1
Exhibit 12
November , 1998
Pegasus Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Prime Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Prime Money Market Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Money Market Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999,
or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
2
Pegasus Money Market Fund December 17, 1998
The One Group Prime Money Market Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
3
Pegasus Money Market Fund December 17, 1998
The One Group Prime Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
4
November , 1998
Pegasus Treasury Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group U.S. Treasury Securities Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group U.S. Treasury Securities Money Market Fund
("Acquiring Fund") and Pegasus Fund (the "Target Trust"), a Massachusetts
business trust, on behalf of one of its series, Pegasus Treasury Money Market
Fund ("Target Fund"). The Agreement describes a proposed transaction (the
"Transaction") to occur on March 22, 1999, or such other date as may be decided
by the parties (the "Exchange Date"), pursuant to which Acquiring Fund will
acquire substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 9(g) and 10(g) of the Agreement.
Capitalized terms not defined herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
5
Pegasus Treasury Money Market Fund December 17, 1998
The One Group U.S. Treasury Securities Money Market Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
6
Pegasus Treasury Money Market Fund December 17, 1998
The One Group U.S. Treasury Securities Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
7
November , 1998
Pegasus Municipal Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Municipal Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Municipal Money Market Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Municipal Money Market Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
8
Pegasus Municipal Money Market Fund December 17, 1998
The One Group Municipal Money Market Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
9
Pegasus Municipal Money Market Fund December 17, 1998
The One Group Municipal Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
10
November , 1998
Pegasus Michigan Municipal
Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Michigan Municipal
Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Michigan Municipal Money Market Fund ("Acquiring
Fund") and Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on
behalf of one of its series, Pegasus Michigan Municipal Money Market Fund
("Target Fund"). The Agreement describes a proposed transaction (the
"Transaction") to occur on March 22, 1999, or such other date as may be decided
by the parties (the "Exchange Date"), pursuant to which Acquiring Fund will
acquire substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 9(g) and 10(g) of the Agreement.
Capitalized terms not defined herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
11
Pegasus Michigan Municipal Money Market Fund December 17, 1998
The One Group Michigan Municipal Money Market Fund
-2-
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
12
Pegasus Michigan Municipal Money Market Fund December 17, 1998
The One Group Michigan Municipal Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
13
November , 1998
Pegasus Cash Management Money
Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Cash Management
Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Cash Management Money Market Fund ("Acquiring
Fund") and Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on
behalf of one of its series, Pegasus Cash Management Money Market Fund ("Target
Fund"). The Agreement describes a proposed transaction (the "Transaction") to
occur on March 22, 1999, or such other date as may be decided by the parties
(the "Exchange Date"), pursuant to which Acquiring Fund will acquire
substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 9(g) and 10(g) of the Agreement.
Capitalized terms not defined herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
14
Pegasus Cash Management Money Market Fund December 17, 1998
The One Group Cash Management Money Market Fund
-2-
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
15
Pegasus Cash Management Money Market Fund December 17, 1998
The One Group Cash Management Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
16
November , 1998
Pegasus Treasury Prime Cash Management
Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Treasury Prime Cash
Management Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Treasury Prime Cash Management Money Market Fund
("Acquiring Fund") and Pegasus Fund (the "Target Trust"), a Massachusetts
business trust, on behalf of one of its series, Pegasus Treasury Prime Cash
Management Money Market Fund ("Target Fund"). The Agreement describes a proposed
transaction (the "Transaction") to occur on March 22, 1999, or such other date
as may be decided by the parties (the "Exchange Date"), pursuant to which
Acquiring Fund will acquire substantially all of the assets of Target Fund in
exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
17
Pegasus Treasury Prime Cash Management Money Market Fund December 17, 1998
The One Group Treasury Prime Cash Management Money Market Fund
-2-
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
18
Pegasus Treasury Prime Cash Management Money Market Fund December 17, 1998
The One Group Treasury Prime Cash Management Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
19
November , 1998
Pegasus U.S. Government Securities Cash
Management Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group U.S. Government Securities
Cash Management Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group U.S. Government Securities Cash Management Money
Market Fund ("Acquiring Fund") and Pegasus Fund (the "Target Trust"), a
Massachusetts business trust, on behalf of one of its series, Pegasus U.S.
Government Securities Cash Management Money Market Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
20
December 17, 1998
Pegasus U.S. Government Securities Cash Management Money Market Fund
The One Group U.S. Government Securities Cash Management Money Market Fund
-2-
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
21
December 17, 1998
Pegasus U.S. Government Securities Cash Management Money Market Fund
The One Group U.S. Government Securities Cash Management Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
22
November , 1998
Pegasus Municipal Cash Management Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Municipal Cash Management Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Municipal Cash Management Money Market Fund
("Acquiring Fund") and Pegasus Fund (the "Target Trust"), a Massachusetts
business trust, on behalf of one of its series, Pegasus Municipal Cash
Management Money Market Fund ("Target Fund"). The Agreement describes a proposed
transaction (the "Transaction") to occur on March 22, 1999, or such other date
as may be decided by the parties (the "Exchange Date"), pursuant to which
Acquiring Fund will acquire substantially all of the assets of Target Fund in
exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
23
Pegasus Municipal Cash Management Money Market Fund December 17, 1998
The One Group Municipal Cash Management Money Market Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
24
Pegasus Municipal Cash Management Money Market Fund December 17, 1998
The One Group Municipal Cash Management Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
25
November , 1998
Pegasus Treasury Cash Management Money Market Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Treasury Cash Management Money Market Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Treasury Cash Management Money Market Fund
("Acquiring Fund") and Pegasus Fund (the "Target Trust"), a Massachusetts
business trust, on behalf of one of its series, Pegasus Treasury Cash Management
Money Market Fund ("Target Fund"). The Agreement describes a proposed
transaction (the "Transaction") to occur on March 22, 1999, or such other date
as may be decided by the parties (the "Exchange Date"), pursuant to which
Acquiring Fund will acquire substantially all of the assets of Target Fund in
exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
26
Pegasus Treasury Cash Management Money Market Fund December 17, 1998
The One Group Treasury Cash Management Money Market Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
27
Pegasus Treasury Cash Management Money Market Fund December 17, 1998
The One Group Treasury Cash Management Money Market Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
28
December 17, 1998
Pegasus Short Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Limited Volatility Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Limited Volatility Bond Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Short Bond Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999
, or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
29
Pegasus Short Bond Fund December 17, 1998
The One Group Limited Volatility Bond Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
30
Pegasus Short Bond Fund December 17, 1998
The One Group Limited Volatility Bond Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
31
December 17, 1998
Pegasus Intermediate Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Intermediate Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Intermediate Bond Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Intermediate Bond Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999,
or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
32
Pegasus Intermediate Bond Fund
The One Group Intermediate Bond Fund December 17, 1998
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
33
Pegasus Intermediate Bond Fund
The One Group Intermediate Bond Fund December 17, 1998
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
34
December 17, 1998
Pegasus Multi Sector Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Income Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Income Bond Fund ("Acquiring Fund") and Pegasus
Fund (the "Target Trust"), a Massachusetts business trust, on behalf of one of
its series, Pegasus Multi Sector Bond Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999,
or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
35
Pegasus Multi Sector Bond Fund
The One Group Income Bond Fund December 17, 1998
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
36
Pegasus Multi Sector Bond Fund
The One Group Income Bond Fund December 17, 1998
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
37
December 17, 1998
Pegasus Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Bond Fund ("Acquiring Fund") and Pegasus Fund (the
"Target Trust"), a Massachusetts business trust, on behalf of one of its series,
Pegasus Bond Fund ("Target Fund"). The Agreement describes a proposed
transaction (the "Transaction") to occur on March 22, 1999, or such other date
as may be decided by the parties (the "Exchange Date"), pursuant to which
Acquiring Fund will acquire substantially all of the assets of Target Fund in
exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
38
Pegasus Bond Fund
The One Group Bond Fund December 17, 1998
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
39
Pegasus Bond Fund
The One Group Bond Fund December 17, 1998
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
40
November , 1998
Pegasus High Yield Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group High Yield Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group High Yield Bond Fund ("Acquiring Fund") and Pegasus
Fund (the "Target Trust"), a Massachusetts business trust, on behalf of one of
its series, Pegasus High Yield Bond Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999,
or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
41
Pegasus High Yield Bond Fund
The One Group High Yield Bond Fund December 17, 1998
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
42
Pegasus High Yield Bond Fund
The One Group High Yield Bond Fund December 17, 1998
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
43
November , 1998
Pegasus Intermediate Municipal Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Intermediate Tax-Free Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Intermediate Tax-Free Bond Fund ("Acquiring Fund")
and Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf
of one of its series, Pegasus Intermediate Municipal Bond Fund ("Target Fund").
The Agreement describes a proposed transaction (the "Transaction") to occur on
March 22, 1999, or such other date as may be decided by the parties (the
"Exchange Date"), pursuant to which Acquiring Fund will acquire substantially
all of the assets of Target Fund in exchange for shares of beneficial interest
in Acquiring Fund (the "Acquiring Fund Shares") and the assumption by Acquiring
Fund of all of the liabilities of Target Fund following which the Acquiring Fund
Shares received by Target Fund will be distributed by Target Fund to its
shareholders in liquidation and termination of Target Fund. This opinion as to
certain federal income tax consequences of the Transaction is furnished to you
pursuant to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not
defined herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
44
Pegasus Intermediate Municipal Bond Fund December 17, 1998
The One Group Intermediate Tax-Free Bond Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
45
Pegasus Intermediate Municipal Bond Fund December 17, 1998
The One Group Intermediate Tax-Free Bond Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
46
November , 1998
Pegasus Municipal Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Municipal Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Municipal Bond Fund ("Acquiring Fund") and Pegasus
Fund (the "Target Trust"), a Massachusetts business trust, on behalf of one of
its series, Pegasus Municipal Bond Fund ("Target Fund"). The Agreement describes
a proposed transaction (the "Transaction") to occur on March 22, 1999, or such
other date as may be decided by the parties (the "Exchange Date"), pursuant to
which Acquiring Fund will acquire substantially all of the assets of Target Fund
in exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
47
Pegasus Municipal Bond Fund December 17, 1998
The One Group Municipal Bond Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
48
Pegasus Municipal Bond Fund December 17, 1998
The One Group Municipal Bond Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
49
November , 1998
Pegasus Michigan Municipal Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Michigan Municipal Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Michigan Municipal Bond Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Michigan Municipal Bond Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
50
Pegasus Michigan Municipal Bond Fund December 17, 1998
The One Group Michigan Municipal Bond Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
51
Pegasus Michigan Municipal Bond Fund December 17, 1998
The One Group Michigan Municipal Bond Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
52
November , 1998
Pegasus Short Municipal Bond Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Short Municipal Bond Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Short Municipal Bond Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Short Municipal Bond Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
53
Pegasus Short Municipal Bond Fund December 17, 1998
The One Group Short Municipal Bond Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
54
Pegasus Short Municipal Bond Fund December 17, 1998
The One Group Short Municipal Bond Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
55
November , 1998
Pegasus Equity Income Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Equity Income Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Equity Income Fund ("Acquiring Fund") and Pegasus
Fund (the "Target Trust"), a Massachusetts business trust, on behalf of one of
its series, Pegasus Equity Income Fund ("Target Fund"). The Agreement describes
a proposed transaction (the "Transaction") to occur on March 22, 1999, or such
other date as may be decided by the parties (the "Exchange Date"), pursuant to
which Acquiring Fund will acquire substantially all of the assets of Target Fund
in exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
56
Pegasus Equity Income Fund December 17, 1998
The One Group Equity Income Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
57
Pegasus Equity Income Fund December 17, 1998
The One Group Equity Income Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
58
November , 1998
Pegasus Equity Index Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Equity Index Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Equity Index Fund ("Acquiring Fund") and Pegasus
Fund (the "Target Trust"), a Massachusetts business trust, on behalf of one of
its series, Pegasus Equity Index Fund ("Target Fund"). The Agreement describes a
proposed transaction (the "Transaction") to occur on March 22, 1999, or such
other date as may be decided by the parties (the "Exchange Date"), pursuant to
which Acquiring Fund will acquire substantially all of the assets of Target Fund
in exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
59
Pegasus Equity Index Fund December 17, 1998
The One Group Equity Index Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
60
Pegasus Equity Index Fund December 17, 1998
The One Group Equity Index Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
61
November , 1998
Pegasus Growth and Value Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Value Growth Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Value Growth Fund ("Acquiring Fund") and Pegasus
Fund (the "Target Trust"), a Massachusetts business trust, on behalf of one of
its series, Pegasus Growth and Value Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999,
or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
62
Pegasus Growth and Value Fund December 17, 1998
The One Group Value Growth Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
63
Pegasus Growth and Value Fund December 17, 1998
The One Group Value Growth Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
64
November , 1998
Pegasus Intrinsic Value Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Disciplined Value Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Disciplined Value Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Intrinsic Value Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999,
or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
65
Pegasus Intrinsic Value Fund December 17, 1998
The One Group Disciplined Value Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
66
Pegasus Intrinsic Value Fund December 17, 1998
The One Group Disciplined Value Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
67
November , 1998
Pegasus Growth Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Large Company Growth Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Large Company Growth Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Growth Fund ("Target Fund"). The Agreement describes
a proposed transaction (the "Transaction") to occur on March 22, 1999, or such
other date as may be decided by the parties (the "Exchange Date"), pursuant to
which Acquiring Fund will acquire substantially all of the assets of Target Fund
in exchange for shares of beneficial interest in Acquiring Fund (the "Acquiring
Fund Shares") and the assumption by Acquiring Fund of all of the liabilities of
Target Fund following which the Acquiring Fund Shares received by Target Fund
will be distributed by Target Fund to its shareholders in liquidation and
termination of Target Fund. This opinion as to certain federal income tax
consequences of the Transaction is furnished to you pursuant to Sections 9(g)
and 10(g) of the Agreement. Capitalized terms not defined herein are defined in
the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
68
Pegasus Growth Fund December 17, 1998
The One Group Large Company Growth Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
69
Pegasus Growth Fund December 17, 1998
The One Group Large Company Growth Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
70
November , 1998
Pegasus Mid-Cap Opportunity Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Mid-Cap Opportunity Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Mid- Cap Opportunity Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Mid-Cap Opportunity Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
71
Pegasus Mid-Cap Opportunity Fund December 17, 1998
The One Group Mid-Cap Opportunity Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
72
Pegasus Mid-Cap Opportunity Fund December 17, 1998
The One Group Mid-Cap Opportunity Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
73
November , 1998
Pegasus Small-Cap Opportunity Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Small-Cap Opportunity Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Small- Cap Opportunity Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Small-Cap Opportunity Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
74
Pegasus Small-Cap Opportunity Fund December 17, 1998
The One Group Small-Cap Opportunity Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
75
Pegasus Small-Cap Opportunity Fund December 17, 1998
The One Group Small-Cap Opportunity Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
76
November , 1998
Pegasus International Equity Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group International Equity Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group International Equity Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus International Equity Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
77
Pegasus International Equity Fund December 17, 1998
The One Group International Equity Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
78
Pegasus International Equity Fund December 17, 1998
The One Group International Equity Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
79
November , 1998
Pegasus Market Expansion Index Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Small-Cap Index Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Small- Cap Index Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Market Expansion Index Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
80
Pegasus Market Expansion Index Fund December 17, 1998
The One Group Small-Cap Index Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
81
Pegasus Market Expansion Index Fund December 17, 1998
The One Group Small-Cap Index Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
82
November , 1998
Pegasus Managed Assets Growth Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Investor Growth Fund Index Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Investor Growth Fund ("Acquiring Fund") and Pegasus
Fund (the "Target Trust"), a Massachusetts business trust, on behalf of one of
its series, Pegasus Managed Assets Growth Fund ("Target Fund"). The Agreement
describes a proposed transaction (the "Transaction") to occur on March 22, 1999,
or such other date as may be decided by the parties (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
83
Pegasus Managed Assets Growth Fund December 17, 1998
The One Group Investor Growth Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
84
Pegasus Managed Assets Growth Fund December 17, 1998
The One Group Investor Growth Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
85
November , 1998
Pegasus Managed Assets Balanced Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Investor Growth & Income Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Investor Growth & Income Fund ("Acquiring Fund")
and Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf
of one of its series, Pegasus Managed Assets Balanced Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
86
Pegasus Managed Assets Balanced Fund December 17, 1998
The One Group Investor Growth & Income Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
87
Pegasus Managed Assets Balanced Fund December 17, 1998
The One Group Investor Growth & Income Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray
88
November , 1998
Pegasus Managed Assets Conservative Fund
-- Pegasus Funds
3435 Stelzer Road
Columbus, Ohio 43219
The One Group Investor Balanced Fund
-- The One Group
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of November __, 1998 (the "Agreement"), between The One
Group (the "Acquiring Trust"), a Massachusetts business trust, on behalf of one
of its series, The One Group Investor Balanced Fund ("Acquiring Fund") and
Pegasus Fund (the "Target Trust"), a Massachusetts business trust, on behalf of
one of its series, Pegasus Managed Assets Conservative Fund ("Target Fund"). The
Agreement describes a proposed transaction (the "Transaction") to occur on March
22, 1999, or such other date as may be decided by the parties (the "Exchange
Date"), pursuant to which Acquiring Fund will acquire substantially all of the
assets of Target Fund in exchange for shares of beneficial interest in Acquiring
Fund (the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all
of the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined
herein are defined in the Agreement.
Target Fund is a series of the Target Trust which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust which is registered
under the 1940 Act as an open-end management investment company. Shares of
Acquiring Fund are redeemable at net asset value at each shareholder's option.
89
Pegasus Managed Assets Conservative Fund December 17, 1998
The One Group Investor Balanced Fund
-2-
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. Acquiring Fund and
Target Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares for
Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund shareholder
receives in connection with the Transaction will be the same
as the basis of his or her Target Fund Shares exchanged
therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such Target
Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the Transaction
will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer; and
90
Pegasus Managed Assets Conservative Fund December 17, 1998
The One Group Investor Balanced Fund
-3-
(viii) The holding periods of the assets of Target Fund in the hands
of Acquiring Fund will include the periods during which such
assets were held by Target Fund.
Very truly yours,
DRAFT
Ropes & Gray