<PAGE> 1
Filed pursuant to Rule 497(b)
Registration No. 333-69159
PEGASUS FUNDS
P.O. BOX 5142
WESTBOROUGH, MASSACHUSETTS 01581
January 19, 1999
Dear Shareholder:
The Board of Trustees of the Pegasus Funds has called a Special Meeting of
Shareholders to be held at 10:00 a.m. (Eastern time) on March 17, 1999 at the
offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio (the
"Meeting"). At the Meeting, you will be asked:
(1) To consider a proposed reorganization of your Pegasus Fund into a
corresponding Fund of The One Group(R) ("One Group").
Enclosed you will find several documents furnished to you in connection
with the Special Meeting of Shareholders of the Pegasus Money Market, Treasury
Money Market, Municipal Money Market, Michigan Municipal Money Market, Cash
Management, Treasury Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management, Municipal Cash Management, Managed Assets
Conservative, Managed Assets Balanced, Managed Assets Growth, Equity Income,
Growth, Mid-Cap Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and
Value, Equity Index, Market Expansion Index, International Equity, Intermediate
Bond, Bond, Short Bond, Multi Sector Bond, High Yield Bond, Municipal Bond,
Short Municipal Bond, Intermediate Municipal Bond and Michigan Municipal Bond
Funds (collectively, the "Pegasus Portfolios"). We hope this material will
receive your immediate attention and that, if you cannot attend the meeting in
person, you will vote your proxy promptly.
The Board of Trustees of Pegasus Funds recommends that shareholders of each
of the Pegasus Portfolios approve a proposed Agreement and Plan of
Reorganization (the "Reorganization Agreement"). The Reorganization Agreement
provides that each of the following Pegasus Portfolios will transfer all of its
assets and liabilities to the One Group investment portfolio (each, a "One Group
Fund") identified opposite its name:
<TABLE>
<CAPTION>
PEGASUS FUNDS ONE GROUP FUNDS
------------- ---------------
<S> <C>
Money Market Fund Prime Money Market Fund
Treasury Money Market Fund U.S. Treasury Securities Money Market Fund
Municipal Money Market Fund Municipal Money Market Fund
Michigan Municipal Money Market Fund Michigan Municipal Money Market Fund
Cash Management Fund Cash Management Money Market Fund
Treasury Cash Management Fund Treasury Cash Management Money Market Fund
Treasury Prime Cash Management Fund Treasury Prime Cash Management Money Market
Fund
U.S. Government Securities Cash U.S. Government Securities Cash Management
Management Fund Money Market Fund
Municipal Cash Management Fund Municipal Cash Management Money
Market Fund
Managed Assets Conservative Fund Investor Balanced Fund
Managed Assets Balanced Fund Investor Growth & Income Fund
Managed Assets Growth Fund Investor Growth Fund
Equity Income Fund Income Equity Fund
Growth Fund Large Company Growth Fund
Mid-Cap Opportunity Fund Diversified Mid Cap Fund
Small-Cap Opportunity Fund Small Cap Value Fund
Intrinsic Value Fund Disciplined Value Fund
Growth and Value Fund Value Growth Fund
Equity Index Fund Equity Index Fund
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
PEGASUS FUNDS ONE GROUP FUNDS
------------- ---------------
<S> <C>
Market Expansion Index Fund Market Expansion Index Fund
International Equity Fund Diversified International Fund
Intermediate Bond Fund Intermediate Bond Fund
Bond Fund Bond Fund
Short Bond Fund Limited Volatility Bond Fund
Multi Sector Bond Fund Income Bond Fund
High Yield Bond Fund High Yield Bond Fund
Municipal Bond Fund Tax-Free Bond Fund
Short Municipal Bond Fund Short-Term Municipal Bond Fund
Intermediate Municipal Bond Fund Intermediate Tax-Free Bond Fund
Michigan Municipal Bond Fund Michigan Municipal Bond Fund
</TABLE>
After the transfer, shares of the One Group Funds will be distributed to
the corresponding Pegasus Portfolios' shareholders and the Pegasus Funds will be
liquidated.
As a result of these transactions, shares of your Pegasus Portfolio would,
in effect, be exchanged at net asset value and on a tax-free basis for shares of
a corresponding One Group Fund. Class A, Class B and Institutional Class or
Class I shares (either, "Class I" shares) of the Pegasus Portfolios will be
exchanged for One Group Class A, Class B and Class I shares, respectively.
Service Class ("Class S") shareholders of the Pegasus Cash Management, Treasury
Cash Management, Treasury Prime Cash Management, U.S. Government Securities Cash
Management and Municipal Cash Management Funds will receive Class A shares of
the One Group Cash Management Money Market, Treasury Cash Management Money
Market, Treasury Prime Cash Management Money Market, U.S. Government Securities
Cash Management Money Market and Municipal Cash Management Money Market Funds,
respectively.
In considering the proposed reorganization, you should note, among other
things, the following benefits:
1. The similarity of the investment objectives and policies of the One
Group Funds with those of the Pegasus Portfolios;
2. The performance of the One Group Funds, which are competitive with,
and in many cases superior to, those of the Pegasus Portfolios;
3. An enhanced range of investment options will be available to
investors in the One Group. Upon completion of the Reorganization,
the One Group will offer 49 different funds;
4. The tax-free nature of the transaction; and
5. The increased market presence that the One Group will have as a
result of the Reorganization, which may result in additional
investment opportunities and trading efficiencies.
THE BOARD OF TRUSTEES BELIEVES THAT THE PROPOSED COMBINATION OF THE PEGASUS
PORTFOLIOS WITH THEIR CORRESPONDING ONE GROUP FUNDS IS IN THE BEST INTERESTS OF
THE PEGASUS PORTFOLIOS AND THEIR SHAREHOLDERS AND RECOMMEND THAT YOU VOTE IN
FAVOR OF SUCH PROPOSAL.
The Notice of Special Meeting of Shareholders, the accompanying Combined
Prospectus/Proxy Statement, Prospectuses for the currently operating One Group
Funds and the form of proxy are enclosed. Please read these materials carefully.
If you are unable to attend the meeting in person, we urge you to sign, date,
and return the proxy card so that your shares may be voted in accordance with
your instructions.
If you have any questions, you may call Shareholder Communications
Corporation which has been retained to assist in the solicitation of proxies at
(800)848-1134. Thank you for your cooperation.
Sincerely,
John P. Gould
Chairman of the Board of Trustees
<PAGE> 3
PEGASUS FUNDS
P.O. BOX 5142
WESTBOROUGH, MASSACHUSETTS 01581
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1999
To Pegasus Shareholders:
Notice is hereby given that a Special Meeting of the Shareholders
("Shareholders") of each investment portfolio (a "Pegasus Portfolio") of Pegasus
Funds ("Pegasus") will be held at the offices of BISYS Fund Services, 3435
Stelzer Road, Columbus, Ohio, on March 17, 1999 at 10:00 a.m. (Eastern time) for
the following purposes:
ITEM 1. With respect to each Pegasus Portfolio:
To consider and act upon a proposal to approve an Agreement and
Plan of Reorganization (the "Reorganization Agreement") and the
transactions contemplated thereby, including (a) the transfer of
all of the assets and liabilities of the Pegasus Money Market,
Treasury Money Market, Municipal Money Market, Michigan Municipal
Money Market, Cash Management, Treasury Cash Management, Treasury
Prime Cash Management, U.S. Government Securities Cash Management,
Municipal Cash Management, Managed Assets Conservative, Managed
Assets Balanced, Managed Assets Growth, Equity Income, Growth,
Mid-Cap Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth
and Value, Equity Index, Market Expansion Index, International
Equity, Intermediate Bond, Bond, Short Bond, Multi Sector Bond,
High Yield Bond, Municipal Bond, Short Municipal Bond, Intermediate
Municipal Bond, and Michigan Municipal Bond Funds to corresponding
investment portfolios ("One Group Funds") of The One Group(R) (the
"One Group") in exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Funds; (b) the distribution of such
One Group Fund shares to the shareholders of the Pegasus Portfolios
according to their respective interests; and (c) the termination of
Pegasus under state law and the Investment Company Act of 1940, as
amended.
ITEM 2. With respect to each Pegasus Portfolio:
To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
The proposed reorganization and related matters are described in the
attached Combined Prospectus/ Proxy Statement. Appendix I to the Combined
Prospectus/Proxy Statement is a copy of the Reorganization Agreement.
Shareholders of record as of the close of business on December 18, 1998 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE EACH ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY PEGASUS' BOARD
OF TRUSTEES. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO
PEGASUS A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY
ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
----------------------------------------
W. Bruce McConnel, III
Secretary
January 19, 1999
<PAGE> 4
COMBINED PROSPECTUS/PROXY STATEMENT
DATED JANUARY 19, 1999
THE ONE GROUP(R)
3435 Stelzer Road
Columbus, Ohio 43219
(800) 480-4111
TO ACQUIRE THE ASSETS OF THE:
PEGASUS FUNDS
P.O. Box 5142
Westborough, Massachusetts 01581
1-800-688-3350
This Combined Prospectus/Proxy Statement is furnished in connection with
the solicitation of proxies by the Board of Trustees of Pegasus Funds
("Pegasus") in connection with a Special Meeting (the "Meeting") of Shareholders
("Shareholders") to be held on March 17, 1999 at 10:00 a.m. (Eastern time) at
the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio at which
Shareholders will be asked to consider and approve a proposed Agreement and Plan
of Reorganization dated January 12, 1999 (the "Reorganization Agreement"), by
and between Pegasus and The One Group(R) ("One Group") and the transactions
contemplated therein. A copy of the Reorganization Agreement is attached as
Appendix I.
Pegasus and One Group are each open-end, management investment companies.
First Chicago NBD Investment Management Company ("FCNIMCO") currently provides
investment advisory services to each of the investment portfolios of Pegasus
(the "Pegasus Portfolios"). Banc One Investment Advisors Corporation ("BOIA")
presently provides investment advisory services to each of the investment
portfolios offered by One Group (the "One Group Funds"). BANC ONE CORPORATION,
the parent company of BOIA, recently completed a merger with First Chicago NBD
Corporation ("FCN"), the parent company of FCNIMCO. In the merger, BANC ONE
CORPORATION and FCN combined into a new corporation named "BANK ONE CORPORATION"
("BOC") which has since taken steps to consolidate the mutual fund investment
advisory activities of its subsidiaries. As part of that consolidation, FCNIMCO
and BOIA recently recommended to the Boards of Trustees of Pegasus and One Group
the proposed reorganization of Pegasus and One Group ("Reorganization")
described below.
In reviewing the proposed Reorganization, the Pegasus Board concluded that
participation in the proposed transaction is in the best interests of the
Pegasus Portfolios and their shareholders. The Board has further concluded that
the economic interests of the shareholders of the Pegasus Portfolios will not be
diluted as a result of the proposed transaction. In reaching this conclusion,
the Board considered, among other things:
1. The similarity of the investment objectives and policies of the One
Group Funds with those of the Pegasus Portfolios;
2. The performance of the One Group Funds, which are competitive with,
and in many cases superior to, those of the Pegasus Portfolios;
3. An enhanced range of investment options which will be available to
investors in the One Group. Upon completion of the Reorganization, the One
Group will offer 49 different funds;
4. The tax-free nature of the transaction; and
5. The increased market presence that the One Group will achieve as a
result of the Reorganization, which may result in additional investment
opportunities and trading efficiencies.
The Reorganization Agreement provides that each of the following sixteen
investment portfolios of Pegasus (collectively, the "Reorganizing Pegasus
Portfolios") will transfer all its assets and liabilities to the
<PAGE> 5
currently operating One Group investment portfolio (collectively, the "Existing
One Group Funds") identified below opposite its name:
<TABLE>
<CAPTION>
REORGANIZING PEGASUS PORTFOLIOS EXISTING ONE GROUP FUNDS
------------------------------- ------------------------
<S> <C>
Pegasus Money Market Fund One Group(R) Prime Money Market Fund
Pegasus Treasury Money Market Fund One Group(R) U.S. Treasury Securities Money
Market Fund
Pegasus Municipal Money Market Fund One Group(R) Municipal Money Market Fund
Pegasus Managed Assets Conservative Fund One Group(R) Investor Balanced Fund
Pegasus Managed Assets Balanced Fund One Group(R) Investor Growth & Income Fund
Pegasus Managed Assets Growth Fund One Group(R) Investor Growth Fund
Pegasus Equity Income Fund One Group(R) Income Equity Fund
(to be renamed Equity Income Fund upon
Reorganization)
Pegasus Growth Fund One Group(R) Large Company Growth Fund
(to be renamed Large Cap Growth Fund upon
Reorganization)
Pegasus Intrinsic Value Fund One Group(R) Disciplined Value Fund
(to be renamed Mid Cap Value Fund
upon Reorganization)
Pegasus Growth and Value Fund One Group(R) Value Growth Fund
(to be renamed Diversified Equity Fund upon
Reorganization)
Pegasus Equity Index Fund One Group(R) Equity Index Fund
Pegasus Intermediate Bond Fund One Group(R) Intermediate Bond Fund
Pegasus Short Bond Fund One Group(R) Limited Volatility Bond Fund
(to be renamed Short-Term Bond Fund upon
Reorganization)
Pegasus Multi Sector Bond Fund One Group(R) Income Bond Fund
Pegasus High Yield Bond Fund One Group(R) High Yield Bond Fund
Pegasus Intermediate Municipal Bond Fund One Group(R) Intermediate Tax-Free Bond Fund
</TABLE>
The Reorganization Agreement also provides that each of the following
fourteen investment portfolios of Pegasus (collectively, the "Continuing Pegasus
Portfolios") will transfer all its assets and liabilities to the newly organized
One Group investment portfolio (collectively, the "New One Group Funds")
identified below opposite its name:
<TABLE>
<CAPTION>
CONTINUING PEGASUS PORTFOLIOS NEW ONE GROUP FUNDS
----------------------------- -------------------
<S> <C>
Pegasus Michigan Municipal Money Market Fund One Group(R) Michigan Municipal Money
Market Fund
Pegasus Cash Management Fund One Group(R) Cash Management Money
Market Fund
Pegasus Treasury Cash Management Fund One Group(R) Treasury Cash Management Money
Market Fund
Pegasus Treasury Prime Cash Management Fund One Group(R) Treasury Prime Cash Management
Money Market Fund
Pegasus U.S. Government Securities Cash One Group(R) U.S. Government Securities Cash
Management Fund Management Money Market Fund
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
CONTINUING PEGASUS PORTFOLIOS NEW ONE GROUP FUNDS
----------------------------- -------------------
<S> <C>
Pegasus Municipal Cash Management Fund One Group(R) Municipal Cash Management Money
Market Fund
Pegasus Mid-Cap Opportunity Fund One Group(R) Diversified Mid Cap Fund
Pegasus Small-Cap Opportunity Fund One Group(R) Small Cap Value Fund
Pegasus Market Expansion Index Fund One Group(R) Market Expansion Index Fund
Pegasus International Equity Fund One Group(R) Diversified International Fund
Pegasus Bond Fund One Group(R) Bond Fund
Pegasus Municipal Bond Fund One Group(R) Tax-Free Bond Fund
Pegasus Short Municipal Bond Fund One Group(R) Short-Term Municipal Bond Fund
Pegasus Michigan Municipal Bond Fund One Group(R) Michigan Municipal Bond Fund
</TABLE>
In exchange for the transfers of these assets and liabilities, One Group
will issue shares in the thirty One Group investment portfolios listed above
(collectively, the "One Group Funds") to the corresponding Pegasus investment
portfolios listed above (collectively, the "Pegasus Portfolios"). The
transaction between the Reorganizing Pegasus Portfolios and the Existing One
Group Funds and between the Pegasus Michigan Municipal Money Market, Mid-Cap
Opportunity, Small-Cap Opportunity, Market Expansion Index, International
Equity, Bond, Municipal Bond, Short Municipal Bond and Michigan Municipal Bond
Funds and their corresponding New One Group Funds is referred to as the
"Reorganizing Portfolios Transaction" and the transaction between the remaining
Continuing Pegasus Portfolios and their corresponding New One Group Funds is
referred to herein as the "Continuing Portfolios Transaction." The transactions
are expected to occur on or about March 22, 1999 and March 29, 1999,
respectively.
The Pegasus Portfolios have two or three classes of shares outstanding. The
One Group Funds offer comparable classes of shares. Holders of each share class
of a Pegasus Portfolio will receive shares of the corresponding One Group Fund
share class. Class A shares, Class B shares and Institutional Class and Class I
(either, "Class I") shares of the Pegasus Portfolios will be exchanged for One
Group Class A, Class B and Class I shares, respectively. Service Class ("Class
S") shareholders of the Pegasus Cash Management, Treasury Cash Management,
Treasury Prime Cash Management, U.S. Government Securities Cash Management and
Municipal Cash Management Funds will receive Class A shares of the One Group
Cash Management Money Market, Treasury Cash Management Money Market, Treasury
Prime Cash Management Money Market, U.S. Government Securities Cash Management
Money Market and Municipal Cash Management Money Market Funds, respectively.
The Pegasus Portfolios will make distributions of the One Group Funds'
shares to the Shareholders of the Pegasus Portfolios in connection with the
liquidation of Pegasus, so that a holder of a share class in a Pegasus Portfolio
will receive shares of a share class (as described herein) of the corresponding
One Group Fund with the same aggregate net asset value as the Shareholder had in
the Pegasus Portfolio immediately before the transaction. Following the
Reorganization, Shareholders of the Pegasus Portfolios will be Shareholders of
their corresponding One Group Funds, and Pegasus will be terminated under state
law and the Investment Company Act of 1940, as amended (the "1940 Act").
The Existing One Group Funds currently are conducting investment operations
as described in this Combined Prospectus/Proxy Statement. The New One Group
Funds have recently been organized for the purpose of continuing the investment
operations of the Continuing Pegasus Portfolios, and have no substantial assets
or prior history of investment operations.
This Combined Prospectus/Proxy Statement sets forth the information that a
Shareholder of Pegasus should know before voting on matters covered by the
Reorganization Agreement, and should be retained for future reference. The
Prospectuses relating to the shares of the Existing One Group Funds, which
describe those Funds' operations, accompany this Combined Prospectus/Proxy
Statement and the information contained therein is incorporated by reference
into this Combined Prospectus/Proxy Statement. Additional
3
<PAGE> 7
information is set forth in the Statements of Additional Information relating to
the Existing One Group Funds dated November 1, 1998 and this Combined
Prospectus/Proxy Statement dated January 19, 1999 and in the Prospectuses and
Statements of Additional Information, each dated April 30, 1998, relating to
Pegasus. Annual reports for the Existing One Group Funds and for Pegasus and
Semi-annual reports for Pegasus will accompany the Statement of Additional
Information. Each of these documents is on file with the Securities and Exchange
Commission (the "SEC"), is available without charge upon written or oral request
by writing or calling either Pegasus or One Group at their respective addresses
or telephone numbers indicated above, and is incorporated herein by reference.
This Combined Prospectus/Proxy Statement constitutes the Proxy Statement of
Pegasus for the Meeting of its Shareholders, and One Group's Prospectus for the
shares of its Existing and New One Group Funds that have been registered with
the SEC and are to be issued in connection with the Reorganization.
The following summarizes the proposals to be voted on by Pegasus
Shareholders at the meeting:
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C>
1. To approve a Reorganization Agreement, Shareholders of each Pegasus Portfolio
which provides for (a) the transfer of voting separately on a class-by-class basis
all of the assets and liabilities of the on the Reorganization Agreement.
Pegasus Portfolios to corresponding One
Group Funds in exchange for Class A,
Class B or Class I shares, as applicable,
of the One Group Funds, (b) the
distribution of such One Group Fund
shares to the Shareholders of the Pegasus
Portfolios according to their respective
interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
</TABLE>
This Combined Prospectus/Proxy Statement is expected to first be sent to
Shareholders on or about January 19, 1999.
THE SECURITIES OF THE ONE GROUP FUNDS OFFERED HEREBY HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY PEGASUS, ONE GROUP OR THEIR RESPECTIVE
DISTRIBUTORS.
EACH MONEY MARKET FUND SEEKS TO MAINTAIN A NET ASSET VALUE OF $1.00 PER
SHARE. AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF PEGASUS AND ONE GROUP ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED, ENDORSED OR OTHERWISE SUPPORTED BY BANK ONE CORPORATION, ANY OF ITS
AFFILIATES, OR ANY BANK. SHARES OF PEGASUS AND ONE GROUP ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER GOVERNMENTAL AGENCY. MUTUAL FUND SHARES INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE DISTRIBUTOR OF
PEGASUS IS BISYS FUND SERVICES LIMITED PARTNERSHIP. THE DISTRIBUTOR OF ONE GROUP
IS THE ONE GROUP SERVICES COMPANY.
4
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
FEE TABLES.................................................. 6
SUMMARY..................................................... 6
Proposed Reorganization................................... 6
Overview of Pegasus and One Group......................... 7
Purchase/Redemption Procedures............................ 8
Federal Income Tax Consequences........................... 8
Board Consideration....................................... 8
Principal Risk Factors.................................... 9
Voting Information........................................ 13
Management Discussion..................................... 13
INFORMATION RELATING TO THE PROPOSED REORGANIZATION......... 13
Description of the Reorganization Agreement............... 13
Pegasus Board Consideration............................... 14
Capitalization............................................ 20
Federal Income Tax Consequences........................... 29
One Group Board Composition............................... 30
COMPARISON OF PEGASUS AND ONE GROUP......................... 32
Investment Objectives and Policies........................ 32
Expense Ratios............................................ 32
Investment Adviser -- Pegasus Portfolios.................. 36
Investment Adviser -- One Group Funds..................... 38
Certain Other Service Providers........................... 40
Distribution Plan and Shareholder Servicing
Arrangements -- Pegasus Portfolios..................... 41
Distribution Plan and Shareholder Servicing
Arrangements -- One Group.............................. 42
Shareholder Transactions and Services..................... 42
INFORMATION RELATING TO VOTING MATTERS...................... 43
General Information....................................... 43
Shareholder and Board Approvals........................... 46
Appraisal Rights.......................................... 73
Quorum.................................................... 74
Annual Meetings........................................... 74
ADDITIONAL INFORMATION ABOUT THE ONE GROUP AND PEGASUS...... 74
LITIGATION.................................................. 75
FINANCIAL STATEMENTS........................................ 75
OTHER BUSINESS.............................................. 75
SHAREHOLDER INQUIRIES....................................... 75
Appendix I -- Agreement and Plan of Reorganization......... I-1
Appendix II -- Comparative Fee Tables...................... II-1
Appendix III -- Comparison of Investment Objectives and
Certain Significant Policies.............................. III-1
Appendix IV -- Shareholder Transactions and Services....... IV-1
Appendix V -- Management's Discussion of Fund
Performance -- Existing One Group Funds................... V-1
</TABLE>
5
<PAGE> 9
FEE TABLES
All shareholders of the Pegasus Municipal Money Market, Michigan Municipal
Money Market, Cash Management, Treasury Cash Management, Treasury Prime Cash
Management, Municipal Cash Management, Managed Assets Conservative, Mid-Cap
Opportunity, Small-Cap Opportunity, Equity Index, International Equity,
Intermediate Bond, Bond, Short Bond, Multi-Sector Bond, High Yield Bond,
Municipal Bond, Intermediate Municipal Bond and the Pegasus Michigan Municipal
Bond Funds, are projected to experience lower annualized per share total
operating expense ratios upon consummation of the Reorganization. All
shareholders of the Pegasus Money Market, Treasury Money Market, Managed Assets
Balanced, Managed Assets Growth, Equity Income, Growth, Intrinsic Value, and
Growth and Value Funds, are projected to experience higher annualized per share
total expense ratios upon consummation of the Reorganization. The Pegasus U.S.
Government Securities Cash Management, Pegasus Market Expansion Index and
Pegasus Short Municipal Bond Funds are projected to experience no increase in
annualized per share total expense ratios upon consummation of the
Reorganization. Such projections take into account potential savings in fixed
and variable expenses resulting from synergies and renegotiated contract terms
with vendors, as well as voluntary fee waivers and/or expense reimbursements.
The voluntary fee waivers and/or expense reimbursements may be terminated at any
time except as noted below. For detailed information regarding pro forma and
other expense information, see the Tables under "Expense Ratios," "Investment
Adviser -- Pegasus Portfolios," "Investment Adviser -- One Group Funds" under
the heading "Comparison of Pegasus and One Group" and Appendix II -- Comparative
Fee Tables. BOIA as investment adviser to the Existing One Group Funds has
agreed to limit the total operating expense ratios of the Existing One Group
Funds following the Reorganization as set forth in the Table under "Comparison
of Pegasus and One Group -- Expense Ratios" and Appendix II until August 1999.
With respect to the New One Group Funds, BOIA has agreed to waive a portion of
its investment advisory fee until at least March 2000 so that the rate of total
operating expenses actually paid will not exceed the rate currently paid for
total operating expenses by the corresponding Continuing Pegasus Portfolios.
SUMMARY
The following is a summary of certain information relating to the
Reorganization and is qualified by reference to the more complete information
contained elsewhere in this Combined Prospectus/Proxy Statement, the
Prospectuses and Statements of Additional Information of Pegasus and One Group,
and the Appendices attached hereto. Pegasus' Annual Reports and Semi-Annual
Reports to Shareholders may be obtained free of charge by calling 1-800-688-3350
or writing Pegasus Funds, P.O. Box 5142, Westborough, Massachusetts 01581. One
Group's Annual Reports to Shareholders may be obtained free of charge by calling
1-800-480-4111 or writing to The One Group(R), 3435 Stelzer Road, Columbus, Ohio
43219.
PROPOSED REORGANIZATION. The Reorganization Agreement provides for: (1) the
transfer of all of the Fund Assets and Liabilities of each of the Reorganizing
Pegasus Portfolios and Continuing Pegasus Portfolios (each a "Pegasus
Portfolio," together the "Pegasus Portfolios") to a corresponding Existing One
Group Fund or a New One Group Fund (each a "One Group Fund," together the "One
Group Funds") in exchange for Shares of designated classes of the corresponding
One Group Fund; and (2) the distribution of One Group Fund Shares to the
shareholders of the Pegasus Portfolios in liquidation of the Pegasus Portfolios.
The Reorganization is subject to a number of conditions with respect to each
Pegasus Portfolio, including shareholder approval. Shareholders of each Pegasus
Portfolio will vote separately on the Reorganization on a class-by-class basis.
Following the Reorganization, Pegasus will wind up its affairs and deregister as
an investment company under the 1940 Act. If a majority of the shares of one or
more classes of a Pegasus Portfolio fails to approve the Reorganization, that
Pegasus Portfolio will not participate in the Reorganization and Pegasus will
not be terminated under state law. In such a case, the Pegasus Board of Trustees
will take such action as it deems to be in the best interests of any such
non-participating portfolio.
As a result of the proposed Reorganization, a Pegasus Portfolio shareholder
will become a shareholder of the corresponding One Group Fund and will hold,
immediately after the Exchange Date (as defined in the Reorganization
Agreement), shares of the designated classes of the corresponding One Group Fund
having a
6
<PAGE> 10
total dollar value equal to the total dollar value of the shares of the Pegasus
Portfolio that the shareholder held immediately before the Exchange Date. The
exchange of the Fund Assets and Liabilities of each Pegasus Portfolio, other
than the Pegasus Cash Management, Treasury Cash Management, Treasury Prime Cash
Management, U.S. Government Securities Cash Management and Municipal Cash
Management Funds, is expected to occur on or about March 22, 1999 or such later
date as may be determined pursuant to the Reorganization Agreement. The exchange
of the Fund Assets and Liabilities of the remaining Pegasus Portfolios is
expected to occur on or after March 29, 1999 or such later date as may be
determined pursuant to the Reorganization Agreement.
OVERVIEW OF PEGASUS AND ONE GROUP. The investment objectives and policies
of the Pegasus Portfolios are similar to those of their corresponding One Group
Funds. There are, however, certain significant differences. For example, the
Pegasus Small-Cap Opportunity Fund primarily invests in companies with a market
capitalization of $100 million to $1 billion while The One Group Small Cap Value
Fund invests in companies with a market capitalization of $100 million to $2
billion. Likewise, the Pegasus Mid-Cap Opportunity Fund invests primarily in
companies with a market capitalization of $500 million to $3 billion while The
One Group Diversified Mid Cap Fund invests in companies with a market
capitalization of $500 million to $5 billion. Investments in companies with
smaller market capitalizations may be riskier than investments in companies with
larger market capitalizations.
The Intermediate Municipal Bond Fund and the International Equity Fund of
Pegasus are "non-diversified" funds, but the corresponding One Group Funds are
diversified. Non-diversified funds may invest a more significant portion of
their assets in the securities of a single issuer which increases the risk of
loss if an issuer fails to make interest or principal payments or if the market
value of a security declines. The Pegasus High Yield Bond Fund has no stated
policy on weighted average maturity, but as of September 30, 1998, the Fund's
average weighted maturity was 6.2 years. The weighted average maturity of the
investments of The One Group High Yield Bond Fund must range between five and
ten years. This is significant because the longer the maturity of an investment,
the greater its volatility. The Pegasus Multi Sector Bond Fund may invest in
investment grade debt securities only, but the corresponding One Group Income
Bond Fund may invest up to 30% of its total assets in securities rated below
investment grade (sometimes known as "junk bonds"). As of December 1, 1998, The
One Group Income Bond Fund had invested less than 10% of its total assets in
below investment grade securities. Investments in securities rated below
investment grade are high risk investments subject to greater risk of loss,
valuation difficulties, interest rate sensitivity, low liquidity and changes in
credit quality. The percentage of assets allocated to the various underlying
mutual funds varies for the Pegasus Managed Assets Funds and The One Group
Investor Funds. For additional investment related information, see "Comparison
of Pegasus and One Group -- Investment Objectives and Policies," Appendix
III -- Comparison of Investment Objectives and Certain Significant Policies
attached to this Combined Prospectus/Proxy Statement, and Pegasus' and Existing
One Group Funds' Prospectuses and Statements of Additional Information, which
are incorporated by reference herein.
FCNIMCO presently serves as the investment adviser to each Pegasus
Portfolio. Federated Investment Counseling ("Federated") currently serves as
sub-adviser to the Pegasus High Yield Bond Fund. BOIA currently serves as
investment adviser to The One Group Funds. FCNIMCO and BOIA are affiliates of
BOC. Banc One High Yield Partners, LLC, an affiliate of BOIA, serves as
sub-adviser to The One Group High Yield Bond Fund and Independence International
Associates, Inc. serves as sub-adviser to The One Group International Equity
Index Fund. The Pegasus Portfolios and One Group Funds have different trustees
and service providers, but similar custodial, administrative and distribution
arrangements. State Street Bank and Trust Company ("State Street") serves as
Custodian to The One Group and sub-custodian to Pegasus. BISYS Fund Services
serves as co-administrator and distributor for Pegasus and an affiliate, The One
Group Services Company ("OGSC"), serves as administrator and distributor for The
One Group. BOIA serves as sub-administrator of The One Group. See "Investment
Advisers," "Certain Other Service Providers" and "Distribution Plan and
Shareholder Servicing Arrangements" under "Comparison of Pegasus and One Group."
7
<PAGE> 11
The Table under "Comparison of Pegasus and One Group -- Expense Ratios,"
shows the current annualized per share total operating expense ratio for each
share class of each Pegasus Portfolio along with the pro forma total operating
expense ratio that could be expected for each designated class of shares of the
corresponding One Group Fund after the Reorganization. The section entitled "Fee
Tables" above and Appendix II -- Comparative Fee Tables to this Combined
Prospectus/Proxy Statement provide additional information about the fees and
expenses for each of the Pegasus Portfolios and corresponding One Group Funds.
PURCHASE/REDEMPTION PROCEDURES. The purchase, redemption, dividend and
other policies and procedures of the Pegasus Portfolios and the One Group Funds
are generally similar. See "Comparison of Pegasus and One Group -- Shareholder
Transactions and Services" and Appendix IV -- Shareholder Transactions and
Services to this Combined Prospectus/Proxy Statement. NO SALES CHARGE OR
CONTINGENT DEFERRED SALES CHARGE ("CDSC") WILL BE IMPOSED ON ANY OF THE
SHAREHOLDERS OF PEGASUS PORTFOLIOS IN CONNECTION WITH THE REORGANIZATION.
FEDERAL INCOME TAX CONSEQUENCES. Ropes & Gray, independent outside counsel
to One Group and to its Board of Trustees, is expected to issue an opinion
(based on certain assumptions) as of the effective time of each of the
Reorganizing Pegasus Portfolios Transaction and the Continuing Pegasus
Portfolios Transaction that each transaction, will not give rise to the
recognition of income, gain or loss for federal income tax purposes to the
Pegasus Portfolios or the One Group Funds or their respective shareholders. Such
an opinion is required by the Reorganization Agreement with respect to each
Pegasus Portfolio that is not a money market fund, but is not required with
respect to a Pegasus Portfolio that is a money market fund.
Shareholders should note that each One Group Fund may, to the extent
permitted by law and consistent with the opinion to be issued by Ropes & Gray
discussed above, dispose of some of the securities acquired by it in connection
with the transaction. Disposition of securities may have tax consequences to
shareholders. In addition, immediately prior to the transaction, each Pegasus
Portfolio will declare and distribute a dividend which will have the effect of
distributing to shareholders all of the Pegasus Portfolio's investment company
taxable income and net realized capital gains. To the extent that a Pegasus
Portfolio's investments, consistent applicable law and with the opinion to be
issued by Ropes & Gray, are restructured prior to the Reorganization, the
Pegasus Portfolio may realize a greater amount of net capital gains which would
then need to be distributed to Pegasus shareholders. These distributions may
have tax consequences to Pegasus shareholders. In addition, any distributions by
a One Group fund after the Reorganization will be taxable to Pegasus
shareholders who become shareholders of such fund as a result of the
Reorganization even if the distributions are paid from income earned prior to
the Reorganization. For additional information, see the sections below entitled
"Federal Income Tax Consequences" and "Pegasus Board Consideration" under
"Information Relating to the Proposed Reorganization."
BOARD CONSIDERATION. Based upon their evaluation of the relevant
information presented to them, and in light of their fiduciary duties under
federal and state law, Pegasus' and One Group's Boards, including their members
who are not "interested persons" within the meaning of the 1940 Act, have
unanimously determined that the proposed Reorganization is in the best interests
of their Funds' respective shareholders and that the interests of such
shareholders will not be diluted as a result of the Reorganization. In making
this determination, the Pegasus Board considered the potential overall effect of
the Reorganization on shareholders of the Pegasus Portfolios including the
following factors in particular: (1) the relative performance of the Pegasus
Portfolios and One Group Funds; (2) comparative management fees and expense
ratios; (3) tax-free nature of the transaction; (4) similarity of fund
investment objectives, policies and limitations; (5) terms and conditions of the
Reorganization Agreement; (6) capabilities, practices, and resources of BOIA and
the other service providers; (7) increased market presence; (8) enhanced
shareholder services; (9) products offered; (10) back office support; (11)
availability of Class C shares; and (12) benefits to other persons, especially
BOIA and its affiliates.
For a more complete discussion of the factors affecting the Board's
decision, see "Information Relating to the Proposed Reorganization -- Pegasus
Board Consideration."
8
<PAGE> 12
PEGASUS' BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE REORGANIZATION AGREEMENT.
PRINCIPAL RISK FACTORS. Because of the similarities in investment
objectives and policies, the Pegasus Portfolios and The One Group Funds (for
purposes of this discussion only, collectively, the "Funds") are subject to
similar investment risks. The following discussion identifies certain broad
risks inherent in investing in the Funds. The One Group Investor Funds and the
Pegasus Managed Assets Funds invest primarily in the securities of other One
Group Funds and Pegasus Portfolios ("Underlying Funds"), respectively. These
Funds do not invest in individual securities (other than certain short-term
instruments). However, to the extent the Underlying Funds invest in various
securities the following risks apply. For more specific risks relating to
specific securities purchased by a particular Fund described below, see the
sections entitled "Investment Practices" and "Investment Risks" in The One Group
Prospectuses, and "Risk Factors" and "Supplemental Information" in the Pegasus
Prospectuses.
Volatility. The One Group Income Equity, Disciplined Value, Value Growth,
Equity Index, Intermediate Bond, Limited Volatility Bond and Intermediate
Tax-Free Bond Funds have a "beta" statistic higher than that of their
corresponding Pegasus Portfolios. The "beta" statistic measures the relative
volatility (that is, the variability in returns) to a common market index.
Specifically, "beta" equals the expected change in fund return per 1% change in
the index return.
The chart below illustrates "beta" statistic differentials for One Group
Funds with betas higher than their corresponding Pegasus Portfolios during the
three-year period ended June 30, 1998:
<TABLE>
<CAPTION>
FUND NAME INDEX 3 YEAR BETA VS INDEX
--------- ----- --------------------
<S> <C> <C>
One Group(R) Income Equity............................. S&P 500(1) 0.87
Pegasus Equity Income 0.62
One Group(R) Disciplined Value......................... S&P 500 0.76
Pegasus Intrinsic Value 0.70
One Group(R) Value Growth.............................. S&P 500 1.04
Pegasus Growth and Value 0.79
One Group(R) Equity Index.............................. S&P 500 1.00
Pegasus Equity Index 0.98
One Group(R) Intermediate Bond......................... Lehman Aggregate(2) 0.77
Pegasus Intermediate Bond 0.74
One Group(R) Limited Volatility Bond................... Lehman Aggregate 0.42
Pegasus Short Bond 0.30
One Group(R) Intermediate Tax-Free Bond................ Lehman Aggregate 0.68
Pegasus Intermediate Municipal Bond 0.58
</TABLE>
- ---------------
(1) The S&P 500 Index is comprised of 500 widely held common stocks. It consists
of 400 industrial, 40 utility, 20 transportation and 40 financial companies
listed on U.S. market exchanges. It is a capitalization-based index,
calculated on a total return basis with dividends reinvested.
(2) The Lehman Brothers Aggregate Bond Index is comprised of publicly-issued
fixed-rate non-convertible domestic bond issues rated investment grade or
higher, with at least one year to maturity and having an outstanding par
value of at least $100 million. It is a capitalization-based index,
calculated on a total return basis inclusive of accrued income.
None of these funds has a "beta" statistic indicative of a high risk
posture relative to its index. As a general policy, BOIA attempts to limit the
volatility of all One Group Funds by managing them within a band around a market
index. BOIA attempts to use stock selection to outperform the index without
assuming significant risk. As a result, the One Group Funds generally seek to
achieve higher returns while maintaining volatility consistent with the chosen
index. BOIA believes that this strategy achieves an acceptable risk/return
tradeoff.
9
<PAGE> 13
Equity Securities. The Pegasus Managed Assets Conservative, Managed Assets
Balanced, Managed Assets Growth, Equity Income, Growth, Mid-Cap Opportunity,
Small-Cap Opportunity, Intrinsic Value, Growth and Value, Equity Index, Market
Expansion Index, International Equity Funds and The One Group Investor Balanced,
Investor Growth & Income, Investor Growth, Income Equity, Large Company Growth,
Diversified Mid Cap, Small Cap Value, Disciplined Value, Value Growth, Equity
Index, Market Expansion Index, and Diversified International Funds invest in
equity securities, which may increase or decrease in value. As a result, the
value of your investment in a Fund may increase or decrease in value. The
Pegasus High Yield Bond Fund and The One Group Intermediate Bond, Income Bond,
Limited Volatility Bond, High Yield Bond and Bond Funds also invest to a limited
extent in preferred stocks.
Small Capitalization Companies. The Pegasus Small-Cap Opportunity and The
One Group Small Cap Value Funds invest in small capitalization companies.
Investments in smaller, younger companies may be riskier than investments in
larger, more established companies. These companies may be more vulnerable to
changes in economic conditions, specific industry conditions, market
fluctuations, and other factors affecting the profitability of other companies.
Because economic events may have a greater impact on smaller companies, there
may be a greater and more frequent fluctuation in their stock price. This may
cause frequent and unexpected increases or decreases in the value of your
investment.
Fixed Income Securities. Each Fund may invest in fixed income securities.
Investments in fixed income securities (for example, bonds) will increase or
decrease in value based on changes in interest rates. If rates increase, the
value of a Fund's investments generally declines. On the other hand, if rates
fall, the value of the investments generally increases. The value of your
investment in a Fund will increase and decrease as the value of a Fund's
investments increase and decrease. While securities with longer duration and
maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
Non-Diversified Funds. The Pegasus Michigan Municipal Money Market,
International Equity, Municipal Bond, Short Municipal Bond, Intermediate
Municipal Bond and Michigan Municipal Bond Funds and The One Group Michigan
Municipal Money Market and Michigan Municipal Bond Funds are "non-diversified"
funds. This means that the Funds may invest a more significant portion of their
assets in the securities of a single issuer than can a "diversified" fund. In
addition, these Funds' investments may be concentrated geographically. These
concentrations increase the risk of loss to the Funds if an issuer fails to make
interest or principal payments or if the market value of a security declines. A
diversified Fund invests in a larger number of issuers, with a smaller
percentage in each issuer. Although diversification reduces the risk that a
fund's investments will be affected by a single issuer, other factors, such as
risks inherent in the underlying securities, are also relevant.
State Specific Municipal Securities. Because the Pegasus Michigan Municipal
Money Market and Michigan Municipal Bond Funds and The One Group Michigan
Municipal Money Market and Michigan Municipal Bond Funds concentrate their
investments in Michigan, the following factors may have a disproportionately
negative effect on the Funds' investments. First, the economy of Michigan is
dependent on the automobile manufacturing industry which is highly cyclical.
This cyclical economy affects the revenue streams of the state and its political
subdivisions because it impacts their tax sources. Second, state based sources,
including increased sales tax, are being used to pay a larger portion of the
cost of public education than in the past. These recent changes in the payment
of education costs will affect state and local revenue of Michigan governmental
units in future years in varying ways.
Index Funds. The Pegasus Market Expansion Index and Equity Index Funds and
The One Group Market Expansion Index and Equity Index Funds are index funds. An
index fund's investment objective is to track the performance of a specified
index. Therefore, securities may be purchased, retained and sold by an index
fund at times when an actively managed fund would not do so. As a result, you
can expect greater risk of loss (and a correspondingly greater prospect of gain)
from changes in the value of securities that are heavily weighted in the index
than would be the case if the Funds were not fully invested in such securities.
Because of
10
<PAGE> 14
this, an index fund's share price can be volatile and you should be prepared to
handle sudden, and sometimes substantial, fluctuations in the value of your
investment.
International Funds. Investments in foreign securities involve risks
different from investments in U.S. securities. These include the risk of losses
attributable to unfavorable governmental or political actions, seizure of
foreign assets, changes in tax or trade statutes, and governmental collapse and
war. Investments in foreign securities also involve the risk associated with
higher transaction costs, delayed settlements, currency controls and adverse
economic developments. This also includes the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign currencies may negatively
affect an investment. Adverse changes in exchange rates may erode or reverse any
gains produced by foreign currency denominated investments and may widen any
losses. Exchange rate volatility also may affect the ability of an issuer to
repay U.S. dollar denominated debt, thereby increasing credit risk. Because of
these risk factors, the share price of both the Pegasus International Equity
Fund and The One Group(R) Diversified International Fund can be volatile, and
you should be prepared to sustain sudden, and sometimes, substantial,
fluctuations in the value of your investment.
Lower Rated Investment Grade Securities. All Pegasus Portfolios, other than
the money market funds, and The One Group Income Bond, Limited Volatility Bond,
Bond, Investor Balanced, Investor Growth & Income, Investor Growth, and
Intermediate Bond Funds may invest in debt securities rated in the lowest
investment grade category. Securities in this rating category are considered to
have speculative characteristics. Changes in economic conditions or other
circumstances may have a greater effect on the ability of issuers of these
securities to make principal and interest payments than they do on issuers of
higher grade securities.
High Yield/Junk Bonds. The Pegasus Managed Assets Growth, Managed Assets
Balanced, Managed Assets Conservative, Equity Income, Equity Index, Growth and
Value, Intrinsic Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity,
International Equity, Market Expansion Index and High Yield Bond Funds and The
One Group Investor Growth, Investor Growth & Income, Investor Balanced, Income
Bond and High Yield Bond Funds may invest in debt securities rated below
investment grade. These securities are regarded as predominantly speculative.
Securities rated below investment grade generally provide a higher yield than
higher rated securities of similar maturity, but are subject to a greater degree
of risk that the issuer may not be able to make principal and interest payments.
Issuers of these securities may not be as strong financially as those issuing
higher rated securities. Such high yield issuers may include smaller, less
creditworthy companies or highly indebted firms.
The market value of high yield securities may fluctuate more than the
market value of higher rated securities, since high yield securities tend to
reflect short-term corporate and market developments to a greater extent than
higher rated securities. Thus, periods of economic uncertainty and change can
result in the increased volatility of market prices of high yield bonds and of
the fund's net asset value. Additional risks of high yield securities include
limited liquidity and secondary market support. As a result, the prices of high
yield securities may decline rapidly in the event that a significant number of
holders decide to sell. Issuers of high yield securities also are more
vulnerable to real or perceived economic changes, political changes or adverse
developments specific to the issuer. A projection of an economic downturn, for
example, could cause the price of these securities to decline because a
recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. In the event of a
default, these Funds would experience a decline in the market value of their
investments. In addition, a long-term track record on bond default rates, such
as that for investment grade corporate bonds, does not exist for the high yield
market. It may be that future default rates on high-yield bonds will be more
widespread and higher than in the past, especially during periods of
deteriorating economic conditions.
The market prices of debt securities generally fluctuate with changes in
interest rates so that these Funds' net asset values can be expected to decrease
as long-term interest rates rise and to increase as long-term rates fall. The
market prices of high yield securities structured as zero coupon or pay-in-kind
securities are generally affected to a greater extent by interest rate changes
and tend to be more volatile than securities which pay interest periodically.
11
<PAGE> 15
Credit quality in the high yield market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security.
Because investments in high yield securities involve greater investment
risk, achievement of a fund's investment objective may be more dependent on its
adviser's credit analysis than would be the case if the fund were investing in
higher rated securities. The One Group Funds may seek to hedge investments
through transactions in options, futures contracts and related options. The One
Group Funds also may use swap agreements to further manage exposure to high
yield securities.
Derivatives. Some of the Funds invest in securities that are considered to
be derivatives. These securities may be more volatile and may be riskier than
other investments. These include:
- Each Pegasus Portfolio, other than the money market funds, and each One
Group Fund, other than the money market funds and the Limited Volatility
Bond Fund, may purchase options, futures contracts or options on futures
contracts.
- The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value,
Intrinsic Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity,
International Equity, Market Expansion Index, Multi Sector Bond and High
Yield Bond Funds and The One Group Investor Balanced, Investor Growth &
Income, Investor Growth, Large Company Growth, Diversified Mid Cap, Small
Cap Value, Value Growth, Market Expansion Index, Equity Index,
Diversified International, Income Bond and High Yield Bond Funds may hold
warrants.
- The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value,
Intrinsic Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity,
International Equity, Market Expansion Index, Short Bond, Intermediate
Bond, Multi Sector Bond, Bond, High Yield Bond, Intermediate Municipal
Bond, Municipal Bond, Michigan Municipal Bond and Short Municipal Bond
Funds, and The One Group Prime Money Market, Municipal Money Market,
Michigan Municipal Money Market, Municipal Cash Management Money Market,
Investor Growth, Investor Growth & Income, Investor Balanced, Diversified
Mid Cap, Small Cap Value, Market Expansion Index, Diversified
International, Intermediate Bond, Bond, Limited Volatility, Income Bond,
High Yield Bond, Intermediate Tax-Free Bond, Tax-Free Bond, Michigan
Municipal Bond and Short-Term Municipal Bond Funds may invest in
mortgage-backed securities, which may include collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and
REMICs) and stripped mortgage-backed securities (IOs and POs).
- The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value,
Intrinsic Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity,
International Equity, Market Expansion Index, Short Bond, Intermediate
Bond, Multi Sector Bond, Bond and High Yield Bond Funds, and The One
Group Prime Money Market, Municipal Money Market, Investor Growth,
Investor Growth & Income, Investor Balanced, Diversified Mid Cap, Small
Cap Value, Market Expansion Index, Diversified International,
Intermediate Bond, Bond, Limited Volatility, Income Bond, High Yield
Bond, Municipal Bond, Michigan Municipal Bond, Short-Term Municipal Bond
and Intermediate Tax-Free Bond Funds may purchase asset-backed
securities.
- The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value,
Intrinsic Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity,
International Equity, Market Expansion Index, Short Bond, Intermediate
Bond, Multi Sector Bond, Bond, High Yield Bond, Municipal Bond, Short
Municipal Bond, Intermediate Municipal Bond and Michigan Municipal Bond
Funds and The One Group Investor Growth, Investor Growth & Income,
Investor Balanced, Income Equity, Equity Index, Value Growth, Disciplined
Value, Large Company Growth, Diversified Mid Cap, Small Cap Value,
Diversified International, Market Expansion Index, Intermediate Bond,
Limited Volatility Bond, Income Bond,
12
<PAGE> 16
Bond, High Yield Bond, Intermediate Tax-Free Bond, Tax-Free Bond,
Michigan Municipal Bond and Short-Term Municipal Bond Funds may invest in
swap, cap and floor transactions.
- Each Pegasus Fund, other than the money market funds, and The One Group
Investor Growth, Investor Growth & Income, Investor Balanced,
Intermediate Bond, Income Bond, Bond, High Yield Bond, Intermediate
Tax-Free Bond, Tax-Free Bond, Short-Term Municipal Bond and Michigan
Municipal Bond Funds may invest in inverse floating rate instruments.
Inverse floating rate instruments are floating rate debt instruments with
interest rates that reset in the opposite direction from the market rate
of interest to which the inverse floater is indexed.
- The Pegasus Managed Assets Growth, Managed Assets Balanced, Managed
Assets Conservative, Equity Income, Equity Index, Growth and Value,
Intrinsic Value, Growth, Mid-Cap Opportunity, Small-Cap Opportunity,
International Equity, Market Expansion Index, Short Bond, Intermediate
Bond, Multi Sector Bond, Bond, High Yield Bond, Intermediate Municipal
Bond, Municipal Bond, Michigan Municipal Bond and Short Municipal Bond
Funds, and The One Group Investor Growth, Investor Growth & Income,
Investor Balanced, Diversified Mid Cap, Small Cap Value, Diversified
International, Market Expansion Index, Limited Volatility Bond,
Intermediate Bond, Income Bond, Bond, High Yield Bond, Intermediate
Tax-Free Bond, Tax-Free Bond, Michigan Municipal Bond and Short-Term
Municipal Bond Funds may invest in structured instruments.
- Each Fund, other than the Pegasus money market funds, and The One Group
money market funds and Limited Volatility Bond Fund, may invest in new
financial products.
The above discussion is qualified in its entirety by the disclosure in The
One Group Funds Prospectuses accompanying this Combined Prospectus/Proxy
Statement and the information in the Pegasus Funds Prospectuses incorporated
herein by reference.
VOTING INFORMATION. This Combined Prospectus/Proxy Statement is being
furnished in connection with the solicitation of proxies by Pegasus' Board of
Trustees at the Meeting. Only shareholders of record at the close of business on
December 18, 1998 will be entitled to vote at the Meeting. Each whole or
fractional share is entitled to a whole or fractional vote, respectively. Shares
represented by a properly executed proxy will be voted in accordance with the
instructions thereon or, if no specification is made, the persons named as
proxies will vote in favor of each proposal set forth in the Notice of Meeting.
Proxies may be revoked at any time before they are exercised by submitting to
Pegasus a written notice of revocation or a subsequently executed proxy or by
attending the Meeting and voting in person. For additional information, see
"Information Relating to Voting Matters."
MANAGEMENT DISCUSSION. A discussion of the management and performance of
The One Group Funds (except The One Group High Yield Bond Fund and the New One
Group Funds) and an analysis of their performance can be found at Appendix V to
this Combined Prospectus/Proxy Statement.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
The terms and conditions of the Reorganization are set forth in the
Reorganization Agreement. Certain provisions of the Reorganization Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Reorganization Agreement, a copy of which is attached as
Appendix I to this Combined Prospectus/Proxy Statement.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. The Reorganization Agreement
provides that on the Exchange Date (as that term is defined in the
Reorganization Agreement), the Assets and Liabilities existing at the Valuation
Time (as that term is defined in the Reorganization Agreement) of each Pegasus
Portfolio will be transferred to its corresponding One Group Fund, as previously
described (see pages 2-3 of this Combined Prospectus/Proxy Statement), in
exchange for full and fractional Shares of the designated classes of the
corresponding One Group Fund.
13
<PAGE> 17
The Shares issued by each One Group Fund in the Reorganization will have an
aggregate dollar value equal to the aggregate dollar value of the net assets per
share of the respective Pegasus Portfolio at the Valuation Time. Immediately
after the Exchange Date, each Pegasus Portfolio will distribute the Shares of
the One Group Fund received in the Reorganization to its shareholders in
liquidation of each Pegasus Portfolio. Each shareholder owning shares of a
particular Pegasus Portfolio at the Exchange Date will receive Shares of the
designated class of the corresponding One Group Fund, and will receive any
unpaid dividends or distributions that were declared before the Exchange Date on
Pegasus Portfolio shares. One Group will establish an account for each former
shareholder of the Pegasus Portfolios reflecting the appropriate number of One
Group Fund Shares distributed to that shareholder. These accounts will be
substantially identical to the accounts currently maintained by Pegasus for each
shareholder. Shares of the One Group Funds are in uncertificated form.
With respect to each Pegasus Portfolio, the Reorganization is subject to a
number of conditions, including approval of the Reorganization Agreement and the
related matters described in this Combined Prospectus/ Proxy Statement by
Pegasus shareholders at the Meeting; the receipt of certain legal opinions
described in the Reorganization Agreement (which include an opinion of One
Group's counsel addressed to Pegasus that the One Group Fund Shares issued in
the Reorganization will be validly issued, fully paid and non-assessable); the
receipt of certain certificates from the parties concerning the continuing
accuracy of the representations and warranties in the Reorganization Agreement;
the receipt of certain information from the independent accountants of Pegasus
regarding tax matters; and the parties' performance in all material respects of
their respective covenants and undertakings in the Reorganization Agreement.
The Reorganization Agreement provides that Pegasus and One Group will each
be responsible for their own expenses in connection with the Reorganization.
However, BOIA has agreed to assume the costs of proxy materials proxy
solicitations and certain other fees payable by Pegasus in connection with the
Reorganization as described on page 30. The Reorganization Agreement also
provides, among other things, that the Reorganization may be abandoned at any
time upon the mutual consent of both Pegasus and One Group, or by either One
Group or Pegasus under certain conditions; that in the event shareholder
approval of the Reorganization is obtained by one or more but not all Pegasus
Portfolios, the Reorganization will be consummated with respect to those Pegasus
Portfolios whose shareholders have approved the Reorganization; that in the
event that shareholder approval is obtained with respect to some but not all
classes of a Pegasus Portfolio, the transactions with respect to that Pegasus
Portfolio, will not be consummated unless and until shareholder approval is
obtained with respect to all classes; and that officers of One Group and of
Pegasus may amend, modify or supplement the Reorganization Agreement, provided
however, that following the Meeting, no such amendment may have the effect of
changing the provisions for determining the number of Shares of the
corresponding One Group Fund to be issued to the shareholders of any Pegasus
Portfolio without obtaining the Pegasus Portfolio shareholders' further
approval. In the event the transactions contemplated by the Reorganization
Agreement are not consummated by reason of Pegasus or One Group being either
unwilling or unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to that party's obligations referred to in Sections
8(a) and 10 of the Reorganization Agreement), the party failing to consummate
shall pay directly all reasonable fees and expenses incurred by Pegasus or by
One Group in connection with such transactions, including without limitation,
legal, accounting and filing fees.
PEGASUS BOARD CONSIDERATION. At meetings on August 13, September 28,
October 30, November 5, November 18, November 23 and December 16, 1998 and
January 12, 1999, the Board of Trustees of Pegasus considered the proposed
Reorganization. On January 12, 1999, the Board of Trustees of Pegasus approved
the Reorganization Agreement and determined that the Reorganization of the
Pegasus Portfolios and the One Group Funds would be in the best interests of
each Pegasus Portfolio. The Trustees further determined that the interests of
existing shareholders of the Pegasus Portfolios would not be diluted upon
effectuation of the Reorganization. The Trustees recommend approval of the
Reorganization Agreement after considering the
14
<PAGE> 18
potential overall effect of the Reorganization on the shareholders of the
Pegasus Portfolios including the following factors:
1. Performance. The total returns of the One Group Funds are competitive
with, and in many cases superior to, those of the Pegasus Portfolios as shown
below. Total returns for Class A and Class B shares reflect any applicable sales
load. The Trustees noted, however, that the performance shown is based on
historical earnings and is not predictive of future performance.
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRIME
MONEY MARKET FUND MONEY MARKET FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... 4.20% 3.55% 4.42% 4.22% 3.56% 4.43%
1 Year Annualized -- 10/31/98..... 5.08% 4.29% 5.34% 5.11% 4.32% 5.37%
3 Year Annualized -- 10/31/98..... 5.05% 4.52% 5.25% 5.05% -- 5.31%
5 Year Annualized -- 10/31/98..... 4.84% 4.52% 4.96% 4.82% -- 5.08%
10 Year Annualized -- 10/31/98.... 5.47% 5.31% 5.53% -- -- 5.55%
</TABLE>
<TABLE>
<CAPTION>
PEGASUS TREASURY ONE GROUP(R) U.S. TREASURY
MONEY MARKET FUND SECURITIES MONEY MARKET FUND
--------------------------- ------------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... 4.08% -- 4.29% 4.04% 3.39% 4.25%
1 Year Annualized -- 10/31/98..... 4.94% -- 5.20% 4.89% 4.10% 5.15%
3 Year Annualized -- 10/31/98..... 4.93% -- 5.12% 4.88% -- 5.14%
5 Year Annualized -- 10/31/98..... 4.72% -- 4.84% 4.62% -- 4.88%
10 Year Annualized -- 10/31/98.... -- -- -- -- -- 5.32%
</TABLE>
<TABLE>
<CAPTION>
PEGASUS MUNICIPAL ONE GROUP(R) MUNICIPAL
MONEY MARKET FUND MONEY MARKET FUND
--------------------------- ---------------------------
CLASS A CLASS I CLASS A CLASS I
------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... 2.40% 2.61% 2.39% 2.60%
1 Year Annualized -- 10/31/98..... 2.93% 3.19% 2.93% 3.19%
3 Year Annualized -- 10/31/98..... 3.00% 3.19% 2.98% 3.22%
5 Year Annualized -- 10/31/98..... 2.92% 3.03% 2.87% 3.11%
10 Year Annualized -- 10/31/98.... 3.59% 3.65% -- 3.69%
</TABLE>
<TABLE>
<CAPTION>
PEGASUS MANAGED ASSETS ONE GROUP(R) INVESTOR
CONSERVATIVE FUND BALANCED FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... -1.27% -1.54% 4.16% 3.87% 3.05% 9.09%
1 Year Annualized -- 10/31/98..... 0.62% 1.38% 6.19% 6.77% 5.96% 12.20%
3 Year Annualized -- 10/31/98..... 8.96% 9.17% 11.12% -- -- --
5 Year Annualized -- 10/31/98..... 8.72% -- 10.06% -- -- --
10 Year Annualized -- 10/31/98.... 10.75% -- 11.56% -- -- --
</TABLE>
15
<PAGE> 19
<TABLE>
<CAPTION>
PEGASUS MANAGED ASSETS ONE GROUP(R) INVESTOR
BALANCED FUND GROWTH & INCOME FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... -2.51% -2.82% 2.75% 4.16% 3.14% 9.14%
1 Year Annualized -- 10/31/98..... 0.08% 0.99% 5.53% 7.77% 6.92% 13.05%
3 Year Annualized -- 10/31/98..... 10.08% 9.06% 12.21% -- -- --
5 Year Annualized -- 10/31/98..... -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) INVESTOR
MANAGED ASSETS GROWTH FUND GROWTH FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... -4.02% -4.47% 1.19% 3.73% 2.99% 8.88%
1 Year Annualized -- 10/31/98..... -0.96% -0.51% 4.43% 8.14% 7.37% 13.50%
3 Year Annualized -- 10/31/98..... -- -- -- -- -- --
5 Year Annualized -- 10/31/98..... -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) INCOME
EQUITY INCOME FUND EQUITY FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... -7.72% -7.85% -2.65% 4.53% 3.86% 9.76%
1 Year Annualized -- 10/31/98..... -4.07% -2.92% 1.24% 11.39% 10.78% 16.99%
3 Year Annualized -- 10/31/98..... 13.19% 13.53% 15.47% 20.30% 20.61% 22.51%
5 Year Annualized -- 10/31/98..... 11.33% 11.74% 12.90% 16.75% -- 18.15%
10 Year Annualized -- 10/31/98.... 12.05% 12.32% 13.13% -- -- 15.45%
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) LARGE COMPANY
GROWTH FUND GROWTH FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... 9.45% 9.42% 15.36% 19.70% 19.54% 25.59%
1 Year Annualized -- 10/31/98..... 14.19% 15.23% 20.41% 27.09% 27.02% 33.41%
3 Year Annualized -- 10/31/98..... 21.29% 21.76% 23.68% 25.11% 25.68% 27.52%
5 Year Annualized -- 10/31/98..... 17.07% 17.49% 18.66% -- -- 21.82%
10 Year Annualized -- 10/31/98.... 15.82% 16.08% 16.91% -- -- --
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) DISCIPLINED
INTRINSIC VALUE FUND VALUE FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............ -11.50% -12.04% -6.67% -6.52% -7.03% -1.93%
1 Year
Annualized -- 10/31/98....... -8.05% -7.45% -2.99% 2.11% 1.81% 7.10%
3 Year
Annualized -- 10/31/98....... 13.01% 13.53% 15.16% 15.83% 16.00% 17.91%
5 Year
Annualized -- 10/31/98....... 11.65% 12.28% 12.92% 12.99% -- 14.29%
10 Year
Annualized -- 10/31/98....... 12.12% 12.50% 12.76% -- -- --
</TABLE>
16
<PAGE> 20
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) VALUE GROWTH FUND
GROWTH AND VALUE FUND (FORMERLY VALUE GROWTH FUND)
--------------------------- ------------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98............... -1.18% -1.43% 4.20% 8.28% 7.59% 13.64%
1 Year Annualized -- 10/31/98..... 5.49% 6.53% 11.29% 14.95% 14.47% 20.72%
3 Year Annualized -- 10/31/98..... 17.44% 17.74% 19.67% 22.01% 22.27% 24.21%
5 Year Annualized -- 10/31/98..... 14.88% 15.37% 16.19% 16.50% -- 17.76%
10 Year Annualized -- 10/31/98.... 13.24% 13.54% 13.88% -- -- --
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) EQUITY
EQUITY INDEX FUND INDEX FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98.................. 10.75% 10.47% 14.42% 8.96% 8.40% 14.33%
1 Year Annualized -- 10/31/98........ 17.69% 17.42% 21.62% 15.88% 15.46% 21.65%
3 Year Annualized -- 10/31/98........ 24.19% 23.70% 25.66% 23.29% 23.63% 25.57%
5 Year Annualized -- 10/31/98........ 20.13% 20.10% 20.99% 19.46% -- 20.83%
10 Year Annualized -- 10/31/98....... 17.11% 17.09% 17.52% -- -- --
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) INTERMEDIATE
INTERMEDIATE BOND FUND BOND FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98.................. 6.88% 6.13% 7.08% 6.60% 6.06% 6.83%
1 Year Annualized -- 10/31/98........ 7.86% 7.00% 8.10% 7.40% 6.72% 7.65%
3 Year Annualized -- 10/31/98........ 7.91% 7.40% 8.13% 6.86% 6.22% 7.11%
5 Year Annualized -- 10/31/98........ 6.42% 6.11% 6.55% -- -- 6.13%
10 Year Annualized -- 10/31/98....... 8.11% 7.95% 8.18% -- -- --
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) LIMITED VOLATILITY
SHORT BOND FUND BOND FUND
--------------------------- ---------------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98.................. 4.66% 4.07% 5.94% 3.04% 2.80% 6.42%
1 Year Annualized -- 10/31/98........ 5.45% 4.72% 6.78% 2.96% 2.78% 6.45%
3 Year Annualized -- 10/31/98........ 5.55% 5.29% 6.10% 4.97% 4.94% 6.32%
5 Year Annualized -- 10/31/98........ 5.17% 5.02% 5.50% 4.75% -- 5.68%
10 Year Annualized -- 10/31/98....... 6.75% 6.67% 6.92% -- -- --
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) INCOME
MULTI SECTOR BOND FUND BOND FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98.................. 3.43% 3.03% 6.90% 1.16% 0.39% 6.08%
1 Year Annualized -- 10/31/98........ 4.87% 4.38% 8.44% 1.43% 0.54% 6.36%
3 Year Annualized -- 10/31/98........ 5.90% 5.64% 7.32% 4.73% 4.77% 6.56%
5 Year Annualized -- 10/31/98........ 6.03% 6.16% 6.93% 4.53% -- 5.76%
10 Year Annualized -- 10/31/98....... -- -- -- -- -- 7.62%
</TABLE>
17
<PAGE> 21
<TABLE>
<CAPTION>
PEGASUS INTERMEDIATE ONE GROUP(R) INTERMEDIATE
MUNICIPAL BOND FUND TAX-FREE BOND FUND
--------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YTD Ending 10/31/98.................. 1.72% 1.21% 5.08% 0.54% -0.34% 5.43%
1 Year Annualized -- 10/31/98........ 3.39% 2.80% 6.86% 2.39% 1.50% 7.44%
3 Year Annualized -- 10/31/98........ 4.69% 4.32% 6.05% 4.81% 4.88% 6.71%
5 Year Annualized -- 10/31/98........ 4.65% 4.67% 5.63% 4.32% -- 5.54%
10 Year Annualized -- 10/31/98....... 6.86% 6.88% 7.50% -- -- --
</TABLE>
No performance comparison is provided for the Pegasus Michigan Municipal
Money Market, Cash Management, Treasury Cash Management, Treasury Prime Cash
Management, U.S. Government Securities Cash Management, Municipal Cash
Management, Mid-Cap Opportunity, Small-Cap Opportunity, Market Expansion Index,
International Equity, Bond, High Yield Bond, Municipal Bond, Short Municipal
Bond and Michigan Municipal Bond Funds because the corresponding One Group Funds
have not yet commenced operations as of October 31, 1998 and the investment
policies and historical performance of these Pegasus Portfolios (other than the
High Yield Bond Fund) will carry forward. Although performance numbers are
provided for the Pegasus Intermediate Bond Fund and Pegasus Multi Sector Bond
Fund and the corresponding One Group Funds, Pegasus' performance history for
these funds survives the Reorganization.
For additional information concerning performance of the Pegasus Portfolios
and One Group Funds, see the Statement of Additional Information prepared in
connection with this Combined Prospectus/Proxy Statement, Pegasus' Prospectuses,
Statements of Additional Information, Annual Reports and Semi-Annual Reports to
Shareholders, One Group's Prospectuses, Statements of Additional Information and
Annual Reports to Shareholders, and Appendix V Management's Discussion of Fund
Performance -- Existing One Group Funds attached to this Combined
Prospectus/Proxy Statement.
2. Management Fees and Expense Ratios. The Trustees noted that in many
instances the investment advisory fees, and in some instances the total
operating expense ratios, of the One Group Funds are or will be higher than
those of the corresponding Pegasus Portfolios. For comparative information, see
the sections entitled "Investment Adviser -- Pegasus Portfolios," "Investment
Adviser -- One Group" and "Expense Ratios" under "Comparison of Pegasus and One
Group" below, "Fee Tables" above and Appendix II -- Comparative Fee Tables
attached to this Combined Prospectus/Proxy Statement.
BOIA has agreed to limit the total operating expense ratios of the Existing
One Group Funds following the Reorganization until August 1999 as set forth
under the "Pro Forma Total Operating Expenses" column in the Table under
"Comparison of Pegasus and One Group -- Expense Ratios" and Appendix II
- -Comparative Fee Tables to this Combined Prospectus/Proxy Statement. See also
"Fee Tables" above. With respect to the New One Group Funds, BOIA has agreed to
waive a portion of its advisory fee until at least March 2000 so that the rate
of total operating expenses actually paid will not exceed the rate currently
paid for total operating expenses by the Continuing Pegasus Portfolios.
Furthermore, if the Reorganization Agreement is approved, One Group's increased
asset size to approximately $50 billion and resulting leverage with its service
providers may result in lower overall expense ratios. BOIA's current estimates
anticipate expense savings.
3. Tax-Free Conversion of Pegasus Portfolio Shares. If a Pegasus
shareholder were to redeem his or her investment in a Pegasus Portfolio, other
than a money market fund, in order to invest in a One Group Fund or another
investment product, the shareholder would recognize gain or loss for Federal
income tax purposes upon the redemption of those shares. By contrast, the
proposed Reorganization of each Pegasus Portfolio will cause shareholders to
exchange their investments in the Pegasus Portfolios for investments in the One
Group Funds without recognition of gain or loss for Federal income tax purposes.
After the Reorganization, as a shareholder of One Group, investors may redeem
any or all of their One Group shares (other than Class B shares) at any time,
without incurring a redemption fee or sales charge. At that time, a taxable gain
or loss would be recognized. For further information concerning the tax
consequences of the Reorganization, see "Information Relating to the Proposed
Reorganization -- Federal Income Tax Consequences" below.
18
<PAGE> 22
4. Similarity of Fund Investment Objectives, Policies and Limitations and
Related Tax Consequences. The Trustees considered the similarities between One
Group Funds' investment objectives, policies and limitations and those of the
corresponding Pegasus Portfolios. For information relating to certain
significant differences in the investment objectives, policies and related risk
factors, see the sections entitled "Overview of Pegasus and One Group" and
"Principal Risk Factors" under "Summary" above, "Comparison of Pegasus and One
Group -- Investment Objectives and Policies" below and Appendix
III -- Comparison of Investment Objectives and Certain Significant Policies
attached to this Combined Prospectus/Proxy Statement.
The Trustees noted that the One Group Funds may dispose of some of the
securities acquired by them in the Reorganization and that such dispositions may
have tax consequences to shareholders. In addition, to the extent that a Pegasus
Portfolio's investments are restructured prior to the Reorganization, the
Portfolio may realize capital gains and losses which may have tax consequences
to shareholders. The ability of either entity to dispose of assets in connection
with the Reorganization is limited by the Internal Revenue Code. For additional
information, see "Comparison of Pegasus and One Group -- Federal Income Tax
Consequences" below.
5. Terms and Conditions of the Reorganization Agreement. The Trustees
considered the terms and conditions of the Reorganization Agreement. See
"Summary -- Proposed Reorganization," "Information Relating to the Proposed
Reorganization -- Description of the Reorganization Agreement" and Appendix
I -- Agreement and Plan of Reorganization attached hereto.
6. Capabilities, Practices and Resources of BOIA and the Other Service
Providers. The Trustees considered the capabilities, practices and resources of
BOIA and the other service providers. For further information, see
"Summary -- Overview of Pegasus and One Group" above, and the sections entitled
"Investment Advisers," "Certain Other Service Providers," "Distribution Plan and
Shareholder Servicing Arrangements" under "Comparison of Pegasus and One Group"
below.
7. Increased Market Presence. The Reorganization is expected to result in
greater market presence for the One Group. If the Reorganization Agreement is
consummated, the One Group would have approximately $50 billion in assets under
management. BOIA believes fund investment opportunities increase as assets
increase.
8. Enhanced Shareholder Services. OGSC and BOIA provide a higher level of
shareholder servicing for One Group shareholders, including a dedicated
shareholder support function, broker-dealer desk and a transaction oriented
state-of-the-art website. The website allows investors to purchase and exchange
shares of their One Group Funds. The website is directly linked to the BOC
website for convenient use. It contains up-to-date investor tools such as
pricing and account history queries, retirement planning, and investment
profiling tools, and allows on-line prospectus access. Moreover, shareholders of
One Group have access to weekly-recorded economic updates, as well as updates on
the equity and fixed income markets through a state of the art voice response
unit ("VRU").
9. Expanded Product Offering. Through exchange privileges, current Pegasus
shareholders (other than those shareholders owning shares of an institutional
money market fund) will be able to exchange the One Group shares they receive in
the Reorganization for any of the 49 funds (excluding the 7 institutional money
market funds) which will be offered by One Group to the general public after the
Reorganization. Institutional money market fund shareholders may exchange their
new One Group shares for any of the 7 institutional money market funds offered
by One Group. Investors in One Group will enjoy a wide variety of investment
options and strategies, ranging from various equity styles and state specific
municipal bond funds, to taxable and tax-advantaged bond funds and
funds-of-funds.
10. Strong Back Office. OGSC provides a strong back office infrastructure
for One Group, including fund administration and fund accounting services. A
wholly-owned subsidiary of BISYS Fund Services, OGSC leverages the extensive
knowledge and experience of BISYS, yet is dedicated to The One Group.
11. Availability of Class C Shares. Unlike Pegasus, the One Group offers
Class C Shares. Class C shareholders pay a "level load." This means that Class C
shareholders do not pay a front end sales charge and,
19
<PAGE> 23
if they hold their shares for more than one year, they do not pay a contingent
deferred sales load. However, shareholders do pay a 12b-1 fees for as long as
they hold the Class C shares.
12. Benefits to Other Persons, Especially BOIA and Its Affiliates. The
Trustees considered the potential benefits of the Reorganization to other
persons, especially BOIA and its affiliates.
CAPITALIZATION. As proposed, the sixteen Reorganizing Pegasus Portfolios
would be reorganized into the sixteen corresponding Existing One Group Funds.
The following table sets forth as of June 30, 1998, (1) the capitalization of
each of the Reorganizing Pegasus Portfolios, (2) the capitalization of each of
the corresponding Existing One Group Funds, and (3) the pro forma capitalization
of each of the Existing One Group Funds as adjusted to give effect to the
Reorganization of the Reorganizing Pegasus Portfolios. The following table also
sets forth as of June 30, 1998, the capitalization of each of the Continuing
Pegasus Portfolios and the pro forma capitalization of each of the New One Group
Funds. The capitalization of each Reorganizing Pegasus Portfolio and Existing
One Group Fund is likely to be different at the effective time of the
Reorganizing Pegasus Portfolios Transaction as a result of daily share purchase
and redemption activity in the respective Portfolios and Funds, as well as the
effects of the other ongoing operations of the respective Portfolios and Funds
prior to the effective time of the Reorganizing Pegasus Portfolios Transaction.
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRIME PRO FORMA
MONEY MARKET FUND MONEY MARKET FUND COMBINED
----------------- ------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $2,708,552,219 $3,223,901,238 $5,932,453,457
Class A Shares................. $1,167,246,199 $ 605,291,334 $1,772,537,533
Class B Shares................. $ 1,180,010 $ 1,912,430 $ 3,092,440
Class I Shares................. $1,540,126,010 $2,616,697,474 $4,156,823,484
Shares Outstanding............... 2,708,549,425 3,223,806,869 5,932,356,294
Class A Shares................. 1,167,243,404 605,275,293 1,772,518,697
Class B Shares................. 1,180,010 1,911,896 3,091,906
Class I Shares................. 1,540,126,011 2,616,619,680 4,156,745,691
Net Asset Value Per Share
Class A Shares................. $1.00 $1.00 $1.00
Class B Shares................. $1.00 $1.00 $1.00
Class I Shares................. $1.00 $1.00 $1.00
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP(R)
PEGASUS TREASURY U.S. TREASURY SECURITIES PRO FORMA
MONEY MARKET FUND MONEY MARKET FUND COMBINED
----------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $1,062,585,850 $3,887,139,739 $4,949,725,589
Class A Shares................. $ 219,101,494 $ 861,349,389 $1,080,450,883
Class B Shares................. N/A $ 181,171 $ 181,171
Class C Shares................. N/A $ 1,162 $ 1,162
Class I Shares................. $ 843,484,356 $3,025,608,017 $3,869,092,373
Shares Outstanding............... 1,062,602,578 3,886,904,029 4,949,506,607
Class A Shares................. 219,118,222 861,312,823 1,080,431,045
Class B Shares................. N/A 181,172 181,172
Class C Shares................. N/A 1,162 1,162
Class I Shares................. 843,484,356 3,025,408,872 3,868,893,228
Net Asset Value Per Share
Class A Shares................. $1.00 $1.00 $1.00
Class B Shares................. N/A $1.00 $1.00
Class C Shares................. N/A $1.00 $1.00
Class I Shares................. $1.00 $1.00 $1.00
</TABLE>
20
<PAGE> 24
<TABLE>
<CAPTION>
PEGASUS MUNICIPAL ONE GROUP(R) MUNICIPAL PRO FORMA
MONEY MARKET FUND MONEY MARKET FUND COMBINED
----------------- ---------------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $ 764,664,703 $ 602,935,643 $1,367,600,346
Class A Shares................. $ 209,296,247 $ 104,808,547 $ 314,104,794
Class I Shares................. $ 555,368,456 $ 498,127,096 $1,053,495,552
Shares Outstanding............... 764,720,453 603,066,850 1,367,787,303
Class A Shares................. 209,350,372 104,821,450 314,171,822
Class I Shares................. 555,370,081 498,245,400 1,053,615,481
Net Asset Value Per Share
Class A Shares................. $1.00 $1.00 $1.00
Class I Shares................. $1.00 $1.00 $1.00
</TABLE>
<TABLE>
<CAPTION>
PEGASUS
MANAGED ASSETS ONE GROUP(R) PRO FORMA
CONSERVATIVE FUND INVESTOR BALANCED FUND COMBINED
----------------- ---------------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $ 134,985,917 $ 203,277,567 $ 338,231,988
Class A Shares................. $ 100,507,996 $ 32,604,462 $ 133,112,458
Class B Shares................. $ 22,223,117 70,462,733 $ 92,685,850
Class C Shares................. N/A $ 6,652,937 $ 6,652,937
Class I Shares................. $ 12,254,804 $ 93,557,435 $ 105,780,743
Shares Outstanding............... 9,147,504 17,207,740 28,618,891
Class A Shares................. 6,814,414 2,755,243 11,251,270
Class B Shares................. 1,505,363 5,962,388 7,842,516
Class C Shares................. N/A 565,081 565,081
Class I Shares................. 827,727 7,925,028 8,960,024
Net Asset Value Per Share
Class A Shares................. $14.75 $11.83 $11.83
Class B Shares................. $14.76 $11.82 $11.82
Class C Shares................. N/A $11.77 $11.77
Class I Shares................. $14.81 $11.81 $11.81
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R)
MANAGED ASSETS INVESTOR GROWTH & PRO FORMA
BALANCED FUND INCOME FUND COMBINED
---------------------- ----------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $ 277,228,675 $ 229,830,622 $ 507,054,440
Class A Shares................. $ 169,028,463 $ 39,873,760 $ 208,902,223
Class B Shares................. $ 15,874,569 $ 85,467,873 $ 101,342,442
Class C Shares................. N/A $ 6,428,710 $ 6,428,710
Class I Shares................. $ 92,325,643 $ 98,060,279 $ 190,381,065
Shares Outstanding............... 23,320,248 18,219,060 40,139,308
Class A Shares................. 14,298,714 3,142,422 16,462,238
Class B Shares................. 1,198,186 6,761,003 8,016,902
Class C Shares................. N/A 512,841 512,841
Class I Shares................. 7,823,748 7,802,794 15,147,327
Net Asset Value Per Share
Class A Shares................. $11.82 $12.69 $12.69
Class B Shares................. $13.25 $12.64 $12.64
Class C Shares................. N/A $12.54 $12.54
Class I Shares................. $11.80 $12.57 $12.57
</TABLE>
21
<PAGE> 25
<TABLE>
<CAPTION>
PEGASUS
MANAGED ASSETS ONE GROUP(R) PRO FORMA
GROWTH FUND INVESTOR GROWTH FUND COMBINED
---------------------- -------------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $ 21,899,958 $ 220,699,449 $ 242,599,407
Class A Shares................. $ 9,404,036 $ 55,056,896 $ 64,460,932
Class B Shares................. $ 10,912,932 $ 70,514,733 $ 81,427,665
Class C Shares................. N/A $ 8,772,688 $ 8,772,688
Class I Shares................. $ 1,582,990 $ 86,355,132 $ 87,938,122
Shares Outstanding............... 1,847,635 16,475,898 18,109,765
Class A Shares................. 787,670 4,131,090 4,836,569
Class B Shares................. 928,030 5,236,548 6,046,714
Class C Shares................. N/A 657,648 657,648
Class I Shares................. 131,935 6,450,612 6,568,834
Net Asset Value Per Share
Class A Shares................. $11.94 $13.33 $13.33
Class B Shares................. $11.76 $13.47 $13.47
Class C Shares................. N/A $13.34 $13.34
Class I Shares................. $12.00 $13.39 $13.39
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRO FORMA
EQUITY INCOME FUND INCOME EQUITY FUND COMBINED
------------------ ------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 328,320,624 $ 976,168,311 $1,304,466,364
Class A Shares................. $ 13,397,091 $ 117,682,024 $ 131,079,115
Class B Shares................. $ 3,637,767 $ 165,813,214 $ 169,450,981
Class C Shares................. N/A $ 795,480 $ 795,480
Class I Shares................. $ 311,285,766 $ 691,877,593 $1,003,140,788
Shares Outstanding............... 26,402,536 40,556,276 54,196,212
Class A Shares................. 1,074,534 4,894,497 5,451,780
Class B Shares................. 291,641 6,886,250 7,037,320
Class C Shares................. N/A 33,035 33,035
Class I Shares................. 25,036,361 28,742,494 41,674,077
Net Asset Value Per Share
Class A Shares................. $12.47 $24.04 $24.04
Class B Shares................. $12.47 $24.08 $24.08
Class C Shares................. N/A $24.08 $24.08
Class I Shares................. $12.43 $24.07 $24.07
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP(R)
PEGASUS LARGE COMPANY PRO FORMA
GROWTH FUND GROWTH FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 847,715,182 $1,990,628,224 $2,838,316,707
Class A Shares................. $ 109,752,170 $ 199,051,299 $ 308,803,469
Class B Shares................. $ 4,353,084 $ 280,563,764 $ 284,916,848
Class C Shares................. N/A $ 491,859 $ 491,859
Class I Shares................. $ 733,609,928 1,510,521,302 $2,244,104,531
Shares Outstanding............... 49,937,827 87,419,506 124,619,585
Class A Shares................. 6,471,853 8,533,858 13,240,212
Class B Shares................. 261,575 12,341,219 12,532,732
Class C Shares................. N/A 21,792 21,792
Class I Shares................. 43,204,399 66,522,637 98,824,849
Net Asset Value Per Share
Class A Shares................. $16.96 $23.32 $23.32
Class B Shares................. $16.64 $22.73 $22.73
Class C Shares................. N/A $22.57 $22.57
Class I Shares................. $16.98 $22.71 $22.71
</TABLE>
22
<PAGE> 26
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R)
INTRINSIC DISCIPLINED PRO FORMA
VALUE FUND VALUE FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 683,010,616 $ 694,209,090 $1,377,219,706
Class A Shares................. $ 132,278,364 $ 29,442,860 $ 161,721,224
Class B Shares................. $ 5,341,678 $ 30,094,907 $ 35,436,585
Class I Shares................. $ 545,390,574 $ 634,671,323 $1,180,061,897
Shares Outstanding............... 42,744,414 41,084,545 81,486,443
Class A Shares................. 8,254,937 1,738,826 9,552,078
Class B Shares................. 469,782 1,785,585 2,102,599
Class I Shares................. 34,019,695 37,560,134 69,831,766
Net Asset Value Per Share
Class A Shares................. $16.02 $16.93 $16.93
Class B Shares................. $11.37 $16.85 $16.85
Class I Shares................. $16.03 $16.90 $16.90
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRO FORMA
GROWTH AND VALUE FUND VALUE GROWTH FUND COMBINED
--------------------- ----------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $1,227,370,787 $ 737,575,048 $1,964,945,835
Class A Shares................. $ 264,449,804 $ 80,500,100 $ 344,949,904
Class B Shares................. $ 9,612,670 $ 25,501,072 $ 35,113,742
Class C Shares................. N/A $ 1,234,273 $ 1,234,273
Class I Shares................. $ 953,308,313 $ 630,339,603 $1,583,647,916
Shares Outstanding............... 72,759,641 54,603,610 145,473,009
Class A Shares................. 15,604,881 5,963,678 25,552,552
Class B Shares................. 938,778 1,902,425 2,619,788
Class C Shares................. N/A 91,611 91,611
Class I Shares................. 56,215,982 46,645,896 117,209,058
Net Asset Value Per Share
Class A Shares................. $16.95 $13.50 $13.50
Class B Shares................. $10.24 $13.40 $13.40
Class C Shares................. N/A $13.47 $13.47
Class I Shares................. $16.96 $13.51 $13.51
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRO FORMA
EQUITY INDEX FUND EQUITY INDEX FUND COMBINED
----------------- ----------------- ---------
<S> <C> <C> <C>
Total Net Assets................. $ 981,290,293 $1,244,778,050 $2,226,068,343
Class A Shares................. $ 281,046,761 $ 218,517,419 $ 499,564,180
Class B Shares................. $ 2,821,942 $ 351,624,116 $ 354,446,058
Class C Shares................. N/A $ 3,214,236 $ 3,214,236
Class I Shares................. $ 697,421,590 $ 671,422,279 $1,368,843,869
Shares Outstanding............... 39,629,988 45,844,648 81,978,556
Class A Shares................. 11,332,956 8,048,525 18,400,155
Class B Shares................. 188,271 12,959,252 13,063,268
Class C Shares................. N/A 118,427 118,427
Class I Shares................. 28,108,761 24,718,444 50,396,706
Net Asset Value Per Share
Class A Shares................. $24.80 $27.15 $27.15
Class B Shares................. $14.99 $27.13 $27.13
Class C Shares................. N/A $27.14 $27.14
Class I Shares................. $24.81 $27.16 $27.16
</TABLE>
23
<PAGE> 27
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R)
INTERMEDIATE INTERMEDIATE PRO FORMA
BOND FUND BOND FUND COMBINED
------------ ------------ ---------
<S> <C> <C> <C>
Total Net Assets................. $ 593,679,600 $ 746,159,292 $1,339,838,892
Class A Shares................. $ 86,340,805 $ 44,566,620 $ 130,907,425
Class B Shares................. $ 728,387 $ 19,924,343 $ 20,652,730
Class C Shares................. N/A $ 868,686 $ 868,686
Class I Shares................. $ 506,610,408 $ 680,799,643 $1,187,410,051
Shares Outstanding............... 56,515,680 73,742,862 127,533,898
Class A Shares................. 8,222,132 4,392,082 12,466,572
Class B Shares................. 69,980 1,969,711 1,983,942
Class C Shares................. N/A 85,636 83,447
Class I Shares................. 48,223,568 67,295,433 112,999,937
Net Asset Value Per Share
Class A Shares................. $10.50 $10.15 $10.50
Class B Shares................. $10.41 $10.12 $10.41
Class C Shares................. N/A $10.14 $10.41
Class I Shares................. $10.51 $10.12 $10.51
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRO FORMA
SHORT BOND FUND LIMITED VOLATILITY FUND COMBINED
--------------- ----------------------- ---------
<S> <C> <C> <C>
Total Net Assets................. $ 259,058,041 $ 613,102,190 $ 872,151,629
Class A Shares................. $ 14,082,561 $ 15,582,402 $ 29,664,963
Class B Shares................. $ 273,648 $ 4,851,117 $ 5,124,765
Class I Shares................. $ 244,701,832 $ 592,668,671 $ 837,361,901
Shares Outstanding............... 25,534,348 58,347,823 82,996,852
Class A Shares................. 1,387,147 1,484,029 2,825,225
Class B Shares................. 27,205 458,824 484,713
Class I Shares................. 24,119,996 56,404,970 79,686,914
Net Asset Value Per Share
Class A Shares................. $10.15 $10.50 $10.50
Class B Shares................. $10.06 $10.57 $10.57
Class I Shares................. $10.15 $10.51 $10.51
</TABLE>
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRO FORMA
MULTI-SECTOR BOND FUND INCOME BOND FUND COMBINED
---------------------- ---------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $ 131,260,895 $ 928,511,932 $1,059,757,735
Class A Shares................. $ 12,159,376 $ 14,737,824 $ 26,897,200
Class B Shares................. $ 603,757 $ 15,511,055 $ 16,114,812
Class I Shares................. $ 118,497,762 $ 898,263,053 $1,016,745,723
Shares Outstanding............... 16,221,028 97,587,753 130,984,875
Class A Shares................. 1,503,596 1,549,876 3,325,329
Class B Shares................. 74,393 1,617,401 1,984,621
Class I Shares................. 14,643,039 94,420,476 125,674,925
Net Asset Value Per Share
Class A Shares................. $8.09 $9.51 $8.09
Class B Shares................. $8.12 $9.59 $8.12
Class I Shares................. $8.09 $9.51 $8.09
</TABLE>
24
<PAGE> 28
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) PRO FORMA
HIGH YIELD BOND FUND HIGH YIELD BOND FUND* COMBINED
-------------------- --------------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $ 68,442,132 N/A $ 68,442,132
Class A Shares................. $ 1,574,353 N/A $ 1,574,353
Class B Shares................. $ 234,824 N/A $ 234,824
Class I Shares................. $ 66,632,955 N/A $ 66,632,955
Shares Outstanding............... 6,642,830 N/A 6,642,830
Class A Shares................. 153,979 N/A 153,979
Class B Shares................. 22,931 N/A 22,931
Class I Shares................. 6,465,920 N/A 6,465,920
Net Asset Value Per Share
Class A Shares................. $10.22 N/A $10.22
Class B Shares................. $10.24 N/A $10.24
Class I Shares................. $10.31 N/A $10.31
</TABLE>
- ---------------
* The One Group High Yield Bond Fund commenced investment operations on November
12, 1998.
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R)
INTERMEDIATE MUNICIPAL INTERMEDIATE TAX-FREE PRO FORMA
BOND FUND BOND FUND COMBINED
---------------------- --------------------- --------------
<S> <C> <C> <C>
Total Net Assets................. $ 454,779,406 $ 513,859,726 $ 968,622,640
Class A Shares................. $ 20,176,884 $ 14,515,087 $ 34,691,971
Class B Shares................. $ 800,830 $ 5,658,736 $ 6,459,566
Class I Shares................. $ 433,801,692 $ 493,685,903 $ 927,471,103
Shares Outstanding............... 36,966,397 46,100,591 86,888,062
Class A Shares................. 1,640,534 1,303,116 3,114,326
Class B Shares................. 65,162 507,110 578,869
Class I Shares................. $ 35,260,701 44,290,365 83,194,867
Net Asset Value Per Share
Class A Shares................. $12.30 $11.14 $11.14
Class B Shares................. $12.29 $11.16 $11.16
Class I Shares................. $12.30 $11.15 $11.15
</TABLE>
<TABLE>
<CAPTION>
PEGASUS MICHIGAN ONE GROUP(R) MICHIGAN
MUNICIPAL MONEY MUNICIPAL MONEY PRO FORMA
MARKET FUND MARKET FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 107,749,167 N/A $ 107,749,167
Class A Shares................. $ 37,229,831 N/A $ 37,229,831
Class I Shares................. $ 70,519,336 N/A $ 70,519,336
Shares Outstanding............... 107,750,154 N/A 107,750,154
Class A Shares................. 37,230,395 N/A 37,230,395
Class I Shares................. 70,519,759 N/A 70,519,759
Net Assets Value Per Share
Class A Shares................. $1.00 N/A $1.00
Class I Shares................. $1.00 N/A $1.00
</TABLE>
25
<PAGE> 29
<TABLE>
<CAPTION>
ONE GROUP(R) CASH
PEGASUS CASH MANAGEMENT MONEY PRO FORMA
MANAGEMENT FUND MARKET FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $2,117,354,253 N/A $2,117,354,253
Class I Shares................. $ 928,341,028 N/A $ 928,341,028
Class S Shares................. $1,189,013,225 N/A $1,189,013,225
Shares Outstanding............... 2,117,556,151 N/A 2,117,556,151
Class I Shares................. 928,500,029 N/A 928,500,029
Class S Shares................. 1,189,056,122 N/A 1,189,056,122
Net Assets Value Per Share
Class I Shares................. $1.00 N/A $1.00
Class S Shares................. $1.00 N/A $1.00
</TABLE>
<TABLE>
<CAPTION>
PEGASUS TREASURY ONE GROUP(R) TREASURY
CASH MANAGEMENT CASH MANAGEMENT PRO FORMA
FUND MONEY MARKET FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 309,992,426 N/A $ 309,992,426
Class I Shares................. $ 22,868,856 N/A $ 22,868,856
Class S Shares................. $ 287,123,570 N/A $ 287,123,570
Shares Outstanding............... 309,992,426 N/A 309,992,426
Class I Shares................. 22,868,856 N/A 22,868,856
Class S Shares................. 287,123,570 N/A 287,123,570
Net Assets Value Per Share
Class I Shares................. $1.00 N/A $1.00
Class S Shares................. $1.00 N/A $1.00
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP(R) TREASURY
PEGASUS TREASURY PRIME CASH
PRIME CASH MANAGEMENT PRO FORMA
MANAGEMENT FUND MONEY MARKET FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 443,090,087 N/A $ 443,090,087
Class I Shares................. $ 92,324,603 N/A $ 92,324,603
Class S Shares................. $ 350,765,484 N/A $ 350,765,484
Shares Outstanding............... 443,080,975 N/A 443,080,975
Class I Shares................. 92,323,956 N/A 92,323,956
Class S Shares................. 350,757,019 N/A 350,757,019
Net Assets Value Per Share
Class I Shares................. $1.00 N/A $1.00
Class S Shares................. $1.00 N/A $1.00
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP(R) U.S.
PEGASUS U.S. GOVERNMENT
GOVERNMENT SECURITIES CASH
SECURITIES CASH MANAGEMENT PRO FORMA
MANAGEMENT FUND MONEY MARKET FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $1,257,778,347 N/A $1,257,778,347
Class I Shares................. $ 810,685,995 N/A $ 810,685,995
Class S Shares................. $ 447,092,352 N/A $ 447,092,352
Shares Outstanding............... 1,258,285,310 N/A 1,258,285,310
Class I Shares................. 811,092,142 N/A 811,092,142
Class S Shares................. 447,193,168 N/A 447,193,168
Net Assets Value Per Share
Class I Shares................. $1.00 N/A $1.00
Class S Shares................. $1.00 N/A $1.00
</TABLE>
26
<PAGE> 30
<TABLE>
<CAPTION>
PEGASUS MUNICIPAL ONE GROUP(R) MUNICIPAL
CASH MANAGEMENT CASH MANAGEMENT PRO FORMA
FUND MONEY MARKET FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 420,500,355 N/A $ 420,500,355
Class I Shares................. $ 352,314,800 N/A $ 352,314,800
Class S Shares................. $ 68,185,555 N/A $ 68,185,555
Shares Outstanding............... 420,500,355 N/A 420,500,355
Class I Shares................. 352,314,800 N/A 352,314,800
Class S Shares................. 68,185,555 N/A 68,185,555
Net Assets Value Per Share
Class I Shares................. $1.00 N/A $1.00
Class S Shares................. $1.00 N/A $1.00
</TABLE>
<TABLE>
<CAPTION>
PEGASUS INTERNATIONAL ONE GROUP(R) DIVERSIFIED PRO FORMA
EQUITY FUND INTERNATIONAL FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 599,026,639 N/A $ 599,026,639
Class A Shares................. $ 43,279,818 N/A $ 43,279,818
Class B Shares................. $ 2,455,836 N/A $ 2,455,836
Class I Shares................. $ 553,870,240 N/A $ 553,870,240
Shares Outstanding............... 43,832,810 N/A 43,832,810
Class A Shares................. 3,173,445 N/A 3,173,445
Class B Shares................. 191,940 N/A 191,940
Class I Shares................. 40,467,425 N/A 40,467,425
Net Assets Value Per Share
Class A Shares................. $13.64 N/A $13.64
Class B Shares................. $12.79 N/A $12.79
Class I Shares................. $13.67 N/A $13.67
</TABLE>
<TABLE>
<CAPTION>
PEGASUS BOND ONE GROUP(R) PRO FORMA
FUND BOND FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $1,448,676,385 N/A $1,448,676,385
Class A Shares................. $ 238,038,439 N/A $ 238,038,439
Class B Shares................. $ 6,097,242 N/A $ 6,097,242
Class I Shares................. $1,204,540,704 N/A $1,204,540,704
Shares Outstanding............... 135,765,947 N/A 135,765,947
Class A Shares................. 22,312,932 N/A 22,312,932
Class B Shares................. 571,538 N/A 571,538
Class I Shares................. 112,881,477 N/A 112,881,477
Net Assets Value Per Share
Class A Shares................. $10.67 N/A $10.67
Class B Shares................. $10.67 N/A $10.67
Class I Shares................. $10.67 N/A $10.67
</TABLE>
27
<PAGE> 31
<TABLE>
<CAPTION>
PEGASUS MUNICIPAL ONE GROUP(R) TAX FREE PRO FORMA
BOND FUND BOND FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 444,879,451 N/A $ 444,879,451
Class A Shares................. $ 40,156,768 N/A $ 40,156,768
Class B Shares................. $ 1,757,634 N/A $ 1,757,634
Class I Shares................. $ 402,965,049 N/A $ 402,965,049
Shares Outstanding............... 34,631,030 N/A 34,631,030
Class A Shares................. 3,124,215 N/A 3,124,215
Class B Shares................. 136,862 N/A 136,862
Class I Shares................. 31,369,953 N/A 31,369,953
Net Assets Value Per Share
Class A Shares................. $12.85 N/A $12.85
Class B Shares................. $12.84 N/A $12.84
Class I Shares................. $12.85 N/A $12.85
</TABLE>
<TABLE>
<CAPTION>
PEGASUS SHORT ONE GROUP(R) SHORT
MUNICIPAL TERM PRO FORMA
BOND FUND MUNICIPAL BOND FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 10,696,373 N/A $ 10,696,373
Class A Shares................. $ 72,967 N/A $ 72,967
Class B Shares................. $ 100 N/A $ 100
Class I Shares................. $ 10,623,306 N/A $ 10,623,306
Shares Outstanding............... 1,060,460 N/A 1,060,460
Class A Shares................. 7,245 N/A 7,245
Class B Shares................. 10 N/A 10
Class I Shares................. 1,053,205 N/A 1,053,205
Net Assets Value Per Share
Class A Shares................. $10.07 N/A $10.07
Class B Shares................. $10.00 N/A $10.00
Class I Shares................. $10.09 N/A $10.09
</TABLE>
<TABLE>
<CAPTION>
PEGASUS MICHIGAN ONE GROUP(R) MICHIGAN PRO FORMA
MUNICIPAL BOND FUND MUNICIPAL BOND FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 100,063,233 N/A $ 100,063,233
Class A Shares................. $ 18,692,737 N/A $ 18,692,737
Class B Shares................. $ 1,436,391 N/A $ 1,436,391
Class I Shares................. $ 79,934,105 N/A $ 79,934,105
Shares Outstanding............... 9,140,591 N/A 9,140,591
Class A Shares................. 1,706,520 N/A 1,706,520
Class B Shares................. 135,407 N/A 135,407
Class I Shares................. 7,298,664 N/A 7,298,664
Net Assets Value Per Share
Class A Shares................. $10.95 N/A $10.95
Class B Shares................. $10.61 N/A $10.61
Class I Shares................. $10.95 N/A $10.95
</TABLE>
28
<PAGE> 32
<TABLE>
<CAPTION>
PEGASUS MID-CAP ONE GROUP(R) DIVERSIFIED PRO FORMA
OPPORTUNITY FUND MID CAP FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $1,145,956,419 N/A $1,145,956,419
Class A Shares................. $ 296,264,467 N/A $ 296,264,467
Class B Shares................. $ 6,632,015 N/A $ 6,632,015
Class I Shares................. $ 843,059,937 N/A $ 843,059,937
Shares Outstanding............... 54,537,323 N/A 54,537,323
Class A Shares................. 14,048,016 N/A 14,048,016
Class B Shares................. 662,182 N/A 662,182
Class I Shares................. 39,827,125 N/A 39,827,125
Net Assets Value Per Share
Class A Shares................. $21.09 N/A $21.09
Class B Shares................. $10.02 N/A $10.02
Class I Shares................. $21.17 N/A $21.17
</TABLE>
<TABLE>
<CAPTION>
PEGASUS SMALL-CAP ONE GROUP(R) SMALL CAP PRO FORMA
OPPORTUNITY FUND VALUE FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 327,614,361 N/A $ 327,614,361
Class A Shares................. $ 33,523,431 N/A $ 33,523,431
Class B Shares................. $ 3,843,342 N/A $ 3,843,342
Class I Shares................. $ 290,247,588 N/A $ 290,247,588
Shares Outstanding............... 19,409,424 N/A 19,409,424
Class A Shares................. 2,008,892 N/A 2,008,892
Class B Shares................. 235,473 N/A 235,473
Class I Shares................. 17,165,059 N/A 17,165,059
Net Assets Value Per Share
Class A Shares................. $16.69 N/A $16.69
Class B Shares................. $16.32 N/A $16.32
Class I Shares................. $16.91 N/A $16.91
</TABLE>
<TABLE>
<CAPTION>
PEGASUS MARKET ONE GROUP(R) SMALL CAP PRO FORMA
EXPANSION INDEX FUND* INDEX FUND COMBINED
---------------------- ------------------------ --------------
<S> <C> <C> <C>
Total Net Assets................. $ 27,514,159 N/A $ 27,514,159
Class A Shares................. $ 30,460 N/A $ 30,460
Class B Shares................. $ 219 N/A $ 219
Class I Shares................. $ 27,483,480 N/A $ 27,483,480
Shares Outstanding............... 2,615,460 N/A 2,615,460
Class A Shares................. 2,894 N/A 2,894
Class B Shares................. 21 N/A 21
Class I Shares................. 2,612,545 N/A 2,612,545
Net Assets Value Per Share
Class A Shares................. $10.53 N/A $10.53
Class B Shares................. $10.49 N/A $10.49
Class I Shares................. $10.52 N/A $10.52
</TABLE>
- ---------------
* Fund commenced operations on July 29, 1998. Data provided for this fund is as
of December 31, 1998.
FEDERAL INCOME TAX CONSEQUENCES. With respect to each Pegasus Portfolio
that is not a money market fund, consummation of the Reorganization is subject
to the condition that Pegasus and One Group receive an opinion from Ropes &
Gray, in form reasonably satisfactory to both Pegasus and One Group and dated as
of the Exchange Date, to the effect that for federal income tax purposes: (i) no
gain or loss will be recognized by the Pegasus Portfolio upon transfer of the
assets to the corresponding One Group Fund in exchange for Shares and the
assumption by such One Group Fund of the liabilities of the Pegasus Portfolio;
(ii) no gain or loss will
29
<PAGE> 33
be recognized by the shareholders of the Pegasus Portfolio upon the exchange of
their shares for Shares; (iii) the basis of the Shares a Pegasus shareholder
receives in connection with the transaction will be the same as the basis of his
or her Pegasus Portfolio shares exchanged therefor; (iv) a Pegasus shareholder's
holding period for his or her Shares will be determined by including the period
for which he or she held the Pegasus Portfolio shares exchanged therefor,
provided that he or she held such Pegasus Portfolio shares as capital assets;
(v) no gain or loss will be recognized by the corresponding One Group Fund upon
the receipt of the assets of the corresponding Pegasus Portfolio in exchange for
Shares and the assumption by the One Group Fund of the liabilities of the
corresponding Pegasus Portfolio; (vi) the basis in the hands of the
corresponding One Group Fund of the assets of the corresponding Pegasus
Portfolio transferred to the One Group Fund in the transaction will be the same
as the basis of the assets in the hands of the corresponding Pegasus Portfolio
immediately prior to the transfer; and (vii) the holding periods of the assets
of the Pegasus Portfolio in the hands of the corresponding One Group Fund will
include the periods for which such assets were held by the Pegasus Portfolio.
Receipt of such an opinion with respect to any Pegasus Portfolio that is a money
market fund is not a condition to the Reorganization. In any event, however, no
material amount of taxable gain or loss will be recognized by any money market
fund or money market fund shareholders by reason of the Reorganization.
Pegasus and One Group have not sought a tax ruling from the Internal
Revenue Service ("IRS"), but are acting in reliance upon the opinion of counsel
discussed in the previous paragraph. That opinion is not binding on the IRS and
does not preclude the IRS from adopting a contrary position. Shareholders should
consult their own advisers concerning the potential tax consequences to them,
including state and local income taxes.
Shareholders should note that each One Group Fund may, to the extent
permitted by law and consistent with the opinion to be issued by Ropes & Gray
discussed above, dispose of some of the securities acquired by it in connection
with the transaction. Disposition of securities may have tax consequences to
shareholders. In addition, immediately prior to the transaction, each Pegasus
Portfolio will declare and distribute a dividend which will have the effect of
distributing to Pegasus shareholders all of the Pegasus Portfolio's investment
company taxable income and net realized capital gains. To the extent that a
Pegasus Portfolio's investments are restructured prior to the Reorganization,
the Pegasus Portfolio may realize a greater amount of net capital gains which
would then need to be distributed to Pegasus shareholders. These distributions
may have tax consequences to Pegasus shareholders. The ability of either entity
to dispose of assets in connection with the Reorganization is limited by federal
tax requirements. For additional information, see "Information Relating to the
Proposed Reorganization -- Federal Income Tax Consequences."
BOARD COMPOSITION
Listed below are the current members of the Board of Trustees of One Group.
Following the Reorganization, three members of the current Board of Trustees of
Pegasus will be invited to join the One Group Board of Trustees. One Group will
hold a shareholders meeting to elect these new Trustees. Pegasus will pay a
retirement benefit of $60,000 to each of its Trustees who does not become a One
Group Trustee, in recognition of the Trustee's services to Pegasus. These
amounts, together with certain other expenses of the Reorganization, will be
reimbursed by BOIA or an affiliate.
30
<PAGE> 34
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE WITH THE TRUST DURING THE PAST 5 YEARS
---------------- --- ---------------- -----------------------
<S> <C> <C> <C>
Peter C. Marshall 56 Trustee From November, 1993 to present,
DCI Marketing, Inc. President, DCI Marketing, Inc.; from
2727 W. Good Hope Road August, 1992 to November, 1993, Vice
Milwaukee, WI 53209 President-Finance and Treasurer DCI
Marketing, Inc.
Charles I. Post 70 Trustee From July, 1986 to present, consultant
7615 4th Avenue West
Bradenton, FL 34209
Frederick W. Ruebeck 58 Trustee From June, 1988 to present, Director of
Eli Lilly & Company Investments, Eli Lilly and Company
Lilly Corporate Center
307 East McCarty
Indianapolis, IN 46285
Robert A. Oden, Jr. 51 Trustee From 1995 to present, President, Kenyon
Office of the President College; from 1989 to 1995, Headmaster,
Ransom Hall The Hotchkiss School
Kenyon College
Gambier, OH 43022
John F. Finn 51 Trustee From 1975 to present, President of
President Gardner, Inc.
Gardner, Inc.
1150 Chesapeake Avenue
Columbus, Ohio 43212
</TABLE>
31
<PAGE> 35
COMPARISON OF PEGASUS AND ONE GROUP
INVESTMENT OBJECTIVES AND POLICIES. The investment objectives, policies and
restrictions of the Pegasus Portfolios are, in general, similar to those of
their corresponding One Group Funds. There are, however, certain differences.
For example, the percentage of assets allocated to the various Underlying Funds
varies for the three Pegasus Managed Assets Funds and the three One Group
Investor Funds; and the Intermediate Municipal Bond Fund and the International
Equity Fund of Pegasus are "non-diversified" funds, but the corresponding One
Group Funds are diversified. Diversification reduces the risk that a fund's
investments will be affected by a single issuer.
The Bond Funds have certain differences. The Pegasus Multi Sector Bond Fund
may invest in investment grade debt securities only, but the corresponding One
Group(R) Income Bond Fund may invest up to 30% of its assets in securities rated
below investment grade (also known as junk bonds). Investments in securities
rated below investment grade are high risk investments subject to greater risk
of loss, valuation difficulties, interest rate sensitivity, low liquidity and
changes in credit quality. The One Group(R) Limited Volatility Bond Fund must
invest 80% of its total assets in debt securities with short to intermediate
maturities, while the Pegasus Short Bond Fund has no such limitation. The
average weighted maturities of the investments of the Pegasus Short Bond,
Intermediate Bond, Multi Sector Bond, Bond and High Yield Bond Funds differ from
those of their corresponding One Group(R) Limited Volatility, Intermediate Bond,
Income Bond and High Yield Bond Funds. Generally, these Pegasus Funds have
shorter average weighted maturities. This is significant because a longer
average weighted maturity will cause greater fluctuations in the value of a
fund.
The Equity Funds have differences as well. The Pegasus Small-Cap
Opportunity Fund primarily invests in companies with market capitalization of
$100 million to $1 billion while The One Group(R) Small Cap Value Fund invests
in companies with a market capitalization of $100 million to $2 billion. The
Pegasus Mid-Cap Opportunity Fund invests primarily in equity securities of
companies with a market capitalization of $500 million to $3 billion. The One
Group(R) Diversified Mid-Cap Fund invests primarily in equity securities of
companies with a market capitalization of $500 million to $5 billion.
For additional information, see "Overview of Pegasus and One Group" and
"Principal Risk Factors" under "Summary" above and Appendix III -- Comparison of
Investment Objectives and Certain Significant Policies attached to this Combined
Prospectus and Proxy Statement. Further information on the investment
objectives, policies and restrictions of the One Group Funds and the Pegasus
Portfolios is also included in their respective Prospectuses and Statements of
Additional Information, which have been incorporated herein by reference.
EXPENSE RATIOS. The following table shows (1) the current total expense
ratios of the Pegasus Portfolios, before and after fee waivers and/or expense
reimbursements, based on information contained in the Pegasus Prospectuses dated
April 30, 1998, (2) the current total expense ratios of the corresponding
Existing One Group Funds, before and after fee waivers and/or expense
reimbursements, based on information contained in the One Group Prospectuses
dated November 1, 1998, and (3) the pro forma annualized total expense ratios of
the combined funds, based upon the fee arrangements, before and after fee
waivers and/or expense reimbursements, that will be in place upon consummation
of the Reorganization. BOIA has agreed to limit the total operating expense
ratios of the Existing One Group Funds following the Reorganization as set forth
under the column "Pro Forma Total Operating Expenses" in the following Table
until at least August 1999. With respect to the New One Group Funds, BOIA has
agreed to waive a portion of its investment advisory fee until at least March
2000 so that the rate of total operating expenses actually paid will at least
equal the rate currently paid for total operating expense by the corresponding
Continuing Pegasus Portfolios. Detailed pro forma expense information for each
proposed reorganization is included in Appendix II -- Comparative Fee Tables to
this Combined Prospectus/Proxy Statement.
32
<PAGE> 36
<TABLE>
<CAPTION>
TOTAL TOTAL
OPERATING OPERATING
EXPENSES CORRESPONDING EXPENSES COMBINED
PEGASUS FUND BEFORE/AFTER ONE GROUP FUND SHARE BEFORE/AFTER FUND SHARE CLASS
SHARE CLASS WAIVERS CLASS WAIVERS POST-REORGANIZATION
- ----------------------- --------------- ---------------------------- --------------- ----------------------------
<S> <C> <C> <C> <C>
Pegasus Money Market One Group(R) Prime Money One Group(R) Prime Money
Fund Market Fund Market Fund
Class A Shares 0.77%/0.75% Class A Shares 0.77%/0.77% Class A Shares
Class B Shares 1.52%/1.50% Class B Shares 1.52%/1.52% Class B Shares
Class I Shares 0.52%/0.50% Class I Shares 0.52%/0.52% Class I Shares
Pegasus Treasury Money One Group(R) U.S. Treasury One Group(R) U.S. Treasury
Market Fund Securities Money Market Fund Securities Money Market Fund
Class A Shares 0.73%/0.73% Class A Shares 0.77%/0.77% Class A Shares
Class B Shares N/A Class B Shares 1.52%/1.52% Class B Shares
Class I Shares 0.48%/0.48% Class I Shares 0.52%/0.52% Class I Shares
Pegasus Municipal Money One Group(R) Municipal One Group(R) Municipal
Market Fund Money Market Fund Money Market Fund
Class A Shares 0.73%/0.73% Class A Shares 0.80%/0.72% Class A Shares
Class B Shares N/A Class B Shares N/A Class B Shares
Class I Shares 0.48%/0.48% Class I Shares 0.55%/0.47% Class I Shares
Pegasus Michigan One Group(R) Michigan One Group(R) Michigan
Municipal Money Market Municipal Money Market Fund Municipal Money Market Fund
Fund
Class A Shares 0.76%/0.75% Class A Shares 0.84%/0.74% Class A Shares
Class B Shares N/A Class B Shares N/A Class B Shares
Class I Shares 0.51%/0.50% Class I Shares 0.59%/0.49% Class I Shares
Pegasus Cash Management One Group(R) Cash Management One Group(R) Cash Management
Fund Money Market Fund Money Market Fund
Class I Shares 0.39%/0.35% Class I Shares 0.39%/0.34% Class I Shares
Class S Shares 0.64%/0.60% Class A Shares 0.64%/0.59% Class A Shares
Pegasus Treasury Cash One Group(R) Treasury Cash One Group(R) Treasury Cash
Management Fund Management Money Market Fund Management Money Market Fund
Class I Shares 0.38%/0.35% Class I Shares 0.38%/0.34% Class I Shares
Class S Shares 0.63%/0.60% Class A Shares 0.63%/0.59% Class A Shares
Pegasus Treasury Prime One Group(R) Treasury Prime One Group(R) Treasury Prime
Cash Management Fund Cash Management Money Market Cash Management Money Market
Fund Fund
Class I Shares 0.40%/0.35% Class I Shares 0.40%/0.34% Class I Shares
Class S Shares 0.65%/0.60% Class A Shares 0.65%/0.59% Class A Shares
Pegasus U.S. Government One Group(R) U.S. Government One Group(R) U.S. Government
Securities Cash Securities Cash Management Securities Cash Management
Management Fund Money Market Fund Money Market Fund
Class I Shares 0.37%/0.35% Class I Shares 0.38%/0.35% Class I Shares
Class S Shares 0.62%/0.60% Class A Shares 0.63%/0.60% Class A Shares
Pegasus Municipal Cash One Group(R) Municipal Cash One Group(R) Municipal Cash
Management Fund Management Money Market Fund Management Money
Market Fund
Class I Shares 0.38%/0.35% Class I Shares 0.38%/0.34% Class I Shares
Class S Shares 0.63%/0.60% Class A Shares 0.63%/0.59% Class A Shares
Pegasus Managed Assets One Group(R) Investor One Group(R) Investor
Conservative Fund Balanced Fund Balanced Fund
Class A Shares 1.38%/1.25% Class A Shares 1.43%/1.23% Class A Shares
Class B Shares 2.13%/2.00% Class B Shares 2.08%/1.98% Class B Shares
Class I Shares 1.13%/1.00% Class I Shares 1.08%/0.98% Class I Shares
<CAPTION>
PRO FORMA
TOTAL
OPERATING
EXPENSES
BEFORE/AFTER
WAIVERS
- ---------------
<S><C>
0.82%/0.77%
1.57%/1.52%
0.57%/0.52%
0.78%/0.75%
1.53%/1.50%
0.53%/0.50%
0.82%/0.70%
N/A
0.57%/0.45%
0.84%/0.74%
N/A
0.59%/0.49%
0.39%/0.34%
0.64%/0.59%
0.38%/0.34%
0.63%/0.59%
0.40%/0.34%
0.65%/0.59%
0.38%/0.35%
0.63%/0.60%
0.38%/0.34%
0.63%/0.59%
1.43%/1.22%
2.08%/1.97%
1.08%/0.97%
</TABLE>
33
<PAGE> 37
<TABLE>
<CAPTION>
TOTAL TOTAL
OPERATING OPERATING
EXPENSES CORRESPONDING EXPENSES COMBINED
PEGASUS FUND BEFORE/AFTER ONE GROUP FUND SHARE BEFORE/AFTER FUND SHARE CLASS
SHARE CLASS WAIVERS CLASS WAIVERS POST-REORGANIZATION
- ----------------------- --------------- ---------------------------- --------------- ----------------------------
<S> <C> <C> <C> <C>
Pegasus Managed Assets One Group(R) Investor Growth One Group(R) Investor Growth
Balanced Fund & Income Fund & Income Fund
Class A Shares 1.38%/1.25% Class A Shares 1.46%/1.28% Class A Shares
Class B Shares 2.13%/2.00% Class B Shares 2.11%/2.03% Class B Shares
Class I Shares 1.13%/1.00% Class I Shares 1.11%/1.03% Class I Shares
Pegasus Managed Assets One Group(R) Investor Growth One Group(R) Investor Growth
Growth Fund Fund Fund
Class A Shares 1.67%/1.25% Class A Shares 1.47%/1.30% Class A Shares
Class B Shares 2.42%/2.00% Class B Shares 2.12%/2.05% Class B Shares
Class I Shares 1.42%/1.00% Class I Shares 1.12%/1.05% Class I Shares
Pegasus Equity Income One Group(R) Income Equity One Group(R) Equity Income
Fund Fund Fund
Class A Shares 0.95%/0.95% Class A Shares 1.35%/1.25% Class A Shares
Class B Shares 1.70%/1.70% Class B Shares 2.00%/2.00% Class B Shares
Class I Shares 0.70%/0.70% Class I Shares 1.00%/1.00% Class I Shares
Pegasus Growth Fund One Group(R) Large Company One Group(R) Large Cap
Growth Fund Growth Fund
Class A Shares 1.07%/1.07% Class A Shares 1.35%/1.25% Class A Shares
Class B Shares 1.82%/1.82% Class B Shares 2.00%/2.00% Class B Shares
Class I Shares 0.82%/0.82% Class I Shares 1.00%/1.00% Class I Shares
Pegasus Mid-Cap One Group(R) Diversified One Group(R) Diversified
Opportunity Fund MidCap Fund MidCap Fund
Class A Shares 1.14%/1.14% Class A Shares 1.36%/1.11% Class A Shares
Class B Shares 1.89%/1.89% Class B Shares 2.01%/1.86% Class B Shares
Class I Shares 0.89%/0.89% Class I Shares 1.01%/0.86% Class I Shares
Pegasus Small-Cap One Group(R) Small Cap Value One Group(R) Small Cap Value
Opportunity Fund Fund Fund
Class A Shares 1.19%/1.19% Class A Shares 1.31%/1.16% Class A Shares
Class B Shares 1.94%/1.94% Class B Shares 1.96%/1.91% Class B Shares
Class I Shares 0.94%/0.94% Class I Shares 0.96%/0.91% Class I Shares
Pegasus Intrinsic Value One Group(R) Disciplined One Group(R) Mid Cap Value
Fund Value Fund Fund
Class A Shares 1.09%/1.09% Class A Shares 1.35%/1.25% Class A Shares
Class B Shares 1.84%/1.84% Class B Shares 2.00%/2.00% Class B Shares
Class I Shares 0.84%/0.84% Class I Shares 1.00%/1.00% Class I Shares
Pegasus Growth and One Group(R) Value Growth One Group(R) Diversified
Value Fund Fund Equity Fund
Class A Shares 1.11%/1.11% Class A Shares 1.35%/1.25% Class A Shares
Class B Shares 1.86%/1.86% Class B Shares 2.00%/2.00% Class B Shares
Class I Shares 0.86%/0.86% Class I Shares 1.00%/1.00% Class I Shares
Pegasus Equity Index One Group(R) Equity Index One Group(R) Equity Index
Fund Fund Fund
Class A Shares 0.65%/0.65% Class A Shares 0.90%/0.75% Class A Shares
Class B Shares 1.40%/1.40% Class B Shares 1.55%/1.50% Class B Shares
Class I Shares 0.40%/0.40% Class I Shares 0.55%/0.50% Class I Shares
Pegasus Market One Group(R) Market One Group(R) Market
Expansion Index Fund* Expansion Index Fund Expansion Index Fund
Class A Shares 1.17%/0.82% Class A Shares 1.22%/0.82% Class A Shares
Class B Shares 1.92%/1.57% Class B Shares 1.87%/1.57% Class B Shares
Class I Shares 0.92%/0.57% Class I Shares 0.87%/0.57% Class I Shares
Pegasus International One Group(R) Diversified One Group(R) Diversified
Equity Fund International Fund International Fund
Class A Shares 1.44%/1.32% Class A Shares 1.38%/1.27% Class A Shares
Class B Shares 2.19%/2.07% Class B Shares 2.03%/2.02% Class B Shares
Class I Shares 1.19%/1.07% Class I Shares 1.03%/1.02% Class I Shares
<CAPTION>
PRO FORMA
TOTAL
OPERATING
EXPENSES
BEFORE/AFTER
WAIVERS
- ---------------
<S><C>
1.45%/1.26%
2.10%/2.03%
1.10%/1.03%
1.46%/1.28%
2.11%/2.03%
1.11%/1.03%
1.31%/1.05%
1.96%/1.80%
0.96%/0.80%
1.27%/1.17%
1.92%/1.92%
0.92%/0.92%
1.36%/1.11%
2.01%/1.86%
1.01%/0.86%
1.31%/1.16%
1.96%/1.91%
0.96%/0.91%
1.29%/1.19%
1.94%/1.94%
0.94%/0.94%
1.31%/1.21%
1.96%/1.96%
0.96%/0.96%
0.93%/0.61%
1.58%/1.36%
0.58%/0.36%
1.22%/0.82%
1.87%/1.57%
0.87%/0.57%
1.38%/1.27%
2.03%/2.02%
1.03%/1.02%
</TABLE>
34
<PAGE> 38
<TABLE>
<CAPTION>
TOTAL TOTAL
OPERATING OPERATING
EXPENSES CORRESPONDING EXPENSES COMBINED
PEGASUS FUND BEFORE/AFTER ONE GROUP FUND SHARE BEFORE/AFTER FUND SHARE CLASS
SHARE CLASS WAIVERS CLASS WAIVERS POST-REORGANIZATION
- ----------------------- --------------- ---------------------------- --------------- ----------------------------
<S> <C> <C> <C> <C>
Pegasus Intermediate One Group(R) Intermediate One Group(R) Intermediate
Bond Fund Bond Fund Bond Fund
Class A Shares 0.90%/0.90% Class A Shares 1.17%/0.87% Class A Shares
Class B Shares 1.65%/1.65% Class B Shares 1.82%/1.52% Class B Shares
Class I Shares 0.65%/0.65% Class I Shares 0.82%/0.62% Class I Shares
Pegasus Bond Fund One Group(R) Bond Fund One Group(R) Bond Fund
Class A Shares 0.88%/0.88% Class A Shares 1.16%/0.85% Class A Shares
Class B Shares 1.63%/1.63% Class B Shares 1.81%/1.50% Class B Shares
Class I Shares 0.63%/0.63% Class I Shares 0.81%/0.60% Class I Shares
Pegasus Short Bond Fund One Group(R) Limited One Group(R) Short-Term Bond
Volatility Fund Fund
Class A Shares 0.84%/0.84% Class A Shares 1.17%/0.87% Class A Shares
Class B Shares 1.59%/1.59% Class B Shares 1.82%/1.37% Class B Shares
Class I Shares 0.59%/0.59% Class I Shares 0.82%/0.62% Class I Shares
Pegasus Multi Sector One Group(R) Income Bond One Group(R) Income Bond
Bond Fund Fund
Class A Shares 0.90%/0.90% Class A Shares 1.17%/0.87% Class A Shares
Class B Shares 1.65%/1.65% Class B Shares 1.82%/1.52% Class B Shares
Class I Shares 0.65%/0.65% Class I Shares 0.82%/0.62% Class I Shares
Pegasus High Yield Bond One Group(R) High Yield Bond One Group(R) High Yield Bond
Fund Fund Fund
Class A Shares 1.24%/1.14% Class A Shares 1.45%/1.20% Class A Shares
Class B Shares 1.99%/1.89% Class B Shares 2.10%/1.85% Class B Shares
Class I Shares 0.99%/0.89% Class I Shares 1.10%/0.95% Class I Shares
Pegasus Municipal Bond One Group(R) Tax-Free Bond One Group(R) Tax-Free Bond
Fund Fund Fund
Class A Shares 0.88%/0.88% Class A Shares 1.03%/0.87% Class A Shares
Class B Shares 1.63%/1.63% Class B Shares 1.68%/1.52% Class B Shares
Class I Shares 0.63%/0.63% Class I Shares 0.68%/0.62% Class I Shares
Pegasus Short Municipal One Group(R) Short-Term One Group(R) Short-Term
Bond Fund Municipal Bond Fund Municipal Bond Fund
Class A Shares 0.94%/0.87% Class A Shares 1.24%/0.87% Class A Shares
Class B Shares 1.69%/1.62% Class B Shares 1.89%/1.52% Class B Shares
Class I Shares 0.69%/0.62% Class I Shares 0.89%/0.62% Class I Shares
Pegasus Intermediate One Group(R) Intermediate One Group(R) Intermediate
Municipal Bond Fund Tax-Free Bond Fund Tax-Free Bond Fund
Class A Shares 0.85%/0.85% Class A Shares 1.19%/0.91% Class A Shares
Class B Shares 1.60%/1.60% Class B Shares 1.84%/1.56% Class B Shares
Class I Shares 0.60%/0.60% Class I Shares 0.84%/0.66% Class I Shares
Pegasus Michigan One Group(R) Michigan One Group(R) Michigan
Municipal Bond Fund Municipal Bond Fund Municipal Bond Fund
Class A Shares 0.91%/0.91% Class A Shares 1.06%/0.90% Class A Shares
Class B Shares 1.66%/1.66% Class B Shares 1.71%/1.55% Class B Shares
Class I Shares 0.66%/0.66% Class I Shares 0.71%/0.65% Class I Shares
<CAPTION>
PRO FORMA
TOTAL
OPERATING
EXPENSES
BEFORE/AFTER
WAIVERS
- ---------------
<S><C>
1.17%/0.83%
1.82%/1.48%
0.82%/0.58%
1.16%/0.85%
1.81%/1.50%
0.81%/0.60%
1.16%/0.78%
1.81%/1.28%
0.81%/0.53%
1.16%/0.87%
1.81%/1.52%
0.81%/0.62%
1.37%/1.12%
2.02%/1.77%
1.02%/0.87%
1.03%/0.87%
1.68%/1.52%
0.68%/0.62%
1.24%/0.87%
1.89%/1.52%
0.89%/0.62%
1.14%/0.83%
1.79%/1.48%
0.79%/0.58%
1.06%/0.90%
1.71%/1.55%
0.71%/0.65%
</TABLE>
- ---------------
* The Pegasus Market Expansion Index commenced investment operations on August
1, 1998.
35
<PAGE> 39
SHARE CLASSES. The non-money market funds of Pegasus currently offer three
share classes: Class A, Class B, and Institutional Class or Class I (either,
"Class I"). The Pegasus Money Market Fund offers Class A, Class B and Class I
shares, but B shares are only offered through an exchange from a non-money
market fund. The Treasury Money Market, Municipal Money Market and Michigan
Municipal Money Market Funds offer Class A and Class I shares. The Pegasus Cash
Management Funds offer Institutional Class ("Class I") and Service Class ("Class
S") Shares. Class A shares and Class B shares may be purchased through a number
of institutions including FCNIMCO, First National Bank of Chicago ("FNBC"),
American National Bank and Trust Company ("ANB") and their affiliates, including
First NBD Investment Services, Inc., a registered broker-dealer, BISYS which
serves the Trust as its Distributor and certain banks, securities dealers and
other industry professionals such as investment advisers, accountants and estate
planning firms. Class I and Class S shares of the Cash Management Funds are sold
to institutional investors, including banks (such as FNBC, NBD Bank ("NBD"), and
ANB or their affiliates), acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity, public agencies and municipalities,
employee benefit plans or other programs, registered investment advisers and
other financial institutions. For more information, see the section entitled
"Description of Classes" in the Pegasus Prospectuses incorporated by reference
into this Combined Prospectus/Proxy Statement.
The One Group Funds currently offer five classes of shares: Class A, Class
B, Class C, Class I and Service Class Shares. Class A, Class B and Class C
shares are offered to the general public. The Institutional Money Market Funds
offer Class I shares only. The One Group Prime and U.S. Treasury Securities
Money Market Funds offer Class A, Class B, Class C, Class I and Service Class
shares. The One Group Ohio Municipal and Michigan Municipal Money Market Funds
offer Class A, Class C, Class I and Service Class shares. Class I shares are
offered to institutional investors, including affiliates of BOC and any bank,
depository institution, insurance company, pension plan or other organization
authorized to act in fiduciary, advisory, agency, custodial or similar
capacities. Service Class shares are offered to entities purchasing such shares
on behalf of investors requiring additional administrative or accounting
services such as sweep processing. For more information, see the section
entitled "How To Do Business With The One Group" in the One Group Prospectuses
incorporated by reference into the Combined Prospectus/Proxy Statement.
INVESTMENT ADVISER -- PEGASUS PORTFOLIOS. FCNIMCO, an indirect subsidiary
of BOC, serves as investment adviser for the Pegasus Portfolios. Federated
serves as sub-adviser to the High Yield Bond Fund subject to the oversight and
supervision of FCNIMCO. Pursuant to the Pegasus investment advisory agreement
and FCNIMCO's sub-advisory agreement with Federated, FCNIMCO and, Federated in
the case of the High Yield Bond Fund, provide the day-to-day management of each
Pegasus Portfolio's investments, subject to the overall authority of the Board
and in conformity with applicable state law and the stated policies of the
Portfolio. FCNIMCO, and Federated in the case of the High Yield Bond Fund, are
responsible for making investment decisions for each Pegasus Portfolio, placing
purchase and sale orders and providing research, statistical analysis and
continuous supervision of each Portfolio's investments.
FCNIMCO located at Three First National Plaza, Chicago Illinois 60670, is a
registered investment adviser.
Federated, located at Federated Investors Tower, Pittsburgh, Pennsylvania
15222, is a registered investment adviser and a subsidiary of Federated
Investors.
36
<PAGE> 40
FCNIMCO is entitled to and has received advisory fees from the Pegasus
Portfolios, computed daily and paid monthly, at the following annual rates,
expressed as a percentage of the Portfolios' average daily net assets:
<TABLE>
<CAPTION>
EFFECTIVE ADVISORY FEE
RATE FOR FISCAL YEAR
OR PERIOD ENDED
DECEMBER 31, 1997
PEGASUS PORTFOLIOS CURRENT CONTRACTUAL ADVISORY FEE RATE (AFTER WAIVERS)
------------------ ------------------------------------- ----------------------
<S> <C> <C>
Money Market Fund................... .30% of the first $1 billion, .275% .28%
of the next $1 billion and .25% of
average daily net assets in excess
of $2 billion
Treasury Money Market Fund.......... .30% of the first $1 billion, .275% .29%
of the next $1 billion and .25% of
average daily net assets in excess
of $2 billion
Municipal Money Market Fund......... .30% of the first $1 billion, .275% .30%
of the next $1 billion and .25% of
average daily net assets in excess
of $2 billion
Michigan Municipal Money Market
Fund.............................. .30% of the first $1 billion, .275% .27%
of the next $1 billion and .25% of
average daily net assets in excess
of $2 billion
Cash Management Fund................ .20% .17%
Treasury Cash Management Fund....... .20% .17%
Treasury Prime Cash Management
Fund.............................. .20% .16%
U. S. Government Securities Cash
Management Fund................... .20% .17%
Municipal Cash Management Fund...... .20% .17%
Managed Assets Conservative Fund.... .65% .52%
Managed Assets Balanced Fund........ .65% .52%
Managed Assets Growth Fund.......... .65% .35%
Equity Income Fund.................. .50% .50%
Growth Fund......................... .60% .60%
Mid-Cap Opportunity Fund............ .60% .60%
Small-Cap Opportunity Fund.......... .70% .70%
Intrinsic Value Fund................ .60% .60%
Growth and Value Fund............... .60% .59%
Equity Index Fund................... .10% .08%
Market Expansion Index Fund......... .25% N/A
International Equity Fund........... .80% .80%
Intermediate Bond Fund.............. .40% .40%
Bond Fund........................... .40% .40%
Short Bond Fund..................... .35% .33%
Multi Sector Bond Fund.............. .40% .40%
High Yield Bond Fund................ .70% .61%
Municipal Bond Fund................. .40% .40%
</TABLE>
37
<PAGE> 41
<TABLE>
<CAPTION>
EFFECTIVE ADVISORY FEE
RATE FOR FISCAL YEAR
OR PERIOD ENDED
DECEMBER 31, 1997
PEGASUS PORTFOLIOS CURRENT CONTRACTUAL ADVISORY FEE RATE (AFTER WAIVERS)
------------------ ------------------------------------- ----------------------
<S> <C> <C>
Short Municipal Bond Fund........... .40% N/A
Intermediate Municipal Bond Fund.... .40% .40%
Michigan Municipal Bond Fund........ .40% .34%
</TABLE>
For the services provided by Federated to the High Yield Bond Fund, FCNIMCO
pays, out of the fees it receives from Pegasus, a monthly fee at the following
annual rate (as a percentage of the Fund's average daily net assets): .50% on
the first $30 million of average daily net assets; .40% on the next $20 million;
.30% on the next $25 million; .25% on the next $25 million; and .20% of the
Fund's average daily net assets in excess of $100 million. For the fiscal year
ended December 31, 1997, Federated was paid an effective advisory fee rate of
.61%.
INVESTMENT ADVISER -- ONE GROUP FUNDS. BOIA, an indirect subsidiary of BOC,
serves as investment adviser to the One Group Funds. Under its investment
advisory agreement with One Group, BOIA makes the day-to-day investment
decisions for the One Group Funds and continuously reviews, supervises and
administers their investment programs subject to the supervision of, and
policies established by, the Board of Trustees of One Group. Independence
International Associates, Inc. ("Independence International") serves as
sub-adviser to the International Equity Index Fund and Banc One High Yield
Partners LLC ("Banc One Partners") serves as sub-adviser to the High Yield Bond
Fund subject to the oversight and supervision of BOIA. Pursuant to BOIA's
sub-advisory agreements with Independence International and Banc One Partners,
BOIA and Independence International, in the case of the International Equity
Index Fund, and Banc One Partners, in the case of the High Yield Bond Fund,
provide the day-to-day management of each One Group Fund's investments, subject
to the overall authority of BOIA and the Board and in conformity with applicable
state law and the stated policies of the Fund.
Independence International, located at 75 State Street, Boston,
Massachusetts, 02109, is a registered investment adviser and an indirect
subsidiary of John Hancock Mutual Life Insurance Company. Banc One Partners,
located at 1111 Polaris Parkway, P.O. Box 710211, Columbus, Ohio 43271-0211, is
a registered investment adviser. Banc One Partners is controlled by BOIA and
Pacholder Associates, Inc., an investment advisory firm which specializes in
high yield, high risk, fixed income securities.
BOIA, located at 1111 Polaris Parkway, Columbus, Ohio 43271, is a
registered investment adviser and an indirect subsidiary of BOC. BOIA is
entitled to and has received advisory fees from the One Group Funds, computed
daily and paid monthly, at the following annual rates, expressed as a percentage
of the Funds' average daily net assets:
<TABLE>
<CAPTION>
EFFECTIVE ADVISORY FEE
RATE FOR FISCAL YEAR
OR PERIOD ENDED
JUNE 30, 1998
ONE GROUP FUNDS CURRENT CONTRACTUAL ADVISORY FEE RATE (AFTER WAIVERS)
--------------- ------------------------------------- ----------------------
<S> <C> <C>
Prime Money Market Fund............. .35% .30%
U.S. Treasury Securities Money
Market Fund....................... .35% .28%
Municipal Money Market Fund......... .35% .25%
Michigan Municipal Money Market
Fund(1)........................... .35% N/A
Cash Management Money Market
Fund(1)........................... .20% N/A
Treasury Cash Management Money
Market Fund(1).................... .20% N/A
</TABLE>
38
<PAGE> 42
<TABLE>
<CAPTION>
EFFECTIVE ADVISORY FEE
RATE FOR FISCAL YEAR
OR PERIOD ENDED
JUNE 30, 1998
ONE GROUP FUNDS CURRENT CONTRACTUAL ADVISORY FEE RATE (AFTER WAIVERS)
--------------- ------------------------------------- ----------------------
<S> <C> <C>
Treasury Prime Cash Management Money
Market Fund(1).................... .20% N/A
U.S. Government Cash Management
Money Market Fund(1).............. .20% N/A
Municipal Cash Management Money
Market Fund(1).................... .20% N/A
Investor Balanced Fund.............. .05% .04%
Investor Growth & Income Fund....... .05% .04%
Investor Growth Fund................ .05% .03%
Income Equity Fund (to be renamed
Equity Income Fund upon
Reorganization)................... .74% of the first $1.5 billion, .70% .74%(2)
of the next $500 million, and .65% of
average daily net assets in excess of
$2 billion
Large Company Growth Fund (to be
renamed Large Cap Growth Fund upon
Reorganization)................... .74% of the first $1.5 billion, .70% .74%(2)
of the next $500 million, and .65% of
average daily net assets in excess of
$2 billion
Diversified Mid Cap Fund(1)......... .74% of the first $1.5 billion, .70% N/A
of the next $500 million, and .65% of
average daily net assets in excess of
$2 billion
Small Cap Value Fund(1)............. .74% of the first $1.5 billion, .70% N/A
of the next $500 million, and .65% of
average daily net assets in excess of
$2 billion
Disciplined Value Fund (to be
renamed Mid Cap Value Fund upon
Reorganization)..................... .74% of the first $1.5 billion, .70% .74%(2)
of the next $500 million, and .65% of
average daily net assets in excess of
$2 billion
Value Growth Fund................... .74% of the first $1.5 billion, .70% .74%(2)
of the next $500 million, and .65% of
average daily net assets in excess of
$2 billion
Equity Index Fund................... .30% .10%
Market Expansion Index Fund(1)...... .35% N/A
Diversified International Fund(1)... .80% N/A
Intermediate Bond Fund.............. .60% .34%
Bond Fund(1)........................ .60% N/A
Limited Volatility Bond Fund........ .60% .31%
(to be renamed Short-Term Bond
Fund upon Reorganization)
Income Bond Fund.................... .60% .40%
High Yield Bond Fund(3)............. .75% N/A
Tax-Free Bond Fund(1)............... .45% N/A
</TABLE>
39
<PAGE> 43
<TABLE>
<CAPTION>
EFFECTIVE ADVISORY FEE
RATE FOR FISCAL YEAR
OR PERIOD ENDED
JUNE 30, 1998
ONE GROUP FUNDS CURRENT CONTRACTUAL ADVISORY FEE RATE (AFTER WAIVERS)
--------------- ------------------------------------- ----------------------
<S> <C> <C>
Short-Term Municipal Bond Fund(1)... .60% N/A
Intermediate Tax-Free Bond Fund..... .60% .39%
Michigan Municipal Bond Fund(1)..... .45% N/A
</TABLE>
- ---------------
(1) The New One Group Funds have recently been organized for the purpose of
continuing the investment operations of the Continuing Pegasus Portfolios.
With respect to the New One Group Funds, BOIA has agreed to waive a portion
of its investment advisory fee until at least March, 2000 so that the rate
of total operating expenses actually paid will equal the rate currently paid
for total operating expenses by the corresponding Continuing Pegasus
Portfolios.
(2) The effective advisory fee rate was based on a contractual rate of .74% then
in effect. BOIA has agreed to waive a portion of its advisory fees with
respect to Income Equity until August 1999.
(3) The One Group(R) High Yield Bond Fund commenced operations on November 13,
1998.
Independence International is entitled to a fee from BOIA at the following
annual rates as a percentage of average daily net assets: up to $10
million -- .275%, over $10,000,000 up to $25,000,000 -- .225%, over $25,000,000
up to $50,000,000 -- .195%, over $50,000,000 up to $100,000,000 -- .125%, over
$100,000,000 -- .060%. Independence International was paid at an effective
sub-advisory fee rate of .55% for the fiscal year or period ended June 30, 1998.
For its services, Banc One Partners is entitled to a fee, from BOIA equal
to .70% of the High Yield Bond Fund's average daily net assets. Banc One
Partners received no payment for the period ended June 30, 1998, since the High
Yield Bond Fund had not commenced operations during that period.
CERTAIN OTHER SERVICE PROVIDERS
FOR THE PEGASUS PORTFOLIOS AND ONE GROUP FUNDS
<TABLE>
<CAPTION>
PEGASUS PORTFOLIOS ONE GROUP FUNDS
------------------ ---------------
<S> <C> <C>
Administrators FCNIMCO and BISYS Fund Services One Group Services Company
Limited Partnership d/b/a BISYS ("OGSC") (Administrator) Banc
Fund Services ("BISYS") One Investment Advisors
("Co-Administrators") ("BOIA") ("Sub-Administrator")
Transfer Agents First Data Investor Services State Street Bank and Trust
Group, Inc. ("FDISG") Company ("State Street")
Custodian NBD Bank ("NBD") ("Custodian") State Street ("Custodian") Bank
State Street ("Sub-Custodian") One Trust Company, N.A.
("BOTC") ("Sub-Custodian")
Distributor BISYS OGSC
</TABLE>
FCNIMCO and BISYS (located at 3435 Stelzer Road, Columbus, Ohio 43219-3035)
jointly serve as the Co-Administrators for the Pegasus Portfolios pursuant to an
Administration Agreement with the Trust. Under the Administration Agreement,
FCNIMCO and BISYS generally assist in all aspects of the Trust's operations,
other than providing investment advice, subject to the overall authority of the
Pegasus Board in accordance with Massachusetts law. Under the terms of the
Administration Agreement Pegasus pays FCNIMCO, as agent for the
Co-Administrators, a monthly administration fee at the annual rate of .15% of
40
<PAGE> 44
each Pegasus Portfolio's average daily net assets. For the fiscal year ended
December 31, 1997, Pegasus paid administration fees at the effective annual rate
of .15% of each Pegasus Portfolio's average daily net assets.
The Managed Assets Conservative, Managed Assets Balanced and Managed Assets
Growth Funds (collectively, the "Asset Allocation Funds") invest in shares of
certain of the other Pegasus Portfolios (the "Underlying Funds"). FCNIMCO and
the Co-Administrators reimburse the Asset Allocation Funds the full amount of
advisory fees and administration fees incurred by each of the Underlying Funds
with respect to shares held by the Asset Allocation Funds. FCNIMCO and BISYS can
discontinue or modify any such reimbursements at their discretion. Investors in
the Asset Allocation Funds do indirectly bear that portion of the expenses of
the Underlying Funds related to other expenses such as custody, transfer agency
and professional fees.
OGSC, a wholly-owned subsidiary of The BISYS Group, Inc., serves as the
Administrator for the One Group Funds and BOIA acts as Sub-Administrator. OGSC
is responsible for responding to shareholder inquiries and requests for
information, as well as providing regulatory reporting and compliance. For these
services, OGSC receives a fee based on the total assets of One Group. With
respect to each of the One Group Funds (other than the institutional money
market funds and the Investor Funds), for the first $1.5 billion in One Group
assets, OGSC receives an annual fee of .20% of each Fund's average daily net
assets; the annual rate declines to .18% on assets between $1.5 and $2 billion,
and to .16% on assets in excess of $2 billion. With respect to the institutional
money market funds, OGSC receives an annual fee of .05% of each institutional
money market fund's average daily net assets. OGSC receives from One Group
Investor Funds an annual fee of .10% of each Investor Fund's average daily net
assets on $500,000,000 in Fund assets. The fee declines to .075% on net assets
between $500,000,000 and $1 billion, and to .05% on assets over $1 billion. The
fees are calculated daily and paid monthly. Some Funds are not included in these
calculations. As Sub-Administrator, BOIA provides office space, equipment and
facilities, as well as legal and regulatory support.
OGSC is located at 3435 Stelzer Road, Columbus, Ohio 43219.
FDISG, located at P.O. Box 5142, Westborough, Massachusetts 01581-5120,
serves as transfer agent to the Pegasus Portfolios.
State Street, located at P.O. Box 8500, Boston Massachusetts 02266-8500,
serves as transfer agent and custodian to the One Group Funds. BOTC serves as
sub-custodian in connection with the Funds' securities lending activities under
an agreement with State Street. BOTC is located at 774 Park Meadow Road,
Westerville, OH 43271.
NBD Bank ("NBD") serves as Pegasus' custodian. As of September 8, 1998, NBD
has entered into a Sub-Custodian Agreement with State Street Bank and Trust
Company ("State Street"). As sub-custodian State Street agreed to hold, deliver
and register securities, maintain bank accounts, collect income, pay fund
monies, appoint agents and deposit fund assets in U.S. Securities Systems, among
other things. NBD, located at 900 Tower Drive, Troy, Michigan 48098, is an
indirect wholly-owned subsidiary of BOC.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICING ARRANGEMENTS -- PEGASUS
PORTFOLIOS. BISYS is the principal underwriter and distributor for Pegasus.
Pegasus has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act (the "Pegasus 12b-1 Plan") with respect to Class B Shares of the Pegasus
Portfolios that offer such shares and a Shareholders Services Plan with respect
to Class A and Class B shares. Under the Pegasus 12b-1 Plan, the Class B Shares
have agreed to pay BISYS for advertising, marketing and distributing shares of
each Portfolio at an aggregate annual rate of 0.75% of the average daily net
asset value of such Portfolio's outstanding Class B Shares. BISYS may pay
institutions, including FCNIMCO, and its subsidiaries and affiliates
(collectively, "Service Agents"), for distribution services to Class B
shareholders. BISYS determines the amounts, if any, to be paid to Service Agents
under the Pegasus 12b-1 Plan and the basis on which such payments are made. The
fees payable under the Pegasus 12b-1 Plan are payable without regard to actual
expenses incurred. The Cash Management Funds have a Distribution and Services
Plan with respect to Class S shares adopted by the Board of Trustees under which
BISYS is paid a fee of up to .25% of the average daily net asset value of Class
S.
41
<PAGE> 45
In addition to the 12b-1 Plan, Pegasus has adopted a Shareholder Services
Plan for the Class A and Class B Shares (each a "Shareholder Services Plan") for
each Pegasus Portfolio other than the Cash Management Funds. Under each
Shareholder Services Plan, each Pegasus Portfolio pays BISYS for the provision
of certain administrative support services to the shareholders of these shares a
fee at the annual rate of .25% of the value of the average daily net assets of
such Class A or Class B Shares. The services provided may include personal
services related to shareholder accounts, such as answering shareholder
inquiries regarding the applicable Portfolio and providing reports and other
information, and services related to the maintenance of shareholder accounts.
Under each Shareholder Services Plan, BISYS may make payments to Service Agents
in respect of those services.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICING ARRANGEMENTS -- ONE
GROUP. OGSC, a wholly-owned subsidiary of The BISYS Group, Inc., is the
principal underwriter and distributor for The One Group.
One Group has adopted a 12b-1 Plan under the 1940 Act (the "Plan") with
respect to its funds under which fees are paid by One Group to OGSC as
compensation for its services and expenses. OGSC in turn pays all or part of
such fees to shareholder servicing agents that sell shares of One Group. Plan
fees vary by share class. Class A shares for all funds except the Prime,
Municipal and U.S. Treasury Securities Money Market Funds are subject to a Plan
fee of .35% of the average daily net assets of the Fund, which is currently
being waived to .25%. Class A shares of the Prime, Municipal and U.S. Treasury
Securities Money Market Funds pay a Plan fee of .25% of average daily net assets
of the Fund. Class B and Class C shares pay a Plan fee (including shareholder
service fee) of 1.00% of average daily net assets of the Fund, which is
currently being waived to .90% for the Intermediate Bond and Income Bond and to
.75% for the Limited Volatility Bond Fund. Service Class shares of the Prime,
Municipal, Michigan Municipal and U.S. Treasury Securities Money Market Funds
are subject to a Plan fee of .75% of the average daily net assets of the Fund,
which is currently being waived to .55%. There are no Plan fees for Class I
shares. As with the Pegasus 12b-1 and Shareholder Servicing Plans, OGSC may use
up to .25% of the Plan fees for shareholder servicing and up to .75% for
distribution.
See the Existing One Group Fund Prospectuses accompanying this Combined
Prospectus/Proxy Statement, which are incorporated herein by reference, and the
Pegasus Prospectuses for additional information on the service providers.
SHAREHOLDER TRANSACTIONS AND SERVICES. The Pegasus Portfolios and their
corresponding One Group Funds offer generally similar shareholder services and
transactions. There are, however, some differences. For example, the minimum
initial investment amount for Class I shares of the Pegasus Portfolios is
generally $1,000,000, while the minimum initial investment amount for Class I
shares of the One Group is generally $1,000. For a more detailed comparison of
shareholder transactions and services see Appendix IV -- Shareholder
Transactions and Services.
After the Reorganization, One Group will continue to honor any standing
instructions regarding the corresponding Pegasus Portfolio share classes under
arrangements such as automatic withdrawal plans, systematic investment plans or
dividend reinvestment plans. In such cases, standing instructions will be
subject to the same or similar terms (e.g., minimum investments, account
balances and minimum transaction amounts) currently in effect, except that there
may be exceptions with respect to the timing of transactions which may need to
be altered to comport with One Group's procedures. Shareholders will be notified
of any such exceptions. After the Reorganization, any instructions given with
respect to any new account will be subject to the terms of the applicable One
Group Fund share class. For a complete description and comparison of the terms
applicable to standing instructions and other account features regarding the
Pegasus Portfolios and One Group Funds, see Appendix IV to this Combined
Prospectus/Proxy Statement.
42
<PAGE> 46
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. This Combined Prospectus/Proxy Statement is being
furnished in connection with the solicitation of proxies by Pegasus' Board of
Trustees in connection with the Meeting. It is expected that the solicitation of
proxies will be primarily by mail. Officers and service contractors of Pegasus
may also solicit proxies by telephone, telegraph, facsimile or personal
interview. Shareholder Communications Corporation has been retained to assist in
the solicitation of proxies primarily by contacting shareholders by telephone
and telegram. Authorizations to execute proxies may be obtained by telephonic or
electronically transmitted instructions in accordance with procedures designed
to authenticate the shareholder's identity. In all cases where a telephonic
proxy is solicited, the shareholder will be asked to provide his or her address,
social security number (in the case of an individual) or taxpayer identification
number (in the case of an entity) and the number of shares owned and to confirm
that the shareholder has received the Combined Prospectus/Proxy Statement and
proxy card in the mail. Within 72 hours of receiving a shareholder's telephonic
or electronically transmitted voting instructions, a confirmation will be sent
to the shareholder to ensure that the vote has been taken in accordance with the
shareholder's instructions and to provide a telephone number to call immediately
if the shareholder's instructions are not correctly reflected in the
confirmation. Shareholders requiring further information with respect to
telephonic or electronically transmitted voting instructions or the proxy
generally should contact Shareholder Communications Corporation toll-free at
1-800-848-1134. Any shareholder giving a proxy may revoke it at any time before
it is exercised by submitting to Pegasus a written notice of revocation or a
subsequently executed proxy or by attending the Meeting and voting in person.
Only shareholders of record at the close of business on December 18, 1998
will be entitled to vote at the Meeting. On that date, the following Pegasus
Shares were outstanding and entitled to be voted:
<TABLE>
<CAPTION>
NAME OF PEGASUS FUND AND CLASS SHARES ENTITLED TO VOTE
------------------------------ -----------------------
<S> <C>
Pegasus Money Market Fund............................... 3,425,480,709.995
Class A............................................... 1,590,657,184.074
Class B............................................... 593,029.541
Class I............................................... 1,834,230,496.38
Pegasus Treasury Money Market Fund...................... 1,113,419,468.32
Class A............................................... 344,189,575.18
Class I............................................... 769,229,893.14
Pegasus Municipal Money Market Fund..................... 876,187,827.25
Class A............................................... 210,663,332.95
Class I............................................... 665,524,494.30
Pegasus Michigan Municipal Money Market Fund............ 188,213,010.30
Class A............................................... 67,701,071.98
Class I............................................... 120,511,938.32
Pegasus Cash Management Fund............................ 2,570,863,581.25
Class I............................................... 1,156,094,099.63
Class S............................................... 1,414,769,481.62
Pegasus Treasury Cash Management Fund................... 388,218,511.98
Class I............................................... 29,644,842.96
Class S............................................... 358,573,669.02
Pegasus Treasury Prime Cash Management Fund............. 594,683,368.57
Class I............................................... 139,632,806.45
Class S............................................... 455,050,562.12
Pegasus U.S. Government Securities Cash Management
Fund.................................................. 1,870,065,115.12
Class I............................................... 561,132,992.90
Class S............................................... 1,308,932,122.22
</TABLE>
43
<PAGE> 47
<TABLE>
<CAPTION>
NAME OF PEGASUS FUND AND CLASS SHARES ENTITLED TO VOTE
------------------------------ -----------------------
<S> <C>
Pegasus Municipal Cash Management Fund.................. 663,452,561.11
Class I............................................... 594,954,968.04
Class S............................................... 68,497,593.07
Pegasus Managed Assets Conservative Growth Fund......... 9,524,950.054
Class A............................................... 6,711,113.844
Class B............................................... 1,790,206.826
Class I............................................... 1,023,629.384
Pegasus Managed Assets Balanced Fund.................... 24,235,921.861
Class A............................................... 15,149,528.068
Class B............................................... 1,428,140.226
Class I............................................... 7,658,253.567
Pegasus Managed Assets Growth Fund...................... 2,450,704.856
Class A............................................... 1,252,405.502
Class B............................................... 1,094,037.956
Class I............................................... 104,261.398
Pegasus Equity Income Fund.............................. 48,457,979.738
Class A............................................... 1,049,002.277
Class B............................................... 285,625.557
Class I............................................... 47,123,351.904
Pegasus Growth Fund..................................... 52,013,265.267
Class A............................................... 6,656,571.656
Class B............................................... 316,389.856
Class I............................................... 45,040,303.755
Pegasus Mid-Cap Opportunity Fund........................ 62,948,070.752
Class A............................................... 13,712,501.463
Class B............................................... 739,164.901
Class I............................................... 48,496,404.388
Pegasus Small-Cap Opportunity Fund...................... 21,037,409.677
Class A............................................... 2,146,153.52
Class B............................................... 277,045.187
Class I............................................... 18,614,210.97
Pegasus Intrinsic Value Fund............................ 42,425,522.588
Class A............................................... 8,516,991.455
Class B............................................... 510,000.694
Class I............................................... 33,398,530.439
Pegasus Growth and Value Fund........................... 90,636,008.481
Class A............................................... 16,118,909.369
Class B............................................... 1,150,884.536
Class I............................................... 73,366,214.576
Pegasus Equity Index Fund............................... 40,504,905.236
Class A............................................... 12,661,680.262
Class B............................................... 348,080.995
Class I............................................... 27,495,143.979
Pegasus Market Expansion Index Fund..................... 2,613,983.688
Class A............................................... 2,889.659
Class B............................................... 20.838
Class I............................................... 2,611,073.191
</TABLE>
44
<PAGE> 48
<TABLE>
<CAPTION>
NAME OF PEGASUS FUND AND CLASS SHARES ENTITLED TO VOTE
------------------------------ -----------------------
<S> <C>
Pegasus International Equity Fund....................... 44,480,078.697
Class A............................................... 3,252,613.182
Class B............................................... 194,964.339
Class I............................................... 41,032,501.176
Pegasus Intermediate Bond Fund.......................... 61,655,452.199
Class A............................................... 8,303,454.196
Class B............................................... 79,249.409
Class I............................................... 53,272,748.594
Pegasus Bond Fund....................................... 140,066,331.251
Class A............................................... 20,875,898.788
Class B............................................... 813,540.786
Class I............................................... 118,376,891.677
Pegasus Short Bond Fund................................. 33,751,658.62
Class A............................................... 1,388,695.796
Class B............................................... 26,136.054
Class I............................................... 32,336,826.77
Pegasus Multi Sector Bond Fund.......................... 49,697,150.295
Class A............................................... 1,923,950.528
Class B............................................... 78,072.501
Class I............................................... 47,695,127.266
Pegasus High Yield Bond Fund............................ 8,091,276.053
Class A............................................... 226,760.448
Class B............................................... 35,322.417
Class I............................................... 7,829,193.188
Pegasus Municipal Bond Fund............................. 68,473,760.889
Class A............................................... 3,588,861.502
Class B............................................... 164,463.836
Class I............................................... 64,720,435.551
Pegasus Short Municipal Bond Fund....................... 11,767,201.887
Class A............................................... 54,912.787
Class B............................................... 10,919.246
Class I............................................... 11,701,369.854
Pegasus Intermediate Municipal Bond Fund................ 39,852,687.140
Class A............................................... 1,875,641.793
Class B............................................... 58,703.015
Class I............................................... 37,918,342.332
Pegasus Michigan Municipal Bond Fund.................... 29,331,005.965
Class A............................................... 2,072,840.068
Class B............................................... 181,387.935
Class I............................................... 27,076,777.962
</TABLE>
Each share or fraction thereof is entitled to one vote or fraction thereof,
and all shares will vote separately by class.
Pegasus and One Group have been advised by FCNIMCO that the shares of each
Pegasus Portfolio over which BOC or its affiliates have voting power will,
wherever possible, be voted in accordance with instructions received from
beneficial owners or fiduciaries of such accounts who are not related to BOC or
its affiliates. As to employee benefit plans, BOC may vote such shares in
accordance with the recommendation of an independent fiduciary. Where BOC is
required to vote Pegasus shares, it will vote them in the same
45
<PAGE> 49
proportions as the shares of all other voting shareholders of each respective
class of each Pegasus Portfolio were actually voted.
If the accompanying proxy is executed and returned in time for the Meeting,
the shares covered thereby will be voted in accordance with the proxy on all
matters that may properly come before the Meeting or any adjournment thereof.
For information on adjournment of the meeting, see "Quorum" below.
SHAREHOLDER AND BOARD APPROVALS. The Reorganization Agreement (and the
transactions contemplated thereby) is being submitted for approval at the
Meeting by the holders of a majority of the outstanding shares of each share
class of each of the Pegasus Money Market, Treasury Money Market, Municipal
Money Market, Michigan Municipal Money Market, Cash Management, Treasury Cash
Management, Treasury Prime Cash Management, U.S. Government Securities Cash
Management, Municipal Cash Management, Managed Assets Conservative, Managed
Assets Balanced, Managed Assets Growth, Equity Income, Growth, Mid-Cap
Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and Value, Equity
Index, Market Expansion Index, International Equity, Intermediate Bond, Bond,
Short Bond, Multi Sector Bond, High Yield Bond, Municipal Bond, Short Municipal
Bond, Intermediate Municipal Bond and Michigan Municipal Bond Funds in
accordance with the provisions of Pegasus' Declaration of Trust and the
requirements of the 1940 Act. The term "majority of the outstanding shares" of a
share class of each Pegasus Portfolio as used herein means the lesser of (a) 67%
of the shares of a particular share class of the Pegasus Portfolio present at
the meeting if the holders of more than 50% of the outstanding shares of such a
share class are present in person or by proxy, or (b) more than 50% of the
outstanding shares of such share class.
If the shareholders of one or more but not all of the Pegasus Portfolios
approve the Reorganization, the Reorganization will be consummated with respect
to those Pegasus Portfolios whose shareholders have approved the Reorganization.
If shareholders of some but not all classes of a Pegasus Portfolio approve the
Reorganization, the Reorganization with respect to that Pegasus Portfolio will
not be consummated unless and until shareholder approval is obtained with
respect to all classes. If shareholders of one or more of the Pegasus Portfolios
do not approve the Reorganization, Pegasus will remain in existence and expenses
for the remaining portfolios are expected to continue as disclosed in each such
portfolio's prospectus dated April 30, 1998 through April 30, 1999. After that
date, the prospectuses applicable to any remaining Pegasus Portfolios would be
updated to reflect, among other things, projected expense ratios for the next
year. In such event, the Pegasus Board of Trustees will take such action as it
deems to be in the best interest of any such remaining portfolios.
The approval of the Reorganization by the shareholders of One Group is not
being solicited because their approval or consent is not legally required.
As of December 18, 1998, FCNIMCO and its affiliates beneficially owned
26.37% of the outstanding shares of the Pegasus Money Market, Treasury Money
Market, Municipal Money Market, Michigan Municipal Money Market, Cash
Management, Treasury Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management, Municipal Cash Management, Managed Assets
Conservative, Managed Assets Balanced, Managed Assets Growth, Equity Income,
Growth, Mid-Cap Opportunity, Small-Cap Opportunity, Intrinsic Value, Growth and
Value, Equity Index, Market Expansion Index, International Equity, Intermediate
Bond, Short Bond, Bond, Multi Sector Bond, High Yield Bond, Municipal Bond,
Short Municipal Bond, Intermediate Municipal Bond and Michigan Municipal Bond
Funds on behalf of their customer accounts.
As of December 18, 1998, the name, address and percentage of ownership of
the persons who owned of record 5% or more of any class of the Reorganizing
Pegasus Portfolios, and the percentage of the respective
46
<PAGE> 50
share classes of the corresponding One Group Funds that would be owned by those
persons upon the consummation of the Reorganization based upon their holdings on
December 18, 1998, are as follows:
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Money Market Fund......... Corelink Financial, Inc. B 60.555% 4.02%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Donaldson Lufkin Jenrette B 25.89% 1.72%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Trussal and Company I 69.83% 24.66%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
First Chicago NBD TTEE I 9.38% 3.31%
First Chicago NBD Svgs & Record
Invsmt Pln
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
First National Bank of I 5.22% 1.84%
Chicago Record
Corporate Trust
Administration
Attn: Cash Sweep Coordinator
1 F&B Plaza Ste 0126
Chicago, IL 60670-0001
Treasury Money
Market Fund............. Spar Marketing Force Inc. A 10.34% 1.81%
1757 Northfield Drive Record
Rochester Hills, MI 48309
Potomac Corporation A 7.61% 1.33%
PO Box 67-A Record
100 W Willow Rd
Wheeling, IL 60090-6522
Immuno US Inc A 5.79% 1.01%
Attn: Accounting Record
1200 Parkdale Road
Rochester Hills, MI
48307-1744
Trussal and Company A 5.03% 0.88%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
</TABLE>
47
<PAGE> 51
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
First National Bank of I 58.23% 5.76%
Chicago Record
Corporate Trust
Administration
Attn: Cash Sweep Coordinator
1 F&B Plaza Ste 0126
Chicago, IL 60670-0001
Trussal and Company I 28.20% 4.51%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Municipal Money
Market Fund............. Trussal and Company I 92.55% 3.55%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Managed Assets
Conservative Fund....... Corelink Financial, Inc. A 7.37% 5.87%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company A 7.04% 5.61%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
First Chicago NBD TTEE I 83.32% 12.08%
First Chicago NBD Svgs & Record
Invsmt Pln
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Trussal and Company I 14.63% 2.12%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Managed Assets
Balanced Fund........... Corelink Financial, Inc. A 27.14% 36.24%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
First Chicago NBD TTEE A 12.45% 9.61%
Clarian Health Partners Inc. Record
Defined Contribution Plan
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
</TABLE>
48
<PAGE> 52
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Trussal and Company A 11.06% 8.54%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc B 6.83% 0.83%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
First Chicago NBD TTEE I 66.43% 31.74%
First Chicago NBD Svgs & Record
Invsmt Pln
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Trussal and Company I 33.05% 15.79%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Managed Assets
Growth Fund............. Trussal and Company A 31.03% 6.31%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc..... A 6.42% 1.30%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company I 99.98% 1.55%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Equity Income Fund........ Corelink Financial, Inc A 12.93% 2.16%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company I 56.50% 35.07%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 38.26% 23.75%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Growth Fund............... Corelink Financial, Inc B 11.15% 0.21%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
</TABLE>
49
<PAGE> 53
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Trussal and Company I 47.09% 17.88%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 50.07% 19.02%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Intrinsic Value Fund...... Corelink Financial, Inc A 22.03% 16.37%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company A 21.17% 15.74%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc B 6.56% 0.98%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company I 73.89% 28.89%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 10.19% 3.99%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Inner Wharf & Co I 8.95% 3.50%
American National Bank Record
1 Heritage Drive JP2N
North Quincy, MA 02171
Growth and Value
Fund.................... Trussal and Company A 29.59% 20.73%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc A 14.10% 9.88%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Corelink Financial, Inc B 7.83% 2.49%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
</TABLE>
50
<PAGE> 54
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Trussal and Company I 73.48% 43.06%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
First Chicago NBD TTEE I 10.05% 5.89%
First Chicago NBD Svgs & Record
Invsmt Pln
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Eagle & Co I 7.99% 4.69%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Equity Index Fund......... Corelink Financial, Inc A 27.14% 15.48%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company A 8.49% 4.84%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
NBD Bank TTEE A 8.37% 4.78%
American Axle & Record
Manufacturing Inc.
Personal S/P Hourly Rate
Associates
900 Tower Drive
Troy, MI 48098
Putnam Fiduciary Trust Co A 6.36% 3.63%
TTEE Record
Market Square P/A Plan
Attn: Lisa Dory
859 Willard Street Ms B-3-B
Quincy, MA 02269-9110
First Chicago NBD TTEE A 5.34% 3.05%
Honigman Miller Schwartz & Record
Cohn
Profit Sharing Plan
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
NBD Bank as TTEE A 5.26% 3.00%
Reilly Industries Inc. Record
401(k)
Deferred Savings Plan
107 N Cross St. Ste 2092
Wheaton, IL 60187
</TABLE>
51
<PAGE> 55
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Trussal and Company I 93.55% 49.80%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Intermediate Bond
Fund.................... Trussal and Company A 48.32% 29.52%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Canadaigua Brands Inc A 17.90% 10.94%
401(k) and Profit Sharing Record
Plan
300 Willowbrook Office Park
Fairport, NY 14450
Corelink Financial, Inc A 9.93% 6.07%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Corelink Financial, Inc B 21.56% 0.63%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Donaldson Lufkin Jenrette B 6.32% 0.18%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Trussal and Company I 75.64% 32.98%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 21.42% 9.34%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Multi Sector Bond
Fund.................... Trussal and Company A 31.94% 15.76%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc A 13.48% 6.65%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
First Chicago as TTEE A 8.22% 4.06%
McDonough Assoc. Record
218 E Wesley St Ste 2030
Wheaton, IL 60187-5317
</TABLE>
52
<PAGE> 56
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
First Chicago A 6.23% 3.07%
Brambles USA Inc Pro & Sal Record
Plan
107 N Cross St Ste 2092
Wheaton, IL 60187-5317
Donaldson Lufkin Jenrette B 15.52% 0.65%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Trussal and Company I 82.32% 26.56%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 14.43% 4.65%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Short Bond Fund........... Trussal and Company A 80.55% 4.06%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Donaldson Lufkin Jenrette B 75.18% 2.99%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
BA Investment Services, Inc B 16.72% 1.74%
185 Berry St. Record
San Francisco, CA 94107
Trussal and Company I 98.05% 35.79%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
High Yield Bond Fund...... Trussal and Company A 48.44% 48.41%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Donaldson Lufkin Jenrette A 24.46% 24.45%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette B 80.99% 78.41%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
</TABLE>
53
<PAGE> 57
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Trussal and Company I 37.44% 27.98%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 23.72% 17.73%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Inner Wharf & Co I 20.96% 15.67%
c/o State Street Bank Record
1 Heritage Drive JP2N
North Quincy, MA 02171
Inner Wharf & Co I 15.60% 11.66%
c/o State Street Bank Record
1 Heritage Drive JP2N
North Quincy, MA 02171
Intermediate
Municipal Bond
Fund.................... Donald Lufkin Jenrette A 5.42% 3.08%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette B 50.80% 4.15%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Eagle & Co I 82.58% 36.87%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602
Trussal and Company I 16.63% 7.42%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
</TABLE>
As of December 18, 1998, the name, address and percentage of ownership of
each person who owns of record 5% or more of any class of shares of the
Continuing Pegasus Funds is listed below. Prior to the Continuing Pegasus Funds
Transaction the New One Group Funds will have only nominal assets.
54
<PAGE> 58
Accordingly, the persons who own of record 5% or more of any class of shares of
the Continuing Pegasus Funds will not materially change upon consummation of the
Continuing Pegasus Funds Transaction.
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Michigan Municipal Money
Market Fund............. NBD Michigan A 32.05% 32.05%
Attn: M E Bradley Record
9000 Haggerty Road
Belleville, MI 48111
Richard H. Brown A 11.88% 11.88%
6775 3 Mile Road NE Record
Ada, MI 49301-9538
American Plastic Toys Inc. A 6.30% 6.30%
799 Ladd Road Record
PO Box 100
Walled Lake, MI 48390
Trussal and Company I 88.72% 88.72%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Inner Lake & Co. I 5.94% 5.94%
c/o State Street Bank Record
1 Heritage Drive JP2N
North Quincy, MA 02171
Cash Management Fund...... Eagle & Co I 42.67% 42.67%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
First National Bank of I 19.97% 19.97%
Chicago Record
Corporate Trust
Administration
Attn: Cash Sweep Coordinator
1 F&B Plaza Ste 0126
Chicago, IL 60670-0001
Trussal and Company I 18.85% 18.85%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Morand & Co. I 7.92% 7.92%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 7
Chicago, IL 60602-3902
</TABLE>
55
<PAGE> 59
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
NBD Bank NA S 58.49% 58.49%
Attn: Mary Ellen Bradley Record
9000 Haggerty Road
Belleville, MI 48111
First National Bank of S 24.74% 24.74%
Chicago Record
Cash Management Dept
Attn: Brian Finegan
Ste 0256 6th Floor
525 W Monroe St.
Chicago, IL 60661-3629
First National Bank of S 12.73% 12.73%
Chicago Record
Attn: Commercial Products
1 1st National Plaza Ste
0649
Chicago, IL 60670
Treasury Cash Management
Fund.................... First National Bank of I 55.79% 55.79%
Chicago Record
Corporate Trust
Administration
Attn: Cash Sweep Coordinator
1 F&B Plaza Ste 0126
Chicago, IL 60670-0001
Eagle & Co I 27.90% 27.90%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Trussal and Company I 9.11% 9.11%
c/o NBD Company Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Acordia of Illinois Inc. I 7.20% 7.20%
650 E Algonquin Rd Ste 300 Record
Schaumburg, IL 60173-3853
NBD Bank NA S 77.63% 77.63%
Attn: Mary Ellen Bradley Record
9000 Haggerty Road
Belleville, MI 48111
American National Bank S 10.74% 10.74%
33 N La Salle St FL 7 Record
Chicago, IL 60602-2607
</TABLE>
56
<PAGE> 60
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
First National Bank of S 5.28% 5.28%
Chicago Record
Cash Management Dept
Attn: Brian Finegan
Ste 0256 6th Floor
525 W Monroe St.
Chicago, IL 60661-3629
First National Bank of S 5.06% 5.06%
Chicago Record
Attn: Commercial Products
1 1st National Plaza Ste
0649
Chicago, IL 60670
Treasury Prime Cash
Management Fund......... Hella North America Holding I 38.67% 38.67%
Inc. Record
1101 Vincennes Ave
PO Box 398
Flora, IL 62839-0398
First National Bank of I 33.98% 33.98%
Chicago Record
Corporate Trust
Administration
Attn: Cash Sweep Coordinator
1 F&B Plaza Ste 0126
Chicago, IL 60670-0001
Trussal and Company I 13.29% 13.29%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
First National Bank of I 8.24% 8.24%
Chicago Record
Cash Management Dept.
Attn: Brian Finegan
Ste 0256 6th Floor
525 W Monroe Street
Chicago, IL 60661-3629
First National Bank of S 39.77% 39.77%
Chicago Record
Cash Management Dept
Attn: Brian Finegan
Ste 0256 6th Floor
525 W Monroe St.
Chicago, IL 60661-3629
</TABLE>
57
<PAGE> 61
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
First National Bank of S 21.30% 21.30%
Chicago Record
Corporate Trust
Administration
Attn: Cash Sweep Coordinator
One N State St 9th Floor
Mail St 0126
Chicago, IL 60670-0126
First National Bank of S 15.60% 15.60%
Chicago Record
Attn: Commercial Products
1 1st National Plaza Ste
0649
Chicago, IL 60670
Morand & Co S 14.90% 14.90%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
U.S. Government Securities
Cash Management Fund.... First National Bank of I 87.57% 87.57%
Chicago Record
Corporate Trust
Administration
Attn: Cash Sweep Coordinator
1 F&B Plaza Ste 0126
Chicago, ILL 60670-0001
Eagle & Co I 5.85% 5.85%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
First National Bank of S 53.28% 53.28%
Chicago Record
Cash Management Dept
Attn: Brian Finegan
Ste 0256 6th Floor
525 W Monroe St.
Chicago, IL 60661-3629
First National Bank of S 22.62% 22.62%
Chicago Record
Attn: Commercial Products
1 1st National Plaza Ste
0649
Chicago, IL 60670
Morand & Co. S 13.81% 13.81%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
</TABLE>
58
<PAGE> 62
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Municipal Cash Management
Fund.................... Eagle & Co I 73.82% 73.82%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Morand & Co. I 12.35% 12.35%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 7
Chicago, IL 60602-3902
Trussal and Company I 10.59% 10.59%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
NBD Bank NA S 93.54% 93.54%
Attn: Mary Ellen Bradley Record
9000 Haggerty Road
Belleville, MI 48111
First National Bank of S 6.46% 6.46%
Chicago Record
Attn: Commercial Products
1 1st National Plaza Ste
0649
Chicago, IL 60670
Mid-Cap Opportunity Fund Corelink Financial, Inc. A 18.65% 18.65%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company A 13.67% 13.67%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
NBD Bank TTEE A 7.10% 7.10%
American Axle & Record
Manufacturing Inc.
Personal S/P Hourly Rate
Associates
900 Tower Drive
Troy, MI 48098
MAC and Company A 6.79% 6.79%
Mutual Funds Operations Record
PO Box 3198
Pittsburgh, PA 15230
Corelink Financial, Inc. B 8.88% 8.88%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
</TABLE>
59
<PAGE> 63
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Trussal and Company I 77.01% 77.01%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
First Chicago NBD TTEE I 11.15% 11.15%
First Chicago NBD Svgs & Record
Invsmt Pln
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Eagle & Co I 7.97% 7.97%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Small-Cap Opportunity
Fund.................... Trussal and Company A 15.47% 15.47%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc. A 12.49% 12.49%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
NBD as Trustee A 12.13% 12.13%
Banker Systems, Inc. Record
Employees Profit Sharing
Plan
107 N. Cross Street Ste 2092
Wheaton, IL 60187
Corelink Financial, Inc. B 10.98% 10.98%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company I 46.45% 46.45%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 45.99% 45.99%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Market Expansion Index
Fund.................... Covenant Trust Company TTEE A 99.28% 99.28%
Jolene M Petersen Rev. Trust Record
5101 N Francisco Ave
Chicago, IL 60625
</TABLE>
60
<PAGE> 64
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
BISYS Fund Services Ohio
Inc. B 100.00% 100.00%
Attn: Fund Administration Record
3435 Stelzer Road
Columbus, OH 43219
HOJO and Company I 84.61% 84.61%
c/o American National Bank Record
1 North La Salle Third Floor
Chicago, IL 60690
Morand & Co. I 10.73% 10.73%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
International Equity Fund Trussal and Company A 21.80% 21.80%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc. A 5.60% 5.60%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Corelink Financial, Inc. B 10.73% 10.73%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
Trussal and Company I 54.10% 54.10%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co. I 35.52% 35.52%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Inner Wharf & Co. I 5.88% 5.88%
American National Bank Record
1 Heritage Drive JP2N
North Quincy, MA 02171
Bond Fund................. Trussal and Company A 21.29% 21.29%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Corelink Financial, Inc. A 8.38% 8.38%
1855 Gateway Blvd Ste 500 Record
Concord, CA 94520
</TABLE>
61
<PAGE> 65
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Putnam Fiduciary Trust Co A 7.31% 7.31%
TTEE Record
Market Square P/S Plan
Attn: Lisa Doty
859 Willard Street
Quincy, MA 02269-9110
Putnam Fiduciary Trust Co A 5.96% 5.96%
TTEE Record
Elco Textron Inc.
Attn: K Barry
859 Willard Street
Quincy, MA 02269-9110
Trussal and Company I 63.16% 63.16%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 17.79% 17.79%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
Inner Wharf & Co I 12.39% 12.39%
American National Bank Record
1 Heritage Drive JP2N
North Quincy, MA 02171
First Chicago NBD TTEE I 5.09% 5.09%
First Chicago NBD Svgs & Record
Invsmt Pln
c/o Putnam Investments
PO Box 9740
Providence, RI 02940-9740
Municipal Bond Fund....... Donald Lufkin Jenrette A 17.13% 17.13%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Donald Lufkin Jenrette B 15.17% 15.17%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Trussal and Company I 67.81% 67.81%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
Eagle & Co I 27.11% 27.11%
American National Bank Record
Mutual Fund Processing Unit
1 N La Salle St FL 3
Chicago, IL 60602-3902
</TABLE>
62
<PAGE> 66
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
PERCENTAGE CLASS OF ONE
CLASS OF SHARES OF CLASS GROUP FUND
NAME AND OWNED AND OWNED ON OWNED ON
REORGANIZING PEGASUS FUND ADDRESS TYPE OF OWNERSHIP RECORD DATE CONSUMMATION
- ------------------------- ---------------------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Short Municipal Bond
Fund.................... Donaldson Lufkin Jenrette A 80.44% 80.44%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette B 99.91% 99.91%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Michigan Municipal Bond
Fund.................... James R. Donahey A 13.71% 13.71%
Pat J. Donahey Jt Ten Record
421 Highland
Ann Arbor, MI 48104
Donaldson Lufkin Jenrette B 39.21% 39.21%
Securities Corporation Inc. Record
PO Box 2052
Jersey City, NJ 07303-9998
Trussal and Company I 97.10% 97.10%
c/o NBD Bank Record
Attn: Pegasus Funds
900 Tower Drive Eighth Floor
Troy, MI 48098
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing tables is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class.
As of December 18, 1998, the trustees/directors and officers of Pegasus, as
a group, owned less than 1% of the outstanding shares of each of the Pegasus
Funds.
On December 18, 1998, Trussal & Co., 9000 Haggerty Road, Belleville,
Michigan 48111, held of record the outstanding Class I Shares, as listed below,
of each investment portfolio of the Pegasus Funds as nominee of NBD Bank's Trust
Division and affiliated banks which acted as agent or custodian on behalf of
their customers. NBD Bank possessed or shared voting or investment power and may
be deemed for certain purposes to be the beneficial owner with respect to those
Class I Shares listed below at December 18, 1998.
<TABLE>
<CAPTION>
PEGASUS FUND TRUSSAL & CO. NBD BANK
------------ ------------------ -----------------
<S> <C> <C>
Money Market Fund....................... 1,280,769,437.11 808,478,392.62
Treasury Money Market Fund.............. 216,925,138.00 166,486,813.00
Municipal Money Market Fund............. 615,975,145.00 484,490,501.00
Michigan Municipal Money Market Fund.... 106,922,069.00 83,067,045.00
Cash Management Fund.................... 217,889,364.00 140,853,420.50
Treasury Cash Management Fund........... 2,701,199.00 300,282.00
Treasury Prime Cash Management Fund..... 18,557,837.00 4,413,497.00
U.S. Government Securities Cash
Management Fund....................... 7,769,429.52 2,239,825.00
</TABLE>
63
<PAGE> 67
<TABLE>
<CAPTION>
PEGASUS FUND TRUSSAL & CO. NBD BANK
------------ ------------------ -----------------
<S> <C> <C>
Municipal Cash Management Fund.......... 62,984,470.00 12,846,757.00
Managed Assets Conservative Fund........ 149,720.252 147,712.68
Managed Assets Balanced Fund............ 2,531,209.234 1,823,972.223
Managed Assets Growth Fund.............. 104,250.46 98,027.01
Equity Income Fund...................... 26,590,246.153 22,651,959.445
Growth Fund............................. 21,212,169.415 19,349,032.044
Mid-Cap Opportunity Fund................ 37,347,572.185 33,263,961.135
Small-Cap Opportunity Fund.............. 8,653,848.918 7,887,034.458
Intrinsic Value Fund.................... 24,588,949.841 22,927,033.30
Growth and Value Fund................... 53,907,135.742 49,233,671.633
Equity Index Fund....................... 25,730,701.432 19,442,426.08
Market Expansion Index Fund............. 74,586.659 10,226.08
International Equity Fund............... 22,202,377.706 21,469,366.271
Intermediate Bond Fund.................. 40,331,302.904 35,345,596.870
Bond Fund............................... 74,802,802.692 70,279,374.506
Short Bond Fund......................... 31,703,469.147 30,393,177.461
Multi Sector Bond Fund.................. 39,268,239.668 36,678,680.11
High Yield Bond Fund.................... 2,934,712.597 2,616,316.789
Municipal Bond Fund..................... 43,909,831.724 37,083,617.83
Short Municipal Bond Fund............... 11,426,245.897 8,489,712.530
Intermediate Municipal Bond Fund........ 6,306,638.94 5,427,503.623
Michigan Municipal Bond Fund............ 26,292,212.795 21,989,274.408
================== =================
</TABLE>
As of December 18, 1998, the Automated Cash Management System ("ACMS"),
9000 Haggerty Road, Belleville, Michigan 48111, held of record the following
Class I Shares on behalf of its participants (no participant owned beneficially
5% or more of such Shares):
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NUMBER OF CLASS OWNED FUND SHARES OWNED
PEGASUS FUND SHARES HELD ON RECORD DATE ON RECORD DATE
------------ --------------- -------------- -----------------
<S> <C> <C> <C>
Money Market Fund.......................... 0
Treasury Money Market Fund................. 16,351,001.46 2.13% 1.47%
Municipal Money Market Fund................ 24,004,004.39 3.61% 2.74%
Michigan Municipal Money Market Fund....... 3,579,918.63 2.97% 1.90%
Cash Management Fund....................... 0
Treasury Cash Management Fund.............. 0
Treasury Prime Cash Management Fund........ 0
U.S. Government Securities Cash............ 0
Management Fund............................ 0
Municipal Cash Management Fund............. 0
</TABLE>
64
<PAGE> 68
As of December 18, 1998, the name, address and percentage of ownership of
the persons who owned of record 5% or more of the outstanding shares of the
respective share classes of the Existing One Group Funds are as follows:
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Charles Schwab & Co. Inc. Large Company Growth Fund 5.11% Record 4.81%
Special Custody Account for the Class A
Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
Dean Witter For The Benefit Of Large Company Growth Fund 11.93% Record 11.93%
Selma J Berry & Colin G Berry JTTEN Class C
Church St Station -- PO Box 250
New York, NY 10008-0250
Dean Witter Reynolds Cust For Large Company Growth Fund 8.00% Record 8.00%
Alvin B Wesneski Class C
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Strafe & Co Large Company Growth Fund 89.16% Record 55.32%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Corporation Large Company Growth Fund 11.49% Beneficial 7.13%
100 E Broad Street Class I
Columbus, OH 43215-3607
Banc One Sec Svgs Plan Large Company Growth Fund 10.40% Beneficial 6.45%
100 E Broad Street Class I
Columbus, OH 43215-3607
Strafe & Co Disciplined Value Fund 86.61% Record 52.63%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Banc One Corporation Disciplined Value Fund 12.91% Beneficial 7.84%
100 E Broad Street Class I
Columbus, OH 43215-3607
The One Group Investor Growth Fund Disciplined Value Fund 5.14% Beneficial 3.12%
The One Group Services Company Class I
3435 Stelzer Road
Columbus, OH 43219-6004
Dean Witter For The Benefit Of Income Bond Fund 11.02% Record 5.58%
Alpert Corp Money Purchase Plan Class A
Steven Kurtz TTEE
5 World Trade Center 6th Floor
New York, NY 10048-0205
</TABLE>
65
<PAGE> 69
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Strafe & Co Income Bond Fund 88.35% Record 59.85%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
J Noland Singletary Intermediate Tax-Free Fund 6.18% Beneficial 2.65%
7350 Bocage Blvd Class A
Baton Rouge LA 70809-1138
Dean Witter For the Benefit of Intermediate Tax-Free Fund 6.05% Record 2.60%
Jerome Kearns & Class A
PO Box 250 Church Street Station
New York, NY 10008-0250
Norwest Bank Co NA TTEE Intermediate Tax-Free Fund 5.04% Record 2.16%
FBO Eliot S Wolff Class A
1740 Broadway
Denver, CO 80274-0002
Dean Witter For The Benefit Of Intermediate Tax-Free Fund 5.31% Record 4.88%
Leon Morgan Trust Class B
C/O Leon Morgan TTEE
Church St Station -- PO Box 250
New York, NY 10013-0250
Strafe & Co Intermediate Tax-Free Fund 99.51% Record 55.13%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
Dean Witter FBO Prime Money Market Fund 55.34% Record 17.74%
Banc One Securities Class A
PO Box 250
Church Street Station
New York, NY 10013-0250
BISYS Fund Services Inc Prime Money Market Fund 30.70% Record 9.84%
Fbo Bank One Corporate Sweep Class A
3435 Stelzer Road Suite 1000
Columbus OH 43219-6004
Strafe & Co Prime Money Market Fund 78.66% Record 50.88%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One Trust Company NA Prime Money Market Fund 7.31% Record 4.73%
Omnibus-Corporate Cash Sweep AC Class I
Attn Cash Management DB3
235 W Schrock Rd
Westerville OH 43081-2874
</TABLE>
66
<PAGE> 70
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
BISYS Fund Services Inc US Treasury Securities Money 22.68% Record 18.71%
Fbo Bank One Corporate Sweep Market Fund
3435 Stelzer Road Suite 1000 Class A
Columbus OH 43219-6004
National Financial Services Corp US Treasury Securities Money 21.46% Record 17.70%
Fbo Our Customers Market Fund
200 Liberty St World Financial CT Class A
New York, NY 10281-1003
BISYS Fund Services Inc US Treasury Securities Money 20.18% Record 16.65%
Fbo Bank One Securities Market Fund
3435 Stelzer Road Suite 1000 Class A
Columbus OH 43219-6004
Dean Witter FBO US Treasury Securities Money 16.96% Record 13.99%
Banc One Securities Market Fund
PO Box 250 Class A
Church Street Station
New York NY 10013-0250
BISYS Fund Services Inc US Treasury Securities Money 15.85% Record 13.08%
Fbo Bank One Texas Sweep Market Fund
Attn Mike Bryan Class A
3435 Stelzer Road Suite 1000
Columbus OH 43219-6004
State Street Bank & Trust Co US Treasury Securities Money 8.76% Record 8.76%
CUST for the IRA Rollover of Market Fund
Michael R Nides Class B
2046A Dickory Ave
New Orleans, LA 70123-5317
NFSC FEBO #093-954381 US Treasury Securities Money 7.62% Record 7.62%
Chung Shing Chiang Market Fund
3337 Somerset Class B
New Orleans, LA 70131-5361
Dean Witter For the Benefit Of US Treasury Securities Money 7.52% Record 7.52%
Mary Sue Gilpin Market Fund
413 Dunmoreland Circle Class B
5 World Trade Center, 6th Floor
New York, NY 10048-0205
NFSC FEBO #AFL-668885 US Treasury Securities Money 6.82% Record 6.82%
FNBC Cust Collateral Acct FBO Market Fund
Sterling H Smith Class B
Carolyn S Smith
PO Box 493
Amite, LA 70422
State Street Bank & Trust Co US Treasury Securities Money 5.48% Record 5.48%
Sep IRA Jeffrey S Lux Market Fund
2220 Justice Street Class B
Monroe, LA 71201-3620
</TABLE>
67
<PAGE> 71
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Dean Witter For the Benefit Of US Treasury Securities Money 49.78% Record 49.78%
Martin Homes Inc Prof Shar Pln Market Fund
PO Box 250 Church Street Station Class C
New York, NY 10008-0250
Evelyn C Balser US Treasury Securities Money 15.72% Beneficial 15.72%
Raymond F Balser JT TEN Market Fund
191 Brigham Hill Rd Class C
North Grafton, MA 01536-1117
Dean Witter Reynolds Cust For US Treasury Securities Money 12.57% Record 12.57%
Paul E Puckett Market Fund
PO Box 250 Church Street Station Class C
New York, NY 10008-0250
Dean Witter For The Benefit Of US Treasury Securities Money 7.54% Record 7.54%
Osareni Christopher Ogiesoba & Market Fund
Margaret Iyobosa Ogiesoba JTTE Class C
Church Street Station -- PO Box 250
New York, NY 10013-0250
Dean Witter For The Benefit Of US Treasury Securities Money 7.39% Record 7.39%
Steven R Swift & Market Fund
PO Box 250 -- Church Street Station Class C
New York, NY 10008-0250
Strafe & Co (N) US Treasury Securities Money 85.30% Record 71.66%
BOIA -- One Group Operations Market Fund
1111 Polaris Parkway Class I
PO Box 710211
Columbus OH 43271-0211
Bank one Trust Company NA US Treasury Securities Money 14.39% Record 12.09%
Omnibus-Corporate Cash Sweep AC Market Fund
Attn: Cash Management DB3 Class I
235 W Schrock Rd
Westerville OH 43081-2874
Dean Witter FBO Municipal Money Market Fund 42.88% Record 19.01%
Banc One Securities Class A
PO Box 250
Church Street Station
New York NY 10013-0250
BISYS Fund Services Inc Municipal Money Market Fund 25.04% Record 11.10%
FBO Bank One Corporate Sweep Class A
3435 Stelzer Road Suite 1000
Columbus OH 43219-6004
National Financial Services Corp Municipal Money Market Fund 24.31% Record 10.78%
FBO Our Customers Class A
200 Liberty St World Financial Ct
New York, NY 10281-1003
</TABLE>
68
<PAGE> 72
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Strafe & Co Municipal Money Market Fund 97.32% Record 46.49%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus, OH 43271-0211
DC Livestock Co Ltd Part Yea Municipal Money Market Fund 5.53% Beneficial 2.64%
100 E Broad Street Class I
Columbus, OH 43215-3607
Dean Witter For The Benefit Of Income Equity Fund 68.83% Record 68.83%
McKee Char TR/Lynn A Hammond & Clare Class C
W White Co-TTEES
Church St Station -- PO Box 250
New York NY 10013-0250
UMB Bank Cust Fbo Income Equity Fund 6.94% Record 6.94%
Bruce W Young IRA Class C
718 Sycamore Ave SPC 200
Vista CA 92083-7952
Dean Witter For The Benefit Of Income Equity Fund 5.69% Record 5.69%
Williams Brother Construction Inc Class C
401(K) PSP Thomas J Williams
Church St Station -- PO Box 250
New York NY 10013-0250
Strafe & Co Income Equity Fund 92.60% Record 35.00%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Securities Corp Fbo Equity Index Fund 36.52% Record 15.69%
The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Banc One Securities Corp Fbo Equity Index Fund 61.28% Record 61.28%
The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
Strafe & Co. Equity Index Fund 86.82% Record 40.55%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Sec Svgs Plan-Equity Fund Equity Index Fund 32.48% Beneficial 15.17%
100 E Broad Street Class I
Columbus, OH 43215-3607
</TABLE>
69
<PAGE> 73
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Wallace & Co Limited Volatility Bond Fund 6.79% Record 3.57%
PO Box 21119 Class A
Shreveport LA 71152-0001
Strafe & Co. Limited Volatility Bond Fund 90.20% Record 57.26%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Securities Corp Fbo Value Growth Fund 22.25% Record 6.65%
The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Banc One Securities Corp Fbo Value Growth Fund 83.10% Record 83.10%
The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
Strafe & Co. Value Growth Fund 80.98% Record 33.57%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
The One Group Investor Growth Fund Value Growth Fund 5.64% Beneficial 2.34%
C/O Mark Redman Class I
The One Group Services Company
3435 Stelzer Road
Columbus OH 43219-6004
The One Group Investor Growth & Value Growth Fund 5.53% Beneficial 2.29%
Income Fund Class I
C/O Mark Redman
The One Group Services Company
3435 Stelzer Road
Columbus OH 43219-6004
Banc One Securities Corp FBO Intermediate Bond Fund 54.73% Record 21.21%
The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Banc One Securities Corp FBO Intermediate Bond Fund 44.33% Record 44.33%
The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
Dean Witter For The Benefit Of Intermediate Bond Fund 7.15% Record 7.15%
Dennis J Furlong & Class C
PO Box 250 Church Street Station
New York NY 10008-0250
</TABLE>
70
<PAGE> 74
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Dean Witter For The Benefit Of Intermediate Bond Fund 5.82% Record 5.82%
Williams Brother Construction Class C
PO Box 250 Church Street Station
New York NY 10008-0250
Strafe & Co. Intermediate Bond Fund 90.70% Record 51.26%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Bank One TTEE Investor Growth Fund 5.76% Record 4.58%
Harrison Holding Corp 401K Class A
C/O Banc One Investment Mgmt
Retirement Services -- Daily R K
190 Heatherdown Drive
Westerville OH 43081-2868
Dean Witter For The Benefit Of Investor Growth Fund 5.27% Record 5.27%
William D Robertson DDS PSP Class C
PO Box 250 Church Street Station
New York NY 10008-0250
Strafe & Co. Investor Growth Fund 66.15% Record 64.93%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Sec Svgs Pl -- Inv Grwth Investor Growth Fund 19.20% Beneficial 18.85%
100 E Broad Street Class I
Columbus, OH 43215-3607
Bank One TTEE Investor Growth Fund 12.29% Record 12.06%
Brillion Iron Works P/S Class I
C/O Banc One Investment Mgmt
Retirement Services -- Daily R K
190 Heatherdown Drive
Westerville OH 43081-2868
Virginia R Corrin Investor Growth Fund 9.02% Beneficial 8.85%
100 E Broad Street Class I
Columbus, OH 43215-3607
Dean Witter For The Benefit Of Investor Growth & Income Fund 8.09% Record 8.09%
St Mary's Educational Endowment Class C
Foundation
Church St Station PO Box 250
New York NY 10013-0250
Dean Witter For The Benefit Of Investor Growth & Income Fund 7.49% Record 7.49%
Milo L Meacham Jr Class C
PO Box 250 Church Street Station
New York NY 10008-0250
</TABLE>
71
<PAGE> 75
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Strafe & Co. Investor Growth & Income Fund 81.32% Record 42.42%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Revco D.S., Inc. Serp -- Trust A Investor Growth & Income Fund 14.24% Beneficial 7.05%
100 E Broad Street Class I
Columbus, OH 43215-3607
Banc One Sec Svgs Plan Investor Growth & Income Fund 13.52% Beneficial 4.28%
100 E Broad Street Class I
Columbus, OH 43215-3607
Institutional Trust Co TTEE Investor Balanced Fund 8.21% Record 4.57%
PBC Industrial Supplies Inc Plan Class A
PO Box 77405
Atlanta, GA 30357-1405
State Street Bank & Trust Co Investor Balanced Fund 6.60% Record 6.60%
Cust For The IRA Rollover Of Class C
George L Allison
768 E Indiana Ave
Spencer IN 47460-1538
Dean Witter For The Benefit Of Investor Balanced Fund 6.33% Record 6.33%
Joseph A Hess Class C
IRA Standard Dated 11/18/97
Church St Station -- PO Box 250
New York NY 10013-0250
Dean Witter For The Benefit Of Investor Balanced Fund 5.88% Record 5.88%
James B White & Norma J White JTTEN Class C
Church St Station -- PO Box 250
New York NY 10013-0250
Strafe & Co. Investor Balanced Fund 82.57% Record 70.65%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Kenosha Carpenters #161 Pens-Mgd Investor Balanced Fund 8.34% Beneficial 7.14%
100 E Broad Street Class I
Columbus, OH 43215-3607
Centennial Liquor Retirement Plan Investor Balanced Fund 7.87% Beneficial 6.73%
100 E Broad Street Class I
Columbus, OH 43215-3607
Affiliated MPP Investor Balanced Fund 5.58% Beneficial 4.77%
100 E Broad Street Class I
Columbus, OH 43215-3607
</TABLE>
72
<PAGE> 76
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE OF
CLASS OF ONE
GROUP FUND
PERCENTAGE OF TYPE OF OWNED ON
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP CONSUMMATION
- ---------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Josephine M Gibson High Yield Bond Fund 95.61% Record 1.10%
James L Gibson JR JT TEN Class A
3636 Janlin Court
Cincinnati, OH 45211-6306
Dean Witter For the Benefit Of High Yield Bond Fund 90.43% Record 2.98%
Charles M Westerfield & Class B
PO Box 250 Church Street Station
New York, NY 10008-0250
The One Group Services Company High Yield Bond Fund 8.33% Record 0.27%
C/O Fund Administration Class B
3435 Stelzer Road
Columbus OH 43219-6004
Strafe & Co. High Yield Bond Fund 39.68% Record 10.05%
BOIA -- One Group Operations Class I
1111 Polaris Parkway
PO Box 710211
Columbus OH 43271-0211
Banc One Corporation High Yield Bond Fund 39.31% Beneficial 9.96%
100 E. Broad Street Class I
Columbus, OH 43215
The One Group Investor Growth & High Yield Bond Fund 31.45% Beneficial 7.97%
Income Fund Class I
C/O Mark Redman
The One Group Services Company
3435 Stelzer Road
Columbus OH 43219-6004
The One Group Investor Growth Fund High Yield Bond Fund 27.89% Beneficial 7.07%
C/O Mark Redman Class I
The One Group Services Company
3435 Stelzer Road
Columbus OH 43219-6004
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing tables is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class.
As of December 18, 1998, the trustees and officers of One Group Funds, as a
group, owned less then 1% of the outstanding shares of the respective share
classes of each of the One Group's investment portfolios.
APPRAISAL RIGHTS. Shareholders are not entitled to any rights of share
appraisal under Pegasus' Declaration of Trust or By-laws, or under the laws of
the Commonwealth of Massachusetts, in connection with the Reorganization.
Shareholders have, however, the right to redeem from Pegasus their Pegasus
Portfolio shares at net asset value until the effective time of the
Reorganization, and thereafter shareholders may redeem from One Group the shares
of the One Group Fund acquired by them in the Reorganization at net asset value.
73
<PAGE> 77
QUORUM. In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve
the Reorganization Agreement and the transactions contemplated thereby are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of the proxies. Any such adjournment
will require the affirmative vote of a majority of those shares affected by the
adjournment that are represented at the Meeting in person or by proxy. If a
quorum is present, the persons named as proxies will vote those proxies which
they are entitled to vote FOR the Reorganization Agreement, in favor of such
adjournments, and will vote those proxies required to be voted AGAINST such
Proposal against any adjournment. A shareholder vote may be taken with respect
to one or more of the share classes on the Proposal prior to any such
adjournment as to which sufficient votes have been received for approval. A
quorum is constituted with respect to each of the share classes of each of the
Pegasus Portfolios by the presence in person or by proxy of the holders of more
than 50% of the outstanding shares thereof entitled to vote at the Meeting. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions, but not broker "non-votes" (that is, proxies from brokers
or nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power),
will be treated as shares that are present at the Meeting but which have not
been voted. Abstentions and broker "non-votes" will have the effect of a "no"
vote for purposes of obtaining the requisite approval of the Proposal.
ANNUAL MEETINGS. Neither One Group nor Pegasus presently intends to hold
annual meetings of shareholders for the election of trustees and other business
unless otherwise required by the 1940 Act. Under certain circumstances, however,
holders of at least 10% of the outstanding shares of Pegasus or 20% of the
outstanding shares of One Group have the right to call a meeting of
shareholders. Shareholder proposals to be considered at a meeting must be
submitted within a reasonable period of time.
ADDITIONAL INFORMATION ABOUT THE ONE GROUP AND PEGASUS
Information about the Existing One Group Funds is included in the
Prospectuses accompanying this Combined Prospectus/Proxy Statement, which are
incorporated by reference herein. Additional information about these Funds is
included in their Statement of Additional Information dated November 1, 1998,
which have been filed with the SEC under the Securities Act of 1933 and
Investment Company Act of 1940. The file numbers of The One Group Prospectuses
and Statements of Additional Information are Registration Numbers
002-95973/811-04236. A copy of the Statement of Additional Information may be
obtained without charge by writing The One Group Services Company at 3435
Stelzer Road, Columbus, Ohio 43219 or by calling 1-800-480-4111. Information
about Pegasus is incorporated herein by reference from its Prospectuses dated
April 30, 1998 and Statements of Additional Information, dated April 30, 1998,
copies of which may be obtained without charge by writing or calling Pegasus at
the address and telephone number shown on the cover page of this Combined
Prospectus/Proxy Statement. The SEC file numbers for the Pegasus Fund's
Prospectuses and related Statements of Additional Information are Registration
Numbers 33-13990/811-5148.
The One Group and Pegasus are subject to the informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act, as applicable, and, in
accordance with such requirements, files proxy materials, reports and other
information with the SEC. Reports and other information filed by One Group and
Pegasus can be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, New
York 10048; 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 90
Devonshire Street, Suite 700, Boston, MA 02109; and 601 Walnut Street, Suite
1005E, Philadelphia, PA 19106. Copies of such material may also be obtained from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549, at
prescribed rates. The SEC maintains a website (www.SEC.gov) which also contains
Prospectuses and Statements of Additional Information and other information
regarding The One Group and Pegasus.
74
<PAGE> 78
LITIGATION
Neither Pegasus nor One Group is involved in any litigation that would have
any material adverse effect upon either the Pegasus or One Group Funds.
FINANCIAL STATEMENTS
The financial highlights and financial statements for Pegasus for the
fiscal year or period ended December 31, 1997 are contained in Pegasus' Annual
Reports to Shareholders and in Pegasus' Prospectuses and Statements of
Additional Information dated April 30, 1998, each of which is incorporated by
reference into this Combined Prospectus/Proxy Statement. Unaudited financial
highlights and financial statements for the Pegasus Portfolios for the six-month
fiscal period ended June 30, 1998 are contained in Pegasus' Semi-Annual Reports
to Shareholders, which are incorporated by reference into this Combined
Prospectus/Proxy Statement. The financial highlights and the financial
statements for the Existing One Group Funds for the fiscal year ended June 30,
1998 are contained in One Group's Annual Reports to Shareholders and in One
Group's Prospectuses and Statement of Additional Information dated November 1,
1998, each of which is incorporated by reference into this Combined
Prospectus/Proxy Statement.
The audited financial highlights and financial statements of Pegasus for
the fiscal year or period ended December 31, 1997, contained in Pegasus' Annual
Reports and incorporated by reference in this Combined Proxy/Prospectus, have
been incorporated herein in reliance on the report of Arthur Andersen LLP,
independent auditors, given upon the authority of such firm as experts in
accounting and auditing.
The audited financial highlights and financial statements of the Existing
One Group Funds for the fiscal year ended June 30, 1998, contained in One
Group's Annual Reports and incorporated by reference in this Combined
Proxy/Prospectus, have been audited by PricewaterhouseCoopers LLP, independent
public accountants, as indicated in their reports with respect thereto and are
incorporated herein in reliance upon the authority of said firm as experts in
accounting and auditing.
Unaudited pro forma combined financial statements of the Pegasus and One
Group Funds for the twelve-month period ending June 30, 1998 are included in the
Statement of Additional Information. Because the Reorganization Agreement
provides that the One Group Funds, other than the New One Group Funds, the
Income Bond Fund and the Intermediate Bond Fund, will be the surviving funds
following the Reorganization and because the One Group Funds' investment
objectives and policies will remain unchanged, the pro forma combined financial
statements reflect the transfer of assets and liabilities of each Pegasus
Portfolio to the corresponding One Group Fund as contemplated by the
Reorganization Agreement. In the case of the combinations of the Continuing
Pegasus Portfolios and the New One Group Funds, the Pegasus Multi Sector Fund
and One Group Income Bond Fund and the Pegasus Intermediate Bond Fund and One
Group Intermediate Bond Fund, the Pegasus Funds will be the survivors for
accounting purposes.
OTHER BUSINESS
Pegasus' Board of Trustees knows of no other business to be brought before
the Meeting. However, should any other matter requiring a vote of shareholders
arise, the persons named in the enclosed proxy card will vote on matters
according to their best judgment in the interest of the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Pegasus in writing at the address
on the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-688-3350.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PEGASUS WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS DECEMBER 31, 1997
ANNUAL REPORTS AND ITS JUNE 30, 1998 SEMI-ANNUAL REPORTS TO ANY SHAREHOLDER UPON
REQUEST ADDRESSED TO: PEGASUS FUNDS P. O. BOX 5142, WESTBOROUGH, MASSACHUSETTS
01581 OR BY TELEPHONE AT 1-800-688-3350.
75
<PAGE> 79
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
January 12, 1999 by and between The One Group(R), a Massachusetts business
trust, ("One Group") and Pegasus Funds, a Massachusetts business trust
("Pegasus"). The capitalized terms used herein shall have the meaning ascribed
to them in this Agreement.
I. PLAN OF REORGANIZATION
(a) Pegasus will sell, assign, convey, transfer and deliver to One Group,
and One Group will acquire, on the Exchange Date all of the properties and
assets existing at the Valuation Time in Pegasus Money Market Fund ("Pegasus
Money Market"), Pegasus Treasury Money Market Fund ("Pegasus Treasury"), Pegasus
Municipal Money Market Fund ("Pegasus Municipal"), Pegasus Michigan Municipal
Money Market Fund ("Pegasus Michigan Money Market"), Pegasus Cash Management
Money Market Fund ("Pegasus Cash Management"), Pegasus Treasury Prime Cash
Management Money Market Fund ("Pegasus Treasury Prime Cash"), Pegasus U.S.
Government Securities Cash Management Money Market Fund ("Pegasus Government
Cash"), Pegasus Municipal Cash Management Money Market Fund ("Pegasus Municipal
Cash"), Pegasus Treasury Cash Management Fund ("Pegasus Treasury Cash"), Pegasus
Short Bond Fund ("Pegasus Short Bond"), Pegasus Intermediate Bond Fund ("Pegasus
Intermediate Bond"), Pegasus Multi Sector Bond Fund ("Pegasus Multi Sector"),
Pegasus Bond Fund ("Pegasus Bond"), Pegasus High Yield Bond Fund ("Pegasus High
Yield"), Pegasus Intermediate Municipal Bond Fund ("Pegasus Intermediate
Municipal"), Pegasus Municipal Bond Fund ("Pegasus Municipal Bond"), Pegasus
Michigan Municipal Bond Fund ("Pegasus Michigan Municipal"), Pegasus Short
Municipal Bond Fund ("Pegasus Short Municipal"), Pegasus Equity Income Fund
("Pegasus Equity Income"), Pegasus Equity Index Fund ("Pegasus Equity Index"),
Pegasus Growth and Value Fund ("Pegasus Value"), Pegasus Intrinsic Value Fund
("Pegasus Intrinsic Value"), Pegasus Growth Fund ("Pegasus Growth"), Pegasus
Mid-Cap Opportunity Fund ("Pegasus Mid-Cap"), Pegasus Small-Cap Opportunity Fund
("Pegasus Small-Cap"), Pegasus International Equity Fund ("Pegasus
International"), Pegasus Market Expansion Index Fund ("Pegasus Expansion"),
Pegasus Managed Assets Growth Fund ("Pegasus Managed Assets"), Pegasus Managed
Assets Balanced Fund ("Pegasus Managed Balanced"), and Pegasus Managed Assets
Conservative Fund ("Pegasus Managed Conservative") (Pegasus Money Market,
Pegasus Treasury, Pegasus Municipal, Pegasus Michigan Municipal, Pegasus Cash
Management, Pegasus Treasury Prime Cash, Pegasus Government Cash, Pegasus
Municipal Cash, Pegasus Treasury Cash, Pegasus Short Bond, Pegasus Intermediate
Bond, Pegasus Multi Sector, Pegasus Bond, Pegasus High Yield, Pegasus
Intermediate Municipal, Pegasus Municipal Bond, Pegasus Michigan Municipal,
Pegasus Short Municipal, Pegasus Equity Income, Pegasus Equity Index, Pegasus
Value, Pegasus Intrinsic Value, Pegasus Growth, Pegasus Mid-Cap, Pegasus
Small-Cap, Pegasus International, Pegasus Expansion, Pegasus Managed Assets,
Pegasus Managed Balanced, and Pegasus Managed Conservative, each is a "Pegasus
Fund" and are collectively the "Pegasus Funds"), such acquisition to be made by
The One Group(R) Prime Money Market Fund ("One Group(R) Prime"), The One
Group(R) U.S. Treasury Securities Money Market Fund ("One Group(R) Treasury
Securities"), The One Group(R) Municipal Money Market Fund ("One Group(R)
Municipal"), The One Group(R) Michigan Municipal Money Market Fund, ("One
Group(R) Michigan Money Market"), The One Group(R) Cash Management Money Market
Fund ("One Group(R) Cash Management"), The One Group(R) Treasury Prime Cash
Management Money Market Fund ("One Group(R) Treasury Prime Cash"), The One
Group(R) U.S. Government Securities Cash Management Money Market Fund ("One
Group(R) Government Cash"), The One Group(R) Municipal Cash Management Money
Market ("One Group(R) Municipal Cash"), The One Group(R) Treasury Cash
Management ("One Group(R) Treasury Cash"), The One Group(R) Limited Volatility
Bond Fund ("One Group(R) Limited Volatility"), The One Group(R) Intermediate
Bond Fund ("One Group(R) Intermediate Bond"), The One Group(R) Income Bond Fund
("One Group(R) Income"), The One Group(R) Bond Fund ("One Group(R) Bond"), The
One Group(R) High Yield Bond Fund ("One Group(R) High Yield"), The One Group(R)
Intermediate Tax-Free Bond Fund ("One Group(R) Intermediate Tax-Free"), The One
Group(R) Municipal
I-1
<PAGE> 80
Bond Fund ("One Group(R) Municipal Bond"), The One Group(R) Michigan Municipal
Bond Fund ("One Group(R) Michigan Municipal"), The One Group(R) Short Municipal
Bond Fund ("One Group(R) Short Municipal"), The One Group(R) Equity Income Fund
("One Group(R) Equity Income"), The One Group(R) Equity Index Fund ("One
Group(R) Equity Index"), The One Group(R) Value Growth Fund ("One Group(R)
Value"), The One Group(R) Disciplined Value Fund ("One Group(R) Disciplined"),
The One Group(R) Large Company Growth Fund ("One Group(R) Growth"), The One
Group(R) Mid-Cap Opportunities Fund ("One Group(R) Mid-Cap"), The One Group(R)
Small Cap Opportunity Fund ("One Group(R) Small Cap"), The One Group(R)
International Equity Fund ("One Group(R) International"), The One Group(R) Small
Cap Index Fund ("One Group(R) Small Cap Index"), The One Group(R) Investor
Growth Fund ("One Group(R) Investor Growth"), The One Group(R) Investor Growth &
Income Fund ("One Group(R) Investor Income") and The One Group(R) Investor
Balanced Fund ("One Group(R) Investor Balanced") (One Group(R) Prime, One
Group(R) Treasury Securities, One Group(R) Municipal, One Group(R) Michigan
Money Market, One Group(R) Cash Management, One Group(R) Treasury Prime Cash,
One Group(R) Government Cash, One Group(R) Municipal Cash, One Group(R) Treasury
Cash, One Group(R) Limited Volatility, One Group(R) Intermediate Bond, One
Group(R) Income, One Group(R) Bond, One Group(R) High Yield, One Group(R)
Intermediate Tax-Free, One Group(R) Municipal Bond, One Group(R) Michigan
Municipal, One Group(R) Short Municipal, One Group(R) Income Equity, One
Group(R) Equity Index, One Group(R) Value, One Group(R) Disciplined, One
Group(R) Growth, One Group(R) Mid-Cap, One Group(R) Small Cap, One Group(R)
International, One Group(R) Small Cap Index, One Group(R) Investor Growth, One
Group(R) Investor Income and One Group(R) Investor Balanced, each is a "One
Group Fund" and are collectively the "One Group Funds"), respectively, of One
Group. For purposes of this Agreement the respective Pegasus Funds correspond to
the One Group Funds as follows: Pegasus Money Market corresponds to One Group(R)
Prime; Pegasus Treasury corresponds to One Group(R) Treasury Securities; Pegasus
Municipal corresponds to One Group(R) Municipal; Pegasus Michigan Money Market
corresponds to One Group(R) Michigan Money Market; Pegasus Cash Management
corresponds to One Group(R) Cash Management; Pegasus Treasury Prime Cash
corresponds to One Group(R) Treasury Prime Cash; Pegasus Government Cash
corresponds to One Group(R) Government Cash; Pegasus Municipal Cash corresponds
to One Group(R) Municipal Cash; Pegasus Treasury Cash corresponds to One
Group(R) Treasury Cash; Pegasus Short Bond corresponds to One Group(R) Limited
Volatility; Pegasus Intermediate Bond corresponds to One Group(R) Intermediate
Bond; Pegasus Multiple Sector Bond corresponds to One Group(R) Income; Pegasus
Bond corresponds to One Group(R) Bond; Pegasus High Yield corresponds to One
Group(R) High Yield; Pegasus Intermediate Municipal corresponds to One Group(R)
Intermediate Tax-Free; Pegasus Municipal Bond corresponds to One Group(R)
Municipal Bond; Pegasus Michigan Municipal corresponds to One Group(R) Michigan
Municipal; Pegasus Short Municipal corresponds to One Group(R) Short Municipal;
Pegasus Equity Income corresponds to One Group(R) Income Equity; Pegasus Equity
Index corresponds to One Group(R) Equity Index; Pegasus Value corresponds to One
Group(R) Value; Pegasus Intrinsic Value corresponds to One Group(R) Disciplined;
Pegasus Growth corresponds to One Group Growth; Pegasus Mid-Cap corresponds to
One Group(R) Mid-Cap; Pegasus Small-Cap corresponds to One Group(R) Small Cap;
Pegasus International corresponds to One Group(R) International; Pegasus
Expansion corresponds to One Group(R) Small Cap Index; Pegasus Managed Assets
corresponds to One Group(R) Investor Growth; Pegasus Managed Balanced
corresponds to One Group(R) Investor Income; and Pegasus Managed Conservative
corresponds to One Group(R) Investor Balanced. In consideration therefor, each
One Group Fund shall, on the Exchange Date, assume all of the liabilities of the
corresponding Pegasus Fund, which liabilities shall include any obligation of
the corresponding Pegasus Fund to indemnify the Trustees and officers of Pegasus
Funds to the fullest extent permitted by applicable law and by Pegasus's
Declaration of Trust, as in affect as of the date of this Agreement, and issue a
number of full and fractional One Group Class A, Class B or Class I shares of
the corresponding One Group Fund (collectively, "Shares") having an aggregate
net asset value equal to the value of all of the assets of each Pegasus Fund
transferred to the corresponding One Group Fund on such date less the value of
all of the liabilities of each Pegasus Fund assumed by the corresponding One
Group Fund on that date. It is intended that each reorganization described in
this Agreement shall be a tax-free reorganization under the Internal Revenue
Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, each Pegasus Fund shall distribute in complete liquidation to
its respective shareholders of record as of the Exchange Date
I-2
<PAGE> 81
the Shares received by it, each shareholder being entitled to receive that
number of Shares equal to the proportion which the number of shares of
beneficial interest of the applicable class of the Pegasus Fund held by such
shareholder bears to the number of such shares of such class of the Pegasus Fund
outstanding on such date. Pegasus Class I, Class A and Class B shareholders will
receive One Group Class I, Class A and Class B shares, respectively. Class I and
Class S shareholders of Pegasus Cash Management, Pegasus Treasury Prime Cash,
Pegasus Government Cash, Pegasus Municipal Cash, and Pegasus Treasury Cash, will
receive Class I and Class A shares, respectively, of One Group Cash Management,
One Group Treasury Prime Cash, One Group Government Cash, One Group Municipal
Cash, and One Group Treasury Cash, respectively.
II. AGREEMENT
One Group and Pegasus represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF PEGASUS. Pegasus and each Pegasus
Fund jointly and severally represent and warrant to and agree with One
Group and each One Group Fund that:
(a) Pegasus is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts and has
power to own all of its properties and assets and to carry out its
obligations under this Agreement. Pegasus and each Pegasus Fund is not
required to qualify as a foreign association in any jurisdiction.
Pegasus and each Pegasus Fund has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to
fulfill the terms of this Agreement, except as set forth in Section
1(l).
(b) Pegasus is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment
company, and such registration has not been revoked or rescinded and is
in full force and effect. Each Pegasus Fund has elected to qualify and
has qualified as a regulated investment company under Part I of
Subchapter M of the Code, as of and since its first taxable year, and
qualifies and intends to continue to qualify as a regulated investment
company for its taxable year ending upon its liquidation. Each Pegasus
Fund has been a regulated investment company under such sections of the
Code at all times since its inception.
(c) The statements of assets and liabilities, statements of
operations, statements of changes in net assets and schedules of
portfolio investments (indicating their market values) for each Pegasus
Fund at and for the year ended December 31, 1997, such statements and
schedules having been audited by Arthur Anderson, LLP, independent
accountants to Pegasus, have been furnished to One Group. Unaudited
statements of net assets, statement of operations, statement of changes
in net assets, and schedules of portfolio investments for the period
ended June 30, 1998 also have been provided to One Group.
(d) The prospectuses of each Pegasus Fund dated April 30, 1998
(collectively, the "Pegasus Prospectuses") and the Statement of
Additional Information for the Pegasus Funds dated April 30, 1998 and on
file with the Securities and Exchange Commission (the "Commission"),
which have been previously furnished to One Group, did not as of their
dates and do not as of the date hereof contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(e) There are no material legal, administrative or other
proceedings pending or, to the knowledge of Pegasus or any Pegasus Fund,
threatened against Pegasus or any Pegasus Fund which assert liability on
the part of Pegasus or any Pegasus Fund.
(f) There are no material contracts outstanding to which Pegasus or
any Pegasus Fund is a party, other than as disclosed in the Pegasus
Prospectuses and the corresponding Statement of Additional Information,
or in the Registration Statement and the Proxy Statement as defined
herein.
(g) Neither Pegasus nor any Pegasus Fund has any known liabilities
of a material nature, contingent or otherwise, other than those shown as
belonging to it on its above referenced statement of assets and
liabilities as of June 30, 1998, and those incurred in the ordinary
course of Pegasus's
I-3
<PAGE> 82
business as an investment company since that date. Prior to the Exchange
Date, Pegasus will advise One Group of all known material liabilities,
contingent or otherwise, incurred by it and each Pegasus Fund subsequent
to June 30, 1998, whether or not incurred in the ordinary course of
business.
(h) As used in this Agreement, the term "Investments" shall mean
each Pegasus Fund's investments shown on the schedule of its portfolio
investments as of June 30, 1998 referred to in Section 1(c) hereof, as
supplemented with such changes as Pegasus or each Pegasus Fund shall
make after June 30, 1998, which changes have been disclosed to One
Group, and changes made on and after the date of this Agreement after
advising One Group of such proposed changes, and changes resulting from
stock dividends, stock split-ups, mergers and similar corporate actions.
(i) Each Pegasus Fund has filed or will file all federal and state
tax returns which, to the knowledge of Pegasus's officers, are required
to be filed by each Pegasus Fund and has paid or will pay all federal
and state taxes shown to be due on said returns or on any assessments
received by each Pegasus Fund. All tax liabilities of each Pegasus Fund
have been adequately provided for on its books, and no tax deficiency or
liability of any Pegasus Fund has been asserted, and no question with
respect thereto has been raised, by the Internal Revenue Service or by
any state or local tax authority for taxes in excess of those already
paid.
(j) As of both the Valuation Time and the Exchange Date and except
for shareholder approval as described in Section 8(a) and otherwise as
described in Section 1(1), Pegasus on behalf of each Pegasus Fund will
have full right, power and authority to sell, assign, transfer and
deliver the Investments and any other assets and liabilities of each
Pegasus Fund to be transferred to the corresponding One Group Fund
pursuant to this Agreement. At the Exchange Date, subject only to the
delivery of the Investments and any such other assets and liabilities as
contemplated by this Agreement, One Group will, on behalf of each One
Group Fund, acquire the Investments and any such other assets subject to
no encumbrances, liens or security interests in favor of any third party
creditor of Pegasus or a Pegasus Fund and, except as described in
Section 1(k), without any restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as amended
(the "1933 Act"), of any of the Investments would be required if they
were, as of the time of such transfer, the subject of a public
distribution by either of Pegasus or One Group, except as previously
disclosed to One Group by Pegasus in writing.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Pegasus or
any Pegasus Fund of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, state
securities or blue sky laws (which term as used herein shall include the
laws of the District of Columbia and of Puerto Rico) or the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "H-S-R Act"),
assuming that, for purposes of this representation, the Pegasus Funds
and The One Group may be considered affiliated persons or affiliated
persons of affiliated persons solely by reason of having a common
investment advisor.
(m) The registration statement (the "Registration Statement") filed
with the Commission by One Group on Form N-14 relating to the Shares
issuable hereunder, and the proxy statement of Pegasus included therein
(the "Proxy Statement"), on the effective date of the Registration
Statement and insofar as they relate to Pegasus and the Pegasus Funds,
(i) will comply in all material respects with the provisions of the 1933
Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time
of the shareholders' meeting referred to in Section 8(a) below and on
the Exchange Date, the prospectus contained in the Registration
Statement of which the Proxy Statement is a part (the "Prospectus"), as
amended or supplemented by any amendments or supplements filed with the
Commission by One Group, insofar as it relates to Pegasus and the
Pegasus Funds, will not contain any untrue statement of a material fact
or omit to state a material
I-4
<PAGE> 83
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the representations and
warranties in this subsection shall apply only to statements of fact
relating to Pegasus and any Pegasus Fund contained in the Registration
Statement, the Prospectus or the Proxy Statement, or omissions to state
in any thereof a material fact relating to Pegasus or any Pegasus Fund,
as such Registration Statement, Prospectus and Proxy Statement shall be
furnished to Pegasus in definitive form as soon as practicable following
effectiveness of the Registration Statement and before any public
distribution of the Prospectus or Proxy Statement.
(n) All of the issued and outstanding shares of beneficial interest
of each Pegasus Fund have been offered for sale and sold in conformity
with all applicable federal and state securities laws.
(o) Each of the Pegasus Funds is qualified, and will at all times
through the Exchange Date qualify for taxation as a "regulated
investment company" under Sections 851 and 852 of the Code.
(p) At the Exchange Date, each of the Pegasus Funds, as One Group
may reasonably direct via written instructions, will have sold such of
its assets, if any, as necessary to assure that, after giving effect to
the acquisition of the assets pursuant to this Agreement, each of the
One Group Funds (other than One Group Michigan Money Market and One
Group Michigan Municipal) will remain a "diversified company" within the
meaning of Section 5(b)(l) of the 1940 Act and in compliance with such
other mandatory investment restrictions as are set forth in the One
Group Prospectuses previously furnished to Pegasus.
2. REPRESENTATIONS AND WARRANTIES OF ONE GROUP. One Group and each One
Group Fund jointly and severally represent and warrant to and agree with
Pegasus and each Pegasus Fund that:
(a) One Group is a business trust duly established and validly
existing under the laws of The Commonwealth of Massachusetts and has
power to carry on its business as it is now being conducted and to carry
out this Agreement. One Group and each One Group Fund is not required to
qualify as a foreign association in any jurisdiction. One Group and each
One Group Fund has all necessary federal, state and local authorizations
to own all of its properties and assets and to carry on its business as
now being conducted and to fulfill the terms of this Agreement, except
as set forth in Section 2(i).
(b) One Group is registered under the 1940 Act as an open-end
management investment company, and such registration has not been
revoked or rescinded and is in full force and effect. Each One Group
Fund that has had active operations prior to the Exchange Date, has
elected to qualify and has qualified as a regulated investment company
under Part I of Subchapter M of the Code, as of and since its first
taxable year, and qualifies and intends to continue to qualify as a
regulated investment company for its taxable year ending June 30, 1999.
Each One Group Fund that has had active operations prior to the Exchange
Date, has been a regulated investment company under such sections of the
Code at all times since its inception. Each One Group Fund that has not
had active operations prior to the Exchange Date intends to qualify as a
regulated investment company under Part I of Subchapter M under the
Code.
(c) The statements of assets and liabilities, statements of
operations, statements of changes in net assets and schedules of
portfolio investments (indicating their market values) for each One
Group Fund for the year ended June 30, 1998, such statements and
schedules having been audited by PricewaterhouseCoopers LLP, independent
accountants to One Group, have been furnished to Pegasus. Such
statements of assets and liabilities and schedules fairly present the
financial position of the One Group Funds as of their respective dates,
and said statements of operations and changes in net assets fairly
reflect the results of its operations and changes in financial position
for the periods covered thereby in conformity with generally accepted
accounting principles.
(d) The prospectuses of each One Group Fund dated November 1, 1998,
(collectively, the "One Group Prospectuses"), and the Statement of
Additional Information for the One Group
I-5
<PAGE> 84
Funds, dated November 1, 1998, and on file with the Commission, which
have been previously furnished to Pegasus, did not as of their dates and
do not as of the date hereof contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) There are no material legal, administrative or other
proceedings pending or, to the knowledge of One Group or any One Group
Fund, threatened against One Group or any One Group Fund which assert
liability on the part of One Group or any One Group Fund.
(f) There are no material contracts outstanding to which One Group
or any One Group Fund is a party, other than as disclosed in the One
Group Prospectuses and the corresponding Statement of Additional
Information or in the Registration Statement and the Proxy Statement.
(g) Neither One Group nor any One Group Fund has any known
liabilities of a material nature, contingent or otherwise, other than
those shown as belonging to it on its above referenced statement of
assets and liabilities as of June 30, 1998 referred to above and those
incurred in the ordinary course of the business of One Group as an
investment company or any One Group Fund since such date. Prior to the
Exchange Date, One Group will advise Pegasus of all known material
liabilities, contingent or otherwise, incurred by it and each One Group
Fund subsequent to June 30, 1998, whether or not incurred in the
ordinary course of business.
(h) Each One Group Fund has filed or will file all federal and
state tax returns which, to the knowledge of One Group's officers, are
required to be filed by each One Group Fund and has paid or will pay all
federal and state taxes shown to be due on said returns or on any
assessments received by each One Group Fund. All tax liabilities of each
One Group Fund have been adequately provided for on its books, and no
tax deficiency or liability of any One Group Fund has been asserted, and
no question with respect thereto has been raised, by the Internal
Revenue Service or by any state or local tax authority for taxes in
excess of those already paid.
(i) No consent, approval, authorization or order of any
governmental authority is required for the consummation by One Group or
any One Group Fund of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, the 1934 Act, the
1940 Act, state securities or Blue Sky laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and
otherwise as described in Section 2(i), One Group on behalf of each One
Group Fund will have full right, power and authority to purchase the
Investments and any other assets and assume the liabilities of each
Pegasus Fund to be transferred to the corresponding One Group Fund
pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy
Statement, on the effective date of the Registration Statement and
insofar as they relate to One Group and the One Group Funds: (i) will
comply in all material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and the rules and regulations thereunder and
(ii) will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and at the time of the
shareholders' meeting referred to in Section 8(a) and at the Exchange
Date, the Prospectus, as amended or supplemented by any amendments or
supplements filed with the Commission by One Group or any One Group
Fund, will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that none
of the representations and warranties in this subsection shall apply to
statements in or omissions from the Registration Statement, the
Prospectus or the Proxy Statement made in reliance upon and in
conformity with information furnished by Pegasus or any Pegasus Fund for
use in the Registration Statement, the Prospectus or the Proxy
Statement.
(l) Shares to be issued to each Pegasus Fund have been duly
authorized and, when issued and delivered pursuant to this Agreement and
the Prospectus, will be legally and validly issued and will
I-6
<PAGE> 85
be fully paid and nonassessable by One Group and no shareholder of One
Group will have any preemptive right of subscription or purchase in
respect thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each One Group Fund that has had active operations prior to the
Exchange Date is qualified and will at all times through the Exchange
Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code. Each One Group Fund that has not had
active operations prior to the Exchange Date, upon the filing of its
first income tax return at the completion of its first taxable year will
elect to be a regulated investment company and until such time will take
all steps necessary to ensure qualification as a regulated investment
company.
3. REORGANIZATION. (a) Subject to the requisite shareholder approval
as described in Section 8(a) and to the other terms and conditions
contained herein (including each Pegasus Fund's obligation to distribute to
its respective shareholders all of its investment company taxable income
and net capital gain as described in Section 9(k) hereof), Pegasus and each
Pegasus Fund agree to sell, assign, convey, transfer and deliver to the
corresponding One Group Fund, and One Group and each One Group Fund agree
to acquire from the corresponding Pegasus Fund, on the Exchange Date all of
the Investments and all of the cash and other assets of each Pegasus Fund
in exchange for that number of Shares of the corresponding One Group Fund
provided for in Section 4 and the assumption by the corresponding One Group
Fund of all the liabilities of the Pegasus Fund. Pursuant to this
Agreement, each Pegasus Fund will, as soon as practicable after the
Exchange Date, distribute in liquidation all of the Shares received by it
to its shareholders in exchange for their shares of beneficial interest of
such Pegasus Fund.
(b) Pegasus, on behalf of each Pegasus Fund, will pay or cause to
be paid to the corresponding One Group Fund any interest and cash
dividends received by it on or after the Exchange Date with respect to
the Investments transferred to the One Group Funds hereunder. Pegasus,
on behalf of each Pegasus Fund, will transfer to the corresponding One
Group Fund any rights, stock dividends or other securities received by
Pegasus or any Pegasus Fund after the Exchange Date as stock dividends
or other distributions on or with respect to the Investments
transferred, which rights, stock dividends and other securities shall be
deemed included in the assets transferred to each One Group Fund at the
Exchange Date and shall not be separately valued, in which case any such
distribution that remains unpaid as of the Exchange Date shall be
included in the determination of the value of the assets of the Pegasus
Fund acquired by the corresponding One Group Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, One Group will
deliver to Pegasus a number of Shares having an aggregate net asset value
equal to the value of the assets of the corresponding Pegasus Fund acquired
by each One Group Fund, less the value of the liabilities of such Pegasus
Fund assumed, determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each Pegasus
Fund's net assets will be computed as of the Valuation Time using the
valuation procedures for the corresponding One Group Fund as set forth
in the One Group Prospectus for the particular One Group Fund.
(b) Subject to Section 4(d) hereof, the net asset value of a share
of each One Group Fund will be determined to the nearest full cent as of
the Valuation Time, using the valuation procedures set forth in the One
Group Prospectus for the particular One Group Fund.
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m.
Eastern Standard time on FRIDAY, MARCH 19, 1999, for all Pegasus and One
Group Funds other than Pegasus Cash Management, Pegasus Treasury Prime
Cash, Pegasus Government Cash, Pegasus Municipal Cash, Pegasus Treasury
Cash, One Group Cash Management, One Group Treasury Prime Cash, One
Group Government Cash, One Group Municipal Cash, One Group Treasury
Cash, and FRIDAY, MARCH 26, 1999, for Pegasus Cash Management, Pegasus
Treasury Prime Cash, Pegasus Government Cash, Pegasus Municipal Cash,
Pegasus Treasury Cash, One Group Cash Management, One
I-7
<PAGE> 86
Group Treasury Prime Cash, One Group Government Cash, One Group
Municipal Cash, and One Group Treasury Cash or such earlier or later day
as may be mutually agreed upon in writing by the parties hereto (the
"Valuation Time").
(d) No formula will be used to adjust the net asset value of any
Pegasus Fund or One Group Fund to take into account differences in
realized and unrealized gains and losses.
(e) Each One Group Fund shall issue its Shares to the corresponding
Pegasus Fund on one share deposit receipt per class registered in the
name of the corresponding Pegasus Fund. Each Pegasus Fund shall
distribute in liquidation the Shares received by it hereunder pro rata
to its shareholders of each class of shares by redelivering such share
deposit receipt to One Group's transfer agent which will as soon as
practicable set up open accounts for each Pegasus Fund shareholder in
accordance with written instructions furnished by Pegasus.
(f) Each One Group Fund shall assume all liabilities of the
corresponding Pegasus Fund, whether accrued or contingent, in connection
with the acquisition of assets and subsequent dissolution of the
corresponding Pegasus Fund or otherwise, except that recourse for
assumed liabilities relating to a particular Pegasus Fund will be
limited to the corresponding One Group Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5 (e),
all fees and expenses, including accounting expenses, portfolio transfer
taxes (if any) or other similar expenses incurred in connection with the
consummation by One Group and Pegasus of the transactions contemplated by
this Agreement will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation
will be borne by Banc One Investment Advisors Corporation; provided,
however, that such expenses will in any event be paid by the party directly
incurring such expenses if and to the extent that the payment by the other
party of such expenses would result in the disqualification of any One
Group Fund or any Pegasus Fund, as the case may be, as a "regulated
investment company" within the meaning of Section 851 of the Code.
(b) In the event the transactions contemplated by this Agreement
are not consummated by reason of Pegasus being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Pegasus's obligations referred to in Section
8(a) or Section 10) Pegasus shall pay directly all reasonable fees and
expenses incurred by One Group in connection with such transactions,
including, without limitation, legal, accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement
are not consummated by reason of One Group being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to One Group's obligations referred to in
Section 8(a) or Section 9), One Group shall pay directly all reasonable
fees and expenses incurred by Pegasus in connection with such
transactions, including without limitation legal, accounting and filing
fees.
(d) In the event the transactions contemplated by this Agreement
are not consummated for any reason other than (i) One Group or Pegasus
being either unwilling or unable to go forward or (ii) the
nonfulfillment or failure of any condition to Pegasus or One Group's
obligations referred to in Section 8(a), Section 9 or Section 10 of this
Agreement, then each of Pegasus and One Group shall bear the expenses it
has actually incurred in connection with such transactions as specified
in Section 5 of this Agreement.
(e) Notwithstanding any other provisions of this Agreement, if for
any reason the transactions contemplated by this Agreement are not
consummated, no party shall be liable to the other party for any damages
resulting therefrom, including without limitation consequential damages,
except as specifically set forth above.
6. PERMITTED ASSETS. One Group agrees to advise Pegasus promptly if at
any time prior to the Exchange Date the assets of any Pegasus Fund include
any assets that the corresponding One Group Fund is not permitted, or
reasonably believes to be unsuitable for it, to acquire, including without
I-8
<PAGE> 87
limitation any security that, prior to its acquisition by any Pegasus Fund,
One Group has informed Pegasus is unsuitable for the corresponding One
Group Fund to acquire.
7. EXCHANGE DATE. Delivery of the assets of the Pegasus Funds to be
transferred, assumption of the liabilities of the Pegasus Funds to be
assumed, and the delivery of Shares to be issued shall be made at the
offices of Banc One Investment Advisors Corporation at 9:00 a.m. on MONDAY,
MARCH 22, 1999, for all Pegasus and One Group Funds other than, Pegasus
Cash Management, Pegasus Treasury Prime Cash, Pegasus Government Cash,
Pegasus Municipal Cash, Pegasus Treasury Cash, One Group(R) Cash
Management, One Group(R) Treasury Prime Cash, One Group(R) Government Cash,
One Group(R) Municipal Cash, One Group(R) Treasury Cash, and MONDAY, MARCH
29, 1999, for Pegasus Cash Management, Pegasus Treasury Prime Cash, Pegasus
Government Cash, Pegasus Municipal Cash, Pegasus Treasury Cash, One
Group(R) Cash Management, One Group(R) Treasury Prime Cash, One Group(R)
Government Cash, One Group(R) Municipal Cash, and One Group(R) Treasury
Cash or at such other time and date agreed to by Pegasus and One Group, the
date and time upon which such delivery is to take place being referred to
herein as the "Exchange Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Pegasus agrees to
call a special meeting of the shareholders of each Pegasus Fund as soon as
is practicable after the effective date of the Registration Statement for
the purpose of considering the sale of all of the assets of each Pegasus
Fund to and the assumption of all of the liabilities of each Pegasus Fund
by the corresponding One Group Fund as herein provided, adopting this
Agreement, and authorizing the liquidation and dissolution of any Pegasus
Fund, and, except as set forth in Section 13, it shall be a condition to
the obligations of each of the parties hereto that the holders of the
shares of beneficial interest of each Pegasus Fund, and each class of
shares of each Pegasus Fund if such is required under the 1940 Act, shall
have approved this Agreement and the transactions contemplated herein in
the manner required by law and Pegasus's Declaration of Trust at such a
meeting on or before the Valuation Time.
(b) Pegasus and each Pegasus Fund agree that the liquidation and
dissolution of each Pegasus Fund will be effected in the manner provided
in Pegasus's Declaration of Trust in accordance with applicable law, and
that it will not make any distributions of any Shares to the
shareholders of a Pegasus Fund without first paying or adequately
providing for the payment of all of such Pegasus Fund's known debts,
obligations and liabilities.
(c) Each of One Group and Pegasus will cooperate with the other,
and each will furnish to the other the information relating to itself
required by the 1933 Act, the 1934 Act and the 1940 Act and the rules
and regulations thereunder to be set forth in the Registration
Statement, including the Prospectus and the Proxy Statement.
9. CONDITIONS TO ONE GROUP'S OBLIGATIONS. The obligations of One Group
and each One Group Fund hereunder shall be subject to the following
conditions:
(a) That this Agreement shall have been adopted and the
transactions contemplated hereby, including the liquidation and
dissolution of the Pegasus Funds, shall have been approved as set forth
in Section 8(a).
(b) Pegasus shall have furnished to One Group a statement of each
Pegasus Fund's assets and liabilities, with values determined as
provided in Section 4 of this Agreement, together with a list of
Investments with their respective tax costs, all as of the Valuation
Time, certified on Pegasus's behalf by its President (or any Vice
President) and Treasurer, and a certificate of both such officers, dated
the Exchange Date, to the effect that as of the Valuation Time and as of
the Exchange Date there has been no material adverse change in the
financial position of any Pegasus Fund since June 30, 1998, other than
changes in the Investments since that date or changes in the market
value of the Investments, or changes due to net redemptions of shares of
the Pegasus Funds, dividends paid or losses from operations.
I-9
<PAGE> 88
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Pegasus and each Pegasus Fund made in
this Agreement are true and correct in all material respects as if made
at and as of such dates, Pegasus and each Pegasus Fund has complied with
this Agreement and satisfied all the conditions on its part to be
performed or satisfied at or prior to each of such dates, and Pegasus
shall have furnished to One Group a statement, dated the Exchange Date,
signed by Pegasus's President (or any Vice President) and Treasurer
certifying those facts as of such dates.
(d) Pegasus shall have delivered to One Group a letter from Arthur
Andersen, LLP dated the Exchange Date stating that such firm prepared
the federal and state income tax returns of each Pegasus Fund for the
year ended December 31, 1997, and will prepare the Federal and state
income tax returns of each Pegasus Fund for the year ended December 31,
1998.
(e) There shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
(f) One Group shall have received an opinion of Drinker Biddle &
Reath LLP, in form reasonably satisfactory to One Group and dated the
Exchange Date, to the effect that (i) Pegasus is a business trust duly
established and validly existing under the laws of the Commonwealth of
Massachusetts, and neither Pegasus nor any Pegasus Fund is, to the
knowledge of such counsel, required to qualify to do business as a
foreign association in any jurisdiction, (ii) this Agreement has been
duly authorized, executed, and delivered by Pegasus and, assuming that
the Registration Statement, the Prospectus and the Proxy Statement
comply with the 1933 Act, the 1934 Act and the 1940 Act and assuming due
authorization, execution and delivery of this Agreement by One Group, is
a valid and binding obligation of Pegasus subject to applicable
bankruptcy, insolvency, fraudulent conveyance and similar laws or court
decisions regarding enforcement of creditors' rights generally, (iii)
Pegasus and each Pegasus Fund has power to sell, assign, convey,
transfer and deliver the Investments and other assets contemplated
hereby and, upon consummation of the transactions contemplated hereby in
accordance with the terms of this Agreement, Pegasus and each Pegasus
Fund will have duly sold, assigned, conveyed, transferred and delivered
such Investments and other assets to One Group, (iv) the execution and
delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate Pegasus's Declaration
of Trust, or Bylaws, as amended, the current Pegasus Prospectus and
Statement of Additional Information, or any provision of any agreement
known to such counsel to which Pegasus or any Pegasus Fund is a party or
by which it is bound, it being understood that with respect to
investment restrictions as contained in Pegasus's Declaration of Trust,
or Bylaws, or then-current prospectus or statement of additional
information of each Pegasus Fund, such counsel may rely upon a
certificate of an officer of Pegasus whose responsibility it is to
advise Pegasus with respect to such matters and (v) no consent,
approval, authorization or order of any court or governmental authority
is required for the consummation by Pegasus or any Pegasus Fund of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act, and
it being understood that such opinion shall not be deemed to apply to
One Group's compliance obligations under the 1933 Act, 1934 Act, 1940
Act, state securities or blue sky laws and H-S-R Act. For purposes of
analysis regarding the 1940 Act, Drinker Biddle & Reath LLP may assume
as fact that the Pegasus Funds and the One Group Funds may be considered
affiliated persons or affiliated persons of an affiliated person solely
by reason of having a common investment adviser.
(g) One Group shall have received an opinion of Ropes & Gray,
counsel to One Group addressed to The One Group and each One Group Fund,
in form reasonably satisfactory to One Group and dated the Exchange
Date, to the effect that for Federal income tax purposes (i) no gain or
loss will be recognized by any Pegasus Fund upon the transfer of the
assets to the corresponding One Group Fund in exchange for Shares and
the assumption by such One Group Fund of the liabilities of the Pegasus
Fund; (ii) no gain or loss will be recognized by the shareholders of any
Pegasus Fund upon the exchange of their shares for Shares; (iii) the
basis of the Shares a Pegasus
I-10
<PAGE> 89
shareholder receives in connection with the transaction will be the same
as the basis of his or her Pegasus Fund shares exchanged therefor; (iv)
a Pegasus shareholder's holding period for his or her Shares will be
determined by including the period for which he or she held the Pegasus
Fund shares exchanged therefor, provided that he or she held such
Pegasus Fund shares as capital assets; (v) no gain or loss will be
recognized by any One Group Fund upon the receipt of the assets of the
corresponding Pegasus Fund in exchange for Shares and the assumption by
the One Group Fund of the liabilities of the corresponding Pegasus Fund;
(vi) the basis in the hands of the One Group Fund of the assets of the
corresponding Pegasus Fund transferred to the One Group Fund in the
transaction will be the same as the basis of the assets in the hands of
the corresponding Pegasus Fund immediately prior to the transfer; and
(vii) the holding periods of the assets of the corresponding Pegasus
Fund in the hands of the One Group Fund will include the periods for
which such assets were held by the corresponding Pegasus Fund provided,
that with respect to Pegasus Money Market, Pegasus Treasury, Pegasus
Municipal, Pegasus Michigan Municipal, Pegasus Cash Management, Pegasus
Treasury Prime Cash, Pegasus Government Cash, Pegasus Municipal Cash,
Pegasus Treasury Cash, One Group(R) Prime, One Group(R) Treasury
Securities, One Group(R) Municipal, One Group(R) Michigan Money Market,
One Group(R) Cash Management, One Group(R) Treasury Prime Cash, One
Group(R) Government Cash, One Group(R) Municipal Cash, and One Group(R)
Treasury Cash (the "Money Market Funds"), One Group shall seek an
opinion from Ropes & Gray with respect to Federal income tax matters
enumerated in this Section 9(g), but receipt of such opinion with
respect to the Money Market Funds shall not be a condition to the
transaction.
(h) The assets of each Pegasus Fund to be acquired by the
corresponding One Group Fund will include no assets which the
corresponding One Group Fund, by reason of limitations contained in its
Declaration of Trust or of investment restrictions disclosed in the One
Group Prospectuses in effect on the Exchange Date, may not properly
acquire.
(i) The Registration Statement shall have become effective under
the 1933 Act and applicable blue sky provisions, and no stop order
suspending such effectiveness shall have been instituted or, to the
knowledge of One Group contemplated by the Commission and or any state
regulatory authority.
(j) All proceedings taken by Pegasus in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to One
Group.
(k) Prior to the Exchange Date, each Pegasus Fund shall have
declared a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders all
of its investment company taxable income for its taxable year ended
December 31, 1998 and the short taxable year beginning on January 1,
1999 and ending on the Exchange Date (computed without regard to any
deduction for dividends paid), and all of its net capital gain realized
in its taxable year ended December 31, 1998 and the short taxable year
beginning on January 1, 1999 and ending on the Exchange Date (after
reduction for any capital loss carryover).
(l) Pegasus shall have furnished to One Group a certificate, signed
by the President (or any Vice President) and the Treasurer of Pegasus,
as to the tax cost to One Group of the securities delivered to One Group
pursuant to this Agreement, together with any such other evidence as to
such tax cost as One Group may reasonably request.
(m) Pegasus's custodian shall have delivered to One Group a
certificate identifying all of the assets of each Pegasus Fund held by
such custodian as of the Valuation Time.
(n) Pegasus's transfer agent shall have provided to One Group (i)
the originals or true copies of all of the records of each Pegasus Fund
in the possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of each class of Pegasus
Fund outstanding as of the Valuation Time and (iii) the name and address
of each holder of record of any such shares of each Pegasus Fund and the
number of shares of each class held of record by each such shareholder.
I-11
<PAGE> 90
(o) All of the issued and outstanding shares of beneficial interest
of each Pegasus Fund shall have been offered for sale and sold in
conformity with all applicable federal or state securities or blue sky
laws and, to the extent that any audit of the records of Pegasus or any
Pegasus Fund or its transfer agent by One Group or its agents shall have
revealed otherwise, either (i) Pegasus and each Pegasus Fund shall have
taken all actions that in the reasonable opinion of One Group, are
necessary to remedy any prior failure on the part of Pegasus to have
offered for sale and sold such shares in conformity with such laws or
(ii) Pegasus shall have furnished (or caused to be furnished) surety, or
deposited (or caused to be deposited) assets in escrow, for the benefit
of One Group in amounts sufficient and upon terms satisfactory, in the
opinion of One Group, to indemnify One Group against any expense, loss,
claim, damage or liability whatsoever that may be asserted or threatened
by reason of such failure on the part of Pegasus to have offered and
sold such shares in conformity with such laws.
(p) Pegasus shall have duly executed and delivered to One Group
bills of sale, assignments, certificates and other instruments of
transfer ("Transfer Documents") as One Group may deem necessary or
desirable to transfer all of Pegasus's and each Pegasus Fund's entire
right, title and interest in and to the Investments and all other assets
of each Pegasus Fund.
10. CONDITIONS TO PEGASUS' OBLIGATIONS. The obligations of Pegasus and
each Pegasus Fund hereunder shall be subject to the following conditions:
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the
Pegasus Funds, shall have been approved as described in Section 8(a).
(b) One Group shall have furnished to Pegasus a Statement of each
One Group Fund's net assets, together with a list of portfolio holdings
with values determined as provided in Section 4, all as of the Valuation
Time, certified on One Group's behalf by its President (or any Vice
President) and Treasurer (or any Assistant Treasurer), and a certificate
of both such officers, dated the Exchange Date, to the effect that as of
the Valuation Time and as of the Exchange Date there has been no
material adverse change in the financial position of any One Group Fund
since June 30, 1998, other than changes in its portfolio securities
since that date, changes in the market value of its portfolio
securities, changes due to net redemptions, dividends paid or losses
from operations.
(c) One Group shall have executed and delivered to Pegasus an
Assumption of Liabilities Certificate and other instruments as Pegasus
may deem necessary and desirable dated as of the Exchange Date pursuant
to which each One Group Fund will assume all of the liabilities of the
corresponding Pegasus Fund existing at the Valuation Time in connection
with the transactions contemplated by this Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of One Group and each One Group Fund made
in this Agreement are true and correct in all material respects as if
made at and as of such dates, One Group and each One Group Fund has
complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied at or prior to each of such
dates, and One Group shall have furnished to Pegasus a statement, dated
the Exchange Date, signed by One Group's President (or any Vice
President) and Treasurer certifying those facts as of such dates.
(e) There shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
(f) Pegasus shall have received an opinion of Ropes & Gray, in form
reasonably satisfactory to Pegasus and dated the Exchange Date, to the
effect that (i) One Group is a business trust and validly existing in
conformity with the laws of the Commonwealth of Massachusetts, and, (to
the knowledge of such counsel), neither One Group nor any One Group Fund
is required to qualify to do business as a foreign association in any
jurisdiction, (ii) the Shares to be delivered to Pegasus as provided for
by this Agreement are duly authorized and upon such delivery will be
validly issued and
I-12
<PAGE> 91
will be fully paid and nonassessable by One Group and no shareholder of
One Group has any preemptive right to subscription or purchase in
respect thereof, (iii) this Agreement has been duly authorized, executed
and delivered by One Group and, assuming that the Prospectus, the
Registration Statement and the Proxy Statement comply with the 1933 Act,
the 1934 Act and the 1940 Act and assuming due authorization, execution
and delivery of this Agreement by Pegasus, is a valid and binding
obligation of One Group, (iv) One Group and each One Group Fund has the
power to acquire and assume all of the liabilities of Pegasus and the
Pegasus Funds and, upon consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement, One Group and
each respective One Group Fund shall have duly acquired and assumed such
liabilities, (v) the execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not,
violate One Group's Declaration of Trust, as amended, or Code of
Regulations, One Group's current Prospectus and Statement of Additional
Information, or any provision of any agreement known to such counsel to
which One Group or any One Group Fund is a party or by which it is
bound, it being understood that with respect to investment restrictions
as contained in One Group's Declaration of Trust, as amended, Code of
Regulations or then-current prospectus or statement of additional
information of each One Group Fund, such counsel may rely upon a
certificate of an officer of One Group whose responsibility it is to
advise One Group with respect to such matters, (vi) no consent,
approval, authorization or order of any court or governmental authority
is required for the consummation by One Group or any One Group Fund of
the transactions contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act and
it being understood that such opinion shall not be deemed to apply to
Pegasus's compliance obligations under the 1933 Act, 1934 Act, 1940 Act,
state securities or blue sky laws and the H-S-R Act; and (vii) the
Registration Statement has become effective under the 1933 Act, and to
the best of the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act.
(g) Pegasus shall have received an opinion of Ropes & Gray
addressed to Pegasus and each Pegasus Fund, and in a form reasonably
satisfactory to Pegasus and dated the Exchange Date, with respect to the
matters specified in Section 9(g) of this Agreement, subject to the
provision in such Section 9(g).
(h) All proceedings taken by One Group in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to
Pegasus.
(i) The Registration Statement shall have become effective under
the 1933 Act and applicable blue sky provisions, and no stop order
suspending such effectiveness shall have been instituted or, to the
knowledge of Pegasus, contemplated by the Commission or any state
regulatory authority.
11. INDEMNIFICATION. (a) The Pegasus Funds will indemnify and hold
harmless One Group, its trustees and its officers (for purposes of this
subsection, the "Indemnified Parties") against any and all expenses,
losses, claims, damages and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parties in
connection with, arising out of, or resulting from any claim, action, suit
or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement of
a material fact relating to Pegasus or any Pegasus Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement or any
amendment or supplement to any of the foregoing, or arising out of or based
upon the omission or alleged omission to state in any of the foregoing a
material fact relating to Pegasus or any Pegasus Fund required to be stated
therein or necessary to make the statements relating to Pegasus or any
Pegasus Fund therein not misleading, including, without limitation, any
amounts paid by any one or more of the Indemnified Parties in a reasonable
compromise or settlement of any such claim, action, suit or proceeding or
threatened claim, action, suit or proceeding made with the prior consent of
Pegasus. The Indemnified Parties will notify
I-13
<PAGE> 92
Pegasus in writing within ten days after the receipt by any one or more of
the Indemnified Parties of any notice of legal process or any suit brought
against or claim made against any Indemnified Party as to any matters
covered by this Section 11(a). Pegasus shall be entitled to participate at
its own expense in the defense of any claim, action, suit or proceeding
covered by this Section 11(a), or, if it so elects, to assume at its
expense by counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and if Pegasus elects to assume
such defense, the Indemnified Parties shall be entitled to participate in
the defense of any such claim, action, suit or proceeding at their expense.
The Pegasus Funds' obligation under this Section 11(a) to indemnify and
hold harmless the Indemnified Parties shall constitute a guarantee of
payment so that the Pegasus Funds will pay in the first instance any
expenses, losses, claims, damages and liabilities required to be paid by it
under this Section 11(a) without the necessity of the Indemnified Parties
first paying the same.
(b) The One Group Funds will indemnify and hold harmless Pegasus,
its trustees and its officers (for purposes of this subsection, the
"Indemnified Parties") against any and all expenses, losses, claims,
damages and liabilities at any time imposed upon or reasonably incurred
by any one or more of the Indemnified Parties in connection with,
arising out of, or resulting from any claim, action, suit or proceeding
in which any one or more of the Indemnified Parties may be involved or
with which any one or more of the Indemnified Parties may be threatened
by reason of any untrue statement or alleged untrue statement of a
material fact relating to One Group or any One Group Fund contained in
the Registration Statement, the Prospectus or the Proxy Statement, or
any amendment or supplement to any of the foregoing, or arising out of
or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to One Group or any One Group Fund
required to be stated therein or necessary to make the statements
relating to One Group or any One Group Fund therein not misleading,
including, without limitation, any amounts paid by any one or more of
the Indemnified Parties in a reasonable compromise or settlement of any
such claim, action, suit or proceeding, or threatened claim, action,
suit or proceeding made with the prior consent of One Group. The
Indemnified Parties will notify One Group in writing within ten days
after the receipt by any one or more of the Indemnified Parties of any
notice of legal process or any suit brought against or claim made
against any Indemnified Party as to any matters covered by this Section
11(b). One Group shall be entitled to participate at its own expense in
the defense of any claim, action, suit or proceeding covered by this
Section 11(b), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim,
action, suit or proceeding, and, if One Group elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their own
expense. The One Group Funds' obligation under this Section 11(b) to
indemnify and hold harmless the Indemnified Parties shall constitute a
guarantee of payment so that the One Group Funds will pay in the first
instance any expenses, losses, claims, damages and liabilities required
to be paid by it under this Section 11(b) without the necessity of the
Indemnified Parties first paying the same.
12. NO BROKER, ETC. Each of One Group and Pegasus represents that
there is no person who has dealt with it who by reason of such dealings is
entitled to any broker's or finder's or other similar fee or commission
arising out of the transactions contemplated by this Agreement.
13. TERMINATION. One Group and Pegasus may, by mutual consent of their
respective trustees, terminate this Agreement, and One Group or Pegasus,
after consultation with counsel and by consent of their respective trustees
or an officer authorized by such trustees, may waive any condition to their
respective obligations hereunder. If the transactions contemplated by this
Agreement have not been substantially completed by August 30, 1999, this
Agreement shall automatically terminate on that date unless a later date is
agreed to by One Group and Pegasus.
Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by
this Agreement is obtained with respect to only one or more Pegasus Funds
but not all of the Pegasus Funds, One Group and Pegasus agree to consummate
those transactions with respect to those Pegasus Funds whose shareholders
have approved this Agreement and those transactions.
I-14
<PAGE> 93
In the event that shareholder approval of this Agreement and the
transactions contemplated by this Agreement is required, but is obtained
with respect to only one class of shares of a Pegasus Fund, the transaction
with respect to that Pegasus Fund will not be consummated unless and until
shareholder approval is obtained with respect to both classes.
14. RULE 145. Pursuant to Rule 145 under the 1933 Act, One Group will,
in connection with the issuance of any Shares to any person who at the time
of the transaction contemplated hereby is deemed to be an affiliate of a
party to the transaction pursuant to Rule 145 (c), cause to be affixed upon
the certificates issued to such person (if any) a legend as follows:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO
THE ONE GROUP OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (ii) IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ONE GROUP SUCH REGISTRATION IS NOT REQUIRED."
and, further, One Group will issue stop transfer instructions to One
Group's transfer agent with respect to such shares. Pegasus will provide
One Group on the Exchange Date with the name of any shareholder of the
Pegasus Funds who is to the knowledge of Pegasus an affiliate of Pegasus on
such date.
15. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any
certificates delivered pursuant to this Agreement shall be deemed to have
been material and relied upon by each of the parties, notwithstanding any
investigation made by them or on their behalf.
16. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the
subject matter hereof, constitutes the only understanding with respect to
such subject matter, may not be changed except by a letter of agreement
signed by each party hereto, and shall be construed in accordance with and
governed by the laws of the Commonwealth of Massachusetts provided,
however, that no such amendment may have the effect of changing the
provisions for determining the number or value of shares to be paid to the
Pegasus Fund's shareholders under Sections I(b) and II(4)(b) this Agreement
to the material detriment of such shareholder's without their further
approval.
17. AGREEMENT AND DECLARATION OF TRUST. The names "Pegasus Funds" and
"Trustees of Pegasus Funds" refer respectively to Pegasus and the Trustees,
as trustees but not individually or personally, acting from time to time
under a Declaration of Trust, to which reference is hereby made and a copy
of which is on file at the office of the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all
amendments thereto so filed or hereafter filed. The obligations of "Pegasus
Funds" entered into in the name or on behalf thereof by any of the
Trustees, officers, employees or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of Pegasus personally, but bind only the
assets of Pegasus, and all persons dealing with any of the series or funds
of Pegasus, such as Pegasus Funds, must look solely to the assets of
Pegasus belonging to such series or funds for the enforcement of any claims
against Pegasus.
The names "The One Group" and "Trustees of The One Group" refer
respectively to One Group and the Trustees, as trustees but not individually or
personally, acting from time to time under a Declaration of Trust dated May 23,
1985 to which reference is hereby made and a copy of which is on file at the
office of the Secretary of The Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The One Group" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders or representatives of One Group personally, but bind only
the assets of One Group, and all persons dealing with any series or fund of One
I-15
<PAGE> 94
Group, such as the One Group Funds, must look solely to the assets of One Group
belonging to such series for the enforcement of any claims against One Group.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
PEGASUS FUNDS
By: /s/ DONALD G. SUTHERLAND
----------------------------------
ONE GROUP
By: /s/ MARK S. REDMAN
----------------------------------
I-16
<PAGE> 95
APPENDIX II
COMPARATIVE FEE TABLE FOR EACH PORTFOLIO
<TABLE>
<CAPTION>
PEGASUS One Group(R)
MONEY MARKET PRIME MONEY COMBINED
FUND MARKET FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price).................. None None None None None None None None None
Sales Charge on Reinvested
Dividends............... None None None None None None None None None
Maximum Contingent
Deferred Sales Charge
(as a percentage of
original purchase price
or redemption proceeds,
as applicable).......... None None+ None None 5.00% None None 5.00% None
Redemption Fees........... None None None None None None None None None
Exchange Fees............. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of
average daily net assets)
Advisory Fees (after fee
waivers)(2)............... .27% .27% .27% .35% .35% .35% .32% .32% .32%
12b-1 Fees(3)............... None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee
waivers)(4)............... .48% .48% .23% .17% .17% .17% .20% .20% .20%
Total Fund Operating
Expenses (after fee
waivers)(5,6)............. .75% 1.50% .50% .77% 1.52% .52% .77% 1.52% .52%
</TABLE>
- ---------------
* If shares of the One Group(R) Prime Money Market Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ Shares of the Pegasus Money Market Fund acquired through an exchange of
shares offered with a CDSC will be subject to a CDSC of up to a maximum of
5% upon redemption in accordance with the Prospectus for the particular B
shares. See "How to Redeem Shares."
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waiver, Advisory Fees for the Combined Fund would be .35%
for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class A and Class B shareholders of the One
Group Prime Money Market Fund, Class B shareholders of the Pegasus Money
Market Fund and Combined Fund may pay more than the equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. The amount of 12b-1 Fees shown for the
One Group Prime Money Market Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees payable
by the Class A and Class B shareholders of the Pegasus Money Market Fund are
reflected under "Other Expenses."
(4) Without the fee waivers, Other Expenses for the Combined Fund would be .22%
for all classes of shares.
(5) The Investment Adviser of the Pegasus Money Market Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to .75%, 1.50% and .50%,
respectively, for the Class A, Class B and Class I shares.
II-1
<PAGE> 96
(6) Without the voluntary reduction of Advisory Fees and expense reimbursement
arrangements, Total Fund Operating Expenses would be .77% for Class A
shares, 1.52% for Class B shares, and .52% for Class I shares of the Pegasus
Money Market Fund and .82% for Class A shares, 1.57% for Class B shares, and
.57% for Class I shares of the Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Money Market Fund
Class A Shares....................................... $ 8 $24 $ 42 $ 93
Class A Shares (without fee waivers)................. $ 8 $25 $ 43 $ 95
Class B Shares....................................... $65 $77 $102 $149
Class B Shares (without fee waivers)................. $65 $78 $103 $151**
Class I Shares....................................... $ 5 $16 $ 28 $ 63
Class I Shares (without fee waivers)................. $ 5 $17 $ 29 $ 65
One Group(R) Prime Money Market Fund
Class A Shares....................................... $ 8 $25 $ 43 $ 95
Class B Shares....................................... $65 $78 $103 $161**
Class I Shares....................................... $ 5 $17 $ 29 $ 65
Combined Fund Pro Forma
Class A Shares....................................... $ 8 $25 $ 43 $ 95
Class A Shares (without fee waivers)................. $ 8 $26 $ 46 $101
Class B Shares....................................... $65 $78 $103 $161**
Class B Shares (without fee waivers)................. $66 $80 $106 $167**
Class I Shares....................................... $ 5 $17 $ 29 $ 65
Class I Shares (without fee waivers)................. $ 6 $18 $ 32 $ 71
</TABLE>
- ---------------
** Class B shares of the One Group(R) Prime Money Market Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Money Market Fund
Class B Shares....................................... $15 $47 $ 82 $149
Class B Shares (without fee waivers)................. $15 $48 $ 83 $151**
One Group(R) Prime Money Market Fund
Class B Shares....................................... $15 $48 $ 83 $161**
Combined Funds Pro Forma
Class B Shares....................................... $15 $48 $ 83 $161**
Class B Shares (without fee waivers)................. $16 $50 $ 86 $167**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Prime Money Market Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
II-2
<PAGE> 97
<TABLE>
<CAPTION>
PEGASUS One Group(R)
TREASURY MONEY U.S. TREASURY SECURITIES COMBINED FUND
MARKET FUND MONEY MARKET FUND(1) PRO FORMA
----------------- --------------------------- ---------------------------
CLASS A CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES*
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price).................... None None None None None None None None
Sales Charge on Reinvested
Dividends................. None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)............... None None None 5.00% None None 5.00% None
Redemption Fees............. None None None None None None None None
Exchange Fees............... None None None None None None None None
ANNUAL OPERATING EXPENSES (as
a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2)................. .30% .30% .35% .35% .35% .32% .32% .32%
12b-1 Fees(3)................. None None .25% 1.00% None .25% 1.00% None
Other Expenses................ .43% .18% .17% .17% .17% .18% .18% .18%
Total Fund Operating Expenses
(after fee waivers)(4,5).... .73% .48% .77% 1.52% .52% .75% 1.50% .50%
</TABLE>
- ---------------
* If shares of the One Group(R) U.S. Treasury Securities Money Market Fund or
Combined Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and a $7.00 charge will be deducted from redemption amounts paid
by wire.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waiver, Advisory Fees for the Combined Fund would be .35%
for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class A and Class B shareholders of the One
Group U.S. Treasury Securities Money Market Fund and Combined Fund may pay
more than the equivalent of the maximum front-end sales charges permitted by
the rules of the National Association of Securities Dealers. The amount of
12b-1 Fees shown for the One Group(R) U.S. Treasury Securities Money Market
Fund and Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A shareholders
of the Pegasus Treasury Money Market Fund are reflected under "Other
Expenses."
(4) The Investment Adviser of the Pegasus Treasury Money Market Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .75% and
.50%, respectively, for the Class A and Class I shares.
(5) Without the voluntary reduction of Advisory Fees, Total Fund Operating
Expenses would be .78% for Class A shares, 1.53% for Class B shares, and
.53% for Class I shares for the Combined Fund.
II-3
<PAGE> 98
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Treasury Money Market Fund
Class A Shares........................................ $ 7 $23 $ 41 $ 91
Class I Shares........................................ $ 5 $15 $ 27 $ 60
One Group(R) U.S. Treasury Securities Money Market Fund
Class A Shares........................................ $ 8 $25 $ 43 $ 99
Class B Shares........................................ $65 $78 $103 $161**
Class I Shares........................................ $ 5 $17 $ 29 $ 65
Combined Fund Pro Forma
Class A Shares........................................ $ 8 $24 $ 42 $ 93
Class A Shares (without fee waivers).................. $ 8 $25 $ 43 $ 97
Class B Shares........................................ $65 $77 $102 $159**
Class B Shares (without fee waivers).................. $66 $78 $103 $162**
Class I Shares........................................ $ 5 $16 $ 28 $ 63
Class I Shares (without fee waivers).................. $ 5 $17 $ 30 $ 66
</TABLE>
- ---------------
** Class B shares of the One Group(R) U.S. Treasury Securities Money Market Fund
and the Combined Fund automatically convert to Class A Shares after eight (8)
years. Therefore, the "10 Years" example above reflects this conversion.
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
One Group(R) U.S. Treasury Securities Money Market Fund
Class B Shares....................................... $15 $48 $ 83 $161**
Combined Funds Pro Forma
Class B Shares....................................... $15 $47 $ 82 $159**
Class B Shares (without fee waivers)................. $16 $48 $ 83 $162**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) U.S. Treasury Securities Money Market Fund
and the Combined Fund automatically convert to Class A Shares after eight (8)
years. Therefore, the "10 Years" example above reflects this conversion.
II-4
<PAGE> 99
<TABLE>
<CAPTION>
PEGASUS One Group(R)
MUNICIPAL MONEY MUNICIPAL MONEY COMBINED FUND
MARKET FUND(1) MARKET FUND(1) PRO FORMA
------------------ ------------------ ------------------
CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price).................. None None None None None None
Sales Charge on Reinvested
Dividends........................ None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable)...................... None None None None None None
Redemption Fees..................... None None None None None None
Exchange Fees....................... None None None None None None
ANNUAL OPERATING EXPENSES (as a
percentage of average daily net
assets)
Advisory Fees (after fee
waivers)(2)......................... .30% .30% .27% .27% .25% .25%
12b-1 Fees(3)......................... None None .25% None .25% None
Other Expenses (after fee
waivers)(4)......................... .43% .18% .20% .20% .20% .20%
Total Fund Operating Expenses (after
fee waivers)(5, 6).................. .73% .48% .72% .47% .70% .45%
</TABLE>
- ---------------
* If shares of the One Group(R) Municipal Money Market Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from the redemption amounts paid by wire.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group(R) Municipal Money
Market Fund and Combined Fund would be .35% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class A shareholders of the One Group(R)
Municipal Money Market Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. The amount of 12b-1 Fees
shown for the One Group(R) Municipal Money Market Fund and Combined Fund
includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A shareholders of the Pegasus Municipal
Money Market Fund are reflected under "Other Expenses."
(4) Without the fee waiver, Other Expenses for the Combined Fund would be .22%
for all classes of shares.
(5) The Investment Adviser of the Pegasus Municipal Money Market Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .75% and
.50%, respectively, for the Class A and Class I shares.
(6) Without the voluntary reduction of Investment Advisory Fees and expense
reimbursement arrangements, Total Fund Operating Expenses would be .80% for
Class A shares and .55% for Class I shares of the One Group Municipal Money
Market and .82% for Class A and .57% for Class I shares of the Combined
Fund.
II-5
<PAGE> 100
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Municipal Money Market Fund
Class A Shares......................................... $7 $23 $41 $ 91
Class I Shares......................................... $5 $15 $27 $ 60
One Group Municipal Money Market Fund
Class A Shares......................................... $7 $23 $40 $ 89
Class A Shares (without fee waivers)................... $8 $26 $44 $ 99
Class I Shares......................................... $5 $15 $26 $ 59
Class I Shares (without fee waivers)................... $6 $18 $31 $ 69
Combined Fund Pro Forma
Class A Shares......................................... $7 $22 $39 $ 87
Class A Shares (without fee waivers)................... $8 $26 $46 $101
Class I Shares......................................... $5 $14 $25 $ 57
Class I Shares (without fee waivers)................... $6 $18 $32 $ 71
</TABLE>
<TABLE>
<CAPTION>
One Group(R)
PEGASUS MICHIGAN MUNICIPAL
MICHIGAN MUNICIPAL MONEY MARKET COMBINED FUND
MONEY MARKET FUND FUND* PRO FORMA
------------------ ------------------ ------------------
CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price).................. None None None None None None
Sales Charge on Reinvested
Dividends........................ None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable)...................... None None None None None None
Redemption Fees..................... None None None None None None
Exchange Fees....................... None None None None None None
ANNUAL OPERATING EXPENSES (as a
percentage of average daily net
assets)
Advisory Fees (after fee
waivers)(1)......................... .27% .27% .27% .27% .27% .27%
12b-1 Fees (after fee waivers)(2)..... None None .25% None .25% None
Other Expenses (after fee
waivers)(3)......................... .48% .23% .22% .22% .22% .22%
Total Fund Operating Expenses (after
fee waivers)(4)..................... .75% .50% .74% .49% .74% .49%
</TABLE>
- ---------------
* The One Group(R) Michigan Municipal Money Market Fund has not yet commenced
operations. The One Group(R) Michigan Municipal Money Market Fund will
continue the operations of the Pegasus Michigan Municipal Money Market Fund
upon consummation of the Reorganization relating to that Fund.
** If shares of the One Group(R) Michigan Municipal Money Market Fund or
Combined Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $10.00 sub-minimum account fee may be
applicable and charge will be deducted from the redemption amounts paid by
wire.
II-6
<PAGE> 101
(1) Without the fee waivers, Advisory Fees for the One Group(R) Michigan
Municipal Money Market Fund and Combined Fund would be .35% for all classes
of shares.
(2) Due to 12b-1 Fees, long-term Class A shareholders of the One Group(R)
Michigan Municipal Money Market Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted under the rules
of The National Association of Securities Dealer. The amount of 12b-1 fees
shown for the One Group(R) Michigan Municipal Money Market Fund and Combined
Fund includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A shareholders of the Pegasus Michigan
Municipal Money Market Fund are reflected under "Other Expenses."
(3) Other Expenses for the One Group(R) Michigan Municipal Money Market Fund and
Combined Fund are based on estimated amounts for the current fiscal year.
Without the fee waiver, Other Expenses for the One Group(R) Michigan
Municipal Money Market Fund and Combined Fund would be .24% for all classes
of shares.
(4) The Investment Adviser of the Pegasus Michigan Municipal Money Market Fund
has voluntarily agreed to limit the Total Fund Operating Expenses to .75%
and .50%, respectively, for the Class A and Class I shares. Without the
voluntary reduction of investment advisory fees and expense reimbursement
arrangements, Total Fund Operating Expenses would be .76% for Class A shares
and .51% for Class I shares of the Pegasus Michigan Municipal Money Market
Fund. Without a voluntary reduction of Advisory Fees and other expense
reimbursement arrangements, Total Fund Operating Expenses for the One
Group(R) Michigan Municipal Money Market Fund and Combined Fund would be
.84% for Class A shares and .59% for Class I shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Michigan Municipal Money Market Fund
Class A Shares......................................... $8 $24 $42 $ 93
Class A Shares (without fee waivers)................... $8 $24 $42 $ 94
Class I Shares......................................... $5 $16 $28 $ 63
Class I Shares (without fee waivers)................... $5 $16 $29 $ 64
One Group(R) Michigan Municipal Money Market Fund
Class A Shares......................................... $8 $24 $41 $ 92
Class A Shares (without fee waivers)................... $9 $27 $47 $104
Class I Shares......................................... $5 $16 $27 $ 62
Class I Shares (without fee waivers)................... $6 $19 $33 $ 74
Combined Fund Pro Forma
Class A Shares......................................... $8 $24 $41 $ 92
Class A Shares (without fee waivers)................... $9 $27 $47 $104
Class I Shares......................................... $5 $16 $27 $ 62
Class I Shares (without fee waivers)................... $6 $19 $33 $ 74
</TABLE>
II-7
<PAGE> 102
<TABLE>
<CAPTION>
One Group(R)
PEGASUS CASH MANAGEMENT
CASH MANAGEMENT MONEY MARKET COMBINED
FUND FUND* PRO FORMA FUND
------------------------ ------------------ ------------------
INSTITUTIONAL SERVICE CLASS I CLASS A CLASS I CLASS A
SHARES SHARES SHARES SHARES SHARES SHARES
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)................ None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1)....................... .16% .16% .16% .16% .16% .16%
12b-1 Fees(2)....................... None .25% None .25% None .25%
Other Expenses (after fee
waivers)(3)....................... .19% .19% .18% .18% .18% .18%
Total Fund Operating Expenses (after
fee waivers and/or expense
reimbursements)(4)................ .35% .60% .34% .59% .34% .59%
</TABLE>
- ---------------
* The One Group(R) Cash Management Money Market Fund has not yet commenced
investment operations. The One Group(R) Cash Management Money Market Fund
will continue the operations of the Pegasus Cash Management Fund upon
consummation of the Reorganization relating to that Fund.
+ If shares of the One Group(R) Cash Management Money Market Fund or Combined
Fund are purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder Servicing
Agent. In addition, a $7.00 charge will be deducted from the redemption
amounts paid by wire.
(1) Without Advisory Fee waivers, Advisory Fees for the Pegasus Cash Management
Fund, the One Group(R) Cash Management Money Market Fund and Combined Fund
would be .20% for all classes of shares.
(2) The amount of 12b-1 Fees shown for the One Group(R) Cash Management Money
Market Fund and Combined Fund includes fees for shareholder servicing and
distribution.
(3) Other Expenses for the One Group(R) Cash Management Money Market Fund and
Combined Fund are based on estimated amounts for this current fiscal year.
Without the fee waiver, Other Expenses for the One Group(R) Cash Management
Money Market Fund and Combined Fund would be .19% for all classes of shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements, Total
Fund Operating Expenses for the Pegasus Cash Management Fund would be .39%
for the Institutional Shares and .64% for the Service Shares. Without
Advisory Fee Waivers, Total Fund Operating Expenses for the One Group(R)
Cash Management Money Market Fund and Combined Fund would be .39% for Class
I and .64% for Class A shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Cash Management Fund
Institutional Shares................................... $4 $11 $20 $44
Institutional Shares (without fee waivers)............. $4 $13 $22 $49
Service Shares......................................... $6 $19 $33 $75
Service Shares (without fee waivers)................... $7 $20 $36 $80
</TABLE>
II-8
<PAGE> 103
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
One Group(R) Cash Management Money Market Fund
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $13 $22 $49
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $7 $20 $36 $80
Combined Fund Pro Forma
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $13 $22 $49
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $7 $20 $36 $80
</TABLE>
<TABLE>
<CAPTION>
One Group(R)
TREASURY CASH
MANAGEMENT
PEGASUS TREASURY CASH MONEY MARKET COMBINED FUND
MANAGEMENT FUND FUND* PRO FORMA
----------------------- ----------------- -----------------
INSTITUTIONAL SERVICE CLASS I CLASS A CLASS I CLASS A
SHARES SHARES SHARES SHARES SHARES SHARES
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PEGASUS TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)..................... None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Advisory Fees (after fee waivers)(1)..... .17% .17% .17% .17% .17% .17%
12b-1 Fees(2)............................ None .25% None .25% None .25%
Other Expenses (after fee waivers)(3).... .18% .18% .17% .17% .17% .17%
Total Fund Operating Expenses (after fee
waivers and/or expense
reimbursements)(4)..................... .35% .60% .34% .59% .34% .59%
</TABLE>
- ---------------
* The One Group(R) Treasury Cash Management Money Market Fund has not yet
commenced operations. The One Group(R) Treasury Cash Management Money Market
Fund will continue the operations of the Pegasus Treasury Cash Management
Fund upon consummation of the Reorganization relating to that Fund.
+ If shares of the One Group(R) Treasury Cash Management Money Market Fund or
Combined Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $7.00 charge is deducted from the redemption
amounts paid by wire.
(1) Without Advisory Fee waivers, Advisory Fees for the Pegasus Treasury Cash
Management Fund, the One Group(R) Treasury Cash Management Fund and Combined
Fund would be .20% for all classes of shares.
(2) The amount of 12b-1 Fees shown for the One Group(R) Treasury Cash Management
Money Market Fund and Combined Fund includes fees for shareholder servicing
and distribution.
(3) Other Expenses for the One Group(R) Treasury Cash Management Money Market
Fund and Combined Fund are based on estimated amounts for the current fiscal
year. Without the fee waiver, Other Expenses for the One Group(R) Treasury
Cash Management Money Market Fund and Combined Fund would be .18% for all
classes of shares.
(4) Without Advisory Fee Waivers and expense reimbursement arrangements, Total
Fund Operating Expenses would be .38% for the Institutional Shares and .63%
for the Service Shares of the Pegasus
II-9
<PAGE> 104
Treasury Cash Management Fund and .38% for the Class I Shares and .63% for
the Class A Shares of the One Group(R) Treasury Cash Management Money Market
Fund and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Treasury Cash Management Fund
Institutional Shares................................... $4 $11 $20 $44
Institutional Shares (without fee waivers)............. $4 $12 $21 $48
Service Shares......................................... $6 $19 $33 $75
Service Shares (without fee waivers)................... $6 $20 $35 $79
One Group(R) Treasury Cash Management Money Market Fund
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $12 $21 $48
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $6 $20 $35 $79
Combined Fund Pro Forma
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $12 $21 $48
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $6 $20 $35 $79
</TABLE>
<TABLE>
<CAPTION>
One Group(R)
TREASURY PRIME
PEGASUS TREASURY CASH MANAGEMENT
PRIME CASH MONEY MARKET COMBINED FUND
MANAGEMENT FUND FUND* PRO FORMA
----------------------- ----------------- -----------------
INSTITUTIONAL SERVICE CLASS I CLASS A CLASS I CLASS A
SHARES SHARES SHARES SHARES SHARES SHARES
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)..................... None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Advisory Fees (after fee waivers)(1)..... .15% .15% .15% .15% .15% .15%
12b-1 Fees(2)............................ None .25% None .25% None .25%
Other Expenses (after fee waiver and/or
expense reimbursements)(3)............. .20% .20% .19% .19% .19% .19%
Total Fund Operating Expenses (after fee
waivers and/or expense
reimbursements)(4)..................... .35% .60% .34% .59% .34% .59%
</TABLE>
- ---------------
* The One Group(R) Treasury Prime Cash Management Money Market Fund has not
yet commenced operations. The One Group(R) Treasury Prime Cash Management
Money Market Fund will continue the operations of the Pegasus Treasury Prime
Cash Management Fund upon consummation of the Reorganization relating to
that Fund.
+ If shares of the One Group(R) Treasury Prime Cash Management Money Market
Fund or Combined Fund are purchased or sold through an account with a
Shareholder Servicing Agent, separate transaction fees
II-10
<PAGE> 105
may be charged by the Shareholder Servicing Agent. In addition, a $7.00
charge will be deducted from the redemption amounts paid by wire.
(1) Without Advisory Fee waivers, Advisory Fees would be .20% for the Pegasus
Treasury Prime Cash Management Fund and .20% for the One Group(R) Treasury
Prime Cash Management Money Market Fund and the Combined Fund for all
classes of shares.
(2) The amount of 12b-1 Fees shown for the One Group(R) Treasury Prime Cash
Management Money Market Fund and Combined Fund includes fees for shareholder
servicing and distribution.
(3) Other Expenses for the One Group(R) Treasury Prime Cash Management Money
Market Fund and Combined Fund are based on estimated amounts for the current
fiscal year. Without the fee waiver, Other Expenses for the One Group(R)
Treasury Prime Cash Management Money Market Fund and Combined Fund would be
.20% for all classes of shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements, Total
Fund Operating Expenses would be .40% for the Institutional Shares and .65%
for the Service Shares of the Pegasus Treasury Prime Cash Management Fund.
Without waivers, Total Fund Operating Expenses for the One Group(R) Treasury
Prime Cash Management Money Market Fund and Combined Fund would be .40% for
the Class I shares and .65% for Class A shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Treasury Cash Management Fund
Institutional Shares................................... $4 $11 $20 $44
Institutional Shares (without fee waivers)............. $4 $13 $22 $51
Service Shares......................................... $6 $19 $33 $75
Service Shares (without fee waivers)................... $7 $21 $36 $81
One Group(R) Treasury Cash Management Money Market Fund
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $13 $22 $51
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $7 $21 $36 $81
Combined Fund Pro Forma
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $13 $22 $51
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $7 $21 $36 $81
</TABLE>
II-11
<PAGE> 106
<TABLE>
<CAPTION>
One Group(R)
U.S. GOVERNMENT
PEGASUS SECURITIES CASH
U.S. GOVERNMENT MANAGEMENT
SECURITIES CASH MONEY MARKET COMBINED FUND
MANAGEMENT FUND FUND* PRO FORMA
----------------------- ----------------- -----------------
INSTITUTIONAL SERVICE CLASS I CLASS A CLASS I CLASS A
SHARES SHARES SHARES SHARES SHARES SHARES
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)..................... None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Advisory Fees (after fee waivers)(1)..... .18% .18% .18% .18% .18% .18%
12b-1 Fees(2)............................ None .25% None .25% None .25%
Other Expenses (after fee waivers and/or
expense reimbursements)(3)............. .17% .17% .17% .17% .17% .17%
Total Fund Operating Expenses (after fee
waivers and/or expense
reimbursements)(4)..................... .35% .60% .35% .60% .35% .60%
</TABLE>
- ---------------
* The One Group(R) U.S. Government Securities Cash Management Money Market
Fund has not yet commenced investment operations. The One Group(R) U.S.
Government Securities Cash Management Money Market Fund will continue the
operations of the Pegasus U.S. Government Securities Cash Management Fund
upon consummation of the Reorganization relating to that Fund.
+ If shares of the One Group(R) U.S. Government Securities Cash Management
Money Market Fund or Combined Fund are purchased or sold through an account
with a Shareholder Servicing Agent, separate transaction fees may be charged
by the Shareholder Servicing Agent. In addition, a $7.00 charge will be
deducted from the redemption amounts paid by wire.
(1) Without fee waivers, Advisory Fees would be .20% for the Pegasus U.S.
Government Securities Cash Management Fund, the One Group(R) U.S. Government
Securities Cash Management Money Market Fund and Combined Fund for all
classes of shares.
(2) The amount of 12b-1 Fees shown for the Combined Fund includes fees for
shareholder servicing and distribution.
(3) Other Expenses for the One Group(R) U.S. Government Securities Cash
Management Money Market Fund and Combined Fund are based on estimated
amounts for the current fiscal year. Without the fee waiver, Other Expenses
for the One Group(R) U.S. Government Securities Cash Management Money Market
Fund and Combined Fund would be .18% for all classes of shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements, Total
Fund Operating Expenses would be .37% for the Institutional Shares and .62%
for the Service Shares of the Pegasus U.S. Government Securities Prime Cash
Management Fund. Without Advisory Fee waivers, Total Fund Operating Expenses
would be .38% for the Class I shares and .63% for Class A shares of the One
Group(R) U.S. Government Securities Cash Management Money Market Fund and
Combined Fund.
II-12
<PAGE> 107
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus U.S. Government Securities Cash Management Fund
Institutional Shares................................ $4 $11 $20 $44
Institutional Shares (without fee waivers).......... $4 $12 $21 $47
Services Shares..................................... $6 $19 $33 $75
Services Shares (without fee waivers)............... $6 $20 $35 $77
One Group(R) U.S. Government Securities Cash Management
Money Market Fund
Class I Shares...................................... $4 $11 $20 $44
Class I Shares (without fee waivers)................ $4 $12 $21 $48
Class A Shares...................................... $6 $19 $33 $75
Class A Shares (without fee waivers)................ $6 $20 $35 $79
Combined Fund Pro Forma
Class I Shares...................................... $4 $11 $20 $44
Class I Shares (without fee waivers)................ $4 $12 $21 $48
Class A Shares...................................... $6 $19 $33 $75
Class A Shares (without fee waivers)................ $6 $20 $35 $79
</TABLE>
<TABLE>
<CAPTION>
One Group(R)
MUNICIPAL CASH
PEGASUS MUNICIPAL MANAGEMENT
CASH MANAGEMENT MONEY MARKET COMBINED FUND
FUND FUND* PRO FORMA
----------------------- ----------------- -----------------
INSTITUTIONAL SERVICE CLASS I CLASS A CLASS I CLASS A
SHARES SHARES SHARES SHARES SHARES SHARES
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)..................... None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Advisory Fees (after fee waivers)(1)..... .17% .17% .17% .17% .17% .17%
12b-1 Fees (after fee waivers)(2)........ None .25% None .25% None .25%
Other Expenses (after fee waivers and/or
expense reimbursements)(3)............. .18% .18% .17% .17% .17% .17%
Total Fund Operating Expenses (after fee
waivers and/or expense
reimbursements)(4)..................... .35% .60% .34% .59% .34% .59%
</TABLE>
- ---------------
* The One Group(R) Municipal Cash Management Money Market Fund has not yet
commenced investment operations. The One Group(R) Municipal Cash Management
Money Market Fund will continue the operations of the Pegasus Municipal Cash
Management Fund upon consummation of the Reorganization relating to that
Fund.
+ If shares of the One Group(R) Municipal Cash Management Money Market Fund or
Combined Fund are purchased or sold through an account with a Shareholder
Servicing Agent, separate transaction fees may be charged by the Shareholder
Servicing Agent. In addition, a $7.00 charge will be deducted from the
redemption amounts paid by wire.
II-13
<PAGE> 108
(1) Without Advisory Fee waivers, Advisory Fees would be .20% for the Pegasus
Municipal Cash Management Fund and the One Group(R) Municipal Cash
Management Money Market Fund and Combined Fund for all classes of shares.
(2) The amount of 12b-1 Fees shown for the One Group(R) Municipal Cash
Management Money Market Fund and Combined Fund includes fees for shareholder
servicing and distribution.
(3) Other Expenses for the One Group(R) Municipal Cash Management Money Market
Fund and Combined Fund are based on estimated amounts for the current fiscal
year. Without the fee waiver, Other Expenses for the One Group(R) Municipal
Cash Management Money Market Fund and Combined Fund would be .18% for all
classes of shares.
(4) Without Advisory Fee waivers and expense reimbursement arrangements, Total
Fund Operating Expenses would be .38% for the Institutional Shares and .63%
for the Service Shares of the Pegasus Municipal Cash Management Fund.
Without Advisory Fee waivers and expense reimbursement arrangements, Total
Fund Operating Expenses would be .38% for Class I shares and .63% for Class
A shares of the One Group(R) Municipal Cash Management Money Market Fund and
Combined Fund. The following examples are calculated using Combined total
operating expenses.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
(1) 5% annual return, and (2) redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Municipal Cash Management Fund
Institutional Shares................................... $4 $11 $20 $44
Institutional Shares (without fee waivers)............. $4 $12 $21 $48
Service Shares......................................... $6 $19 $33 $75
Service Shares (without fee waivers)................... $6 $20 $35 $79
One Group(R) Municipal Cash Management Money Market Fund
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $12 $21 $48
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $6 $20 $35 $79
Combined Fund Pro Forma
Class I Shares......................................... $3 $11 $19 $43
Class I Shares (without fee waivers)................... $4 $12 $21 $48
Class A Shares......................................... $6 $19 $33 $74
Class A Shares (without fee waivers)................... $6 $20 $35 $79
</TABLE>
II-14
<PAGE> 109
<TABLE>
<CAPTION>
PEGASUS MANAGED ASSETS ONE GROUP(R) INVESTOR COMBINED FUND
CONSERVATIVE FUND++ BALANCED FUND(1) PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES*
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price)...................... 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends................... None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or redemption
proceeds, as applicable).... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............... None None None None None None None None None
Exchange Fees................. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees(2)................ .52% .52% .52% .05% .05% .05% .05% .05% .05%
12b-1 Fees (after fee
waivers)(3)................... None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee
waivers and/or expense
reimbursements)............... .73% .73% .48% .15% .15% .15% .15% .15% .15%
Total Fund Operating Expenses
(after fee waivers and/or
expense reimbursements)
(4,5,6)....................... 1.25% 2.00% 1.00% .45% 1.20% .20% .45% 1.20% .20%
</TABLE>
- ---------------
* If shares of the One Group(R) Investor Balanced Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from the redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
++ Expenses for the Pegasus Managed Assets Conservative Fund include expenses
borne indirectly by the Fund in connection with its investments in the
Underlying Funds. There is no layering of fees.
(1) Expense information has been restated to reflect current fees.
(2) Without Advisory Fee waivers, Advisory Fees for the Pegasus Managed Assets
Conservative Fund would be .65% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Managed
Assets Conservative Funds and Class A and Class B shareholders of the One
Group(R) Investor Balanced and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares of the One Group(R)
Investor Balanced Fund and Combined Fund. The amount of 12b-1 Fees shown for
the One Group(R) Investor Balanced Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees payable
by the Class A and Class B shareholders of the Pegasus Managed Assets
Conservative Fund are reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Managed Assets Conservative Fund has
voluntarily agreed to limit the total operating expenses to 1.25%, 2.00% and
1.00%, respectively, for the Class A, Class B and Class I shares.
II-15
<PAGE> 110
(5) Without the voluntary reduction of Investment Advisory, 12b-1 Fees and other
expenses, Total Fund Operating Expenses would be 1.38% for Class A Shares,
2.13% for Class B Shares, and 1.13% for Class I Shares of the Pegasus
Managed Assets Conservative Fund. Without the voluntary reduction of 12b-1
fees, Total Fund Operating Expenses for Class A shares of the One Group(R)
Investor Balanced and Combined Fund would be .55%.
(6) After combining the Total Fund Operating Expenses of the One Group(R)
Investor Balanced Fund and Combined Fund with those of the Underlying Funds,
the estimated average weighted expense ratio is 1.22% for Class A shares,
1.97% for Class B shares and .97% for Class I shares. The following examples
are calculated using Combined total operating expenses.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Managed Assets Conservative Fund
Class A Shares........................................ $62 $88 $115 $194
Class A Shares (without fee waivers).................. $63 $92 $122 $207
Class B Shares........................................ $70 $93 $128 $204+
Class B Shares (without fee waivers).................. $72 $97 $134 $218+
Class I Shares........................................ $10 $32 $ 55 $122
Class I Shares (without fee waivers).................. $12 $36 $ 62 $137
One Group(R) Investor Balanced Fund
Class A Shares........................................ $57 $83 $111 $189
Class A Shares (without fee waivers).................. $59 $88 $119 $208
Class B Shares........................................ $70 $93 $128 $213**
Class B Shares (without fee waivers).................. $71 $95 $131 $223**
Class I Shares........................................ $10 $32 $ 55 $122
Class I Shares (without fee waivers).................. $11 $34 $ 59 $131
Combined Fund Pro Forma
Class A Shares........................................ $64 $89 $116 $192
Class A Shares (without fee waivers).................. $66 $95 $127 $215
Class B Shares........................................ $70 $92 $126 $210**
Class B Shares (without fee waivers).................. $71 $95 $132 $224**
Class I Shares........................................ $10 $31 $ 54 $119
Class I Shares (without fee waivers).................. $11 $34 $ 60 $132
</TABLE>
- ---------------
** Class B shares of the One Group(R) Investor Balanced Fund and the Combined
Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
II-16
<PAGE> 111
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Managed Assets Conservative Fund
Class B Shares....................................... $20 $63 $109 $204+
Class B Shares (without fee waivers)................. $22 $67 $114 $218+
One Group(R) Investor Balanced Fund
Class B Shares....................................... $20 $63 $108 $213**
Class B Shares (without fee waivers)................. $21 $65 $111 $223**
Combined Funds Pro Forma
Class B Shares....................................... $20 $62 $106 $210**
Class B Shares (without fee waivers)................. $21 $65 $112 $224**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Investor Balanced Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
<TABLE>
<CAPTION>
PEGASUS One Group(R)
MANAGED ASSETS INVESTOR GROWTH & COMBINED
BALANCED FUND++ INCOME FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)........... 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)............... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............. None None None None None None None None None
Exchange Fees............... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2)................. .52% .52% .52% .05% .05% .05% .05% .05% .05%
12b-1 Fees (after fee
waivers)(3)................. None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee
waivers and expense
reimbursements)............. .73% .73% .48% .15% .15% .15% .15% .15% .15%
Total Fund Operating Expenses
(after fee waivers and/or
expense
reimbursements)(4,5,6)...... 1.25% 2.00% 1.00% .45% 1.20% .20% .45% 1.20% .20%
</TABLE>
- ---------------
* If shares of the One Group(R) Investor Growth & Income Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from the redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
II-17
<PAGE> 112
++ Expenses for the Pegasus Managed Assets Balanced Fund include expenses
borne indirectly by the Fund in connection with its investments in the
Underlying Funds. There is no layering of fees.
(1) Expense information has been restated to reflect current fees.
(2) Without Advisory Fee waivers, Advisory Fees for the Pegasus Managed Assets
Balanced Fund would be .65% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Managed
Assets Balanced Fund and Class A and Class B shareholders of the One
Group(R) Investor Growth & Income and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares of the One Group(R)
Investor Growth & Income Fund and Combined Fund. The amount of 12b-1 Fees
shown for the One Group(R) Investor Growth & Income Fund and Combined Fund
includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Managed Assets Balanced Fund are reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Managed Assets Balanced Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.25%,
2.00% and 1.00%, respectively, for the Class A, Class B and Class I shares.
(5) Without the voluntary reduction of Investment Advisory, 12b-1 Fees and Other
Expenses, Total Fund Operating Expenses would be 1.38% for Class A shares,
2.13% for Class B shares, and 1.13% for Class I shares of the Pegasus
Managed Assets Balanced Fund. Without the voluntary reduction of 12b-1 Fees,
Total Fund Operating Expenses would be .55% for Class A shares of the One
Group(R) Investor Growth & Income Fund and Combined Fund.
(6) After combining the Total Fund Operating Expenses of the One Group(R)
Investor Growth and Income Fund and Combined with those of the Underlying
Funds, estimated average weighted expense ratio is 1.26% for Class A shares,
2.01% for Class B shares and 1.01% for Class I shares. The following
examples are calculated using Combined total operating expenses.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Managed Assets Balanced Fund
Class A Shares....................................... $62 $88 $115 $194
Class A Shares (without fee waivers)................. $63 $92 $122 $207
Class B Shares....................................... $70* $93 $128 $204+
Class B Shares (without fee waivers)................. $72 $97 $134 $218+
Class I Shares....................................... $10 $32 $ 55 $122
Class I Shares (without fee waivers)................. $12 $36 $ 62 $137
One Group(R) Investor Growth & Income Fund Class A
Shares............................................... $58 $84 $113 $195
Class A Shares (without fee waivers)................. $59 $89 $121 $212
Class B Shares....................................... $71 $94 $130 $219**
Class B Shares (without fee waivers)................. $71 $96 $133 $228**
Class I Shares....................................... $11 $33 $ 58 $128
Class I Shares (without fee waivers)................. $11 $35 $ 61 $135
Combined Fund Pro Forma
Class A Shares....................................... $65 $90 $118 $197
Class A Shares (without fee waivers)................. $66 $96 $128 $217
Class B Shares....................................... $70 $93 $128 $214**
Class B Shares (without fee waivers)................. $71 $96 $133 $227**
Class I Shares....................................... $10 $32 $ 56 $124
Class I Shares (without fee waivers)................. $11 $35 $ 61 $134
</TABLE>
II-18
<PAGE> 113
- ---------------
** Class B shares of the One Group(R) Investor Growth & Income Fund and the
Combined Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Managed Assets Balanced Fund
Class B Shares....................................... $20 $63 $108 $204+
Class B Shares (without fee waivers)................. $22 $67 $114 $218+
One Group(R) Investor Growth & Income Fund
Class B Shares....................................... $21 $64 $110 $219**
Class B Shares (without fee waivers)................. $21 $66 $113 $228**
Combined Funds Pro Forma
Class B Shares....................................... $20 $63 $108 $214**
Class B Shares (without fee waivers)................. $21 $66 $113 $227**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Investor Growth & Income Fund and the
Combined Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
<TABLE>
<CAPTION>
PEGASUS One Group(R)
MANAGED ASSETS INVESTOR GROWTH COMBINED
GROWTH FUND++ FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)........... 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)............... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............. None None None None None None None None None
Exchange Fees............... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2)................. .23% .23% .23% .05% .05% .05% .05% .05% .05%
12b-1 Fees (after fee
waivers)(3)................. None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses................ 1.02% 1.02% .77% .15% .15% .15% .15% .15% .15%
Total Fund Operating Expenses
(after fee waivers and/or
expense
reimbursements)(4,5,6)...... 1.25% 2.00% 1.00% .45% 1.20% .20% .45% 1.20% .20%
</TABLE>
- ---------------
* If shares of the One Group(R) Investor Growth Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the
II-19
<PAGE> 114
Shareholder Servicing Agent. In addition, a $10.00 sub-minimum account fee
may be applicable and a $7.00 charge will be deducted from the redemption
amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
++ Expenses for the Pegasus Managed Assets Growth Fund include expenses borne
indirectly by the Fund in connection with its investments in the Underlying
Funds. There is no layering of fees.
(1) Expense information has been restated to reflect current fees.
(2) Without Advisory Fee waivers, Advisory Fees for the Pegasus Managed Assets
Growth Fund would be .65% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Managed
Assets Growth Fund and Class A and Class B shareholders of the One Group(R)
Investor Growth Fund and Combined Fund may pay more than the equivalent of
the maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares of the One Group(R) Investor Growth Fund
and Combined Fund. The amount of 12b-1 Fees shown for the One Group(R)
Investor Growth Fund and Combined Fund includes fees for shareholder
servicing and distribution. Shareholder servicing fees payable by the Class
A and Class B shareholders of the Pegasus Managed Assets Growth Fund are
reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Managed Assets Growth Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.25%,
2.00% and 1.00%, respectively, for the Class A, Class B and Class I shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees, Total
Fund Operating Expenses would be 1.67% for Class A shares, 2.42% for Class B
shares, and 1.42% for Class I shares of the Pegasus Managed Assets Growth
Fund. Without the voluntary reduction of 12b-1 Fees, Total Fund Operating
Expenses would be .55% for Class A shares of the One Group(R) Investor
Growth Fund and Combined Fund.
(6) After combining the Total Fund Operating Expenses of the One Group(R)
Investor Growth Fund and Combined Fund with those of the Underlying Funds,
the estimated average weighted expense ratio is 1.28% for Class A shares,
2.03% for Class B shares and 1.03% for Class I shares. The following
examples are calculated using Combined total operating expenses.
II-20
<PAGE> 115
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Managed Assets Growth Fund
Class A Shares....................................... $62 $ 88 $115 $194
Class A Shares (without fee waivers)................. $66 $100 $136 $238
Class B Shares....................................... $70 $ 93 $128 $204+
Class B Shares (without fee waivers)................. $75 $105 $149 $248+
Class I Shares....................................... $10 $ 32 $ 55 $122
Class I Shares (without fee waivers)................. $14 $ 45 $ 78 $170
One Group(R) Investor Growth Fund
Class A Shares....................................... $58 $ 85 $114 $197
Class A Shares (without fee waivers)................. $59 $ 89 $121 $212
Class B Shares....................................... $71 $ 95 $131 $221**
Class B Shares (without fee waivers)................. $71 $ 96 $133 $228**
Class I Shares....................................... $11 $ 34 $ 59 $131
Class I Shares (without fee waivers)................. $11 $ 35 $ 61 $135
Combined Fund Pro Forma
Class A Shares....................................... $65 $ 91 $119 $199
Class A Shares (without fee waivers)................. $67 $ 96 $128 $218
Class B Shares....................................... $71 $ 94 $129 $217**
Class B Shares (without fee waivers)................. $71 $ 96 $133 $228**
Class I Shares....................................... $11 $ 33 $ 57 $126
Class I Shares (without fee waivers)................. $11 $ 35 $ 61 $135
</TABLE>
- ---------------
** Class B shares of the One Group(R) Investor Growth Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Managed Assets Growth Fund
Class B Shares....................................... $20 $63 $108 $204+
Class B Shares (without fee waivers)................. $25 $75 $129 $248+
One Group(R) Investor Growth Fund
Class B Shares....................................... $21 $65 $111 $221**
Class B Shares (without fee waivers)................. $21 $66 $113 $228**
Combined Funds Pro Forma Class B Shares................ $21 $64 $109 $217**
Class B Shares (without fee waivers)................. $21 $66 $113 $228**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Investor Growth Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-21
<PAGE> 116
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) COMBINED FUND
EQUITY INCOME FUND INCOME EQUITY FUND(1) PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price).................... 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)............... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............. None None None None None None None None None
Exchange Fees............... None None None None None None None None None
ANNUAL OPERATING EXPENSES (as
a percentage of average
daily net assets)
Advisory Fees (after fee
waiver)(2).................. .50% .50% .50% .74% .74% .74% .66% .66% .66%
12b-1 Fees (after fee
waivers)(3)................. None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee
waiver)(4).................. .45% .45% .20% .26% .26% .26% .14% .14% .14%
Total Fund Operating Expenses
(after fee waivers)(5,6).... .95% 1.70% .70% 1.25% 2.00% 1.00% 1.05% 1.80% .80%
</TABLE>
- ---------------
* If shares of the One Group(R) Income Equity Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the Fee Waiver, Advisory Fees for the combined fund would be .74%
for all classes of shares
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Equity
Income Fund and Class A and Class B Shareholders of the One Group(R) Income
Equity Fund and Combined Fund may pay more than the equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares of the One Group(R) Income Equity Fund and
Combined Fund. The amount of 12b-1 Fees shown for the One Group(R) Income
Equity Fund and Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Income Equity Fund are reflected under "Other
Expenses."
(4) Without fee waivers, Other Expenses would be .22% for all classes of shares
of the Combined Fund.
(5) The Investment Adviser of the Pegasus Equity Income Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to 1.21%, 1.96% and .96%,
respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of 12b-1 Fees, Advisory fees, and Other
Expenses, Total Fund Operating Expenses would be 1.35% for Class A shares of
the One Group(R) Income Equity Fund and 1.31% for Class A Shares 1.96% for
Class B Shares and .96% for Class I Shares of the Combined Fund.
II-22
<PAGE> 117
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Equity Income Fund
Class A Shares........................................ $59 $79 $100 $161
Class B Shares........................................ $67 $84 $113 $173+
Class I Shares........................................ $ 7 $22 $ 39 $ 87
One Group(R) Income Equity Fund
Class A Shares........................................ $57 $83 $111 $189
Class A Shares (without fee waivers).................. $58 $86 $116 $200
Class B Shares........................................ $70 $93 $128 $213**
Class I Shares........................................ $10 $32 $ 55 $122
Combined Fund Pro Forma
Class A Shares........................................ $63 $84 $107 $174
Class A Shares (without fee waivers).................. $65 $92 $121 $202
Class B Shares........................................ $68 $87 $117 $192**
Class B Shares (without fee waivers).................. $70 $92 $126 $212
Class I Shares........................................ $ 8 $26 $ 44 $ 99
Class I Shares (without fee waivers).................. $10 $31 $ 53 $118
</TABLE>
- ---------------
** Class B shares of the One Group(R) Income Equity and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Equity Income Fund
Class B Shares....................................... $17 $54 $ 93 $173+
One Group(R) Income Equity Fund
Class B Shares....................................... $20 $63 $108 $213**
Combined Funds Pro Forma
Class B Shares....................................... $18 $57 $ 97 $192**
Class B Shares (without fee Waivers)................. $20 $62 $106 $212**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Income Equity Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-23
<PAGE> 118
<TABLE>
<CAPTION>
One Group(R)
PEGASUS LARGE COMPANY GROWTH COMBINED
GROWTH FUND FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price).................... 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)............... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............. None None None None None None None None None
Exchange Fees............... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees................. .60% .60% .60% .74% .74% .74% .71% .71% .71%
12b-1 Fees (after fee
waivers)(2)................. None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses................ .47% .47% .22% .26% .26% .26% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(3,4).... 1.07% 1.82% .82% 1.25% 2.00% 1.00% 1.17% 1.92% .92%
</TABLE>
- ---------------
* If shares of the One Group(R) Large Company Growth Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Growth Fund
and Class A and Class B shareholders of the One Group(R) Large Company
Growth Fund and the Combined Fund may pay more than the equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares of the One Group(R) Large Company Growth
Fund and Combined Fund. The amount of 12b-1 Fees shown for the One Group(R)
Large Company Growth Fund and Combined Fund includes fees for shareholder
servicing and distribution. Shareholder servicing fees payable by the Class
A and Class B shareholders of the Pegasus Growth Fund are reflected under
"Other Expenses."
(3) The Investment Adviser of the Pegasus Growth Fund has voluntarily agreed to
limit the Total Fund Operating Expenses to 1.25%, 2.00% and 1.00%,
respectively, for the Class A, Class B and Class I shares.
(4) Without the voluntary reduction of 12b-1 Fees, Total Fund Operating Expenses
would be 1.35% for Class A shares of the One Group(R) Large Company Growth
Fund and 1.27% for Class A Shares of the Combined Fund.
II-24
<PAGE> 119
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Growth Fund
Class A Shares....................................... $60 $82 $106 $175
Class B Shares....................................... $69 $88 $119 $186+
Class I Shares....................................... $ 8 $27 $ 46 $103
One Group(R) Large Company Growth Fund
Class A Shares....................................... $57 $83 $111 $189
Class A Shares (without fee waivers)................. $58 $86 $116 $200
Class B Shares....................................... $70 $93 $128 $213**
Class I Shares....................................... $10 $32 $ 55 $122
Combined Fund Pro Forma
Class A Shares....................................... $64 $88 $113 $187
Class A Shares (without fee waivers)................. $65 $91 $119 $198
Class B Shares....................................... $69 $90 $124 $205**
Class I Shares....................................... $ 9 $29 $ 51 $113
</TABLE>
- ---------------
** Class B shares of the One Group(R) Large Company Growth Fund and the Combined
Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Growth Fund
Class B Shares....................................... $19 $58 $ 99 $186+
One Group(R) Large Company Growth Fund
Class B Shares....................................... $20 $63 $108 $213**
Combined Funds Pro Forma (R)Class B Shares............. $19 $60 $104 $205**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Large Company Growth Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-25
<PAGE> 120
<TABLE>
<CAPTION>
PEGASUS MID CAP ONE GROUP(R) DIVERSIFIED
OPPORTUNITY FUND MID CAP FUND* COMBINED FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price).................... 5.00% None None 5.25% None None 5.25% None None
Sales Charge on Reinvested
Dividends................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)............... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............. None None None None None None None None None
Exchange Fees............... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(1)................. .60% .60% .60% .60% .60% .60% .60% .60% .60%
12b-1 Fees (after fee
waivers)(2)................. None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee
waivers)(3)................. .54% .54% .29% .26% .26% .26% .26% .26% .26%
Total Fund Operating Expenses
(after fee waivers)(4)...... 1.14% 1.89% .89% 1.11% 1.86% .86% 1.11% 1.86% .86%
</TABLE>
- ---------------
* The One Group(R) Diversified Mid Cap Fund has not yet commenced operations.
The One Group(R) Diversified Mid Cap Fund will continue the operations of
the Pegasus Mid Cap Opportunity Fund upon consummation of the Reorganization
relating to the Fund.
** If shares of the One Group(R) Diversified Mid Cap Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Without the fee waivers, Advisory Fees for the One Group(R) Diversified Mid
Cap Fund and Combined Fund would be .74% for all classes of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Mid-Cap
Opportunity Fund and long-term Class A and Class B shareholders of the One
Group(R) Diversified Mid Cap Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares. The amount of 12b-1
fees shown for the One Group(R) Diversified Mid Cap Fund and Combined Fund
includes fees for shareholders servicing and distribution. Shareholders
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Mid-Cap Opportunity Fund are reflected under "Other Expenses."
(3) Without the fee waiver, Other Expenses for the One Group(R) Diversified Mid
Cap Fund and Combined Fund would be .27% for all classes of shares.
(4) The Investment Adviser of the Pegasus Mid-Cap Opportunity Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.27%,
2.02% and 1.02%, respectively, for the Class A, Class B and Class I shares.
Without the voluntary reduction of Investment Advisory, 12b-1 and other
Fees, Total Fund Operating Expenses for the One Group(R) Diversified Mid Cap
Fund and Combined Fund would be 1.36% for Class A shares, 2.01% for Class B
shares and 1.01% for Class I shares.
II-26
<PAGE> 121
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Mid Cap Opportunity Fund
Class A Shares....................................... $61 $85 $110 $182
Class B Shares....................................... $69 $90 $123 $194+
Class I Shares....................................... $ 9 $29 $ 50 $110
One Group(R) Diversified Mid Cap Fund
Class A Shares....................................... $63 $86 $110 $181
Class A Shares (without fee waivers)................. $66 $93 $123 $207
Class B Shares....................................... $69 $88 $121 $198**
Class B Shares (without fee waivers)................. $70 $93 $128 $217**
Class I Shares....................................... $ 9 $27 $ 48 $106
Class I Shares (without fee waivers)................. $10 $32 $ 56 $124
Combined Fund Pro Forma
Class A Shares....................................... $63 $86 $110 $181
Class A Shares (without fee waivers)................. $66 $93 $123 $207
Class B Shares....................................... $69 $88 $121 $198**
Class B Shares (without fee waivers)................. $70* $93 $128 $217**
Class I Shares....................................... $ 9 $27 $ 48 $106
Class I Shares (without fee waivers)................. $10 $32 $ 56 $124
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Diversified MidCap Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Mid Cap Opportunity Fund
Class B Shares....................................... $19 $60 $103 $194+
One Group(R) Diversified MidCap Fund
Class B Shares....................................... $19 $58 $101 $198**
Class B Shares (without fee waivers)................. $20 $63 $108 $217**
Combined Funds Pro Forma
Class B Shares....................................... $19 $58 $101 $198**
Class B Shares (without fee waivers)................. $20 $63 $108 $217**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Diversified MidCap Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-27
<PAGE> 122
<TABLE>
<CAPTION>
PEGASUS SMALL-CAP ONE GROUP(R) SMALL CAP COMBINED FUND
OPPORTUNITY FUND VALUE FUND* PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price)...................... 5.00% None None 5.25% None None 5.25% None None
Sales Charge on Reinvested
Dividends................... None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or redemption
proceeds, as applicable).... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............... None None None None None None None None None
Exchange Fees................. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(1)................... .70% .70% .70% .70% .70% .70% .70% .70% .70%
12b-1 Fees (after fee
waivers)(2)................... None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses(3)............... .49% .49% .24% .21% .21% .21% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(4)........ 1.19% 1.94% .94% 1.16% 1.91% .91% 1.16% 1.91% .91%
</TABLE>
- ---------------
* The One Group(R) Small Cap Value Fund has not yet commenced investment
operations. The One Group(R) Small Cap Value Fund will continue the
operations of the Pegasus Small-Cap Opportunity Fund upon consummation of
the Reorganization relating to that Fund.
** If shares of the One Group(R) Small Cap Value Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from the redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Without the fees waivers, Advisory Fees for the One Group(R) Small Cap Value
Fund and Combined Fund would be .74% for all classes of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Small-Cap
Opportunity Fund and long-term Class A and Class B shareholders of the One
Group(R) Small Cap Value Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees for A shares of the One Group(R) Small Cap Value Fund and
Combined Fund would be .35%. The amount of 12b-1 Fees shown for the One
Group(R) Small Cap Value Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees payable
by the Class A and Class B shareholders of the Pegasus Small-Cap Opportunity
Fund are reflected under "Other Expenses."
(3) Other Expenses for the One Group(R) Small Cap Value Fund and Combined Fund
are based on estimated amounts for the current fiscal year. Without the fee
waiver, Other Expenses for the One Group(R) Small Cap Value Fund and
Combined Fund would be .22% for all classes of shares.
(4) The Investment Adviser of the Pegasus Small Cap Opportunity Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.42%,
2.17% and 1.17%, respectively, for the Class A, Class B and Class I shares.
Without the voluntary reduction of Investment Advisory, 12b-1 and other
Fees, Total
II-28
<PAGE> 123
Fund Operating Expenses for the One Group(R) Small Cap Value Fund and
Combined Fund would be 1.31% for Class A Shares, 1.96% for Class B shares
and .96% for Class I shares.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Small-Cap Opportunity Fund
Class A Shares........................................ $62 $86 $112 $188
Class B Shares........................................ $70 $91 $126 $199+
Class I Shares........................................ $10 $30 $ 52 $116
One Group(R) Small Cap Value Fund
Class A Shares........................................ $64 $87 $113 $186
Class A Shares (without fee waivers).................. $65 $92 $121 $202
Class B Shares........................................ $69 $90 $123 $204**
Class B Shares (without fee waivers).................. $70 $92 $126 $212**
Class I Shares........................................ $ 9 $29 $ 50 $112
Class I Shares (without fee waivers).................. $10 $31 $ 53 $118
Combined Fund Pro Forma
Class A Shares........................................ $64 $87 $113 $186
Class A Shares (without fee waivers).................. $65 $92 $121 $202
Class B Shares........................................ $69 $90 $123 $204**
Class B Shares (without fee waivers).................. $70 $92 $126 $212**
Class I Shares........................................ $ 9 $29 $ 50 $112
Class I Shares (without fee waivers).................. $10 $31 $ 53 $118
</TABLE>
- ---------------
** Class B shares of the One Group(R) Small Cap Value Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Small-Cap Opportunity Fund
Class B Shares....................................... $20 $61 $106 $199+
One Group(R) Small Cap Value Fund
Class B Shares....................................... $19 $60 $103 $204**
Class B Shares (without fee waivers)................. $20 $62 $106 $212**
Combined Funds Pro Forma
Class B Shares....................................... $19 $60 $103 $204**
Class B Shares (without fee waivers)................. $20 $62 $106 $212**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Small Cap Value Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-29
<PAGE> 124
<TABLE>
<CAPTION>
PEGASUS INTRINSIC ONE GROUP(R) DISCIPLINED COMBINED FUND
VALUE FUND VALUE FUND(1) PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price)...................... 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends................... None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or redemption
proceeds, as applicable).... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............... None None None None None None None None None
Exchange Fees................. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees................... .60% .60% .60% .74% .74% .74% .74% .74% .74%
12b-1 Fees (after fee
waiver)(2).................... None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses.................. .49% .49% .24% .26% .26% .26% .20% .20% .20%
Total Fund Operating Expenses
(after fee waivers)(3,4)...... 1.09% 1.84% .84% 1.25% 2.00% 1.00% 1.19% 1.94% .94%
</TABLE>
- ---------------
* If shares of the One Group(R) Disciplined Value Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Intrinsic
Value Fund and Class A and Class B shares of the One Group(R) Disciplined
Value Fund and the Combined Fund may pay more than the equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares of the One Group(R) Disciplined Value Fund
and Combined Fund. The amount of 12b-1 Fees shown for the One Group(R)
Disciplined Value Fund and Combined Fund includes fees for shareholder
servicing and distribution. Shareholder servicing fees payable by the Class
A and Class B shareholders of the Pegasus Intrinsic Value Fund are reflected
under "Other Expenses."
(3) The Investment Adviser of the Pegasus Intrinsic Value Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to 1.19%, 1.94% and 0.94%,
respectively, for the Class A, Class B and Class I shares.
(4) Without the voluntary reduction of 12b-1 Fees, Total Fund Operating Expenses
would be 1.35% for Class A shares of the One Group(R) Disciplined Value Fund
and 1.29% for Class A Shares of the Combined Fund.
II-30
<PAGE> 125
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Intrinsic Value Fund
Class A Shares........................................ $61 $83 $107 $177
Class B Shares........................................ $69 $88 $120 $188+
Class I Shares........................................ $ 9 $27 $ 47 $104
One Group(R) Disciplined Value Fund
Class A Shares........................................ $57 $83 $111 $189
Class A Shares (without fee waivers).................. $58 $86 $116 $200
Class B Shares........................................ $70 $93 $128 $213**
Class I Shares........................................ $10 $32 $ 55 $122
Combined Fund Pro Forma
Class A Shares........................................ $64 $88 $114 $189
Class A Shares (without fee waivers).................. $65 $91 $120 $200
Class B Shares........................................ $70 $91 $125 $207**
Class I Shares........................................ $10 $30 $ 52 $115
</TABLE>
- ---------------
** Class B shares of the One Group(R) Mid Cap Value Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Intrinsic Value Fund
Class B Shares....................................... $19 $58 $100 $188+
One Group(R) Disciplined Value Fund
Class B Shares....................................... $20 $63 $108 $213**
Combined Funds Pro Forma
Class B Shares....................................... $20 $61 $105 $207**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Disciplined Value Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-31
<PAGE> 126
<TABLE>
<CAPTION>
PEGASUS GROWTH AND ONE GROUP(R) COMBINED FUND
VALUE FUND VALUE GROWTH FUND(1) PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price)...................... 5.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends................... None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or redemption
proceeds, as applicable).... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............... None None None None None None None None None
Exchange Fees................. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees................... .60% .60% .60% .74% .74% .74% .73% .73% .73%
12b-1 Fees (after fee
waivers)(2)................... None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses.................. .51% .51% .26% .26% .26% .26% .23% .23% .23%
Total Fund Operating Expenses
(after fee waivers)(3,4)...... 1.11% 1.86% .86% 1.25% 2.00% 1.00% 1.21% 1.96% .96%
</TABLE>
- ---------------
* If shares of the One Group(R) Value Growth Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Growth and
Value Fund and Class A and Class B shares of the One Group(R) Value Growth
Fund and Combined Fund may pay more than the equivalent of the maximum
front-end sales charges permitted by the rules of the National Association
of Securities Dealers. Without the voluntary waiver, 12b-1 Fees would be
.35% for Class A shares of the One Group(R) Value Growth Fund and Combined
Fund. The amount of 12b-1 Fees shown for the One Group(R) Value Growth Fund
and Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B shareholders
of the Pegasus Growth and Value Fund are reflected under "Other Expenses."
(3) The Investment Adviser of the Pegasus Growth and Value Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to 1.12%, 1.87% and 0.87%,
respectively, for the Class A, Class B and Class I shares.
(4) Without the voluntary reduction of 12b-1 Fees, Total Fund Operating Expenses
would be 1.35% for Class A shares of the One Group(R) Value Growth Equity
Fund and 1.31% for Class A shares of the Combined Fund.
II-32
<PAGE> 127
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Growth and Value Fund
Class A Shares........................................ $61 $84 $108 $179
Class B Shares........................................ $69 $89 $121 $190+
Class I Shares........................................ $ 9 $28 $ 48 $106
One Group(R) Value Growth Fund
Class A Shares........................................ $57 $83 $111 $189
Class A Shares (without fee waivers).................. $58 $86 $116 $200
Class B Shares........................................ $70 $93 $128 $213**
Class I Shares........................................ $10 $32 $ 55 $122
Combined Fund Pro Forma
Class A Shares........................................ $64 $89 $116 $191
Class A Shares (without fee waivers).................. $65 $92 $121 $202
Class B Shares........................................ $70 $92 $126 $209**
Class I Shares........................................ $10 $31 $ 53 $118
</TABLE>
- ---------------
** Class B shares of the One Group(R) Diversified Equity Fund and the Combined
Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Growth and Value Fund
Class B Shares....................................... $19 $59 $101 $190+
One Group(R) Value Growth Fund
Class B Shares....................................... $20 $63 $108 $213**
Combined Funds Pro Forma
Class B Shares....................................... $20 $62 $106 $209**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Value Growth Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-33
<PAGE> 128
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) COMBINED
EQUITY INDEX FUND EQUITY INDEX FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)..................... 3.00% None None 4.50% None None 5.25% None None
Sales Charge on Reinvested
Dividends........................... None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of original
purchase price or redemption
proceeds, as applicable)............ None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees....................... None None None None None None None None None
Exchange Fees......................... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Advisory Fees (after fee waivers)(2).... .10% .10% .10% .25% .25% .25% .15% .15% .15%
12b-1 Fees (after fee waivers)(3)....... None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses(4)....................... .55% .55% .30% .25% .25% .25% .21% .21% .21%
Total Fund Operating Expenses (after fee
waivers and/or expense
reimbursements)(5,6).................. .65% 1.40% .40% .75% 1.50% .50% .61% 1.36% .36%
</TABLE>
- ---------------
* If shares of the One Group(R) Equity Index Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group(R) Equity Index
Fund and Combined Fund would be .30% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Equity
Index Fund and long-term Class A and Class B shares of the One Group(R)
Equity Index Fund and Combined Fund may pay more than the equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares of the One Group(R) Equity Index Fund and
Combined Fund. The amount of 12b-1 Fees shown for the One Group(R) Equity
Index Fund and Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Equity Index Fund are reflected under "Other
Expenses."
(4) Without the fee waiver, Other Expenses for the Combined Fund would be .28%
for all classes of shares.
(5) The Investment Adviser of the Pegasus Equity Index Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to .86%, 1.41% and .51%,
respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Investment Advisory, 12b-1 and other
Fees, Total Fund Operating Expenses would be .90% for Class A shares, 1.55%
for Class B shares, and .55% for Class I shares of the One Group(R) Equity
Index Fund and .93% for Class A shares, 1.58% for Class B shares and .58%
for Class I shares of the Combined Fund.
II-34
<PAGE> 129
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (2)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Equity Index Fund
Class A Shares........................................ $36 $50 $ 65 $109
Class B Shares........................................ $44 $65 $ 87 $129+
Class I Shares........................................ $ 4 $13 $ 22 $ 51
One Group(R) Equity Index Fund
Class A Shares........................................ $52 $68 $ 85 $134
Class A Shares (without fee waivers).................. $54 $72 $ 93 $151
Class B Shares........................................ $65 $77 $102 $159**
Class B Shares (without fee waivers).................. $66 $79 $104 $167**
Class I Shares........................................ $ 5 $16 $ 28 $ 63
Class I Shares (without fee waivers).................. $ 6 $18 $ 31 $ 69
Combined Fund Pro Forma
Class A Shares........................................ $58 $71 $ 85 $125
Class A Shares (without fee waivers).................. $61 $81 $101 $161
Class B Shares........................................ $64 $73 $ 94 $143**
Class B Shares (without fee waivers).................. $66 $80 $106 $170**
Class I Shares........................................ $ 4 $12 $ 20 $ 46
Class I Shares (without fee waivers).................. $ 6 $19 $ 32 $ 73
</TABLE>
- ---------------
** Class B shares of the One Group(R) Equity Index Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Equity Index Fund
Class B Shares........................................ $14 $45 $77 $129+
One Group(R) Equity Index Fund
Class B Shares........................................ $15 $47 $82 $159**
Class B Shares (without fee waivers).................. $16 $49 $84 $167**
Combined Funds Pro Forma
Class B Shares........................................ $14 $43 $74 $143**
Class B Shares (without fee waivers).................. $16 $50 $86 $170**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Equity Index Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-35
<PAGE> 130
<TABLE>
<CAPTION>
PEGASUS One Group(R)
MARKET EXPANSION MARKET EXPANSION COMBINED
INDEX FUND(1) INDEX FUND* FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)..................... 3.00% None None 5.25% None None 5.25% None None
Transaction Fee Imposed on
Purchases***........................ .50% .50% .50% .50% .50% .50% .50% .50% .50%
Sales Charge on Reinvested
Dividends........................... None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of original
purchase price or redemption
proceeds, as applicable)............ None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees....................... None None None None None None None None None
Exchange Fees......................... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Advisory Fees (after fee waivers)(2).... .00% .00% .00% .15% .15% .15% .15% .15% .15%
12b-1 Fees(3)........................... None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses (after fee waivers and/or
expense reimbursements)(4)............ .82% .82% .57% .42% .42% .42% .42% .42% .42%
Total Fund Operating Expenses (after fee
waivers and/or expense
reimbursements)(5,6).................. .82% 1.57% .57% .82% 1.57% .57% .82% 1.57% .57%
</TABLE>
- ---------------
* The One Group(R) Market Expansion Index Fund has not yet commenced
operations. The One Group(R) Market Expansion Index Fund will continue the
operations of the Pegasus Market Expansion Index Fund upon consummation of
the Reorganization relating to that Fund.
** If shares of the One Group(R) Market Expansion Index Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Agent. In
addition, a $7.00 charge is deducted from the redemptions amounts paid by
wire.
*** To prevent the Pegasus Market Expansion Index Fund and the One Group(R)
Market Expansion Index Fund from being adversely affected by the transaction
costs associated with share purchases, the Fund will sell shares at a price
equal to the net asset value of the shares plus a transaction fee equal to
0.50% of such value. Such fees are not sales charges, but are retained by
the Fund for the benefit of all shareholders. This fee will not apply to
in-kind contributions, reinvested dividends or capital gain contributions;
however, it will apply to exchanges. Furthermore, a sales charge will also
be imposed on purchases of Class A shares. Currently, a transaction fee is
not being charged; however, the Fund reserves the right to impose this fee
at a future date.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the voluntary reduction of Investment Advisory fee waivers, Advisory
Fees for the Pegasus Market Expansion Index Fund would be .25% for all
classes of shares. Without the fee waivers, Advisory Fees for the One
Group(R) Market Expansion Index Fund and Combined Fund would be .35% for all
classes.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Market
Expansion Index Fund and long-term Class A and Class B shareholders of the
One Group(R) Market Expansion Index Fund and Combined Fund may pay more than
the equivalent of the maximum front-end sales charges permitted by the rules
of the National Association of Securities Dealers. Without the voluntary
waivers, 12b-1 fees would be .35% for Class A shares of the One Group(R)
Market Expansion Index Fund and Combined Fund. The amount of 12b-1 Fees
shown for the One Group(R) Market Expansion Index Fund and
II-36
<PAGE> 131
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B shareholders
of the Pegasus Market Expansion Index Fund are reflected under "Other
Expenses."
(4) Without the fee waiver, Other Expenses for the One Group(R) Market Expansion
Index Fund and Combined Fund would be .52% for all classes of shares.
(5) The Investment Adviser of the Pegasus Market Expansion Index Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .82%, 1.57%
and .57%, respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Investment Advisory fees and Other
Expenses, Total Fund Operating Expenses would be 1.17% for Class A shares,
1.92% for Class B shares, and .92% for Class I shares of the Pegasus Market
Expansion Index Fund and 1.22% for Class A shares, 1.87% for Class B shares
and .87% for Class I shares of the One Group(R) Market Expansion Index Fund
and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Market Expansion Index Fund
Class A Shares......................................... $38 $55 N/A N/A
Class B Shares......................................... $46 $70 N/A N/A
Class I Shares......................................... $ 6 $18 N/A N/A
One Group(R) Market Expansion Index Fund
Class A Shares......................................... $60 $77 $ 96 $149
Class A Shares (without fee waivers)................... $64 $89 $116 $192
Class B Shares......................................... $66 $80 $106 $167
Class B Shares (without fee waivers)................... $69 $89 $121 $202
Class I Shares......................................... $ 6 $18 $ 32 $ 71
Class I Shares (without fee waivers)................... $ 9 $28 $ 48 $107
Combined Fund Pro Forma
Class A Shares......................................... $60 $77 $ 96 $149
Class A Shares (without fee waivers)................... $64 $89 $116 $192
Class B Shares......................................... $66 $80 $106 $167
Class B Shares (without fee waivers)................... $69 $89 $121 $202
Class I Shares......................................... $ 6 $18 $ 32 $ 71
Class I Shares (without fee waivers)................... $ 9 $28 $ 48 $107
</TABLE>
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Market Expansion Index Fund
Class B Shares......................................... $16 $50 N/A N/A
One Group(R) Market Expansion Index Fund
Class B Shares......................................... $16 $50 $ 86 $167
Class B Shares (without fee Waivers)................... $19 $59 $101 $202
Combined Funds Pro Forma
Class B Shares......................................... $16 $50 $ 86 $167
Class B Shares (without fee waivers)................... $19 $59 $101 $202
</TABLE>
II-37
<PAGE> 132
<TABLE>
<CAPTION>
PEGASUS One Group(R)
INTERNATIONAL DIVERSIFIED COMBINED
EQUITY FUND INTERNATIONAL FUND* FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price)................... 5.00% None None 5.25% None None 5.25% None None
Sales Charge on Reinvested
Dividends................ None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds,
as applicable)........... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............ None None None None None None None None None
Exchange Fees.............. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees................ .80% .80% .80% .80% .80% .80% .80% .80% .80%
12b-1 Fees (after fee
waivers)(1)................ None .75% None .25% 1.00% None .25% 1.00% None
Other Expenses(2)............ .52% .52% .27% .22% .22% .22% .22% .22% .22%
Total Fund Operating Expenses
(after fee waivers)(3)..... 1.32% 2.07% 1.07% 1.27% 2.02% 1.02% 1.27% 2.02% 1.02%
</TABLE>
- ---------------
* The One Group(R) Diversified International Fund has not yet commenced
investment operations. The One Group(R) Diversified International Fund will
continue the operations of the Pegasus International Equity Fund upon
consummation of the Reorganization relating to that Fund.
** If shares of the One Group(R) Diversified International Fund or Combined
Fund are purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder Agent. In
addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charged is deducted from the redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
International Equity Fund and long-term Class A and Class B shareholders of
the One Group(R) Diversified International Fund and Combined Fund may pay
more than the equivalent of the maximum front-end sales charges permitted by
the rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares for the One
Group(R) Diversified International Fund and Combined Fund. The amount of
12b-1 Fees shown for the One Group(R) Diversified International Fund and
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B Shareholders
of the Pegasus International Equity Fund are reflected under "Other
Expenses."
(2) Other Expenses for the One Group(R) Diversified International Fund and
Combined Fund are based on estimated amounts for the current fiscal year.
Without the fee waiver, Other Expenses for the One Group(R) Diversified
International Fund and Combined Fund would be .23% for all classes of
shares.
(3) The Investment Adviser of the Pegasus International Equity Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 1.44%,
2.19% and 1.19%, respectively, for the Class A, Class B and Class I shares.
Without the voluntary reduction of 12b-1 Fees, Total Fund Operating Expenses
for One Group(R) Diversified International Fund and Combined Fund would be
1.38% for Class A shares, 2.03% for Class B shares and 1.03% for Class I
shares.
II-38
<PAGE> 133
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus International Equity Fund
Class A Shares...................................... $63 $90 $119 $202
Class B Shares...................................... $71 $96 $132 $213+
Class I Shares...................................... $11 $34 $ 59 $131
One Group(R) Diversified International Fund
Class A Shares...................................... $65 $91 $119 $198
Class A Shares (without fee waivers)................ $66 $94 $124 $210
Class B Shares...................................... $71 $93 $129 $216**
Class B Shares (without fee waivers)................ $71 $94 $129 $219**
Class I Shares...................................... $10 $32 $ 56 $125
Class I Shares (without fee waivers)................ $11 $33 $ 57 $126
Combined Fund Pro Forma
Class A Shares...................................... $65 $91 $119 $198
Class A Shares (without fee waivers)................ $66 $94 $124 $210
Class B Shares...................................... $71 $93 $129 $216**
Class B Shares (without fee waivers)................ $71 $94 $129 $219**
Class I Shares...................................... $10 $32 $ 56 $125
Class I Shares (without fee waivers)................ $11 $33 $ 57 $126
</TABLE>
- ---------------
** Class B shares of the One Group(R) Diversified International Fund and
Combined Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus International Equity Fund
Class B Shares...................................... $21 $66 $112 $213+
One Group(R) Diversified International Fund
Class B Shares...................................... $21 $63 $109 $216**
Class B Shares (without fee Waivers)................ $21 $64 $109 $219**
Combined Funds Pro Forma
Class B Shares...................................... $21 $63 $109 $216**
Class B Shares (without fee Waivers)................ $21 $64 $109 $219**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Diversified International Fund and the
Combined Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-39
<PAGE> 134
<TABLE>
<CAPTION>
PEGASUS INTERMEDIATE BOND ONE GROUP(R) INTERMEDIATE BOND
FUND FUND(1) COMBINED FUND PRO FORMA
--------------------------- ------------------------------ ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES*
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price).................. 3.00% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends............... None None None None None None None None None
Maximum Contingent
Deferred Sales Charge
(as a percentage of
original purchase price
or redemption proceeds,
as applicable).......... None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees........... None None None None None None None None None
Exchange Fees............. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of
average daily net assets)
Advisory Fees (after fee
waivers)(2)............... .40% .40% .40% .40% .40% .40% .36% .36% .36%
12b-1 Fees (after fee
waivers)(3)............... None .75% None .25% .90% None .25% .90% None
Other Expenses.............. .50% .50% .25% .22% .22% .22% .22% .22% .22%
Total Fund Operating
Expenses (after fee
waivers and/or expense
reimburse-
ments) (4,5).............. .90% 1.65% .65% .87% 1.52% .62% .83% 1.48% .58%
</TABLE>
- ---------------
* If shares of the One Group(R) Intermediate Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group(R) Intermediate
Bond Fund and Combined Fund would be .60% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Intermediate Bond Fund and Class A and Class B shareholders of the One
Group(R) Intermediate Bond Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. Without the voluntary
waiver, 12b-1 Fees would be .35% for Class A shares and 1.00% for Class B
shares of the One Group(R) Intermediate Bond Fund and Combined Fund. The
amount of 12b-1 Fees shown for the One Group(R) Intermediate Bond Fund and
Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B shareholders
of the Pegasus Intermediate Bond Fund are reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Intermediate Bond Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to 1.04%, 1.79% and .79%,
respectively, for the Class A, Class B and Class I shares.
II-40
<PAGE> 135
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees, Total
Fund Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, and .82% for Class I shares of the One Group(R) Intermediate Bond
Fund and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Intermediate Bond Fund
Class A Shares...................................... $39 $58 $ 79 $138
Class B Shares...................................... $47 $72 $100 $158+
Class I Shares...................................... $ 7 $21 $ 36 $ 81
One Group(R) Intermediate Bond Fund
Class A Shares...................................... $53 $72 $ 91 $147
Class A Shares (without fee waivers)................ $56 $80 $106 $181
Class B Shares...................................... $65 $78 $103 $164**
Class B Shares (without fee waivers)................ $68 $87 $119 $197**
Class I Shares...................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................ $ 8 $26 $ 46 $101
Combined Fund Pro Forma
Class A Shares...................................... $53 $70 $ 89 $143
Class A Shares (without fee waivers)................ $56 $80 $106 $181
Class B Shares...................................... $65 $77 $101 $159**
Class B Shares (without fee waivers)................ $68 $87 $119 $197**
Class I Shares...................................... $ 6 $19 $ 32 $ 73
Class I Shares (without fee waivers)................ $ 8 $26 $ 46 $101
</TABLE>
- ---------------
** Class B shares of the One Group(R) Intermediate Bond Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore,
the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Intermediate Bond Fund
Class B Shares...................................... $17 $52 $90 $158+
One Group(R) Intermediate Bond Fund
Class B Shares...................................... $15 $48 $83 $164**
Class B Shares (without fee waivers)................ $18 $57 $99 $197**
Combined Funds Pro Forma
Class B Shares...................................... $15 $47 $81 $159**
Class B Shares (without fee waivers)................ $18 $57 $99 $197**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Intermediate Bond Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-41
<PAGE> 136
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) COMBINED
BOND FUND BOND FUND* FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)................... 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends......................... None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable)....................... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees..................... None None None None None None None None None
Exchange Fees....................... None None None None None None None None None
ANNUAL OPERATING EXPENSES(1)
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(2)......................... .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees (after fee waivers)(3)..... None .75% None .25% .90% None .25% .90% None
Other Expenses(4)..................... .48% .48% .23% .20% .20% .20% .20% .20% .20%
Total Fund Operating Expenses (after
fee waivers)(5,6)................... .88% 1.63% .63% .85% 1.50% .60% .85% 1.50% .60%
</TABLE>
- ---------------
* The One Group(R) Bond Fund has not yet commenced operations. The One
Group(R) Bond Fund will continue the operations of the Pegasus Bond Fund
upon consummation of the Reorganization relating to that Fund.
** If shares of the One Group(R) Bond Fund or Combined Fund are purchased or
sold through an account with a Shareholder Servicing Agent, separate
transaction fees may be charged by the Shareholder Servicing Agent. In
addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the Combined Fund would be .60%
for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Bond Fund
and Class A and Class B shareholders of the One Group(R) Bond Fund and the
Combined Fund may pay more than the equivalent of the maximum front-end
sales charges permitted by the rules of the National Association of
Securities Dealers. Without the voluntary waiver, 12b-1 Fees would be .35%
for Class A shares and 1.00% for Class B shares of the One Group(R) Bond
Fund and Combined Fund. The amount of 12b-1 Fees shown for the One Group(R)
Bond Fund and Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Bond Fund are reflected under "Other Expenses."
(4) Other Expenses for the One Group(R) Bond Fund and Combined Fund are based on
estimated amounts for the current fiscal year. Without the fee waiver, Other
Expenses for the One Group(R) Bond Fund and Combined Fund would be .21% for
all classes of shares.
(5) The Investment Adviser of the Pegasus Bond Fund has voluntarily agreed to
limit the Total Fund Operating Expenses to .99%, 1.74% and 0.74%,
respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Fund Operating Expenses would be 1.16% for Class A Shares, 1.81% for Class B
shares and .81% for Class I shares of the One Group(R) Bond Fund and the
Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
II-42
<PAGE> 137
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------- --------- --------
<S> <C> <C> <C> <C>
Pegasus Bond Fund
Class A Shares.............................. $54 $72 $ 92 $149
Class B Shares.............................. $67 $82 $109 $165+
Class I Shares.............................. $ 6 $20 $ 35 $ 79
One Group(R) Bond Fund
Class A Shares.............................. $53 $71 $ 90 $145
Class A Shares (without fee waivers)........ $56 $80 $106 $180
Class B Shares.............................. $65 $77 $102 $161**
Class B Shares (without fee waivers)........ $68 $87 $118 $196**
Class I Shares.............................. $ 6 $19 $ 33 $ 75
Class I Shares (without fee waivers)........ $ 8 $26 $ 45 $100
Combined Fund Pro Forma
Class A Shares.............................. $53 $71 $ 90 $145
Class A Shares (without fee waivers)........ $56 $80 $106 $180
Class B Shares.............................. $65 $77 $102 $161**
Class B Shares (without fee waivers)........ $68 $87 $118 $196**
Class I Shares.............................. $ 6 $19 $ 33 $ 75
Class I Shares (without fee waivers)........ $ 8 $26 $ 45 $100
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Bond Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Bond Fund
Class B Shares...................................... $17 $52 $89 $165+
One Group(R) Bond Fund
Class B Shares...................................... $15 $47 $82 $161**
Class B Shares (without fee waivers)................ $18 $57 $98 $196**
Combined Funds Pro Forma
Class B Shares...................................... $15 $47 $82 $161**
Class B Shares (without fee waivers)................ $18 $57 $98 $196**
</TABLE>
- ---------------
** Class B shares of the One Group(R) Bond Fund and Combined Fund automatically
convert to Class A shares after eight (8) years. Therefore, the "10 Years"
example above reflects this conversion.
+ Assumes conversion to Class A shares
II-43
<PAGE> 138
<TABLE>
<CAPTION>
One Group(R)
PEGASUS LIMITED VOLATILITY COMBINED
SHORT BOND FUND BOND FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES*
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)............ 1.00% None None 3.00% None None 3.00% None None
Sales Charge on Reinvested
Dividends.................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)................ None+ 1.00% None None+ 3.00% None None+ 3.00% None
Redemption Fees.............. None None None None None None None None None
Exchange Fees................ None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2).................. .35% .35% .35% .40% .40% .40% .32% .32% .32%
12b-1 Fees (after fee
waivers)(3).................. None .75% None .25% .75% None .25% .75% None
Other Expenses................. .49% .49% .24% .22% .22% .22% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(4,5)..... .84% 1.59% .59% .87% 1.37% .62% .78% 1.28% .53%
</TABLE>
- ---------------
* If shares of the One Group(R) Limited Volatility Bond Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group(R) Limited
Volatility Bond Fund and Combined Fund would be .60% for all classes of
shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Short Bond
Fund and Class A and Class B Shareholders of the One Group(R) Limited
Volatility Bond Fund and Combined Fund may pay more than the equivalent of
the maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares and 1.00% for Class B shares of the One
Group(R) Limited Volatility Bond Fund and Combined Fund. The amount of 12b-1
Fees shown for the One Group(R) Limited Volatility Bond Fund and Combined
Fund includes fees for shareholder servicing and distribution. Shareholder
servicing fees payable by the Class A and Class B shareholders of the
Pegasus Short Bond Fund are reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Short Bond Fund has voluntarily agreed
to limit the Total Fund Operating Expenses to .86%, 1.61% and .61%,
respectively, for the Class A, Class B and Class I shares.
(5) Without the voluntary reduction of Investment advisory and 12b-1 Fees, Total
Fund Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, and .82% for Class I shares of the One Group(R) Limited Volatility
Bond Fund and 1.16% for Class A shares, 1.81% for Class B shares and .81%
for Class I shares of the Combined Fund.
II-44
<PAGE> 139
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Short Bond Fund
Class A Shares....................................... $19 $37 $ 56 $113
Class B Shares....................................... $26 $42+ $ 62+ $118+
Class I Shares....................................... $ 6 $19 $ 33 $ 74
One Group(R) Limited Volatility Bond Fund
Class A Shares....................................... $39 $57 $ 77 $134
Class A Shares (without fee waivers)................. $42 $66 $ 92 $168
Class B Shares....................................... $44 $63 $ 75 $138**
Class B Shares (without fee waivers)................. $48 $77 $ 99 $181**
Class I Shares....................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................. $ 8 $26 $ 46 $101
Combined Fund Pro Forma
Class A Shares....................................... $38 $54 $ 72 $124
Class A Shares (without fee waivers)................. $41 $66 $ 92 $167
Class B Shares....................................... $43 $61 $ 70 $128**
Class B Shares (without fee waivers)................. $48 $77 $ 98 $180**
Class I Shares....................................... $ 5 $17 $ 30 $ 66
Class I Shares (without fee waivers)................. $ 8 $26 $ 45 $100
</TABLE>
- ---------------
** Class B shares of the One Group(R) Limited Volatility Bond Fund and the
Combined Fund automatically convert to Class A shares after six (6) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Short Bond Fund
Class B Shares....................................... $16 $42+ $62+ $118+
One Group(R) Limited Volatility Fund
Class B Shares....................................... $14 $43 $75 $138**
Class B Shares (without fee waivers)................. $18 $57 $99 $181**
Combined Funds Pro Forma
Class B Shares....................................... $13 $41 $70 $128**
Class B Shares (without fee waivers)................. $18 $57 $98 $180**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Limited Volatility Fund and the Combined
Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-45
<PAGE> 140
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) COMBINED
MULTI SECTOR BOND FUND INCOME BOND FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)........... 3.00% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)............... None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees............. None None None None None None None None None
Exchange Fees............... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2)................. .40% .40% .40% .40% .40% .40% .41% .41% .41%
12b-1 Fees (after fee
waivers)(3)................. None .75% None .25% .90% None .25% .90% None
Other Expenses................ .50% .50% .25% .22% .22% .22% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(4,5).... .90% 1.65% .65% .87% 1.52% .62% .87% 1.52% .62%
</TABLE>
- ---------------
* If shares of the One Group(R) Income Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group(R) Income Bond Fund
and Combined Fund would be .60% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Multi
Sector Bond Fund and Class A and Class B shareholders of the One Group(R)
Income Bond Fund and Combined Fund may pay more than the equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares and 1.00% for Class B shares of the One
Group(R) Income Bond Fund and Combined Fund. The amount of 12b-1 Fees shown
for the One Group(R) Income Bond Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees payable
by the Class A and Class B shareholders of the Pegasus Multi Sector Bond
Fund are reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Multi Sector Bond Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to .92%, 1.67% and .67%,
respectively, for the Class A, Class B and Class I shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees, Total
Fund Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares and .82% for Class I shares of the One Group(R) Income Bond Fund and
1.16% for Class A shares, 1.81% for Class B shares and .81% for Class I
shares of the Combined Fund.
II-46
<PAGE> 141
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Multi Sector Bond Fund
Class A Shares....................................... $39 $58 $ 79 $138
Class B Shares....................................... $47 $72 $100 $158+
Class I Shares....................................... $ 7 $21 $ 36 $ 81
One Group(R) Income Bond Fund
Class A Shares....................................... $53 $72 $ 91 $147
Class A Shares (without fee waivers)................. $56 $80 $106 $181
Class B Shares....................................... $65 $78 $103 $164**
Class B Shares (without fee waivers)................. $68 $87 $119 $197**
Class I Shares....................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................. $ 8 $26 $ 46 $101
Combined Fund Pro Forma
Class A Shares....................................... $53 $72 $ 91 $147
Class A Shares (without fee waivers)................. $56 $80 $106 $180
Class B Shares....................................... $65 $78 $103 $164**
Class B Shares (without fee waivers)................. $68 $87 $118 $196**
Class I Shares....................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................. $ 8 $26 $ 45 $100
</TABLE>
- ---------------
** Class B shares of the One Group(R) Income Bond Fund automatically convert to
Class A shares after eight (8) years. Therefore, the "10 Years" example above
reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Multi Sector Bond Fund
Class B Shares....................................... $17 $52 $90 $158+
One Group(R) Income Bond Fund
Class B Shares....................................... $15 $48 $83 $164**
Class B Shares (without fee waivers)................. $18 $57 $99 $197**
Combined Funds Pro Forma
Class B Shares....................................... $15 $48 $83 $164**
Class B Shares (without fee waivers)................. $18 $57 $98 $196**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Income Bond Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-47
<PAGE> 142
<TABLE>
<CAPTION>
PEGASUS ONE GROUP(R) HIGH YIELD COMBINED
HIGH YIELD BOND FUND(1) BOND FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)................... 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends......................... None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable)....................... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees..................... None None None None None None None None None
Exchange Fees....................... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(2)......................... .60% .60% .60% .60% .60% .60% .60% .60% .60%
12b-1 Fees (after fee waivers)(3)..... None .75% None .25% .90% None .25% .90% None
Other Expenses(4)..................... .54% .54% .29% .35% .35% .35% .27% .27% .27%
Total Fund Operating Expenses (after
fee waivers and/or expense
reimbursements)(5,6)................ 1.14% 1.89% .89% 1.20% 1.85% .95% 1.12% 1.77% .87%
</TABLE>
- ---------------
* If shares of the One Group(R) High Yield Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the Pegasus High Yield Bond Fund
would be .70% for all classes of shares. Without the fee waivers, Advisory
Fees for the One Group(R) High Yield Bond Fund and Combined Fund would be
.75% for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus High Yield
Bond Fund and Class A and Class B shareholders of the One Group(R) High
Yield Bond Fund and Combined Fund may pay more than the equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers. Without the voluntary waiver, 12b-1 Fees
would be .35% for Class A shares and 1.00% for Class B shares of the One
Group(R) High Yield Bond Fund and Combined Fund. The amount of 12b-1 Fees
shown for the Class A and Class B Shareholders of the One Group(R) High
Yield Bond Fund and Combined Fund includes fees for shareholder servicing
and distribution. Shareholder servicing fees payable by the Pegasus High
Yield Bond Fund are reflected under "Other Expenses."
(4) Other Expenses are based on estimated amounts for the current fiscal year.
(5) The Investment Adviser of the Pegasus High Yield Bond Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to 1.14%, 1.89% and .89%,
respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Investment Advisory and/or expense
reimbursements, Total Fund Operating Expenses would be 1.24% for Class A
shares, 1.99% for Class B shares, and .99% for Class I shares of the Pegasus
High Yield Bond Fund. Without the voluntary reduction of Investment Advisory
and 12b-1 Fees, Total Fund Operating Expenses would be 1.45% for Class A
shares, 2.10% for Class B shares, and 1.10% for Class I shares of the One
Group(R) High Yield Bond Fund and 1.37% for Class A shares, 2.02% for Class
B shares and 1.02% for Class I shares of the Combined Fund.
II-48
<PAGE> 143
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus High Yield Bond Fund
Class A Shares...................................... $61 $85 $110 $182
Class B Shares...................................... $69 $90 $123 $194+
Class I Shares...................................... $ 9 $29 $ 50 $110
One Group(R) High Yield Bond Fund
Class A Shares...................................... $57 $81 N/A N/A
Class A Shares (without fee waivers)................ $59 $89 N/A N/A
Class B Shares...................................... $69 $88 N/A N/A
Class B Shares (without fee waivers)................ $71 $96 N/A N/A
Class I Shares...................................... $10 $30 N/A N/A
Class I Shares (without fee waivers)................ $11 $35 N/A N/A
Combined Fund Pro Forma
Class A Shares...................................... $56 $79 $104 $175
Class A Shares (without fee waivers)................ $58 $86 $117 $202
Class B Shares...................................... $68 $86 $116 $191
Class B Shares (without fee waivers)................ $71 $93 $129 $218
Class I Shares...................................... $ 9 $28 $ 48 $107
Class I Shares (without fee waivers)................ $10 $32 $ 56 $125
</TABLE>
- ---------------
** Class B shares of the One Group(R) High Yield Bond Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus High Yield Bond Fund
Class B Shares...................................... $19 $60 $103 $194+
One Group(R) High Yield Bond Fund
Class B Shares...................................... $19 $58 N/A N/A
Class B Shares (without fee waivers)................ $21 $66 N/A N/A
Combined Funds Pro Forma
Class B Shares...................................... $18 $56 $ 96 $191
Class B Shares (without fee waivers)................ $21 $63 $109 $218
</TABLE>
- ---------------
** Class B shares of the One Group(R) High Yield Bond Fund and the Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore, the
"10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
II-49
<PAGE> 144
<TABLE>
<CAPTION>
PEGASUS MUNICIPAL BOND ONE GROUP(R) TAX-FREE BOND
FUND FUND* COMBINED FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price)................. 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends....................... None None None None None None None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds, as
applicable)..................... None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees................... None None None None None None None None None
Exchange Fees..................... None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Advisory Fees (after fee
waivers)(1)....................... .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees (after fee waivers)(2)... None .75% None .25% .90% None .25% .90% None
Other Expenses(3)................... .48% .48% .23% .22% .22% .22% .22% .22% .22%
Total Fund Operating Expenses (after
fee waivers)(4,5)................. .88% 1.63% .63% .87% 1.52% .62% .87% 1.52% .62%
</TABLE>
- ---------------
* The One Group(R) Tax-Free Bond Fund has not yet commenced operations. The
One Group(R) Tax-Free Bond Fund will continue the operations of the Pegasus
Municipal Bond Fund upon consummation of the Reorganization relating to that
Fund.
** If shares of the One Group(R) Tax-Free Bond Fund or Combined Fund are
purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Without the fee waivers, Advisory Fees for the One Group(R) Tax-Free Bond
Fund and Combined Fund would be .45% for all classes of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Municipal
Bond Fund and Class A and Class B shareholders of the One Group(R) Tax-Free
Bond Fund and Combined Fund may pay more than the equivalent of the maximum
front-end sales charges permitted by the rules of the National Association
of Securities Dealers. Without the voluntary waiver, 12b-1 Fees would be
.35% for Class A shares and 1.00% for Class B shares of the One Group(R)
Tax-Free Bond Fund and the Combined Fund. The amount of 12b-1 Fees shown for
the One Group(R) Tax-Free Bond Fund and the Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees payable
by the Class A and Class B shareholders of the Pegasus Municipal Bond Fund
are reflected under "Other Expenses."
(3) Other Expenses for the One Group(R) Tax-Free Bond Fund and Combined Fund are
based on estimated amounts for the current fiscal year. Without the fee
waiver, Other Expenses for the One Group(R) Tax-Free Bond Fund and Combined
Fund would be .23% for all classes of shares.
(4) The Investment Adviser of the Pegasus Municipal Bond Fund has voluntarily
agreed to limit the Total Fund Operating Expenses to .98%, 1.73% and .73%,
respectively, for the Class A, Class B and Class I shares.
II-50
<PAGE> 145
(5) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Fund Operating Expenses would be 1.03% for Class A shares, 1.68% for Class B
shares, and .68% for Class I shares of the One Group(R) Tax-Free Bond Fund
and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Municipal Bond Fund
Class A Shares...................................... $54 $72 $ 92 $149
Class B Shares...................................... $67 $82 $109 $165+
Class I Shares...................................... $ 6 $20 $ 35 $ 79
One Group(R) Tax-Free Bond Fund
Class A Shares...................................... $53 $72 $ 91 $147
Class A Shares (without fee waivers)................ $55 $76 $ 99 $165
Class B Shares...................................... $65 $78 $103 $164**
Class B Shares (without fee waivers)................ $67 $83 $111 $181**
Class I Shares...................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................ $ 7 $22 $ 38 $ 85
Combined Fund Pro Forma
Class A Shares...................................... $53 $72 $ 91 $147
Class A Shares (without fee waivers)................ $55 $76 $ 99 $165
Class B Shares...................................... $65 $78 $103 $164**
Class B Shares (without fee waivers)................ $67 $83 $111 $181**
Class I Shares...................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................ $ 7 $22 $ 38 $ 85
</TABLE>
- ---------------
** Class B shares of the One Group(R) Tax-Free Bond Fund and Combined Fund
automatically convert to Class A shares after eight (8) years. Therefore,
the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Municipal Bond Fund
Class B Shares...................................... $17 $52 $ 89 $165+
One Group(R) Tax-Free Bond Fund
Class B Shares...................................... $15 $48 $ 83 $164**
Class B Shares (without fee waivers)................ $17 $53 $ 91 $181**
Combined Funds Pro Forma
Class B Shares...................................... $15 $48 $ 83 $164**
Class B Shares (without fee waivers)................ $17 $53 $ 91 $181**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Tax-Free Bond Fund and the Combined Fund
automatically convert to Class A Shares after eight (8) years. Therefore,
the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-51
<PAGE> 146
<TABLE>
<CAPTION>
One Group(R)
PEGASUS SHORT-TERM MUNICIPAL BOND COMBINED
SHORT MUNICIPAL BOND FUND FUND FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)............ 1.00% None None 3.00% None None 3.00% None None
Sales Charge on Reinvested
Dividends.................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)................ None+ 1.00% None None+ 3.00% None None+ 3.00% None
Redemption Fees.............. None None None None None None None None None
Exchange Fees................ None None None None None None None None None
ANNUAL OPERATING EXPENSES (1)
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2).................. .33% .33% .33% .35% .35% .35% .35% .35% .35%
12b-1 Fees (after fee
waivers)(3).................. None .75% None .25% .90% None .25% .90% None
Other Expenses(4).............. .54% .54% .29% .27% .27% .27% .27% .27% .27%
Total Fund Operating Expenses
(after fee waivers)(5,6)..... .87% 1.62% .62% .87% 1.52% .62% .87% 1.52% .62%
</TABLE>
- ---------------
* The One Group(R) Short-Term Municipal Bond Fund has not yet commenced
operations. The One Group(R) Short-Term Municipal Bond Fund will continue
the operations of the Pegasus Short Municipal Bond Fund upon consummation of
the Reorganization relating to that Fund.
** If shares of the One Group(R) Short-Term Municipal Bond Fund or Combined
Fund are purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder Servicing
Agent. In addition, a $10.00 sub-minimum account fee may be applicable and a
$7.00 charge will be deducted from redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees would be .40% for the Pegasus Short
Municipal Bond Fund and .60% for the One Group(R) Short-Term Municipal Bond
Fund and Combined Fund for all classes of shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Short
Municipal Bond Fund and Class A and Class B shares of the One Group(R)
Short-Term Municipal Bond Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. Without the voluntary
waivers, 12b-1 Fees would be .35% for Class A shares and 1.00% for Class B
shares of the One Group(R) Short-Term Municipal Bond Fund and Combined Fund.
The amount of 12b-1 Fees shown for the One Group(R) Short-Term Municipal
Bond Fund and the Combined Fund includes fees for shareholder servicing and
distribution. Shareholder servicing fees payable by the Class A and Class B
shareholders of the Pegasus Short Municipal Bond Fund are reflected under
"Other Expenses."
(4) Other Expenses for the One Group(R) Short-Term Municipal Bond Fund and
Combined Fund are based on estimated amounts for the current fiscal year.
Without the fee waiver, Other Expenses for the One Group(R) Short-Term
Municipal Bond Fund and Combined Fund would be .28% for all classes of
shares.
II-52
<PAGE> 147
(5) The Investment Adviser of the Pegasus Short Municipal Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .87%, 1.62%
and .62%, respectively, for the Class A, Class B and Class I shares.
(6) Without the voluntary reduction of Investment Advisory fees and other
expenses, Total Fund Operating Expenses would be .94% for Class A shares,
1.69% for Class B shares, and .69% for Class I shares of the Pegasus Short
Municipal Bond Fund. Without the voluntary reduction of Investment Advisory
and 12b-1 Fees, Total Fund Operating Expenses would be 1.23% for Class A
shares, 1.88% for Class B shares, and .88% for Class I shares of the One
Group(R) Short-Term Municipal Bond Fund and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Short Municipal Bond Fund
Class A Shares....................................... $19 $38 N/A N/A
Class B Shares....................................... $26 $43+ N/A N/A
Class I Shares....................................... $ 6 $20 N/A N/A
One Group(R) Short-Term Municipal Bond Fund
Class A Shares....................................... $39 $57 $ 77 $134
Class A Shares (without fee waivers)................. $42 $68 $ 96 $174
Class B Shares....................................... $45 $68 $ 83 $148**
Class B Shares (without fee waivers)................. $49 $79 $102 $188**
Class I Shares....................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................. $ 9 $28 $ 49 $108
Combined Fund Pro Forma
Class A Shares....................................... $39 $57 $ 77 $134
Class A Shares (without fee waivers)................. $42 $68 $ 96 $174
Class B Shares....................................... $45 $68 $ 83 $148**
Class B Shares (without fee waivers)................. $49 $79 $102 $188**
Class I Shares....................................... $ 6 $20 $ 35 $ 77
Class I Shares (without fee waivers)................. $ 9 $28 $ 49 $108
</TABLE>
- ---------------
** Class B shares of the One Group(R) Short-Term Bond Fund and Combined Fund
automatically convert to Class A shares after six (6) years. Therefore, the
"10 years" examples above reflect this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the dollar
amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Short Municipal Bond Fund
Class B Shares......................................... $17 $43+ N/A N/A
One Group(R) Short-Term Municipal Bond Fund
Class B Shares......................................... $15 $48 $ 83 $148**
Class B Shares (without fee waivers)................... $19 $59 $102 $189**
Combined Funds Pro Forma
Class B Shares......................................... $15 $48 $ 83 $148**
Class B Shares (without fee waivers)................... $19 $59 $102 $188**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Short-Term Municipal Bond Fund and the
Combined Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-53
<PAGE> 148
<TABLE>
<CAPTION>
PEGASUS One Group(R)
INTERMEDIATE INTERMEDIATE COMBINED
MUNICIPAL BOND FUND TAX-FREE BOND FUND(1) FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)............ 3.00% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends.................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)................ None+ 3.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees.............. None None None None None None None None None
Exchange Fees................ None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(2).................. .40% .40% .40% .42% .42% .42% .39% .39% .39%
12b-1 Fees (after fee
waivers)(3).................. None .75% None .25% .90% None .25% .90% None
Other Expenses................. .45% .45% .20% .24% .24% .24% .19% .19% .19%
Total Fund Operating Expenses
(after fee waivers)(4,5)..... .85% 1.60% .60% .91% 1.56% .66% .83% 1.48% .58%
</TABLE>
- ---------------
* If shares of the One Group(R) Intermediate Tax-Free Bond Fund or Combined
Fund are purchased or sold through an account with a Shareholder Servicing
Agent, separate transaction fees may be charged by the Shareholder Servicing
Agent. In addition, a $10.00 sub-minimum account fee may be applicable and a
$7.00 charge will be deducted from redemption amounts paid by wire.
** A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Expense information has been restated to reflect current fees.
(2) Without the fee waivers, Advisory Fees for the One Group(R) Intermediate
Tax-Free Bond Fund and Combined Fund would be .60% for all classes of
shares.
(3) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus
Intermediate Municipal Bond Fund and Class A and Class B shareholders of the
One Group(R) Intermediate Tax-Free Bond Fund and Combined Fund may pay more
than the equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers. Without the
voluntary waiver, 12b-1 Fees would be .35% for Class A shares and 1.00% for
Class B shares of the One Group(R) Intermediate Tax-Free Bond Fund and
Combined Fund. The amount of 12b-1 Fees shown for the One Group(R)
Intermediate Tax-Free Bond Fund and Combined Fund includes fees for
shareholder servicing and distribution. Shareholder servicing fees payable
by the Class A and Class B shareholders of the Pegasus Intermediate
Municipal Bond Fund are reflected under "Other Expenses."
(4) The Investment Adviser of the Pegasus Intermediate Municipal Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to .93%, 1.68%
and .68%, respectively, for the Class A, Class B and Class I shares.
(5) Without the voluntary reduction of Investment Advisory and 12b-1 Fees, Total
Fund Operating Expenses would be 1.19% for Class A shares, 1.84% for Class B
shares, and .84% for Class I shares of the One Group(R) Intermediate
Tax-Free Bond Fund and 1.14% for Class A shares, 1.79% for Class B shares
and .79% for Class I shares of the Combined Fund.
II-54
<PAGE> 149
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Intermediate Municipal Bond Fund
Class A Shares....................................... $38 $56 $ 76 $132
Class B Shares....................................... $46 $71 $ 98 $152+
Class I Shares....................................... $ 6 $19 $ 34 $ 75
One Group(R) Intermediate Tax-Free Bond Fund
Class A Shares....................................... $54 $73 $ 93 $152
Class A Shares (without fee waivers)................. $57 $81 $107 $185
Class B Shares....................................... $66 $79 $105 $168**
Class B Shares (without fee waivers)................. $69 $88 $120 $199**
Class I Shares....................................... $ 7 $21 $ 37 $ 82
Class I Shares (without fee waivers)................. $ 9 $27 $ 47 $104
Combined Fund Pro Forma
Class A Shares....................................... $53 $70 $ 89 $143
Class A Shares (without fee waivers)................. $56 $80 $105 $177
Class B Shares....................................... $65 $77 $101 $159**
Class B Shares (without fee waivers)................. $68 $86 $117 $193**
Class I Shares....................................... $ 6 $19 $ 32 $ 73
Class I Shares (without fee waivers)................. $ 8 $25 $ 44 $ 98
</TABLE>
- ---------------
** Class B shares of the One Group(R) Intermediate Tax-Free Bond Fund and the
Combined Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Intermediate Municipal Bond Fund
Class B Shares....................................... $16 $51 $ 88 $152+
One Group(R) Intermediate Tax-Free Bond Fund
Class B Shares....................................... $16 $49 $ 85 $168**
Class B Shares (without fee waivers)................. $19 $58 $101 $199**
Combined Funds Pro Forma
Class B Shares....................................... $15 $47 $ 81 $159**
Class B Shares (without fee Waivers)................. $18 $56 $ 97 $193**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Intermediate Tax-Free Bond Fund and the
Combined Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-55
<PAGE> 150
<TABLE>
<CAPTION>
PEGASUS One Group(R)
MICHIGAN MUNICIPAL MICHIGAN MUNICIPAL COMBINED
BOND FUND BOND FUND FUND PRO FORMA
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES**
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)............ 4.50% None None 4.50% None None 4.50% None None
Sales Charge on Reinvested
Dividends.................. None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds, as
applicable)................ None+ 5.00% None None+ 5.00% None None+ 5.00% None
Redemption Fees.............. None None None None None None None None None
Exchange Fees................ None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees (after fee
waivers)(1).................. .40% .40% .40% .40% .40% .40% .40% .40% .40%
12b-1 Fees (after fee
waivers)(2).................. None .75% None .25% .90% None .25% .90% None
Other Expenses(3).............. .51% .51% .26% .25% .25% .25% .25% .25% .25%
Total Fund Operating Expenses
(after fee waivers)(4)....... .91% 1.66% .66% .90% 1.55% .65% .90% 1.55% .65%
</TABLE>
- ---------------
* The One Group(R) Michigan Municipal Bond Fund has not yet commenced
operations. The One Group(R) Michigan Municipal Bond Fund will continue the
operations of the Pegasus Michigan Municipal Bond Fund upon consummation of
the Reorganization relating to that Fund.
** If shares of the One Group(R) Michigan Municipal Bond Fund or Combined Fund
are purchased or sold through an account with a Shareholder Servicing Agent,
separate transaction fees may be charged by the Shareholder Servicing Agent.
In addition, a $10.00 sub-minimum account fee may be applicable and a $7.00
charge will be deducted from the redemption amounts paid by wire.
+ A contingent deferred sales charge of up to 1.00% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
(1) Without the fee waiver, Investment Advisory Fees for the One Group(R)
Michigan Municipal Bond Fund and Combined Fund would be .45% for all classes
of shares.
(2) Due to 12b-1 Fees, long-term Class B shareholders of the Pegasus Michigan
Municipal Bond Fund and Class A and Class B shareholders of the One Group(R)
Michigan Municipal Bond Fund and Combined Fund may pay more than the
equivalent of the maximum front-end sales charges permitted by the rules of
the National Association of Securities Dealers. Without the voluntary
waivers, 12b-1 Fees would be .35% for Class A shares and 1.00% for Class B
shares of the One Group Michigan Municipal Bond Fund and the Combined Fund.
The amount of 12b-1 Fees shown for the One Group(R) Michigan Municipal Bond
and Combined Fund includes fees for shareholder servicing and distribution.
Shareholder servicing fees payable by the Class A and Class B shareholders
of the Pegasus Michigan Municipal Bond Fund are reflected under "Other
Expenses."
(3) Other Expenses for the One Group(R) Michigan Municipal Bond Fund and
Combined Fund are based on estimated amounts for the current fiscal year.
Without the fee waiver, Other Expenses for the One Group(R) Michigan
Municipal Bond Fund and Combined Fund would be .26% for all classes of
shares.
(4) The Investment Adviser of the Pegasus Michigan Municipal Bond Fund has
voluntarily agreed to limit the Total Fund Operating Expenses to 0.98%,
1.73% and 0.73%, respectively, for the Class A, Class B and Class I shares.
Without the voluntary reduction of Investment Advisory and 12b-1 Fees, Total
Fund
II-56
<PAGE> 151
Operating Expenses would be 1.06% for Class A shares, 1.71% for Class B
shares, and .71% for Class I shares of the One Group(R) Michigan Municipal
Bond Fund and Combined Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) payment of the maximum sales charge, (2) 5% annual return, and (3)
redemption at the end of the following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Michigan Municipal Bond Fund
Class A Shares....................................... $54 $73 $ 93 $152
Class B Shares....................................... $67 $83 $111 $168+
Class I Shares....................................... $ 7 $21 $ 37 $ 82
One Group(R) Michigan Municipal Bond Fund
Class A Shares....................................... $54 $72 $ 93 $151
Class A Shares (without fee waivers)................. $55 $77 $101 $169
Class B Shares....................................... $66 $79 $104 $167**
Class B Shares (without fee waivers)................. $67 $84 $113 $185**
Class I Shares....................................... $ 7 $21 $ 36 $ 81
Class I Shares (without fee waivers)................. $ 7 $23 $ 40 $ 88
Combined Fund Pro Forma
Class A Shares....................................... $54 $72 $ 93 $151
Class A Shares (without fee waivers)................. $55 $77 $101 $169
Class B Shares....................................... $66 $79 $104 $167**
Class B Shares (without fee waivers)................. $67 $84 $113 $185**
Class I Shares....................................... $ 7 $21 $ 36 $ 81
Class I Shares (without fee waivers)................. $ 7 $23 $ 40 $ 88
</TABLE>
- ---------------
** Class B shares of the One Group(R) Michigan Municipal Bond Fund and Combined
Fund automatically convert to Class A shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A shares
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Pegasus Michigan Municipal Bond Fund
Class B Shares....................................... $17 $53 $ 91 $168+
One Group(R) Michigan Municipal Bond Fund
Class B Shares....................................... $16 $49 $ 84 $167**
Class B Shares (without fee waivers)................. $17 $54 $ 93 $185**
Combined Funds Pro Forma
Class B Shares....................................... $16 $49 $ 84 $167**
Class B Shares (without fee waivers)................. $17 $54 $ 93 $185**
</TABLE>
- ---------------
** Class B Shares of the One Group(R) Michigan Municipal Bond Fund and the
Combined Fund automatically convert to Class A Shares after eight (8) years.
Therefore, the "10 Years" example above reflects this conversion.
+ Assumes conversion to Class A Shares.
II-57
<PAGE> 152
APPENDIX III
COMPARISON OF INVESTMENT
OBJECTIVES AND CERTAIN SIGNIFICANT POLICIES
This Appendix sets forth the investment objectives and certain significant
investment policies of the Pegasus Portfolios and The One Group Funds. The
investment objective and certain investment policies of each of the Pegasus
Portfolios and One Group Funds are fundamental. This means that they may not be
changed without a vote of the holders of a majority of a fund's outstanding
shares, as defined by the 1940 Act. Investment policies of the Pegasus
Portfolios and One Group Funds that are not fundamental may be changed by the
respective Board of Trustees. The following is qualified in its entirety by the
more detailed information included in the prospectuses and statements of
additional information for the Reorganizing Pegasus Portfolios and the
corresponding Existing One Group Funds which are incorporated by reference in
this Combined Prospectus/Proxy Statement.
PEGASUS MONEY MARKET FUND AND THE ONE GROUP(R) PRIME MONEY MARKET FUND.
The Pegasus Money Market Fund's investment objective is to seek to provide
a high level of current income consistent with the preservation of capital and
liquidity. The One Group(R) Prime Money Market Fund seeks current income with
liquidity and stability of principal. Each Fund pursues its investment objective
by investing in a diversified portfolio of high quality money market
instruments.
PEGASUS TREASURY MONEY MARKET FUND AND THE ONE GROUP(R) U.S. TREASURY SECURITIES
MONEY MARKET FUND.
The Pegasus Treasury Money Market Fund's investment objective is to seek to
provide a high level of current income consistent with the preservation of
capital and liquidity. The One Group(R) U.S. Treasury Securities Money Market
Fund seeks current income with liquidity and stability of principal. Each Fund
invests exclusively in short-term U.S. Treasury obligations, including
repurchase agreements collateralized by such Treasury obligations and
when-issued securities.
The One Group(R) U.S. Treasury Securities Money Market Fund has a
fundamental policy that says the Fund will invest only in U.S. Treasury
obligations and repurchase agreements collateralized by such obligations. The
Pegasus Treasury Money Market Fund has a similar investment policy, but it is
not fundamental.
PEGASUS MUNICIPAL MONEY MARKET FUND AND THE ONE GROUP(R) MUNICIPAL MONEY MARKET
FUND.
The Pegasus Municipal Money Market Fund's investment objective is to seek
to provide a high level of current interest income that is exempt from Federal
income taxes consistent with the preservation of capital and liquidity. The One
Group(R) Municipal Money Market Fund seeks as high a level of current interest
income exempt from Federal income tax as is consistent with capital preservation
and stability of principal. Under normal market conditions, both Funds invest at
least 80% of their assets in high quality obligations issued by or on behalf of
the states, territories and possessions of the United States, including the
District of Columbia, and their respective political subdivisions, agencies,
instrumentalities and authorities, the interest on which is exempt from regular
Federal income tax ("Municipal Securities"). The Funds have no limitation on
investments in Municipal Securities that produce income that is subject to the
Federal alternative minimum tax.
PEGASUS MICHIGAN MUNICIPAL MONEY MARKET FUND AND THE ONE GROUP(R) MICHIGAN
MUNICIPAL MONEY MARKET FUND.
The investment objective of both Funds is to seek as high a level of
current interest income exempt from Federal income tax and Michigan personal
income tax as is consistent with capital preservation and stability of
principal. The Pegasus Michigan Municipal Money Market Fund, under normal market
conditions will invest
III-1
<PAGE> 153
at least 65% of its assets in high quality debt obligations issued by the State
of Michigan, its political subdivisions, municipalities, corporation and
authorities, the interest on which, in the opinion of bond counsel, is exempt
from regular Federal income tax and Michigan personal income tax ("Michigan
Municipal Securities"). The One Group(R) Michigan Municipal Money Market Fund,
as a matter of fundamental policy, must invest at least 80% of its assets in
Michigan Municipal Securities. The One Group(R) Michigan Municipal Money Market
Fund was created to continue the business of the Pegasus Michigan Municipal
Money Market Fund.
PEGASUS CASH MANAGEMENT FUND AND THE ONE GROUP(R) CASH MANAGEMENT MONEY MARKET
FUND.
The Pegasus Cash Management Fund's investment objective is to provide
investors with as high a level of current income as is consistent with the
preservation of capital and maintenance of liquidity. The One Group(R) Cash
Management Money Market Fund seeks high current income with liquidity and
stability of principal. The One Group(R) Cash Management Money Market Fund was
created to continue the business of the Pegasus Cash Management Fund.
The Pegasus Cash Management Fund invests in short-term money market
obligations, including securities that are issued or guaranteed by the U.S.
government or its agencies, certificates of deposit, time deposits, bankers'
acceptances and other short-term obligations issued by domestic banks, foreign
subsidiaries of domestic banks and foreign banks and thrift institutions,
guaranteed investment contracts, repurchase agreements, and high quality
domestic and foreign commercial paper and other eligible short-term obligations.
During normal market conditions, at least 25% of the Fund's total assets will be
invested in bank obligations or instruments secured by such obligations.
The One Group(R) Cash Management Money Market Fund invests in short-term
money market obligations, including securities that are issued or guaranteed by
the U.S. government or by select U.S. government agencies and instrumentalities,
some of which are subject to repurchase agreements, certificates of deposit,
variable and floating rate instruments, mortgage-backed securities, puts and
other short-term obligations. The Fund may also invest in other money market
funds if those funds have similar investment policies and objectives. At least
25% of the Fund's total assets will be invested in bank obligations. The Fund
also engages in securities lending. Both Funds will only acquire securities with
a maturity of 397 days or less.
It is a fundamental policy of The One Group(R) Cash Management Money Market
Fund to maintain a constant net asset value of $1 per share, although there is
no guarantee that the Fund will be able to do so. The Pegasus Cash Management
Fund has a similar investment policy, but it is not fundamental.
The One Group(R) Cash Management Money Market Fund was created to continue
the business of the Pegasus Cash Management Fund.
PEGASUS TREASURY CASH MANAGEMENT FUND AND THE ONE GROUP(R) TREASURY CASH
MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus Treasury Cash
Management Fund are substantially the same as those of the corresponding One
Group(R) Treasury Cash Management Money Market Fund. The Pegasus Treasury Cash
Management Fund seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity. The One Group(R) Treasury Cash Management Money Market Fund seeks
high current income with liquidity and stability of principal.
The Pegasus Treasury Cash Management Fund invests in U.S. Treasury bills,
notes, and direct U.S. Treasury obligations having remaining maturities at 397
days or less. The Fund also invests in repurchase agreements relating to U.S.
Treasury obligations. The One Group(R) Treasury Cash Management Money Market
Fund invests exclusively in U.S. Treasury bills, notes, bonds and other U.S.
obligations issued or guaranteed by the U.S. Treasury, some of which are subject
to repurchase agreements. Both Funds will only acquire securities with a
maturity at 397 days or less.
It is a fundamental policy of The One Group(R) Treasury Cash Management
Money Market Fund to maintain a constant net asset value of $1 per share,
although there is no guarantee that the Fund will be able to
III-2
<PAGE> 154
do so. The Pegasus Treasury Cash Management Fund has a similar investment
policy, but it is not fundamental.
The One Group(R) Treasury Cash Management Money Market Fund was created to
continue the business of the Pegasus Treasury Cash Management Fund.
PEGASUS TREASURY PRIME CASH MANAGEMENT FUND AND THE ONE GROUP(R) TREASURY PRIME
CASH MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus Treasury Prime Cash
Management Fund are substantially the same as those of the corresponding One
Group(R) Treasury Prime Cash Management Money Market Fund. The Pegasus Treasury
Prime Cash Management Fund seeks to provide investors with as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. The One Group(R) Treasury Prime Cash Management Money
Market Fund seeks high current income with liquidity and stability of principal.
The Pegasus Treasury Prime Cash Management Fund invests in U.S. Treasury
bills, notes, and direct U.S. Treasury obligations having remaining maturities
at 397 days or less. The One Group(R) Treasury Prime Cash Management Money
Market Fund invests in U.S. Treasury bills, notes, bonds and other U.S.
obligations issued or guaranteed by the U.S. Treasury having remaining
maturities of 397 days or less. Neither Fund invests in repurchase agreements.
It is a fundamental policy of The One Group(R) Treasury Prime Cash
Management Money Market Fund to maintain a constant net asset value of $1 per
share, although there is no guarantee that the Fund will be able to do so. The
Pegasus Treasury Prime Cash Management Fund has a similar investment policy, but
it is not fundamental.
The One Group(R) Treasury Prime Cash Management Money Market Fund was
created to continue the business of the Pegasus Treasury Prime Cash Management
Fund.
PEGASUS U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND AND THE ONE GROUP(R)
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus U.S. Government
Securities Cash Management Fund are substantially the same as those of the
corresponding One Group(R) U.S. Government Securities Cash Management Money
Market Fund. The Pegasus U.S. Government Securities Cash Management Fund seeks
to provide investors with as high a level of current income as is consistent
with the preservation of capital and the maintenance of liquidity. The One
Group(R) U.S. Government Securities Cash Management Money Market Fund seeks high
income with liquidity and stability of principal. Each pursues its investment
objective by investing only in short-term securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; and repurchase agreements
relating to such securities. The One Group(R) U.S. Government Securities Cash
Management Money Market Fund also engages in securities lending. Both Funds will
only acquire securities with a maturity of 397 days or less.
It is a fundamental policy of The One Group(R) U.S. Government Securities
Cash Management Money Market Fund to maintain a constant net asset value of $1
per share, although there is no guarantee that the Fund will be able to do so.
The Pegasus U.S. Government Securities Cash Management Fund has a similar
investment policy, but it is not fundamental.
The One Group(R) U.S. Government Securities Cash Management Money Market
Fund was created to continue the business of the Pegasus U.S. Government
Securities Cash Management Fund.
PEGASUS MUNICIPAL CASH MANAGEMENT FUND AND THE ONE GROUP(R) MUNICIPAL CASH
MANAGEMENT MONEY MARKET FUND.
The investment objectives and policies of the Pegasus Municipal Cash
Management Fund are substantially the same as those of the corresponding One
Group(R) Municipal Cash Management Money Market Fund.
III-3
<PAGE> 155
The Pegasus Municipal Cash Management Fund seeks to provide investors with as
high a level of current income as is consistent with the preservation of capital
and the maintenance of liquidity. The One Group(R) Municipal Cash Management
Money Market Fund seeks high current income exempt from Federal Income tax with
liquidity and stability or principal.
Each Fund invests at least 80% of its assets in the same types of municipal
securities, that, in the opinion of bond counsel for the issuer, are exempt from
Federal income tax. The investments are in high quality debt obligations issued
by or on behalf of states, territories and possessions of the United States,
including the District of Columbia, and their respective political subdivisions
and authorities. However, under extraordinary circumstances, both Funds may
adopt a temporary defensive position by holding uninvested cash or investing in
taxable short-term securities. Both Funds will only acquire securities with a
maturity of 397 days or less.
The Funds may engage in repurchase agreements and lend their securities.
Each Fund may also invest as much as 100% of its assets in municipal securities
that produce income that is subject to the Federal alternative minimum tax.
It is a fundamental policy of The One Group(R) Municipal Cash Management
Money Market Fund to maintain a constant net asset value of $1 per share,
although there is no guarantee that the Fund will be able to do so. The Pegasus
Municipal Cash Management Fund has a similar investment policy, but it is not
fundamental.
The One Group(R) Municipal Cash Management Money Market Fund was created to
continue the business of the Pegasus Municipal Cash Management Fund.
PEGASUS MANAGED ASSETS CONSERVATIVE FUND AND THE ONE GROUP(R) INVESTOR BALANCED
FUND.
The Pegasus Managed Assets Conservative Fund's investment objective is to
seek to provide long-term total return; capital appreciation is a secondary
consideration. The Fund invests primarily in various equity, fixed income and
money market funds of Pegasus. The One Group(R) Investor Balanced Fund's
investment objective is to seek high total return consistent with the
preservation of capital by investing primarily in a diversified group of The One
Group mutual funds which invest primarily in equity and fixed income securities.
While the range of underlying funds in which each of the Pegasus Managed
Assets Conservative Fund and The One Group(R) Investor Balanced Fund invests
have similar investment objectives and policies, the Funds differ in their
target asset allocations. The Pegasus Managed Assets Conservative Fund seeks to
achieve a target asset allocation consisting of 30%-50% in equity exposure,
50%-70% in debt exposure, and 0%-20% in cash equivalents. The Fund achieves the
target allocation by investing in up to eight Pegasus equity funds to provide
the desired equity exposure, up to six Pegasus fixed income funds to provide the
desired debt exposure, and the Pegasus Money Market Fund to provide the desired
cash equivalency. In order to meet liquidity needs and for temporary defensive
purposes, the Pegasus Managed Assets Conservative Fund also may invest directly
in short-term U.S. Government obligations and high quality money market
instruments. The One Group(R) Investor Balanced Fund invests 40%-60% of its
total assets in twelve mutual funds of The One Group which invest primarily in
equity securities, 40%-60% of its total assets in six mutual funds of The One
Group that invest primarily in fixed income securities, and up to 10% of its
assets in one money market fund of The One Group. The One Group(R) Investor
Balanced Fund may also hold cash and cash equivalents.
PEGASUS MANAGED ASSETS BALANCED FUND AND THE ONE GROUP(R) INVESTOR GROWTH &
INCOME FUND.
The Pegasus Managed Assets Balanced Fund's investment objective is to
achieve long-term total return through a combination of capital appreciation and
current income. The Fund invests primarily in various equity, fixed income and
money market funds of Pegasus. The One Group(R) Investor Growth & Income Fund's
investment objective is to seek long-term capital appreciation and growth of
income by investing primarily in a diversified group of The One Group mutual
funds which invest primarily in equity securities.
While the range of underlying funds in which each of the Pegasus Managed
Assets Balanced Fund and The One Group(R) Investor Growth & Income Fund invests
have similar investment objectives and policies, the Funds differ in their
target asset allocations. The Pegasus Managed Assets Balanced Fund seeks to
achieve a
III-4
<PAGE> 156
target asset allocation consisting of 50%-70% in equity exposure, 30%-50% in
debt exposure, and 0%-20% in cash equivalents. The Fund achieves the target
allocation by investing in up to eight Pegasus equity funds to provide the
desired equity exposure, up to six Pegasus fixed income funds to provide the
desired debt exposure, and the Pegasus Money Market Fund to provide the desired
cash equivalency. In order to meet liquidity needs and for temporary defensive
purposes, the Pegasus Managed Assets Balanced Fund also may invest directly in
short-term U.S. Government obligations and high quality money market
instruments. The One Group(R) Investor Growth & Income Fund invests 60%-80% of
its total assets in twelve mutual funds of The One Group which invest primarily
in equity securities, 20%-40% of its total assets in eight mutual funds of The
One Group that invest primarily in fixed income securities, and up to 10% of its
assets in one money market fund of The One Group. The One Group(R) Investor
Growth & Income Fund also may hold cash and cash equivalents.
PEGASUS MANAGED ASSETS GROWTH FUND AND THE ONE GROUP(R) INVESTOR GROWTH FUND.
The Pegasus Managed Assets Growth Fund's investment objective is to achieve
long-term total return; current income is a secondary consideration. The Fund
invests primarily in various equity, fixed income and money market funds of
Pegasus. The One Group(R) Investor Growth Fund's investment objective is to seek
long-term capital appreciation by investing primarily in a diversified group of
The One Group mutual funds which invest primarily in equity securities.
While the range of underlying funds in which each of the Pegasus Managed
Assets Growth Fund and The One Group(R) Investor Growth Fund invests have
similar investment objectives and policies, the Funds differ in their target
asset allocations. The Pegasus Managed Assets Growth Fund seeks to achieve a
target asset allocation consisting of 70%-90% in equity exposure, 10%-30% in
debt exposure, and 0%-20% in cash equivalents. The Fund achieves the target
allocation by investing in up to eight Pegasus equity funds to provide the
desired equity exposure, up to six Pegasus fixed income funds to provide the
desired debt exposure, and the Pegasus Money Market Fund to provide the desired
cash equivalency. In order to meet liquidity needs and for temporary defensive
purposes, the Pegasus Managed Assets Growth Fund may invest directly in
short-term U.S. Government obligations and high quality money market
instruments. The One Group(R) Investor Growth Fund invests 80%-100% of its total
assets in twelve mutual funds of The One Group which invest primarily in equity
securities, up to 20% of its total assets in seven mutual funds of The One Group
that invest primarily in fixed income securities, and up to 10% of its assets in
one money market fund of The One Group. The One Group(R) Investor Growth Fund
also may hold cash and cash equivalents.
PEGASUS SHORT BOND FUND AND THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND.
The Pegasus Short Bond Fund's investment objective is to maximize total
rate of return while providing relative stability of principal. The One Group(R)
Limited Volatility Bond Fund's investment objective is to seek current income
consistent with preservation of capital through investment in high and
medium-grade fixed-income securities.
The Pegasus Short Bond Fund normally invests at least 65% of the value of
its total assets in various types of debt securities. It invests in a portfolio
of U.S. dollar denominated investment grade debt securities of domestic and
foreign issuers which have maturities or average lives of up to ten years. Under
normal market conditions, the Fund's average weighted maturity is limited to a
maximum of three years. The One Group(R) Limited Volatility Bond Fund invests at
least 80% of its total assets in debt securities with short to intermediate
maturities. At least 65% of the Fund's total assets consist of bonds and at
least 65% of its total assets consists of obligations issued by the U.S.
Government, its agencies, or instrumentalities some of which may be subject to
repurchase agreements. The Fund's average weighted maturity ordinarily ranges
between one and five years, but the Fund may shorten the weighted average
maturity to as little as ninety days for temporary defensive purposes.
In connection with the Reorganization, The One Group(R) Limited Volatility
Bond Fund is expected to change its name to The One Group(R) Short-Term Bond
Fund.
III-5
<PAGE> 157
PEGASUS INTERMEDIATE BOND FUND AND THE ONE GROUP(R) INTERMEDIATE BOND FUND.
The Pegasus Intermediate Bond Fund's investment objective is to seek to
maximize total rate of return while providing relative stability of principal by
investing predominantly in intermediate-term debt securities. The One Group(R)
Intermediate Bond Fund's investment objective is to seek current income
consistent with the preservation of capital by investing in high and
medium-grade fixed income securities with intermediate maturities.
Under normal market conditions, the Pegasus Intermediate Bond Fund invests
at least 65% of the value of its total assets in debt securities. The Fund
invests primarily in a portfolio of investment grade U.S. dollar denominated
debt securities of domestic and foreign issuers. The One Group(R) Intermediate
Bond Fund normally invests at least 80% of its total assets in debt securities
of all types, including bonds, notes, U.S. Government obligations, and taxable
and tax-exempt municipal securities, rated as investment grade at the time of
investment or, if unrated, determined to be of comparable quality by the Fund's
investment adviser. As a matter of fundamental policy, at least 65% of the
Fund's total assets must consist of bonds and at least 50% of total assets must
consist of obligations issued by the U.S. Government, or its agencies and
instrumentalities, some of which may be subject to repurchase agreements. The
Pegasus Intermediate Bond Fund invests in securities which have maturities or
average lives of up to 15 years. During normal market conditions, the Fund's
average portfolio maturity is expected to be between three and six years. The
One Group(R) Intermediate Bond Fund's average weighted maturity will ordinarily
range between three and ten years, although the Fund may shorten the weighted
average maturity to as little as one year for temporary defensive purposes.
PEGASUS MULTI SECTOR BOND FUND AND THE ONE GROUP(R) INCOME BOND FUND.
The Pegasus Multi Sector Bond Fund's investment objective is to seek to
provide as high a level of current income as is consistent with relative
stability of principal. The One Group(R) Income Bond Fund's investment objective
is to seek a high level of current income by investing primarily in a
diversified portfolio of high, medium and low grade debt securities.
Under normal market conditions, the Pegasus Multi Sector Bond Fund invests
at least 65% of the value of its total assets in debt securities. The Fund
invests primarily in a portfolio of U.S. dollar denominated investment grade
debt securities of domestic and foreign issuers. The One Group(R) Income Bond
Fund invests at least 70% of its total assets in debt securities of all types
rated as investment grade at the time of investment or, if unrated, determined
to be of comparable quality by the Fund's investment adviser. Up to 30% of the
Fund's total assets may be invested in convertible securities, preferred stock,
loan participations and debt securities rated below investment grade or, if
unrated, determined to be of comparable quality by the Fund's investment
adviser. However, the Fund will not invest more than 20% of its total assets
below the fifth highest rating category. Securities rated below investment grade
are called "high yield bonds," and "junk bonds" and are considered to be
speculative. As a matter of fundamental policy, at least 65% of the Fund's total
assets must consist of bonds. The Fund may also purchase taxable or tax exempt
municipal securities.
Under normal market conditions, the Pegasus Multi Sector Bond Fund's
average weighted maturity is expected to range between three years and ten
years. The average weighted maturity of The One Group(R) Income Bond Fund
normally ranges between five years and twenty years. The Pegasus Multi Sector
Bond Fund may invest in cash equivalent securities for temporary defensive
purposes. The One Group(R) Income Bond Fund may shorten its weighted maturity to
as little as two years for temporary defensive purposes.
PEGASUS BOND FUND AND THE ONE GROUP(R) BOND FUND.
The investment objectives of the Pegasus Bond Fund and The One Group(R)
Bond Fund are substantively identical. Each Fund seeks to maximize total rate of
return by investing primarily in a diversified portfolio of intermediate and
long-term debt securities.
Under normal market conditions, the Pegasus Bond Fund invests at least 65%
of its total assets in debt securities. The Fund invests in a portfolio of U.S.
dollar denominated investment grade debt securities of
III-6
<PAGE> 158
domestic and foreign issuers. The Fund may invest in cash equivalent securities
for temporary defensive purposes. The One Group(R) Bond Fund invests in all
types of debt securities rated as investment grade, as well as convertible
securities, preferred stock, and loan participations. The Fund invests at least
65% of its total assets in debt securities with intermediate to long maturities.
The Fund may also purchase taxable and tax-exempt securities. As a matter of
fundamental policy, at least 65% of the Fund's total assets must consist of
bonds. The Pegasus Bond Fund's average weighted maturity normally ranges between
six years and twelve years. The One Group(R) Bond Fund's average maturity is
between four and twelve years. The One Group(R) Bond Fund may shorten its
weighted average maturity for temporary defensive purposes.
The One Group(R) Bond Fund was created to continue the business of the
Pegasus Bond Fund.
PEGASUS HIGH YIELD BOND FUND AND THE ONE GROUP(R) HIGH YIELD BOND FUND.
The Pegasus High Yield Bond Fund's investment objective is to seek high
current income. It invests primarily in a diversified portfolio of U.S. dollar
denominated debt securities of domestic and foreign issuers which, under normal
market conditions, are expected to be lower-rated corporate debt obligations or
unrated obligations of comparable quality. The One Group(R) High Yield Bond
Fund's investment objective is to seek a high level of current income by
investing primarily in a diversified portfolio of debt securities which are
rated below investment grade or unrated. Capital appreciation is a secondary
objective.
Both Funds invest primarily in junk bonds. Under normal market conditions,
the Pegasus High Yield Bond Fund invests at least 65% of its total assets in
debt securities. The Fund invests primarily in debt securities rated in the
fourth or lower rating categories, i.e., Baa or lower by Moody's Investor
Services, Inc. ("Moody's") or BBB or lower by Standard & Poor's Ratings Group
("S&P"), Fitch IBCA, Inc. ("Fitch"), or Duff & Phelps Credit Rating Co.
("Duff"), or in unrated securities of comparable quality. The Fund may invest up
to 10% of its total assets in equity securities, however, preferred and
convertible securities are not subject to this limitation. The Fund may also
invest up to 10% of its total assets in foreign securities which are not
publicly traded in the United States. The One Group(R) High Yield Bond Fund
normally invests at least 80% of its total assets in debt securities, loan
participations, convertible securities and preferred stock which are rated below
investment grade or unrated securities of comparable quality. These securities
are generally rated in the fifth or lower rating categories (e.g., BB or lower
by S&P and Ba or lower by Moody's). The Fund may invest up to 100% of its assets
in such securities. The Fund may invest up to 20% of its assets in other
securities, including investment grade debt securities. As a matter of
fundamental policy, at least 65% of the Fund's total assets will consist of
bonds. The Fund's weighted average maturity will normally range between five and
ten years, although it may shorten its weighted average maturity to as little as
two years for temporary defensive purposes. The Pegasus High Yield Bond Fund has
no stated weighted average maturity target range. Securities rated below
investment grade are called "high yield bonds," and "junk bonds" and are
considered to be speculative.
PEGASUS INTERMEDIATE MUNICIPAL BOND FUND AND THE ONE GROUP(R) INTERMEDIATE
TAX-FREE BOND FUND.
The Pegasus Intermediate Municipal Bond Fund's investment objective is to
seek to provide as high a level of current income exempt from Federal income tax
as is consistent with relative stability of principal. The One Group(R)
Intermediate Tax-Free Bond Fund's investment objective is to seek current income
exempt from Federal income taxes consistent with prudent investment management
and the preservation of capital.
As a fundamental investment policy, the Pegasus Intermediate Municipal Bond
Fund must invest at least 80% of the value of its net assets in Municipal
Securities. The One Group(R) Intermediate Tax-Free Bond Fund has a similar
policy, although it is not fundamental. As a fundamental policy, this Fund must
invest at least 65% of its total assets in bonds. Under normal market
conditions, the average weighted maturity is expected to range between three and
ten years for both funds.
As a fundamental investment policy, The One Group(R) Intermediate Tax-Free
Bond Fund invests in a diversified portfolio. The Pegasus Intermediate Municipal
Bond Fund is not diversified.
III-7
<PAGE> 159
PEGASUS MUNICIPAL BOND FUND AND THE ONE GROUP(R) TAX-FREE BOND FUND.
The investment objectives of the Pegasus Municipal Bond Fund and The One
Group(R) Tax-Free Bond Fund are identical. The Pegasus Municipal Bond Fund seeks
to provide as high a level of current income exempt from Federal income tax as
is consistent with relative stability of principal. The One Group(R) Tax-Free
Bond Fund seeks current income exempt from Federal income taxes consistent with
prudent investment management and the preservation of capital. The One(R) Group
Tax-Free Bond Fund was created to continue the business of the Pegasus Municipal
Bond Fund.
As a fundamental investment policy, the Pegasus Municipal Bond Fund must
invest at least 80% of the value of its net assets in Municipal Securities. The
One Group(R) Tax-Free Bond Fund has a similar policy, although it is not
fundamental. As a fundamental policy, this Fund invests at least 65% of its
total assets in bonds. Each Fund invests in Municipal Securities without regard
to maturity.
Up to 20% of The One Group(R) Tax-Free Bond Fund's total assets may be held
in cash or cash equivalents. The Fund will, from time to time, invest more than
25% of its net assets in municipal housing authority obligations and single
family mortgage revenue bonds. The Fund also may invest in mortgage backed
securities, restricted securities, and mortgage dollar rolls. The securities in
which the Fund invests may have fixed rates of return or floating or variable
rates.
PEGASUS MICHIGAN MUNICIPAL BOND FUND AND THE ONE GROUP(R) MICHIGAN MUNICIPAL
BOND FUND.
The Pegasus Michigan Municipal Bond Fund's investment objective is to seek
to provide as high a level of current income exempt from Federal, and to the
extent possible, from State of Michigan income taxes as is consistent with
relative stability of principal. The One Group(R) Michigan Municipal Bond Fund's
investment objective is to seek current income exempt from Federal income tax
and Michigan personal income tax, consistent with the preservation of principal.
The One Group(R) Michigan Municipal Bond Fund was created to continue the
business of the Pegasus Michigan Municipal Bond Fund.
As a fundamental investment policy, the Pegasus Michigan Municipal Bond
Fund must invest at least 80% of the value of its net assets in Municipal
Securities. Under normal market conditions, the Fund invests at least 65% of its
total assets in investment grade Municipal Securities the interest on which is
exempt from both Federal and Michigan income taxes. The One Group(R) Michigan
Municipal Bond Fund has a fundamental policy that requires 80% of its total
assets to be invested in Michigan Municipal Securities. The Fund also may invest
up to 20% of its total assets in Municipal Securities other than Michigan
Municipal Securities.
PEGASUS SHORT MUNICIPAL BOND FUND AND THE ONE GROUP(R) SHORT-TERM MUNICIPAL BOND
FUND.
The investment objectives of the Pegasus Short Municipal Bond Fund and The
One Group(R) Short-Term Municipal Bond Fund are identical. Each Fund seeks to
provide as high a level of current income exempt from Federal income tax as is
consistent with relative stability of principal.
The Pegasus Short Municipal Bond Fund invests in a portfolio of investment
grade municipal obligations, the interest on which is exempt from Federal income
tax. As a fundamental investment policy, the Fund must invest at least 80% of
the value of its net assets in municipal obligations. The Fund may invest up 20%
(and, for temporary defensive purposes, up to 100%) of its assets in taxable
cash equivalent securities. Under normal market conditions, the Fund's average
weighted maturity ranges between one year and three years. The One Group(R)
Short-Term Municipal Bond Fund invests at least 80% of its net assets in
municipal securities, the interest on which is exempt from Federal income tax.
As a fundamental policy, the Fund invests at least 65% of its total assets in
bonds. Up to 20% of the Fund's total assets may be held in cash and cash
equivalents. From time to time, the Fund invests more than 25% of its net assets
in municipal housing authority obligations and single-family mortgage revenue
bonds. The Fund may also invest in mortgage-backed securities, restricted
securities, and mortgage dollar rolls. The securities in which the Fund invests
may have fixed rates of return or floating or variable rates. The Fund's average
weighted maturity ranges between one year and three years.
III-8
<PAGE> 160
The One Group(R) Short-Term Municipal Bond Fund was created to continue the
business of the Pegasus Short Municipal Bond Fund.
PEGASUS EQUITY INCOME FUND AND THE ONE GROUP(R) INCOME EQUITY FUND.
The Pegasus Equity Income Fund's investment objective is to seek to provide
income; capital appreciation and growth of earnings are secondary, but
nonetheless important, goals. The One Group(R) Income Equity Fund's investment
objective is to seek current income through regular payment of dividends with
the secondary goal of achieving capital appreciation by investing primarily in
equity securities. Under normal market conditions, the Pegasus Equity Income
Fund invests at least 65% of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States.
The One Group(R) Income Equity Fund normally invests at least 65% of its assets
in the common stocks, debt securities, and preferred stocks that are convertible
into common stocks of corporations which regularly pay dividends, as well as
stocks with favorable long-term fundamental characteristics.
In connection with the Reorganization, The One Group(R) Income Equity Fund
is expected to change its name to The One Group(R) Equity Income Fund.
PEGASUS EQUITY INDEX FUND AND THE ONE GROUP(R) EQUITY INDEX FUND.
The investment objectives of the Pegasus Equity Index Fund and The One
Group(R) Equity Index Fund are substantively identical. Each Fund seeks
investment results that correspond to the aggregate price and dividend
performance of securities in the S&P 500 Index.
While each of the Funds seeks to achieve a 95% correlation coefficient
between its performance and that of the S&P 500 Index, their stated investment
programs are somewhat different. The Pegasus Equity Index Fund uses a sampling
methodology to determine which stocks to purchase or sell in order to closely
replicate the performance of the S&P 500 Index. Stocks are selected based on
both capitalization weighting in the S&P 500 Index and industry representation.
The Pegasus Equity Index Fund may also invest up to 5% of its total assets in
futures contracts and related options in an effort to maintain exposure to price
movements in the S&P 500 Index pending investment of funds or while maintaining
liquidity to meet potential shareholder redemptions. The One Group(R) Equity
Index Fund invests primarily in a representative sampling of stocks included in
the S&P 500 Index and, secondarily, in stock index futures. The stocks are
selected in the order of their weightings in the Standard & Poor's 500 Index
beginning with the heaviest weighted stocks. The Fund is not authorized to
invest in foreign securities. Pending investment of funds and to meet redemption
requests, the Pegasus Equity Index Fund and The One Group(R) Equity Index Fund
may hold up to 5% and 10% of their respective assets in cash equivalents.
PEGASUS GROWTH AND VALUE FUND AND THE ONE GROUP(R) VALUE GROWTH FUND.
The Pegasus Growth and Value Fund's investment objective is to seek to
achieve long-term capital growth, with income a secondary consideration. The One
Group(R) Value Growth Fund's investment objective is to seek long term capital
growth and growth of income with a secondary objective of providing a moderate
level of current income.
Under normal market conditions, the Pegasus Growth and Value Fund invests
at least 65% of the value of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States.
The Fund invests in equity securities of companies believed by the Fund's
investment adviser to represent a value or potential worth which is not fully
recognized by prevailing market prices and which have earnings growth
expectations that exceed those implied by the market's current valuation. The
Fund seeks to invest in companies whose earnings will increase at a faster rate
than those within the general equity market. The One Group(R) Value Growth Fund
normally invests at least 65% of its total assets in common stocks, debt
securities, preferred stocks, convertible securities, warrants and other equity
securities of overlooked or undervalued companies that have the potential for
earnings growth over time. The Fund invests across capitalization levels
targeting both value and growth oriented companies.
III-9
<PAGE> 161
The One Group(R) Value Growth Fund will change its name to The One Group(R)
Diversified Equity Fund.
PEGASUS INTRINSIC VALUE FUND AND THE ONE GROUP(R) DISCIPLINED VALUE FUND.
The Pegasus Intrinsic Value Fund's investment objective is to seek to
provide long-term capital appreciation. The One Group(R) Disciplined Value
Fund's investment objective is to seek capital appreciation with the secondary
goal of achieving current income by investing primarily in equity securities.
Under normal market conditions, the Pegasus Intrinsic Value Fund invests at
least 65% of the value of its total assets in publicly traded income-producing
common stocks of companies incorporated in the United States. The One Group(R)
Disciplined Value Fund invests at least 80% of its total assets in equity
securities, including common stocks, debt securities, and preferred stocks that
are convertible into common stocks. A portion of the Fund's assets will be held
in cash equivalents. Both Funds primarily invest in equity securities of
companies with below-market average price-to-earnings and price-to-book value
ratios.
In connection with the Reorganization, The One Group(R) Disciplined Value
Fund is expected to change its name to The One Group(R) Mid Cap Value Fund.
PEGASUS GROWTH FUND AND THE ONE GROUP(R) LARGE COMPANY GROWTH FUND.
The investment objective of the Pegasus Growth Fund is to seek long-term
capital appreciation. The One Group(R) Large Company Growth Fund's investment
objective is to seek long-term capital appreciation and growth of income by
investing primarily in equity securities.
Under normal market conditions, the Pegasus Growth Fund invests at least
65% of the value of its total assets in publicly traded income-producing common
stocks of companies incorporated in the United States. The Fund invests
primarily in equity securities of domestic issuers believed by the Fund's
investment adviser to have above-average growth characteristics. The One
Group(R) Large Company Growth Fund normally invests at least 65% of its total
assets in equity securities of large, well-established companies, whose weighted
average capitalization will normally exceed the market median capitalization of
the S&P 500 Index.
In connection with the Reorganization, The One Group(R) Large Company
Growth Fund is expected to change its name to The One Group(R) Large Cap Growth
Fund.
PEGASUS MID-CAP OPPORTUNITY FUND AND THE ONE GROUP(R) DIVERSIFIED MID CAP FUND.
The investment objective of the Pegasus Mid-Cap Opportunity Fund is to
achieve long-term capital appreciation. The investment objective of The One
Group(R) Diversified Mid Cap Fund is to seek long-term capital growth by
investing primarily in equity securities of companies with intermediate market
capitalizations. The One Group(R) Diversified Mid Cap Fund was created to
continue the business of the Pegasus Mid-Cap Opportunity Fund.
Under normal market conditions, the Pegasus Mid-Cap Opportunity Fund
invests at least 65% of the value of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States
with market capitalizations of $500 million to $3 billion. The One Group(R)
Diversified Mid Cap Fund normally invests at least 65% of its total assets in
common and preferred stock, rights, warrants, convertible securities and other
equity securities. The Fund invests primarily in equity securities of companies
with market capitalizations of $500 million to $5 billion. While each Fund
invests primarily in securities of U.S. companies, up to 25% of each Fund's
total assets may be invested in equity securities of foreign issuers.
Additionally, up to 20% and 35% of The One Group(R) Diversified Mid Cap Fund and
the Pegasus Mid-Cap Opportunity Fund, respectively, may be invested in U.S.
government securities, other investment grade fixed income securities, cash and
cash equivalents.
PEGASUS SMALL-CAP OPPORTUNITY FUND AND THE ONE GROUP(R) SMALL CAP VALUE FUND.
The investment objective of the Pegasus Small-Cap Opportunity Fund is to
seek long-term capital appreciation. The One Group(R) Small Cap Value Fund's
investment objective is to seek long-term capital
III-10
<PAGE> 162
growth by investing primarily in equity securities of companies with small
capitalizations. The One Group(R) Small Cap Value Fund was created to continue
the business of the Pegasus Small-Cap Opportunity Fund.
Under normal market conditions, the Pegasus Small-Cap Opportunity Fund
invests at least 65% of the value of its total assets in publicly traded
income-producing common stocks of companies incorporated in the United States.
The Fund will normally invest at least 65% of the value of its total assets in
equity securities of small domestic issuers with market capitalizations of $100
million to $1 billion. The One Group(R) Small Cap Value Fund normally invests at
least 80% of its total assets in common and preferred stocks, debt securities,
warrants, convertible securities, and other equity securities of small
capitalization domestic issuers with market capitalizations of $100 million to
$2 billion. While each Fund invests primarily in securities of U.S. companies,
up to 25% of each Fund's total assets may be invested in equity securities of
foreign issuers. Up to 20% of The One Group(R) Small Cap Value Fund's total
assets may be invested in U.S. government securities, other investment grade
debt securities, cash and cash equivalents.
PEGASUS INTERNATIONAL EQUITY FUND AND THE ONE GROUP(R) DIVERSIFIED INTERNATIONAL
FUND.
The investment objective of the Pegasus International Equity Fund is to
seek to achieve long-term capital appreciation. In seeking to achieve its
objective, the Fund invests primarily in equity securities of foreign issuers.
The One Group(R) Diversified International Fund's investment objective is to
seek long-term capital growth by investing primarily in equity securities of
foreign issuers. The One Group(R) Diversified International Fund was created to
continue the business of the Pegasus International Equity Fund.
Under normal market conditions, the Pegasus International Equity Fund
invests at least 65% of the value of its total assets in equity securities. The
One Group(R) Diversified International Fund invests at least 65% of its total
assets in foreign equity securities, consisting of common stocks, preferred
stocks, rights, warrants, convertible securities, foreign currencies and options
on foreign currency, and other equity securities. Each Fund invests primarily in
equity securities of foreign issuers located in but not limited to the United
Kingdom and European continent, Japan, other Far East areas and Latin America.
Each Fund may also invest in other regions seeking to capitalize on investment
opportunities in other parts of the world including developing countries.
Investments in a particular country may exceed 25% of each Fund's total assets.
Up to 20% of The One Group(R) Diversified International Fund's total assets may
be invested in U.S. government securities, other investment grade fixed income
securities, cash and cash equivalents.
As a matter of fundamental policy, The One Group(R) Diversified
International Fund invests in a diversified portfolio. The Pegasus International
Equity Fund is a "non-diversified" fund.
PEGASUS MARKET EXPANSION INDEX FUND AND THE ONE GROUP(R) MARKET EXPANSION INDEX
FUND.
Each Fund's investment objective is to seek to provide a return which
substantially duplicates the price and yield performance of domestically traded
common stocks in the small and mid capitalization equity markets, as represented
by a market capitalization weighted combination of the Standard & Poor's
SmallCap 600 Index and the Standard & Poor's MidCap 400 Index. The Funds use a
sampling methodology to determine which stocks to purchase or sell in order to
closely replicate the performance of the combined indices. Stocks are selected
based on both capitalization weighting in the combined indices and industry
representation. The One Group(R) Market Expansion Index Fund was created to
continue the business of Pegasus Market Expansion Index Fund.
Under normal market conditions, each Fund invests at least 65% of the value
of its total assets in publicly traded common stocks of companies incorporated
in the United States. Pending investment of funds and to meet redemption
requests, each Fund may hold up to 5% of its total assets in cash equivalents.
The Funds may also invest up to 5% of their total assets in futures contracts
and related options in an effort to maintain exposure to price movements in the
combined indices pending investment of funds or while maintaining liquidity to
meet potential shareholder redemptions. Each Fund seeks to achieve a 95%
correlation coefficient to its benchmark combined indices.
III-11
<PAGE> 163
APPENDIX IV
SHAREHOLDER TRANSACTIONS AND SERVICES
This Appendix compares certain shareholder transactions and services of the
Pegasus Portfolios and The One Group Funds which will be affected by the
Reorganization. Throughout this Appendix, the Pegasus Money Market, Treasury
Money Market, Municipal Money Market and Michigan Municipal Money Market Funds
are collectively referred to as the "Pegasus Money Market Funds; "the Pegasus
Cash Management, Treasury Cash Management, Treasury Prime Cash Management, U.S.
Government Securities Cash Management and Municipal Cash Management Funds are
collectively referred to as the "Pegasus Cash Management Funds;" and the
remaining Pegasus Portfolios are collectively referred to as the "Pegasus
Non-Money Market Funds." Occasionally, the Pegasus Managed Assets Conservative,
Managed Assets Balanced and Managed Assets Growth Funds are referred to as the
"Pegasus Asset Allocation Funds;" otherwise, they are among the Pegasus
Non-Money Market Funds.
The One Group(R) Cash Management Money Market, Treasury Cash Management
Money Market, Treasury Prime Cash Management Money Market, U.S. Government Cash
Management Money Market and Municipal Cash Management Money Market Funds are
collectively referred to as the "One Group(R) Cash Management Funds" throughout
this Appendix. These Funds have not yet commenced operations and will continue
the operations of the Pegasus Cash Management Funds after the Reorganization.
The One Group(R) Prime Money Market, U.S. Treasury Securities Money Market,
Municipal Money Market and Michigan Municipal Money Market Funds are
collectively referred to as the "One Group(R) Money Market Funds." All remaining
One Group Funds are collectively referred to as the "One Group(R) Non-Money
Market Funds."
The Pegasus Non-Money Market Funds currently offer three share classes:
Class A, Class B, and Institutional Class or Class I (either, "Class I"). The
Pegasus Money Market Fund offers Class A, Class B and Class I shares, but B
shares are only offered through an exchange from a Non-Money Market Fund. The
Treasury Money Market, Municipal Money Market and Michigan Municipal Money
Market Funds offer Class A and Class I shares. The Pegasus Cash Management Funds
offer Institutional Class ("Class I") and Service Class ("Class S") Shares.
Class A and Class B shares may be purchased through a number of institutions
including First Chicago NBD Investment Management Company ("FCNIMCO") or (the
"Investment Adviser"), First National Bank of Chicago ("FNBC") American National
Bank and Trust Company ("ANB") and their affiliates, including First NBD
Investment Services, Inc., a registered broker-dealer, BISYS which serves the
Trust as its Distributor and certain banks, securities dealers and other
industry professionals such as investment advisers, accountants and estate
planning firms. Class I and Class S shares of the Cash Management Funds are sold
to institutional investors, including banks (such as FNBC, NBD Bank ("NBD"), and
ANB or their affiliates), acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity, public agencies and municipalities,
employee benefit plans or other programs, registered investment advisers and
other financial institutions. For more information, see the section entitled
"Description of Classes" in the Pegasus Prospectuses incorporated by reference
into this Combined Prospectus/Proxy Statement.
The One Group Funds currently offer five classes of shares: Class A, Class
B, Class C, Class I and Service Class Shares. Class A, Class B and Class C
shares are offered to the general public. The Institutional Money Market Funds
offer Class I shares only. The One Group(R) Prime and U.S. Treasury Securities
Money Market Funds offer Class A, Class B, Class C, Class I and Class S shares.
The One Group(R) Ohio Municipal, Municipal and Michigan Municipal Money Market
Funds offer Class A, Class C, Class I and Service Class shares. Class I shares
are offered to institutional investors, including affiliates of Bank One
Corporation and any bank, depository institution, insurance company, pension
plan or other organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities. Class S Shares are offered to entities
purchasing such shares on behalf of investors requiring additional
administrative or accounting services such as sweep processing. For more
information, see the section entitled "How To Do Business With The One Group" in
the One Group Prospectuses incorporated by reference into the Combined
Prospectus/Proxy Statement.
The One Group also maintains a Web site (www.onegroup.com) where
shareholders may purchase or exchange shares, check account balances, or find
information about The One Group.
IV-1
<PAGE> 164
A. PURCHASE POLICIES
The following chart compares the existing purchase policies of the Pegasus
Portfolios and the One Group Funds.
<TABLE>
<CAPTION>
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON-MONEY CLASS I AND S SHARES OF THE
MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------------------ --------------------------- ---------------
<S> <C> <C> <C>
Minimum Initial $1,000 for Class A and B $1,000,000.(2) $1,000 ($100 for employees
Investment shares of Non-Money Market of Bank One Corporation
Funds; $2,500 for Class A and and its affiliates); $250
B shares of Money Market for an IRA. Investors may
Funds(1); $1,000,000 for Class purchase up to a maximum
I shares; $250 for an IRA.(2) of $250,000 of Class B
shares per individual
purchase order.(3,4)
Minimum Subsequent $100. Subsequent Investments No minimum $100 ($25 for employees of
Investment may be made through the Bank One Corporation and
Automatic Investment Plan.(2) its affiliates); $25 under
the Systematic Investment
Plan.(3)
Purchase Methods Shares may be purchased by Shares may be purchased by Shares may be purchased
wire, telephone or with wire, telephone or with directly from OGSC by
compatible computer compatible computer mail, telephone, wire, or
facilities. Class A and B facilities. Class I shares through The One Group's
shares may be purchased may be purchased through Web site. Shares may also
through a number of fiduciary accounts at the be purchased through
institutions, including the Investment Adviser, NBD, investment advisors,
Investment Adviser, NBD, FNBC, FNBC and ANB or their brokers, financial
ANB and their affiliates, affiliates Share planners, banks, insurance
including First Chicago NBD certificates will not be companies, retirement or
Investment Services, Inc., the issued. 401(k) plan sponsors, or
Distributor, and certain other intermediaries Class
banks, securities dealers and I shares may be purchased
other industry professionals through fiduciary accounts
such as investment advisors, at Bank One Trust Company,
accountants and estate N.A. or its affiliates.
planning firms Class I shares Shares may also be
may be purchased through purchased through a
fiduciary accounts at the "mutual fund supermarket."
Investment Adviser, NBD, FNBC Shares are electronically
and ANB or their affiliates. recorded. Therefore,
Shares may also be purchased certificates will not be
through a "mutual fund issued.
supermarket." If an investor
does not specify a class of
shares at the time of
purchase, Class A shares will
be purchased. Share
certificates will not be
issued.
Checkwriting Class A. Shareholders of Money None Class A shareholders of
Option Market Funds may write checks Money Market Funds may
for $500 or more write checks for $250 or
more.
</TABLE>
- ---------------
(1) Pegasus may charge a fee of $2 per month for accounts with balances of less
than $2,500. Pegasus will notify shareholders prior to the assessment of
such fees.
(2) Pegasus reserves the right to offer Fund shares without regard to the
minimum purchase requirements to qualified or non-qualified employee benefit
plans. The investment adviser and service agents may impose
IV-2
<PAGE> 165
initial or subsequent investment minimums which are higher or lower than
those specified above and may impose different minimums for different types
of accounts or purchase arrangements. Pegasus reserves the right to reject
any purchase order.
(3) OGSC may waive these minimums.
(4) OGSC can reject a purchase order if it does not think that it is in the best
interests of a Fund and/or its shareholders to accept the order.
B. PRICING OF SHARES
As to each Pegasus Portfolio and One Group Fund, the net asset value
("NAV") per share of each class is computed by dividing the value of a Fund's
net assets represented by that class by the number of outstanding shares of that
class. A Fund's NAV is subject to change every day. The Pegasus Money Market
Funds and the One Group(R) Money Market Funds calculate NAV at different times
during the business day, as shown in the following table. All other funds
calculate NAV at the same time.
<TABLE>
<CAPTION>
TIME OF CALCULATION PEGASUS PORTFOLIOS ONE GROUP FUNDS
- ------------------- ------------------ ---------------
<S> <C> <C>
12:00 noon EST/ Municipal Money Market, Municipal Cash Municipal Money Market Fund
11:00 a.m. CST Management and Michigan Municipal Money
AND Market Funds
4:00 p.m. EST*/
3:00 p.m. CST
2:00 p.m. EST/ Prime Money Market and U.S.
1:00 p.m. CST Treasury Securities Money
AND Market Funds
4:00 p.m. EST*/
3:00 p.m. CST
1:00 p.m. EST/ Treasury Prime Cash Management Fund
12:00 noon CST
3:00 p.m. EST/ Money Market, Treasury Money
2:00 p.m. CST Market, Cash Management, U.S. Government
Securities Cash Management and Treasury
Cash Management Funds
4:00 p.m. EST*/ All other funds All other funds
3:00 p.m. CST/
</TABLE>
- ---------------
* Normal close of the New York Stock Exchange ("NYSE"). On occasion, the NYSE
may close before 4:00 p.m. ET. When that happens, NAV will be calculated as of
the time the NYSE closes.
Shares of the Pegasus and One Group(R) Money Market Funds will not be
priced on those days the Funds are closed, the NYSE is closed, and the following
holidays: New Year's Day, Dr. Martin Luther King Jr., Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day, and Christmas Day. The Non-Money Market Funds will be closed
on the same holidays with the exception of Columbus Day and Veterans' Day.
IV-3
<PAGE> 166
<TABLE>
<CAPTION>
DEADLINE FOR RECEIPT OF
DEADLINE FOR RECEIPT OF RELATED PAYMENT BY THE
PURCHASE ORDER CUSTODIAN PEGASUS PORTFOLIOS ONE GROUP FUNDS
- ----------------------- ----------------------- ------------------ ---------------
<S> <C> <C> <C>
12:00 noon, EST/ 4:00 p.m., EST/ Municipal Money Market
11:00 a.m., CST 3:00 p.m., CST Fund
4:00 p.m., EST*/ 4:00 p.m., EST/ Prime Money Market and
3:00 p.m., CST 3:00 p.m., CST U.S. Treasury Securities
Money Market Funds
4:00 p.m., EST*/ 4:00 p.m., EST on (i) Non-Money Market Funds
3:00 p.m., CST the business day after
the order is placed for
Class I shares and (ii)
the third business day
after the order is
placed for a purchase of
Class A, Class B, and
Class C Shares
Purchase requests will Purchase requests will Money Market Funds
be effective after an be effective after an
order in proper form and order in proper form and
federal funds are federal funds are
received by the Transfer received by the Transfer
Agent. Agent.
4:00 p.m., EST/ Non-Money Market Funds
3:00 p.m., CST
</TABLE>
- ---------------
* Normal close of the New York Stock Exchange ("NYSE"). On occasion, the NYSE
may close before 4:00 p.m. ET. When that happens, NAV will be calculated as of
the time the NYSE closes.
The assets of each Pegasus and One Group(R) Money Market Fund are valued
based on the amortized cost method. Although each fund seeks to maintain a $1.00
net asset value per share, there can be no assurance that net asset value will
not vary.
C. SALES CHARGES AND EXEMPTIONS.
Class A and Class B Shares
Initial Sales Charge and Contingent Deferred Sales Charge ("CDSC")
a. Class A Shares of the Pegasus Money Market Funds and the corresponding
One Group(R) Money Market Funds are offered to the general public at net
asset value without an initial sales charge.
b. Class A Shares of the Pegasus Portfolios and the corresponding One
Group(R) Non-Money Market Funds are offered to the general public at
their public offering price (which is a Fund's net asset value per
share, plus an applicable sales charge).
c. Class B Shares of the Pegasus Portfolios and One Group Funds are sold to
the general public at net asset value, without an initial sales charge.
However, Class B Shares of the One Group(R) Prime Money Market and U.S.
Treasury Securities Money Market Funds and the Pegasus and One Group(R)
Non-Money Market Funds will be assessed a CDSC.
d. The following chart summarizes the maximum sales charges applicable to
Class A and Class B shares with respect to each Pegasus Portfolio and
the corresponding One Group Fund.
<TABLE>
<CAPTION>
MAXIMUM INITIAL SALES MAXIMUM
REORGANIZING PEGASUS PORTFOLIOS EXISTING ONE GROUP FUNDS CHARGE -- CLASS A CDSC -- CLASS B
- ------------------------------- ------------------------ --------------------- ---------------
<S> <C> <C> <C>
Pegasus Managed Assets The One Group(R) Investor 5.00%/5.25% 5.00%/5.00%
Conservative Fund Balanced Fund
Pegasus Managed Assets Balanced The One Group(R) Investor Growth 5.00%/5.25% 5.00%/5.00%
Fund & Income Fund
</TABLE>
IV-4
<PAGE> 167
<TABLE>
<CAPTION>
MAXIMUM INITIAL SALES MAXIMUM
REORGANIZING PEGASUS PORTFOLIOS EXISTING ONE GROUP FUNDS CHARGE -- CLASS A CDSC -- CLASS B
- ------------------------------- ------------------------ --------------------- ---------------
<S> <C> <C> <C>
Pegasus Managed Assets Balanced The One Group(R) Investor Growth 5.00%/5.25% 5.00%/5.00%
Fund Fund
Pegasus Equity Income Fund The One Group(R) Income Equity 5.00%/5.25% 5.00%/5.00%
Fund (to be renamed Equity
Income Fund upon Reorganization)
Pegasus Growth Fund The One Group(R) Large Company 5.00%/5.25% 5.00%/5.00%
Growth Fund (to be renamed Large
Cap Growth Fund upon
Reorganization)
Pegasus Intrinsic Value Fund The One Group(R) Disciplined 5.00%/5.25% 5.00%/5.00%
Value Fund (to be renamed Mid
Cap Value Fund upon
Reorganization)
Pegasus Growth and Value Fund The One Group(R) Value Growth 5.00%/5.25% 5.00%/5.00%
Fund (to be renamed Diversified
Equity Fund upon Reorganization)
Pegasus Equity Index Fund The One Group(R) Equity Index 3.00%/5.25% 3.00%/5.00%
Fund
Pegasus Intermediate Bond Fund The One Group(R) Intermediate 3.00%/4.50% 3.00%/5.00%
Bond Fund
Pegasus Short Bond Fund The One Group(R) Limited 1.00%/3.00% 1.00%/3.00%
Volatility Bond Fund (to be
renamed Short-Term Bond Fund
upon Reorganization)
Pegasus Multi Sector Bond Fund The One Group(R) Income Bond 3.00%/4.50% 3.00%/5.00%
Fund
Pegasus High Yield Bond Fund The One Group(R) High Yield Bond 4.50%/4.50% 5.00%/5.00%
Fund
Pegasus Intermediate Municipal The One Group(R) Intermediate 3.00%/4.50% 3.00%/5.00%
Bond Fund Tax- Free Bond Fund
Pegasus Mid-Cap Opportunity Fund The One Group(R) Mid Cap 5.00%/5.25% 5.00%/5.00%
Opportunities Fund (to be
renamed Diversified Mid-Cap Fund
upon Reorganization)
Pegasus Small-Cap Opportunity The One Group(R) Small Cap Value 5.00%/5.25% 5.00%/5.00%
Fund Fund
Pegasus Market Expansion Index The One Group(R) Market 3.00%/5.25% 3.00%/5.00%
Fund Expansion Index Fund (to be
renamed Small-Cap Index Fund
upon Reorganization)
Pegasus International Equity The One Group(R) International 5.00%/5.25% 5.00%/5.00%
Fund Opportunities Fund (to be
renamed Diversified
International Fund upon
Reorganization)
Pegasus Bond Fund The One Group(R) Bond Fund 4.50%/4.50% 5.00%/5.00%
Pegasus Municipal Bond Fund The One Group(R) Tax-Free Bond 4.50%/4.50% 5.00%/5.00%
Fund
Pegasus Short Municipal Bond The One Group(R) Short-Term 1.00%/3.00% 1.00%/3.00%
Fund Municipal Bond Fund
Pegasus Michigan Municipal Bond The One Group(R) Michigan 4.50%/4.50% 5.00%/5.00%
Fund Municipal Bond Fund
</TABLE>
Each One Group Fund currently imposes a CDSC equal to 1% of the purchase
price on any or all Class A Shares redeemed within one year of purchase which
were purchases as part of an investment of $1,000,000 or more and not assessed a
sales charge at the time of purchase.
With respect to Class A shares of the Pegasus Portfolios purchased without
an initial sales charge as part of an investment of at least $1,000,000 and
where such shares are redeemed within two years after purchase, a
IV-5
<PAGE> 168
CDSC of 1% or .50% will be imposed at the time of redemption if shares are
redeemed within the first or second year, respectively, after purchase unless
the investor qualifies for a waiver of the CDSC as described below under "Class
B Shares -- Waiver of CDSC."
The Pegasus Market Expansion Index Fund requires the payment of a
transaction fee on purchases of shares of the Fund equal to 0.50% of the dollar
amount invested.
The CDSC charged with respect to the (i) Pegasus Bond and Short Municipal
Bond Funds; (ii) the Pegasus Equity Index, Market Expansion Index, Multi Sector
Bond, Intermediate Bond and Intermediate Municipal Bond Funds and (iii) all
other Pegasus Funds decline over time so that no CDSC is charged on redemptions
made more than one, five and six years from the date of purchase, respectively.
Class B shares of the Pegasus Short Bond and Short Municipal Bond Funds convert
to Class A shares after two years. Class B shares of the Pegasus Equity Index,
Market Expansion Index, Multi Sector Bond, Intermediate Bond and Intermediate
Municipal Bond Funds convert to Class A shares after six years. All other Class
B shares of Pegasus Funds convert to Class A Shares after seven years. Class B
shares of the Pegasus Money Market Fund are available only to the holders of
Class B shares in Pegasus' non-money market funds who wish to exchange their
shares in such funds for shares in the Money Market Fund. Class B shares of the
Money Market Fund will automatically convert to Class A shares at the time the
exchanged shares would have converted.
The CDSC charged with respect to the Class B shares of each One Group Fund
(except the Limited Volatility Bond Fund) declines over time so that no CDSC is
charged on redemptions made more than six years from the date of purchase (four
years with respect to the Limited Volatility Bond Fund). Class B shares of the
One Group Funds automatically convert to Class A shares after eight years,
except with respect to Class B shares of the Limited Volatility Bond Fund which
automatically convert to Class A shares after six years.
CLASS A SHARES -- SALES LOAD WAIVERS -- PEGASUS PORTFOLIOS
Class A Shares of the Pegasus Non-Money Market Funds may be purchased at
net asset value and without an initial sales charge by: (a) full-time employees
of NASD member firms which have entered into an agreement with the Distributor
pertaining to the sale of Fund shares (or which otherwise have a brokerage-
related or clearing arrangement with an NASD member firm with respect to sales
of Fund shares), their spouses and minor children; (b) accounts opened by a
bank, trust company or thrift institution, acting as a fiduciary or custodian
(other than 401(k) and other defined contribution or other retirement plan
accounts), provided that they have furnished the Distributor appropriate
notification of such status at the time of the investment and such other
information as it may request from time to time in order to verify eligibility
for this privilege; (c) purchases for accounts registered under the Uniform
Gifts to Minor Act or Uniform Transfers to Minors Act which are opened through
First Chicago NBD Investment Services, Inc. ("FCNIS") and 401(k) and other
defined contributions of other retirement plan accounts for which The First
National Bank of Chicago ("FNBC") or its subsidiaries or affiliates have served
as custodian or trustee since at least June 1, 1995 or NBD Bank ("NBD") or its
subsidiaries or affiliates, other than FNBC or American National Bank and Trust
Company ("ANB"), have served as administrator or Trustee since January 1, 1996;
(d) directors and full-time or part-time employees of FCN, or any of its
affiliates or subsidiaries, retired employees of FCN, or any of its affiliates
and subsidiaries, Board members of a fund advised by the investment advisers,
including members of the Funds' Board of Trustees, or the spouses, children,
grandchildren, siblings, parents, grandparents and in-laws of any of the
foregoing individuals; (e) purchases through certain broker-dealers, registered
investment advisers and other financial institutions which have entered into an
agreement with a "mutual fund supermarket" or with the Distributor which
includes a requirement that such shares be purchased for the benefit of clients
participating in a "wrap account" or a similar program under which such clients
pay a fee to such broker-dealer, registered investment adviser or other
financial institution; (f) employees participating in accounts such as
retirement, 401(k), profit sharing and other employee benefit plan or program
accounts where (i) the employers or affiliated employers maintaining such plans
or programs have a minimum of 200 employees eligible for participation in such
plans or programs or (ii) such plan's or program's assets exceed one million
dollars; (g) individuals participating in a qualified retirement, profit
IV-6
<PAGE> 169
sharing, 401(k) or other employee benefit plan which is eligible to purchase
Class A shares or Class I shares without a sales charge and rolls Fund shares
into a qualified IRA, then that IRA may purchase Class A shares without a sales
charge; (h) current shareholders of the Equity Index Fund who owned shares of
the Fund prior to August 26, 1996 and have held all or a portion of such shares
thereafter.
Class A shares also may be purchased at net asset value, without an initial
sales charge, with the proceeds from the redemption of shares of an investment
company sold with a sales charge or commission or annuity contract or guaranteed
investment contract subject to a surrender charge. This also includes shares of
an investment company that were or would be subject to a contingent deferred
sales charge upon redemption. The purchase must be made within 60 days of the
redemption, and the Transfer Agent must be notified in writing by the investor
at the time the purchase is made.
The One Group Funds and Pegasus Portfolios also offer rights of
accumulation and letter of intent programs that can reduce the sales charge
payable on shares purchases.
CLASS A SHARES -- SALES LOAD WAIVERS -- ONE GROUP FUNDS
Class A shares of the One Group Non-Money Market Funds may be purchased at
net asset value and without an initial sales charge if the shares were: (a)
bought with the reinvestment of dividends and capital gains distributions; (b)
acquired in exchange for other One Group Fund shares if a comparable sales
charge has been paid for the exchanged shares; (c) bought by officers,
directors, or trustees, retirees and employees (and their spouses and immediate
family members) of: (i) The One Group, (ii) Bank One Corporation and its
subsidiaries and affiliates, (iii) The One Group Services Company ("OGSC") and
its subsidiaries and affiliates, (iv) State Street Bank and Trust Company and
its subsidiaries and affiliates; (v) broker/dealers who have entered into dealer
agreements with The One Group and their subsidiaries and affiliates, (vi) an
investment sub-adviser of a fund of The One Group and such sub-adviser's
subsidiaries and affiliates; (d) bought by (i) affiliates of Bank One
Corporation and certain accounts (other than IRA accounts) for which an
intermediary acts in a fiduciary, advisory, agency, custodial or similar
capacity; (ii) accounts as to which a bank or broker-dealer charges an asset
allocation fee, provided the bank or broker/dealer has an agreement with the
(OGSC); (iii) accounts which participate in select affinity programs with Bank
One Corporation and its affiliates and subsidiaries; (iv) retirement and
deferred compensation plans and trusts used to fund those plans, including, but
not limited to, those defined in sections 401(a), 403(b) or 457 of the Internal
Revenue Code and "rabbi trusts;" (v) Shareholder Servicing Agents who have a
dealer arrangement with the (OGSC), who place trades for their own accounts or
for the accounts of their clients and who charge a management, consulting or
other fee for their services, as well as clients of such shareholder servicing
agents who place trades for their own accounts if the accounts are linked to the
master account of such shareholder servicing agent; (e) bought with proceeds
from the sale of Class I shares of a fund of The One Group or acquired in an
exchange of Class I shares of a fund for Class A shares of the same fund, but
only if the purchase is made within 60 days of the sale or distribution; (f)
bought with proceeds from the sale of shares of a mutual fund (including a fund
of The One Group) for which a sales charge was paid, but only if the purchase is
made within 60 days of the sale or distribution; (g) bought in an IRA with the
proceeds of a distribution from an employee benefit plan, but only if the
purchase is made within 60 days of the sale or distribution and, at the time of
the distribution, the employee benefit plan had plan assets invested in a fund
of The One Group; (h) bought with assets of The One Group; (i) bought in
connection with plans of reorganization of a fund, such as mergers, asset
acquisitions and exchange offers to which a fund is a party.
The waivers described in (e), (f) and (g) above will not continue
indefinitely and may be discontinued at any time without notice.
CLASS B SHARES -- WAIVER OF CDSC -- PEGASUS PORTFOLIOS
No CDSC is charged on redemptions of Class B shares of the Pegasus
Portfolios in connection with: (a) redemptions made within one year after the
death of the shareholder; (b) redemptions by shareholders after age 70 1/2 for
purposes of the minimum required distribution from an IRA, Keogh plan or
custodial
IV-7
<PAGE> 170
account pursuant to Section 403(b) of the Code; (c) distributions from a
qualified plan upon retirement or termination of employment; (d) redemption of
shares acquired through a contribution in excess of permitted amounts; (e)
in-service withdrawals from tax qualified plans by participants; (f) redemptions
initiated by a Fund of accounts with net assets of less than $1,000; (g)
redemptions by Eligible Financial Intermediaries who have purchased Class A
shares at net asset value as part of a "wrap account" or similar program; (h)
redemptions of up to 10% of the value of shares during a 12-month period as part
of a Systematic Withdrawal Plan.
CLASS B SHARES -- WAIVER OF CDSC -- ONE GROUP FUNDS
No CDSC is imposed on redemptions of Class B shares of the One Group Funds:
(a) provided that a shareholder withdraws no more than 10% of the account value
annually; (b) if a shareholder buys the shares in connection with certain
retirement plans, such as 401(k) and similar qualified plans; (c) if a
shareholder is a participant or beneficiary of certain retirement plans and dies
or becomes disabled (as defined in the Tax Code), but only if the redemption is
made within one year of such death or disability; (d) that represent minimum
required distributions from an IRA Account or other qualifying retirement plan,
but only if a shareholder is at least age 70 1/2; (e) exchanged in connection
with plans of reorganizations of a Fund, such as mergers, asset acquisitions and
exchange offers to which a Fund is a party; (f) acquired in exchange for Class B
shares of other Funds of The One Group.
Class I Shares of the Pegasus Portfolios and One Group Funds
a. Class I shares of the Pegasus Money Market Funds are offered with no
initial sales charge or CDSC to institutional investors, including banks
(such as FNBC and NBD), acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity and to public agencies
and municipalities. Class I shares may not be purchased directly by
individuals, although institutions may purchase shares for accounts
maintained by individuals.
b. Class I shares of the Pegasus Non-Money Market Funds are offered at net
asset value with no initial sales charge or CDSC (although the Market
Expansion Index Fund imposes a transaction fee) exclusively to Fiduciary
Accounts, Eligible Retirement Plans, Eligible Financial Intermediaries
(as each item is defined in the prospectus), and the Pegasus Asset
Allocation Funds.
c. Class S shares of the Pegasus Cash Management Funds are offered at net
asset value with no initial sales charge or CDSC to institutional
investors, including banks (such as FNBC and NBD), acting for themselves
or in a fiduciary, advisory, agency, custodial or similar capacity and
to public agencies and municipalities.
d. Class I and Class A shares of the One Group Cash Management Funds are
offered at net asset value with no initial sales charge or CDSC to
certain institutional investors and high net worth individuals. Class I
shares of the remaining One Group Funds are offered at net asset value
with no initial sales charge or CDSC to certain institutional investors.
CONVERSION FEATURE FOR CLASS I SHARES OF THE PEGASUS PORTFOLIOS
Class I shares of each Pegasus Portfolio (other than the Cash Management
Funds) held by investors who, after purchasing Class I shares for their
Fiduciary Accounts, withdraw from such Accounts will convert to Class A shares
upon such withdrawal, based upon the relative net asset values for shares of
each such Class.
D. SHARE EXCHANGES
Class I shares of a One Group Fund may be exchanged for Class A shares of
that Fund or for Class A or Class I shares of another One Group Fund. Class A
shares of a One Group Fund may be exchanged for Class I shares of that Fund or
for Class A or Class I shares of another One Group Fund, but only if you are
eligible to purchase those shares. Class B shares of a One Group Fund may be
exchanged for Class B shares of another One Group Fund. The One Group does not
charge a fee for this privilege. The One Group reserves the right to reject any
exchange request if the Fund reasonably believes that the exchange will result
in excessive transaction costs or otherwise adversely affect other shareholders.
IV-8
<PAGE> 171
The Pegasus Portfolios permit investors to purchase, in exchange for shares
of a Fund which have been owned for at least 30 days, shares of the same Class
of the other Pegasus Funds. The Class I and S shares of the Cash Management
Funds do not offer an exchange privilege.
The exchange privilege may be modified or terminated at any time upon
notice to shareholders. The exchange privilege with respect to the
post-Reorganization Funds is substantially similar to the exchange privilege
applicable to the One Group Funds.
IV-9
<PAGE> 172
The following chart compares the existing exchange policies of the Pegasus
Portfolios and the One Group Funds.
<TABLE>
<CAPTION>
PEGASUS PORTFOLIOS ONE GROUP FUNDS
------------------ ---------------
<S> <C> <C>
Mail Yes. Yes.
Telephone Yes. Yes.
Web site No. Yes.
Sales Charges Shares of the same Class of Funds Generally, a sales charge will not
purchased by exchange will be be incurred on an exchange. However,
purchased on the basis of relative a sales charge will be incurred on
net asset value per share as Class I Shares exchanged for Class A
follows: (i) shares of Funds shares, unless shareholder qualifies
purchased with or without a sales for a sales charge waiver; on Class
load may be exchanged without a A shares of a Fund with no sales
sales load for shares of other Funds charge exchanged for shares of a
sold without a sales load; (ii) Fund with a sales charge, and on
shares of Funds purchased without a shares of a Fund with a sales charge
sales load may be exchanged for exchanged for shares of a fund with
shares of other Funds sold with a a higher sales charge, in which case
sales load, and the applicable sales the shareholder would pay the
load will be deducted; (iii) difference between that Fund's sales
"Purchased Shares"(1) may be charge and all other sales charges
exchanged for "Offered Shares"(1) of already paid by the shareholder.(4)
other Funds, provided that, if the
sales load applicable to the Offered
Shares exceeds the maximum sales
load that could have been imposed in
connection with the Purchased Shares
(at the time the Purchased Shares
were acquired), without giving
effect to any reduced loads, the
difference will be deducted; (iv)
shares of Funds subject to a CDSC
that are exchanged for shares of
another Fund or the Pegasus Money
Market Fund will be subject to the
higher applicable CDSC of the two
Funds(2); (v) shares of the Money
Market Fund acquired through an
exchange of Class B shares of the
Pegasus Non-Money Market Funds are
subject to a CDSC upon redemption of
the shares in accordance with the
prospectus of the exchanged
shares(2); and (vi) a qualified or
non-qualified employee benefit plan
with assets of at least $1 million
or 200 eligible lives may be
exchanged from Class B shares to
Class A shares on or after January 1
of the year following the year of
the plan's eligibility, provided
that the sponsor of the plan has so
notified the service agent of its
eligibility and in turn, the service
agent has notified Pegasus of such
eligibility.(3)
</TABLE>
IV-10
<PAGE> 173
- ---------------
(1) "Purchased Shares" are shares of Funds purchased with a sales load, shares
of Funds acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of dividends or
distributions of any such Funds. 'Offered Shares' are shares of Funds sold
with a sales load.
(2) For purposes of calculating CDSC rates and conversion periods, if any,
shares will be deemed to have been held since the date the shares being
exchanged were initially purchased.
(3) No fees currently will be charged shareholders directly in connection with
exchanges although Pegasus reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with
rules promulgated by the SEC. Exchanges made into the Market Expansion Index
Fund will be charged a transaction fee.
(4) If a shareholder exchanged Class B shares of a Fund, the shareholder will
not pay a sales charge at the time of the exchange, however: (1) the new
Class B shares will be subject to the higher CDSC of either the Fund from
which the shareholder exchanged, the Fund into which the shareholder
exchanged, or any Fund from which the shareholder previously exchanged, (2)
the current holding period for the shareholder's exchanged Class B shares is
carried over to the new shares.
E. REDEMPTION POLICIES
The following chart compares the existing redemption policies of the
Pegasus Portfolios and the One Group Funds.
<TABLE>
<CAPTION>
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON-MONEY CLASS I AND S SHARES OF THE
MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------------------ --------------------------- ---------------
<S> <C> <C> <C>
Redemption Methods By telephone or mail. By telephone and compatible By telephone or mail
computer facilities. (except for IRA accounts
whose redemption requests
must be made in writing).
Payment Methods By check, by wire (within one By mail or by wire (on the By mail or by wire (paid
business day) or Automated same day).(1) within seven days after
Clearing House (within five receipt but next day and
business days). two business day payments
on redemptions are
available(2); State Street
Bank & Trust Company
currently charges a $7.00
wire redemption fee).
Systematic Yes ($15,000 minimum account No. Yes ($10,000 minimum
Withdrawal Plan balance with respect to Class account balance/$100
A or B shares; $10,000 with minimum per transaction);
respect to Money Market Class A shareholders
Funds). should consider the
initial sales charge and
Class B shareholders'
payments are limited to no
more than 10% of the
account value annually
measured from the date the
redemption request is
received; IRA account
payments must not exceed
the minimum required
distribution amount.
Reinstatement Yes (Class A or B redemptions No. No.
Privilege may purchase, within 120 days,
Class A shares without a sales
load in an amount not to
exceed the redemption
proceeds).
</TABLE>
IV-11
<PAGE> 174
Additional Information Regarding Redemptions:
<TABLE>
<CAPTION>
PEGASUS PORTFOLIOS:
CLASS A, B AND I SHARES OF THE PEGASUS PORTFOLIOS:
MONEY MARKET AND NON-MONEY CLASS I AND S SHARES OF THE
MARKET FUNDS CASH MANAGEMENT FUNDS ONE GROUP FUNDS
------------------------------ --------------------------- ---------------
<S> <C> <C> <C>
Automatic Upon 60 days written notice, Upon 60 days written notice No. Accounts less than
Redemption of if net asset value in account if net asset value in $1,000 that are not
Investor's Account is (i) $2,500 or less for account decreases to participating in a
Class A or B shares of the $1,000,000 or less. Systematic Investment Plan
Money Market Funds; of (ii) will be charged an annual
$1,000,000 or less for Class I fee $10.00. This
shares of the Money Market sub-minimum account fee
Funds, and (iii) less than does not apply to IRA
$1,000 for Class A, B and I accounts and the accounts
shares of other Pegasus of employees of Bank One
portfolios. each Corporation and its
affiliates. The
sub-minimum account fee
also does not apply to
Institutional Money Market
Funds.
Proceeds of Cash Paid in federal funds on Cash
Redemption the business day the
redemption is effected.
Acting on Requires form of Requires form of Recording telephone
Telephone identification identification instructions; requesting
Instructions personal identification
</TABLE>
- ---------------
(1) If the request is received before 12:00 noon, Eastern time, for the
Municipal Cash Management Fund; 1:00 p.m. Eastern time, for the Treasury
Prime Cash Management Fund, and 3:00 p.m. Eastern time, for the Cash
Management Fund, Treasury Cash Management Fund and U.S. Government
Securities Cash Management Fund.
(2) Requests for same day payment will be honored if the request is received
before 12:00 noon, Eastern time, for the Municipal Money Market Fund, and
4:00 p.m., Eastern time, for the Prime Money Market Fund and the U.S.
Treasury Securities Money Market Fund. The Funds also will attempt to honor
requests for payments by the next business day, if the redemption request is
received after the times mentioned above.
F. DIVIDENDS AND DISTRIBUTIONS
Each existing One Group Fund and Pegasus Portfolio distributes its net
capital gains to shareholders at least annually. The table below shows the
policies concerning the declaration and payment of dividends from net investment
income. Pegasus makes available to investors of Class A and Class B shares a
Cross Reinvestment of Dividend Plan. Investors who own shares of any Fund with a
minimum value of $10,000 at the time he or she elects may have dividends paid by
such Fund automatically reinvested into shares of another Pegasus Fund in which
he or she has invested a minimum of $1,000. A transaction fee will be charged to
all investors who elect to have dividends from other Funds reinvested in the
Market Expansion Index Fund.
<TABLE>
<CAPTION>
CURRENT CURRENT DIVIDEND
DIVIDEND DIVIDEND POST-REORGANIZATION TO BE
PEGASUS PORTFOLIO DECLARED/PAID ONE GROUP FUND DECLARED/PAID FUND DECLARED/PAID
----------------- ------------- -------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
Money Market Fund D/M Prime Money Market D/M The One Group D/M
Fund Prime Money Market
Fund
Treasury Money D/M U. S. Treasury D/M The One Group D/M
Market Fund Securities Money U.S. Treasury
Market Fund Securities Money
Market Fund
</TABLE>
IV-12
<PAGE> 175
<TABLE>
<CAPTION>
CURRENT CURRENT DIVIDEND
DIVIDEND DIVIDEND POST-REORGANIZATION TO BE
PEGASUS PORTFOLIO DECLARED/PAID ONE GROUP FUND DECLARED/PAID FUND DECLARED/PAID
----------------- ------------- -------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
Municipal Money D/M Municipal Money D/M The One Group(R) D/M
Market Fund Market Fund Municipal Money
Market Fund
Michigan Municipal D/M Michigan Municipal D/M The One Group(R) D/M
Money Market Fund Money Market Fund Michigan Municipal
Money Market Fund
Cash Management D/M Cash Management D/M The One Group(R) D/M
Cash
Fund Money Market Fund Management Money
Market Fund
Treasury Prime Cash D/M Treasury Prime D/M The One Group(R) D/M
Management Fund Cash Management Treasury Prime
Money Market Fund Cash Management
Money Market Fund
U.S. Government D/M U. S. Government D/M The One Group(R) D/M
Securities Cash Securities Cash U.S. Government
Management Fund Management Money Securities Cash
Market Fund Management Money
Market Fund
Municipal Cash D/M Municipal Cash D/M The One Group(R) D/M
Management Fund Management Money Municipal Cash
Market Fund Management Money
Market Fund
Treasury Cash D/M Treasury Cash D/M The One Group(R) D/M
Management Fund Management Money Treasury Cash
Market Fund Management Money
Market Fund
Short Bond Fund M/M Limited Volatility D/M The One Group(R) D/M
Bond Fund Short-Term Bond
Fund
Intermediate Bond M/M Intermediate Bond D/M The One Group(R) D/M
Fund Fund Intermediate Bond
Fund
Multi Sector Bond M/M Income Bond Fund D/M The One Group(R) D/M
Fund Income Bond Fund
Bond Fund M/M Bond Fund D/M The One Group(R) D/M
Bond
Fund
High Yield Bond Fund M/M High Yield Bond D/M The One Group(R) D/M
High
Fund Yield Bond Fund
Intermediate M/M Intermediate D/M The One Group(R) D/M
Municipal Tax-Free Bond Fund Intermediate
Bond Fund Tax-Free Bond Fund
Municipal Bond Fund M/M Municipal Bond Fund D/M The One Group(R) D/M
Tax-Free Bond Fund
Michigan Municipal M/M Michigan Municipal D/M The One Group(R) D/M
Bond Fund Bond Fund Michigan Municipal
Bond Fund
Short Municipal Bond M/M Short Municipal D/M The One Group(R) D/M
Fund Bond Fund Short-Term
Municipal Bond Fund
</TABLE>
IV-13
<PAGE> 176
<TABLE>
<CAPTION>
CURRENT CURRENT DIVIDEND
DIVIDEND DIVIDEND POST-REORGANIZATION TO BE
PEGASUS PORTFOLIO DECLARED/PAID ONE GROUP FUND DECLARED/PAID FUND DECLARED/PAID
----------------- ------------- -------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
Equity Income Fund M/M Income Equity Fund M/M The One Group(R) M/M
Equity Income Fund
Equity Index Fund Q/Q Equity Index Fund M/M The One Group(R) M/M
Equity Index Fund
Growth and Value Q/Q Value Growth Fund M/M The One Group(R) M/M
Fund Diversified Equity
Fund
Intrinsic Value Fund Q/Q Disciplined Value M/M The One Group(R) M/M
Fund Mid Cap Value Fund
Growth Fund Q/Q Large Company M/M The One Group(R) M/M
Growth Fund Large Cap Growth
Fund
Mid-Cap Opportunity Q/Q Diversified Mid M/M The One Group(R) M/M
Fund Cap Fund Diversified
Mid Cap Fund
Small-Cap Q/Q Small Cap Value M/M The One Group(R) M/M
Opportunity Fund Fund Small Cap Value
Fund
International Equity Q/Q Diversified Q/Q The One Group(R) Q/Q
Fund International Fund Diversified
International Fund
Market Expansion Q/Q Market Expansion M/M The One Group(R) M/M
Index Fund Index Fund Market Expansion
Index Fund
Managed Assets Q/Q Investor Growth M/M The One Group(R) M/M
Growth Fund Fund Investor Growth
Fund
Managed Assets Q/Q Investor Growth & M/M The One Group(R) M/M
Balanced Fund Income Fund Investor Growth &
Income Fund
Managed Assets M/M Investor Balanced M/M The One Group(R) M/M
Conservative Fund Fund Investor Balanced
Fund
</TABLE>
- ---------------
D/M = Daily/Monthly
M/M = Monthly/Monthly
Q/Q = Quarterly/Quarterly
IV-14
<PAGE> 177
APPENDIX V
THE ONE GROUP(R) U.S. TREASURY SECURITIES MONEY MARKET FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The seven-day yield on The One Group(R) U.S. Treasury Securities Money
Market Fund Fiduciary share class was 5.12% on June 30, 1998, up slightly from
5.03% on June 30, 1997.
WHAT CONTRIBUTED TO THE FUND'S FAIRLY STABLE YIELDS?
The Fund's yield reflects the relative stability in interest rates brought
on by the Federal Reserve's unchanged monetary policy. Rate movements throughout
the year were fairly moderate. They reflected changing views on economic
strength and whether that strength would lead to inflationary pressures
requiring Federal Reserve action.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our primary strategy during the period was to maintain a "barbell" maturity
structure, meaning that we focused on securities at the extremes of the
short-term maturity range. As such, the Fund emphasized securities with
maturities between six months and one year along with overnight repurchase
agreements.
The money market yield curve during the fiscal year remained fairly steep,
meaning that securities with longer maturities paid relatively higher yields.
The Fund's "longer" securities -- those maturing in six months to one
year -- enabled the Fund to increase its yield. At the same time, the repurchase
agreements, which matured overnight, allowed the Fund to retain a high level of
liquidity.
This strategy led to an average maturity of 37 days on June 30, 1998,
enabling the Fund to maintain its "AAA" average quality rating -- the best
possible -- from Standard & Poor's and Moody's Investors Service. This rating
indicates that the Fund's securities are of the highest quality and offer the
lowest risk. In order to receive this rating, a fund must have an average
maturity no greater than 60 days.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Economic activity and its influences on Federal Reserve policies will have
a direct effect on the Fund over the next year. Over the near term, strong
domestic demand is likely to be offset by the Asian crisis. This will require
the Federal Reserve to be diligent in directing monetary policy. This outlook
warrants continued caution so the Fund can be positioned to benefit from any
action the Federal Reserve may take.
/s/ ANDREW T. LINTON
- ------------------------------------------------------
Andrew T. Linton
Fund Manager
/s/ GARY J. MADICH
- ------------------------------------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed Income Securities
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
CLASS OF SHARES 7 DAY YIELD 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
<S> <C> <C> <C> <C> <C> <C>
Fiduciary 5.12% 5.19% 4.73% 5.39% 5.48%
Class A 4.87% 4.92% 4.47% NA 4.10%
Class B 4.12% 4.14% NA NA 4.11%
Class C 4.08% NA NA NA 1.47%
</TABLE>
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
V-1
<PAGE> 178
THE ONE GROUP(R) PRIME MONEY MARKET FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The seven-day yield on The One Group(R) Prime Money Market Fund Fiduciary
share class was 5.22% on June 30, 1998, down slightly from 5.25% on June 30,
1997.
WHAT CONTRIBUTED TO THE FUND'S FAIRLY STABLE YIELD?
The relative stability of the Fund's yield reflects the fact that the
Federal Reserve left monetary policy unchanged throughout the fiscal year.
Interim rate movements were fairly moderate and reflected market participants'
changing views on how the problems in Asia would affect the domestic economy.
Some believed that the seriousness of the situation would lead to a significant
slowdown of the U.S. economy, causing the Federal Reserve to cut interest rates.
Others believed that the underlying strength of the domestic economy would
overwhelm any Asian impact, and that the Federal Reserve would be forced to hike
interest rates in anticipation of higher inflation.
WHICH VIEWPOINT DID YOU FAVOR?
Our stance was that the Federal Reserve would leave interest rates
unchanged. We believed that cheaper imports resulting from the Asian crisis
would help keep the U.S. inflation rate low, as U.S. producers would be
compelled to keep prices down in order to compete. Also encouraging the Federal
Reserve to leave rates alone was the federal budget surplus. With Congress
apparently gridlocked on how to spend it, fiscal stimulus was not a problem
facing monetary policy makers.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
With Federal Reserve monetary policy on hold, the Fund's weighted average
maturity stayed in a range of 60 days to 85 days -- slightly higher than usual.
When interest rates climbed, we extended the weighted average maturity to the
higher end of the range to capture better yields. And, when rates drifted
downward, we shortened the weighted average maturity until we perceived better
value in the market.
On June 30, 1998, the Fund's weighted average maturity was 71 days,
compared to 68 days on June 30, 1997.
WHAT IS YOUR OUTLOOK FOR THE FUND?
As long as the Federal Reserve maintains a gradual, modest approach to
regulating monetary supply, we will continue to pursue yield advantages from a
weighted average maturity range that is slightly longer than average.
ROGER C. HALE
- ------------------------------------------------------
Roger C. Hale, CFA, CFP
Fund Manager
GARY J. MADICH
- ------------------------------------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed Income Securities
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
CLASS OF SHARES 7 DAY YIELD 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
<S> <C> <C> <C> <C> <C> <C>
Fiduciary 5.22% 5.39% 4.92% 5.63% 5.76%
Class A 4.97% 5.13% 4.66% NA 4.29%
Class B 4.22% 4.35% NA NA 4.36%
</TABLE>
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
V-2
<PAGE> 179
THE ONE GROUP(R) MUNICIPAL MONEY MARKET FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The seven-day yield on The One Group(R) Municipal Money Market Fund
Fiduciary share class was 3.15% on June 30, 1998, compared to 3.63% on June 30,
1997. (For investors in the 39.6% federal income tax bracket, the June 30, 1998,
tax-exempt yield translates into a tax-equivalent yield of 5.16%.)
The Fund also experienced a significant increase in assets during the year
to $613.9 million from $524.5 million.
DID YIELDS FLUCTUATE MUCH DURING THE YEAR?
Yields in the variable-rate sector experienced the most volatility of any
sector, moving within a trading range of 2.75% to 4.50%. Rates reached their
peak in April and their low point in February. This volatility was due primarily
to changing technical supply and demand factors combined with inconsistent
market cash flows. In comparison, the one-year fixed-rate sector traded within a
narrower range of 3.55% to 3.85%.
HOW DID ECONOMIC EVENTS INFLUENCE MARKET PERFORMANCE?
Short-term tax-exempt rates moved moderately lower during the year. With
the Federal Reserve's monetary policy remaining unchanged, the market reacted
positively to moderate economic output and a low-inflation environment.
Many short-term municipal issuers have continued to benefit significantly
from the ongoing economic expansion. This favorable environment has allowed many
borrowers to either reduce their outstanding deficits or increase their cash
surplus, which resulted in reduced issuance compared to previous years. Lower
financing needs coupled with steady demand supported the downward trend in
rates.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our primary strategy continues to involve adjusting the mix of
variable-rate and fixed-rate obligations based on changing market conditions. We
also incorporate a quality-oriented investment selection process to help ensure
that all issues selected for the Fund represent minimal credit risk. Because of
this process, the Fund did not experience any adverse impact or credit
downgrades from the Asian bank and credit crisis that began to unfold in
October.
As the yield curve shifted during the year, we maintained the Fund's
average maturity in a range of 34 days to 61 days. This enabled us to take
advantage of changing market conditions and to accommodate the Fund's liquidity
needs. At year-end, the average maturity was 46 days, compared to 37 days a year
ago.
WHAT IS YOUR OUTLOOK FOR THE FUND?
The outlook for the municipal money market continues to look positive.
While demand for short-term products should continue to exceed available market
supply, we plan to focus on longer-term issues and rely on our investment
process in an attempt to provide competitive returns.
/s/ THOMAS W. CARY
- ------------------------------------------------------
Thomas W. Cary
Fund Manager
/s/ GARY J. MADICH
- ------------------------------------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed Income Securities
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
CLASS OF SHARES 7 DAY YIELD 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
<S> <C> <C> <C> <C> <C> <C>
Fiduciary 3.15% 3.27% 3.05% 3.77% 3.84%
Class A 2.90% 3.01% 2.81% NA 2.64%
</TABLE>
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
V-3
<PAGE> 180
THE ONE GROUP(R) INVESTOR FUNDS
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUNDS PERFORM?
For the year ended June 30, 1998, The One Group(R) Investor Funds posted
the following total returns for their respective Fiduciary share class:
- The One Group(R) Investor Growth Fund, 23.81%
- The One Group(R) Investor Growth and Income Fund, 20.34%
- The One Group(R) Investor Balanced Fund, 17.02%
- The One Group(R) Investor Conservative Growth Fund, 12.73%
For information on other share classes and performance comparisons to
indexes, please see pages 4-7.
HOW DID THE BOND AND STOCK MARKETS PERFORM?
The bond market continued to benefit from low inflation, which helped push
interest rates down and bond prices up. Furthermore, events in Asia contributed
to a weakening global economy, which in turn helped support favorable bond
market conditions in the United States.
The stock market continued to provide better-than-average investment
returns, thanks to low inflation, moderate economic growth and strong corporate
earnings growth. In addition, a favorable bond market contributed to the stock
market's strength by allowing price/earnings (P/E) multiple expansion. That is,
the declining interest rate environment allowed companies to realize greater
profits, and stock prices increased on these favorable earnings results.
For more than four years, large-capitalization growth stocks have led the
domestic market surge, outperforming smaller-company stocks and value-oriented
stocks. Investors continued to favor larger companies due to their earnings
reliability and stock liquidity.
DID THE SITUATION IN ASIA INFLUENCE STOCK RETURNS?
Beginning in late 1997, many larger, multinational companies, particularly
in the semiconductor, energy and commodities sectors, felt the effects of the
Asian markets' meltdown. With too much capital and investment generating excess
capacity, lower prices led to insufficient profits. As a result, currencies
declined and market returns plummeted for most Asian markets.
WERE THERE ANY OTHER NOTABLE PERFORMANCES OVERSEAS?
Many European markets experienced a comeback, with strong one-year
performance from Italy, up 63%; Spain up 50%; Germany, up 46%; and France, up
43%.
WHAT WAS YOUR OVERALL ASSET ALLOCATION STRATEGY?
Each of the Investor Funds maintained relatively strong exposure to equity
funds (depending, of course, on each fund's overall investment objective and
asset allocation parameters), which enabled the funds to participate in the
ongoing stock market rally and post attractive overall returns. In addition,
each Fund's allocation toward the bond market was slightly greater than what we
consider to be average exposure.
WHY WAS THAT?
We implemented this strategy based on our ongoing research efforts, which
showed that stocks, on a valuation basis, continued to be more expensive than
bonds. We felt that this presented some additional risks for stocks. At the same
time, earnings momentum remained strong. We therefore made only a slight shift
V-4
<PAGE> 181
THE ONE GROUP(R) INVESTOR FUNDS
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
toward fixed income funds in order to gain some downside protection from the
stock market's high valuations. The average fund allocations during the period
were as follows:
- The One Group(R) Investor Growth Fund: 86% equity funds; 13% fixed income
funds; 1% money market funds
- The One Group(R) Investor Growth and Income Fund: 66% equity funds; 33%
fixed income funds; 1% money market funds
- The One Group(R) Investor Balanced Fund: 46% equity funds; 53% fixed
income funds; 1% money market funds
- The One Group(R) Conservative Growth Fund: 26% equity funds; 72% fixed
income funds; 2% money market funds
WHAT WERE YOUR KEY STRATEGIES IN THE EQUITY ARENA?
The Investor Funds enjoyed varying exposure, depending on the overall
investment objective, to the following equity styles: large capitalization,
mid-capitalization, small capitalization and international. Within each style,
individual stock selection remains the core of our management process. We
modestly adjusted our asset allocations to include international stocks, giving
the funds an opportunity to take advantage of lower valuations in Asia and
continued economic recovery in Europe. Our international exposure is now between
5% and 11%, with the greatest exposure in The One Group Investor Growth Fund.
This ongoing approach toward diversification helped limit risk while offering
return opportunities from different market segments.
WHAT WERE YOUR KEY STRATEGIES WITHIN THE FIXED INCOME MARKET?
Within the fixed income funds, our efforts centered on maintaining a
low-risk profile by keeping durations at or near their average levels. (Duration
is a measure of a fund's price sensitivity to interest rate changes. A longer
duration indicates greater sensitivity; a shorter duration indicates less.)
Instead of making "bets" on interest rate movements by significantly altering
duration, we prefer to concentrate on the yield component of total return.
Over the past year, our fund managers focused on select investments in the
corporate, asset-backed and mortgage-backed sectors. This allowed the funds to
capture the yield advantages that these securities generally offered compared to
Treasury securities. At the same time, they focused on maintaining portfolios
with good average credit quality.
WHAT IS YOUR OUTLOOK FOR THE FUNDS?
Economic activity is critical to the funds' performance because the economy
drives earnings. The current economic expansion, now in its eighth year, is one
of the longest in history. Looking ahead to fiscal 1999, we expect U.S. economic
growth to remain positive, but to slow down from recent levels. Corporate
earnings should continue to grow, but perhaps not at the pace we've seen
recently.
We also believe that inflation will remain low, leading to a stable or
lower interest rate environment. As such, we believe there will be little
opportunity for price volatility to significantly influence bond market returns.
Asia remains the one wild card. An unforeseen depression in any of these
countries could spill over and put a squeeze on U.S. growth. We believe that a
depression is unlikely, however, because Japan's economic package should provide
guidance for the country and establish an outline for deregulation. These moves
should bring Japan closer to financial reform and improve the banking system.
V-5
<PAGE> 182
THE ONE GROUP(R) INVESTOR FUNDS
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
Given the extraordinary equity gains of the last several years, it is not
realistic to expect this pace to continue. Going forward, we think the equity
market will be a bit more selective, which would make individual security
selection even more important.
We currently don't anticipate making any significant changes to our asset
allocation strategies. But we will continue to monitor the economic climate for
inflationary pressures and valuation levels in the financial markets. We also
will keep close tabs on the situation in Asia and how events there may affect
the funds' investments.
/s/ RICHARD R. JANDRAIN III
------------------------------------
Richard R. Jandrain III
Senior Managing Director of Equity
Securities
Director, Asset Allocation Committee
Please refer to the prospectus and the accompanying financial statements
for more information about your Fund.
V-6
<PAGE> 183
THE ONE GROUP(R) INVESTOR GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Fiduciary 23.81% 24.49%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Fiduciary S&P 1500 Lipper Mix
<S> <C> <C> <C>
Dec-96 10000 10000 10000
Jun-97 11350 11945 10680
Jun-98 14053 15462 12724
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 23.44% 23.78%
Class A* 17.87% 20.17%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class A* Class A
<S> <C> <C> <C> <C>
12/96 10000 10000 9550 10000
6/97 11945 10680 10776 11284
6/98 15462 12724 13303 13929
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 22.52% 23.91%
Class B** 18.52% 21.61%
</TABLE>
** Reflects Applicable Contingent Deferred
Sales Charge.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class B** Class B
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 10000
6/97 11945 10680 11388 11388
6/98 15462 12724 13552 13952
</TABLE>
V-7
<PAGE> 184
THE ONE GROUP(R) INVESTOR GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 22.42% 22.42%
Class C** 21.42% 21.42%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class C** Class C
<S> <C> <C> <C> <C>
7/97 10000 10000 10000 10000
6/98 12944 11914 12141 12241
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth Fund is measured against the S&P
1500 Index, an unmanaged index generally representative of the performance of
large and small companies in the US stock market. Investors are unable to
purchase the index directly, although they can invest in the underlying
securities. The performance of the index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management. By
contrast, the performance of the fund reflects the deduction of these
value-added services as well as the deduction of sales charges on Class A Shares
and applicable contingent deferred sales charges on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns
of the Lipper General Equity Funds Universe (75%), the Lipper International
Funds Universe (10%), and the Lipper Intermediate US Government Bond Funds
Universe (15%). The Lipper Universes consist of the equally weighted average
monthly return of all the funds within the category.
V-8
<PAGE> 185
THE ONE GROUP(R) INVESTOR GROWTH & INCOME FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Fiduciary 20.34% 20.40%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Fiduciary
<S> <C> <C> <C>
12/96 10000 10000 10000
6/97 11945 10535 11087
6/98 15462 12342 13342
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 20.18% 20.73%
Class A* 14.76% 17.21%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class A* Class A
<S> <C> <C> <C> <C>
12/96 10000 10000 9550 10000
6/97 11945 10535 10648 11150
6/98 15462 12342 12797 13399
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 19.13% 19.72%
Class B** 15.13% 17.38%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class B** Class B
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 10000
6/97 11945 10535 11102 11102
6/98 15462 12342 12825 13225
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 19.08% 19.08%
Class C** 18.08% 18.08%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 1500 Lipper Mix Class C** Class C
<S> <C> <C> <C> <C>
6/98 12944 11715 11808 11908
7/97 10000 10000 10000 10000
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
V-9
<PAGE> 186
THE ONE GROUP(R) INVESTOR GROWTH & INCOME FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
The performance of the Investor Growth & Income Fund is measured against
the S&P 1500 Index, an unmanaged index generally representative of the
performance of large and small companies in the US stock market. Investors are
unable to purchase the index directly, although they can invest in the
underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management. By contrast, the performance of the fund reflects the deduction of
these value-added services as well as the deduction of sales charges on Class A
Shares and applicable contingent deferred sales charges on Class B and Class C
Shares.
The Lipper Mix for all the classes consists of the average monthly returns
of the Lipper General Equity Funds Universe (60%), the Lipper International
Funds Universe (5%), and the Lipper Intermediate US Government Bond Funds
Universe (35%). The Lipper Universes consist of the equally weighted average
monthly return of all the funds within the category.
V-10
<PAGE> 187
THE ONE GROUP(R) INVESTOR BALANCED FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Fiduciary 17.02% 16.60%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman
Brothers
Intermediate
Measurement Period Aggregate
(Fiscal Year Covered) Bond Lipper Mix Fiduciary
<S> <C> <C> <C>
12/96 10000 10000 10000
6/97 10323 10390 10848
6/98 11219 11890 12694
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 16.62% 16.29%
Class A* 11.39% 12.90%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class A* Class A
<S> <C> <C> <C> <C>
12/96 10000 10000 9550 10000
6/97 10323 10390 10353 10841
6/98 11219 11890 12074 12641
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 15.85% 15.67%
Class B** 11.85% 13.28%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class B** Class B
<S> <C> <C> <C> <C>
12/96 10000 10000 10000 10000
6/97 10323 10390 10822 10822
6/98 11219 11890 12136 12536
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 15.66% 15.66%
Class C** 14.66% 14.66%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman
Brothers
Measurement Period Intermediate
(Fiscal Year Covered) Bond Lipper Mix Class C** Class C
<S> <C> <C> <C> <C>
7/97 10000 10000 10000 10000
6/98 10868 11444 11466 11566
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
V-11
<PAGE> 188
THE ONE GROUP(R) INVESTOR BALANCED FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
The performance of the Investor Balanced Fund is measured against the
Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised
of US Government, mortgage, corporate and asset-backed securities with
maturities of one to ten years. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management. By contrast, the performance of the fund
reflects the deduction of these value-added services as well as the deduction of
sales charges on Class A Shares and applicable contingent deferred sales charges
on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns
of the Lipper General Equity Funds Universe (40%), the Lipper International
Funds Universe (5%), and the Lipper Intermediate US Government Bond Funds
Universe (55%). The Lipper Universes consist of the equally weighted average
monthly return of all the funds within the category.
V-12
<PAGE> 189
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group(R) Intermediate Tax-Free Bond Fund Fiduciary share class
offered a total return of 7.74% for the year ended June 30, 1998. (For
information on other share classes and performance comparisons to indexes,
please see page 4.)
Overall, interest rates declined during the year, and the Fund's 30-day SEC
yield (Fiduciary share class) fell to 4.15% at year-end, compared to 4.57% on
June 30, 1997. (For investors in the 39.6% federal income tax bracket, the June
30, 1998, yield translates into a taxable-equivalent yield of 6.87%.)
HOW DID YOU MANAGE INTEREST RATE VOLATILITY?
We generated the Fund's total return by continually realigning the
portfolio through one of the most volatile market environments in recent
history. With worries of inflation-induced Federal Reserve intervention and
fallout from the Asian situation, we witnessed significant market moves on a
regular basis. With limited cash flow in the Fund, we sought to add value for
shareholders by taking advantage of this volatility. By investing in discount
coupon bonds, we could buy when the market fell off and let the bonds run up in
price when the markets recovered from the many sell-offs during the year.
With an eye on after-tax total return, we remain conscious of capital
gains. As such, we will take losses on bonds when the market declines, which
helps offset the gains the Fund realizes when the market rallies. Our intent is
to generate tax-free income, but we also want to enhance total return by
realigning the portfolio to react to market conditions.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our belief during the year was that the market would be volatile, but that
interest rates would head lower. As such, we maintained an average duration near
the six-year mark, added yield to the portfolio, and traded securities to take
advantage of market volatility. (Duration is a measure of a fund's price
sensitivity to interest rate changes. A longer duration indicates greater
sensitivity; a shorter duration indicates less.)
In keeping with our strategy, when rates moved up, and prices fell, we sold
certain issues and captured losses (see above). Then, we replaced those issues
with bonds of similar structure -- positive convexity, discount coupons and high
liquidity -- which increased the portfolio's yield. (Convexity is a secondary
measure of a fund's price sensitivity to interest rate changes. Generally, bonds
with positive convexity perform better than those with negative convexity in
periods of high interest rate volatility.) Our strategy was to restructure a
portion of the portfolio with blocks of desirable bonds, so as to sell them at a
profit if our outlook changed during the year. Given the volatility in the
market from repeated economic data suggesting the death of inflation, to the
Asian turmoil that sent the markets reeling in the fourth quarter of 1997, our
tactics were sound.
DID THE FUND'S OVERALL QUALITY CHANGE?
The Fund's overall credit quality remained high, largely because an
increasing number of bonds coming to market are insured. At year-end, 73.9% of
the Fund's assets were invested in securities rated AAA and AA. We continue to
look in the lower-investment-grade areas for bonds with higher yields. But, this
has been somewhat challenging because the spread, or difference in yield,
between medium-grade bonds (those rated A and BBB) and AAA-rated bonds has been
compressed over the last 18 months, meaning that there is little yield advantage
to moving into the medium-quality area.
V-13
<PAGE> 190
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
WHAT IS YOUR OUTLOOK FOR THE FUND?
We have no real evidence that market volatility will subside in the near
future, so we anticipate trading in the range we have seen over the past year.
We remain vigilant in our inflation watch, because any sign of an overheating
economy should lead the Federal Reserve to raise rates and, therefore, erode the
value of bonds. Nevertheless, we expect inflation to remain under control for
the near term, as a slower-growth economy should keep interest rates low and may
even force the Fed to ease monetary policy.
/s/ PATRICK M. MORRISSEY
- ------------------------------------------------------
Patrick M. Morrissey
Fund Manager
/s/ GARY J. MADICH, CFA
- ------------------------------------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements
for further information about your Fund.
V-14
<PAGE> 191
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (9/4/90)
<S> <C> <C> <C>
Fiduciary 7.74% 5.46% 6.95%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lipper Intermediate
Lehman Brothers 7 Municipal Bond Funds
Fiduciary Year Municipal Bond Index
<S> <C> <C> <C>
Jun-98 16908 17653 16807
Jun-97 15694 16446 15715
Jun-96 14564 15366 14764
Jun-95 13820 14560 14046
Jun-94 12946 13453 13156
Jun-93 12961 13285 13026
Jun-92 11805 11996 11854
Jun-91 10777 10814 10749
Sep-90 10000 10000 10000
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
<S> <C> <C> <C>
Class A 7.50% 5.22% 6.08%
Class A* 2.70% 4.26% 5.32%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman Brothers 7 Lipper Intermediate
Year Municipal Municipal Bond Funds
Class A Class A* Bond Index
<S> <C> <C> <C> <C>
Jun-98 14561 13904 15185 14619
Jun-97 13547 12933 14147 13669
Jun-96 12616 12046 13218 12842
Jun-95 11983 11444 12525 12218
Jun-94 11253 10747 11572 11443
Jun-93 11291 10783 11428 11331
Jun-92 10314 9850 10319 10311
Feb-92 10000 9550 10000 10000
</TABLE>
V-15
<PAGE> 192
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
<S> <C> <C> <C>
Class B 6.81% 4.28%
Class B** 2.81% 3.89%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman Brothers 7 Lipper Intermediate
Year Municipal Municipal Bond
<S> <C> <C> <C> <C>
Class B Class B** Bond Funds Index
Jun-98 12056 11856 12625 12266
Jun-97 11289 11289 11762 11469
Jun-96 10568 10568 10990 10775
Jun-95 10115 10115 10413 10251
Jun-94 9552 9552 9622 9601
Jan-94 10000 10000 10000 10000
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The fund's income may be subject to the federal alternative minimum tax.
The performance of the Intermediate Tax-Free Bond Fund is measured against
the Lehman Brothers 7 Year Municipal Bond Index, an unmanaged index comprised of
investment grade municipal bonds with maturities close to seven years. Investors
are unable to purchase the index directly, although they can invest in the
underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management. By contrast, the performance of the fund reflects the deduction of
these value-added services as well as the deduction of sales charges on Class A
Shares and applicable contingent deferred sales charges on Class B Shares.
The Lipper Intermediate Municipal Bond Funds Index consists of the equally
weighted average monthly return of the largest funds within the universe of all
funds in the category.
V-16
<PAGE> 193
THE ONE GROUP(R) INCOME EQUITY FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group(R) Income Equity Fund Fiduciary share class posted a total
return of 23.18% for the year ended June 30, 1998. (For information on other
share classes and performance comparisons to the Fund's benchmark index, please
see page 7.)
With inflation, unemployment and federal fiscal balances at their best
levels in a generation, the equity market offered strong double-digit returns
for the fourth consecutive year.
TO WHAT DO YOU ATTRIBUTE SUCH STRONG PERFORMANCE?
The Fund continued to benefit from its concentration in the types of
companies investors have preferred-large-capitalization, high-quality,
consistent-growth companies. At the same time, the Fund was rewarded for not
owning companies with severe earnings problems, such as those with significant
exposure to Asia.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our portfolio strategies during the year focused on maintaining strong
performance measures while positioning the portfolio for a more challenging
market environment we think may be in store. As such, we sold and took profits
on certain issues that have been the best performers over the last several
years. We also eliminated some disappointing holdings and established new
positions in securities that we think are likely to be future market leaders.
We also have been improving the Fund's current income by reducing
lower-dividend-yielding issues and building positions in higher-yielding
securities. We also cut in half the Fund's position in convertible securities
and used the proceeds to invest in real estate investment trusts (REITs). In
addition to enhancing the Fund's diversification, we believe the REITs offer
good value and add important defensive characteristics to the Fund due to their
attractive yields.
On average, the Fund held 89% of its assets in common stocks, 5% in
convertible securities, 5% in REITs and 1% in cash during the year.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
The Fund enjoyed strong fiscal-year performance from several sectors in
which certain companies consistently achieved superior earnings growth or
benefited from major restructuring:
- Health care (Schering-Plough, Pfizer and Warner-Lambert were up 65%
or more)
- Finance (American Express, Chase Manhattan, U.S. Bancorp, Lincoln
National, FNMA and National City were up 35% or more)
- Telephone utilities (AT&T, BellSouth and Sprint were up 30% or more)
- Selected industrials (Ford was up 55%).
WERE THERE ANY DISAPPOINTING HOLDINGS?*
Disappointing performers were concentrated in more volatile sectors,
including transportation (Union Pacific declined 37% for the fiscal year),
energy and mining (Amoco was off 4%, Cyprus-Amax down 46%) and manufacturing
(Corning, Boeing and Deere declined in price). Our policy in handling such
"problem" issues is to reduce the position size when earnings expectations are
not being met and sell out completely if a
V-17
<PAGE> 194
THE ONE GROUP(R) INCOME EQUITY FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
turnaround is unlikely, as we did with Union Pacific and Cyprus-Amax. To help
avoid problem situations, we concentrate on favorable growth areas and look to
fundamental research conducted by our in-house analysts.
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE?*
Two new issues moved into the top 10 holdings-American Home Products, 2.1%
(health care) and Schering-Plough, 1.9% replaced Mobil (energy) and Philip
Morris (consumer non-durables). The remaining top 10 holdings were unchanged
from last year and included General Electric, 3.4% (capital goods), American
Express, 2.5%, Bristol-Myers Squibb, 2.4% (health care), Exxon, 2.2% (energy),
BankAmerica, 2.1% (financial services), Warner-Lambert, 2.1%, Coca-Cola, 2.1%
(consumer non-durable), and Royal Dutch Petroleum, 2.0% (energy).
WHAT IS YOUR OUTLOOK FOR THE FUND?
We are pleased with the current composition of the portfolio and the
fundamental progress of the companies the Fund owns. Nevertheless, the financial
markets have been highly volatile. Many of the uncertainties confronting
investors today -- Asian problems, nuclear proliferation, historically high
stock valuations -- have no quick-fix solutions. Furthermore, corporate earnings
gains aren't as good as they have been in recent years. This would suggest that
we should lower our return expectations and become more focused and selective.
Perhaps the best plan is to remain flexible and vigilant in order to take
advantage of opportunities when they arise. If a more challenging market
develops, we believe the Fund is well positioned, given its defensive
characteristics, higher-than-average income, holdings in predictable growth
companies and exposure to real estate.
R. LYNN YTURRI
- ------------------------------------------------------
R. Lynn Yturri
Fund Manager
RICHARD R. JANDRAIN III
- ------------------------------------------------------
Richard R. Jandrain III
Senior Managing Director of Fixed Income Securities
- ---------------
* Holdings are subject to change.
Please refer to the prospectus and the accompanying financial statements
for further information about your Fund.
V-18
<PAGE> 195
THE ONE GROUP(R) INCOME EQUITY FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year 10 Year (7/2/87)
<S> <C> <C> <C> <C>
Fiduciary 23.18% 20.21% 16.29% 13.99%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Fiduciary
<S> <C> <C>
6/88 10000 10000
6/89 12055 11858
6/90 14044 13375
6/91 15082 14376
6/92 17104 16153
6/93 19436 18020
6/94 19709 18609
6/95 24847 22526
6/96 31307 28053
6/97 42170 36720
6/98 54889 45230
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
<S> <C> <C> <C>
Class A 22.91% 19.89% 17.43%
Class A* 17.39% 18.79% 16.59%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Class A* Class A
<S> <C> <C> <C>
2/92 10000 9550 10000
6/92 9992 9625 10079
6/93 11354 10721 11226
6/94 11514 11037 11557
6/95 14515 13301 13961
6/96 18289 16569 17353
6/97 24635 21602 22625
6/98 32065 26558 27806
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
<S> <C> <C> <C>
Class B 21.97% 20.06%
Class B** 17.97% 19.82%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Class B** Class B
<S> <C> <C> <C>
1/94 10000 10000 10000
6/94 9344 9663 9663
6/95 11779 11587 11587
6/96 14842 14300 14300
6/97 19992 18515 18515
6/98 26022 22387 22587
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
(11/4/97)
<S> <C> <C>
Class C 16.57%
Class C** 15.57%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Measurement Period
(Fiscal Year Covered) S&P 500 Class C** Class C
<S> <C> <C> <C>
11/97 10000 10000 10000
6/98 11973 11556 11656
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
V-19
<PAGE> 196
THE ONE GROUP(R) INCOME EQUITY FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
The performance of the Income Equity Fund is measured against the S&P 500
Index, an unmanaged index generally representative of the performance of large
companies in the US stock market. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management. By contrast, the performance of the fund
reflects the deduction of these value-added services as well as the deduction of
sales charges on Class A Shares and applicable contingent deferred sales charges
on Class B and Class C Shares.
V-20
<PAGE> 197
THE ONE GROUP(R) EQUITY INDEX FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
For the year ended June 30, 1998, The One Group(R) Equity Index Fund
Fiduciary share class posted a total return of 29.73%. (For information on other
share classes and a performance comparison to the index, please see page 9.)
As it is designed to do, the Fund offered a return that nearly matched that
of the S&P 500 Index, the unmanaged group of stocks the Fund seeks to track with
little or no excess risk. The S&P 500 Index returned 30.16% for the year. The
slight difference in returns between the Fund and the Index is due to fees and
transaction costs charged to the Fund but not to the Index.
WHAT CONTRIBUTED TO SUCH A STRONG RETURN?
A strong economy, low inflation, declining interest rates and favorable
corporate earnings growth led to attractive stock market returns for yet another
year. Once again, large-capitalization growth companies, the type represented in
the S&P 500 Index, outperformed other types of U.S. stocks.
WHICH MARKET SECTORS OFFERED NOTABLE PERFORMANCE?
The Fund offered exposure to 15 market sectors. Among those sectors, retail
and telephone utilities offered the strongest performance. The retail sector
benefited from lower costs on Asian imports, while telephone utilities advanced
due to acquisition activity.
The weakest-performing sectors included technology, energy and industrial
commodities. The technology sector suffered somewhat from the economic and
market crisis that swept through Asia, while energy stocks declined due to lower
oil prices. In the industrial commodities sector (chemical, paper and metal
companies), stocks suffered from the sector's lack of pricing power.
WHAT WERE SOME OF THE STRONGEST AND WEAKEST STOCKS?*
The Fund enjoyed outstanding performance from a handful of stocks,
including technology provider Unisys, up 270% for the fiscal year due to strong
earnings; computer manufacturer Dell Computer, up 216% on strong earnings; cable
television company Tele-Communications, up 159% and acquired by AT&T; financial
service provider Providian Financial, up 145% on strong earnings; and auto
manufacturer Ford Motor, up 55% due to strong earnings.
Weak earnings contributed to poor performance from certain holdings,
including diversified mining company Freeport-McMoran Copper and Gold, down 51%
for the fiscal year; technology company Advanced Micro Devices, down 52%; and
technology provider Cabletron Systems, down 53%.
WHAT WERE THE FUND'S TOP 10 HOLDINGS?*
Most of the Fund's top 10 holdings retained their spots during the past
year. The only changes to the group were the addition of Pfizer, 1.5% (health
care sector) and Wal-Mart, 1.5% (retail), which replaced Philip Morris (consumer
non-durables) and IBM (technology). The remaining top 10 included General
Electric, 3.2% (capital goods), Microsoft, 2.9% (technology), Coca-Cola, 2.3%
(consumer non-durables), Exxon, 1.9% (energy), Merck, 1.7% (health care), Intel,
1.4% (technology), Proctor & Gamble, 1.3% (consumer non-durables) and Royal
Dutch Petroleum, 1.3% (energy).
V-21
<PAGE> 198
THE ONE GROUP(R) EQUITY INDEX FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
WHAT IS YOUR OUTLOOK FOR THE STOCK MARKET?
The environment for stocks should remain favorable over the coming year. We
expect economic growth to continue, but at a slower pace. We also expect
interest rates and inflation to remain low. Corporate earnings and stock prices
should continue to grow, but earnings are likely to come under increasing
pressure. Nevertheless, it's important to remember that returns of the last few
years have been unusually strong, and they probably are not sustainable. We
expect to see stock returns revert to more "normal" levels.
/S/ RICHARD R. JANDRAIN III
- ------------------------------------------------------
Richard R. Jandrain III
Senior Managing Director of Equity Securities
- ---------------
* Holdings subject to change.
Please refer to the prospectus and the accompanying financial statements
for more information about your Fund.
The S&P 500 Index is an unmanaged group of stocks generally representative
of the performance of large U.S.-based companies. Investors cannot purchase the
index directly, but they can invest in the underlying securities.
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (7/2/91)
<S> <C> <C> <C>
Fiduciary 29.73% 22.58% 19.64%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Class A Class A* S&P 500
<S> <C> <C> <C>
Feb-92 10000 9550 10000
Jun-92 9992 9595 9992
Jun-93 11354 10818 11354
Jun-94 11514 10879 11514
Jun-95 14515 13644 14515
Jun-96 18289 17075 18289
Jun-97 24635 22869 24635
Jun-98 30976 29574 32066
</TABLE>
V-22
<PAGE> 199
THE ONE GROUP(R) EQUITY INDEX FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
<S> <C> <C> <C>
Class A 29.33% 22.29% 19.44%
Class A* 23.49% 21.17% 18.58%
<CAPTION>
<S> <C>
Class A
Class A*
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
Class A Class A* S&P 500
<S> <C> <C> <C>
Feb-92 10000 9550 10000
Jun-92 9992 9595 9992
Jun-93 11354 10818 11354
Jun-94 11514 10879 11514
Jun-95 14515 13644 14515
Jun-96 18289 17075 18289
Jun-97 24635 22869 24635
Jun-98 30976 29574 32066
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
<S> <C> <C> <C>
Class B 28.47% 22.74%
Class B** 24.47% 22.51%
</TABLE>
** Reflects Applicable Contingent Deferred
Sales Charge.
<TABLE>
<CAPTION>
Class B Class B** S&P 500
<S> <C> <C> <C>
Jan-94 10000 10000 10000
Jun-94 9443 9443 9344
Jun-95 11765 11765 11779
Jun-96 14595 14595 14842
Jun-97 19400 19400 19992
Jun-98 24921 24721 26022
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
(11/4/97)
<S> <C> <C>
Class C 21.07%
Class C** 20.07%
</TABLE>
** Reflects Applicable Contingent Deferred
Sales Charge.
<TABLE>
<CAPTION>
Class C Class C** S&P 500
<S> <C> <C> <C>
Nov-97 10000 10000 10000
Jun-98 12106 12006 11973
</TABLE>
V-23
<PAGE> 200
THE ONE GROUP(R) EQUITY INDEX FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Equity Index Fund is measured against the S&P 500
Index, an unmanaged index generally representative of the performance of large
companies in the US stock market. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management. By contrast, the performance of the fund
reflects the deduction of these value-added services as well as the deduction of
sales charges on Class A Shares and applicable contingent deferred sales charges
on Class B and Class C Shares.
V-24
<PAGE> 201
THE ONE GROUP(R) VALUE GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group(R) Value Growth Fund Fiduciary share class posted a total
return of 32.26% for the year ended June 30, 1998. (For information on other
share classes and performance comparisons to indexes, please see page 12.)
TO WHAT DO YOU ATTRIBUTE THE FUND'S SOLID RETURN?
Domestic stocks of all styles enjoyed another strong year, as low
inflation, declining interest rates and better-than-expected corporate earnings
contributed to the gains.
Rather than emphasizing particular market sectors or trying to time the
market's next moves, we research, evaluate and select stocks on an individual
basis to build a diversified portfolio. We don't consciously overweight a single
sector or a single style of stock. Instead, we invest in stocks from the four
major equity styles -- large capitalization growth, large capitalization value,
medium capitalization growth and medium capitalization value -- and look for
stocks that we believe offer the best return potential relative to their level
of risk.
Over the past year, for example, we saw some vicious swings among sectors,
creating a momentum market that saw investors attempting to pick the "right"
sector at the right time. But, our emphasis on individual stock selection paid
off, as that process gave the Fund exposure to many different industries and
contributed to the Fund's strong return.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
The Fund owned more stocks than usual and was more diverse than usual in an
active attempt to be less exposed to any single momentum play. Momentum markets
tend to last longer than investors expect, and stocks that are not participating
tend to lose their value quickly.
Events in Asia played an interesting role in the Fund's performance. After
the domino effect, which started in Thailand, hit U.S. shores in October 1997,
we avoided the stocks of companies that we thought would be most negatively
affected by the malaise -- namely, commodity cyclical companies. By steering
away from that group, the Fund became more growth-oriented than usual.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
Industry positions such as the pharmaceutical area of health care
(Schering-Plough, up 91% for the fiscal year, and Bristol-Myers Squibb, up 42%);
the software and PC areas of technology (Microsoft, up 71%; BMC Software, up
88%; Dell Computer, up 216%); and the long distance segment of
telecommunications (Century Telephone, up 104%; Sprint, up 35%) added to the
Fund's strong performance.
The Fund also benefited from strong performance from Cisco Systems
(technology), up 106% for the year; Equitable Co. (financial services), up 125%;
Morgan Stanley Dean Witter (financial services), up 112%; Lucent Technologies
(technology), up 131%; and Energy East (utility), up 99%.
At the same time, a few Fund holdings realized poor performance, namely
Callaway Golf (consumer services), down 45% for the year; Toys R Us (retail),
down 33%; BetzDearborn (raw materials), down 37%; Columbia/HCA Healthcare
(health care), down 26%; and Phycor (health care), down 52%.
V-25
<PAGE> 202
THE ONE GROUP(R) VALUE GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE?*
More than half of the Fund's top 10 holdings were among the leading
holdings one year ago: Microsoft, 3.3% (technology), General Electric, 2.9%
(capital goods), Exxon, 2.1% (energy), Wal-Mart, 1.8% (retail), Bristol Myers,
1.8% (health care) and Intel, 1.7% (technology). The remaining members of the
top 10 on June 30, 1998, included NationsBank, 1.8% (financial services), Cisco
Systems, 1.8%, Dell Computer, 1.7% and Coca-Cola, 1.5% (consumer non-durables).
WHAT IS YOUR OUTLOOK FOR THE FUND?
We anticipate corporate earnings to revert to more normal levels, and we
believe volatility will continue. We plan to maintain the Fund's style diversity
in similar proportion as last year to address this market.
/s/ MICHAEL D. WEINER
- ------------------------------------------------------
Michael D. Weiner
Fund Manager
/s/ RICHARD R. JANDRAIN III
- ------------------------------------------------------
Richard R. Jandrain III
Senior Managing Director of Equity Securities
- ---------------
* Holdings are subject to change.
Please refer to the prospectus and the accompanying financial statements
for further information about your Fund.
V-26
<PAGE> 203
THE ONE GROUP(R) VALUE GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (12/29/89)
<S> <C> <C> <C>
Fiduciary 32.26% 19.63% 17.91%
</TABLE>
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Fiduciary S&P 1500
<S> <C> <C>
Dec-89 10000 10000
Jun-90 10657 10309
Jun-91 11631 11072
Jun-92 13847 12557
Jun-93 16554 14268
Jun-94 16496 14469
Jun-95 19198 18241
Jun-96 23242 22959
Jun-97 30673 30524
Jun-98 40584 39510
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (12/29/89)
<S> <C> <C> <C>
Class A 31.96% 19.48% 17.82%
Class A* 26.04% 18.38% 17.19%
</TABLE>
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P 1500 Class A* Class A
<S> <C> <C> <C>
Dec-89 10000 9550 10000
Jun-90 10309 10178 10657
Jun-91 11072 11107 11631
Jun-92 12557 13224 13847
Jun-93 14268 15809 16554
Jun-94 14469 15754 16496
Jun-95 18241 18334 19198
Jun-96 22959 22178 23225
Jun-97 30524 29171 30548
Jun-98 39510 38504 40326
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (9/9/94)
<S> <C> <C> <C>
Class B 30.89% 23.28%
Class B** 26.89% 22.84%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Class B Class B** S&P 1500
<S> <C> <C> <C>
Sep-94 10000 10000 10000
Jun-95 10806 10806 12019
Jun-96 12981 12981 15129
Jun-97 16942 16942 20113
Jun-98 22173 21873 26034
</TABLE>
V-27
<PAGE> 204
THE ONE GROUP(R) VALUE GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
(11/4/97)
<S> <C> <C>
Class C 20.87%
Class C** 19.87%
</TABLE>
** Reflects Applicable Contingent Deferred
Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Class C Class C** S&P 1500
<S> <C> <C> <C>
Nov-97 10000 10000 10000
Jun-98 12087 11987 11858
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The above-quoted performance data includes the performance of the Paragon
Value Equity Income Fund for the period prior to the commencement of operations
of The One Group Value Growth Fund on March 26, 1996. Performance for the
Fiduciary Shares is based on Class A Share performance adjusted to reflect the
absence of sales charges.
The performance of the Value Growth Fund is measured against the S&P 1500
Index, an unmanaged index generally representative of the performance of large
and small companies in the US stock market. Investors are unable to purchase the
index directly, although they can invest in the underlying securities. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management. By contrast, the performance
of the fund reflects the deduction of these value-added services as well as the
deduction of sales charges on Class A Shares and applicable contingent deferred
sales charges on Class B and Class C Shares.
The S&P 1500 Index for all classes consists of the average monthly returns
of the S&P 500 Index from December 1989 through December 1994. Thereafter, the
data are from the S&P 1500 Index which corresponds with the initiation of the
S&P 1500 Index on January 1, 1995.
V-28
<PAGE> 205
THE ONE GROUP(R) DISCIPLINED VALUE FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group(R) Disciplined Value Fund Fiduciary share class posted a
total return of 28.27% for the year ended June 30, 1998. (For information on
other share classes and performance comparisons to the index, please see page
18.)
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Interest rates ended the year lower, but experienced volatility throughout
the 12-month period. To avoid some of the stock price volatility associated with
interest rate swings, we maintained a diversified portfolio with exposure to a
variety of economic sectors. Within this framework, we emphasized in-depth
analysis and individual stock selection, and we continued to rebalance the
portfolio in order to improve structure and upgrade holdings as market
conditions changed.
Because of the Fund's value orientation, we emphasized the sectors that
offered the greatest perceived value. As a result, almost half of the Fund's
assets were in the electric utility, financial, industrial, commodity and
banking sectors. These were the areas that contained the largest number of
equity securities with below-market-average price-to-earnings and price-to-book
ratios.
Given the continued strength of the market, certain stocks reached their
target prices quicker than we had anticipated, prompting the sale of those
securities and the purchase of new ones. In addition, as certain stocks
increased in valuation, they became more growth-like and were no longer
appropriate for this value-oriented fund. For example, in the second half of
1997 prices on bank stocks soared, and the resulting valuations converted many
of these stocks to growth stocks. As a result, remaining sectors that were
relatively undervalued became more influential, and their weightings within the
Fund increased. Specifically, we increased the Fund's holdings within the
capital equipment, financial, industrial commodity and consumer durable sectors
to make up for the gap caused by the decline in bank holdings.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
Outstanding performance from several individual stocks during the fiscal
year was driven largely by takeovers. For example, in the technology sector
Qwest Communications acquired LCI International, in which the Fund had a large
exposure; National City Bank acquired First of America, a Fund holding; and
Williams Companies acquired the energy company Mapco, another Fund holding. In
addition, the Fund's holding of Century Telephone nearly doubled in value over
the year, as analysts projected superior earnings growth for the combined
Century Telephone/Pacific Telesis company. Indeed, the merged company
experienced revenue growth and margin expansion after joining forces, as it cut
costs and expanded its territory.
Another merger, between cement manufacturers Southdown and Medusa, also
contributed to the Fund's solid return. But, price gains on these stocks
primarily were driven by excellent fundamentals within the industry. The
supply/demand equation favored the manufacturers, given the steadily increasing
demand for cement from the housing and infrastructure sectors, while the supply
of cement has been virtually unchanged in the last decade. In addition, U.S.
government restrictions on the amount of cement that can be imported helped the
U.S. manufacturers.
DID EVENTS IN ASIA INFLUENCE ANY OF THE FUND'S HOLDINGS?*
On the downside, events in Asia caused certain Fund holdings to decline. As
Asian currency values plummeted, it appears Asian customers chose to curtail
their gaming excursions to the United States. As a result, the Fund's holdings
in Circus Circus and MGM declined for the fiscal year. In addition, CompUSA
V-29
<PAGE> 206
THE ONE GROUP(R) DISCIPLINED VALUE FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
lost half of its value due to the unanticipated sharp declines in computer
prices. Lower demand from Asia contributed to the price declines, as did the
lack of new memory-consuming software applications, which prompted revenue
declines and margin contraction.
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE DURING THE FISCAL YEAR?*
Only two of the Fund's top 10 holdings remained from last year -- CMS
Energy, 1.6% (utilities) and Southtrust Corp., 1.6% (financial services).
Rounding out the top 10 were utilities companies New Century Enterprises, 1.5%,
Allegheny Energy, 1.3%, Century Telephone, 1.5%, El Paso Natural Gas, 1.6% and
Teco Energy, 1.2%; financial companies Bear Stearns, 1.6% and Paine Webber,
1.2%; and Tyson Foods, 1.1%, a member of the consumer non-durable sector.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Looking ahead, we plan to maintain our current strategy of broad sector
diversification, stringent in-house research and individual stock selection.
Within each sector, we will continue to look for the best values among medium
capitalization stocks, or those issues with low price/earnings and price/book
ratios.
/s/ EDMUND M. COWART
- ------------------------------------------------------
Edmund M. Cowart
Managing Director, Value Growth Team
/s/ RICHARD R. JANDRAIN III
- ------------------------------------------------------
Richard R. Jandrain III
Senior Managing Director of Equity Securities
- ---------------
* Holdings subject to change.
Please refer to the prospectus and the accompanying financial statements
for further information about your Fund.
V-30
<PAGE> 207
THE ONE GROUP(R) DISCIPLINED VALUE FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (3/2/89)
<S> <C> <C> <C>
Fiduciary 28.27% 17.52% 14.11%
</TABLE>
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P BARRA/Midcap
Fiduciary 400/Value
<S> <C> <C>
Mar-89 10000 10000
Jun-89 10989 10883
Jun-90 11372 12677
Jun-91 11572 13615
Jun-92 13451 15441
Jun-93 15278 17545
Jun-94 15895 17792
Jun-95 18443 22430
Jun-96 22150 27627
Jun-97 26704 34233
Jun-98 34253 43366
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
<S> <C> <C> <C>
Class A 27.90% 17.27% 15.79%
Class A* 22.13% 16.19% 14.96%
</TABLE>
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P BARRA/Midcap
Class A Class A* 400/Value
<S> <C> <C> <C>
Feb-92 10000 9550 10000
Jun-92 10121 9666 9992
Jun-93 11464 10948 11354
Jun-94 11956 11418 11514
Jun-95 13801 13179 14515
Jun-96 16534 15788 17879
Jun-97 19875 18977 22153
Jun-98 25419 24279 28063
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
<S> <C> <C>
Class B 26.97% 16.38%
Class B** 22.97% 16.12%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Class B Class B** S&P BARRA/Midcap
<S> <C> <C> <C>
Jan-94 10000 10000 10000
Jun-94 9500 9500 9344
Jun-95 10918 10918 11779
Jun-96 12985 12985 14509
Jun-97 15476 15476 17978
Jun-98 19665 19465 22775
</TABLE>
V-31
<PAGE> 208
THE ONE GROUP(R) DISCIPLINED VALUE FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Disciplined Value Fund is measured against the
S&P/BARRA Midcap 400 Value Index, an unmanaged index representing the
performance of the lowest price to book securities in the S&P Midcap 400 Index.
Investors are unable to purchase the index directly, although they can invest in
the underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management. By contrast, the performance of the fund reflects the deduction of
these value-added services as well as the deduction of sales charges on Class A
Shares and applicable contingent deferred sales charges on Class B Shares.
The S&P/BARRA Midcap 400 Value Index consists of the average monthly
returns of the S&P 500 Index for periods prior to June 1991. Thereafter, the
data are from the S&P/BARRA Midcap 400 Value Index which corresponds with the
initiation of the S&P/BARRA Midcap 400 Value Index on June 30, 1991.
V-32
<PAGE> 209
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group(R) Large Company Growth Fund Fiduciary share class posted a
total return of 35.75% for the year ended June 30, 1998. (For information on
other share classes and performance comparisons to indexes, please see page 20.)
TO WHAT DO YOU ATTRIBUTE THE FUND'S SOLID RETURN?
A strong domestic economy, low inflation and declining interest rates all
worked together to maintain a favorable equity environment. Once again, the
market favored the largest growth-oriented companies because of their earnings
reliability and stock liquidity.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Our primary investment strategy during this market climate has been to find
good companies within industries that are growing at a faster rate than the
economy. These are companies that we believe have the ability to exhibit
sustained growth at some multiple of their underlying industry growth rate. In
addition, we search for strong management teams and superior product
positioning.
After evaluating the impact of the Asian crisis on the Fund's stocks, we
cut the portfolio's technology holdings because much of these companies' exports
went to Asia. We also increased our retail holdings, as many of these companies
purchase their materials from Asia and thus benefit from lower costs.
This strategy worked well, because the technology sector, as a whole, has
underperformed the market, while the retail sector has outperformed.
DID THE PORTFOLIO BENEFIT FROM ANY PARTICULARLY STRONG HOLDINGS?*
The Fund enjoyed outstanding performance from computer manufacturer Dell
Computer, up 216% for the fiscal year; software giant Microsoft, up 71% and
online service provider America Online, up 278%.
On the other hand, there were a few disappointing performances from the
technology sector. For example, Applied Materials was off 17% and Oracle Corp.
declined 27%.
HOW DID THE FUND'S TOP 10 HOLDINGS CHANGE?*
Most of the Fund's top 10 holdings remained unchanged during the year. The
only newcomers were Dell Computer, 2.6% (technology) and Lucent Technologies,
2.3% (technology). The remaining members included General Electric, 6.8%
(capital goods), Microsoft, 6.4% (technology), Coca-Cola, 4.3% (consumer
non-durable), Wal-Mart, 3.2% (retail), Merck, 3.0% (health care), Bristol-Myers
Squibb, 3.0% (health care), Pfizer, 2.9% (health care) and Proctor & Gamble,
2.6% (consumer non-durable).
WHAT IS YOUR OUTLOOK FOR THE FUND?
Looking ahead, we remain optimistic about continued U.S. economic growth
and low inflation. We believe that interest rates may continue to decline, which
would support ongoing stock market growth, but perhaps not at the unusually
strong pace we've seen over the last several years. As such, it seems prudent to
lower our expectations somewhat for the next year.
V-33
<PAGE> 210
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
Our overall strategy remains intact -- to search for companies with strong
fundamentals, effective management teams and favorable long-term outlooks.
Because the Asian situation remains unresolved, we will continue to monitor its
effects on the Fund's holdings.
/s/ ASHI PARIKH
- ------------------------------------------------------
Ashi Parikh
Managing Director, Growth Equity Team
/s/ RICHARD R. JANDRAIN III
- ------------------------------------------------------
Richard R. Jandrain III
Senior Managing Director of Equity Securities
- ---------------
* Holdings are subject to change.
Please refer to the prospectus and the accompanying financial statements
for more information about your fund.
V-34
<PAGE> 211
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/28/92)
<S> <C> <C> <C>
Fiduciary 35.75% 22.79% 19.88%
</TABLE>
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P/BARRA 500 Growth Fiduciary
<S> <C> <C>
Feb-92 10000 10000
Jun-92 9743 9920
Jun-93 10550 11301
Jun-94 10522 12210
Jun-95 13755 14878
Jun-96 17505 17461
Jun-97 24215 23243
Jun-98 32661 31553
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (2/22/94)
<S> <C> <C> <C>
Class A 35.43% 23.70%
Class A* 29.33% 22.39%
</TABLE>
* Reflects 4.50% Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P/BARRA 500
Growth Class A* Class A
<S> <C> <C> <C>
Feb-94 10000 9550 10000
Jun-94 9530 9453 9898
Jun-95 12458 11486 12028
Jun-96 15854 13420 14054
Jun-97 21931 17790 18631
Jun-98 29581 24085 25230
</TABLE>
V-35
<PAGE> 212
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
<S> <C> <C> <C>
Class B 34.39% 22.49%
Class B** 30.39% 22.26%
</TABLE>
** Reflects Applicable Contingent Deferred
Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P/BARRA 500
Growth Class B** Class B
<S> <C> <C> <C>
Jan-94 10000 10000 10000
Jun-94 9539 9934 9934
Jun-95 12235 11831 11831
Jun-96 15570 13952 13952
Jun-97 21539 18381 18381
Jun-98 29052 24496 24696
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
(11/4/97)
<S> <C> <C>
Class C 27.63%
Class C** 26.63%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P/BARRA 500
Growth Class C** Class C
<S> <C> <C> <C>
Nov-97 10000 10000 10000
Jun-98 12458 12663 12763
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Large Company Growth Fund is measured against the
S&P/BARRA 500 Growth Index, an unmanaged index representing the performance of
the highest price to book securities in the S&P 500. Investors are unable to
purchase the index directly, although they can invest in the underlying
securities. The performance of the index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management. By
contrast, the performance of the fund reflects the deduction of these
value-added services as well as the deduction of sales charges on Class A Shares
and applicable contingent deferred sales charges on Class B and Class C Shares.
V-36
<PAGE> 213
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
For the year ended June 30, 1998, The One Group(R) Limited Volatility Bond
Fund Fiduciary share class posted a total return of 6.59%. (For information on
other share classes and performance comparisons to indexes, please see page 5.)
HOW DID INTEREST RATES INFLUENCE PERFORMANCE?
Interest rates among five-year securities (the area of the yield curve
where the Fund is most heavily invested) declined 0.91 percentage points during
the fiscal year. The Fund's Fiduciary share class 30-day SEC yield also
declined, dropping from 6.18% on June 30, 1997, to 5.75% on June 30, 1998.
Because interest rates declined during the year, prices on most of the
Fund's bonds appreciated and, therefore, added to the Fund's total return. (Bond
prices and interest rates move inversely of each other. When rates fall, bond
prices rise, and vice versa.) The only exceptions were the few Asian bonds in
the Fund's portfolio, which declined in value when the Asian market crisis hit
in 1997.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
The Fund's strategy included investing in securities that offered
attractive yields within our maturity and high credit-quality guidelines. As
such, we continued to emphasize government agency mortgage pass-through
securities because they offered yield advantages over other government
securities. And, we focused on 15-year, current coupon issues because they are
less likely to be refinanced even if interest rates fall further. We also
invested in asset-backed securities and high-grade corporate bonds, which
provided an excellent combination of yield, total return and relative safety.
With interest rates declining, we maintained the Fund's duration in a range
of 2.3 years to 2.5 years. (Duration is a measure of a fund's price sensitivity
to interest rate changes. A longer duration indicates greater sensitivity; a
shorter duration indicates less.) This, coupled with the Fund's emphasis on
yield, contributed to the Fund's solid return.
DID THE FUND'S OVERALL QUALITY CHANGE DURING THE YEAR?
Because the majority of the Fund's assets always are invested in U.S.
government-related securities (69% of the portfolio at year-end), the Fund's
average quality remains high. On June 30, 1998, 80% of the Fund's securities
were rated AAA (the highest rating), 18% were rated A, and 2% were rated Baa,
giving the Fund an overall quality rating of AA.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We expect positive economic growth to continue, but at a slower pace. This
should help keep inflation low for the near-term, which should perpetuate the
current interest-rate trading range and market status quo. In the corporate
sector, though, a potential negative influence is the steady slowdown in
corporate earnings growth, which could cause corporate yield spreads to widen.
(Corporate spreads refer to the difference in yield between corporate bonds and
comparable-maturity Treasury bonds. When spreads widen, prices on corporate
bonds decline, and vice versa.) We believe a strong offset to this, though, is
the healthy economy, which gives us reason not to abandon the corporate sector.
As a precaution, we will focus on corporate bonds with maturities of five years
or less.
/s/ ROGER CRAIG
- ------------------------------------------------------
Roger Craig
Fund Manager
/s/ GARY J. MADICH
- ------------------------------------------------------
Gary J. Madich, CFA
Senior Managing Director of
Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements
for further information about your Fund.
V-37
<PAGE> 214
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (9/4/90)
<S> <C> <C> <C>
Fiduciary 6.59% 5.41% 7.03%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lipper Short US
Lehman Brothers 1-3 Government Bond
Fiduciary Year Government Index Funds Index
<S> <C> <C> <C>
Jun-98 17008 16609 16136
Jun-97 15957 15554 15153
Jun-96 14947 14595 14309
Jun-95 14218 13837 13604
Jun-94 13170 12852 12668
Jun-93 13066 12659 12515
Jun-92 12068 11881 11730
Jun-91 10799 10768 10710
Sep-90 10000 10000 10000
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
<S> <C> <C> <C>
Class A 6.32% 5.13% 5.86%
Class A* 3.16% 4.49% 5.35%
</TABLE>
* Reflects 3.00% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman Brothers Lipper Short US
1-3 Year Government Bond
Class A Class A* Government Index Funds Index
<S> <C> <C> <C> <C>
Jun-98 14368 13935 14375 14134
Jun-97 13515 13110 13462 13273
Jun-96 12694 12314 12632 12534
Jun-95 12105 11742 11976 11916
Jun-94 11243 10906 11123 11096
Jun-93 11188 10853 10957 10962
Jun-92 10356 10045 10284 10274
Feb-92 10000 9700 10000 10000
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
<S> <C> <C> <C>
Class B 5.98% 4.75%
Class B** 2.98% 4.75%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman Brothers Lipper Short US
1-3 Year Government Bond
Class B Class B** Government Index Funds Index
<S> <C> <C> <C> <C>
Jun-98 12297 12297 12780 12578
Jun-97 11604 11604 11969 11811
Jun-96 10974 10974 11231 11153
Jun-95 10524 10524 10648 10603
Jun-94 9819 9819 9889 9874
Jan-94 10000 10000 10000 10000
</TABLE>
V-38
<PAGE> 215
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Limited Volatility Bond Fund is measured against the
Lehman Brothers 1 to 3 Year Government Index, an unmanaged index comprised of US
Government and agency securities with maturities of one to three years.
Investors are unable to purchase the index directly, although they can invest in
the underlying securities. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management. By contrast, the performance of the fund reflects the deduction of
these value-added services as well as the deduction of sales charges on Class A
Shares and applicable contingent deferred sales charges on Class B Shares.
The Lipper Short US Government Bond Funds Index consists of the equally
weighted average monthly return of the largest funds within the universe of all
funds in the category.
V-39
<PAGE> 216
THE ONE GROUP(R) INTERMEDIATE BOND FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
The One Group(R) Intermediate Bond Fund Fiduciary share class offered a
total return of 8.71% for the year ended June 30, 1998. (For information on
other share classes and performance comparisons to indexes, please see page 7.)
HOW DID MARKET DEVELOPMENTS INFLUENCE PERFORMANCE?
Throughout the year, three key trends developed in the bond market:
1. Interest rates, in general, declined, resulting in gains for most
bonds and an overall increase in the Fund's net asset value (NAV).
2. Lower interest rates led to a rise in homeowner refinancing
activity, which caused the performance on many higher-rate
mortgage-backed bonds to suffer.
3. Many foreign economies, especially those in Asia, fell into
recession, and prices declined on many Yankee bonds (U.S.
dollar-denominated foreign bonds) associated with these markets.
Overall, the positive influence from the drop in interest rates had a
greater impact on the Fund's performance than the negative influence from
holding select mortgage and Yankee bonds.
While the Fund enjoyed a solid total return and an approximately 2.0% gain
in NAV for the one year period, the declining interest rate environment pushed
the Fund's yield slightly lower-from 6.35% on June 30, 1997, to 5.90% on June
30, 1998.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
Once again, duration management remained a key strategy in generating
return and controlling risk. (Duration is a measure of a fund's price
sensitivity to interest rate changes. A longer duration indicates greater
sensitivity; a shorter duration indicates less.) We managed the Fund's duration
within a tight, shorter-than-market-average range during the year, which limited
some of the price gains that occurred mid-year when interest rates fell. While
we do manage the Fund's exposure to changes in interest rates, we also purposely
limit the degree to which we alter duration. We believe these risk-control
guidelines protect us from making ill-timed "bets" on the magnitude and
direction of possible interest rate movements.
Nevertheless, the Fund's strong yield helped make up for the effects of our
shorter duration. Furthermore, the Fund's holdings in long-duration U.S.
Treasury and corporate bonds and select commercial mortgage-backed securities
helped overall performance during the year.
Another key move during the Fund's fiscal year occurred in early 1998, when
we reduced the Fund's small exposure to Asian Yankee bonds, which deteriorated
along with many Asian economies. By fiscal year-end, the Fund held about 1.5% of
its assets in Asian-based Yankee bonds, all of which maintained investment-
grade quality ratings (rated BBB or better).
WHAT IS YOUR OUTLOOK FOR THE FUND?
Our forecast calls for the U.S. economy to maintain its steady, albeit
slower, growth pattern over the next year. As a result, inflation should remain
tame and interest rates stable to lower.
At the same time, the prospect for unfavorable developments has risen. For
example, the economy is operating at employment levels that typically lead to
increasing rates of inflation. This, however, is being offset by economic
recession in many Asian countries. While we remain optimistic, unexpected
changes in these or
V-40
<PAGE> 217
THE ONE GROUP(R) INTERMEDIATE BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
other important economic dynamics could lead to greater-than-expected volatility
in the U.S. financial markets.
/s/ JAMES A. SEXTON
- ------------------------------------------------------
James A. Sexton, CFA
Fund Manager
/s/ GARY J. MADICH
- ------------------------------------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements
for further information about your Fund.
V-41
<PAGE> 218
THE ONE GROUP(R) INTERMEDIATE BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/29/92)
<S> <C> <C> <C>
Fiduciary 8.71% 6.08% 6.96%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman Brothers
Intermediate Lipper Intermediate US
Government/Corporate Government Bond
Fiduciary Bond Index Funds Index
<S> <C> <C> <C>
Jun-98 15310 15394 14959
Jun-97 14084 14182 13670
Jun-96 13080 13228 12786
Jun-95 12463 12597 12260
Jun-94 11315 11413 11162
Jun-93 11400 11442 11357
Jun-92 10300 10355 10307
Feb-92 10000 10000 10000
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (11/30/94)
<S> <C> <C> <C>
Class A 8.47% 8.66%
Class A* 3.58% 7.26%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman Brothers
Intermediate Lipper Intermediate
Government/Corporate US Government
Class A Class A* Bond Index Bond Funds Index
<S> <C> <C> <C> <C>
Jun-98 13462 12850 13441 13431
Jun-97 12411 11853 12383 12274
Jun-96 11556 11036 11550 11480
Jun-95 11029 10533 10999 10984
Nov-94 10000 9550 10000 10000
</TABLE>
V-42
<PAGE> 219
THE ONE GROUP(R) INTERMEDIATE BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (11/30/94)
<S> <C> <C> <C>
Class B 7.78% 7.59%
Class B** 3.78% 6.90%
</TABLE>
** Reflects Applicable Contingent Deferred
Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Lehman Brothers
Intermediate Lipper Intermediate
Government/Corporate US Government
Class B Class B** Bond Index Bond Funds Index
<S> <C> <C> <C> <C>
Nov-94 10000 10000 10000 10000
Jun-95 10845 10845 10999 10984
Jun-96 11290 11290 11550 11480
Jun-97 12061 12061 12383 12274
Jun-98 12999 12699 13441 13431
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
(11/4/97)
<S> <C> <C>
Class C 8.20%
Class C** 7.20%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Lehman Brothers
Intermediate Lipper Intermediate
Government/Corporate US Government
Class C Class C** Bond Index Bond Funds Index
<S> <C> <C> <C> <C>
Jun-98 10819 10719 10430 10455
Nov-97 10000 10000 10000 10000
</TABLE>
V-43
<PAGE> 220
THE ONE GROUP(R) INTERMEDIATE BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Intermediate Bond Fund is measured against the
Lehman Brothers Intermediate Government/Corporate Bond Index, an unmanaged index
comprised of US Government agency and Treasury securities and investment grade
corporate bonds. Investors are unable to purchase the index directly, although
they can invest in the underlying securities. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management. By contrast, the performance of the fund reflects the
deduction of these value-added services as well as the deduction of sales
charges on Class A Shares and applicable contingent deferred sales charges on
Class B and Class C Shares.
The Lipper Intermediate US Government Bond Funds Index consists of the
equally weighted average monthly return of the largest funds within the universe
of all funds in the category.
V-44
<PAGE> 221
THE ONE GROUP(R) INCOME BOND FUND
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
HOW DID THE FUND PERFORM?
For the year ended June 30, 1998, The One Group(R) Income Bond Fund
Fiduciary share class posted a total return of 7.97%. (For information on other
share classes and performance comparisons to indexes, please see page 11.)
In general, interest rates declined by approximately one percentage point
during the fiscal year. The Fund's Fiduciary share class 30-day SEC yield also
declined, dropping from 6.70% on June 30, 1997, to 6.13% on June 30, 1998.
WAS THERE A PARTICULAR TYPE OF SECURITY THAT AFFECTED PERFORMANCE?
Even though the Fund's yield fell, it remained attractive due to the Fund's
emphasis on higher-yielding investment-grade securities. Included among those
securities are Yankee bonds (U.S. dollar-denominated foreign bonds), which
performed well and contributed greatly to the Fund's total return until the
fourth quarter of 1997. As the financial crisis overtook Asia, the value of the
Fund's Asian Yankee bonds declined rapidly and, at 10% of Fund assets, caused
significant underperformance. Once prices stabilized and began to improve, we
implemented a control strategy for these bonds, reducing them to only 1.5% of
Fund assets. This measured reduction caused the Fund's performance to return to
above-average.
WHAT WERE YOUR PRIMARY STRATEGIES AND TACTICS?
The Fund's strategy is to try to maintain a relatively stable duration of
approximately 4.6 years and to enhance yield through a widely diversified
portfolio of corporate bonds and mortgage securities. (Duration is a measure of
a fund's price sensitivity to interest rate changes. A longer duration indicates
greater sensitivity; a shorter duration indicates less.) We purposely avoid
making significant changes to the Fund's duration, because we manage the Fund
primarily to maximize income, rather than to seek capital gains by making "bets"
on interest rate movements. We try to maintain a neutral duration and position
the Fund to earn a relatively good rate of interest income.
This strategy has worked well, as the Fund has been able to generate
incremental returns without incurring additional interest rate risk. At the same
time, the strategy involves some exposure to credit risk, which, for short
periods of time, may adversely affect returns, as witnessed in late-1997. But,
over full interest rate and credit cycles, the strategy has proven successful to
date.
DID THE FUND'S OVERALL QUALITY CHANGE DURING THE YEAR?
In April 1997, shareholders approved a measure that allows the Fund to
invest up to 30% of its assets in high-yield securities, or those rated BB or B.
As outlined at that time, the Fund's entry into this sector will be slow and
measured. Since then, we have added a 4% exposure to BB-rated bonds.
The Fund maintained a good quality profile during the fiscal year, with 52%
of its assets invested in securities rated AAA; 5% in those rated AA; 16% in
A-rated; 23% in BBB-rated; and 4% in BB-rated. The Fund's overall quality rating
was A+ at the end of the year.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Moving forward, we expect economic growth to continue, but at a slower
pace. We also expect inflation to remain low for the near term. The bond market
environment is likely to be characterized as a "trading range," which is a
market that doesn't change much. In such a climate, higher-yielding securities
typically produce better results.
V-45
<PAGE> 222
THE ONE GROUP(R) INCOME BOND FUND
PORTFOLIO PERFORMANCE REVIEW -- CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
In the corporate sector, a potential negative influence is the steady
decline in corporate earnings growth, which could cause corporate yield spreads
to widen. (Corporate spreads refer to the difference in yield between corporate
bonds and comparable-maturity Treasury bonds. When spreads widen, prices on
corporate bonds decline, and vice versa.) A strong offset to this, though, is
the healthy economy, which gives us reason not to abandon this sector. As a
precaution, we will focus on corporate bonds with maturities of five years or
less. In the mortgage market, most of the Fund's recent purchases have been
15-year, current coupon issues, which we believe are less likely to be
refinanced even if interest rates fall further.
/s/ ROGER CRAIG
- ------------------------------------------------------
Roger Craig
Fund Manager
/s/ GARY J. MADICH
- ------------------------------------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements
for further information about your Fund.
V-46
<PAGE> 223
THE ONE GROUP(R) INCOME BOND FUND
PORTFOLIO PERFORMANCE REVIEW, CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year 10 Year (7/2/87)
<S> <C> <C> <C> <C>
Fiduciary 7.97% 5.85% 7.63% 7.30%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lipper Intermediate
Lehman Brothers Investment Grade Bond
Fiduciary Aggregate Bond Index Funds Index
<S> <C> <C> <C>
Jun-98 20864 23818 21817
Jun-97 19324 21547 19901
Jun-96 17876 19923 18492
Jun-95 17086 18972 17634
Jun-94 15352 16857 15872
Jun-93 15701 17079 16087
Jun-92 14193 15278 14394
Jun-91 12467 13397 12632
Jun-90 11417 12103 11632
Jun-89 10732 11222 11005
Jun-88 10000 10000 10000
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
<S> <C> <C> <C>
Class A 7.82% 5.60% 6.64%
Class A* 3.00% 4.63% 4.87%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
Lehman Brothers Lipper Intermediate
Aggregate Bond Investment Grade
Class A Class A* Index Bond Funds Index
<S> <C> <C> <C> <C>
Feb-92 10000 9550 10000 10000
Jun-92 10368 9901 10345 10356
Jun-93 11464 10948 11564 11574
Jun-94 11197 10693 11413 11420
Jun-95 12418 11859 12845 12688
Jun-96 12947 12365 13490 13305
Jun-97 13964 13335 14589 14319
Jun-98 15052 14381 16127 15702
</TABLE>
V-47
<PAGE> 224
THE ONE GROUP(R) INCOME BOND FUND
PORTFOLIO PERFORMANCE REVIEW, CONTINUED
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1998
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
<S> <C> <C> <C>
Class B 7.13% 5.07%
Class B** 3.13% 4.70%
</TABLE>
** Reflects Applicable Contingent Deferred
Sales Charge.
VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Lehman Brothers Lipper Intermediate
Aggregate Bond Investment Grade
Class B Class B** Index Bond Funds Index
<S> <C> <C> <C> <C>
Jan-94 10000 10000 10000 10000
Jun-94 9471 9471 9485 9488
Jun-95 10478 10478 10675 10542
Jun-96 10860 10860 11211 11055
Jun-97 11637 11637 12124 11897
Jun-98 12466 12274 13402 13046
</TABLE>
The performance data quoted represents past performance and is not an
indication of future results. Investment return and NAV will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Income Bond Fund is measured against the Lehman
Brothers Aggregate Bond Index, an unmanaged index comprised of US Government,
mortgage, corporate and asset-backed securities. Investors are unable to
purchase the index directly, although they can invest in the underlying
securities. The performance of the index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management. By
contrast, the performance of the fund reflects the deduction of these
value-added services as well as the deduction of sales charges on Class A Shares
and applicable contingent deferred sales charges on Class B Shares.
The Lipper Intermediate Investment Grade Bond Funds Index consists of the
equally weighted average monthly return of the largest funds within the universe
of all funds in the category.
V-48
<PAGE> 225
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG1 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Money Market Fund to the
corresponding One Group Prime Money Market Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 226
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG2 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Treasury Money Market Fund
to the corresponding One Group U.S. Treasury Securities
Money Market Fund in exchange for Class A, Class B or
Class I shares, as applicable, of the One Group Fund,
(b) the distribution of such One Group Fund shares to
the Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 227
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG3 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Municipal Money Market Fund
to the corresponding One Group Municipal Money Market
Fund in exchange for Class A or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 228
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG4 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Michigan Municipal Money
Market Fund to the corresponding One Group Michigan
Municipal Money Market Fund in exchange for Class A or
Class I shares, as applicable, of the One Group Fund,
(b) the distribution of such One Group Fund shares to
the Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 229
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG5 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Cash Management Fund to the
corresponding One Group Cash Management Money Market
Fund in exchange for Class A or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 230
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG6 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Treasury Cash Management
Fund to the corresponding One Group Treasury Cash
Management Money Market Fund in exchange for Class A
or Class I shares, as applicable, of the One Group
Fund, (b) the distribution of such One Group Fund
shares to the Shareholders of the Pegasus Portfolio
according to their respective interests, and (c) the
termination of Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 231
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG7 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Treasury Prime Cash
Management Fund to the corresponding One Group
Treasury Prime Cash Management Money Market Fund in
exchange for Class A or Class I shares, as applicable,
of the One Group Fund, (b) the distribution of such
One Group Fund shares to the Shareholders of the
Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 232
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG8 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus U.S. Government Securities
Cash Management Fund to the corresponding One Group
U.S. Government Securities Cash Management Money
Market Fund in exchange for Class A or Class I shares,
as applicable, of the One Group Fund, (b) the
distribution of such One Group Fund shares to the
Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 233
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPEG9 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Municipal Cash Management
Fund to the corresponding One Group Municipal Cash
Management Money Market Fund in exchange for Class A
or Class I shares, as applicable, of the One Group
Fund, (b) the distribution of such One Group Fund
shares to the Shareholders of the Pegasus Portfolio
according to their respective interests, and (c) the
termination of Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 234
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE10 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Managed Assets Conservative
Fund to the corresponding One Group Investor Balanced
Fund in exchange for Class A, Class B or Class I
shares, as applicable, of the One Group Fund, (b) the
distribution of such One Group Fund shares to the
Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 235
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE11 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Managed Assets Balanced
Fund to the corresponding One Group Investor Growth
& Income Fund in exchange for Class A, Class B or
Class I shares, as applicable, of the One Group Fund,
(b) the distribution of such One Group Fund shares to
the Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 236
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE12 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Managed Assets Growth Fund
to the corresponding One Group Investor Growth Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 237
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE13 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Equity Income Fund to the
corresponding One Group Income Equity Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 238
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE14 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Growth Fund to the
corresponding One Group Large Company Growth Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 239
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE15 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Mid-Cap Opportunity Fund
to the corresponding One Group Diversified Mid Cap Fund
in exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 240
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE16 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Small-Cap Opportunity Fund
to the corresponding One Group Small Cap Value Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 241
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE17 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Intrinsic Value Fund to
the corresponding One Group Disciplined Value Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 242
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE18 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Growth and Value Fund to
the corresponding One Group Value Growth Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 243
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE19 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Equity Index Fund to the
corresponding One Group Equity Index Fund in exchange
for Class A, Class B or Class I shares, as applicable,
of the One Group Fund, (b) the distribution of such
One Group Fund shares to the Shareholders of the
Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 244
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE20 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus International Equity Fund
to the corresponding One Group Diversified
International Fund in exchange for Class A, Class B or
Class I shares, as applicable, of the One Group Fund,
(b) the distribution of such One Group Fund shares to
the Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 245
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE21 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Bond Fund to the
corresponding One Group Bond Fund in exchange for
Class A, Class B or Class I shares, as applicable,
of the One Group Fund, (b) the distribution of such
One Group Fund shares to the Shareholders of the
Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 246
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE22 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Short Bond Fund to the
corresponding One Group Limited Volatility Bond Fund
in exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 247
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE23 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Multi Sector Bond Fund to
the corresponding One Group Income Bond Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 248
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE24 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Municipal Bond Fund to the
corresponding One Group Tax-Free Bond Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 249
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE25 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Intermediate Municipal Bond
Fund to the corresponding One Group Intermediate
Tax-Free Bond Fund in exchange for Class A, Class B or
Class I shares, as applicable, of the One Group Fund,
(b) the distribution of such One Group Fund shares to
the Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 250
EPGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE26 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Michigan Municipal Bond
Fund to the corresponding One Group Michigan Municipal
Bond Fund in exchange for Class A, Class B or Class I
shares, as applicable, of the One Group Fund, (b) the
distribution of such One Group Fund shares to the
Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 251
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE27 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus High Yield Bond Fund to the
corresponding One Group High Yield Bond Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 252
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE28 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Intermediate Bond Fund to
the corresponding One Group Intermediate Bond Fund in
exchange for Class A, Class B or Class I shares, as
applicable, of the One Group Fund, (b) the distribution
of such One Group Fund shares to the Shareholders of
the Pegasus Portfolio according to their respective
interests, and (c) the termination of Pegasus under
state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 253
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE29 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Short Municipal Bond Fund
to the corresponding One Group Short-Term Municipal
Bond Fund in exchange for Class A, Class B or Class I
shares, as applicable, of the One Group Fund, (b) the
distribution of such One Group Fund shares to the
Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
<PAGE> 254
PEGASUS FUND
P.O. BOX 5142
WESTBOROUGH, MA 01518
PEGASUS FUNDS
FUND NAME HERE
--------------
The undersigned hereby appoints Mark S. Redman and Alaina Metz and each of them,
attorneys and proxies of the undersigned each with the power of substitution and
resubstitution, to attend, vote and act for the undersigned at the Meeting of
Shareholders of the above-referenced Fund of the Pegasus Funds (the "Trust") to
be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
on March 17, 1999 at 10:00 a.m. (Eastern Time) and at any adjournment or
adjournments thereof, casting votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth below, in accordance with the specification indicated, if any, and
with all powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such meeting, and hereby ratifying
and confirming all that said attorneys and proxies, or each of them, may
lawfully do by virtue hereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS OF THE TRUST AND THE COMBINED PROSPECTUS/PROXY
STATEMENT DATED JANUARY 19, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE
ABOVE-REFERENCED FUND OF THE TRUST. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The tear-off proxy at the bottom of this form represents your voting power in
the future of your fund. We have grouped your proxy card(s) together for your
convenience and to reduce postage expenses. By voting now and returning your
proxy card(s), you will save your fund the expense of a costly second mailing.
The meeting date for your Fund is March 17, 1999, at the offices of BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio. Please vote below, sign your proxy
card(s), and return in the postage-paid envelope included with this material.
Thank you for your prompt return of your proxy card(s).
PLEASE SIGN, DATE AND RETURN THE PROXY CARD(S)
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. CORPORATE PROXIES
SHOULD BE SIGNED IN FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. EACH JOINT
OWNER SHOULD SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIPE30 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FUND'S NAME HERE
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. THIS PROXY IS SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF THE FUND. THE MEETING WILL BE HELD AT THE
OFFICES OF BISYS FUND SERVICES, 3435 STELZER ROAD, COLUMBUS, OHIO ON MARCH 17,
1999 AT 10:00 a.m. (EASTERN TIME). PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To approve a Reorganization Agreement which provides [ ] [ ] [ ]
for (a) the transfer of all of the assets and
liabilities of the Pegasus Market Expansion Index Fund
to the corresponding One Group Market Expansion Index
Fund in exchange for Class A, Class B or Class I
shares, as applicable, of the One Group Fund, (b) the
distribution of such One Group Fund shares to the
Shareholders of the Pegasus Portfolio according to
their respective interests, and (c) the termination of
Pegasus under state law and the 1940 Act.
2. To transact such other business as may properly come [ ] [ ] [ ]
before the Special Meeting or any adjournment(s)
thereof.
____________________________________ ____________________________________
| | | | | |
| | | | | |
|____________________________|_______| |____________________________|_______|
Signature (PLEASE SIGN Date Signature (Joint Owners) Date
WITHIN BOX)
- -------------------------------------------------------------------------------
