PEGASUS FUNDS
Strength in Investing
ANNUAL REPORT
MONEY MARKET FUNDS
December 31, 1996
Pegasus
Funds
<PAGE>
Dear Shareholders:
1996 has been a year of positive change as the former Prairie Funds
and Woodward Funds were combined into the new Pegasus Funds family.
As of year end 1996, the Pegasus Funds are comprised of 26 funds
with over $13 billion in assets, which places the fund complex among the
50 largest in the U.S. in total assets.
We know that the fund merger process may have been confusing at
times. Many of you underwent proxy solicitations, changes in statement
formats, or were otherwise affected. We want to thank you for your
cooperation and understanding.
With the merger behind us, we are confident that our new, larger
fund family will provide our shareholders with many benefits: more fund
choices, enhanced shareholder services, and even greater depth and talent
within the fund manager ranks of FCNIMCO, the funds' investment advisor.
Thank you for your continued support.
/s/ Marco Hanig
Marco Hanig
Managing Director
First Chicago NBD Investment Management Company
<PAGE>
Pegasus Money Market Funds
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1996
Treasury Municipal Michigan Municipal
Money Market Money Market Money Market Money Market
Fund Fund Fund Fund
------------ ------------ ------------ ------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At cost $2,431,981,777 $1,266,604,783 $820,342,261 $120,924,538
============== ============== ============ ============
At amortized cost $2,438,089,978 $1,267,445,707 $819,323,039 $120,728,652
Cash 23,460 120 9,769 61,944
Interest receivable 12,996,218 8,313,555 6,267,331 1,008,838
Deferred organization costs, net -- 3,031 -- --
Prepaids and other 135,614 22 -- 37,023
-------------- -------------- ------------ ------------
TOTAL ASSETS 2,451,245,270 1,275,762,435 825,600,139 121,836,457
-------------- -------------- ------------ ------------
LIABILITIES:
Payable for securities purchased -- -- 9,016,650 --
Accrued administration fees 313,859 178,588 108,468 16,691
Shareholder services fees payable 160,298 47,416 40,021 16,308
Accrued investment advisory fees 586,622 348,585 216,936 33,381
Accrued custodial fees 3,466 1,258 3,754 644
Dividends payable 6,174,873 4,718,220 1,853,356 148,541
Other payables and accrued expenses 153,270 466,733 197,400 11,358
-------------- -------------- ------------ ------------
TOTAL LIABILITIES 7,392,388 5,760,800 11,436,585 226,923
-------------- -------------- ------------ ------------
NET ASSETS $2,443,852,882 $1,270,001,635 $814,163,554 $121,609,534
============== ============== ============ ============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE:
Class A Shares:
Net assets $ 728,397,382 $ 214,398,036 $182,225,807 $ 72,088,894
Capital shares 728,394,588 214,414,764 182,279,459 72,089,458
-------------- -------------- ------------ ------------
Net asset value and redemption price per share $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============ ============
Class B Shares:
Net assets $ 143,041 $ -- $ -- $ --
Capital shares 143,041 -- -- --
-------------- -------------- ------------ ------------
Net asset value and redemption price per share $ 1.00 $ -- $ -- $ --
============== ============== ============ ============
Class I Shares:
Net assets $1,715,312,459 $1,055,603,599 $631,937,747 $ 49,520,640
Capital shares 1,715,312,459 1,055,603,599 631,937,747 49,521,063
-------------- -------------- ------------ ------------
Net asset value and redemption price per share $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============ ============
NET ASSETS CONSIST OF:
Capital Shares (unlimited number of shares
authorized, par value $.10 per share) $ 244,385,009 $ 127,001,836 $ 81,421,721 $ 12,161,052
Additional paid-in capital 2,199,465,079 1,143,016,527 732,795,485 109,449,469
Accumulated undistributed net realized gains (losses) 2,794 (16,728) (53,652) (987)
-------------- -------------- ------------ ------------
TOTAL NET ASSETS $2,443,852,882 $1,270,001,635 $814,163,554 $121,609,534
============== ============== ============ ============
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
Pegasus Money Market Funds
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996
Treasury Municipal Michigan Municipal
Money Market Money Market Money Market Money Market
Fund Fund Fund Fund
------------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME: $112,242,044 $73,454,342 $24,488,355 $4,766,145
------------ ----------- ----------- ----------
EXPENSES:
Investment advisory fees 7,987,126 5,398,925 2,527,916 571,625
Administration fees 1,113,026 768,050 417,099 66,924
Transfer and dividend disbursement agent fees 576,713 69,583 66,264 12,653
Distribution fees 137,169 62,301 34,232 10,068
Shareholder service fees (Class A shares) 851,719 222,245 296,332 81,482
Shareholder service fees (Class B shares) 154 -- -- --
12b-1 fees (Class B shares) 238 -- -- --
Professional fees 123,574 93,575 55,888 25,355
Custodial fees 51,796 25,977 38,241 7,757
Amortization of deferred organization costs -- 3,032 -- --
Registration, filing fees and other expenses 209,969 762,117 219,403 177,742
Less: Expense reimbursement -- -- -- (37,403)
------------ ----------- ----------- ----------
NET EXPENSES 11,051,484 7,405,805 3,655,375 916,203
------------ ----------- ----------- ----------
NET INVESTMENT INCOME 101,190,560 66,048,537 20,832,980 3,849,942
------------ ----------- ----------- ----------
NET REALIZED GAINS (LOSSES) ON INVESTMENTS 2,794 (743) -- (987)
------------ ----------- ----------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $101,193,354 $66,047,794 $20,832,980 $3,848,955
============ =========== =========== ==========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
Pegasus Money Market Funds
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Treasury
Money Market Money Market
Fund Fund
-------------------------------- -------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 101,190,560 $ 89,976,159 $ 66,048,537 $ 38,914,036
Net realized gains (losses) on investments 2,794 -- (743) --
---------------- ---------------- ---------------- ---------------
Net increase in net assets from operations 101,193,354 89,976,159 66,047,794 38,914,036
---------------- ---------------- ---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME (Note 2):
Class A shares (39,714,946) (89,976,159) (15,961,445) (38,914,036)
Class B shares(1) (1,519) -- -- --
Class I shares(2) (61,474,095) -- (50,087,092) --
---------------- ---------------- ---------------- ---------------
Total distributions to shareholders (101,190,560) (89,976,159) (66,048,537) (38,914,036)
---------------- ---------------- ---------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 14,864,047,666 15,430,620,141 14,570,699,743 6,284,582,300
Proceeds from shares issued in connection
with merger 401,052,532 -- 441,805,139 --
Net asset value of shares issued in
reinvestment of distributions to
shareholders 34,746,272 20,938,255 10,667,035 5,449,979
---------------- ---------------- ---------------- ---------------
15,299,846,470 15,451,558,396 15,023,171,917 6,290,032,279
Less: payments for shares redeemed (14,495,691,196) (15,134,903,898) (14,680,865,041) (6,148,030,955)
---------------- ---------------- ---------------- ---------------
Net increase (decrease) in net assets from
capital share transactions 804,155,274 316,654,498 342,306,876 142,001,324
---------------- ---------------- ---------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS 804,158,068 316,654,498 342,306,133 142,001,324
NET ASSETS:
Beginning of year 1,639,694,814 1,323,040,316 927,695,502 785,694,178
---------------- ---------------- ---------------- ---------------
End of year $ 2,443,852,882 $ 1,639,694,814 $ 1,270,001,635 $ 927,695,502
================ ================ ================ ===============
<FN>
(1) For the period September 14, 1996 (initial offering date of Class B
Shares) through December 31, 1996.
(2) For the period March 30, 1996 (initial offering date of Class I Shares)
through December 31, 1996.
</TABLE>
See Notes to Financial Statements.
<PAGE>
Pegasus Money Market Funds
STATEMENTS OF CHANGES IN NET ASSETS
(CONTINUED)
<TABLE>
<CAPTION>
Municipal Michigan Municipal
Money Market Money Market
Fund Fund
------------------------------- -----------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 20,832,980 $ 18,301,140 $ 3,849,942 $ 3,236,772
Net realized gains (losses) on investments -- -- (987) --
--------------- --------------- ------------- -------------
Net increase in net assets from operations 20,832,980 18,301,140 3,848,955 3,236,772
--------------- --------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME (Note 2):
Class A shares (6,597,625) (18,301,140) (2,516,627) (3,236,772)
Class B shares(1) -- -- -- --
Class I shares(2) (14,235,355) -- (1,333,315) --
--------------- --------------- ------------- -------------
Total distributions to shareholders (20,832,980) (18,301,140) (3,849,942) (3,236,772)
--------------- --------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 3,285,400,405 2,777,275,094 360,970,978 293,836,102
Proceeds from shares issued in connection
with merger 281,427,973 -- -- --
Net asset value of shares issued in
reinvestment of distributions to
shareholders 4,167,474 2,421,757 2,226,403 2,029,545
--------------- --------------- ------------- -------------
3,570,995,852 2,779,696,851 363,197,381 295,865,647
Less: payments for shares redeemed (3,321,245,774) (2,766,019,376) (363,643,802) (252,448,579)
--------------- --------------- ------------- -------------
Net increase (decrease) in net assets from
capital share transactions 249,750,078 13,677,475 (446,421) 43,417,068
NET INCREASE (DECREASE) IN NET ASSETS 249,750,078 13,677,475 (447,408) 43,417,068
NET ASSETS:
Beginning of year 564,413,476 550,736,001 122,056,942 78,639,874
--------------- --------------- ------------- -------------
End of year $ 814,163,554 $ 564,413,476 $ 121,609,534 $ 122,056,942
=============== =============== ============= =============
<FN>
(1) For the period September 14, 1996 (initial offering date of Class B
Shares) through December 31, 1996.
(2) For the period March 30, 1996 (initial offering date of Class I Shares)
through December 31, 1996.
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
Pegasus Money Market Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
December 31, 1996
Amortized
Cost
Description Face Amount (Note 2)
----------- ----------- --------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS -- 10.99%
Allstate Life Insurance Co. Master Note*, 5.65%, 1/2/97 ............. $ 5,000,000 $ 5,000,000
American General Finance, Inc. Master Note, 5.60%, 1/2/97 ........... 15,000,000 15,000,000
Commonwealth Life Insurance Co. Master Note*, 5.67%, 1/2/97 ......... 5,000,000 5,000,000
Peoples Security Life Insurance Co. Master Note*, 5.67%, 1/2/97 ..... 5,000,000 5,000,000
Sun Life Insurance Co. of America Master Note*, 5.74%, 1/2/97 ....... 10,000,000 10,000,000
Transamerica Finance Group, Inc. Master Note, 5.60%, 1/2/97 ......... 25,000,000 25,000,000
Lehman Brothers, Inc., Revolving Repurchase Agreement, 6.90%, 1/2/97
(secured by various U.S. Treasury Notes with maturities ranging
from 1/15/00 through 12/31/01 at various interest rates ranging
from 6.125% to 8.50%, all held at Chase Bank) ..................... 109,350,000 109,350,000
NationsBank Capital Markets, Inc., Revolving Repurchase Agreement,
6.90%, 1/2/97 (secured by various U.S. Treasury Notes with
maturities ranging from 9/30/98 through 10/15/06 at various
interest rates ranging from 5.00% to 8.875%, all held at Chase
Bank) ............................................................. 1,567,000 1,567,000
Salomon Brothers, Revolving Repurchase Agreement, 6.90%, 1/2/97
(secured by various U.S. Treasury Strips with maturities ranging
from 11/15/04 through 5/15/06, all held at Chase Bank) ............ 92,000,000 92,000,000
--------------
267,917,000
--------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-- 3.74%
U.S. Treasury Securities -- 2.37%
U.S. Treasury Bill, 5.13%, 3/6/97 ................................. 25,000,000 24,772,000
U.S. Treasury Notes:
7.500%, 1/31/97 ................................................... 10,000,000 10,018,852
6.750%, 2/28/97 ................................................... 10,000,000 10,024,761
6.875%, 2/28/97 ................................................... 13,000,000 13,032,634
--------------
57,848,247
-------------
U.S. Agency Obligation -- 1.37%
Student Loan Marketing Assn., 5.87%, 6/30/97 ...................... 33,500,000 33,512,099
--------------
COMMERCIAL PAPER -- 35.04%
AESOP Funding Corp., 5.50%, 1/8/97 .................................. 10,000,000 9,989,306
Akzo Nobel Inc.:
5.48%, 1/16/97 .................................................... 14,975,000 14,940,807
5.37%, 3/4/97 ..................................................... 24,975,000 24,744,023
Allomon Funding Corp., 5.35%, 2/25/97 ............................... 5,068,000 5,026,576
Alpine Securitization Corp., 5.72%, 1/23/97 ......................... 17,732,000 17,670,017
American Trading & Production Corp., 5.32%, 2/27/97 ................. 8,975,000 8,899,401
Asset Securitization Corp., 5.60%, 2/6/97 ........................... 10,000,000 9,944,000
Banca Serafin S.A., 5.32%, 5/6/97 ................................... 19,960,000 19,591,294
Banco Bradesoc S.A., 5.45%, 2/24/97 ................................. 25,000,000 24,795,625
Bank of New York Company Inc., 5.32%, 1/10/97 ....................... 15,000,000 14,980,050
Barton Capital Corp., 5.36%, 1/10/97 ................................ 10,000,000 9,986,600
BBL North America Inc., 5.34%, 1/27/97 .............................. 18,300,000 18,229,423
Beal Cayman LTD:
5.32%, 2/18/97 .................................................. 10,000,000 9,929,067
5.31%, 5/22/97 .................................................. 17,000,000 16,646,443
5
<PAGE>
Caterpillar Financial Services Corp., 5.56%, 1/14/97 ................ 4,600,000 4,590,764
CIT Group Holdings Inc., 7.25%, 1/2/97 .............................. 100,000,000 100,000,000
Clipper Receivables Corp., 5.80%, 1/28/97 ........................... 15,000,000 14,934,750
Commercial Credit Company:
5.47%, 2/7/97 ................................................... 10,960,000 10,898,384
5.50%, 2/14/97 .................................................. 13,000,000 12,912,611
Commission Federal De Electric, 5.35%, 3/6/97 ....................... 15,000,000 14,857,333
Deere & Co., 5.32%, 1/24/97 ......................................... 15,000,000 14,949,017
Enterprise Funding Corp.:
5.33%, 1/22/97 .................................................. 14,209,000 14,164,822
5.33%, 3/5/97 ................................................... 10,000,000 9,906,725
Equipment Funding Inc., 6.85%, 1/7/97 ............................... 11,109,000 11,096,317
Eureka Securitization Inc., 5.50%, 2/5/97 ........................... 15,000,000 14,919,792
General Electric Capital Corp., 5.50%, 1/17/97 ...................... 13,980,000 13,945,827
Greenwich Funding Corp., 5.35%, 3/7/97 .............................. 10,000,000 9,903,403
MCI Communications Corp., 5.32%, 1/7/97 ............................. 9,000,000 8,992,020
Mont Blanc Capital Corp., 5.47%, 1/13/97 ............................ 19,712,000 19,676,058
Pacific Dunlop Holdings, Inc.:
5.45%, 2/3/97 ................................................... 19,975,000 19,875,208
5.35%, 2/21/97 .................................................. 10,000,000 9,924,208
Premium Funding Inc., 5.55%, 1/7/97 ................................. 10,000,000 9,990,750
Premium Funding Inc. Series E, 5.50%, 1/21/97 ....................... 10,000,000 9,969,444
Ranger Funding Corporation, 5.52%, 1/10/97 .......................... 13,710,000 13,691,080
Receivables Capital Corp.:
5.80%, 1/3/97 ................................................... 10,000,000 9,996,778
5.38%, 1/9/97 ................................................... 15,000,000 14,982,067
5.35%, 1/30/97 .................................................. 11,110,000 11,062,119
Royal Bank of Canada, 5.32%, 1/17/97 ................................ 16,380,000 16,341,270
RTZ America Inc., 5.32%, 5/5/97 ..................................... 12,045,000 11,824,282
Rubbermaid Inc.:
5.55%, 3/3/97 ................................................... 18,000,000 17,830,725
5.33%, 3/10/97 .................................................. 6,960,000 6,889,928
Sheffield Receivables Corporation, 5.70%, 1/24/97 ................... 12,960,000 12,912,804
Sigma Finance Inc.:
5.65%, 1/10/97 .................................................. 14,960,000 14,938,869
5.55%, 1/21/97 .................................................. 4,000,000 3,987,667
5.33%, 2/3/97 ................................................... 20,000,000 19,902,283
5.31%, 5/19/97 .................................................. 15,975,000 15,649,829
St. Michael Finance LTD., 5.33%, 1/7/97 ............................. 10,000,000 9,991,117
Sun Belt Dix Inc.:
5.38%, 1/9/97 ................................................... 11,000,000 10,986,849
5.35%, 1/30/97 .................................................. 10,000,000 9,956,903
5.35%, 2/18/97 .................................................. 16,000,000 15,885,867
Sweden (Kingdom of), 5.38%, 2/14/97 ................................. 7,000,000 6,953,971
TI Group, Inc.:
5.38%, 4/7/97 ................................................... 10,000,000 9,856,533
5.42%, 6/12/97 .................................................. 20,000,000 19,512,200
6
<PAGE>
Twin Towers Inc.:
5.40%, 1/27/97 .................................................. 15,411,000 15,350,897
5.40%, 3/11/97 .................................................. 14,179,000 14,032,247
WCP Funding Inc., 5.32%, 2/25/97 .................................... 15,000,000 14,878,083
Wood Street Funding Corp., 5.35%, 2/6/97 ............................ 20,000,000 19,893,000
Xerox Corp., 5.32%, 1/23/97 ......................................... 6,025,000 6,005,412
--------------
854,192,845
--------------
CORPORATE NOTES -- 11.23%
Abbey National Treasury Services PLC., 5.50%, 11/21/97 .............. 17,975,000 17,959,025
Associates Corp. of North America, 9.70%, 5/1/97 .................... 1,000,000 1,011,634
Burmah Castrol Finance PLC., 7.00%, 12/15/97 ........................ 16,000,000 16,204,408
Caterpillar Financial Services Corp., 6.06%, 7/28/97 ................ 10,000,000 10,000,000
First Union National Bank of NC, Medium Term Note,
5.70%, 4/29/97 .................................................. 15,000,000 15,000,000
General Electric Capital Corp. Medium Term Notes:
7.625%, 1/10/97 ................................................. 5,635,000 5,638,034
5.24%, 1/17/97 .................................................. 22,980,000 22,979,430
IBM Credit Corp., 5.78%, 8/20/97 .................................... 14,980,000 14,967,740
New York Life Insurance Company, Funding Agreement*,
(A/R), 10/14/97 ................................................. 30,000,000 30,000,000
PHH Corp.:
5.89% (A/R), 1/23/97 ............................................ 25,000,000 24,999,561
5.59% (A/R), 8/8/97 ............................................. 15,000,000 14,995,618
Security Life of Denver Insurance Co., Funding Agreement*,
5.54%, 5/27/97 .................................................. 12,500,000 12,500,000
5.65%, 11/26/97 ................................................. 12,500,000 12,500,000
Transamerica Life Ins. & Annuity Co., Funding Agreement*,
5.70%, 12/8/97 .................................................. 50,000,000 50,000,000
Xerox Credit Corporation, Medium Term Note,
5.72%, (A/R), 5/16/97 ........................................... 25,000,000 25,004,749
--------------
273,760,199
--------------
CERTIFICATES OF DEPOSIT -- 12.19%
American Express Centurion Bank, 5.37%, 2/13/97 ..................... 15,000,000 15,000,000
BankOne Columbus, Bank Note, 5.69%, 10/28/97 ........................ 23,975,000 23,963,571
Banque Nationale de Paris, 5.50%, 1/8/97 ............................ 10,000,000 9,999,490
Canadian Imperial Bank of Commerce:
5.50%, 1/9/97 ................................................... 10,000,000 10,000,000
5.39%, 1/3/97 ................................................... 16,975,000 16,975,000
Comerica Bank, Bank Note, 5.68%, 2/14/97 ............................ 10,000,000 10,000,000
Deutsche Bank, 5.55%, 11/5/97 ....................................... 11,980,000 11,974,181
Dresdner Bank AG:
5.80%, 5/1/97 ................................................... 10,000,000 10,000,000
5.60%, 7/3/97 ................................................... 10,980,000 10,980,000
Huntington National Bank, Bank Note, 5.28%, 1/10/97 ................. 7,000,000 7,000,000
National Australia Bank, Bank Note, 5.80%, 10/3/97 .................. 30,000,000 30,008,727
PNC Bank Corp., 5.55%, 10/1/97 ...................................... 25,000,000 24,985,361
Rabobank Nederland NV, 5.93%, 6/4/97 ................................ 10,000,000 10,000,364
7
<PAGE>
Republic Mase Australia, Bank Note, 5.65%, 10/31/97 ................. 28,000,000 28,015,975
Royal Bank of Canada, 5.75%, 5/14/97 ................................ 24,000,000 23,995,657
Societe Generale:
5.78%, 4/11/97 .................................................. 10,000,000 9,999,475
5.80%, 8/26/97 .................................................. 19,000,000 19,000,000
5.85%, 10/1/97 .................................................. 10,000,000 10,001,297
Society National Bank of Cleveland, Bank Note, 7.125%, 4/15/97 ...... 13,250,000 13,304,006
Swiss Bank Corporation, 5.96%, 6/3/97 ............................... 2,000,000 1,999,316
--------------
297,202,420
--------------
TIME DEPOSITS -- 26.32%
Banca Commerciale Italiana, 7.25%, 1/2/97 ........................... 51,000,000 51,000,000
Bank of America, 8.00%, 1/2/97 ...................................... 5,000,000 5,000,000
Bank Brussel Lambert, 7.25%, 1/2/97 ................................. 55,000,000 55,000,000
Bank of Montreal, 7.50%, 1/2/97 ..................................... 50,000,000 50,000,000
Bank of Tokyo-Mitsubishi Ltd, 8.00%, 1/2/97 ......................... 55,000,000 55,000,000
Boatmens National Bank of St. Louis, 6.50%, 1/2/97 .................. 40,000,000 40,000,000
Caisse National De Credit Agricole, 7.25%, 1/2/97 ................... 48,000,000 48,000,000
Hong Kong & Shanghai Banking Corp., 7.00%, 1/2/97 ................... 48,000,000 48,000,000
Key Bank NA, 7.25%, 1/2/97 .......................................... 75,000,000 75,000,000
Midland Bank PLC, 7.00%, 1/2/97 ..................................... 90,000,000 90,000,000
National City Bank of Cleveland, 6.50%, 1/2/97 ...................... 41,741,000 41,741,000
Republic National Bank of New York, 7.00%, 1/2/97 ................... 35,000,000 35,000,000
Suntrust Banks Inc., 7.125%, 1/2/97 ................................. 48,000,000 48,000,000
--------------
641,741,000
--------------
BANKERS ACCEPTANCE NOTES -- 0.49% Corestates Bank NA:
5.25%, 2/11/97 .................................................. 2,000,000 1,987,768
5.25%, 2/18/97 .................................................. 10,000,000 9,928,400
--------------
11,916,168
--------------
TOTAL INVESTMENTS ..................................................... $2,438,089,978
==============
<FN>
A/R -- Adjustable Rate
* -- Restricted Security (see Note 7)
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Pegasus Treasury Money Market Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
December 31, 1996
AMORTIZED
FACE COST
DESCRIPTION AMOUNT (Note 2)
----------- ------ ---------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS -- 78.84%
Aubrey Langston Revolving Repurchase Agreement, 5.90%, 1/2/97 (secured
by various U.S. Treasury Obligations with maturities ranging from
1/2/97 through 5/15/05 at various interest rates ranging from 0.00%
to 11.875%, all held at Chase Bank) ............................... $ 62,000,000 $ 62,000,000
Barclay Inc., Revolving Repurchase Agreement, 5.80%, 1/2/97 (secured
by various U.S. Treasury obligations with maturities ranging from
2/15/97 through 11/15/02 at various interest rates ranging from
4.75% to 10.75%, all held at the Bank of New York) ................ 62,000,000 62,000,000
Bear Stearns & Co., Inc., Revolving Repurchase Agreement, 6.80%,
1/2/97 (secured by various U.S. Treasury Strips with maturities
ranging from 2/15/97 through 11/15/06, all held at the Custodial
Trust Co.) ........................................................ 310,000,000 310,000,000
Daiwa Securities America, Inc., Revolving Repurchase Agreement,
6.90%, 1/2/97 (secured by U.S. Treasury Bills due 10/16/97, all
held at the Bank of New York) ..................................... 62,000,000 62,000,000
Dean Witter, Revolving Repurchase Agreement, 6.00%, 1/2/97 (secured
by various U. S. Treasury Securities with maturities ranging from
1/31/97 through 11/15/03 at various interest rates ranging from
0.00% to 7.75%, all held at the Bank of New York) ................. 62,000,000 62,000,000
First Union Capital Markets, Revolving Repurchase Agreement, 7.05%,
1/2/97 (secured by various U.S. Treasury Notes with maturities
ranging from 2/15/97 through 5/15/06 at various interest rates
ranging from 4.75% to 8.875%, all held at Bankers Trust Company)... 179,000,000 179,000,000
Greenwich Capital Markets, Inc., Revolving Repurchase Agreement,
6.80%, 1/2/97 (secured by various U.S. Treasury Notes with
maturities ranging from 1/15/00 through 4/30/00 at various interest
rates ranging from 6.375% to 8.50%, all held at Chase Bank) ....... 62,000,000 62,000,000
H.S.B.C. Treasury, Revolving Repurchase Agreement, 6.00%, 1/2/97
(secured by various U.S. Treasury Notes with maturities ranging
from 4/30/01 through 8/15/04 at various interest rates ranging from
5.75% to 8.00%, all held at Chase Bank) ........................... 62,000,000 62,000,000
Lehman Brothers, Inc., Revolving Repurchase Agreement, 6.90%, 1/2/97
(secured by various U.S. Treasury Notes with maturities ranging
from 1/15/00 through 12/31/01 at various interest rates ranging
from 6.125% to 8.50%, all held at Chase Bank) ..................... 92,241,000 92,241,000
NationsBank Capital Markets, Inc., Revolving Repurchase Agreement,
6.90%, 1/2/97 (secured by various U.S. Treasury Notes with
maturities ranging from 9/30/98 through 10/15/06 at various interest
rates ranging from 5.00% to 8.875%, all held at Chase Bank) ....... 46,000,000 46,000,000
--------------
999,241,000
--------------
9
<PAGE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS -- 21.16%
U.S. Treasury Securities -- 10.18%
U.S. Treasury Bills:
4.55%, 2/6/97 ................................................... 25,000,000 24,886,125
5.13%, 3/6/97 ................................................... 15,500,000 15,358,640
U.S. Treasury Notes:
7.500%, 01/31/97 ................................................ 14,480,000 14,507,298
6.875%, 02/28/97 ................................................ 26,500,000 26,579,117
6.500%, 04/30/97 ................................................ 10,000,000 10,018,133
5.875%, 07/31/97 ................................................ 45,000,000 45,026,548
6.500%, 08/15/97 ................................................ 2,000,000 2,007,567
5.750%, 09/30/97 ................................................ 25,000,000 24,967,417
5.625%, 10/31/97 ................................................ 50,000,000 49,993,858
5.250%, 12/31/97 ................................................ 55,000,000 54,860,004
--------------
268,204,707
--------------
TOTAL INVESTMENTS ..................................................... $1,267,445,707
==============
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Pegasus Municipal Money Market Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
December 31, 1996
Amortized
Interest Cost
Description Rating* Rate*** Face Amount (Note 2)
----------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Alabama -- 0.46%
Columbia IDR VRDB-Alabama Power Co. Series A,
5/1/22............................................ VMIG 1 5.00% $ 3,800,000 $ 3,800,000
Alaska -- 3.02%
Valdez Marine Terminal-Arco Transportation:
CP, 1/24/97 ....................................... VMIG 1 3.65% 9,700,000 9,700,000
CP, 2/14/97 ....................................... VMIG 1 3.70% 7,000,000 7,000,000
VRDB, 5/1/31 ...................................... VMIG 1 4.20% 8,000,000 8,000,000
Arizona -- 0.55%
Chandler IDR VRDB-Parsons Municipal Services,
12/15/09 .......................................... A 1+ 3.71% 4,500,000 4,500,000
California -- 0.49%
Contra Costa Transportion Authority (FGIC Insured)
Sales Tax Series A, 3/1/97 ........................ Aaa 5.00% 4,015,000 4,023,841
Colorado -- 1.23%
Colorado State General Fund Revenue, TRAN, Series A,
6/27/97 ........................................... SP 1+ 4.50% 10,000,000 10,032,703
Connecticut -- 0.55%
Connecticut State Special Assessment (FGIC Insured),
7/1/97 ............................................ VMIG 1 3.90% 4,500,000 4,500,000
District of Columbia -- 0.39%
District of Columbia GO Refunding, VRDB:
A-4, 10/1/07 ...................................... VMIG 1 5.00% 2,700,000 2,700,000
A-5, 10/1/07 ...................................... VMIG 1 5.00% 500,000 500,000
Florida -- 4.97%
Florida State Board of Education GO Unlimited Tax
Series B, 6/1/97 .................................. Aaa 7.75% 4,250,000 4,403,881
Orange Co. HFA Series B, 4/1/97 ..................... A 1+ 3.65% 5,000,000 5,000,000
St. Lucie Co. PCR CP-- Florida Power & Light, 1/9/97 VMIG 1 3.65% 9,350,000 9,350,000
St. Lucie Co. CP, 2/25/97 ........................... VMIG 1 3.60% 6,500,000 6,500,000
Sunshine State Finance Authority CP, 3/7/97 ......... VMIG 1 3.40% 8,000,000 8,000,000
Sunshine State Governmental Revenue CP, 2/25/97 ..... VMIG 1 3.60% 7,500,000 7,500,000
Georgia -- 3.65%
Burke Co. Development Authority PCR, 2/11/97 ........ VMIG 1 3.60% 5,000,000 5,000,000
Burke Co. Development Authority PCR VRDB:
7/1/24 ............................................ VMIG 1 4.65% 4,700,000 4,700,000
4/1/25 ............................................ VMIG 1 5.00% 4,200,000 4,200,000
Georgia GO Unlimited Tax, 3/1/97 .................... Aaa 6.75% 5,000,000 5,024,805
Georgia Municipal Gas Authority, 1/23/97 ............ A 1+ 3.70% 5,000,000 5,000,000
Municipal Electric Authority of Georgia CP, 1/10/97.. VMIG 1 3.75% 6,000,000 6,000,000
Idaho -- 1.84%
Idaho GO TAN, 6/30/97 ............................... MIG 1 4.50% 15,000,000 15,042,694
11
<PAGE>
Illinois -- 2.43%
Chicago Gas Supply VRDB, 12/1/97 .................... VMIG 1 3.70% 7,500,000 7,500,000
Chicago O'Hare International Airport, 12/1/17 ....... P 1 5.00% 3,400,000 3,400,000
Lake Cook Kane & Machinery Companies, 12/30/97 ...... ** N/R 3.95% 9,000,000 9,016,650
Indiana -- 6.69%
Burns Harbor IDR VRDB, 3/1/16 ....................... ** N/R 4.30% 9,000,000 9,000,000
Indiana PFA CP, 1/10/97 ............................. P 1 3.65% 20,000,000 20,000,000
Indiana State Development CP, 2/14/97 ............... P 1 3.70% 8,000,000 8,000,000
Mount Vernon CP, 2/11/97 ............................ P 1 3.40% 6,290,000 6,290,000
Mount Vernon PCR Refunding General Electric Project
Series A, 12/1/04 ................................. P 1 3.60% 5,000,000 5,000,000
Sullivan PCR CP, 4/14/97 ............................ P 1 3.40% 6,555,000 6,555,000
Kansas -- 1.06%
Butler Co.-Texaco Refunding & Marketing:
Series A, 8/1/24 .................................. VMIG 1 5.10% 2,000,000 2,000,000
Series B, 8/1/24 .................................. VMIG 1 5.10% 6,700,000 6,700,000
Kentucky -- 1.10%
Henderson Co. VRDB, 3/1/15 .......................... VMIG 1 4.25% 9,000,000 9,000,000
Louisiana -- 2.39%
Calcasieu Parish IDB VRDB, 3/1/25 ................... VMIG 1 5.10% 700,000 700,000
Lake Charles Harbor VRDB, 11/1/11 ................... A 1 + 4.95% 3,300,000 3,300,000
Louisiana GO Refunding Series A, 2/11/97 ............ VMIG 1 3.50% 7,500,000 7,500,000
Plaqeumines Parish VRDB, 5/1/25 ..................... P 1 5.10% 3,300,000 3,300,000
Plaqeumines Port Harbor VRDB, 9/1/97 ................ Aa 2 3.85% 4,000,000 4,005,168
St. Charles PCR VRDB, 11/1/21 ....................... VMIG 1 5.05% 800,000 800,000
Maine -- 1.22%
Maine GO TAN Unlimited Tax, 6/27/97 ................. MIG 1 4.50% 10,000,000 10,029,156
Maryland -- 0.74%
Montgomery Co. GO Unlimited Tax, 4/1/97 ............. Aaa 5.10% 6,000,000 6,022,604
Massachusetts -- 1.48%
Massachusetts Municipal Wholesale, 7/1/97 ........... Aaa 8.75% 11,605,000 12,134,952
Michigan -- 10.65%
Detroit Downtown Development Authority VRDB Millender
Center Project, 12/1/10 ........................... VMIG 1 4.20% 900,000 900,000
Farmington Hills EDR VRDB-Brookfield Building
Associates, 11/1/10 ............................... A 1 4.15% 2,950,000 2,950,000
Ingham Co. EDC VRDB-Martin Luther Memorial Home,
Inc., 4/1/22 ...................................... A 1+ 4.20% 5,370,000 5,370,000
Kent Hospital Finance Authority Series A, 1/15/20 ... VMIG 1 4.00% 10,400,000 10,400,000
12
<PAGE>
Michigan State Hospital VRDB-Hospital,
Equipment Loan Program:
12/1/23 ........................................... VMIG 1 4.15% 1,100,000 1,100,000
12/1/23 ........................................... VMIG 1 4.15% 8,100,000 8,100,000
Michigan State HDA VRDB, 4/1/19 ..................... A 1+ 4.15% 1,000,000 1,000,000
Michigan State HDA Ltd. Obligation VRDB:
Laurel Valley, 12/1/07 ............................ VMIG 1 4.10% 2,800,000 2,800,000
Pine Ridge, 10/1/07 ............................... VMIG 1 4.10% 1,300,000 1,300,000
Michigan State Job Development Authority VRDN-Sugar
Sebewa, 9/1/00 .................................... Aa 3 4.22% 1,700,000 1,700,000
PCR VRDB-Mazda Motor Corp., 10/1/08 ................. A1 4.32% 600,000 600,000
Michigan State Strategic Building Authority CP,
5/1/97 ............................................ P 1 3.50% 17,000,000 17,000,000
Michigan State Strategic Fund Limited Obligation
VRDB:
8/1/16 ............................................ ** N/R 4.35% 4,500,000 4,500,000
4/1/10 ............................................ VMIG 1 4.25% 2,700,000 2,700,000
6/1/15 ............................................ ** N/R 4.40% 2,500,000 2,500,000
Plymouth Township EDC VRDN-Key International
Manufacturing, Inc., 7/1/04 ....................... ** N/R 3.75% 3,400,000 3,400,000
Wayne Charter Co. Airport VRDB-Refunding Series A,
12/1/16 ........................................... VMIG 1 4.25% 4,900,000 4,900,000
Refunding Series B, 12/1/16 ....................... VMIG 1 4.10% 16,000,000 16,000,000
Minnesota -- 3.19%
Minnesota GO Unlimited Tax, 5/1/97 .................. Aaa 4.50% 10,390,000 10,416,490
Minnesota State Higher Education Facilities Series
3-L2 VRDB, 11/1/12 ................................ VMIG 1 4.10% 4,300,000 4,300,000
Rochester GO Various Sales Tax, 11/1/99 ............. VMIG 1 4.10% 11,400,000 11,400,000
Mississippi -- 1.06%
Jackson Co. Industrial Sewer Facilities VRDB,
12/15/24 .......................................... Aa 2 5.05% 2,500,000 2,500,000
Mississippi Hospital Equipment, 5/15/97 ............. Aaa 8.25% 6,000,000 6,217,440
Missouri -- 2.76%
Missouri State Health & Educational Facilities
Authority VRDB, 9/1/30 ............................ VMIG 1 4.75% 6,200,000 6,200,000
Missouri State Environmental Improvement Energy
Research PCR-Union Electric Co.:
Series A, 6/1/97 .................................. P 1 3.65% 10,000,000 10,000,000
Series B, 6/1/97 .................................. P 1 3.65% 6,430,000 6,430,000
Nevada -- 0.34%
Clark Co. IDR VRDB-Nevada Cogeneration, 12/1/22 ..... VMIG 1 5.10% 2,800,000 2,800,000
New Hampshire -- 1.22%
New Hampshire State PCR VRDB, 5/1/21 ................ VMIG 1 4.25% 10,000,000 10,000,000
13
<PAGE>
New York -- 1.54%
New York City Housing Development VRDB-Series A,
1/1/23 ............................................ A 1 4.90% 2,600,000 2,600,000
New York Municipal Water Finance Authority, CP,
4/7/97 ............................................ P 1 3.60% 10,000,000 10,000,000
North Carolina -- 0.13%
Person Co. Industrial Facilities PCR Authority VRDB,
11/1/16 ........................................... VMIG 1 4.75% 1,100,000 1,100,000
Ohio -- 3.70%
Montgomery Co. Hospital Revenue CP, 2/7/97 .......... VMIG 1 3.70% 10,000,000 10,000,000
Ohio Environmental Improvements CP, U.S. Steel Corp.,
5/1/11 ............................................ P 1 4.30% 8,300,000 8,300,000
Ohio State Water Development Authority VRDB, 5/1/18 . P 1 3.80% 8,500,000 8,500,000
Ohio State Turnpike Commission Series A, 2/15/97 .... AA - 4.25% 3,545,000 3,547,519
Oklahoma -- 0.79%
Oklahoma Co. GO Unlimit Tax, 2/1/97 ................. Aa 6.50% 6,420,000 6,437,235
Oregon -- 0.26%
Port St. Helens PCR VRDB, 8/1/14 .................... A 1+ 5.00% 2,100,000 2,100,000
Pennsylvania -- 4.20%
Allegheny Co. IDR VRDB-United Jewish Federation,
10/1/25 ........................................... VMIG 1 4.10% 9,900,000 9,900,000
Carbon Co. Industrial Development Authority, 1/24/97 P 1 3.65% 7,000,000 7,000,000
Montgomery Co. PCR CP, 2/13/97 ...................... P 1 3.60% 8,000,000 8,000,000
Pennsylvania Intergovernment Coop Authority, 6/15/97 Aaa 5.00% 5,000,000 5,028,453
Temple University of the Commonwealth, 5/20/97 ...... SP 1+ 4.63% 4,500,000 4,514,452
Rhode Island -- 1.22%
Rhode Island GO TAN Unlimited Tax, 6/30/97 .......... MIG 1 4.50% 10,000,000 10,030,843
South Carolina -- 1.44%
Charleston Co. School District GO, 2/1/97 ........... ** N/R 7.00% 3,200,000 3,272,889
York Co. PCR VRDB-Electric Project, 9/15/14 ......... MIG 1 3.80% 8,500,000 8,500,000
South Dakota -- 0.86%
South Dakota HDA Series E, 11/13/97 ................. VMIG 1 3.75% 7,000,000 7,000,000
Tennessee -- 4.57%
Memphis Shelby Co. Airport CP, 1/9/97 ............... P 1 3.70% 6,405,000 6,405,000
Oak Ridge IDR VRDN, 1/1/06 .......................... Aa 3 4.25% 10,000,000 10,000,000
Shelby Co. Health, Educational, & Housing Revenue
Series C, 8/1/97 .................................. VMIG 1 4.05% 4,540,000 4,540,000
Tennessee Housing Development Authority, 2/6/97 ..... VMIG 1 3.25% 16,500,000 16,493,141
14
<PAGE>
Texas -- 17.88%
Austin Utilities System CP, 3/21/97 ................. P 1 3.40% 11,300,000 11,300,000
Brazo River Authority PCR VRDB, 6/1/30 .............. VMIG 1 5.10% 17,000,000 17,000,000
Brazo Higher Education Authority VRDB Series B-1,
6/1/23 ............................................ VMIG 1 4.10% 6,000,000 6,000,000
Dallas Area Rapid Transit CP:
2/12/97 ........................................... P 1 3.45% 10,000,000 10,000,000
2/21/97 ........................................... P 1 3.60% 9,000,000 9,000,000
Gulf Coast IDA, 4/1/26 .............................. VMIG 1 5.10% 2,800,000 2,800,000
Harris Co. Helath Facilities Development Corp.
VRDB-General Memorial Hospital, 1/14/97 ........... VMIG 1 3.65% 8,000,000 8,000,000
Harris Co. Health Facilities Development Corp.
VRDB-St. Lukes Episcopal Hospital, 2/15/21 ........ VMIG 1 5.00% 3,700,000 3,700,000
North Central HCFA VRDB-YMCA Dallas, 6/1/21 ......... VMIG 1 4.30% 5,600,000 5,600,000
North Central Methodist Series B, 2/20/97 ........... VMIG 1 3.60% 8,400,000 8,400,000
Panhandle Pln Higher Education Authority Series A,
6/1/21 ............................................ VMIG 1 4.10% 6,000,000 6,000,000
Port Corpus Christi CP, 4/10/97 ..................... P 1 3.50% 10,500,000 10,500,000
Texas Hospital Equipment Finance Council (MBIA
Insured) VRDN, 4/7/05 ............................. VMIG 1 4.25% 7,870,000 7,870,000
Texas State GO TAN, 8/29/97 ......................... MIG 1 4.75% 23,000,000 23,117,283
Tyler Health Facilities Development Corp. CP-East
Texas Medical Center Regional Health, 2/13/97 ..... VMIG 1 4.00% 9,000,000 9,000,000
West Side Calhoun Co. VRDB,
12/1/15 ........................................... P 1 5.00% 2,900,000 2,900,000
4/1/31 ............................................ A 1+ 5.10% 5,300,000 5,300,000
Utah -- 1.21%
International Power Agency, 4/15/97 ................. P 1 3.50% 6,200,000 6,200,000
Intermountain Power Agency, 6/15/97 ................. VMIG 1 3.93% 3,750,000 3,750,000
Vermont -- 1.36%
Vermont Educational Health Agency, 11/1/97 .......... A 1+ 3.75% 6,730,000 6,730,000
Vermont Student Assistance Corp. VRDN, 1/1/04 ....... VMIG 1 3.65% 4,400,000 4,400,000
Washington -- 2.19%
Washington GO Unlimited Tax VRDB, 6/1/20 ............ VMIG 1 4.00% 17,900,000 17,900,000
West Virginia -- 0.73%
West Virginia Public Energy Authority, 2/25/97 ...... A 1+ 3.65% 6,000,000 6,000,000
Wyoming -- 1.75%
Lincoln Co. PCR VRDB, 11/1/24 ....................... VMIG 1 5.00% 3,300,000 3,300,000
Sweetwater Co. PCR CP, 2/5/97 ....................... P 1 3.50% 11,000,000 11,000,000
------------
797,252,199
------------
Puerto Rico -- 2.69%
Puerto Rico Commonwealth, 7/30/97 ................... MIG 1 4.00% 22,000,000 22,070,840
------------
TOTAL INVESTMENTS ................................... $819,323,039
============
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Investment Abbreviations
AMBAC -- AMBAC Indemnity Corp.
BIGI -- Bond Investors Guaranty Insurance Co.
CP -- Commercial Paper
EDC -- Economic Development Corporation
EDR -- Economic Development Revenue
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Securities Assurance Corp.
GO -- General Obligation
HCFA -- Health Care Facilities Administration
HR -- Housing Revenue
HDA -- Housing Development Authority
HFA -- Housing Finance Authority
IDA -- Individual Development & Export Authority
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Insurance Association
PCR -- Pollution Control Revenue
PFA -- Public Facilities Authority
TAN -- Tax Anticipation Note
TRAN -- Tax Revenue Anticipation Note
UPDATE -- Unit Priced Daily Adjustable Tax Exempt Securities
VRDB -- Variable Rate Demand Bond
VRDN -- Variable Rate Demand Note
* Rating -- Moody's when available, otherwise Standard & Poor's.
** N/R -- investment is not rated, yet deemed by the Investment Advisor as
an acceptable credit and having characteristics equivalent to obligations
rated AA or MIG 1 by Moody's, AA or A-1+ by Standard & Poor's.
*** Interest rates on variable rate securities are adjusted periodically
based on appropriate indexes. The interest rates shown are the rates in
effect at December 31, 1996.
See Notes to Financial Statements.
15
<PAGE>
Pegasus Michigan Municipal Money Market Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
December 31, 1996
AMORTIZED
INTEREST FACE COST
DESCRIPTION RATING* RATE*** AMOUNT (Note 2)
----------- ------- ------- ------ --------
<S> <C> <C> <C> <C>
Michigan -- 95.01%
Ann Arbor EDC Ltd. Obligation VRDN-Webers Industries,
5/1/00 ............................................ **N/R 4.30% $ 765,000 $ 765,000
Cornell EDC IDR, 3/1/15 ............................. A 1+ 3.65% 1,900,000 1,900,000
Dearborn EDC Ltd. Obligation VRDB-Oakbrook Common,
3/1/25 ............................................ A 1 4.30% 3,500,000 3,500,000
Detroit City School District Ltd. GO, 5/1/97 ........ SP 1+ 4.50% 4,000,000 4,007,005
Detroit Downtown Development Authority VRDB-Millender
Center Project, 12/1/10 ........................... VMIG 1 4.20% 2,000,000 2,000,000
Detroit State Aid GO, 5/1/97 ........................ BBB + 5.63% 7,750,000 7,794,533
Farmington Hills EDR Ltd. Obligation VRDB-Brookfield
Building Assn., LP, 11/1/10 ....................... A 1 4.15% 1,810,000 1,810,000
Grosse Pointe Public School System TAN General
Obligation Limited Tax, 4/1/97 .................... **N/R 3.90% 5,000,000 5,001,810
Holland EDC VRDB-Thrifty Holland, Inc., 3/1/13 ...... A 1 3.65% 2,300,000 2,300,000
Ingham Co. EDC VRDB-Martin Luther Memorial Home,
Inc., 4/1/22 ...................................... A 1+ 4.20% 1,000,000 1,000,000
Kalamazoo Co. EDC VRDB-Industrial & Economic
Development WBC Properties Ltd., 9/1/15 ........... **N/R 4.50% 1,000,000 1,000,000
Kalamazoo EDC Ltd Obligation, 6/1/20 ................ A 1 4.10% 1,575,000 1,575,000
Leelanau Co. EDC Ltd. Obligation-American Community
Mutual Insurance Co., 6/15/97 ..................... **N/R 3.80% 995,000 995,000
Macomb Township EDC Ltd. Obligation VRDN-ACR
Industries, 1/1/03 ................................ VMIG 1 4.25% 850,000 850,000
Meridian EDC Ltd. Obligation VRDB-Hannah
Technologies, 11/15/14 ............................ A 1+ 3.71% 3,100,000 3,100,000
Michigan Municipal Bond Authority Series A, 7/3/97 .. SP 1+ 4.50% 3,500,000 3,510,125
Michigan Municipal Bond Authority Series B
(FGIC Insured), 5/1/97 ............................ Aaa 6.70% 3,200,000 3,233,989
Michigan State Hospital Finance Authority (AMBAC),
Pontiac Osteopathic, Series B, 2/1/97 ............. Aaa 7.75% 6,000,000 6,140,289
Michigan State Hospital Henry Ford Health
Series A, 1/1/97 .................................. Aaa 7.50% 1,000,000 1,020,000
Michigan State Hospital VRDB-Hospital Equipment Loan
Program, 12/1/23 .................................. VMIG 1 4.15% 2,000,000 2,000,000
Michigan State HDA Ltd. Obligation VRDB, 12/1/07 .... VMIG 1 4.10% 800,000 800,000
Michigan State HDA, Multi-Family Series A, 1/13/97 .. VMIG 1 3.63% 5,000,000 5,000,000
Michigan State HDA Ltd. Obligation VRDB:
Pine Ridge, 10/1/07 ............................... VMIG 1 4.10% 2,300,000 2,300,000
Woodland Meadows, 3/1/13 .......................... VMIG 1 4.20% 2,000,000 2,000,000
Michigan State Job Development Authority PCR:
VRDN-Sugar Sebewa, 9/1/00 ......................... Aa 3 4.22% 900,000 900,000
VRDN-Hitachi Metals, 1/1/04 ....................... Aa 3 3.75% 1,800,000 1,800,000
VRDB-Mazda Motors Mfg. USA Corp., 10/1/08 ......... A 1 4.32% 5,400,000 5,400,000
17
<PAGE>
Michigan State Strategic Building CP, 5/1/97 ........ P 1 3.50% 5,000,000 5,000,000
Michigan State Strategic Fund PCR,
VRDN-Consumers Power Co., 9/1/00 .................. A 1+ 4.32% 3,000,000 3,000,000
Michigan State Strategic Fund Ltd. Obligation AMT:
VRDN-Alpha Tech, Inc., 10/1/97 .................... Aa 4.60% 6,000,000 6,000,000
VRDN-Michigan & Wayne Disposal Inc., 4/1/99 ....... A 1 4.10% 1,100,000 1,100,000
VRDB-United Waste System, Inc., 4/1/10 ............ VMIG 1 4.25% 2,000,000 2,000,000
VRDB-Dennenlease L C, 4/1/10 ...................... **N/R 4.30% 2,210,000 2,210,000
VRDB-Ironwood Plastics, Inc., 11/1/11 ............. **N/R 4.30% 1,275,000 1,275,000
VRDB-Molmec Inc., 12/1/14 ......................... **N/R 4.40% 1,325,000 1,325,000
VRDB-CEC Products Co., 6/1/15 ..................... **N/R 4.40% 400,000 400,000
VRDB-Petosky Plastics Inc., 8/1/16 ................ **N/R 4.35% 500,000 500,000
Michigan State Strategic Fund Ltd. Obligation,
VRDN-Freezer Services, 10/1/97 .................... **N/R 4.20% 390,000 390,000
Michigan State Strategic Fund IDR,
VRDB-Trust Co., Series C, 10/1/11 ................. Aa3 4.15% 1,500,000 1,500,000
Michigan State Underground Storage Tank CP, 2/5/97 .. P 1 3.55% 6,100,000 6,100,000
Oakland Co. Economic Development, 2/1/97 ............ A 1+ 3.90% 615,000 615,000
Van Buren Township EDC AMT,
VRDN-Daikin Clutch USA Inc., 3/1/97 ............... Aa 3 4.58% 3,000,000 3,000,000
Utica Community Schools (FDIC Insured) Unlimited Tax,
5/1/97 ............................................ Aaa 3.65% 2,390,000 2,390,000
Waterford Township School District, 4/1/97 .......... **N/R 3.80% 4,000,000 4,001,581
Wayne Charter Co. Airport AMT,
VRDB Series A, 12/1/16 ............................ VMIG 1 4.25% 2,200,000 2,200,000
------------
114,709,332
------------
Puerto Rico -- 4.99%
Commonwealth of Puerto Rico Transportation, 7/30/97.. MIG 1 4.00% 6,000,000 6,019,320
------------
TOTAL INVESTMENTS ................................... $120,728,652
============
</TABLE>
18
<PAGE>
Investment Abbreviations
AMBAC -- AMBAC Indemnity Corp.
BIGI -- Bond Investors Guaranty Insurance Co.
CP -- Commercial Paper
EDC -- Economic Development Corporation
EDR -- Economic Development Revenue
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Securities Assurance Corp.
GO -- General Obligation
HCFA -- Health Care Facilities Administration
HR -- Housing Revenue
HDA -- Housing Development Authority
HFA -- Housing Finance Authority
IDA -- Industrial Development & Export Authority
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Insurance Association
PCR -- Pollution Control Revenue
PFA -- Public Facilities Authority
TAN -- Tax Anticipation Note
TRAN -- Tax Revenue Anticipation Note
UPDATE -- Unit Priced Daily Adjustable Tax-Exempt Securities
VRDB -- Variable Rate Demand Bond
VRDN -- Variable Rate Demand
Note
* Rating -- Moody's when available, otherwise Standard & Poor's.
** N/R -- investment is not rated, yet deemed by the Investment Advisor as an
acceptable credit and having characteristics equivalent to obligations
rated AA or MIG 1 by Moody's, AA or A-1+ by Standard & Poor's.
*** Interest rates on variable rate securities are adjusted periodically
based on appropriate indexes. The interest rates shown are the rates in
effect at December 31, 1996.
See Notes to Financial Statements.
19
<PAGE>
Pegasus Money Market Funds
NOTES TO FINANCIAL STATEMENTS
(1) General
The Pegasus Funds (Pegasus), formerly "The Woodward Funds", was
organized as a Massachusetts business trust on April 21, 1987 and registered
under the Investment Company Act of 1940, as amended (the Act), as an
open-end investment company. As of December 31, 1996, Pegasus consisted of
twenty six separate series of which there were four money market funds (the
Money Market Funds or the Funds), as described below.
Pegasus Money Market Fund
Pegasus Treasury Money Market Fund
Pegasus Municipal Money Market Fund
Pegasus Michigan Municipal Money Market Fund
The Money Market Funds commenced operations on January 4, 1988, except
for the Michigan Municipal Money Market Fund and the Treasury Money Market
Fund, which commenced operations on January 23, 1991 and January 1, 1993,
respectively.
On September 14, 1996, Pegasus Money Market Funds (formerly The
Woodward Money Market Funds) acquired all the net assets of the Prairie Money
Market Funds pursuant to an Agreement and Plan of Reorganization (the
"Plan"). Shareholders of each reorganizing portfolio approved the Plan which
called for the transfer of the assets, subject to the liabilities, of each
Prairie Fund to the corresponding Pegasus Fund. The Plan also called for the
issuance of shares by the Pegasus Fund to the shareholders of the
corresponding Prairie Fund, such shares being equal in value to the net
assets so transferred.
In accordance with generally accepted accounting principles, the
historical cost of investment securities were carried forward to the
surviving fund (the Pegasus Fund which is the accounting survivor for
performance measurement purposes as noted in the table that follows) and the
results of operations for precombination periods for the surviving fund were
not restated. The financial statements do not reflect the expenses of the
reorganization. The combination of the funds was treated as a tax free
business combination and accordingly was accounted for by a method of
accounting for tax free mergers of investment companies (sometimes referred
to as the pooling without restatement method). The following table sets forth
the name of the surviving fund (for the number of shares issued in connection
with the various mergers and the net assets transferred, see Note 5):
<TABLE>
<CAPTION>
Former Former Current
Woodward Prairie Pegasus
Fund Fund Fund
-------- ------- -------
<S> <C> <C>
*Money Market Money Market Money Market
*Treasury Money Market U.S. Government Money Market Treasury Money Market
*Government Money Market -- Treasury Money Market
*Tax Exempt Money Market Municipal Money Market Municipal Money Market
*Michigan Tax Exempt Michigan Municipal Money
Money Market -- Market
<FN>
* Surviving fund for accounting and performance measurement purposes.
</TABLE>
On the date of reorganization capital loss carryforwards were
transferred from the non-surviving funds in the amounts of $15,985 and
$53,652 for the Treasury Money Market and Municipal Money Market Funds,
respectively.
The Pegasus Money Market Funds (except for the Money Market Fund which
offers Class A, Class B, and Class I shares) each offer Class A shares and
Class I shares. Class A shares, Class B shares and Class I shares are
substantially the same except that Class A shares are not subject to any
sales charge and are subject to a shareholder services fee pursuant to the
Shareholder Services Plan. Class B shares are subject to a contingent
deferred sales charge imposed at the time of redemption and are subject to
fees charged pursuant to a distribution plan adopted pursuant to Rule 12b-1
under the Act and fees charged pursuant to the Shareholders Services Plan.
Class I shares are not subject to any sales charge, shareholder services fees
or distribution 12b-1 fees.
20
<PAGE>
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed
by the Money Market Funds in preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies. Following generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and reported
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates.
Investments
Pursuant to Rule 2a-7 of the Act, the Money Market Funds utilize the
amortized cost method to determine the carrying value of investment
securities. Under this method, investment securities are valued for both
financial reporting and federal tax purposes at amortized cost and any
discount or premium is amortized from the date of acquisition to maturity.
The use of this method results in a carrying value which approximates market
value. Market value is determined based upon quoted market prices or dealer
quotes.
Investment security purchases and sales are accounted for on the trade
date. Realized gains and losses from security transactions are recorded on
the identified cost basis.
Pegasus invests in securities subject to repurchase agreements. First
Chicago NBD Investment Management Company (FCNIMCO), acting under the
supervision of the Board of Trustees, has established the following
additional policies and procedures relating to Pegasus' investments in
securities subject to repurchase agreements: 1) the value of the underlying
collateral is required to equal or exceed 102% of the funds advanced under
the repurchase agreement including accrued interest; 2) collateral is marked
to market daily by FCNIMCO to assure its value remains at least equal to 102%
of the repurchase agreement amount; and 3) funds are not disbursed by Pegasus
or its agent unless collateral is presented or acknowledged by the collateral
custodian.
The Municipal and Michigan Municipal Funds invest in a majority of
instruments whose stated maturity is greater than one year, but whose rate of
interest is readjusted no less frequently than annually, or which possess
demand features and may therefore be deemed to have a maturity equal to the
period remaining until the next interest adjustment date or the demand date,
whichever is longer.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount. Premiums and discounts are
amortized/accreted as required by the Internal Revenue Code (the Code).
Federal Income Taxes
It is Pegasus' policy to comply with the requirements of Subchapter M
of the Code, as amended, applicable to regulated investment companies and to
distribute net investment income and realized gains to its shareholders.
Therefore, no federal income tax provision is required in the accompanying
Financial Statements.
As of December 31, 1996, the Funds have capital loss carryforwards and
related expiration dates as follows:
<TABLE>
<CAPTION>
Fund 1999 2001 2002 2003 2004 Total
---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Treasury Money Market Fund $ -- $ -- $16,000 $ -- $ 1,000 $17,000
Municipal Money Market Fund 1,000 2,000 1,000 36,000 14,000 54,000
Michigan Municipal Money
Market Fund -- -- -- -- 1,000 1,000
</TABLE>
Shareholder Dividends
On each business day except those holidays the New York Stock Exchange
(Exchange), FCNIMCO or its bank affiliates observe, net investment income is
declared as a dividend, at the close of the Exchange, to shareholders of
record at such close. Such dividends are paid monthly.
Distributions from net realized capital gains, if any, are normally
declared annually and paid annually, but
21<PAGE>
each Fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Code. To the extent that net realized
capital gains can be offset by capital loss carryforwards, it is the policy
of each Fund not to distribute such gains.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over
the five year period beginning with the commencement of operations of each
series.
Expenses
Expenses directly attributable to a Fund are charged to that Fund's
operations; expenses which are applicable to all Funds are allocated among
them on the basis of relative net assets. Fund expenses directly attributable
to a class of shares are charged to that class; expenses which are applicable
to all classes are allocated among them. Pegasus monitors the rate at which
expenses are charged to ensure that a proper amount of expense is charged to
income each year. This percentage is subject to revision if there is a change
in the estimate of the future net assets of the funds or a change in
expectations as to the level of actual expenses.
Multiple Classes of Capital Shares of Beneficial Interest
Each class of shares has equal rights as to earnings, assets and voting
privileges except that each class bears different distribution and
shareholder service expenses. Each class of shares has exclusive voting
rights with respect to matters that effect just that class. Dividends are
declared separately for each class. No class has preferential dividend
rights; differences in per share dividend rates are generally due to
differences in separate class expenses. Class B shares of the Money Market
Fund are available only to the holders of Class B shares in the Trust's
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.
(3) Investment Advisory Fees, Administration Fees and Other Transactions With
Affiliates
Pegasus has an Investment Advisor Agreement with FCNIMCO pursuant to
which FCNIMCO has agreed to provide the day-to-day management of each of the
Money Market Fund's investments for a monthly fee computed daily and payable
monthly, expressed as a percentage of each Money Market Fund's average daily
net assets, of 0.30% of the first $1.0 billion, 0.275% of the next $1.0
billion and 0.25% of each such Money Market Fund's average daily net assets
in excess of $2.0 billion. Prior to September 16, 1996, the investment
advisory fee was computed daily and payable monthly, at annual rates of: (1)
0.45% of the first $1.0 billion of each of the Money Market, Treasury Money
Market and Municipal Money Market Fund's average daily net assets, 0.425% of
the next $1.0 billion, and 0.40% of each Fund's average daily net assets in
excess of $2.0 billion; and 0.50% of the average daily net assets of the
Michigan Municipal Money Market Fund. In addition, FCNIMCO is entitled to
4/10ths of the gross income earned by a fund on each loan of securities
(excluding capital gains and losses, if any).
Pegasus has a Co-Administration Agreement with FCNIMCO and BISYS
(collectively the Co-Administrators) pursuant to which the Co-Administrators
have agreed to assist in all aspects of each Money Market Fund's operations
for an administration fee, at an annual rate of 0.15% of each Money Market
Fund's average daily net assets.
BISYS serves as the Trust's principal underwriter and distributor of
the Funds' shares. Prior to the reorganization, First of Michigan Corporation
(FoM) and Essex Securities, Inc. (Essex) acted as sponsors and
co-distributors of the former Woodward funds. Pursuant to their distribution
agreement, FoM was entitled to receive a fee at the annual rate of .005% of
the Money Market Funds' average net assets and Essex was entitled to receive
a fee at the annual rate of .10% of the aggregate average net assets of the
Money Market Fund's investment portfolios attributable to investments by
clients of Essex. NBD Bank is also compensated for its services as Pegasus'
custodian and is reimbursed for certain out of pocket expenses incurred on
behalf of Pegasus. See Note 4 for a summary of fee rates and expenses
pursuant to these agreements.
22
<PAGE>
(4) Expenses
Following is a summary of total expense rates charged for the year
ended December 31, 1996.
<TABLE>
<CAPTION>
Michigan
Treasury Municipal Municipal
Money Market Money Market Money Market Money Market
Effective Date Fund Fund Fund Fund
- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Expense Rates:
January 1 0.52% 0.55% 0.53% 0.69%
March 18 0.52% 0.55% 0.52% 0.70%
May 21 0.52% 0.55% 0.51% 0.70%
September 16 0.73% 0.72% 0.74% 0.75%
CLASS B SHARES
Expense Rates:
September 16 1.48% N/A N/A N/A
CLASS I SHARES
Expense Rates:
January 1 0.52% 0.55% 0.53% 0.69%
March 18 0.52% 0.55% 0.52% 0.70%
May 21 0.52% 0.55% 0.51% 0.70%
September 16 0.48% 0.47% 0.49% 0.50%
</TABLE>
Beginning September 14, 1996, FCNIMCO voluntarily agreed to reimburse a
portion of the operating expenses of the Funds to the extent that the Money
Market Funds' expenses exceeded the following amounts (as a percentage of
each Fund's average daily net assets):
<TABLE>
<CAPTION>
Michigan
Treasury Municipal Municipal
Money Market Money Market Money Market Money Market
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Class A Shares 0.75% 0.75% 0.75% 0.75%
Class B Shares 1.50% N/A N/A N/A
Class I Shares 0.50% 0.50% 0.50% 0.50%
</TABLE>
Following is a summary of amounts paid to FCNIMCO, FoM, Essex, and
BISYS pursuant to the agreements described in Note 3 for the year ended
December 31, 1996.
<TABLE>
<CAPTION>
Michigan
Treasury Municipal Municipal
Money Market Money Market Money Market Money Market
Effective Date Fund Fund Fund Fund
-------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Amounts Paid:
Advisory Fee to FCNIMCO $7,987,126 $5,398,925 $2,527,916 $571,625
Administration Fee to FCNIMCO and BISYS 1,113,026 768,050 417,099 66,924
Distribution Fees to FoM and Essex 137,169 62,301 34,232 10,068
Other Fees & Out of Pocket
Expenses to FCNIMCO 139,908 58,170 52,407 17,285
Expense Reimbursements by FCNIMCO -- -- -- (37,403)
</TABLE>
Pegasus maintains an unfunded, nonqualified deferred compensation plan.
This plan allows an individual Trustee to elect to defer receipt of all or a
percentage of fees which otherwise would be payable for services performed.
The Funds' Class A shares and Class B shares, if any, have a
Shareholder Services Plan (the "Plan") pursuant to which the Funds pay BISYS
Fund Services (the "Distributor") a fee, at an annual rate of 0.25% of the
average daily net assets of the outstanding Class A shares and Class B
shares. Pursuant to the terms of the Plan, the Distributor has agreed to
provide certain shareholder services to the holders of these shares.
Additionally, under the terms of the Plan, the Distributor may make payments
to other shareholder
23
<PAGE>
service agents which may include FCNIMCO and their affiliates. For the year
ended December 31, 1996, the Money Market Funds paid the following amounts
under the Plan:
<TABLE>
<CAPTION>
Amounts Paid
------------
<S> <C>
Money Market Fund $851,873
Treasury Money Market Fund 222,245
Municipal Money Market Fund 296,332
Michigan Municipal Money
Market Fund 81,482
</TABLE>
The Money Market Fund's Class B shares have a distribution plan adopted
pursuant to Rule 12b-1 under the Act (the "12b-1 Plan") pursuant to which the
Money Market Funds have agreed to pay the Distributor for advertising,
marketing and distributing Class B shares of the Money Market Fund at an
annual rate of 0.75% of the average daily net assets of the Money Market
Fund's outstanding Class B shares. Under the terms of the 12b-1 Plan, the
Distributor may make payments to FCNIMCO and their affiliates in respect to
these services. For the year ended December 31, 1996, the Money Market Fund
paid $238 under the 12b-1 Plan which was retained by the Distributor.
24
<PAGE>
(5) Capital Share Transactions
Transactions in shares of the Money Market Funds are summarized below:
<TABLE>
<CAPTION>
Money Market Fund
------------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
----------------------- -------------------------
Amount Shares Amount Shares
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued $ 6,364,896,910 6,364,896,910 $ 15,430,620,141 15,430,620,141
Shares Reclassified (648,644,214) (648,644,214) -- --
Shares Issued in Connection with Merger 400,921,734 400,921,734 -- --
Dividends Reinvested 24,864,635 24,846,635 20,938,255 20,938,255
Shares Redeemed (7,053,339,291) (7,053,339,291) (15,134,903,898) (15,134,903,898)
--------------- -------------- ---------------- ---------------
Net increase (decrease) $ (911,300,226) (911,300,226) $ 316,654,498 316,654,498
=============== ============== ================ ===============
Class B Shares(1):
Shares Issued $ 220,732 220,732 $ -- --
Shares Issued in Connection with Merger 130,798 130,798 -- --
Dividends Reinvested 2,577 2,577 -- --
Shares Redeemed (211,066) (211,066) -- --
--------------- -------------- ---------------- ---------------
Net increase $ 143,041 143,041 $ -- --
=============== ============== ================ ===============
Class I Shares(2):
Shares Issued $ 8,498,930,024 8,498,930,024 $ -- --
Shares Reclassified 648,644,214 648,644,214 -- --
Shares Issued in Connection with Merger -- -- -- --
Dividends Reinvested 9,879,060 9,879,060 -- --
Shares Redeemed (7,442,140,839) (7,442,140,839) -- --
--------------- -------------- ---------------- ---------------
Net increase $ 1,715,312,459 1,715,312,459 $ -- --
=============== ============== ================ ===============
Net increase in Fund $ 804,155,274 804,155,274 $ 316,654,498 316,654,498
=============== ============== ================ ===============
<PAGE>
<CAPTION>
Treasury Money Market Fund
------------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------------- -----------------------
Amount Shares Amount Shares
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued $ 3,820,123,799 3,820,139,784 $ 6,284,582,300 6,284,582,300
Shares Reclassified (1,072,297,258) (1,072,297,258) -- --
Shares Issued in Connection with Merger 159,726,471 159,726,471 -- --
Dividends Reinvested 5,610,939 5,610,939 5,449,979 5,449,979
Shares Redeemed (3,626,460,674) (3,626,460,674) (6,148,030,955) (6,148,030,955)
---------------- --------------- --------------- --------------
Net increase (decrease) $ (713,296,723) (713,280,738) $ 142,001,324 142,001,324
================ =============== =============== ==============
Class B Shares(1):
Shares Issued $ -- -- $ -- --
Shares Issued in Connection with Merger -- -- -- --
Dividends Reinvested -- -- -- --
Shares Redeemed -- -- -- --
---------------- --------------- --------------- --------------
Net increase $ -- -- $ -- --
================ =============== =============== ==============
Class I Shares(2):
Shares Issued $ 10,750,575,944 10,750,575,944 $ -- --
Shares Reclassified 1,072,297,258 1,072,297,258 -- --
Shares Issued in Connection with Merger 282,078,668 282,078,668 -- --
Dividends Reinvested 5,056,096 5,056,096 -- --
Shares Redeemed (11,054,404,367) (11,054,404,367) -- --
---------------- --------------- --------------- --------------
Net increase $ 1,055,603,599 1,055,603,599 $ -- --
================ =============== =============== ==============
Net increase in Fund $ 342,306,876 342,322,861 $ 142,001,324 142,001,324
================ =============== =============== ==============
<FN>
(1) For the period from September 14, 1996 (initial offering date of Class B
shares) through December 31, 1996.
(2) For the period from March 30, 1996 (initial offering date of Class I
shares) through December 31, 1996.
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Municipal Money Market Fund
----------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
----------------------- -----------------------
Amount Shares Amount Shares
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued $ 1,174,088,220 1,174,141,872 $ 2,777,275,094 2,777,275,094
Shares Reclassified (452,842,722) (452,842,722) -- --
Shares Issued in Connection with Merger 281,427,973 281,427,973 -- --
Dividends Reinvested 3,498,925 3,498,925 2,421,757 2,421,757
Shares Redeemed (1,388,360,065) (1,388,360,065) (2,766,019,376) (2,766,019,376)
--------------- -------------- --------------- --------------
Net increase (decrease) $ (382,187,669) (382,134,017) $ 13,677,475 13,677,475
=============== ============== =============== ==============
Class I Shares(1):
Shares Issued $ 2,111,312,185 2,111,312,185 $ -- --
Shares Reclassified 452,842,722 452,842,722 -- --
Dividends Reinvested 668,549 668,549 -- --
Shares Redeemed (1,932,885,709) (1,932,885,709) -- --
--------------- -------------- --------------- --------------
Net increase $ 631,937,747 631,937,747 $ -- --
=============== ============== =============== ==============
Net increase (decrease) in Fund $ 249,750,078 249,803,730 $ 13,677,475 13,677,475
=============== ============== =============== ==============
<PAGE>
<CAPTION>
Michigan Municipal Money Market
----------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
--------------------- ---------------------
Amount Shares Amount Shares
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued $ 226,255,283 226,255,283 $ 293,836,102 293,836,102
Shares Reclassified (27,136,751) (27,136,751) -- --
Shares Issued in Connection with Merger -- -- -- --
Dividends Reinvested 2,098,227 2,098,227 2,029,545 2,029,545
Shares Redeemed (251,184,243) (251,184,243) (252,448,579) (252,448,579)
------------- ------------ ------------- ------------
Net increase (decrease) $ (49,967,484) (49,967,484) $ 43,417,068 43,417,068
============= ============ ============= ============
Class I Shares(1):
Shares Issued $ 134,715,695 134,715,695 $ -- --
Shares Reclassified 27,136,751 27,136,751 -- --
Dividends Reinvested 128,176 128,176 -- --
Shares Redeemed (112,459,559) (112,459,559) -- --
------------- ------------ ------------- ------------
Net increase $ 49,521,063 49,521,063 $ -- --
============= ============ ============= ============
Net increase (decrease) in Fund $ (446,421) (446,421) $ 43,417,068 43,417,068
============= ============ ============= ============
<FN>
(1) For the period March 30, 1996 (initial offering date of Class I Shares)
through December 31, 1996.
</TABLE>
26
<PAGE>
(6) Portfolio Composition
Although the Municipal Money Market Fund has a diversified investment
portfolio, the Fund has investments in excess of 10% of its total investments
in the States of Michigan and Texas. The Michigan Municipal Money Market Fund
does not have a diversified portfolio since 95% of its investments are within
the State of Michigan. Such concentrations within a particular state may
subject the funds more significantly to economic changes occurring within
those states.
(7) Illiquid Securities
The Pegasus Money Market Funds may invest not more than 10% of the
value of their net assets in securities that are illiquid. Illiquid
investments may include securities having legal or contractual restrictions
on resale or no readily available market. At December 31, 1996, the Pegasus
Money Market Fund owned the following restricted securities (constituting
5.3% of net assets) which may not be publicly sold without registration under
the Securities Act of 1933 (the 1933 Act). The Fund does not have the right
to demand that such securities be registered. The value of these securities
is determined by valuations supplied by a pricing service or brokers or, if
not available, in good faith by or at the discretion of the Trustees. Certain
of these securities may be offered and sold to "qualified institutional
buyers" under Rule 144A of the 1933 Act.
<TABLE>
<CAPTION>
Dec. 31,
Acquisition Par Value 1996 Percentage
Security Date Value Per Unit Value of Net Assets Cost
-------- ----------- ----- -------- -------- ------------- ----
<S> <C> <C> <C> <C> <C> <C>
Allstate Life Insurance
Company 4/19/95 $ 5,000,000 $1.00 $ 5,000,000 .2% $ 5,000,000
Commonwealth Life
Insurance Company 4/19/95 5,000,000 1.00 5,000,000 .2 5,000,000
New York Life Insurance
Company 10/15/96 30,000,000 1.00 30,000,000 1.2 30,000,000
Peoples Security Life
Insurance Company 4/19/95 5,000,000 1.00 5,000,000 .2 5,000,000
Security Life of Denver
Insurance Company 11/26/96 25,000,000 1.00 25,000,000 1.0 25,000,000
Sun Life Insurance Company
of America 4/19/95 10,000,000 1.00 10,000,000 .4 10,000,000
Transamerica Life
Insurance & Annuity
Company 12/9/96 50,000,000 1.00 50,000,000 2.1 50,000,000
------------ --- -----------
$130,000,000 5.3% $130,000,00
------------ --- -----------
</TABLE>
27
<PAGE>
Pegasus Money Market Funds
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of net investment
income and distributions from net investment income for the Money Market
Funds. Additional quantitative measures expressed in ratio form analyze
important relationships between certain items presented in the financial
statements. These financial highlights have been derived from the financial
statements of the Money Market Funds and other information for the periods
presented.
Pegasus Money Market Fund
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class I Shares
Period Period
---------- ------------------------------------------------- -------------- --------------
Year Ended Year Ended Year Ended Year Ended Year Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993 1992 1996(2) 1996(1)
---------- ---------- ---------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Income from investment
operations:
Net investment income 0.0488 0.0549 0.0378 0.0281 0.0347 0.0117 0.0373
-------- ---------- ---------- ---------- ---------- -------- ----------
Total from investment
operations 0.0488 0.0549 0.0378 0.0281 0.0347 0.0117 0.0373
-------- ---------- ---------- ---------- ---------- -------- ----------
Less distributions:
From net investment income (0.0488) (0.0549) (0.0378) (0.0281) (0.0347) (0.0117) (0.0373)
-------- ---------- ---------- ---------- ---------- -------- ----------
Total distributions (0.0488) (0.0549) (0.0378) (0.0281) (0.0347) (0.0117) (0.0373)
-------- ---------- ---------- ---------- ---------- -------- ----------
Net asset value, end of
period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ========== ========== ========== ========== ======== ==========
Total Return 4.99% 5.63% 3.86% 2.85% 3.58% 4.70%(3) 5.06%(3)
Ratios to Average Net
Assets:
Expenses 0.63% 0.51% 0.47% 0.49% 0.52% 1.48%(3) 0.51%(3)
Net investment income 4.87% 5.49% 3.78% 2.81% 3.47% 3.99%(3) 4.99%(3)
Net assets, end of year
(000's) $728,397 $1,639,695 $1,323,040 $1,326,693 $1,095,354 $ 143 $1,715,313
======== ========== ========== ========== ========== ======== ==========
<FN>
(1) For the period March 30, 1996 (initial offering date of Class I Shares)
through December 31, 1996.
(2) For the period September 14,1996 (initial offering of Class B Shares)
through December 31, 1996.
(3) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
Pegasus Money Market Funds
FINANCIAL HIGHLIGHTS -- (Continued)
Pegasus Treasury Money Market Fund
<TABLE>
<CAPTION>
Class A Shares Class I Shares
------------------------------------------------- --------------
Year Ended Year Ended Year Ended Year Ended Period Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993 1996(1)
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Income from investment operations:
Net investment income 0.0474 0.0539 0.0370 0.0273 0.0361
Net realized losses on investments (0.0001) -- -- -- --
-------- -------- -------- -------- ----------
Total from investment operations 0.0473 0.0539 0.0370 0.0273 0.0361
-------- -------- -------- -------- ----------
Less distributions:
From net investment income (0.0474) (0.0539) (0.0370) (0.0273) (0.0361)
-------- -------- -------- -------- ----------
Total distributions (0.0474) (0.0539) (0.0370) (0.0273) (0.0361)
-------- -------- -------- -------- ----------
Net asset value, end of period $ 0.9999 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ==========
Total Return 4.83% 5.53% 3.77% 2.77% 4.89%(2)
Ratios to Average Net Assets:
Expenses 0.56% 0.53% 0.50% 0.50% 0.53%(2)
Net investment income 4.82% 5.39% 3.70% 2.73% 4.85%(2)
Net assets, end of year (000's) $214,398 $927,696 $785,694 $854,873 $1,055,604
======== ======== ======== ======== ==========
<FN>
(1) For the period March 30, 1996 (initial offering date of Class I Shares)
through December 31, 1996.
(2) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
Pegasus Money Market Funds
FINANCIAL HIGHLIGHTS -- (Continued)
Pegasus Municipal Money Market Fund
<TABLE>
<CAPTION>
Class A Shares Class I Shares
-------------------------------------------------------------- --------------
Period
Year Ended Year Ended Year Ended Year Ended Year Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993 1992 1996(1)
---------- ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Income from investment operations:
Net investment income 0.0295 0.0335 0.0242 0.0196 0.0264 0.0232
Net realized losses on investments (0.0003) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total from investment operations 0.0292 0.0335 0.0242 0.0196 0.0264 0.0232
-------- -------- -------- -------- -------- --------
Less distributions:
From net investment income (0.0295) (0.0335) (0.0242) (0.0196) (0.0264) (0.0232)
-------- -------- -------- -------- -------- --------
Total distributions (0.0295) (0.0335) (0.0242) (0.0196) (0.0264) (0.0232)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 0.9997 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ========
Total Return 2.96% 3.41% 2.45% 1.98% 2.70% 3.13%(2)
Ratios to Average Net Assets:
Expenses 0.60% 0.53% 0.51% 0.51% 0.53% 0.51%(2)
Net investment income 2.97% 3.35% 2.42% 1.96% 2.64% 3.06%(2)
Net assets, end of year (000's) $182,226 $564,413 $550,736 $498,706 $379,431 $631,938
======== ======== ======== ======== ======== ========
<FN>
(1) For the period March 30, 1996 (initial offering date of Class I Shares)
through December 31, 1996.
(2) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
Pegasus Money Market Funds
FINANCIAL HIGHLIGHTS -- (Continued)
Pegasus Michigan Municipal Money Market Fund
<TABLE>
<CAPTION>
Class A Shares Class I Shares
Period
------------------------------------------------- ---------- --------------
Year Ended Year Ended Year Ended Year Ended Year Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993 1992 1996(1)
---------- ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Income from investment operations:
Net investment income 0.0289 0.0329 0.0235 0.0181 0.0237 0.0225
-------- -------- -------- -------- -------- --------
Total from investment operations 0.0289 0.0329 0.0235 0.0181 0.0237 0.0225
-------- -------- -------- -------- -------- --------
Less distributions:
From net investment income (0.0289) (0.0329) (0.0235) (0.0181) (0.0237) (0.0225)
-------- -------- -------- -------- -------- --------
Total distributions (0.0289) (0.0329) (0.0235) (0.0181) (0.0237) (0.0225)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ========
Total Return 2.93% 3.32% 2.38% 1.83% 2.40% 3.03%(2)
Ratios to Average Net Assets:
Expenses 0.74% 0.69% 0.67% 0.65% 0.64% 0.59%(2)
Net investment income 2.87% 3.30% 2.35% 1.81% 2.37% 3.02%(2)
Expenses without fee waiver 0.77% 0.76% 0.75% -- -- 0.62%(2)
Net investment income without fee waiver 2.84% 3.23% 2.28% -- -- 2.99%(2)
Net assets, end of year (000's) $ 72,089 $122,057 $ 78,640 $ 52,557 $ 52,960 $ 49,521
======== ======== ======== ======== ======== ========
<FN>
(1) For the period March 30, 1996 (initial offering date of Class I Shares)
through December 31, 1996.
(2) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees and Shareholders of
the Pegasus Money Market Funds:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Money Market Funds of the
Pegasus Funds (formerly known as the Woodward Funds) (comprising, as
indicated in Note 1, the Money Market, Treasury Money Market, Municipal Money
Market and Michigan Municipal Money Market Funds) as of December 31, 1996,
and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended or from inception (as indicated in Note 1) through December
31, 1996. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included physical counts and
confirmation of securities owned as of December 31, 1996, by inspection and
correspondence with custodians, banks and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective funds constituting the Money Market Funds
of the Pegasus Funds as of December 31, 1996, and the results of their
operations for the year then ended, the changes in their net assets for each
of the two years in the period then ended and the financial highlights for
the period from inception (as indicated in Note 1) through December 31, 1996,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
February 24, 1997.
32
<PAGE>
RESULTS OF SPECIAL SHAREHOLDER MEETING (Unaudited)
On July 10, 1996, July 31, 1996, August 14, 1996, and October 1, 1996
special meetings of the shareholders of the Pegasus Money Market, Treasury,
Muncipal, and Michigan Municipal Funds were held to approve the following
proposals.
1. To approve a new investment advisory agreement ("New Advisory Agreement")
between the Trust, and FCIMCO.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 936,322,650.417 64,741,343.298 68,426,239.025
Treasury 456,504,552.414 1,952,066.482 10,925,959.574
Municipal 314,896,479.893 3,313,184.846 14,976,075.231
Michigan Municipal 68,341,861.181 771,929.674 5,896,467.915
</TABLE>
2. To approve a change to the fundamental investment limitations of each Fund
of the Trust with regard to the following:
a) investment in commodities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 846,320,301.481 114,850,323.985 108,319,607.274
Treasury 428,178,559.254 21,392,078.765 19,811,940.451
Municipal 306,093,137.183 7,646,534.872 19,446,067.915
Michigan Municipal 65,621,541.161 3,178,712.201 6,210,005.408
</TABLE>
b) expanded power to borrow
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 881,778,057.284 108,278,486.227 79,433,689.229
Treasury 431,394,226.941 18,023,528.482 19,964,823.047
Municipal 305,087,260.802 7,603,266.327 20,495,212.841
Michigan Municipal 65,591,662.800 3,177,581.472 6,241,014.498
</TABLE>
c) issuing senior securities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 886,505,221.138 105,126,847.050 77,858,164.552
Treasury 433,332,306.735 16,199,342.984 19,850,928.751
Municipal 308,314,577.530 5,959,401.717 18,911,760.723
Michigan Municipal 65,357,341.465 3,441,136.509 6,211,450.796
</TABLE>
3. To approve a change to the fundamental investment policies and limitations
of certain Funds of the Trusts as follows:
b) to approve the removal of the 20% limitation of AMT paper
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Municipal 311,152,730.606 5,536,403.103 16,496,606.261
Michigan Municipal 56,880,035.493 2,569,689.731 15,560,533.546
</TABLE>
c) to approve a change to the fundamental investment limitation concerning
concentration of investments in a particular industry with respect to the
Funds
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 897,055,114.756 91,845,846.114 80,589,271.870
Treasury 428,546,374.488 12,412,894.232 28,423,309.750
Municipal 310,652,220.841 5,815,054.227 16,718,464.902
Michigan Municipal 56,146,364.514 3,020,538.097 15,843,356.159
</TABLE>
33
<PAGE>
4. To approve a change of the following fundamental policies and limitations
to non-fundamental policies and limitations:
a) limitation prohibiting investing, with respect to 50% of its total
assets, more than 5% of its assets in the securities of any one issuer
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Michigan Municipal 63,990,009.120 4,437,682.203 6,582,567.447
</TABLE>
b) limitation on investment in other investment companies
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 882,003,997.881 109,442,958.907 78,043,275.952
Treasury 442,421,624.904 15,876,053.582 11,084,899.984
Municipal 305,335,242.154 10,954,357.072 16,896,140.744
Michigan Municipal 64,907,261.747 3,543,482.527 6,559,514.496
</TABLE>
c) limitation on illiquid securities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 872,895,499.963 120,190,299.987 76,404,432.790
Treasury 442,576,602.782 15,998,066.143 10,807,909.545
Municipal 304,764,612.329 12,010,758.849 16,410,368.792
Michigan Municipal 64,128,485.934 4,322,180.690 6,559,592.146
</TABLE>
d) limitation on purchasing securities on margin
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 871,631,343.494 120,611,928.663 77,246,960.583
Treasury 442,229,685.627 16,367,416.359 10,785,476.484
Municipal 305,187,685.683 11,599,145.672 16,398,908.615
Michigan Municipal 55,291,069.939 13,126,597.482 6,592,591.349
</TABLE>
e) limitation on purchasing securities of companies for the purpose of
exercising control
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 881,736,173.961 110,883,347.678 76,870,711.101
Treasury 442,386,469.378 16,090,300.300 10,905,808.792
Municipal 304,860,746.974 11,449,240.735 16,875,752.261
Michigan Municipal 64,325,093.965 4,117,714.937 6,567,449.868
</TABLE>
6. To ratify the appointment of two Trustees to the Board of Trustees of the
Trust.
Elected Trustees Current Trustees
---------------- ----------------
Ms. Marilyn McCoy Mr. Will M. Caldwell * Mr. Julius L. Pallone
Mr. John P. Gould * Mr.Donald L. Tuttle * Dr. Nicholas J. DeGrazia
* Mr. Donald B. Sutherland
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 975,166,997.216 12,929,509.390 81,393,726.134
Treasury 457,594,396.844 407,313.773 11,380,867.853
Municipal 315,275,707.433 3,309,685.310 14,600,347.227
Michigan Municipal 68,024,518.038 1,612,984.273 5,372,756.459
</TABLE>
<PAGE>
7. To approve amendments to the Amended and Restated Declaration of Trust of
the Trust.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 1,274,127,809.402 44,475,127.347 65,240,669.201
Treasury 630,328,765.929 10,247,517.017 15,262,028.684
Municipal 440,413,090.264 12,038,558.436 30,729,496.700
Michigan Municipal 92,058,845.313 2,820,020.590 5,329,977.237
</TABLE>
34
<PAGE>
8. To transact such other business as may properly come before the Meetings or
any adjournment thereof.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
---- ----------- ------- -------
<S> <C> <C> <C>
Money Market 931,428,940.736 61,125,006.118 76,926,285.886
Treasury 446,428,731.840 11,471,112.078 11,482,734.552
Municipal 313,969,842.278 2,357,881.110 16,858,016.582
Michigan Municipal 57,291,162.456 2,286,358.382 15,432,737.932
</TABLE>
On July 31, 1996 and August 14, 1996 special meetings of the
shareholders of The Woodward Government Fund were held to approve the
following proposals.
1. Proposal to approve a Plan of Reorganization and the transactions
contemplated thereby, including the transfer of substantially all of the
assets and liabilities of the Trust's Government Fund to the Trust's
Treasury Money Market Fund (the "Treasury Fund"), in exchange for Class A
or Class I shares, as applicable, of the Treasury Fund, and a liquidating
distribution of such shares so received to shareholders of the Government
Fund according to their respective interests.
<TABLE>
<CAPTION>
Affirmative Against Abstain
----------- ------- -------
<S> <C> <C>
378,134,412.781 422,366.997 8,299,510.843
</TABLE>
35
<PAGE>
PEGASUS FUNDS
Strength in Investing
MMANN - 1296
