Bank One Corp. has expanded its relationship with Bisys Fund Services in a step toward combining its two mutual fund businesses this spring.

The Chicago banking company has picked the unit of Bisys Group Inc. of Little Falls, N.J., to serve as fund accountant for the Pegasus Funds, managed by the former First Chicago NBD Corp.

Bisys Fund Services, based in Columbus, Ohio, handles these chores for the former Banc One Corp.'s One Group of Funds and serves as distributor and administrator for both fund families. Banc One and First Chicago NBD merged Oct. 2.

By handing off the labor- and technology-intensive fund accounting tasks to Bisys, Bank One said, it has freed up time and energy to cultivate its $50 billion-asset fund business.

"We want to focus on what we do best, and that's managing money and selling mutual funds," said Mark Beeson, senior managing director of Banc One Investment Advisors, Columbus, Ohio. The One Group has $29.2 billion of assets in 33 portfolios; the Pegasus Funds have $21.3 billion of assets in 26 portfolios.

Fund accounting-crun-ching out daily net asset values to newspapers and automated customer service lines-is an unglamorous but vital function for mutual fund companies.

In the whirl of day-to-day trading, fund accountants price each security in a portfolio to calculate a share price for purchases and redemptions. If a security is mispriced, a liability can be incurred by the accountant to reconcile the difference in net asset value.

Observers said that typically only the largest mutual fund families handle these chores themselves.

"Unless you have enough volume, you're hard-pressed to do it economically," said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I.

Those that do can "keep expenses down and have a lower expense ratio, if they don't screw up," said W. Christopher Maxwell, former head of KeyCorp's mutual fund family. But, he added, a single mistake can prove costly. "I don't think you should do it yourself," said Mr. Maxwell, who now runs a mutual fund consulting business in Rock Hall, Md.

Bank One decided it wanted to consolidate accounting chores in one place before attempting to blend the two fund families, Mr. Beeson said.

He said the 25 Pegasus Funds accountants in Chicago can apply for jobs at Bisys Fund Services or other positions at Banc One Investment Advisors.

"We set up a subsidiary for them (Bank One), because they are so large and local," said David Huber, president of Bisys Fund Services.

That unit, One Group Services Corp., employs 46 people both onsite at Banc One Investment Advisors and at Bisys' offices. Bisys itself employs 250 fund accountants.

Other decisions lie ahead for Bank One's fund families, including whether to share a name and a marketing strategy, and precisely which funds to merge.

The families are large enough to stand on their own, giving the bank the luxury of deciding whether or not to merge every aspect of them, Mr. Beeson said.

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