costs - 12 (12) -
Transfer agent fees 39 19 (24) 34
Registration, filing fees and other expenses 132 52 (15) 169
-------------- -------------- -------------- --------------
Total expenses before waivers 4,054 2,448 763 7,265
Less waivers (1,041) - (869) (1,910)
-------------- -------------- -------------- --------------
Net Expenses 3,013 2,448 (106) 5,355
-------------- -------------- -------------- --------------
Net Investment Income 22,892 18,209 106 41,207
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments:
Net realized gains (losses) from investment transactions 5,307 1,776 - 7,083
Net change in unrealized appreciation (depreciation)
from investments 7,769 7,223 - 14,992
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments 13,076 8,999 - 22,075
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 35,968 $ 27,208 $ 106 $ 63,282
============== ============== ============== ==============
316
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
Pegasus
Income Equity Equity Income Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 1,924 $ 2,608 $ - $ 4,532
Dividend income 19,180 9,895 - 29,075
Income from securities lending 119 - - 119
-------------- -------------- -------------- --------------
Total Income 21,223 12,503 - 33,726
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 6,571 1,612 773 8,956
Administration fees 1,454 483 45 1,982
12b-1 fees (Class A) 346 32 13 391
12b-1 fees (Class B) 1,219 31 - 1,250
12b-1 fees (Class C) 4 - - 4
Custodian and accounting fees 62 55 (48) 69
Legal and audit fees 28 36 (24) 40
Organization costs - 15 (15) -
Transfer agent fees 439 31 (73) 397
Registration, filing fees and other expenses 294 24 (6) 312
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 10,417 2,319 665 13,401
Less waivers and reimbursements (99) - (13) (112)
-------------- -------------- -------------- --------------
Net Expenses 10,318 2,319 652 13,289
-------------- -------------- -------------- --------------
Net Investment Income 10,905 10,184 (652) 20,437
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments,
and futures transactions 76,585 47,730 - 124,315
Net change in unrealized appreciation
(depreciation) from investments and futures 98,696 (13,677) - 85,019
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments and futures 175,281 34,053 - 209,334
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 186,186 $ 44,237 $ (652) $ 229,771
============== ============== ============== ==============
Pegasus
Equity Index Index Equity Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 1,531 $ 116 $ - $ 1,647
Dividend income 15,277 13,740 - 29,017
Income from securities lending 210 - - 210
-------------- -------------- -------------- --------------
Total Income 17,018 13,856 - 30,874
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 2,978 870 1,738 5,586
Administration fees 1,626 1,305 118 3,049
12b-1 fees (Class A) 544 480 189 1,213
12b-1 fees (Class B) 2,522 16 - 2,538
12b-1 fees (Class C) 6 - - 6
Custodian and accounting fees 170 114 (82) 202
Legal and audit fees 34 49 (29) 54
Organization costs - 2 (2) -
Transfer agent fees 981 664 (152) 1,493
Registration, filing fees and other expenses 306 205 (12) 499
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 9,167 3,705 1,768 14,640
Less waivers and reimbursements (2,774) (60) (2,423) (5,257)
-------------- -------------- -------------- --------------
Net Expenses 6,393 3,645 (655) 9,383
-------------- -------------- -------------- --------------
Net Investment Income 10,625 10,211 655 21,491
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments,
and futures transactions 26,070 31,603 - 57,673
Net change in unrealized appreciation
(depreciation) from investments and future 216,751 182,618 - 399,369
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments and futures 242,821 214,221 - 457,042
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 253,446 $ 224,432 $ 655 $ 478,533
============== ============== ============== ==============
317
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
Pegasus
Value Growth Growth & Value Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 1,683 $ 1,847 $ - $ 3,530
Dividend income 8,118 15,687 - 23,805
Income from securities lending 131 - - 131
-------------- -------------- -------------- --------------
Total Income 9,932 17,534 - 27,466
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 4,485 6,494 1,510 12,489
Administration fees 993 1,623 148 2,764
12b-1 fees (Class A) 216 463 184 863
12b-1 fees (Class B) 161 53 - 214
12b-1 fees (Class C) 2 - - 2
Custodian and accounting fees 70 114 (105) 79
Legal and audit fees 23 54 (27) 50
Transfer agent fees 168 756 (163) 761
Registration, filing fees and other expense 210 256 (7) 459
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 6,328 9,813 1,540 17,681
Less waivers and reimbursements (62) (86) (99) (247)
-------------- -------------- -------------- --------------
Net Expenses 6,266 9,727 1,441 17,434
-------------- -------------- -------------- --------------
Net Investment Income 3,666 7,807 (1,441) 10,032
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments,
and futures transactions 72,571 102,975 - 175,546
Net change in unrealized appreciation
(depreciation) from investments and futures 92,392 73,582 - 165,974
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments and futures 164,963 176,557 - 341,520
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 168,629 $ 184,364 $ (1,441) $ 351,552
============== ============== ============== ==============
Pegasus
Disciplined Intrinsic
Value Value Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 821 $ 4,039 $ - $ 4,860
Dividend income 10,584 13,937 - 24,521
Income from securities lending 251 - - 251
-------------- -------------- -------------- --------------
Total Income 11,656 17,976 - 29,632
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 4,759 3,737 868 9,364
Administration fees 1,053 934 85 2,072
12b-1 fees (Class A) 99 228 90 417
12b-1 fees (Class B) 254 32 - 286
Custodian and accounting fees 69 72 (58) 83
Legal and audit fees 20 40 (29) 31
Transfer agent fees 150 280 (87) 343
Registration, filing fees and other expense 129 63 (10) 182
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 6,533 5,386 859 12,778
Less waivers and reimbursements (28) - (91) (119)
-------------- -------------- -------------- --------------
Net Expenses 6,505 5,386 768 12,659
-------------- -------------- -------------- --------------
Net Investment Income 5,151 12,590 (768) 16,973
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments,
and futures transactions 141,237 37,765 - 179,002
Net change in unrealized appreciation
(depreciation) from investments and futures 9,794 33,471 - 43,265
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments and futures 151,031 71,236 - 222,267
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 156,182 $ 83,826 $ (768) $ 239,240
============== ============== ============== ==============
318
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
Large Company Pegasus
Growth Growth Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Interest income $ 606 $ 319 $ - $ 925
Dividend income 18,607 4,809 - 23,416
Income from securities lending 252 - - 252
-------------- -------------- -------------- --------------
Total Income 19,465 5,128 - 24,593
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 12,024 4,048 802 16,874
Administration fees 2,661 1,012 92 3,765
12b-1 fees (Class A) 553 180 71 804
12b-1 fees (Class B) 1,953 24 (1) 1,976
12b-1 fees (Class C) 1 - - 1
Custodian and accounting fees 119 62 (68) 113
Legal and audit fees 49 40 (29) 60
Organization costs - 15 (15) -
Transfer agent fees 881 182 (53) 1,010
Registration, filing fees and other expenses 399 51 (10) 440
-------------- -------------- -------------- --------------
Total expenses before waivers 18,640 5,614 789 25,043
Less waivers (158) - (72) (230)
-------------- -------------- -------------- --------------
Net Expenses 18,482 5,614 717 24,813
-------------- -------------- -------------- --------------
Net Investment Income 983 (486) (717) (220)
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments,
and futures transactions 278,531 54,960 - 333,491
Net change in unrealized appreciation
(depreciation) from investments and futures 237,485 131,568 - 369,053
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments and futures 516,016 186,528 - 702,544
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 516,999 $ 186,042 $ (717) $ 702,324
============== ============== ============== ==============
319
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited) Pegasus
Investor Managed Assets
Growth Growth Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Distribution Income $ 1,410 $ 389 $ - $ 1,799
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 57 84 (78) 63
Administration fees 114 19 (6) 127
12b-1 fees (Class A) 78 14 5 97
12b-1 fees (Class B) 327 61 - 388
12b-1 fees (Class C) 41 - - 41
Custodian and accounting fees 11 32 (13) 30
Legal and audit fees 6 24 (15) 15
Transfer agent fees 126 14 (3) 137
Registration, filing fees and other expenses 93 23 (1) 115
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 853 271 (111) 1,013
Less waivers and reimbursements (202) (66) 40 (228)
-------------- -------------- -------------- --------------
Net Expenses 651 205 (71) 785
-------------- -------------- -------------- --------------
Net Investment Income 759 184 71 1,014
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments
transactions 7,240 1,205 - 8,445
Net change in unrealized appreciation
(depreciation) from investments 14,046 4 - 14,050
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments 21,286 1,209 - 22,495
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 22,045 $ 1,393 $ 71 $ 25,509
============== ============== ============== ==============
Pegasus
Investor Growth Managed Assets
& Income Balanced Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Distribution Income $ 3,175 $ 9,817 $ - $ 12,992
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 67 1,653 (1,526) 194
Administration fees 134 382 (128) 388
12b-1 fees (Class A) 64 339 139 542
12b-1 fees (Class B) 391 102 1 494
12b-1 fees (Class C) 24 - - 24
Custodian and accounting fees 12 75 (33) 54
Legal and audit fees 7 36 (27) 16
Organization costs - 9 (9) -
Transfer agent fees 105 582 (86) 601
Registration, filing fees and other expenses 118 81 (2) 197
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 922 3,259 (1,671) 2,510
Less waivers and reimbursements (193) (273) (195) (661)
-------------- -------------- -------------- --------------
Net Expenses 729 2,986 (1,866) 1,849
-------------- -------------- -------------- --------------
Net Investment Income 2,446 6,831 1,866 11,143
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments
transactions 6,961 34,620 - 41,581
Net change in unrealized appreciation
(depreciation) from investments 14,037 (11,566) - 2,471
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments 20,998 23,054 - 44,052
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 23,444 $ 29,885 $ 1,866 $ 55,195
============== ============== ============== ==============
320
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Twelve Months Ended June 30, 1998
(Amounts in Thousands)
(Unaudited)
Pegasus
Investor Managed Assets
Balanced Conservative Proforma Proforma
Fund Fund Adjustments Combined
Investment Income:
Total Income 4,519 5,553 - 10,072
-------------- -------------- -------------- --------------
Expenses:
Investment advisory fees 65 750 (692) 123
Administration fees 129 173 (58) 244
12b-1 fees (Class A) 45 228 92 365
12b-1 fees (Class B) 297 143 - 440
12b-1 fees (Class C) 27 - - 27
Custodian and accounting fees 10 37 (24) 23
Legal and audit fees 6 28 (21) 13
Organization costs - 18 (18) -
Transfer agent fees 80 210 (24) 266
Registration, filing fees and other expenses 119 68 (4) 183
-------------- -------------- -------------- --------------
Total expenses before waivers and reimbursements 778 1,655 (749) 1,684
Less waivers and reimbursements (163) (132) (92) (387)
-------------- -------------- -------------- --------------
Net Expenses 615 1,523 (841) 1,297
-------------- -------------- -------------- --------------
Net Investment Income 3,904 4,030 841 8,775
============== ============== ============== ==============
Realized / Unrealized Gains (Losses) from
Investments and Futures:
Net realized gains (losses) from investments
transactions 5,351 10,299 - 15,650
Net change in unrealized appreciation
(depreciation) from investments 10,033 (2,333) - 7,700
-------------- -------------- -------------- --------------
Net realized/unrealized gains
(losses) from investments 15,384 7,966 - 23,350
-------------- -------------- -------------- --------------
Change in net assets resulting from operations $ 19,288 $ 11,996 $ 841 $ 32,125
============== ============== ============== ==============
321
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS,
(Unaudited)
1. Basis Of Combination:
---------------------
The unaudited Pro Forma Combined Statements of Assets and Liabilities,
Statements of Operations, and Schedules of Portfolio Investments reflect the
accounts of fifteen investment portfolios offered by The One Group ("The One
Group Funds") and fifteen investment portfolios offered by Pegasus Funds ("the
Pegasus Funds") as if the proposed reorganization occurred as of and for the
fiscal year ended June 30, 1998. These statements have been derived from books
and records utilized in calculating daily net asset value at June 30, 1998.
Below are the fund names for The One Group Funds (O), the Pegasus Funds (P) and
the Surviving Funds.
- --------------------------------------- -------------------------------------- --------------------------------------
THE ONE GROUP FUNDS PEGASUS FUNDS SURVIVING FUNDS
------------------- ------------- ---------------
- --------------------------------------- -------------------------------------- --------------------------------------
U.S. Treasury Securities Money Treasury Money Market Fund U.S. Treasury Securities Money Market
Market Fund Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Prime Money Market Fund Money Market Fund Prime Money Market Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Municipal Money Market Fund Municipal Money Market Fund Municipal Money Market Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Limited Volatility Bond Fund Short Bond Fund Short Term Bond Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Intermediate Bond Fund Intermediate Bond Fund Intermediate Bond Fund (P)
- --------------------------------------- -------------------------------------- --------------------------------------
Income Bond Fund Multi Sector Bond Fund Income Bond Fund (P)
- --------------------------------------- -------------------------------------- --------------------------------------
Intermediate Tax-Free Bond Fund Intermediate Municipal Bond Fund Intermediate Tax-Free Bond Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Income Equity Fund Equity Income Fund Equity Income Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Equity Index Fund Equity Index Fund Equity Index Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Value Growth Fund Growth and Value Fund Diversified Equity Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Disciplined Value Fund Intrinsic Value Fund Mid-Cap Value Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Large Company Growth Fund Growth Fund Large-Cap Growth Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Investor Growth Fund Managed Assets Growth Fund Investor Growth Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Investor Growth & Income Fund Managed Assets Balanced Fund Investor Growth & Income Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
Investor Balanced Fund Managed Assets Conservative Fund Investor Balanced Fund (O)
- --------------------------------------- -------------------------------------- --------------------------------------
The Plan of Reorganization provides that at the time the reorganization
becomes effective (the "Effective Time of the Reorganization"), all of the
assets and liabilities will be transferred such that at and after the Effective
Time of Reorganization, the assets and liabilities of the Pegasus Funds will
become the assets and liabilities of The One Group Funds. In exchange for the
transfer of assets and liabilities, the One Group Funds will issue to the
Pegasus Funds full and fractional shares of
(CONTINUED)
322
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
the corresponding One Group Funds, and the Pegasus Funds will make a
liquidating distribution of such shares to its shareholders. The number of
shares of The One Group Funds so issued will be equal in value to the full and
fractional shares of the Pegasus Funds that are outstanding immediately prior
to the Effective Time of the Reorganization. At and after the Effective Time of
the Reorganization, all debts, liabilities and obligations of the Pegasus
Funds will attach to The One Group Funds and may thereafter be enforced against
The One Group Funds to the same extent as if they had been incurred by them. The
pro forma statements give effect to the proposed transfer described above.
Under the purchase method of accounting for business combinations under
generally accepted accounting principles, the basis on the part of The One Group
Funds, of the assets of the Pegasus Funds will be the fair market value of such
assets on the closing date of the transaction. The One Group Funds will
recognize no gain or loss for federal tax purposes on its issuance of shares in
the reorganization, and the basis to The One Group Funds of the assets of the
Pegasus Funds received pursuant to the reorganization will equal the fair market
value of the consideration furnished, and costs incurred, by The One Group Funds
in the reorganization -- i.e., the sum of the liabilities assumed, the fair
market value of The One Group Funds shares issued, and such costs. For
accounting purposes, the Surviving Funds are the survivor of this
reorganization. The pro forma statements reflect the combined results of
operations of the Pegasus Funds and The One Group Funds. However, should such
reorganization be effected, the statements of operations of The One Group Funds
will not be restated for precombination period results of the corresponding
Pegasus Funds.
The Pro Forma Combined Statements of Assets and Liabilities, Statements
of Operations, and Schedules of Portfolio Investments should be read in
conjunction with the historical financial statements of The One Group Funds and
The Pegasus Funds incorporated by reference in the Statement of Additional
Information.
The Pegasus Funds and The One Group Funds are each separate portfolios
of the Pegasus Funds and The One Group Funds, which are registered as open-end
management investment companies under the Investment Company Act of 1940 (the
"1940 Act").
Service Providers:
------------------
Banc One Investment Advisors Corporation (the "Advisor"), will serve as
the combined Funds' investment advisor. The One Group Services Company (the
"Administrator"), a wholly owned subsidiary of The BISYS Group, Inc. (BISYS)
will serve as the administrator and distributor
(CONTINUED)
323
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
to the Funds.
Organizational Expenses:
------------------------
Organizational costs of the funds that are not Surviving Funds cannot
be carried over when being merged with another fund. Therefore, in the
Statements of Assets and Liabilities, the organizational costs were reclassified
against capital for the Non Surviving Funds rather than being carried forward.
Pegasus Funds:
--------------
The Pegasus Funds have several classes of shares which have identical
rights and privileges except with respect to fees paid under shareholder
servicing or distribution plans, expenses allocable exclusively to each class of
shares, voting rights on matters affecting a single class of shares, and the
exchange privilege of each class of shares. Class A shares are subject to an
initial sales charge. Class B shares are subject to a contingent deferred sales
charge (CDSC).
------------------------------------------------ ----------------------------------------
PEGASUS FUNDS CLASSES OF SHARES
------------------------------------------------ ----------------------------------------
Treasury Money Market Fund Class A & I
------------------------------------------------ ----------------------------------------
Money Market Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Municipal Money Market Fund Class A & I
------------------------------------------------ ----------------------------------------
Short Bond Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Intermediate Bond Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Multi Sector Bond Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Intermediate Municipal Bond Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Equity Income Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Equity Index Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Growth and Value Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Intrinsic Value Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Growth Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Managed Assets Growth Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Managed Assets Balanced Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Managed Assets Conservative Fund Class A, B, & I
------------------------------------------------ ----------------------------------------
Under the terms of the investment advisory agreement, the Advisor is
entitled to receive fees computed at an annual rate of the average daily net
assets. Such fees are accrued daily and paid
(CONTINUED)
324
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
monthly.
---------------------------------------------- -------------------------------------
PEGASUS FUNDS ADVISORY FEES ANNUAL RATE
---------------------------------------------- -------------------------------------
Treasury Money Market Fund Tiered
---------------------------------------------- -------------------------------------
Money Market Fund Tiered
---------------------------------------------- -------------------------------------
Municipal Money Market Fund Tiered
---------------------------------------------- -------------------------------------
Short Bond Fund 0.35%
---------------------------------------------- -------------------------------------
Intermediate Bond Fund 0.40%
---------------------------------------------- -------------------------------------
Multi Sector Bond Fund 0.40%
---------------------------------------------- -------------------------------------
Intermediate Municipal Bond Fund 0.40%
---------------------------------------------- -------------------------------------
Equity Income Fund 0.50%
---------------------------------------------- -------------------------------------
Equity Index Fund 0.10%
---------------------------------------------- -------------------------------------
Growth and Value Fund 0.60%
---------------------------------------------- -------------------------------------
Intrinsic Value Fund 0.60%
---------------------------------------------- -------------------------------------
Growth Fund 0.60%
---------------------------------------------- -------------------------------------
Managed Assets Growth Fund 0.65%
---------------------------------------------- -------------------------------------
Managed Assets Balanced Fund 0.65%
---------------------------------------------- -------------------------------------
Managed Assets Conservative Fund 0.65%
---------------------------------------------- -------------------------------------
TIERED:
0.30% First $1 billion
0.275% Next $1 billion
0.25% Over $2 billion
Under the terms of the administration agreement, the Administrator is
entitled to receive fees at an annual rate of the average daily net assets. Such
fees are accrued daily and paid monthly.
---------------------------------------------- ---------------------------------------------
PEGASUS FUNDS ADMINISTRATION FEES ANNUAL RATE
---------------------------------------------- ---------------------------------------------
Treasury Money Market Fund 0.15%
---------------------------------------------- ---------------------------------------------
Money Market Fund 0.15%
---------------------------------------------- ---------------------------------------------
Municipal Money Market Fund 0.15%
---------------------------------------------- ---------------------------------------------
Short Bond Fund 0.15%
---------------------------------------------- ---------------------------------------------
Intermediate Bond Fund 0.15%
---------------------------------------------- ---------------------------------------------
Multi Sector Bond Fund 0.15%
---------------------------------------------- ---------------------------------------------
Intermediate Municipal Bond Fund 0.15%
---------------------------------------------- ---------------------------------------------
(CONTINUED)
325
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
---------------------------------------------- ---------------------------------------------
Equity Income Fund 0.15%
---------------------------------------------- ---------------------------------------------
Equity Index Fund 0.15%
---------------------------------------------- ---------------------------------------------
Growth and Value Fund 0.15%
---------------------------------------------- ---------------------------------------------
Intrinsic Value Fund 0.15%
---------------------------------------------- ---------------------------------------------
Growth Fund 0.15%
---------------------------------------------- ---------------------------------------------
Managed Assets Growth Fund 0.15%
---------------------------------------------- ---------------------------------------------
Managed Assets Balanced Fund 0.15%
---------------------------------------------- ---------------------------------------------
Managed Assets Conservative Fund 0.15%
---------------------------------------------- ---------------------------------------------
The One Group Funds:
- --------------------
The One Group Funds have several classes of shares which have
identical rights and privileges except with respect to fees paid under
shareholder servicing or distribution plans, expenses allocable exclusively to
each class of shares, voting rights on matters affecting a single class of
shares, and the exchange privilege of each class of shares. Class A shares are
subject to an initial sales charge upon purchase. Class B shares and Class C
shares are subject to a contingent deferred sales change (CDSC).
----------------------------------------------------------- ------------------------------------
THE ONE GROUP FUNDS CLASSES OF SHARES
----------------------------------------------------------- ------------------------------------
U.S. Treasury Securities Money Market Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Prime Money Market Fund Fiduciary, Class A, B
----------------------------------------------------------- ------------------------------------
Municipal Money Market Fund Fiduciary, Class A
----------------------------------------------------------- ------------------------------------
Limited Volatility Bond Fund Fiduciary, Class A, B
----------------------------------------------------------- ------------------------------------
Intermediate Bond Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Income Bond Fund Fiduciary, Class A, B
----------------------------------------------------------- ------------------------------------
(CONTINUED)
326
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
----------------------------------------------------------- ------------------------------------
Intermediate Tax-Free Bond Fund Fiduciary, Class A, B
----------------------------------------------------------- ------------------------------------
Income Equity Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Equity Index Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Value Growth Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Disciplined Value Fund Fiduciary, Class A, B
----------------------------------------------------------- ------------------------------------
Large Company Growth Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Investor Growth Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Investor Growth & Income Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Investor Balanced Fund Fiduciary, Class A, B, C
----------------------------------------------------------- ------------------------------------
Under the terms of the investment advisory agreement, the Advisor is
entitled to receive fees computed at an annual rate of the average daily net
assets. Such fees are accrued daily and paid monthly.
----------------------------------------------------------- ------------------------------------
THE ONE GROUP FUNDS ADVISORY FEES ANNUAL RATE
----------------------------------------------------------- ------------------------------------
U.S Treasury Securities Money Market Fund 0.35%
----------------------------------------------------------- ------------------------------------
Prime Money Market Fund 0.35%
----------------------------------------------------------- ------------------------------------
Municipal Money Market Fund 0.35%
----------------------------------------------------------- ------------------------------------
Limited Volatility Bond Fund 0.60%
----------------------------------------------------------- ------------------------------------
Intermediate Bond Fund 0.60%
----------------------------------------------------------- ------------------------------------
Income Bond Fund 0.60%
----------------------------------------------------------- ------------------------------------
Intermediate Tax-Free Bond Fund 0.60%
----------------------------------------------------------- ------------------------------------
Income Equity Fund Tiered
----------------------------------------------------------- ------------------------------------
Equity Index Fund 0.30%
----------------------------------------------------------- ------------------------------------
Value Growth Fund Tiered
----------------------------------------------------------- ------------------------------------
Disciplined Value Fund Tiered
----------------------------------------------------------- ------------------------------------
Large Company Growth Fund Tiered
----------------------------------------------------------- ------------------------------------
Investor Growth Fund 0.05%
----------------------------------------------------------- ------------------------------------
Investor Growth & Income Fund 0.05%
----------------------------------------------------------- ------------------------------------
Investor Balanced Fund 0.05%
----------------------------------------------------------- ------------------------------------
TIERED:
0.74% First $1.5 billion
0.70% Next $ 500 million
0.65% Over $2 billion
(CONTINUED)
327
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
Under the terms of the administration agreement, the Administrator is
entitled to receive fees computed at an annual rate (tiered) of the average
daily net assets. Such fees are accrued daily and paid monthly. The Advisor also
serves as Sub-Administrator of each Fund of the One Group, pursuant to an
agreement between the Administrator and the Advisor. Pursuant to this agreement,
the Advisor performs many of the Administrator's duties, for which the Advisor
receives a fee paid by the Administrator.
--------------------------------------------------------- ---------------------------------------------
THE ONE GROUP FUNDS ADMINISTRATION FEES ANNUAL RATE
--------------------------------------------------------- ---------------------------------------------
U.S Treasury Securities Money Market Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Prime Money Market Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Municipal Money Market Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Limited Volatility Bond Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Intermediate Bond Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Income Bond Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Intermediate Tax-Free Bond Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Income Equity Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Equity Index Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Value Growth Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Disciplined Value Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Large Company Growth Fund Tiered (a)
--------------------------------------------------------- ---------------------------------------------
Investor Growth Fund Tiered (b)
--------------------------------------------------------- ---------------------------------------------
Investor Growth & Income Fund Tiered (b)
--------------------------------------------------------- ---------------------------------------------
Investor Balanced Fund Tiered (b)
--------------------------------------------------------- ---------------------------------------------
TIERED:
(a) (b)
0.20% First $1.5 billion 0.10% To $500 million
0.18% $1.5 billion to $2 billion 0.075% $500 million to $1 billion
0.16% Over $2 billion 0.05% Over $2 billion
The One Group Funds are tiered based on the total net assets of the
trust excluding Treasury Only Money Market Fund, Government Money Market Fund,
Investor Growth Fund, Investor Growth & Income Fund, Investor Balanced Fund and
Investor Conservative Growth Fund.
Pro Forma Adjustments and Pro Forma Combined Columns:
-----------------------------------------------------
The pro forma adjustments and pro forma combined columns of the
statements of operations
(CONTINUED)
328
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
reflect the adjustments necessary to show expenses at the rates which would have
been in effect if the Pegasus Funds were included in The One Group Funds for
the fiscal year ended June 30, 1998. Investment Advisory, Administration and
12b-1 fees in the pro forma combined column are calculated at the rates in
effect for The One Group Funds based upon the combined net assets of the
Pegasus Funds and The One Group Funds.
The pro forma Statements of Assets and Liabilities and Schedules of
Portfolio Investments give effect to the proposed transfer of such assets as if
the reorganization had occurred at June 30, 1998.
2. Portfolio Valuation, Securities Transactions and Related Income:
----------------------------------------------------------------
Securities of the Money Market Funds are valued utilizing the amortized
cost method permitted in accordance with Rule 2a-7 under the 1940 Act. Under the
amortized cost method, discount or premium is amortized on a constant basis to
the maturity of the security. In addition, the Money Market Funds may not (a)
purchase any instrument with a remaining maturity greater than thirteen months
unless such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
Securities of the Non-Money Market Funds are valued at market value.
Short-term investments maturing in 60 days or less are valued at amortized cost,
which approximates market value.
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on the
accrual basis. Dividends are recorded on the ex-divided date. Interest income,
including any discount or premium, is accrued as earned using the effective
interest method.
3. CAPITAL SHARES:
---------------
The pro forma net asset values per share assume the issuance of shares
of The One Group Funds, after any necessary stock splits, which would have
occurred at June 30, 1998 in connection with the proposed reorganization. The
pro forma number of shares outstanding consists of the following:
(CONTINUED)
329
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
Shares Additional Proforma
outstanding at Shares Shares at
June 30, 1998 Assumed in the June 30, 1998
(000) Reorganization (000)
(000)
U.S. Treasury Securities Money Market
Fund (O) 3,886,904 1,062,603 4,949,507
Prime Money Market Fund (O) 3,223,807 2,708,549 5,932,356
Municipal Money Market Fund (O) 603,067 764,720 1,367,787
Short Term Bond Fund (O) 58,348 24,649 82,997
Intermediate Bond Fund (P) 56,516 71,018 127,534
Income Bond Fund (P) 16,221 114,764 130,985
Intermediate Tax-Free Bond Fund (O) 46,101 40,787 86,888
Equity Income Fund (O) 40,556 13,640 54,196
Equity Index Fund (O) 45,845 36,134 81,979
Value Growth Fund (O) 54,604 90,869 145,473
Mid-Cap Value Fund (O) 41,085 40,402 81,487
Large-Cap Growth Fund (O) 87,420 37,200 124,620
Investor Growth Fund (O) 16,476 1,633 18,109
Investor Growth & Income Fund (O) 18,219 21,921 40,140
Investor Balanced Fund (O) 17,208 11,411 28,619
330
PART C
331
FORM N-14
PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Information required by this item is incorporated by reference
to the Item 27 of Post-Effective Amendment No. 46 (filed October 19, 1998) to
Registrant's Registration Statement on Form N-1A (File No. 2-95973) under the
Securities Act of 1933 and the Investment Company Act of 1940 (File No.
811-4236).
ITEM 16. EXHIBITS
(1) Amended and Restated Declaration of Trust is incorporated by
reference to Exhibit (1) to Post-Effective Amendment No. 39
(filed August 16, 1996) to Registrant's Registration Statement
on Form N-1A.
(2) Code of Regulations as amended and restated July 26, 1990 is
incorporated by reference to Exhibit (2) to Post-Effective
Amendment No. 39 (filed August 16, 1996) to Registrant's
Registration Statement on Form N-1A.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is filed
herewith.
(5) Instruments defining the Rights of Holders of Securities are
incorporated by reference to Exhibit (4) to Post-Effective
Amendment No. 46 (filed October 19, 1998) to Registrant's
Registration Statement on Form N-1A.
(6) (a) Investment Advisory Agreement dated January 11, 1993 between
Registrant and Banc One Investment Advisors Corporation is
incorporated by reference to Exhibit 5(a) to Post-Effective
Amendment No. 27 (filed March 17, 1993) to Registrant's
Registration Statement on Form N-1A.
(b) Revised Schedule A to the Investment Advisory Agreement
between Registrant and Banc One Investment Advisors
Corporation is filed herewith.
(c) Sub-Investment Advisory Agreement dated October 1, 1996
between Banc One Investment Advisors
C-2
332
Corporation and Independence International Associates, Inc. is
incorporated by reference to Exhibit (5)(c) to Post-Effective
Amendment No. 42 (filed June 16, 1997) to Registrant's
Registration Statement on Form N-1A.
(d) Sub-Investment Advisory Agreement, dated as of August 20, 1998
between Banc One Investment Advisors Corporation and Banc One
High Yield Partners, LLC is incorporated by reference to
Exhibit (5)(d) to Post-Effective Amendment No. 45 (filed
August 26, 1998) to Registrant's Registration Statement on
Form N-1A.
(7) (a) Re-executed Distribution Agreement dated December 13, 1995
between Registrant and The One Group Services Company is
incorporated by reference to Exhibit (7)(c) to Registrant's
Registration Statement on Form N-14 (filed January 19, 1996).
(b) Revised Schedules A-E to the Distribution Agreement between
Registrant and One Group Services Company is filed herewith.
(c) Dealer's Agreement for The One Group dated November 11, 1995
between The One Group Services Company and Banc One Securities
Corporation is incorporated by reference to Exhibit (7)(d) to
Registrant's Registration Statement on Form N-14 (filed
January 19, 1996).
(d) Form of Shareholder Servicing Agreement between the Registrant
and Participating Service Organizations is incorporated by
reference to Exhibit (7)(f) to Registrant's Registration
Statement on Form N-14 (filed on May 29, 1998).
(e) Agency Services and Delegation Agreement between INVESCO Trust
Company and Registrant dated January 1, 1998 is incorporated
by reference to Exhibit (10)(j) to Registrant's Registration
Statement on Form N-14 (filed on May 29, 1998).
(8) (a) Deferred Compensation Plan for Trustees of The One Group is
incorporated by reference to Exhibit (7) to Post-Effective
Amendment No. 45 (filed August 26, 1998) to Registrant's
Registration Statement on Form N-1A.
(b) Revised Deferred Compensation Plan for Trustees of The One
Group is filed herewith.
(9) (a) Custodian Contract dated as of July 29, 1988 between
Registrant and State Street Bank and Trust Company is
incorporated by reference to Exhibit (8)(a) to Post-Effective
Amendment No. 45 (filed August 26, 1998) to Registrant's
Registration
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333
Statement on Form N-1A.
(b) Amendment to Custodian Contract dated as of July 29, 1988
between Registrant and State Street Bank and Trust Company is
incorporated by reference to Exhibit (8)(b) to Post Effective
Amendment No. 45 (filed August 26, 1998) to Registrant's
Registration Statement on Form N-1A.
(c) Sub-Custodian Agreement between State Street Bank and Trust
Company, Bank One Trust Company, N.A. and the Registrant is
incorporated by reference to Exhibit (8)(b) to Post-Effective
Amendment No. 37 (filed June 13, 1996) to the Registrant's
Registration Statement on Form N-1A.
(d) First Amendment to the Subcustodian Agreement dated as of
December, 1996 between State Street Bank and Trust Company,
Bank One Trust Company, N.A. and the Registrant is
incorporated by reference to Exhibit (8)(d) to Post Effective
Amendment No. 45 (filed August 26, 1998) to Registrant's
Registration Statement on Form N-1A.
(e) International Securities Lending Subcustodian and Services
Agreement, dated December 29, 1997 between State Street Bank
and Trust Company, Bank One Trust Company, N.A. and the
Registrant is incorporated by reference to Exhibit (8)(c) to
Post-Effective Amendment No. 44 (filed June 5, 1998) to the
Registrant's Registration Statement on Form N-1A.
(10) (a) Re-Executed Distribution and Shareholder Services Plan - Class
A and Service Class shares dated November 1, 1995 between the
Registrant and The One Group Services Company is incorporated
by reference to Exhibit (15)(a) to Post-Effective Amendment
No. 43 (filed August 29, 1997) to Registrant's Registration
Statement on Form N-1A.
(b) Revised Schedule A to the Distribution and Shareholder
Services Plan between the Registrant and One Group Services
Company is filed herewith.
(c) Distribution and Shareholder Services Plan - Class B and Class
C shares dated January 1, 1994, as amended August 20, 1997,
between the Registrant and The One Group Services Company is
incorporated by reference to Exhibit (15)(b) Post-Effective
Amendment No. 43 filed August 29, 1997) to Registrant's
Registration Statement on Form N-1A.
(d) Revised Schedules A-B to the Distribution and Shareholder
Services Plan (Class B and Class C Shares) between the
Registrant and One Group Securities Company is filed herewith.
C-4
334
(e) Multiple Class Plan for The One Group adopted by the Board of
Trustees on May 22, 1997, as amended November 19, 1998 is
filed herewith.
(f) Agency Services and Delegation Agreement dated January 1, 1996
between the Registrant and BISYS Qualified Plan Services is
incorporated by reference to Exhibit (9)(g) to Post-Effective
Amendment No. 37 (filed June 13, 1996) to the Registrant's
Registration Statement on Form N-1A.
(g) Form of Agency Services and Delegation Agreement between the
Registrant and Bank One Trust Company, N.A. is incorporated by
reference to Exhibit (9)(i) to Post-Effective Amendment No. 43
(filed August 29, 1997) to Registrant's Registration Statement
on Form N-1A.
(h) Form of Order Processing Agreement between the Registrant and
Bank One Trust Company, N.A. is incorporated by reference to
Exhibit (9)(j) to Post-Effective Amendment No. 43 (filed
August 29, 1997) to Registrant's Registration Statement on
Form N-1A.
(i) Shareholder Servicing Agreement is incorporated by reference
to Exhibit 9(h) to Post-Effective Amendment No. 37 (filed June
13, 1996) to the Registrant's Registration Statement on Form
N-1A.
(j) Services Agreement dated as of June 6, 1997 between the
Registrant and Charles Schwab & Company, is incorporated by
reference to Exhibit (9)(l) to Post-Effective Amendment No. 44
(filed June 5, 1998) to Registrant's Registration Statement on
Form N-1A.
(k) Operating Agreement dated as of June 6, 1997 between the
Registrant and Charles Schwab & Company, is incorporated by
reference to Exhibit (9)(m) to Post-Effective Amendment No. 44
(filed June 5, 1998) to Registrant's Registration Statement on
Form N-1A.
(l) Retirement Services Order Processing Agreement dated as of
June 6, 1997 between the Registrant and Charles Schwab &
Company, is incorporated by reference to Exhibit (9)(n) to
Post-Effective Amendment No. 44 (filed June 5, 1998) to
Registrant's Registration Statement on Form N-1A.
(11) Form of Opinion and Consent of Ropes & Gray, that shares are
validly issued, fully paid and non-assessable, is filed
herewith.
(12) Form of Opinion of Ropes & Gray, as to Tax Matters
C-5
335
is filed herewith.
(13) Purchase Agreement dated July 18, 1985, between Registrant and
Physicians Insurance Company of Ohio is incorporated by
reference to Exhibit (13) to Post-Effective Amendment No. 45
(filed August 26, 1998) to Registrant's Registration Statement
on Form N-1A.
(14) (a) Consent of PricewaterhouseCoopers LLP, is filed herewith.
(b) Consent of Ropes & Gray is filed herewith.
(c) Consent of Arthur Andersen LLP is filed herewith.
(15) Not applicable.
(16) Executed Powers of Attorney are filed herewith.
(17) (a) A Prospectus dated November 1, 1998 for The One Group Money
Market Funds, The One Group Investor Funds, The One Group Bond
Funds, The One Group Municipal Bond Funds and The One Group
Equity Funds is filed herewith.
(b) Prospectuses for the Pegasus Money Market Funds, Pegasus Cash
Management Funds, Pegasus Equity and Bond Funds, and Pegasus
Retirement Funds are filed herewith.
(c) Statement of Additional Information for The One Group, dated
November 1, 1998 is filed herewith.
(d) Statements of Additional Information for the Pegasus Funds
dated April 30, 1998.
(e) The One Group Annual Report for the period ended June 30, 1998
is filed herewith.
(f) Pegasus Funds Semi-Annual Reports for the period ended June
30, 1998 is filed herewith.
(g) Pegasus Funds Annual Reports for the period ended December 31,
1997 is filed herewith.
(h) Form of Proxy Ballot is filed herewith.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act of 1933, as amended,
the reoffering prospectus will contain the information
C-6
336
called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used until
the amendment is effective, and that, in determining any liability
under the 1933 Act, each post-effective amendment shall be deemed to
be a new registration statement for the securities offered therein,
and the offering of the securities at that time shall be deemed to
be the initial bona fide offering of them.
C-7
337
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant, in the City of Washington, District
of Columbia, on the 17th day of December, 1998.
THE ONE GROUP
Registrant
*/s/ Mark S. Redman
------------------
MARK S. REDMAN
President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
---------- ----- ----
*/s/ Mark S. Redman President December 17, 1998
------------------------
MARK S. REDMAN
*/s/ William Tomko Treasurer December 17, 1998
------------------------
WILLIAM TOMKO
*/s/ Peter C. Marshall Trustee December 17, 1998
------------------------
PETER C. MARSHALL
*/s/ Charles I. Post Trustee December 17, 1998
------------------------
CHARLES I. POST
*/s/ John S. Randall Trustee December 17, 1998
------------------------
JOHN S. RANDALL
*/s/ Frederick W. Ruebeck Trustee December 17, 1998
------------------------
FREDERICK W. RUEBECK
*/s/ Robert A. Oden, Jr. Trustee December 17, 1998
------------------------
ROBERT A. ODEN, JR.
*/s/ John F. Finn Trustee December 17, 1998
------------------------
JOHN F. FINN
*By:/s/ Alan G. Priest December 17, 1998
---------------------
ALAN G. PRIEST
ATTORNEY-IN-FACT
338
EXHIBIT INDEX
Exhibit No. Page
- ----------- ----
(4) Form of Agreement and Plan of Reorganization
(6) (b) Revised Schedule A to the Investment Advisory Agreement between
Registrant and Banc One Investment Advisors Corporation
(7) (b) Revised Schedules A-E to the Distribution Agreement between
Registrant and One Group Services Company
(8) (b) Revised Deferred Compensation Plan for Trustees of Registrant
(10)(b) Revised Schedule A to the Distribution and Shareholder Services
Plan between the Registrant and One Group Services Company
(10)(d) Revised Schedules A-B to the Distribution and Shareholder
Services Plan (Class B and Class C Shares) between the
Registrant and One Group Services Company
(10)(e) Amended Multiple Class Plan (amended November 19, 1998)
(11) Form of Opinion and Consent of Counsel
(12) Form of Opinion of Ropes & Gray, as to Tax Matters
(14)(a) Consent of PricewaterhouseCoopers LLP
(14)(b) Consent of Ropes & Gray
(14)(c) Consent of Arthur Anderson LLP
(16) Executed Powers of Attorney
(17)(a) A Prospectus dated November 1, 1998 for The One Group Money
Market Funds, The One Group Investor Funds, The One Group Bond
Funds, The One Group Municipal Bond Funds, and The One Group
Equity Funds.
(17)(b) Prospectuses dated April 30,1998 for the Pegasus Money Market
Funds, Pegasus Cash Management Funds, Pegasus Equity and Bond
Funds and Pegasus Retirement Funds.
(17)(c) Statements of Additional Information for the Pegasus Funds dated
April 30, 1998.
(17)(d) Statement of Additional Information of The One Group, dated October 1,
1998.
(17)(e) The One Group Annual Report for the period ended June 30, 1998
(17)(f) Pegasus Funds Semi-Annual Reports for the period ended June 30, 1998
(17)(g) Pegasus Funds Annual Reports for the period ended December 31, 1997
(17)(h) Form of Proxy Ballot