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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
OMB APPROVAL
FORM N-17f-2 -----------------------------
OMB Number: 3235-0360
Certificate of Accounting of Securities and Similar Expires: June 30, 1997
Investments in the Custody of Estimated average burden
Management Investment Companies hours per response.......0.05
Pursuant to Rule 17f-2[17 CFR 270.17f-2]
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1. Investment Company Act File Number: Date examination completed:
811- 811-5148 December 21, 1998
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2. State identification Number:
AL AK AZ AR CA CO
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CT DE DC FL GA HI
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ID IL IN IA KS KY
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LA ME MD MA MI MN
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MS MO MT NE NV NH
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NJ NM NY NC ND OH
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OK OR PA RI SC SD
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TN TX UT VT VA WA
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WV WI WY PUERTO RICO
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Other (specify):
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3. Exact name of investment company as specified in registration statement:
Pegasus Funds
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4. Address of principal executive office (number, street, city, state, zip code):
P.O. Box 7058, Troy, Michigan 48007-7058
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INSTRUCTIONS
This Form must be completed by investment companies that have custody of
securities or similar investments.
INVESTMENT COMPANY
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance with
Rule 17f-2 under the Act and applicable state law, examines securities and
similar investments in the custody of the investment company.
ACCOUNTANT
3. Submit this Form to the Securities and Exchange Commission and appropriate
state securities administrators when filing the certificate of accounting
required by Rule 17f-2 under the Act and applicable state law. File the
original and one copy with the Securities and Exchange Commissions's
principal office in Washington, D.C., one copy with the regional office for
the region in which the investment company's principal business operations
are conducted, and one copy with the appropriate state administrator(s), if
applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
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EXHIBIT 23
[FIRST CHICAGO NBD LETTERHEAD]
Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940
We, as members of management of NBD Bank, Custodian for the Pegasus Funds (the
"Funds"), are responsible for complying with the requirements of subsections (b)
and (c) of Rule 17f-2, "Custody of Investments by Registered Management
Investment Companies," of the Investment Company Act of 1940 (the "Act"). We are
also responsible for establishing and maintaining effective internal controls
over compliance with those requirements. We have performed an evaluation of the
Funds' compliance with the requirements of subsections (b) and (c) of Rule 17f-2
as of June 30, 1998 and from December 31, 1997 through June 30, 1998.
Based on this evaluation, we assert that the Funds were in compliance with the
requirements of subsections (b) and (c) of Rule 17f-2 of the Act as of June 30,
1998 and from December 31, 1997 through June 30, 1998, with respect to
securities reflected in the investment accounts of the Funds.
NBD Bank
By:
/s/ Gary Young
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Gary Young
December 21, 1998
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Report of Independent Public Accountants
To the Trustees of
the Pegasus Funds:
We have examined management's assertion about the Pegasus Funds' (the "Funds")
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 under
the Investment Company Act of 1940 (the "Act") as of June 30, 1998, included in
the accompanying Management Statement Regarding Compliance with Certain
Provisions of the Act. Management is responsible for the Funds' compliance with
those requirements. Our responsibility is to express an opinion on management's
assertion about the Funds' compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants, and accordingly, included
examining, on a test basis, evidence about the Funds' compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of June 30, 1998, and with respect to agreement of security
purchases and sales, for the period from December 31, 1997 through June 30,
1998:
- - Confirmation of all securities held by institutions in book entry form
(i.e., the Federal Reserve Bank of Chicago, the Depository Trust Company,
and Bankers Trust);
- - Confirmation of all securities hypothecated, pledged, placed in escrow, or
out for transfer with brokers, pledgees and/or transfer agents;
- - Reconciliation of all such securities to the books and records of the Funds
and the Custodian;
- - Confirmation of all repurchase agreements with brokers/banks and agreement
of underlying collateral with Custodian records;
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Funds' compliance with
specified requirements.
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In our opinion, management's assertion that the Funds were in compliance with
the requirements of subsections (b) and (c) of Rule 17f-2 of the Act as of June
30, 1998, with respect to securities reflected in the investment accounts of the
Funds is fairly stated, in all material respects.
This report is intended solely for the information and use of management of the
Pegasus Funds and the Securities and Exchange Commission and should not be used
for any other purpose.
Arthur Andersen, LLP
Detroit, Michigan,
December 21, 1998.
