<PAGE> 1
As filed with the Securities and Exchange Commission on December 26, 1995
Registration Nos. 2-81110/811-4293
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. 44 /X/
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 46 /X/
---------------------------------
PACIFIC HORIZON FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
125 W. 55th Street, 11th Floor
New York, NY 10019
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (800) 332-3863
W. Bruce McConnel, III
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940, as amended. The Registrant has filed its Rule 24f-2 Notice relating to
such shares for Registrant's most recent fiscal year on April 28, 1995.
================================================================================
<PAGE> 2
THIS POST-EFFECTIVE AMENDMENT IS BEING FILED SOLELY TO ADD A HORIZON CLASS
OF SHARES OF THE CALIFORNIA TAX-EXEMPT MONEY MARKET FUND TO THE CURRENT
PROSPECTUS FOR THE HORIZON AND HORIZON SERVICE SHARES OF THE TAX-EXEMPT MONEY
FUND AND CALIFORNIA TAX-EXEMPT MONEY MARKET FUND AND TO THE STATEMENT OF
ADDITIONAL INFORMATION FOR THE HORIZON AND HORIZON SERVICE SHARES OF THE PRIME
FUND, TREASURY FUND, GOVERNMENT FUND, TREASURY ONLY FUND, TAX-EXEMPT MONEY FUND
AND CALIFORNIA TAX-EXEMPT MONEY MARKET FUND. ACCORDINGLY, THE PROSPECTUSES AND
STATEMENTS OF ADDITIONAL INFORMATION FOR THE OTHER PACIFIC HORIZON FUNDS ARE NOT
INCLUDED IN THIS FILING.
<PAGE> 3
PACIFIC HORIZON FUNDS, INC.
Horizon Shares and Horizon Service Shares
of the Tax-Exempt Money Fund
and the
California Tax-Exempt Money Market Fund
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
- -------------- ------------------
Part A
- ------
<S> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . Expense Information
3. Condensed Financial Information . . . . . . . . . . . . Financial Highlights
4. General Description of Registrant . . . . . . . . . . . Description of Shares; Cover
Page; Investment Objectives
and Policies; Other Investment
Practices
5. Management of the Fund . . . . . . . . . . . . . . . . . Management of the Funds;
Description of Shares
5A. Management's Discussion of Fund Performance *
6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . . . . . . . Description of Shares;
Dividends, Distributions and
Taxes
7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . . . . . . . . . . Purchase and Redemption of
Shares; Management of the
Funds; Shareholder Services
Plan
8. Redemption or Repurchase . . . . . . . . . . . . . . . . Purchase and Redemption of
Shares; Management of the
Funds; Shareholder Services
Plan
9. Pending Legal Proceedings . . . . . . . . . . . . . . . *
</TABLE>
- --------------
* Item inapplicable or answer negative.
<PAGE> 4
PROSPECTUS
MARCH __, 1996
Horizon Shares and
Horizon Service Shares of the
TAX-EXEMPT MONEY FUND
AND THE
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
(Investment Portfolios Offered by Pacific Horizon Funds, Inc.)
THIS PROSPECTUS APPLIES TO THE HORIZON SHARES AND HORIZON SERVICE SHARES OF THE
TAX-EXEMPT MONEY FUND AND THE CALIFORNIA TAX-EXEMPT MONEY MARKET FUND (THE
"FUNDS"), TWO NO-LOAD TAX-EXEMPT INVESTMENT PORTFOLIOS OFFERED BY PACIFIC
HORIZON FUNDS, INC. (THE "COMPANY"). HORIZON SHARES AND HORIZON SERVICE SHARES
MAY NOT BE PURCHASED BY INDIVIDUALS DIRECTLY, BUT INSTITUTIONAL INVESTORS MAY
PURCHASE SHARES FOR ACCOUNTS MAINTAINED BY INDIVIDUALS. THE FUNDS ARE DESIGNED
TO PROVIDE INSTITUTIONS WITH DAILY LIQUIDITY. THE TAX-EXEMPT MONEY FUND IS A
DIVERSIFIED INVESTMENT PORTFOLIO AND THE CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
IS A NON-DIVERSIFIED INVESTMENT PORTFOLIO.
THE INVESTMENT OBJECTIVE OF THE TAX-EXEMPT MONEY FUND IS TO PROVIDE AS HIGH A
LEVEL OF CURRENT INTEREST INCOME EXEMPT FROM FEDERAL INCOME TAXES AS IS
CONSISTENT WITH RELATIVE STABILITY OF PRINCIPAL. THE INVESTMENT OBJECTIVE OF THE
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND IS TO SEEK AS HIGH A LEVEL OF CURRENT
INTEREST INCOME FREE OF FEDERAL INCOME TAX AND CALIFORNIA STATE PERSONAL INCOME
TAX AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL AND RELATIVE STABILITY OF
PRINCIPAL. THE FUNDS SEEK TO ACHIEVE THEIR OBJECTIVES BY INVESTING PRIMARILY IN
U.S. DOLLAR-DENOMINATED OBLIGATIONS THE INTEREST ON WHICH IS EXEMPT FROM REGULAR
FEDERAL INCOME TAX, AND IN THE CASE OF THE CALIFORNIA TAX-EXEMPT MONEY MARKET
FUND, IS ALSO EXEMPT FROM TAXATION UNDER THE LAWS OR CONSTITUTION OF CALIFORNIA.
PORTFOLIO SECURITIES HELD BY EACH FUND HAVE REMAINING MATURITIES OF THIRTEEN
MONTHS OR LESS FROM THE DATE OF PURCHASE BY THE FUND. PORTFOLIO SECURITIES WHICH
HAVE CERTAIN PUT OR DEMAND FEATURES EXERCISABLE BY THE FUND WITHIN THIRTEEN
MONTHS (AS WELL AS CERTAIN U.S. GOVERNMENT OBLIGATIONS WITH FLOATING OR VARIABLE
INTEREST RATES) AND SECURITIES HELD AS COLLATERAL FOR REPURCHASE AGREEMENTS MAY
HAVE LONGER MATURITIES.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BANK OF AMERICA") ACTS
AS INVESTMENT ADVISER TO THE FUNDS. CONCORD FINANCIAL GROUP, INC. SPONSORS THE
FUNDS AND
<PAGE> 5
ACTS AS THEIR DISTRIBUTOR AND CONCORD HOLDING CORPORATION ACTS AS THEIR
ADMINISTRATOR, NEITHER OF WHICH IS AFFILIATED WITH BANK OF AMERICA.
THIS PROSPECTUS BRIEFLY SETS FORTH CERTAIN INFORMATION ABOUT THE FUNDS DESCRIBED
HEREIN THAT INVESTORS SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE. ADDITIONAL INFORMATION ABOUT THE FUNDS, CONTAINED
IN A STATEMENT OF ADDITIONAL INFORMATION DATED MARCH __, 1996 AND HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE TO INVESTORS UPON
REQUEST AND WITHOUT CHARGE BY CALLING THE FUNDS' DISTRIBUTOR AT (800) 426-3863.
THE STATEMENT OF ADDITIONAL INFORMATION, AS IT MAY FROM TIME TO TIME BE REVISED,
IS INCORPORATED IN ITS ENTIRETY BY REFERENCE INTO THIS PROSPECTUS.
Shares of the Funds are not bank deposits or obligations of or guaranteed or
endorsed by, Bank of America National Trust and Savings Association or any of
its affiliates, and are not federally insured by, guaranteed by, obligations of
or otherwise supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency. Each
Fund seeks to maintain its net asset value per share at $1.00 for purposes of
purchases and redemptions, although there can be no assurance that it will be
able to do so on a continuous basis. Investment in the Funds involves investment
risk, including the possible loss of principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-2-
<PAGE> 6
EXPENSE INFORMATION
The following table sets forth certain information regarding the shareholder
transaction expenses imposed by each Fund and (i) the annual operating expenses
incurred by the Tax-Exempt Money Fund with respect to its Horizon and Horizon
Service Shares during its last fiscal year (ii) the operating expenses expected
to be incurred for the next twelve months by the California Tax-Exempt Money
Market Fund with respect to its Horizon Shares and, (iii) the annual operating
expenses incurred by the California Tax-Exempt Money Market Fund with respect to
its Horizon Service Shares during its last fiscal year. Actual expenses may
vary. Hypothetical examples based on the table are also shown.
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT
TAX-EXEMPT MONEY MONEY MARKET
------------------- ------------
HORIZON HORIZON
HORIZON SERVICE HORIZON SERVICE
SHARES SHARES* SHARES SHARES*
------- ------- ------ -------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C>
Sales Load Imposed on Purchases . . . . . . . None None None None
Sales Load Imposed on Reinvested
Dividends . . . . . . . . . . . . . . . . . None None None None
Deferred Sales Load . . . . . . . . . . . . . None None None None
Redemption Fees . . . . . . . . . . . . . . . None None None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<S> <C> <C> <C> <C>
Management Fees . . . . . . . . . . . . . . . .20% .20% .20% .20%
--- --- --- ---
All Other Expenses . . . . . . . . . . . . . .08% .33% .10% .35%
--- --- --- ---
Shareholder Service Payments . . . . . . . -- .25% -- .25%
Other Expenses . . . . . . . . . . . . . . .08% .08% .10% .10%
Total Operating Expenses . . . . . . . . . . .28% .53% .30% .55%
=== === === ===
</TABLE>
- ---------------
* The Company understands that institutions that enter into agreements
("Shareholder Service Agreements") with the Company ("Shareholder
Organizations") under the Company's Shareholder Services Plan (the
"Plan") may charge fees to their Customers who are the beneficial owners
of Horizon Service Shares in connection with their accounts. Each Fund's
Horizon Service Shares bear fees paid to Shareholder Organizations under
the Plan at the annual rate of up to .25% of the average daily net asset
value of each Fund's Horizon Service Shares.
<TABLE>
<CAPTION>
EXAMPLES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
expenses on a $1,000 invest-
ment, assuming (1) a 5% annual
return and (2) redemption at the
end of each time period:
Tax-Exempt Money-Horizon
Shares . . . . . . . . . . . . . $3 $ 9 $16 $36
Tax-Exempt Money-Horizon
Service Shares . . . . . . . . . $5 $17 $30 $66
California Tax-Exempt Money
Market-Horizon Shares . . . . . . $3 $10 $17 $38
California Tax-Exempt Money
Market-Horizon Service
Shares . . . . . . . . . . . . . $6 $18 $31 $69
</TABLE>
-3-
<PAGE> 7
The foregoing Expense Summary and Examples are intended to assist investors in
Horizon Shares and Horizon Service Shares in understanding the expenses their
class will pay. Investors bear these expenses indirectly since they reduce the
amount of income paid by the Funds to investors as dividends. The investment
adviser and administrator may voluntarily waive a portion of their respective
fees and may voluntarily reimburse expenses from time to time. This voluntary
waiver or reimbursement may be modified or terminated at any time. See
"Management of the Funds" and "Description of Shares" for more complete
descriptions of the various expenses referred to above.
THE EXAMPLES SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE INVESTMENT RETURNS AND OPERATING EXPENSES. ACTUAL INVESTMENT RETURNS
AND OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
The Tax-Exempt Money Fund commenced operations on July 10, 1987 as a separate
investment portfolio (the "Predecessor Tax-Exempt Fund") of The Horizon Funds, a
Massachusetts business trust. On January 19, 1990, the Predecessor Tax-Exempt
Fund was reorganized as a new portfolio of the Company.
The table below sets forth certain information concerning (i) the investment
results of the Predecessor Tax-Exempt Fund for the periods ended on or before
April 30, 1989, (ii) the combined investment results of the Predecessor
Tax-Exempt Fund and the Tax-Exempt Money Fund for the period May 1, 1989
through February 28, 1990, (iii) the investment results of the Tax-Exempt Money
Fund for the fiscal years ended February 28, 1991, February 29, 1992, February
28, 1993, February 28, 1994 and February 28, 1995, (iv) and the investment
results of the Tax-Exempt Money Fund for the six-month period ended August 31,
1995. Except for the period ended August 31, 1995, the information contained in
the Financial Highlights has been audited by Price Waterhouse LLP, independent
accountants of both the Predecessor Tax-Exempt Fund and the Tax-Exempt Money
Fund. Price Waterhouse LLP's unqualified report on the financial statements
containing such information, insofar as it relates to the five year period ended
February 28, 1995, is incorporated by reference into the Statement of Additional
Information, which may be obtained upon request. The Financial Highlights should
be read in conjunction with the financial statements and notes thereto and the
unqualified report of the independent accountants which are incorporated by
reference in the Statement of Additional Information.
-4-
<PAGE> 8
Selected Data for a Horizon Share Outstanding Throughout Each of the Periods
Indicated:
Tax-Exempt Money Fund
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
-----------------------------------------------------------------------------
August February February February February February
31, 28, 28, 28, 29, 28,
1995 1995+++ 1994+++ 1993+++ 1992 1991
---- ------- ------- ------- ---- ----
(Unaudited)
-----------
<S> <C> <C> <C> <C> <C> <C>
HORIZON SHARES
Net asset value per share,
_______________ beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income 0.0184 0.0285 0.0225 0.0269 0.0410 0.0557
Less Dividends from net investment
income (0.0184) (0.0285) (0.0225) (0.0269) (0.0410) (0.0557)
-------- -------- -------- -------- -------- --------
Net change in net asset value per share 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
-------- -------- -------- -------- -------- --------
Net asset value per share, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return 2.14%++++ 2.89% 2.27% 2.72% 4.18% 5.71%
Ratios/Supplemental Data:
Net assets, end of period (000)
$330,701 $381,811 $514,663 $383,848 $345,221 $428,127
Ratio of expenses to average
net assets 0.31%+ 0.28% 0.28%** 0.28% 0.28% 0.27%**
Ratio of net investment income to
average net assets 3.65%+ 2.81% 2.25%** 2.69% 4.12% 5.54%**
</TABLE>
<TABLE>
<CAPTION>
May 1, 1989 Year Period
Through Ended Ended
February April April
28, 30, 30,
1990 1989++ 1988*++
---- ------ -------
<S> <C> <C> <C>
HORIZON SHARES
Net asset value per share,
_______________ beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from Investment Operations:
Net investment income 0.0503 0.0577 0.0392
Less Dividends from net investment
income (0.0503) (0.0577) (0.0389)
-------- -------- --------
Net change in net asset value per share 0.0000 0.0000 0.0003
-------- -------- --------
Net asset value per share, end of period $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return 5.15%++++ 5.93% 3.92%++++
Ratios/Supplemental Data:
Net assets, end of period (000)
$355,656 $178,586 $104,358
Ratio of expenses to average
net assets 0.21%**+ 0.21%** 0.20%**+
Ratio of net investment income to
average net assets 5.96%**+ 5.84%** 5.17%**+
</TABLE>
- ---------------
* For the period July 10, 1987 (commencement of operations) through April 30,
1988.
** Net of fee waivers which had the effect of reducing the ratio of expenses
to average net assets and increasing the ratio of net investment income to
average net assets by 0.01%, 0.02%, 0.07% (annualized), 0.19% and 0.23%
(annualized) for the years or periods ended February 28, 1994, February 28,
1991, February 28, 1990, April 30, 1989 and April 30, 1988, respectively.
+ Annualized.
++ This information represents the results of operations of the former Horizon
Tax-Exempt Money Fund, the assets and liabilities of which were transferred
to the Pacific Horizon Funds, Inc. -- Tax-Exempt Money Fund on January 19,
1990. See Note 1 to the financial statements which are incorporated by
reference into the Statement of Additional Information.
+++ Security Pacific National Bank served as investment adviser through April
21, 1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
++++ Not annualized.
-5-
<PAGE> 9
Selected Data for a Horizon Service Share Outstanding Throughout Each of the
Periods Indicated:
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
Six Months Year Ended
Ended ---------------------------------------------------------------
August February February February February February
31, 28, 28, 28, 29, 28,
1995 1995+++ 1994+++ 1993+++ 1992 1991
----------- --------- --------- --------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income 0.0172 0.0260 0.0200 0.0244 0.0385 0.0532
Less dividends from net investment
income (0.0172) (0.0260) (0.0200) (0.0244) (0.0385) (0.0532)
-------- -------- --------- -------- -------- --------
Net change in net asset value per share (0.0000) 0.0000 0.0000 0.0000 0.0000 0.0000
-------- -------- --------- -------- -------- --------
Net asset value per share, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ======== ========
Total return 1.99%++++ 2.63% 2.02% 2.47% 3.92% 5.45%
Ratios/Supplemental Data:
Net assets, end of period (000) $ 49,311 $ 39,158 $ 48,328 $ 49,695 $ 47,230 $ 53,732
Ratio of expenses to average
net assets 0.56%++ 0.53% 0.53%** 0.53% 0.53% 0.52%**
Ratio of net investment income to
average net assets 3.41%++ 2.57% 2.04%** 2.42% 3.88% 5.29%**
<CAPTION>
May 1, 1989 Year Period
Through Ended Ended
February April April
28, 30, 30,
1990 1989++ 1988*++
----------- ------ --------
<S> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share
beginning of period $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income 0.0482 0.0552 0.0090
Less dividends from net investment
income (0.0482) (0.0552) (0.0090)
------- -------- --------
Net change in net asset value per share 0.0000 0.0000 0.0000
------- -------- --------
Net asset value per share, end of period $ 1.00 $ 1.00 $ 1.00
======= ======== ========
Total return 4.93% 5.66% 0.90%
Ratios/Supplemental Data:
Net assets, end of period (000) $36,538 $178,586 $104,358
Ratio of expenses to average
net assets 0.46%**+++ 0.46%** 0.45%**++
Ratio of net investment income to
average net assets 5.73 %**+++ 5.70%** 4.54%**++
</TABLE>
_______________
* For the period February 18, 1988 (initial offering day) through April 30,
1988.
** Net of expense reimbursements which had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.04%, 0.02%, 0.07% (annualized), 0.19% and
0.16% (annualized) for the years or periods ended February 28, 1994,
February 28, 1991, February 28, 1990, April 30, 1989 and April 30, 1988,
respectively.
+ Annualized.
++ This information represents the results of operations of the former Horizon
Tax-Exempt Money Fund, the assets and liabilities of which were transferred
to the Pacific Horizon Funds, Inc. -- Horizon Tax-Exempt Money Fund on
January 19, 1990.
+++ Security Pacific National Bank served as investment adviser through April
21, 1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
++++ Not annualized.
The California Tax-Exempt Money Market Fund commenced operations on December 6,
1989 as a portfolio of the Company with a single series of shares, Pacific
Horizon Shares. On March 1, 1993, the California Tax-Exempt Money Market Fund
began offering a second series of shares known as the Horizon Service Shares.
On , 1996 the California Tax-Exempt Money Market Fund began offering
a third series of shares known as the Horizon Shares.
The table below sets forth certain information concerning the investment results
for Horizon Service Shares of the California Tax-Exempt Money Market Fund for
the fiscal years ended February 28, 1994 and February 28, 1995 and the period
ended August 31, 1995. Except for the period ended August 31, 1995, the
information contained in the Financial Highlights has been audited by Price
Waterhouse LLP, independent accountants of the California Tax-Exempt Money
Market Fund, whose unqualified report thereon is incorporated by reference into
the Statement of Additional Information, which may be obtained upon request. The
Financial Highlights should be read in conjunction with the financial statements
and notes thereto and the unqualified report of independent accountants which
are incorporated by reference in the Statement of Additional Information.
<R/>
-6-
<PAGE> 10
Selected Data for a Horizon Service Share outstanding throughout the Period:
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
Six Months Ended
August 31, 1995 Year Ended Year Ended
(Unaudited) February 28, 1995 February 28, 1994
----------- ----------------- -----------------
<S> <C> <C> <C>
HORIZON SERVICE SHARES
Net Asset Value per share, Beginning of Year . . $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from Investment Operations:
Net investment income . . . . . . . . . . . . . 0.0170 0.0256 0.0198
Net realized loss on securities . . . . . . . . (0.0001) (0.0001) (0.0001)
-------- -------- --------
Total income from investment operations . . . . 0.0169 0.0255 0.0197
Less dividends: from net investment income . . . (0.0170) (0.0256) (0.0198)
-------- -------- --------
Net change in net asset value per share . . . . . (0.0001) (0.0001) (0.0001)
-------- -------- --------
Net asset value per share, end of period . . . . $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return . . . . . . . . . . . . . . . . . . 1.71%++++ 2.59% 2.00%
Ratios/Supplemental Data:
Net assets, end of period (000) . . . . . . . . $114,240 $88,003 $123,746
Ratio of expenses to average net assets . . . . 0.54%+ 0.55% 0.53%*
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . . 3.36%+ 2.50% 1.98%*
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements by the Adviser and the
Administrator which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.07%.
+ Annualized.
++++ Not Annualized.
YIELD INFORMATION. From time to time the "yield," "effective yield" or
"tax-equivalent yield" of a Fund may be quoted in advertisements or reports to
shareholders. Each yield figure is based on historical earnings and is not
intended to indicate future performance. The "yield" of a Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement or report). This income is then
"annualized" -- that is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment. A
Fund's "tax-equivalent yield" shows the level of taxable yield needed to produce
an after-tax equivalent to the Fund's tax-free yield. This is done by increasing
the Fund's yield (calculated as above) by the amount necessary to reflect the
payment of Federal, and in the case of the California Tax-Exempt Money Market
Fund, California income tax at a stated tax rate. A Fund's "tax-equivalent
yield" will always be higher than its "yield."
-7-
<PAGE> 11
Additionally, the yields of a Fund may be compared to those of other mutual
funds with similar investment objectives and to other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, the
Funds' yields may be compared to Donoghue's Tax-Free Money Fund Average and
Donoghue's Money Fund Averages, which are averages compiled by Donoghue's Money
Fund Report. Yield data as reported in national financial publications,
including Money, Forbes, Barron's, Wall Street Journal and New York Times, or in
publications of a local or regional nature, may also be used in comparing the
yields of a Fund. A complete listing of the indices, rankings and publications
discussed above is contained in the Statement of Additional Information.
Since yields fluctuate, yield data cannot necessarily be used to compare an
investment in the shares of a Fund with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is generally a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses and market conditions. Any
fees charged by Bank of America or Shareholder Organizations (defined below)
directly to their customer accounts in connection with investments in shares of
a Fund (which fees may include, for example, account maintenance fees,
compensating balance requirements or fees based upon account transactions,
assets or income) will not be included in the Fund's calculations of yield.
INVESTMENT OBJECTIVES AND POLICIES
IN GENERAL
This section describes the investment objectives and policies of the Funds.
Assets of the Funds will be invested in dollar-denominated debt securities with
remaining maturities of thirteen months or less as defined by the Securities and
Exchange Commission (the "SEC"), and the dollar-weighted average portfolio
maturity of each Fund will not exceed 90 days. All securities acquired by the
Funds will be determined by the investment adviser, under guidelines established
by the Company's Board of Directors, to present minimal credit risks. Securities
acquired by the Tax-Exempt Money Fund will, under normal market conditions, be
"First Tier Securities" (as defined by the SEC), of the types described below.
During temporary defensive periods or if in the investment adviser's opinion
suitable First Tier Securities are not available for investment, however, the
Tax-Exempt Money Fund may also acquire "Eligible Securities" (as defined by the
SEC) of the types defined below. Securities acquired by the California Tax-
Exempt Money Market Fund will be Eligible Securities. First Tier Securities
consist of instruments that are rated at the time of purchase in the top rating
category by one (if rated by only one) or more unaffiliated nationally
recognized statistical rating organizations ("NRSROs") including Standard and
Poor's Ratings Group, Division of McGraw Hill ("Standard & Poor's"), Moody's
Investors Service, Inc. ("Moody's"), Duff & Phelps Credit Co. ("Duff & Phelps")
or Fitch Investors Service, Inc. ("Fitch") or issued by issuers with such
ratings. Eligible Securities consist either of instruments that are rated at the
time of purchase in the top two rating categories by one or more NRSROs, or are
issued by issuers with such ratings. The Appendix to the Statement of Additional
Information includes a description of the applicable NRSRO ratings. Unrated
instruments (including instruments with long-term but no short-term ratings)
purchased by a particular Fund will be of comparable quality to the rated
instruments that the
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Fund may purchase, as determined by the Funds' investment adviser pursuant to
guidelines approved by the Board of Directors.
TAX-EXEMPT MONEY FUND. The Tax-Exempt Money Fund's investment objective is to
provide as high a level of current interest income exempt from federal income
taxes as is consistent with relative stability of principal. The Fund invests
substantially all of its assets in a diversified portfolio of U.S.
dollar-denominated short-term obligations issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia and
their political subdivisions, agencies, instrumentalities and authorities, the
interest on which, in the opinion of bond counsel to the issuer, is exempt from
regular federal income tax ("Municipal Securities"). Portfolio securities held
by the Fund have remaining maturities of thirteen months or less from the date
of purchase by the Fund. (Portfolio securities which have certain put or demand
features exercisable by the Fund within thirteen months, or are subject to
repurchase agreements may have longer maturities.)
As a matter of fundamental policy, under normal market conditions at least 80%
of the Fund's total assets will be invested in Municipal Securities (other than
private activity bonds, the interest on which is treated as a specific tax
preference item under the federal alternative minimum tax). The Fund may also
invest in taxable obligations and may hold uninvested cash reserves pending
investment, during temporary defensive periods or if, in the opinion of the
Fund's investment adviser, suitable tax-exempt obligations are not available.
Uninvested cash reserves will not earn income. Taxable obligations acquired by
the Fund will not exceed under normal market conditions 20% of the Fund's total
assets at the time of purchase. Such taxable obligations include obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
(some of which may be subject to repurchase agreements), certificates of deposit
and bankers' acceptances of selected banks and commercial paper. These
obligations are described further in the Statement of Additional Information.
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND. The California Tax-Exempt Money Market
Fund's investment objective is to seek as high a level of current interest
income free of Federal income tax and California state personal income tax as is
consistent with the preservation of capital and relative stability of principal.
The Fund's assets are primarily invested in Municipal Securities issued by or on
behalf of the State of California and other governmental issuers. Municipal
Securities acquired by the Fund will generally have remaining maturities of
thirteen months or less.
As a matter of fundamental policy, under normal market conditions at least 80%
of the Fund's net assets will be invested in Municipal Securities, the interest
on which is exempt from taxation under the California Constitution or the laws
of California ("California Municipal Securities"). So long as at least 50% of
the Fund's total assets are invested in debt obligations, the interest on which
is exempt from taxation by the state of California ("California Exempt
Securities," which are generally limited to California Municipal Securities and
certain U.S. Government and U.S. Possession obligations) as of the end of each
quarter, dividends paid by the Fund which are derived from interest on
California Exempt Securities will be exempt from California state personal
income tax; if this policy is not achieved, no portion of the Fund's dividends
will be exempt from California state personal income tax. Dividends derived from
interest on Municipal
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Securities other than California Municipal Securities will be subject to
California state personal income tax. See "Taxes."
The Fund may hold uninvested cash reserves pending investment, during temporary
defensive periods, or if, in the opinion of the Fund's investment adviser,
suitable tax-exempt obligations are unavailable. In accordance with the Fund's
investment objective, and subject to the Fund's fundamental policy that under
normal market conditions 80% of its net assets be invested in California
Municipal Securities, investments may be made in taxable obligations of up to
thirteen months in maturity if, for example, suitable tax-exempt obligations
are unavailable or if acquisition of U.S. Government or other taxable
securities is deemed appropriate for temporary defensive purposes. Such
taxable obligations will be limited to those that may be acquired by the
Tax-Exempt Money Fund. Under normal market conditions, the Fund anticipates
that not more than 5% of its net assets will be invested in any one category of
taxable securities. Additionally, the Fund will not invest more than 10% of
its total assets in securities that are illiquid because of absence of a
readily available market or otherwise, including repurchase agreements
providing for settlement more than seven days after notice.
MUNICIPAL SECURITIES
The two principal classifications of Municipal Securities which may be held by
the Funds are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds are generally revenue
securities, which are not payable from the unrestricted revenues of the
issuers, and the credit ratings of such bonds are usually directly related to
the credit ratings of the users of the facilities involved. The Funds may also
acquire "moral obligation" securities, which are normally issued by special
purpose public authorities. If the issuer of moral obligation securities is
unable to meet its debt service obligations from current revenues it may draw
on a reserve fund, the restoration of which is a moral commitment but not a
legal obligation of the state or municipality which created the issuer.
Municipal Securities include debt obligations issued by governmental entities
to obtain funds for various public purposes, including the construction of a
wide range of public facilities, the refunding of outstanding obligations, the
payment of general operating expenses and the extension of loans to public
institutions and facilities. In addition, certain types of private activity
bonds are issued by or on behalf of public authorities to finance various
privately-operated facilities. Such obligations are included within the term
Municipal Securities if the interest paid thereon is exempt from regular
Federal income tax. Municipal Securities also include short-term tax
anticipation notes, bond anticipation notes, revenue anticipation notes and
other forms of short-term loan obligations. Such notes are issued with a
short-term maturity in anticipation of the receipt of tax funds, the proceeds
of bond placements or revenues. The Funds may also purchase tax-exempt
commercial paper.
Securities acquired by the Funds may be in the form of custodial receipts
evidencing rights to receive a specific future interest payment, principal
payment or both on certain Municipal
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<PAGE> 14
Securities. Such obligations are held in custody by a bank on behalf of holders
of the receipts. These custodial receipts are known by various names, including
"Municipal Receipts," "Municipal Certificates of Accrual on Tax-Exempt
Securities" ("M-CATS") and "Municipal Zero-Coupon Receipts." A Fund may also
purchase from time to time participation interests in debt securities held by
trusts or financial institutions. A participation interest gives the Fund
involved a specified undivided interest (up to 100%) in the underlying
obligation. Participation interests purchased by a Fund may have fixed, floating
or variable rates of interest, and will have remaining maturities of thirteen
months or less as determined in accordance with the regulations of the
Securities and Exchange Commission (although the securities held by the issuer
may have longer maturities). If a participation interest is unrated, the
investment adviser will have determined that the interest is of comparable
quality to those instruments in which the Fund involved may invest pursuant to
guidelines approved by the Company's Board of Directors. For certain
participation interests, the Fund involved will have the right to demand
payment, on not more than 30 days' notice, for all or any part of such
participation interest, plus accrued interest; as to these instruments, the
Funds intend to exercise their right to demand payment as needed to provide
liquidity, to maintain or improve the quality of their respective investment
portfolios or upon a default (if permitted under the terms of the instrument).
Although a participation interest may be sold by a Fund under normal
circumstances they will be held until maturity.
Opinions relating to the validity of Municipal Securities and to the exemption
of interest thereon from regular Federal income tax (and, with respect to
California Municipal Securities, California state personal income tax), are
rendered by bond counsel to the respective issuers at the time of issuance.
Neither the Funds nor their investment adviser will review the proceedings
relating to the issuance of Municipal Securities or the bases for such
opinions.
OTHER INVESTMENT PRACTICES
VARIABLE AND FLOATING RATE INSTRUMENTS. Securities purchased by the Funds may
include variable and floating rate instruments, which may have a stated maturity
in excess of the Funds' maturity limitations but which will, in such event and
except with respect to certain U.S. Government obligations purchased by the
Tax-Exempt Money Fund, permit the Fund involved to demand payment of the
principal of the instrument at least once every thirteen months upon not more
than thirty days notice. Such instruments may include variable amount master
demand notes that permit the indebtedness thereunder to vary, in addition to
providing for periodic adjustments in the interest rate. There may be no active
secondary market with respect to a particular variable or floating rate
instrument. Nevertheless, the periodic readjustments of their interest rates
tend to assure that their value to a Fund will approximate their par value.
Illiquid variable and floating rate instruments (instruments which are not
payable upon seven days notice and do not have an active trading market) that
are acquired by a Fund are subject to a Fund's percentage limitations on
illiquid investments. The Fund's investment adviser will continuously monitor
the creditworthiness of issuers of variable and floating rate instruments in
which the Funds invest, and their ability to repay principal and interest.
WHEN-ISSUED PURCHASES, FORWARD COMMITMENTS AND DELAYED SETTLEMENTS. The Funds
may purchase securities on a "when-issued" basis and may purchase or sell
securities on a "forward commitment" or "delayed settlement" basis. When-issued
and forward commitment transactions,
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<PAGE> 15
which involve a commitment by a Fund to purchase or sell particular securities
with payment and delivery taking place at a future date (perhaps one or two
months later), permit the Fund to lock in a price or yield on a security it
owns or intends to purchase, regardless of future changes in interest rates.
Delayed settlement describes securities transaction in the secondary market for
which settlement will occur sometime in the future. When-issued, forward
commitment and delayed settlement transactions involve the risk, however, that
the yield or price obtained in a transaction may be less favorable than the
yield or price available in the market when the securities delivery takes
place. A Fund's forward commitments, when-issued purchases and delayed
settlements are not expected to exceed 25% of the value of its total assets
absent unusual market conditions. A Fund's liquidity and the ability of the
investment adviser to manage its portfolio may be adversely affected in the
event its forward commitments, commitments to purchase when-issued securities
and delayed settlements ever exceed 25% of the value of its total assets. The
Funds do not intend to engage in these transactions for speculative purposes
but only in furtherance of their respective investment objectives.
"STAND-BY COMMITMENTS." The Funds may acquire "stand-by commitments" with
respect to Municipal Securities held in their respective portfolios. Under a
stand-by commitment, a dealer agrees to purchase at the Fund's option specified
Municipal Securities at a specified price. The Funds will acquire stand-by
commitments solely to facilitate portfolio liquidity and do not intend to
exercise their rights thereunder for trading purposes. The California Tax-Exempt
Money Market Fund expects that "stand-by commitments" will generally be
available without the payment of any direct or indirect consideration. However,
if necessary or advisable, that Fund will pay for a "stand-by commitment" either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities).
REPURCHASE AGREEMENTS. The Funds may agree to purchase securities from financial
institutions, such as banks and broker-dealers, as are deemed creditworthy by
the Company's investment adviser under guidelines approved by the Board of
Directors, subject to the seller's agreement to repurchase them at an agreed
upon time and price ("repurchase agreements"). Although the securities subject
to a repurchase agreement may bear maturities exceeding thirteen months, the
Funds intend only to enter into repurchase agreements having maturities not
exceeding 60 days. Securities subject to repurchase agreements are held either
by the Company's custodian, or sub-custodian, or in the Federal Reserve/Treasury
Book-Entry System. The seller under a repurchase agreement will be required to
deliver instruments the value of which is 102% of the repurchase price
(excluding accrued interest), provided that notwithstanding such requirement the
adviser shall require that the value of the collateral, after transaction costs
(including loss of interest) reasonably expected to be incurred on a default,
shall be equal to or greater than the resale price (including interest) provided
in the agreement. Default by the seller would, however, expose the Fund involved
to possible loss because of adverse market action or delay in connection with
the disposition of the underlying obligations. Repurchase agreements are
considered to be loans under the Investment Company Act of 1940.
REVERSE REPURCHASE AGREEMENTS. The Funds may borrow monies for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, a Fund
would sell portfolio securities to financial institutions and agree to
repurchase them at an agreed upon date and price. At the time a Fund
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<PAGE> 16
enters into a reverse repurchase agreement, it will place in a segregated
custodial account liquid assets or high grade debt securities having a value
equal to or greater than the repurchase price and the investment adviser will
continuously monitor the account to ensure that the value is maintained. A
Fund would only enter into reverse repurchase agreements to avoid otherwise
selling securities during unfavorable market conditions to meet redemptions.
Reverse repurchase agreements involve the risk that the market value of the
portfolio securities sold by the Fund involved may decline below the price of
the securities the Fund is obligated to repurchase. Interest paid by a Fund in
connection with a reverse repurchase agreement will reduce the net investment
income of the Fund. Reverse repurchase agreements are considered to be
borrowings under the Investment Company Act of 1940. A Fund will not purchase
securities while it has borrowings (including reverse repurchase agreements)
outstanding.
SPECIAL CONSIDERATIONS AND RISKS
In seeking to achieve their respective investment objectives the Funds may
invest in private activity bonds the interest on which, although exempt from
regular Federal income tax, may constitute an item of tax preference for
purposes of the Federal alternative minimum tax. See "Taxes." Investments in
such securities, however, will not exceed under normal market conditions 20% of
a Fund's total assets when added together with any taxable investments held by
the Fund. Moreover, although the Funds do not presently intend to do so on a
regular basis, they may invest more than 25% of their respective assets in
Municipal Securities the interest on which is paid solely from revenues of
similar projects if such investment is deemed necessary or appropriate by the
investment adviser. Additionally, although the Tax-Exempt Money Fund may
invest more than 25% of its assets in Municipal Securities the issuers of which
are located in the same state, it does not presently intend to do so on a
regular basis other than issuers located in California. To the extent a Fund's
assets are concentrated in Municipal Securities payable from revenues on
similar projects or issued by issuers located in the same state, the Fund will
be subject to the peculiar economic, political and business risks presented by
the laws and economic conditions relating to such states and projects to a
greater extent than it would be if its assets were not so concentrated.
The California Tax-Exempt Money Market Fund is classified as a non-diversified
investment company under the Investment Company Act of 1940. Investment return
on a non-diversified portfolio typically is dependent upon the performance of a
smaller number of securities relative to the number held in a diversified
portfolio. Consequently, the change in value of any one security may affect
the overall value of a non-diversified portfolio more than it would a
diversified portfolio, and thereby subject the market-based net asset value per
share of the non-diversified portfolio to greater fluctuations. In addition, a
non-diversified portfolio may be more susceptible to economic, political and
regulatory developments than a diversified investment portfolio with similar
objectives may be.
The Funds' concentration in California Municipal Securities raises additional
considerations. Payment of the interest on and the principal of these
obligations is dependent upon the continuing ability of California issuers
and/or obligors of state, municipal and public authority debt obligations to
meet their obligations thereunder. Investors should consider the greater risk
inherent in the Funds' concentration in such obligations versus the safety that
comes with a less geographically concentrated investment portfolio and should
compare the yield available on a
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<PAGE> 17
portfolio of California issues with the yield of a more diversified portfolio
including non-California issues before making an investment decision.
Many of the Funds' Municipal Securities are likely to be obligations of
California governmental issuers which rely in whole or in part, directly or
indirectly, on real property taxes as a source of revenue. "Proposition
Thirteen" and similar California constitutional and statutory amendments and
initiatives in recent years have restricted the ability of California taxing
entities to increase real property tax revenues. Other initiative measures
approved by California voters in recent years, through limiting various other
taxes, have resulted in a substantial reduction in state revenues. Decreased
state revenues may result in reductions in allocations of state revenues to
local governments.
Because of the complex nature of the various initiatives mentioned above and
certain possible ambiguities and inconsistencies in their terms and the scope
of various exemptions and exceptions, as well as the impossibility of
predicting the level of future appropriations for state and local California
governmental entities, it is not presently possible to determine the impact of
these initiatives and related measures on the ability of California
governmental issuers to pay interest or repay principal on their obligations.
There have, however, been certain adverse developments with respect to
Municipal Securities of California governmental issuers over the past several
years.
In addition to the various initiatives discussed above, economic factors such
as the reduction in defense spending, a decline in tourism and high levels of
unemployment have had an adverse impact on the economy of California. These
economic factors have reduced revenues to the state government at a time when
expenses of state government such as education costs, various welfare costs and
other expenses have been rising. Such economic factors have also adversely
impacted the ability of state and local California governmental entities to
repay debt.
In addition to the risk of nonpayment of state and local California
governmental debt, if such debt declines in quality and is downgraded by the
NRSROs, it may become ineligible for purchase by the Funds pursuant to current
Securities and Exchange Commission regulations. Since there are large numbers
of buyers of such debt that are similarly restricted, the supply of Eligible
Securities (as defined above) could become inadequate at certain times. A more
detailed description of special factors affecting investments in California
Municipal Securities, of which investors should be aware, is set forth in the
Statement of Additional Information.
INVESTMENT LIMITATIONS
The investment objective of each Fund is a fundamental policy that may not be
changed without a vote of the holders of a majority of the particular Fund's
outstanding shares (as defined in the Investment Company Act of 1940). A
Fund's policies may be changed by the Company's Board of Directors without the
affirmative vote of the holders of a majority of such Fund's outstanding
shares, except that the investment limitations set forth below may not be
changed without such a vote of shareholders. A description of certain other
fundamental investment limitations is contained in the Statement of Additional
Information.
The Tax-Exempt Money Fund may not:
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1. Under normal circumstances invest less than 80% of its total assets in
Municipal Securities (other than private activity bonds the interest on
which may be subject to the federal alternative minimum tax).
2. Purchase any securities which would cause 25% or more of the value of its
total assets at the time of such purchase to be invested in the securities
of one or more issuers conducting their principal business activities in
the same industry; provided, however, that (a) there is no limitation with
respect to investments in Municipal Securities or obligations issued or
guaranteed by the Federal Government and its agencies and
instrumentalities: (b) although there is no limitation with respect to
investments in certificates of deposit and bankers' acceptances issued by
domestic branches of United States banks, no more than 10% of the total
value of the Fund's assets at the time of purchase may be invested in
certificates of deposit and bankers' acceptances issued by domestic
branches of foreign banks and no more than 25% of the total value of the
Fund's assets at the time of purchase may be invested in certificates of
deposit and bankers' acceptances issued by domestic branches of foreign
banks and foreign branches of domestic banks; (c) each utility service
(such as gas, gas transmission, electric and telephone service) will be
considered a single industry for purposes of this policy; and (d)
wholly-owned finance companies will be considered to be in the industries
of their parents if their activities are primarily related to financing the
activities of their parents.
3. Borrow money except from banks for temporary purposes and in amounts not in
excess of 10% of the value of the Fund's total assets at the time of such
borrowing, or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's
total assets at the time of such borrowing. (This borrowing provision is
not for investment leverage, but solely to facilitate management of the
Fund's portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be disadvantageous or
inconvenient. The Fund will not purchase any securities while borrowings
are outstanding. Interest paid on borrowed funds will reduce the net
investment income of the Fund.)
4. Invest more than 10% of the value of its total assets in securities with
legal or contractual restrictions on resale (including repurchase
agreements with terms greater than seven days).
The California Tax-Exempt Money Market Fund may not:
1. Under normal market conditions invest less than 80% of its net assets in
California Municipal Securities.
2. Purchase the securities of any issuer if as a result more than 5% of the
value of the Fund's total assets would be invested in the securities of
such issuer, except that (a) up to 50% of the value of the Fund's total
assets may be invested without regard to this 5% limitation provided that
no more than 25% of the value of the Fund's total assets are invested in
the securities of any one issuer and (b) this 5% limitation does not apply
to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
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<PAGE> 19
3. Borrow money or issue senior securities, except that the Fund may borrow
from banks or enter into a reverse repurchase agreement to meet redemptions
or for other temporary purposes in amounts up to 10% of its total assets at
the time of such borrowing; or mortgage, pledge or hypothecate any assets
except in connection with any such borrowing and in amounts not in excess
of the lesser of the dollar amounts borrowed or 10% of its total assets at
the time of such borrowing.
INVESTMENT DECISIONS
Investment decisions for each Fund are made independently from those for other
investment companies and accounts managed by Bank of America and its affiliated
entities. Such other investment companies and accounts may also invest in the
same securities as a Fund. When a purchase or sale of the same security is made
at substantially the same time on behalf of a Fund and another investment
company or account, available investments or opportunities for sales will be
allocated in a manner which Bank of America believes to be equitable. In some
instances, this investment procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or sold by a Fund. In
addition, in allocating purchase and sale orders for portfolio securities
(involving the payment of brokerage commissions or dealer concessions), Bank of
America may take into account the sale of shares of a Fund by broker-dealers and
other financial institutions (including affiliates of Bank of America and the
Funds' distributor), provided Bank of America believes that the quality of the
transaction and the amount of the commission are not less favorable than what
they would be with any other unaffiliated qualified firm.
MANAGEMENT OF THE FUNDS
BOARD OF DIRECTORS. The business of the Company is managed under the direction
of its Board of Directors. Information about the Directors and officers of the
Company is included in the Statement of Additional Information.
INVESTMENT ADVISER. Bank of America National Trust and Savings Association
("Bank of America") serves as investment adviser to each Fund. Bank of America,
which has principal offices located at 555 California Street, San Francisco,
California 94104, is a national banking association formed in 1904 which
provides commercial banking and trust business through an extensive system of
branches across the western United States. Bank of America's principal banking
affiliates operate branches in ten U.S. states as well as corporate banking and
business credit offices in major U.S. cities and branches, corporate offices and
representative offices in 37 countries. Bank of America is the successor by
merger to Security Pacific National Bank ("Security Pacific"), which previously
served as investment adviser to the Company since it commenced operations in
1984. Bank of America and its affiliates have over $50 billion under management,
including over $10 billion in mutual funds. Bank of America is a subsidiary of
BankAmerica Corporation, a registered bank holding company.
As investment adviser Bank of America manages the Funds' investments and is
responsible for all purchases and sales of the Funds' portfolio securities. For
its investment advisory services Bank of America is entitled to receive a fee
accrued daily and payable monthly at the following annual rates: .10% of the
first $3 billion of each Fund's net assets, plus .09% of the next $2
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<PAGE> 20
billion of each Fund's average daily net assets, plus .08% of each Fund's net
assets over $5 billion. For the fiscal year ended February 28, 1995, the
Tax-Exempt Money Fund and the California Tax-Exempt Money Market Fund paid Bank
of America advisory fees at the effective annual rates of .10% of their
respective average net assets.
In addition, Bank of America is also entitled to fees under the Company's
Shareholder Services Plan described below and may receive fees charged directly
to its customers' accounts in connection with investments in Fund shares.
ADMINISTRATOR. Concord Holding Corporation (the "Administrator" ) serves as the
Company's administrator and assists generally in supervising the Funds'
operations. The Administrator is a wholly-owned subsidiary of The BISYS Group,
Inc. Its offices are located at 3435 Stelzer Road, Columbus, Ohio 43219.
Under its basic administrative services agreement for the Funds, the
Administrator has agreed to provide facilities, equipment and personnel to
carry out administrative services that are for the benefit of all series in the
Funds, including coordination of reports to shareholders and the Securities and
Exchange Commission; calculation of the net asset value of the Funds' shares
and dividends and capital gains distributions to shareholders; payment of the
costs of maintaining the Funds' offices; preparation of tax returns; provision
of internal legal and accounting compliance services; maintenance (or oversight
of the maintenance by others approved by the Board of Directors) of the Funds'
books and records; and the provision of various services for shareholders who
have made a minimum investment of at least $500,000 including the provision of
a facility to receive purchase and redemption orders for the accounts of such
shareholders.
For its administrative services the Administrator is entitled to receive an
administration fee computed daily and payable monthly at the following annual
rates: .10% of the first $7 billion of each Fund's average daily net assets,
plus .09% of the next $3 billion of each Fund's average daily net assets, plus
.08% of each Fund's average daily net assets over $10 billion. For the fiscal
year ended February 28, 1995, the Tax-Exempt Money Fund and California
Tax-Exempt Money Market Fund paid the Administrator administration fees at the
effective annual rates of .10% of their respective average daily net assets.
Pursuant to the authority granted in its agreement with the Company, the
Administrator has entered into an agreement with The Bank of New York under
which the bank performs certain of the services listed above -- e.g.
calculating the net asset value of Fund shares and dividends to shareholders
and maintaining the Funds' books and records. The Funds bear all fees and
expenses charged by The Bank of New York for these services.
DISTRIBUTOR. Concord Financial Group, Inc. (the "Distributor") is the principal
underwriter and distributor of shares of the Funds. The Distributor is a
wholly-owned subsidiary of the Administrator organized to distribute shares of
mutual funds to institutional and retail investors. Its offices are located at
3435 Stelzer Road, Columbus, Ohio 43219.
The Distributor makes a continuous offering of the Funds' shares and bears the
costs and expenses of printing and distributing to selected dealers and
prospective investors copies of any prospectuses, statements of additional
information and annual and interim reports of the Funds
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<PAGE> 21
(after such items have been prepared and set in type by the Funds) that are
used in connection with the offering of shares, and the costs and expenses of
preparing, printing and distributing any other literature used by the
Distributor or furnished by it for use by selected dealers in connection with
the offering of the Funds' shares for sale to the public.
CUSTODIAN AND TRANSFER AGENT. The Bank of New York, located at 90 Washington
Street, New York, New York 10286, serves as the Funds' custodian. BISYS Fund
Services Ohio, Inc., (the "Transfer Agent"), 3435 Stelzer Road, Columbus, Ohio
43219-3035 serves as transfer agent and dividend disbursing agent for Horizon
Shares and Horizon Service Shares, of the Funds. The Company has also entered
into a Cash Management and Related Services Agreement with The Bank of New York
pursuant to which The Bank of New York receives and disburses funds in
connection with the purchase and redemption of, and the payment of dividends and
other distributions with respect to, the Funds.
FEE WAIVERS. Except as noted in this Prospectus and the Statement of Additional
Information, the Funds' service contractors bear all expenses in connection with
the performance of their services and the Funds bear the expenses incurred in
their operations. From time to time during the course of the Funds' fiscal year,
the Administrator and/or Bank of America may voluntarily not receive payment of
fees and/or assume certain expenses of a Fund, while retaining the ability to be
reimbursed by that Fund for such amounts prior to the end of the fiscal year
and, subject to the expense limitations of certain states, to stop such fee
waivers and expense reimbursement at any time. This will have the effect of
increasing yield to investors at the time such fees are not received or amounts
are assumed and decreasing yield when such fees or amounts are reimbursed.
PURCHASE AND REDEMPTION OF SHARES
PURCHASE PROCEDURES. Fund shares are sold at the net asset value per share next
determined after receipt of a purchase order by the Transfer Agent. Purchase
orders placed directly with the Transfer Agent without the assistance of a
broker-dealer or other person are without charge. Broker-dealers (other than the
Fund's distributor) and others who process purchase orders on behalf of
customers may charge a fee for their services.
Purchase orders for shares are accepted by the Funds only on a day on which both
the Fund's custodian and the New York Stock Exchange (the "Exchange") are open
for business (a "Business Day"), and must be transmitted to the Transfer Agent
by telephone c/o the Distributor (800-426-3863) or terminal access. An
investment in Horizon Shares and Horizon Service Shares of the Fund
automatically entitles the investor to purchase Fund shares, subject to the
minimum described below, without charge, by telephone unless they indicate in a
written notice to the Transfer Agent that they do not wish to use this telephone
privilege.
Purchase orders for the Funds that are received by the Transfer Agent before
10:30 a.m. Eastern time (with respect to the California Tax-Exempt Money Market
Fund), or 12:00 noon Eastern time (with respect to the Tax-Exempt Money Fund) on
a Business Day will be executed at such time on that day if payment is received
by 4:00 p.m. Eastern time on such Business Day. Orders received after 10:30 a.m.
Eastern time (with respect to the California Tax-Exempt Money Market Fund), or
12:00 noon Eastern time (with respect to the Tax-Exempt Money
-18-
<PAGE> 22
Fund) on a Business Day, and orders for which payment has not been received by
4:00 p.m. Eastern time, will not be accepted. A Fund may in its discretion
reject any order for shares. Payment for orders which are not received or paid
for in a timely manner or are not accepted by a Fund will be returned after
prompt notification to the sending institution.
Payment for shares may be made only in Federal funds or other funds immediately
available to the Transfer Agent. The minimum initial investment for Horizon
Shares and Horizon Service Shares in a Fund is $500,000 (although broker-dealers
and other institutional investors may set a higher minimum for their customers)
and there is no minimum subsequent investment. The Funds reserve the right to
suspend the sale of shares to the public at any time, in response to conditions
in the securities markets or otherwise.
Federal regulations require that each investor provide a certified Taxpayer
Identification Number upon opening or reopening an account.
REDEMPTION PROCEDURES. Redemption orders for Horizon Shares and Horizon Service
Shares must be transmitted to the Transfer Agent by telephone c/o the
Distributor or terminal access in the manner described above under "Purchase
Procedures." Shares for which certificates have been issued may not be redeemed
unless the certificates have been submitted to the Transfer Agent and endorsed
for transfer. While each Fund seeks to maintain its net asset value per share at
$1.00 there can be no assurance that it will be able to do so, and the proceeds
paid upon redemption may be more or less than the amount invested depending upon
a share's net asset value at the time of redemption.
Redemption orders submitted directly to the Transfer Agent without the
assistance of a broker-dealer or other person, and orders submitted by the
Distributor for its own brokerage customers, are processed without charge.
Broker-dealers (other than the Distributor) and others who process redemption
orders on behalf of their customers may charge a fee for their services.
Redemption orders are effected at the net asset value per share next determined
after receipt of the order by the Transfer Agent. Payment for redeemed shares
for which a redemption order is received by the Transfer Agent before Noon
Eastern time on a Business Day is normally made in Federal funds wired to the
redeeming shareholder on the same Business Day. Payment for redeemed shares for
which a redemption order is received after Noon Eastern time on a Business Day
is normally made in Federal funds wired to the redeeming shareholder on the next
Business Day following redemption. In order to allow Bank of America to most
effectively manage the Funds' portfolios, investors are urged to initiate
redemptions of shares as early in the day as possible and to notify the Transfer
Agent at least one day in advance of redemptions in excess of $5 million. Each
Fund reserves the right to wire redemption proceeds up to seven days after
receiving the redemption order if, in the judgment of the investment adviser, an
earlier payment could adversely affect the Funds. In making redemption requests
the names of the registered shareholders and their account numbers must be
supplied. An investment in Horizon Shares and Horizon Service Shares of the
Funds automatically entitles the investor to redeem shares, without charge, by
telephone unless the investor indicates through a written notice to the Transfer
Agent that they do not wish to use this telephone privilege. Neither the Fund,
the Distributor nor the Transfer Agent will be responsible for any loss or
expense for acting upon any telephone instructions that are reasonably believed
to be genuine. In attempting
-19-
<PAGE> 23
to confirm that telephone instructions are genuine, the Company will use such
procedures as are considered reasonable.
A Fund may suspend the right of redemption or postpone the date of payment upon
redemption (as well as suspend or postpone the recordation of the transfer of
its shares) for such periods as are permitted under the Investment Company Act
of 1940. Each Fund reserves the right to redeem shares in any account at their
net asset value if the value of the account is less than $500,000 as a result of
redemptions. The shareholder having the account will first be notified in
writing that its account has a value of less than $500,000 and will be allowed
60 days to make additional investments to bring the value of its account to
$500,000 before the redemption is processed by a Fund. In addition, a Fund may
redeem shares involuntarily under certain special circumstances described in the
Statement of Additional Information under "Purchase and Redemption of Shares."
NET ASSET VALUE. The net asset value per share of each Fund is determined on
each Business Day as of Noon Eastern time. In computing net asset value, each
Fund uses the amortized cost method of valuation as described in the Statement
of Additional Information under "Purchase and Redemption of Shares." The net
asset value per share for each Fund for purposes of pricing purchase and
redemption orders is determined independently.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The shareholders of a Fund are entitled to
dividends and distributions arising from the net investment income and net
realized gains, if any, earned on investments held by the Fund involved.
Generally, each Fund's net income is declared daily as a dividend. Shares begin
accruing dividends on the day the purchase order for the shares is executed and
continue to accrue dividends through and including the day before the redemption
order for the shares is executed. Dividends are paid within five business days
after the end of each month. Although the Funds do not expect to realize net
long-term capital gains, any such capital gains as may be realized will be
distributed no more than twice a year after reduction for any available capital
loss carry forward.
Dividends are paid in the form of additional full and fractional shares of the
same series as the shares on which the dividends are declared at the net asset
value of such shares on the payment date, unless the shareholder elects to
receive dividends in cash. Reinvestment dividends receive the same tax
treatment as dividends paid in cash. Such election or any revocation thereof
must be made in writing to Pacific Horizon Funds, Inc.-- [specify the name of
the Fund], First and Market Building, 100 First Avenue, Suite 300, Pittsburgh,
Pennsylvania 15222, and will become effective with respect to dividends paid
after its receipt by the dividend disbursing agent.
TAXES. Management of the Company believes that each Fund qualified separately
for its last taxable year as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"), and it is intended that each Fund
will continue to qualify as a regulated investment company as long as such
qualification is in the best interest of its shareholders. Such qualification
generally relieves a Fund of liability for Federal income taxes, to the extent
its earnings are distributed in accordance with the Code. The policy of each
Fund is to pay to shareholders at least 90% of its exempt-interest income, net
of certain deductions, for each
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<PAGE> 24
taxable year. Dividends derived from interest on Municipal Securities (known as
exempt-interest dividends) and paid to shareholders typically will not be
subject to regular federal income tax.
With respect to the California Tax-Exempt Money Market Fund, if, at the close of
each quarter of its taxable year, at least 50% of the value of the Fund's total
assets consists of California Exempt Securities and if the Fund qualifies as a
regulated investment company under the Code, then the Fund will be qualified to
pay dividends exempt from California state personal income tax to its
shareholders. If the Fund so qualifies, dividends derived from interest
attributable to California Exempt Securities will be exempt from California
state personal income tax. (Such treatment may not apply, however, to investors
who are "substantial users" or "related persons" with respect to facilities
financed by portfolio securities held by the California Tax-Exempt Money Market
Fund.) Any dividends paid to shareholders subject to California state franchise
tax or California state corporate income tax may be taxed as ordinary dividends
to such shareholders notwithstanding that all or a portion of such dividends are
exempt from California state personal income tax.
Except as noted with respect to the California state personal income tax,
distributions of net investment income may be taxable to investors under state
or local law as dividend income even though all or a portion of such
distributions may be derived from interest on tax-exempt obligations which, if
realized directly, would be exempt from such income taxes. Moreover, to the
extent, if any, that dividends paid to shareholders are derived from taxable
interest or from capital gains, such dividends will be subject to federal income
tax and California state personal income tax, whether or not such dividends are
reinvested.
The portion of dividends (if any) attributable to interest on certain private
activity bonds issued after August 7, 1986 must be included by shareholders as
an item of tax preference for purposes of determining liability (if any) for the
26% to 28% federal alternative minimum tax applicable to individuals and the 20%
federal alternative minimum tax and the environmental tax applicable to
corporations. Corporate shareholders also must take all exempt-interest
dividends into account in determining certain adjustments for federal
alternative minimum and environmental tax purposes. The environmental tax
applicable to corporations is imposed at the rate of .12% on the excess of the
corporation's modified federal alternative minimum taxable income over
$2,000,000. Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the tax
liability on such benefits.
Dividends declared in December of any year payable to shareholders of record on
a specified date in December will be deemed for federal tax purposes to have
been paid by a Fund and received by its shareholders on December 31, if such
dividends are paid during January of the following year.
OTHER STATE AND LOCAL TAXES. Investors are advised to consult their tax advisers
concerning the application of state and local taxes generally, which may have
different consequences from those of the Federal income tax and, with respect to
the California Tax- Exempt Money Market Fund, the California state personal
income tax described above. Exempt-interest dividends generally will be exempt
from state and local taxes as well. However, except as noted with respect to
California state personal income tax, dividends paid by the Funds may be taxable
to investors under state or local law as dividend income even though all or a
portion of such
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<PAGE> 25
dividends may be derived from interest on obligations that, if realized
directly, would be exempt from such taxes.
GENERAL. Shareholders will be advised at least annually as to the federal income
tax and, with respect to the California Tax-Exempt Money Market Fund, the
California state personal income tax consequences of dividends and distributions
made each year. The foregoing is only a brief summary of some of the important
tax considerations generally affecting the respective Funds and their
shareholders. Additional tax information of relevance to particular investors,
including investors who may be "substantial users" or "related persons" with
respect to facilities financed by Municipal Securities, is contained in the
Statement of Additional Information. Potential investors in the Funds should
consult their tax advisers with specific reference to their own tax situation.
DESCRIPTION OF SHARES
The Company was organized on October 27, 1982 as a Maryland corporation, and is
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Predecessor Tax-Exempt Fund originally commenced
operations on July 10, 1987 as a separate portfolio of The Horizon Funds. On
January 10, 1990, the Predecessor Tax-Exempt Fund was reorganized as the
Tax-Exempt Money Fund of the Company. The California Tax-Exempt Money Market
Fund commenced operations on December 6, 1989 as a portfolio of the Company with
a single series of shares, Pacific Horizon Shares. On March 1, 1993 the
California Tax-Exempt Money Market Fund began offering Horizon Service Shares,
and on ______________, 1996, the California Tax-Exempt Money Market Fund also
began offering Horizon Shares.
The Company's charter authorizes the Board of Directors to issue up to two
hundred billion full and fractional shares of capital stock, and to classify and
reclassify any authorized and unissued shares into one or more classes of
shares. The Board of Directors may similarly classify or reclassify any class of
shares into one or more series. Pursuant to such authority, the Board of
Directors has authorized the issuance of the following series of shares
representing interests in the Tax-Exempt Money Fund: three billion Horizon
Shares, three billion Horizon Service Shares and one billion, 500 million
Pacific Horizon Shares and the following series of shares representing interests
in the California Tax-Exempt Money Market Fund: five hundred million Horizon
Shares, five hundred million Horizon Service Shares and one billion Pacific
Horizon Shares. Pacific Horizon Shares of the Funds are described in a separate
Prospectus available from the Distributor at the telephone number on the cover
of this Prospectus. The Board of Directors has also authorized the issuance of
additional classes and series of shares representing interests in other
investment portfolios of the Company, which are likewise described in separate
Prospectuses available from the Distributor. This Prospectus relates primarily
to the Horizon Shares and Horizon Service Shares of the Funds and describes only
the investment objectives and policies, operations, contracts and other matters
relating to such shares.
Each Horizon Share, Horizon Service Share and Pacific Horizon Share in a Fund
has a par value of $.001, and, except as noted below, is entitled to participate
equally in the dividends and distributions declared by the Board of Directors
with respect to such Fund and in the net distributable assets of such Fund on
liquidation. Holders of a Fund's Horizon Service Shares
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<PAGE> 26
bear the fees described in the following section that are paid to Shareholder
Organizations by the Fund under the Company's Shareholder Services Plan.
Similarly, holders of a Fund's Pacific Horizon Shares bear the fees described in
the Prospectus for such shares that are paid to Bank of America and the
Administrator by the Fund under the Company's Special Management Services
Agreement for Pacific Horizon Shares. The fees paid under the Special Management
Services Agreement are for services related to investor programs and facilities
that are offered in connection with Pacific Horizon Shares. Holders of Horizon
Shares are not subject to fees such as those paid under the Shareholder Services
Plan or the Special Management Services Agreement. As a result, at any given
time, the net yield on a Fund's Horizon Service Shares is expected to be
approximately .07% higher than the yield on the Fund's Pacific Horizon Shares
and the net yields on the Fund's Horizon Shares are expected to be approximately
.32% higher than the yield on the Pacific Horizon Shares. Standardized yield
quotations will be computed separately for each series of shares.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held, and will vote in the aggregate and not by
class or series except as otherwise required by law or when class voting is
permitted by the Board of Directors. It is contemplated that all shareholders of
a Fund will vote together as a single class on matters relating to the Fund's
investment advisory agreement and on any change in its fundamental investment
limitations, and that only holders of Horizon Service Shares of a Fund will be
entitled to vote on matters submitted to a vote of shareholders pertaining to
the Fund's arrangements with Shareholder Organizations. Shares have no
preemptive rights and only such conversion and exchange rights as the Board may
grant at its discretion. When issued for payment as described in this
Prospectus, shares will be fully paid and non- assessable. Certificates for
shares will not be issued.
The Company does not presently intend to hold annual meetings of shareholders
for the election of directors and other business unless and until such time as
less than a majority of the directors holding office have been elected by the
shareholders of the Company, at which time the directors then in office will
call a shareholders' meeting for the election of directors. Under certain
circumstances, however, shareholders have the right to call a meeting of
shareholders to consider the removal of one or more directors and such meetings
will be called when requested by the holders of record of 10% or more of the
Company's outstanding shares of common stock. To the extent required by law and
the Company's undertaking with the Securities and Exchange Commission, the
Company will assist in shareholder communications in such matters. Shares have
cumulative voting rights to the extent that may be required by applicable law.
SHAREHOLDER SERVICES PLAN. The Company has adopted the Plan pursuant to which
Horizon Service Shares are sold to Shareholder Organizations that enter into
Shareholder Service Agreements with the Company pursuant to the Plan. Such
Shareholder Organizations may include Bank of America, the Administrator and
their affiliates. The Shareholder Service Agreements require the Shareholder
Organizations to provide support services to their customers ("Customers") who
are beneficial owners of Horizon Service Shares in return for payment by the
respective Fund of up to .25% (on an annualized basis) of the average daily net
asset value of the Horizon Service Shares beneficially owned by Customers of the
Shareholder Organizations. Holders of a Fund's Horizon Service Shares will bear
all fees paid to Shareholder Organizations for their services with respect to
such shares. Such fees are not paid to Shareholder Organiza-
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<PAGE> 27
tions with respect to a Fund's Horizon Shares or Pacific Horizon Shares.
During the fiscal year ended February 28, 1995, the Tax-Exempt Money Fund and
the California Tax-Exempt Money Market Fund made payments under the Plan at the
effective annual rates of .25% of each such Fund's average daily net asset
value.
The services provided by Shareholder Organizations may include the following:
aggregating and processing purchase and redemption requests from Customers for
Horizon Service Shares and placing net purchase and redemption orders with the
Distributor; providing Customers with a service that invests the assets of their
accounts in Horizon Service Shares pursuant to specific or preauthorized
instructions; processing dividend payments from a Fund on behalf of Customers;
providing information periodically to Customers regarding their position in
Horizon Service Shares; arranging for bank wires; responding to Customer
inquiries regarding services performed by the Shareholder Organizations;
providing subaccounting with respect to Horizon Service Shares beneficially
owned by Customers or the information necessary for sub-accounting; forwarding
shareholder communications from a Fund to Customers; and other similar services
if requested by a Fund.
Each Fund will accrue payments made pursuant to the Plan daily. The Funds will
receive an undertaking from each Shareholder Organization waiving a portion of
any payment such Organization is entitled to receive pursuant to the Plan to the
extent necessary to assure that the payments made pursuant to the Plan which are
required to be accrued to the respective Fund's Horizon Service Shares on any
day do not exceed the income to be accrued to such shares on that day.
The Company understands that Shareholder Organizations may charge fees to their
Customers who are the beneficial owners of Horizon Service Shares in connection
with their Customer accounts. These fees would be in addition to any amounts
which may be received by a Shareholder Organization under a Shareholder Service
Agreement. Under the terms of the Shareholder Service Agreements, Shareholder
Organizations are required to disclose the compensation payable to them by the
Company and any other compensation payable by their Customers in connection with
the investment of their assets in the Funds. Customers of Shareholder
Organizations should read this Prospectus in light of the terms governing their
accounts with their Shareholder Organizations.
Conflict-of-interest restrictions may apply to an institution's receipt of
compensation paid by a Fund in connection with the investment of fiduciary funds
in Horizon Service Shares. Institutions, including banks regulated by the
Comptroller of the Currency, the Federal Reserve Board or the Federal Deposit
Insurance Corporation, and investment advisers and other money managers subject
to the jurisdiction of the Securities and Exchange Commission, the Department of
Labor or state securities commissions, are urged to consult their legal advisers
before investing fiduciary funds in Horizon Service Shares.
BANKS MAY ACT AS SHAREHOLDER ORGANIZATIONS. The Glass-Steagall Act and other
applicable laws, among other things, prohibit banks from engaging in the
business of underwriting securities. If a bank were prohibited from acting as a
Shareholder Organization, its shareholder clients would be permitted by the
Company to remain shareholders of the Funds and alternative means for continuing
the servicing of such shareholders would be sought. In such event,
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<PAGE> 28
changes in the operation of the Funds might occur and a shareholder serviced by
such bank might no longer be able to avail itself of any automatic investment or
other services then being provided by the bank. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
The Company will obtain a representation from Shareholder Organizations (as well
as from Bank of America and the Administrator) that they are or will be licensed
as dealers as required by applicable law or will not engage in activities which
would require them to be so licensed.
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<PAGE> 29
HORIZON SHARES
AND
HORIZON SERVICE SHARES
OF THE
TAX-EXEMPT MONEY FUND
AND THE
CALIFORNIA TAX-EXEMPT
MONEY MARKET FUND
PROSPECTUS
MARCH __, 1996
<PAGE> 30
PACIFIC HORIZON FUNDS, INC.
Horizon Shares and Horizon Service Shares
of the Prime Fund, Treasury Fund, Government Fund
Treasury Only Fund, Tax-Exempt Money Fund and
California Tax-Exempt Money Market Fund
Cross Reference Sheet
<TABLE>
<CAPTION>
Part B
Item No. Heading
- -------- -------
<S> <C> <C>
10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . . . . . . . . . Table of Contents
12. General Information and History . . . . . . . . . . . . . The Company
13. Investment Objectives and Policies . . . . . . . . . . . . Investment Objectives and Policies
14. Management of the Fund . . . . . . . . . . . . . . . . . . Management of the Funds
15. Control Persons and Principal Holders of Securities . . . Management of the Funds; Shareholder Vote
16. Investment Advisory and Other Services . . . . . . . . . Management of the Funds; Investment
Adviser; Administrator; Distributor;
Custodian and Transfer Agent
17. Brokerage Allocation and Other Practices . . . . . . . . . Portfolio Transactions
18. Capital Stock and Other Securities . . . . . . . . . . . . General Information; Description of
Shares
19. Purchase, Redemption and Pricing of Securities
Being Offered . . . . . . . . . . . . . . . . . . . . . . Purchase and Redemption of Shares
20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . Taxes
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C>
21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . Management of the Funds; Distributor
22. Calculation of Performance Data . . . . . . . . . . . . . Yield Information
</TABLE>
PART C
Information to be included in Part C is set forth under the appropriate Item,
so numbered in Part C to this Registration Statement.
<PAGE> 32
PACIFIC HORIZON FUNDS, INC.
HORIZON SHARES AND
HORIZON SERVICE SHARES
OF THE
PRIME FUND, TREASURY FUND, GOVERNMENT FUND,
TREASURY ONLY FUND, TAX-EXEMPT MONEY FUND AND
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
MARCH __, 1996
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Company ........................................................... 3
Investment Objectives and Policies .................................... 3
Purchase and Redemption of Shares ..................................... 42
Management of the Funds ............................................... 46
Taxes ................................................................. 62
Yield Information ..................................................... 68
General Information ................................................... 70
Appendix A ............................................................ A-1
</TABLE>
-------------------------
This Statement of Additional Information applies to the Horizon Shares
and Horizon Service Shares of the Prime Fund, Treasury Fund, Government Fund,
Treasury Only Fund, Tax-Exempt Money Fund and California Tax-Exempt Money Market
Fund (the "Funds") of Pacific Horizon Funds, Inc. (the "Company"). This
Statement of Additional Information is meant to be read in conjunction with the
prospectus dated July 1, 1995 with respect to Horizon Shares and Horizon Service
Shares of the Prime, Treasury, Government and Treasury Only Funds, and the
prospectus dated March __, 1996 for Horizon Shares and Horizon Service Shares of
the Tax-Exempt Money and California Tax-Exempt Money Market Funds, as the same
may from time to time be revised (individually, a "Prospectus" and collectively,
the
-1-
<PAGE> 33
"Prospectuses"), and is incorporated by reference in its entirety into each such
Prospectus. Because this Statement of Additional Information is not itself a
Prospectus, no investment in shares of any Fund should be made solely upon the
information contained herein. Copies of the Prospectuses relating to the
Company's Horizon and Horizon Service Shares may be obtained by calling Concord
Financial Group, Inc. at (800) 426-3863. Capitalized terms used but not defined
herein have the same meanings as in the Prospectuses.
-2-
<PAGE> 34
THE COMPANY
The Company was organized on October 27, 1982 as a Maryland
corporation and commenced operations on March 30, 1984. On January 19, 1990 the
Prime Fund and Treasury Fund of The Horizon Funds, a Massachusetts business
trust (sometimes called the "Predecessor Prime Fund" and "Predecessor Treasury
Fund," respectively), were combined with the Money Market Portfolio and
Government Money Market Portfolio, respectively, of the Company; the Company
changed the names of its resulting portfolios to "Prime Fund" and "Treasury
Fund"; and the Company began offering Horizon Shares and Horizon Service Shares
in such Funds. On January 19, 1990 the Tax-Exempt Money Fund of The Horizon
Funds (the "Predecessor Tax-Exempt Fund") was reorganized as a new portfolio of
the Company. Each of these three Predecessor Funds originally commenced
operations on July 10, 1987. The California Tax-Exempt Money Market Fund
commenced operations on December 6, 1989 by offering a single series of shares
known as Pacific Horizon Shares, began offering Horizon Service Shares on March
1, 1993 and began offering Horizon Shares on _____________, 1996. The Government
Fund and Treasury Only Fund commenced operations on June 4, 1990 as separate
investment portfolios (the "Predecessor Government Funds" and "Predecessor
Treasury Only Funds," respectively) of First Cash Funds of America and First
Funds of America, which were organized as Massachusetts business trusts. On
March 1, 1993, the Predecessor Government Funds and Predecessor Treasury Only
Funds were reorganized as new portfolios of the Company. Prior to this
reorganization, these Predecessor Funds offered and sold shares of beneficial
interest that were similar to the Company's Horizon Service and Pacific Horizon
Shares.
The Company offers other classes and series of shares, including
Pacific Horizon Shares, in the aforementioned Funds and in other investment
portfolios which are described in separate Prospectuses and Statements of
Additional Information. For information concerning these other shares contact
the Distributor at the telephone number stated on the cover page of this
Statement of Additional Information.
INVESTMENT OBJECTIVES AND POLICIES
The Prospectus for each Fund describes the investment objective of the
Fund to which it applies. The following information supplements the descriptions
of the investment objective and policies in the Prospectuses for the Funds.
-3-
<PAGE> 35
PORTFOLIO TRANSACTIONS
Subject to the general control of the Company's Board of Directors,
Bank of America National Trust and Savings Association ("Bank of America") is
responsible for, makes decisions with respect to and places orders for all
purchases and sales of portfolio securities for each Fund. Securities purchased
and sold by each Fund are generally traded in the over-the-counter market on a
net basis (i.e., without commission) through dealers, or otherwise involve
transactions directly with the issuer of an instrument. During their last three
fiscal periods, the Prime Fund, Treasury Fund, Government Fund, Treasury Only
Fund, Tax-Exempt Money Fund and California Tax-Exempt Money Market Fund did not
pay any brokerage commissions. The cost of securities purchased by the Funds
from underwriters generally includes an underwriting commission or concession,
and the prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down.
In executing portfolio transactions and selecting brokers or dealers,
it is the Company's policy to seek the best overall terms available. The
investment advisory agreement between the Company and Bank of America provides
that, in assessing the best overall terms available for any transaction, Bank of
America shall consider factors it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
addition, the investment advisory agreement authorizes Bank of America, subject
to the approval of the Company's Board of Directors, to cause the Company to pay
a broker-dealer which furnishes brokerage and research services a higher
commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that such commission is deemed
reasonable in terms of either that particular transaction or the overall
responsibilities of Bank of America to the particular Fund and the Company.
Brokerage and research services may include: (1) advice as to the value of
securities, the advisability of investing in, purchasing or selling securities
and the availability of securities or purchasers or sellers of securities, and
(2) analyses and reports concerning industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts.
The Directors will periodically review the commissions paid by the
Company to consider whether the commissions, if any, paid over representative
periods of time appear to be reasonable in relation to the benefits inuring to
the Company. It is possible that certain of the supplementary research or other
services received will primarily benefit one or more other
-4-
<PAGE> 36
investment companies or other accounts for which investment discretion is
exercised. Conversely, the Company or any given Fund may be the primary
beneficiary of the research or services received as a result of portfolio
transactions effected for such other accounts or investment companies.
Brokerage or research services so received are in addition to and not
in lieu of services required to be performed by Bank of America and do not
reduce the advisory fee payable to Bank of America by the Company. Such services
may be useful to Bank of America in serving both the Company and other clients
and, conversely, supplemental information obtained by the placement of business
of other clients may be useful to Bank of America in carrying out its
obligations to the Company. The Company will not acquire certificates of deposit
or other securities issued by Bank of America or its affiliates, and will give
no preference to certificates of deposit or other securities issued by
Shareholder Organizations. In addition, portfolio securities in general will be
purchased from and sold to Bank of America, Concord Financial Group, Inc. (the
"Distributor") and their affiliates acting as principal underwriter, syndicate
member, market-maker, dealer, broker or in any other similar capacity, provided
such purchase, sale or dealing is permitted under the investment Company Act of
1940 and the rules thereunder.
A Fund's annual portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average value of the Fund's portfolio securities. The calculation excludes all
securities the maturities of which at the time of acquisition were thirteen
months or less. There is not expected to be any portfolio turnover for the Funds
for regulatory reporting purposes.
A Fund may participate, if and when practicable, in bidding for the
purchase of securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. Any such Fund will
engage in this practice only when Bank of America, in its sole discretion,
subject to guidelines adopted by the Board of Directors, believes such practice
to be in the Fund's interest.
Subsequent to its purchase by a Fund, an issue of securities may cease
to be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Board of Directors or Bank of America, pursuant to
guidelines established by the Board, will promptly consider such an event in
determining whether the Fund involved should continue to hold the obligation,
but will only continue to hold the obligation if retention is in accordance with
the interests of the Fund and
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applicable regulations of the Securities and Exchange Commission. In addition,
it is possible that unregistered securities purchased by a Fund in reliance upon
Rule 144A under the Securities Act of 1933 could have the effect of increasing
the level of the Fund's illiquidity to the extent that qualified institutional
buyers become, for a period, uninterested in purchasing these securities.
To the extent permitted by law, Bank of America may aggregate the
securities to be sold or purchased for a Fund with those to be sold or purchased
for other investment companies or common trust funds in order to obtain best
execution.
The Company is required to identify any securities of its regular
brokers or dealers (as defined in Rule 10b-1 under the Investment Company Act of
1940) or their parents held by the Company as of the close of its most recent
fiscal year. As of February 28, 1995: (a) the Treasury Fund held the following
securities, Repurchase Agreement with Goldman, Sachs & Co. in the principal
amount of $95,000,000; Repurchase Agreement with Merrill Lynch Government
Securities, Inc. in the principal amount of $95,000,000; (b) the Prime Fund held
the following securities, Merrill Lynch & Co., Inc., commercial paper in the
principal amount of $100,000,000; Goldman, Sachs Group L.P., Daily Variable Rate
Master Note in the principal amount of $120,000,000; Morgan Stanley Group, Inc.,
Daily Variable Rate Master Note in the principal amount of $120,000,000; Bear
Stearns Co., Inc., Series B, Monthly Variable Rate Note in the principal amount
of $100,000,000; Repurchase Agreement with Goldman, Sachs & Co. in the principal
amount of $120,000,000; and (c) the Government Fund held the following
securities, Repurchase Agreement with Goldman, Sachs & Co. in the principal
amount of $40,000,000; Repurchase Agreement with Merrill Lynch Government
Securities, Inc. in the principal amount of $40,000,000. Merrill Lynch & Co.,
Inc., Goldman, Sachs & Co., Bear Stearns Co., Inc., Morgan Stanley & Co.
Incorporated, Shearson Lehman Brothers, Inc., Dean Witter Reynolds, Inc. and
Paine Webber are considered to be regular brokers and dealers of the Company.
PORTFOLIO INSTRUMENTS
CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES, COMMERCIAL PAPER AND
SHORT-TERM NOTES. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specific return. Bankers' acceptances are negotiable deposits or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank (meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument at maturity).
Certificates of
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deposit and bankers' acceptances acquired by a Fund will be dollar-denominated
obligations of domestic or foreign banks having total assets at the time of
purchase (including assets of both domestic and foreign branches) in excess of
$2.5 billion. Commercial paper consists of unsecured promissory notes issued by
corporations. Short-term notes acquired by a Fund may be issued by commercial or
investment banking firms, financing companies or industrial or manufacturing
concerns. Commercial paper and short-term notes, except for variable and
floating rate instruments, will normally have maturities of nine months or less
and fixed rates of return, although such instruments may have maturities of up
to thirteen months. Commercial paper and short-term notes will consist of issues
which, with respect to the Prime, Treasury and Tax-Exempt Money Funds are "First
Tier Securities" as defined by the Securities and Exchange Commission and, with
respect to the California Tax-Exempt Money Market Fund are "Eligible Securities"
as defined by the Securities and Exchange Commission. During temporary defensive
periods or if in the investment adviser's opinion suitable First Tier Securities
are not available for investment, the Tax-Exempt Money Fund may also acquire
"Eligible Securities" as defined by the Securities and Exchange Commission.
First Tier Securities consist of instruments that are either rated at the time
of purchase in the top rating category by one or more unaffiliated nationally
recognized statistical rating organizations ("NRSROs") or issued by issuers with
such ratings. Eligible Securities consist of instruments that are either rated
at the time of purchase in the top two rating categories by one or more
unaffiliated NRSROs or issued by issuers with such ratings. See the Appendix to
this Statement of Additional Information for a description of the applicable
NRSRO ratings. Unrated instruments (including instruments with long-term but no
short-term ratings) purchased by a Fund will be of comparable quality as
determined by Bank of America pursuant to guidelines approved by the Board of
Directors and Bank of America.
A Fund holding Euro CDs, Yankee CDs, Yankee BAs, commercial paper or
other obligations of foreign issuers may be subject to investment risks that are
different in some respects from those incurred by a Fund which invests only in
obligations of domestic issuers. Such risks include future political and
economic developments, the possible imposition of withholding taxes by the
particular country in which the issuer is located on interest income payable on
the securities, the possible seizure or nationalization of foreign deposits, the
possible establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on these securities.
Domestic banks and foreign banks are subject to different governmental
regulations with respect to the amount and
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types of loans which may be made and interest rates which may be charged. In
addition, the profitability of the banking industry is dependent largely upon
the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic conditions
as well as exposure to credit losses arising from possible financial
difficulties of borrowers play an important part in the operations of the
banking industry.
As a result of federal and state laws and regulations, domestic banks
are, among other things, required to maintain specified levels of reserves,
limited in the amount which they can loan to a single borrower, and subject to
other regulations designed to promote financial soundness. However, such laws
and regulations do not necessarily apply to the Euro CDs, Yankee CDs, Yankee BAs
and other foreign bank obligations that a Fund may acquire.
U.S. GOVERNMENT OBLIGATIONS. Obligations of the U.S. Government and
its agencies and instrumentalities include Treasury bills, certificates of
indebtedness, notes and bonds, Treasury strips, and issues of such entities as
the Federal Home Loan Banks, Federal Land Banks, Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Maritime Administration, Resolution Funding Corporation, Tennessee
Valley Authority and Federal National Mortgage Association. The Prime, Treasury,
Tax-Exempt Money and California Tax-Exempt Money Market Funds will not acquire
obligations issued by the International Bank for Reconstruction and Development,
the Asian Development Bank or the Inter-American Development Bank; however, the
Government and Treasury Only Funds may acquire such obligations in accordance
with their investment policies.
Government National Mortgage Association ("GNMA") certificates are
U.S. Government agency mortgage-backed securities representing part ownership of
a pool of mortgage loans. These loans, issued by lenders such as mortgage
bankers, commercial banks and savings and loan associations, are either insured
by the Federal Housing Administration or guaranteed by the Veterans
Administration. A "pool" or group of such mortgages is assembled and, after
being approved by GNMA, is offered to investors through securities dealers. Once
approved by GNMA, the timely payment of interest and principal on each mortgage
is guaranteed by GNMA and backed by the full faith and credit of the U.S.
Government. GNMA certificates differ from bonds in that principal is paid back
monthly by the borrower over the term of
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the loan rather than returned in a lump sum at maturity. GNMA certificates are
called "pass-through" securities because both interest and principal payments
(including prepayments) are passed through to the holder of the certificate. In
addition to GNMA certificates, mortgage-backed securities issued by the Federal
National Mortgage Association ("FNMA") and by the Federal Home Loan Mortgage
Corporation ("FHLMC") may also be acquired. Securities issued and guaranteed by
FNMA and FHLMC are not backed by the full faith and credit of the United States.
If either fixed or variable rate pass-through securities issued by the U.S.
Government or its agencies or instrumentalities are developed in the future, the
Prime, Government, Tax-Exempt Money and California Tax-Exempt Money Market Funds
reserve the right to invest in them, after making appropriate disclosure to
investors. Certain securities issued by all governmental agencies may be
prepaid. Prepayment of mortgages underlying most mortgage-backed securities may
reduce their current yield and total return. During periods of declining
interest rates, such prepayments can be expected to accelerate and the Funds
would be required to reinvest the proceeds at the lower interest rates then
available.
VARIABLE AND FLOATING RATE INSTRUMENTS. The Funds may acquire variable
and floating rate instruments as described in their Prospectuses. Variable and
floating rate instruments are frequently not rated by credit rating agencies;
however, unrated variable and floating rate instruments purchased by a Fund will
be determined by the investment adviser under guidelines established by the
Company's Board of Directors to be of comparable quality at the time of purchase
to rated instruments eligible for purchase by such Fund. In making such
determinations, the investment adviser will consider the earning power, cash
flows and other liquidity ratios of the issuers of such instruments (such
issuers include financial, merchandising, bank holding and other companies) and
will continuously monitor their financial condition. There may not be an active
secondary market with respect to a particular variable or floating rate
instrument purchased by a Fund. The absence of such an active secondary market
could make it difficult for a Fund to dispose of the variable or floating rate
instrument involved. In the event the issuer of the instrument defaulted on its
payment obligations, the Fund involved could, for this or other reasons, suffer
a loss to the extent of the default. Variable and floating rate instruments may
be secured by bank letters of credit and may have maturities of more than
thirteen months. In determining a Fund's average weighted maturity and whether a
variable or floating rate instrument has a remaining maturity of thirteen months
or less, each variable rate instrument having a demand feature that entitles the
Fund to receive the principal amount thereof at any time, or at specified
intervals not exceeding thirteen months, in each case on not more than thirty
days' notice, shall be deemed by the Company to have a maturity
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equal to the longer of the period remaining until its next interest rate
adjustment or the period remaining until the principal amount can be recovered
through demand; each variable rate instrument not having such a demand feature
but having a stated maturity of thirteen months or less or issued or guaranteed
by the U.S. Government or its agencies will be deemed to have a maturity equal
to the period remaining until the next interest rate adjustment; each floating
rate instrument having a demand feature that entitles the Fund to receive the
principal amount thereof at any time, or at specified intervals not exceeding
thirteen months, in each case on not more than thirty days' notice, shall be
deemed to have a maturity equal to the period of time remaining until the
principal amount owed can be recovered through demand. Variable and floating
rate instruments which are not payable upon seven days' notice and which do not
have an active trading market are considered illiquid securities.
RATINGS AND ISSUER'S OBLIGATIONS. The ratings of Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Ratings Group, Division of McGraw
Hill ("S&P"), Duff & Phelps Credit Rating Co. ("D&P"), Fitch Investors Service,
Inc. ("Fitch"), Thomson Bankwatch, Inc. ("Thomson") and IBCA Limited and IBCA
Inc. ("IBCA") represent their opinions as to the quality of debt securities.
However, ratings are general and are not absolute standards of quality, and debt
securities with the same maturity, interest rate and rating may have different
yields while debt securities of the same maturity and interest rate with
different ratings may have the same yield.
An issuer's obligations under its debt securities are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code and laws which may be
enacted by federal or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or, in the case of governmental entities, upon the ability
of such entities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on, and principal of, its debt
securities may be materially adversely affected by litigation or other
conditions.
MUNICIPAL SECURITIES. Substantially all of the assets of the
Tax-Exempt Money Fund and primarily all of the assets of the California
Tax-Exempt Money Market Fund are invested in "Municipal Securities" (securities
issued by or on behalf of states, territories and possessions of the United
States, the District of Columbia and their political subdivisions, authorities,
agencies and instrumentalities, the interest on which is exempt from regular
Federal income tax in the opinion of bond counselor to the issuer). The
Tax-Exempt Money Fund may
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concentrate more than 25% of its assets in California Municipal Securities and
the California Tax-Exempt Money Market Fund intends that under normal market
conditions at least 80% of its net assets will be invested in California
Municipal Securities. Although the Prime Fund is also authorized to invest in
Municipal Securities under certain circumstances, no more than 5% of the value
of such Fund's net assets will be so invested at any one time. (The purchase of
Municipal Securities by the Prime Fund may be advantageous when, as a result of
prevailing economic, regulatory or other circumstances, the yield on such
securities, on a pre-tax basis, is comparable to that of other short-term money
market instruments that the Fund may purchase. Dividends paid by the Prime Fund
that are derived from interest on Municipal Securities would be taxable to the
Fund's shareholders for federal income tax purposes.)
Municipal Securities include debt obligations issued by governmental
entities to obtain funds for various public purposes, including the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses and the extension of loans to public
institutions and facilities. In addition certain types of private activity bonds
are issued by or on behalf of public authorities to finance various
privately-operated facilities. Municipal Securities also include short-term tax
anticipation notes, bond anticipation notes, revenue anticipation notes and
other forms of short-term loan obligations. Such notes are issued with a
short-term maturity in anticipation of the receipt of tax funds, the proceeds of
bond placements or other revenues.
There are variations in the quality of Municipal Securities between
classifications (such as general obligation, revenue and moral obligation
issues) and within a particular classification, and the yields on Municipal
Securities depend upon a variety of factors, including general money market
conditions, the financial condition of the issuer, general conditions of the
municipal bond market, the size of a particular offering, the maturity of the
obligation and the rating of the issue. It should also be noted, with respect to
all Municipal Securities issued after August 15, 1986 (August 31, 1986 in the
case of certain bonds), that the issuer must comply with certain rules formerly
applicable only to "industrial development bonds" which, if the issuer fails to
observe them, could cause interest on the Municipal Securities to become taxable
retroactive to the date of issue.
The payment of principal and interest on most Municipal Securities
purchased by the Funds will depend upon the ability of the issuers to meet their
obligations. The District of Columbia, each state, each of their political
subdivisions, agencies, instrumentalities and authorities and each multi-state
agency of
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which a state is a member is a separate "issuer" as that term is used in this
Statement of Additional Information and the Prospectuses. The non-governmental
user of facilities financed by private activity bonds is also considered to be
an "issuer."
From time to time proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Securities. For example, pursuant to federal tax
legislation passed in 1986, interest on certain private activity bonds must be
included in an investor's federal alternative minimum taxable income, and
corporate investors must include all tax-exempt interest in their federal
alternative minimum taxable income. (See the relevant Funds' Prospectuses under
"Taxes.") The Funds cannot predict what legislation, if any, may be proposed in
Congress or in the California legislature in the future as regards the federal
and California state personal income tax status of interest on Municipal
Securities in general, or California Municipal Securities in particular, or
which proposals, if any, might be enacted. Such proposals, if enacted, might
materially adversely affect the availability of Municipal Securities (and
California Municipal Securities) for investment by the Tax-Exempt Money Fund and
the California Tax-Exempt Money Market Fund and the liquidity and value of such
Funds' portfolios. In such an event the Board of Directors would reevaluate the
Funds' investment objectives and policies and consider changes in their
structure or possible dissolution.
REPURCHASE AGREEMENTS. The Prime Fund, Treasury Fund, Government Fund,
Tax-Exempt Money Fund and California Tax-Exempt Money Market Fund may enter into
repurchase agreements with respect to their portfolio securities as indicated in
their Prospectuses. Pursuant to such agreements, a Fund purchases securities
from financial institutions such as banks and broker-dealers which are deemed to
be creditworthy by the investment adviser under guidelines approved by the Board
of Directors, subject to the seller's agreement to repurchase and the Fund's
agreement to resell such securities at a specified date and price. No Fund will
enter into repurchase agreements with Bank of America or Bank of America's
affiliates, nor will any Fund give preference to repurchase agreements with
Shareholder Organizations. The repurchase price generally equals the price paid
by the Fund plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the underlying portfolio security).
Securities subject to repurchase agreements will be held by the Funds' custodian
or a sub-custodian or in the Federal Reserve/Treasury book-entry system, and a
Fund will make payment for such securities only upon receipt of evidence of
physical delivery of the securities or of such book entry. The seller under a
repurchase agreement will be required to deliver instruments the value of which
is 102% of
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the repurchase price (excluding accrued interest), provided that notwithstanding
such requirement, the adviser shall require that the value of the collateral,
after transaction costs (including loss of interest) reasonably expected to be
incurred on a default, shall be equal to or greater than the resale price
(including interest) provided in the agreement. If the seller defaulted on its
repurchase obligation, the Fund holding the repurchase agreement would suffer a
loss to the extent that the proceeds from a sale of the underlying securities
were less than the repurchase price under the agreement. Bankruptcy or
insolvency of such a defaulting seller may cause the particular Fund's rights
with respect to such securities to be delayed or limited. Repurchase agreements
are considered to be loans by a Fund under the Investment Company Act of 1940.
REVERSE REPURCHASE AGREEMENTS. The Funds may also enter into reverse
repurchase agreements with respect to their securities. Whenever a Fund enters
into a reverse repurchase agreement, it will place in a segregated account
maintained with its custodian cash, U.S. Government securities and other liquid
high-grade debt securities having a value equal to the repurchase price
(including accrued interest) and will subsequently monitor the account for
maintenance of such equivalent value. Reverse repurchase agreements are
considered to be borrowings by a Fund under the Investment Company Act of 1940.
INVESTMENT PRACTICES
WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND DELAYED SETTLEMENTS.
The Funds may purchase securities on a "when-issued," forward commitment or
delayed settlement basis (i.e., for delivery beyond the normal settlement date
at a stated price and yield). When a Fund agrees to purchase securities on a
when- issued, forward commitment or delayed settlement basis, its custodian will
set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally the custodian will set aside
portfolio securities to satisfy a purchase commitment, and in such a case a Fund
may be required subsequently to place additional assets (cash or liquid
securities) in the separate account so that the value of the account remains
equal to the amount of such Fund's commitment. The Funds do not intend to engage
in these transactions for speculative purposes but only in furtherance of their
investment objectives. Because a Fund will set aside cash or liquid investments
to satisfy its purchase commitments in the manner described, the Fund's
liquidity and the ability of the investment adviser to manage it may be affected
in the event the Fund's forward commitments, commitments to purchase when-issued
securities and delayed settlements ever exceeded 25% of the value of its assets.
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A Fund will purchase securities on a when-issued, forward commitment
or delayed settlement basis only with the intention of completing the
transaction. If deemed advisable as a matter of investment strategy, however, a
Fund may dispose of or renegotiate a commitment after it is entered into, and
may sell securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. In these cases the Fund may
realize a taxable capital gain or loss.
When a Fund engages in when-issued, forward commitment and delayed
settlement transactions, it relies on the other party to consummate the trade.
Failure of such party to do so may result in the Fund's incurring a loss or
missing an opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase,
a forward commitment to purchase securities, or a delayed settlement and any
subsequent fluctuations in their market value is taken into account when
determining the market value of a Fund starting on the day the Fund agrees to
purchase the securities. The Fund does not earn interest on the securities it
has committed to purchase until they are paid for and delivered on the
settlement date.
STAND-BY COMMITMENTS. The Tax-Exempt Money Fund and California
Tax-Exempt Money Market Fund may acquire "stand-by commitments" with respect to
Municipal Securities held in their respective portfolios. Under a "stand-by
commitment," a dealer agrees to purchase from a Fund, at the Fund's option,
specified Municipal Securities at a specified price.
The amount payable to the Tax-Exempt Money Fund or the California
Tax-Exempt Money Market Fund upon its exercise of a "stand-by commitment" is
normally the amortized cost of the underlying instruments plus accrued interest,
if any. "Stand-by commitments" can be acquired when the remaining maturity of
the underlying Municipal Securities is not greater than thirteen months, and are
exercisable by a Fund at any time before the maturity of such obligations. In
determining net asset value, a Fund values Municipal Securities on the basis of
amortized cost without reference to the presence of the "stand-by commitment,"
as described below. A "stand-by commitment" may be sold, transferred or assigned
by a Fund only with the instrument involved.
The Tax-Exempt Money Fund and California Tax-Exempt Money Market Fund
expect that "stand-by commitments" will generally be available without the
payment of any direct or indirect consideration. However, if necessary or
advisable, a Fund may pay for a "stand-by commitment" either separately in cash
or by paying a higher price for portfolio securities which
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are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding "stand-by commitments" held by a Fund will not exceed 1/2
of 1% of the value of its total assets calculated immediately after each
"stand-by commitment" is acquired.
The Tax-Exempt Money Fund and California Tax-Exempt Money Market Fund
intend to enter into "stand-by commitments" only with dealers, banks and
broker-dealers which, in the investment adviser's opinion, present minimal
credit risks. A Fund's reliance upon the credit of these dealers, banks and
broker-dealers is secured by the value of the underlying Municipal Securities
that are subject to a commitment.
The Tax-Exempt Money Fund or California Tax-Exempt Money Market Fund
would acquire "stand-by commitments" solely to facilitate portfolio liquidity
and do not intend to exercise their rights thereunder for trading purposes. The
acquisition of a "stand-by commitment" would not affect the valuation or assumed
maturity of the underlying Municipal Securities, which would continue to be
valued at amortized cost in accordance with the ordinary method of valuation
employed by a Fund. "Stand-by commitments" which would be acquired by a Fund
would be valued at zero in determining net asset value. Where a Fund paid any
consideration directly or indirectly for a "stand-by commitment," its cost would
be reflected as unrealized depreciation for the period during which the
commitment was held by the Fund. "Stand-by commitments" would not affect a
Fund's average weighted maturity.
LOANS OF SECURITIES. The Prime Fund, Government Fund and Treasury Only
Fund may lend their securities to brokers, dealers and financial institutions,
provided (1) the loan is secured continuously by collateral consisting of U.S.
Government securities (U.S. Treasury securities with respect to the Treasury
Only Fund) or cash or letters of credit which is marked to the market daily to
ensure that each loan is fully collateralized at all times; (2) the Fund
involved may at any time call the loan and obtain the return of the securities
loaned within five business days; (3) the Fund will receive any interest or
dividends paid on the securities loaned; and (4) the aggregate market value of
securities loaned will not at any time exceed 30% of the total assets of the
Fund (33 1/3% with respect to the Treasury Only Fund).
A Fund will earn income for lending its securities because cash
collateral pursuant to these loans will be invested in short term money market
instruments. In connection with lending securities, a Fund may pay reasonable
finders, administrative and custodial fees. Loans of securities involve a
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risk that the borrower may fail to return the securities or may fail to provide
additional collateral.
SPECIAL CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL SECURITIES
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information drawn from
official statements and prospectuses relating to securities offerings of the
State of California and various local agencies in California, available as of
the date of this Prospectus. While the Company has not independently verified
such information, it has no reason to believe that such information is not
correct in all material respects.
ECONOMIC FACTORS. The Governor's 1993-1994 Budget, introduced on
January 8, 1993, proposed general fund expenditures of $37.3 billion, with
projected revenues of $39.9 billion. To balance the budget in the face of
declining revenues, the Governor proposed a series of revenue shifts from local
government, reliance on increased federal aid, and reductions in state spending.
The Department of Finance of the State of California's May Revision of
General Fund Revenues and Expenditures (the "May Revision"), released on May 20,
1993, projected the State would have an accumulated deficit of about $2.75
billion by June 30, 1993, essentially unchanged from the prior year. The
Governor proposed to eliminate this deficit over an 18-month period. Unlike
previous years, the Governor's Budget and May Revision did not calculate a "gap"
to be closed, but rather set forth revenue and expenditure forecasts and
proposals designed to produce a balanced budget.
The 1993-1994 budget act (the "1993-94 Budget Act") was signed by the
Governor on June 30, 1993, along with implementing legislation. The Governor
vetoed approximately $71 million in spending.
The 1993-94 Budget Act was predicated on general fund revenues and
transfers estimated at $40.6 billion, $400 million below 1992-93 (and the second
consecutive year of actual decline). The principal reasons for declining revenue
were the continued weak economy and the expiration (or repeal) of three fiscal
steps taken in 1991--a half cent temporary sales tax, a deferral of operating
loss carryforwards, and repeal by initiative of a sales tax on candy and snack
foods.
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The 1993-94 Budget Act also assumed special fund revenues of $11.9
billion, an increase of 2.9 percent over 1992-93.
The 1993-94 Budget Act included general fund expenditures of $38.5
billion (a 6.3 percent reduction from projected 1992-93 expenditures of $41.1
billion), in order to keep a balanced budget within the available revenues. The
1993-94 Budget Act also included special fund expenditures of $12.1 billion, a
4.2 percent increase. The 1993-94 Budget Act reflected the following major
adjustments:
1. Changes in local government financing to shift about $2.6 billion
in property taxes from cities, counties, special districts and redevelopment
agencies to school and community college districts, thereby reducing general
fund support by an equal amount. About $2.5 billion is permanent, reflecting
termination of the State's "bailout" of local governments following the property
tax cuts of Proposition 13 in 1978 (See "Constitutional, Legislative and Other
Factors" below).
The property tax revenue losses for cities and counties were offset in
part by additional sales tax revenues and mandate relief.
2. The 1993-94 Budget Act projected K-12 Proposition 98 funding on a
cash basis at the same per-pupil level as 1992-93 by providing schools a $609
million loan payable from future years' Proposition 98 funds.
3. The 1993-94 Budget Act assumed receipt of about $692 million of
aid to the State from the federal government to offset health and welfare costs
associated with foreign immigrants living in the State, which would reduce a
like amount of General Fund expenditures. About $411 million of this amount was
one-time funding. Congress ultimately appropriated only $450 million.
4. Reductions of $600 million in health and welfare programs and
$400 million in support for higher education (partly offset by fee increases at
all three units of higher education) and various miscellaneous cuts (totalling
approximately $150 million) in State government services in many agencies, up to
15 percent.
5. A 2-year suspension of the renters' tax credit ($390 million
expenditure reduction in 1993-94).
6. Miscellaneous one-time items, including deferral of payment to
the Public Employees Retirement Fund ($339 million)
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and a change in accounting for debt service from accrual to cash basis, saving
$107 million.
The 1993-94 Budget Act contained no general fund tax/revenue increases
other than a two year suspension of the renters' tax credit. The 1993-1994
Budget Act suspended the 4 percent automatic budget reduction trigger, as was
done in 1992-1993, so cuts could be focused.
Administration reports during the course of the 1993-1994 Fiscal Year
indicated that while economic recovery appeared to have started in the second
half of the fiscal year, recessionary conditions continued longer than had been
anticipated when the 1993-1994 Budget Act was adopted. Overall, revenues for the
1993-1994 Fiscal Year were about $800 million lower than original projections,
and expenditures were about $780 million higher, primarily because of higher
health and welfare caseloads, lower property taxes which required greater State
support for K-14 education to make up the shortfall, and lower than anticipated
federal government payments for immigration-related costs. The reports in May
and June, 1994, indicated that revenues in the second half of the 1993-1994
Fiscal Year were very close to the projections made in the Governor's Budget of
January 10, 1994, which is consistent with a slow turnaround in the economy.
The Department of Finance's July 1994 Bulletin, including the final
June receipts, reported that June revenues were $114 million (two and one-half
percent) above projections, with final end-of-year results at $377 million
(about one percent) above the May Revision projections. Part of this result was
due to end-of-year adjustments and reconciliations. Personal income tax and
sales tax continued to track projections. The largest factor in the higher than
anticipated revenues was from bank and corporation taxes, which were $140
million (18.4 percent) above projections in June. While the higher June receipts
were reflected in the actual 1993-94 Fiscal Year cash flow results, and helped
the starting cash balance for the 1994- 95 Fiscal Year, the Department of
Finance did not adjust any of its revenue projections for the 1994-95 or 1995-96
Fiscal Years.
During the 1993-94 Fiscal Year, the State implemented the deficit
retirement plan, which was part of the 1993-94 Budget Act, by issuing $1.2
billion of revenue anticipation warrants in February 1994 maturing December 21,
1994. This borrowing reduced the cash deficit at the end of the 1993-94 Fiscal
Year. Nevertheless, because of the $1.5 billion variance from the original
1993-94 Budget Act assumptions, the General Fund ended the fiscal year at June
30, 1994 carrying forward an accumulated deficit of approximately $2 billion.
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Because of the revenue shortfall and the State's reduced internal
borrowable cash resources, in addition to the $1.2 billion of revenue
anticipation warrants issued as part of the deficit retirement plan, the State
issued an additional $2.0 billion of revenue anticipation warrants, maturing
July 26, 1994, which were needed to fund the State's obligations and expenses
through the end of the 1993-94 Fiscal Year.
On January 17, 1994, a major earthquake measuring an estimated 6.8 on
the Richter Scale struck Los Angeles. Significant property damage to private and
public facilities occurred in a four-county area including northern Los Angeles
County, Ventura County, and parts of Orange and San Bernardino Counties, which
were declared as State and federal disaster areas by January 18. Current
estimates of total property damage (private and public) are in the range of $20
billion, but these estimates are still subject to change.
Despite such damage, on the whole, the vast majority of structures in
the areas, including large manufacturing and commercial buildings and all modern
high-rise offices, survived the earthquake with minimal or no damage, validating
the cumulative effect of strict building codes and thorough preparation for such
an emergency by the State and local agencies.
Damage to state-owned facilities included transportation corridors and
facilities such as Interstate Highways 5 and 10 and State Highways 14, 118 and
210. Major highways have now been reopened. The campus of California State
University at Northridge (very near the epicenter) suffered an estimated $350
million damage, resulting in temporary closure of the campus. It has now
reopened. There was also some damage to the University of California at Los
Angeles and to an office building in Van Nuys (now open after a temporary
closure). Overall, except for the temporary road and bridge closures, and
CSU-Northridge, the earthquake did not significantly affect State government
operations.
The State in conjunction with the federal government is committed to
providing assistance to local governments, individuals and businesses suffering
damage as a result of the earthquake, as well as to provide for the repair and
replacement of State-owned facilities. The federal government provide
substantial earthquake assistance totalling in excess of $9.5 billion.
The 1994-95 Fiscal Year represented the fourth consecutive year the
Governor and Legislature were faced with a very difficult budget environment to
produce a balanced budget. The Governor's Budget proposal, as updated in May and
June,
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1994, recognized that the accumulated deficit could not be repaid in one year,
and proposed a two-year solution. The budget proposal projected revenue and
expenditure forecasts and revenue and expenditure proposals which resulted in
operating surpluses for the budget for both 1994-95 and 1995-96, and lead to the
elimination of the accumulated budget deficit, estimated at about $1.8 billion
at June 30, 1994, by June 30, 1996.
The 1994-95 Budget Act, signed by the Governor on July 8, 1994,
projected revenues and transfers of $41.9 billion, $2.1 billion higher than
revenues in 1993-94, reflecting the Administration's forecast of an improving
economy.
The 1994-95 Budget Act projected Special Fund revenues of $12.1
billion, a decrease of 2.4% from 1993-94 estimated revenues.
The 1994-95 Budget Act projected General Fund expenditures of $40.9
billion, an increase of $1.6 billion over 1993-94. The 1994-95 Budget Act also
projected Special Fund expenditures of $12.3 billion, a 4.7% decrease from
1993-94 estimated expenditures. The principal features of the 1994-95 Budget Act
were the following:
1. Receipt of additional federal aid in 1994-95 of about $400
million for costs of refugee assistance and medical care for undocumented
immigrants, thereby offsetting a similar General Fund cost. These funds
ultimately were not budgeted by the Federal Government.
2. Reductions of approximately $1.1 billion in health and welfare
costs. A 2.3% reduction in Aid to Family with Dependent Children payments
(equal to about $56 million for the entire fiscal year) has been suspended
by court order.
3. A General Fund increase of approximately $38 million in support
for the University of California and $65 million for California State
University. It anticipated that student fees for both the University of
California and the California State University would increase up to 10%.
4. Proposition 98 funding for K-14 schools was increased by $526
million from 1993-94 levels, representing an increase for enrollment growth
and inflation. Consistent with previous budget agreements, Proposition 98
funding provided approximately $4,217 per student for K-12 schools, equal
to the level in the past three years.
5. Legislation enacted with the Budget clarifies laws passed in 1992
and 1993 which require counties and other local agencies to transfer funds
to local school districts,
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thereby reducing State aid. Some counties had implemented a method of
making such transfers which provided less money for schools if there were
redevelopment agency projects. The new legislation banned this method of
transfer. If all counties had implemented this method, General Fund aid to
K-12 schools would have been $300 million higher in each of the 1994-95 and
1995-96 Fiscal Years.
6. The 1994-95 Budget Act provided funding for anticipated growth in
the State's prison inmate population, including provisions for implementing
recent legislation (the so-called "Three Strikes" law) which requires
mandatory life prison terms for certain third-time felony offenders.
7. Additional miscellaneous cuts ($500 million) and fund transfers
($255 million) totalling in the aggregate approximately $755 million.
The 1994-95 Budget Act contains no tax increases. Under legislation
enacted for the 1993-94 Budget, the renters' tax credit was suspended for two
years (1993 and 1994). A ballot proposition to permanently restore the renters'
tax credit after this year failed at the June, 1994 election. The Legislature
enacted a further one-year suspension of the renters' tax credit, for 1995,
saving about $390 million in the 1995-96 Fiscal Year.
The 1994-95 Budget assumed that the State would use a cash flow
borrowing program in 1994-95 which combined one-year notes and two-year
warrants, which have now been issued. Issuance of warrants allowed the State to
defer repayment of approximately $1.0 billion of its accumulated budget deficit
into the 1995-96 Fiscal Year.
The State's cash flow management plan for the 1994-95 fiscal year
included the issuance of $4.0 billion of revenue anticipation warrants on July
26, 1994, to mature on April 25, 1996, as part of a two-year plan to retire the
accumulated State budget deficit.
Because preparation of cash flow estimates for the 1995-96 Fiscal Year
necessarily entails greater risks of variance from assumptions, and because the
Governor's two-year budget plan assumes receipt of a large amount of federal aid
in the 1995-96 Fiscal Year for immigration-related costs which is uncertain, the
Legislature enacted a backup budget adjustment mechanism to mitigate possible
deviations from projected revenues, expenditures or internal borrowable
resources which might reduce available cash resources during the two-year plan,
so as to assure repayment of the warrants.
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Pursuant to Section 12467 of the California Government Code, enacted
by Chapter 135, Statutes of 1994 (the "Budget Adjustment Law"), the State
Controller was required to make a report by November 15, 1994 on whether the
projected cash resources for the General Fund as of June 30, 1995 would decrease
more than $430 million from the amount projected by the State in its Official
Statement in July, 1994 for the sale of $4,000,000,000 of Revenue Anticipation
Warrants. On November 15, 1994, the State Controller issued the report on the
State's cash position required by the Budget Adjustment Law. The report
indicated that the cash position of the General Fund on June 30, 1995 would be
$581 million better than was estimated in the July, 1994 cash flow projections
and therefore, no budget adjustment procedures will be invoked for the 1994-95
Fiscal Year. As explained earlier, the Law would only be implemented if the
State Controller estimated that borrowable resources on June 30, 1995 would be
at least $430 million lower than projected.
The State Controller's report identified a number of factors which
have led to the improved cash position of the State. Estimated revenues and
transfers for the 1994-95 Fiscal Year other than federal reimbursement for
immigration costs were up about $650 million. The largest portion of this was in
higher bank and corporation tax receipts, but all major tax sources were above
original projections. However, most of the federal immigration aid revenues
projected in connection with the 1994-95 Budget Act and in the July, 1994 cash
flows will not be received, as indicated above, leaving a net increase in
revenues of $322 million.
On the expenditure side, the State Controller reported that estimated
reduced caseload growth in health and welfare programs, reduced school
enrollment growth, and an accounting adjustment reducing a transfer from the
General Fund to the Special Fund for Economic Uncertainties resulted in overall
General Fund expenditure reductions (again before adjusting for federal aid) of
$672 million. However, the July, 1994 cash flows projected that General Fund
health and welfare and education expenditures would be offset by the anticipated
receipt of $407 million in federal aid for illegal immigrant costs. The State
Controller now estimates that none of these funds will be received, so the net
reduction in General Fund expenditures is $265 million.
Finally, the State Controller indicated that a review of balances in
special funds available for internal borrowing resulted in an estimated
reduction of such borrowable resources of $6 million. The combination of these
factors results in the estimated improvement of the General Fund's cash position
of $581 million. The State Controller's revised cash flow projections for
1994-95 have allocated this improvement to two line items:
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an increase from $0 to $427 million in the estimated ending cash balance of the
General Fund on June 30, 1995, and an increase in unused borrowable resources of
$154 million.
The State Controller's report indicated that there was no anticipated
cash impact in the 1994-95 Fiscal Year for recent initiatives on "three strikes"
criminal penalties and illegal immigration which were approved by voters on
November 8, 1994. At a hearing before a committee of the Legislature on November
15, 1994, both the Legislative Analyst and the Department of Finance concurred
in the reasonableness of the State Controller's report. (The Legislative Analyst
had issued a preliminary analysis on November 1, 1994 which reached a conclusion
very close to that of the State Controller.) The State Controller's report makes
no projections about whether the Law may have to be implemented in 1995-96.
However, both the State Controller and the Legislative Analyst in the November
15 hearing noted that the July, 1994 cash flows for the 1995-96 Fiscal Year
place continued reliance on large amounts of federal assistance for immigration
costs, which did not materialize this year, indicating significant budget
pressures for next year. The Department of Finance indicated that the budgetary
issues identified in the hearing would be addressed in the Governor's Budget
proposal for the 1995-96 Fiscal Year, which was released in early January, 1995.
The 1995-96 Governor's Budget, discussed below, contains a reforecast
of revenues and expenditures for the 1994- 95 Fiscal Year. The Department of
Finance Bulletins for February and March 1995 report that combined General Fund
revenues for February, 1995 were about $356 million below forecast, but combined
revenues for January and February were only about $82 million (or 0.3 percent)
below the 1995-96 Governor's Budget forecast. The largest component of the
decrease is attributable to personal income tax receipts, which were about $131
million (or 1.1 percent) below the two months' forecast. This decrease in
personal income tax receipts appears to be largely attributable to fourth
quarter 1994 activity, probably in the anticipation of tax reform, with some
taxpayers shifting income into 1995 to the extent possible. The withholding
component comprised $77 million of this shortfall, but the Department of Finance
does not yet view this as significant. Additionally, sales and use tax receipts
were very close to forecast for the two-month period, while bank and corporation
tax receipts were about $42 million (or 1.5 percent) below the two months'
forecast. Miscellaneous revenues were about $117 million (or 6.2 percent) above
forecast for the two months, but the Department of Finance is not yet able to
determine whether this gain is real, or is instead attributable to cash flow
factors.
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Initial analysis of the federal Fiscal Year 1995 budget by the
Department of Finance indicates that about $98 million was appropriated for
California to offset costs of incarceration of undocumented and refugee
immigrants, less than the $356 million which was assumed in the State's 1994-95
Budget Act. Because of timing considerations in applying for these federal
funds, the Department estimates that about $33 million of these funds will be
received during the State's 1994-95 Fiscal Year, with the balance received in
the following fiscal year. It does not appear that the federal budget contains
any of the additional $400 million in funding for refugee assistance and health
costs which were also assumed in the 1994-95 Budget Act, but the Department
expects the State to continue its efforts to obtain some or all of these federal
funds.
On January 10, 1995, the Governor presented his 1995-96 Fiscal Year
Budget Proposal (the "Proposed Budget"). The Proposed Budget estimates General
Fund revenues and transfers of $42.5 billion (an increase of 0.2 percent over
1994-95). This increase from the 1994-95 Fiscal Year reflects the Governor's
realignment proposal (a proposal to shift various state obligations to local
government) and the first year of a tax cut proposal of personal income and
corporate taxes. Neither of such proposals was approved by the Legislature. The
1995-96 Budget was signed by the Governor on August 3, 1995, 34 days following
the commencement of the State's fiscal year, resulting in a revised projection
of General Fund revenues of $44.1 billion, or an increase of 3.5 percent over
1994-95. Expenditures are budgeted at $43.4 billion (a four percent increase
over 1994-95). Special Fund revenues are estimated at $13.5 billion (10.7
percent higher than 1994-95) and Special Fund expenditures are estimated at
$13.8 billion (12.2 percent higher than 1994-95). The Budget projects that the
General Fund will end the fiscal year at June 30, 1996 with a budget surplus in
the Special Fund for Economic Uncertainties of about $28 million, or less than 1
percent of General Fund expenditures, and will have repaid all of the
accumulated budget deficits.
The following are the principal features of the Budget:
1. Proposition 98 funding for schools and community colleges will
increase by about $1.2 billion, reflecting strong General Fund revenue
growth. Per-pupil expenditures are projected to increase by $126 to $4,435.
For the first time in several years, a cost-of-living increase (2.7
percent) is added to the enrollment growth factor. The Governor proposed to
set aside about $514 million of the Proposition 98 funding increase to
repay prior years' loans from the General Fund to schools. As the legality
of these loans is currently being challenged in a lawsuit, the
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Governor proposed to set the amount aside in escrow until the litigation is
resolved.
2. Further cuts in health and welfare costs totaling about $0.9
billion. Some of these cuts (approximately $500 million) would require
federal legislative approval.
3. Increases in funding for the University of California ($90
million General Fund) and the California State University system ($3
million General Fund). The Governor has proposed a four-year funding
"company" for the higher education units which includes both annual
increases in State funding and increases in student fees.
4. Assumes receipt of $473 million in new federal aid for costs of
undocumented and refugee immigrants, above commitments already made by the
federal government. This amount is substantially less than an estimated
$2.8 billion which had been included in the Governor's pro-forma two-year
plan from last summer.
5. General Fund support for the Department of Corrections was
increased approximately eight percent, reflecting estimates of increased
prison population; however, funding was less than proposed in the original
budget.
Subsequent Developments - Reports from the Department of Finance
indicate that General Fund revenues through the first three months of the fiscal
year were about $525 million, or 5.3%, above projections made for the enactment
of the Budget Act. For the first quarter, personal income tax (primarily
estimated tax payments) were $224 million (5.1%) above projection, sales and use
taxes were $99 million (2.9% above projection) and bank and corporation taxes
(also primarily estimated tax payments) were $154 million (12.5%) above
projection.
The State Controller's "October Trigger Report," while finding no need
to impose automatic budget cuts, noted a number of areas where there was likely
to be a divergence from the original budget estimates. (See "STATE FINANCES--The
Budget Process--Budget Adjustment Law" above.) On the positive side, the State
Controller noted that improving economic conditions were leading to improved
cash receipts. On the negative side, the State Controller's Report estimated
that federal actions to allow health and welfare cuts and to reimburse the State
for illegal immigrant costs were not likely to provide as much money as had been
planned, and the Proposition 98 expenditures for K-14 schools had been
underestimated. In addition, the State Controller reported that an annual review
of internal borrowable resources resulted in a $705 million increase of
estimated
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available internal borrowable resources. In total, therefore, the State
Controller estimated that the State's cash position on June 30, 1996 would be
about $500 million worse than the estimate of $1.9 billion of available internal
cash resources included in the original budget, but still large enough to avoid
the Budget Adjustment Law cuts.
The Budget contains a cash flow projection (based on all the
assumptions described above) which shows approximately $1 billion of unused
borrowable resources at June 30, 1996, providing this amount of "cushion" before
the budget "trigger" would have to be invoked.
However, a report issued by the Legislative Analyst in February, 1995
notes that the Proposed Budget is subject to a number of major risks, including
receipt of the expected federal immigration aid and other federal actions to
allow health and welfare costs, and the outcome of several lawsuits concerning
previous budget actions which the State has lost at the trial court level, and
which are under appeal. This Analyst's Report also estimates that, despite more
favorable revenues, the two-year budget estimates made in July, 1994 are about
$2 billion out of balance, principally because federal immigration aid appears
likely to be much lower than previously estimated. This shortfall is much
smaller than the State has faced in recent years, and has been addressed in the
Governor's Budget.
The Director of Finance is required to include updated cash-flow
statements for the 1994-95 and 1995-96 Fiscal Years in the May revision to the
1995-96 Fiscal Year budget proposal. By June 1, 1995, the State Controller must
concur with these updated statements or provide a revised estimate of the cash
condition of the General Fund for the 1994-95 and the 1995-96 Fiscal Years. For
the 1995-96 Fiscal Year, Chapter 135 prohibits any external borrowing as of June
30, 1996, thereby requiring the State to rely solely on internal borrowable
resources, expenditure reductions or revenue increases to eliminate any
projected cash flow shortfall.
Commencing on October 15, 1995, the State Controller will, in
conjunction with the Legislative Analyst's Office, review the estimated cash
condition of the General Fund for the 1995-96 Fiscal Year. The "1996 cash
shortfall" shall be the amount necessary to bring the balance of unused
borrowable resources on June 30, 1996 to zero. On or before December 1, 1995,
legislation must be enacted providing for sufficient General Fund expenditure
reductions, revenue increases, or both, to offset any such 1996 cash shortfall
identified by the State Controller. If such legislation is not enacted, within
five days thereafter the Director of Finance must reduce all General Fund
appropriations for the 1995-96 Fiscal Year, except the Required
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Appropriations, by the percentage equal to the ratio of said 1996 cash shortfall
to total remaining General Fund appropriations for the 1995-96 Fiscal Year,
excluding the Required Appropriations.
On December 6, 1994, Orange County, California and its Investment Pool
(the "Pool") filed for bankruptcy under Chapter 9 of the United States
Bankruptcy Code. Approximately 187 California public entities, substantially all
of which are public agencies within the County, invested funds in the Pool. Many
of the agencies have various bonds, notes or other forms of indebtedness
outstanding, in some instances the proceeds of which were invested in the Pool.
Various investment advisors were employed by the County to restructure the Pool.
Such restructuring led to the sale of substantially all of the Pool's portfolio,
resulting in losses estimated to be approximately $1.7 billion or approximately
22% of amounts deposited by the Pool investors, including the County. It is
anticipated that such losses may result in delays or failures of the County as
well as investors in the Pool to make scheduled debt service payments. Further,
the County expects substantial budget deficits to occur in Fiscal Year 1995 with
possibly similar effects upon operations of investors in the Pool.
Investor access to monies in the Pool subsequent to the filing was
pursuant to Court order only and severely limited. On May 2, 1995, the
Bankruptcy Court approved a comprehensive settlement agreement (the "CSA")
between the County and Pool investors which, among other things, (i) established
a formula for distribution of all available cash and securities from the Pool to
the Pool investors, including the County, (ii) established formulas for
distribution among certain settling Pool investors of several tranches of new
County obligations to be payable from, and in some instances secured by, certain
designated sources of potential recoveries on Pool related claims, and (iii)
designated certain outstanding short term note obligations of the County to be
senior to or on a parity with certain of the new County obligations. By order
dated May 22, 1995, following distribution of all available cash and securities
from the Pool to the Pool investors, including the County, the Bankruptcy Court
dismissed the bankruptcy filing of the Pool based upon the Court's finding that
the Pool was not eligible for relief under Chapter 9 of the Bankruptcy Code
because it is not a municipality and it has not been specifically authorized to
file under Chapter 9 as required by the Bankruptcy Code. In negotiations
regarding a plan of arrangement for the County, many municipal investors in the
Pool have indicated a willingness to subordinate their remaining claims against
the County to those of other creditors and to make their further recovery
contingent on recovery by the County in litigation with brokerage houses,
investment advisors and other defendants regarding the Pool's investments.
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Following its bankruptcy filing, the County has, with Bankruptcy Court
approval, made payments of scheduled principal and interest on its outstanding
obligations where no alternative source of payment (such as reserve funds on
deposit with indenture trustees, letters of credit, municipal bond insurance
policies or other alternative payment sources) were available. The County has
not replenished such reserve funds or reimbursed the issuers of such letters of
credit or municipal bond insurance policies. In addition, the County ceased
making set aside deposits for repayment of certain of its short term
indebtedness. The Bankruptcy Court subsequently ruled that the rights of the
holders of such short term indebtedness to require the set aside deposits from
County revenues received following the filing were cut off by operation of the
Bankruptcy Code. In addition, the County has failed to satisfy its obligation to
accept tenders of its $110,200,000 aggregate principal amount of Taxable Pension
Obligation Bonds, Series B used to finance County pension obligations. Interest
at a rate set pursuant to the bond documents has been timely paid on such
Pension Bonds. The failure to satisfy the contractual obligations discussed
above may constitute defaults under the documents governing such securities.
To June 30, 1995 there had been no default in payment of scheduled
interest and principal (excluding the tender payment described above and the
Note Debt hereinafter described) to holders of County securities, although
certain securities are scheduled to mature at various times thereafter and the
Fund is unable to predict whether or to what extent such securities will be
timely paid by the County. On June 27, 1995, the Bankruptcy Court approved a
Stipulation and an Extension Agreement that, offered to holders of certain short
term note obligations of the County ("Note Debt") who elected to be treated
thereunder: (i) extension of maturity dates to June 30, 1996; (ii) payment of
monthly interest at a rate below existing contract rates; (iii) accrual of
monthly interest equal to the difference between the amount paid and the
contract rate, plus a settlement adjustment of 0.95%; (iv) waiver of
post-bankruptcy interest recapture or disallowance; (v) waiver of defenses to
repayment of the Note Debt claims based on California limitations on municipal
indebtedness; and (vi) allowance of the Note Debt claims, subject to certain
reserved rights. The holders of in excess of 90% of the outstanding aggregate
principal amount of all Note Debt elected such treatment. On July 7, 1995
certain of the holders did not approve the agreement and those notes, in the
amount of $2.8 million were defaulted upon by the County on July 18, 1995.
Both Standard & Poor's and Moody's Investors Service have suspended or
downgraded ratings on various debt securities of the County and certain of the
investors in the Pool and,
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following the defeat of the proposition submitted to the voters on June 27,
announced their intention to downgrade the County's debt to default status,
regardless of whether the Stipulation and Extension Agreement receives approval
by holders of the Note Debt. On July 18, 1995, Standard & Poor's declared the
Note Debt in default in spite of the approval of the Stipulation and Extension
Agreement. Standard & Poor's further stated that it had no reason to believe
that the County would be able to fulfill the terms of the Stipulation and
Extension Agreement on June 30, 1996. Such suspensions or downgradings could
affect both price and liquidity of the County's securities. The Fund is unable
to predict (i) the occurrence of covenant and/or payment defaults with respect
to obligations of the County and/or investors in the Pool or (ii) the financial
impact of any such defaults or credit rating suspensions or downgradings upon
the value or liquidity of such securities.
The California Tax-Exempt Money Market Fund currently holds an Orange
County Note, with a par value of $4,500,000 that matures on June 30, 1996. The
Orange County Note is supported by a Letter of Credit issued by PNC Bank,
National Association ("PNC"). BankAmerica Corporation has agreed to reimburse
PNC for any payments PNC may make under the Letter of Credit. The Letter of
Credit expires after June 30, 1996. On November 30, 1995, the Company, on behalf
of the California Tax-Exempt Money Market Fund, filed with the United States
Bankruptcy Court, Central District of California, a Proof of Claim with respect
to the Orange County Note.
CONSTITUTIONAL, LEGISLATIVE AND OTHER FACTORS. Certain California
constitutional amendments, legislative measures, executive orders,
administrative regulations and voter initiatives could result in the adverse
effects described below.
Certain California Municipal Securities in the Tax-Exempt Money Fund
and California Tax-Exempt Money Market Fund may be obligations of issuers which
rely in whole or in part on California State revenues for payment of these
obligations. Property tax revenues and a portion of the State's general fund
surplus are distributed to counties, cities and their various taxing entities
and the State assumes certain obligations theretofore paid out of local funds.
Whether and to what extent a portion of the State's general fund will be
distributed in the future to counties, cities and their various entities, is
unclear.
In 1988, California enacted legislation providing for a water's-edge
combined reporting method if an election fee was paid and other conditions met.
On October 6, 1993, the Governor signed Senate Bill 671 (Alquist) which modifies
the unitary tax law by deleting the requirements that a taxpayer
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electing to determine its income on a water's-edge basis pay a fee and file a
domestic disclosure spreadsheet and instead requiring an annual information
return. Significantly, the Franchise Tax Board can no longer disregard a
taxpayer's election. The Franchise Tax Board is reported to have estimated state
revenue losses from the Legislation as growing from $27 million in 1993-94 to
$616 million in 1999-2000, but others, including Assembly Speaker Willie Brown,
disagree with that estimate and assert that more revenue will be generated for
California, rather than less, because of an anticipated increase in economic
activity and additional revenue generated by the incentives in the Legislation.
Certain California Municipal Securities in the Tax-Exempt Money Fund
and California Tax-Exempt Money Market Fund may be obligations of issuers who
rely in whole or in part on ad valorem real property taxes as a source of
revenue. On June 6, 1978, California voters approved an amendment to the
California Constitution known as Proposition 13, which added Article XIIIA to
the California Constitution. The effect of Article XIIIA is to limit ad valorem
taxes on real property and to restrict the ability of taxing entities to
increase real property tax revenues. On November 7, 1978, California voters
approved Proposition 8 and on June 3, 1986, the California voters approved
Proposition 46, both of which amended Article XIIIA.
Section 1 of Article XIIIA limits the maximum ad valorem tax on real
property to 1% of full cash value (as defined in Section 2), to be collected by
the counties and apportioned according to law; provided that the 1% limitation
does not apply to ad valorem taxes or special assessments to pay the interest
and redemption charges on (i) any indebtedness approved by the voters prior to
July 1, 1978, or (ii) any bonded indebtedness for the acquisition or improvement
of real property approved on or after July 1, 1978, by two-thirds of the votes
cast by the voters voting on the proposition. Section 2 of Article XIIIA defines
"full cash value" to mean "the County Assessor's valuation of real property as
shown on the 1975/76 tax bill under `full cash value' or, thereafter, the
appraised value of real property when purchased, newly constructed, or a change
in ownership has occurred after the 1975 assessment." The full cash value may be
adjusted annually to reflect inflation at a rate not to exceed 2% per year, or
reduction in the consumer price index or comparable local data, or reduced in
the event of declining property value caused by damage, destruction or other
factors. The California State Board of Equalization has adopted regulations,
binding on county assessors, interpreting the meaning of "change in ownership"
and "new construction" for purposes of determining full cash value of property
under Article XIIIA.
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Legislation enacted by the California Legislature to implement Article
XIIIA (Statutes of 1978, Chapter 292, as amended) provides that notwithstanding
any other law, local agencies may not levy any ad valorem property tax except to
pay debt service on indebtedness approved by the voters prior to July 1, 1978,
and that each county will levy the maximum tax permitted by Article XIIIA of
$4.00 per $100 assessed valuation (based on the former practice of using 25%,
instead of 100%, of full cash value as the assessed value for tax purposes). The
legislation further provided that, for the 1978/79 fiscal year only, the tax
levied by each county was to be apportioned among all taxing agencies within the
county in proportion to their average share of taxes levied in certain previous
years. The apportionment of property taxes for fiscal years after 1978/79 has
been revised pursuant to Statutes of 1979, Chapter 282, which provides relief
funds from State moneys beginning in fiscal year 1979/80 and is designed to
provide a permanent system for sharing State taxes and budget funds with local
agencies. Under Chapter 282, cities and counties receive more of the remaining
property tax revenues collected under Proposition 13 instead of direct State
aid. School districts receive a correspondingly reduced amount of property
taxes, but receive compensation directly from the State and are given additional
relief. Chapter 282 does not affect the derivation of the base levy ($4.00 per
$100 assessed valuation) and the bonded debt tax rate.
On November 6, 1979, an initiative known as "Proposition 9" or the
"Gann Initiative" was approved by the California voters, which added Article
XIIIB to the California Constitution. Under Article XIIIB, State and local
governmental entities have an annual "appropriations limit" and are not allowed
to spend certain moneys called "appropriations subject to limitation" in an
amount higher than the "appropriations limit." Article XIIIB does not affect the
appropriation of moneys which are excluded from the definition of
"appropriations subject to limitation," including debt service on indebtedness
existing or authorized as of January 1, 1979, or bonded indebtedness
subsequently approved by the voters. In general terms, the "appropriations
limit" is required to be based on certain 1978/79 expenditures, and is to be
adjusted annually to reflect changes in consumer prices, population and certain
services provided by these entities. Article XIIIB also provides that if these
entities' revenues in any year exceed the amounts permitted to be spent, the
excess is to be returned by revising tax rates or fee schedules over the
subsequent two years.
At the November 8, 1988 general election, California voters approved
an initiative known as Proposition 98. This initiative amends Article XIIIB to
require that (i) the California Legislature establish a prudent state reserve
fund in an amount as it shall deem reasonable and necessary and (ii)
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revenues in excess of amounts permitted to be spent and which would otherwise be
returned pursuant to Article XIIIB by revision of tax rates or fee schedules, be
transferred and allocated (up to a maximum of 4%) to the State School Fund and
be expended solely for purposes of instructional improvement and accountability.
No such transfer or allocation of funds will be required if certain designated
state officials determine that annual student expenditures and class size meet
certain criteria as set forth in Proposition 98. Any funds allocated to the
State School Fund shall cause the appropriation limits established in Article
XIIIB to be annually increased for any such allocation made in the prior year.
Proposition 98 also amends Article XVI to require that the State of
California provide a minimum level of funding for public schools and community
colleges. Commencing with the 1988-89 fiscal year, state monies to support
school districts and community college districts shall equal or exceed the
lesser of (i) an amount equalling the percentage of state general revenue bonds
for school and community college districts in fiscal year 1986-87, or (ii) an
amount equal to the prior year's state general fund proceeds of taxes
appropriated under Article XIIIB plus allocated proceeds of local taxes, after
adjustment under Article XIIIB. The initiative permits the enactment of
legislation, by a two-thirds vote, to suspend the minimum funding requirement
for one year.
On June 30, 1989, the California Legislature enacted Senate
Constitutional Amendment 1, a proposed modification of the California
Constitution to alter the spending limit and the education funding provisions of
Proposition 98. Senate Constitutional Amendment 1, on the June 5, 1990 ballot as
Proposition 111, was approved by the voters and took effect on July 1, 1990.
Among a number of important provisions, Proposition 111 recalculates spending
limits for the State and for local governments, allows greater annual increases
in the limits, allows the averaging of two years' tax revenues before requiring
action regarding excess tax revenues, reduces the amount of the funding
guarantee in recession years for school districts and community college
districts (but with a floor of 40.9 percent of State general fund tax revenues),
removes the provision of Proposition 98 which included excess moneys transferred
to school districts and community college districts in the base calculation for
the next year, limits the amount of State tax revenue over the limit which would
be transferred to school districts and community college districts, and exempts
increased gasoline taxes and truck weight fees from the State appropriations
limit. Additionally, Proposition 111 exempts from the State appropriations limit
funding for capital outlays.
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Article XIIIB, like Article XIIIA, may require further interpretation
by both the Legislature and the courts to determine its applicability to
specific situations involving the State and local taxing authorities. Depending
upon the interpretation, Article XIIIB may limit significantly a governmental
entity's ability to budget sufficient funds to meet debt service on bonds and
other obligations.
On November 4, 1986, California voters approved an initiative statute
known as Proposition 62. This initiative (i) requires that any tax for general
governmental purposes imposed by local governments be approved by resolution or
ordinance adopted by a two-thirds vote of the governmental entity's legislative
body and by a majority vote of the electorate of the governmental entity, (ii)
requires that any special tax (defined as taxes levied for other than general
governmental purposes) imposed by a local governmental entity be approved by a
two-thirds vote of the voters within that jurisdiction, (iii) restricts the use
of revenues from a special tax to the purposes or for the service for which the
special tax was imposed, (iv) prohibits the imposition of ad valorem taxes on
real property by local governmental entities except as permitted by Article
XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on the
sale of real property by local governments, (vi) requires that any tax imposed
by a local government on or after August 1, 1985 be ratified by a majority vote
of the electorate within two years of the adoption of the initiative or be
terminated by November 15, 1988, (vii) requires that, in the event a local
government fails to comply with the provisions of this measure, a reduction in
the amount of property tax revenue allocated to such local government occurs in
an amount equal to the revenues received by such entity attributable to the tax
levied in violation of the initiative, and (viii) permits these provisions to be
amended exclusively by the voters of the State of California.
In September 1988, the California Court of Appeal in City of
Westminster v. County of Orange, 204 Cal. App. 3d 623, 215 Cal. Rptr. 511 (Cal.
Ct. App. 1988), held that Proposition 62 is unconstitutional to the extent that
it requires a general tax by a general law city, enacted on or after August 1,
1985 and prior to the effective date of Proposition 62, to be subject to
approval by a majority of voters. The Court held that the California
Constitution prohibits the imposition of a requirement that local tax measures
be submitted to the electorate by either referendum or initiative. It is not
possible to predict the impact of this decision on charter cities, on special
taxes or on new taxes imposed after the effective date of Proposition 62.
On November 8, 1988, California voters approved Proposition 87.
Proposition 87 amended Article XVI, Section 16,
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of the California Constitution by authorizing the California Legislature to
prohibit redevelopment agencies from receiving any of the property tax revenue
raised by increased property tax rates levied to repay bonded indebtedness of
local governments which is approved by voters on or after January 1, 1989. It is
not possible to predict whether the California Legislature will enact such a
prohibition nor is it possible to predict the impact of Proposition 87 on
redevelopment agencies and their ability to make payments on outstanding debt
obligations.
Certain California Municipal Securities held by the Tax-Exempt Money
Fund and California Tax-Exempt Money Market Fund may be obligations which are
payable solely from the revenues of health care institutions. Certain provisions
under California law may adversely affect these revenues and, consequently,
payment on those Municipal Securities.
The Federally sponsored Medicaid program for health care services to
eligible welfare beneficiaries in California is known as the Medi-Cal program.
Historically, the Medi-Cal program has provided for a cost-based system of
reimbursement for inpatient care furnished to Medi-Cal beneficiaries by any
hospital wanting to participate in the Medi-Cal program, provided such hospital
met applicable requirements for participation. California law now provides that
the State of California shall selectively contract with hospitals to provide
acute inpatient services to Medi-Cal patients. Medi-Cal contracts currently
apply only to acute inpatient services. Generally, such selective contracting is
made on a flat per diem payment basis for all services to Medi-Cal
beneficiaries, and generally such payment has not increased in relation to
inflation, costs or other factors. Other reductions or limitations may be
imposed on payment for services rendered to Medi-Cal beneficiaries in the
future.
Under this approach, in most geographical areas of California, only
those hospitals which enter into a Medi-Cal contract with the State of
California will be paid for non-emergency acute inpatient services rendered to
Medi-Cal beneficiaries. The State may also terminate these contracts without
notice under certain circumstances and is obligated to make contractual payments
only to the extent the California legislature appropriates adequate funding
therefor.
California enacted legislation in 1982 that authorizes private health
plans and insurers to contract directly with hospitals for services to
beneficiaries on negotiated terms. Some insurers have introduced plans known as
"preferred provider organizations" ("PPOs"), which offer financial incentives
for subscribers who use only the hospitals which contract with the plan. Under
an exclusive provider plan, which includes most
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health maintenance organizations ("HMOs"), private payors limit coverage to
those services provided by selected hospitals. Discounts offered to HMOs and
PPOs may result in payment to the contracting hospital of less than actual cost
and the volume of patients directed to a hospital under an HMO or PPO contract
may vary significantly from projections. Often, HMO or PPO contracts are
enforceable for a stated term, regardless of provider losses or of bankruptcy of
the respective HMO or PPO. It is expected that failure to execute and maintain
such PPO and HMO contracts would reduce a hospital's patient base or gross
revenues. Conversely, participation may maintain or increase the patient base,
but may result in reduced payment and lower net income to the contracting
hospitals.
These California Municipal Securities may also be insured by the State
of California pursuant to an insurance program implemented by the Office of
Statewide Health Planning and Development for health facility construction
loans. If a default occurs on insured California Municipal Securities, the State
Treasurer will issue debentures payable out of a reserve fund established under
the insurance program or will pay principal and interest on an unaccelerated
basis from unappropriated State funds. At the request of the Office of Statewide
Health Planning and Development, Arthur D. Little, Inc. prepared a study in
December 1983, to evaluate the adequacy of the reserve fund established under
the insurance program and based on certain formulations and assumptions found
the reserve fund substantially underfunded. In September of 1986, Arthur D.
Little, Inc. prepared an update of the study and concluded that an additional
10% reserve be established for "multi-level" facilities. For the balance of the
reserve fund, the update recommended maintaining the current reserve calculation
method. In March of 1990, Arthur D. Little, Inc. prepared a further review of
the study and recommended that separate reserves continue to be established for
"multi-level" facilities at a reserve level consistent with those that would be
required by an insurance company.
Certain California Municipal Securities in the Tax-Exempt Money Fund
and California Tax-Exempt Money Market Fund may be obligations which are secured
in whole or in part by a mortgage or deed of trust on real property. California
has five principal statutory provisions which limit the remedies of a creditor
secured by a mortgage or deed of trust. Two limit the creditor's right to obtain
a deficiency judgment, one limitation being based on the method of foreclosure
and the other on the type of debt secured. Under the former, a deficiency
judgment is barred when the foreclosure is accomplished by means of a
nonjudicial trustee's sale. Under the latter, a deficiency judgment is barred
when the foreclosed mortgage or deed of trust secures certain purchase money
obligations. Another California
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statute, commonly known as the "one form of action" rule, requires creditors
secured by real property to exhaust their real property security by foreclosure
before bringing a personal action against the debtor. The fourth statutory
provision limits any deficiency judgment obtained by a creditor secured by real
property following a judicial sale of such property to the excess of the
outstanding debt over the fair value of the property at the time of the sale,
thus preventing the creditor from obtaining a large deficiency judgment against
the debtor as the result of low bids at a judicial sale. The fifth statutory
provision gives the debtor the right to redeem the real property from any
judicial foreclosure sale as to which a deficiency judgement may be ordered
against the debtor.
Upon the default of a mortgage or deed of trust with respect to
California real property, the creditor's nonjudicial foreclosure rights under
the power of sale contained in the mortgage or deed of trust are subject to the
constraints imposed by California law upon transfers of title to real property
by private power of sale. During the three-month period beginning with the
filing of a formal notice of default, the debtor is entitled to reinstate the
mortgage by making any overdue payments. Under standard loan servicing
procedures, the filing of the formal notice of default does not occur unless at
least three full monthly payments have become due and remain unpaid. The power
of sale is exercised by posting and publishing a notice of sale for at least 20
days after expiration of the three-month reinstatement period. Therefore, the
effective minimum period for foreclosing on a mortgage could be in excess of
seven months after the initial default. Such time delays in collections could
disrupt the flow of revenues available to an issuer for the payment of debt
service on the outstanding obligations if such defaults occur with respect to a
substantial number of mortgages or deeds of trust securing an issuer's
obligations.
In addition, a court could find that there is sufficient involvement
of the issuer in the nonjudicial sale of property securing a mortgage for such
private sale to constitute "state action," and could hold that the
private-right-of-sale proceedings violate the due process requirements of the
Federal or State Constitutions, consequently preventing an issuer from using the
nonjudicial foreclosure remedy described above.
Certain California Municipal Securities in the Tax-Exempt Money Fund
and California Tax-Exempt Money Market Fund may be obligations which finance the
acquisition of single family home mortgages for low and moderate income
mortgagors. These obligations may be payable solely from revenues derived from
the home mortgages, and are subject to California's statutory limitations
described above applicable to obligations secured by real property. Under
California antideficiency legislation,
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there is no personal recourse against a mortgagor of a single family residence
purchased with the loan secured by the mortgage, regardless of whether the
creditor chooses judicial or nonjudicial foreclosure.
Under California law, mortgage loans secured by single-family
owner-occupied dwellings may be prepaid at any time. Prepayment charges on such
mortgage loans may be imposed only with respect to voluntary prepayments made
during the first five years during the term of the mortgage loan, and cannot in
any event exceed six months' advance interest on the amount prepaid in excess of
20% of the original principal amount of the mortgage loan. This limitation could
affect the flow of revenues available to an issuer for debt service on the
outstanding debt obligations which financed such home mortgages.
INVESTMENT LIMITATIONS
The Prospectuses for each Fund sets forth certain fundamental policies
that may not be changed with respect to such Fund without the affirmative vote
of the holders of the majority of the Fund's outstanding shares (as defined
below under "Miscellaneous"). Similarly, the following enumerated additional
fundamental policies may not be changed with respect to a Fund without such a
vote of shareholders.
THE PRIME FUND MAY NOT:
1. Purchase securities of any one issuer (other than obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities)
if immediately thereafter more than 15% of its total assets would be invested in
certificates of deposit or bankers' acceptances of any one bank, or more than 5%
of its total assets would be invested in other securities of any one bank or the
securities of any other issuer (except that up to 25% of the Fund's total assets
may be invested without regard to this limitation).
In accordance with current regulations of the Securities and Exchange
Commission, the Prime Fund presently intends to limit its investments in the
securities of any single issuer (other than securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities) to not more than 5% of
the Fund's total assets at the time of purchase, provided that the Fund may
invest up to 25% of its total assets in the securities of any one issuer for a
period that does not exceed three business days. This intention is not, however,
a fundamental policy of the Fund.
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THE PRIME FUND, TREASURY FUND AND CALIFORNIA TAX-EXEMPT MONEY MARKET FUND MAY
NOT:
1. Purchase or sell real estate (however, a Fund may, to the extent
appropriate to its investment objective, purchase securities issued by companies
investing in real estate or interests therein and the California Tax-Exempt
Money Market Fund may purchase Municipal Securities secured by real estate or
interests therein).
2. Underwrite the securities of other issuers.
3. Purchase securities of companies for the purpose of exercising
control.
4. Purchase securities on margin, make short sales of securities or
maintain a short position.
5. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization or
acquisition of assets.
6. Make loans except that (i) a Fund may purchase or hold debt
instruments and enter into repurchase agreements pursuant to its investment
objective and policies, and (ii) the Prime Fund may lend portfolio securities.
NEITHER THE GOVERNMENT FUND NOR THE TREASURY ONLY FUND MAY:
1. Purchase any security or evidence of interest therein on margin,
except that a Fund may obtain such short term credit as may be necessary for the
clearance of purchases and sales of securities.
2. Underwrite securities issued by other persons, except that all of
the assets of a Fund may be invested in a corresponding investment company with
the same investment objective and policies and except insofar as a Fund may
technically be deemed an underwriter under the Securities Act of 1933 in selling
a security.
3. Make loans to other persons except (a) through the lending of
securities held by a Fund, (b) through the use of fixed time deposits or
repurchase agreements or the purchase of short term obligations, or (c) by
purchasing all or a portion of an issue of debt securities of types commonly
distributed privately to financial institutions; for purposes of this investment
restriction the purchase of short-term commercial paper or a portion of an issue
of debt securities which are part of an issue to the public shall not be
considered the making of a loan.
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4. Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (each Fund reserves the freedom of action to
hold and to sell real estate acquired as a result of the ownership of securities
by such Fund).
5. Issue any senior security (as that term is defined in the
Investment Company Act of 1940) if such issuance is specifically prohibited by
the Investment Company Act of 1940 or the rules and regulations promulgated
thereunder, except as appropriate to evidence a debt incurred without violating
Investment Restriction No. 2 as stated in the Funds' Prospectus regarding
borrowing.
6. Concentrate its investments in any particular industry (excluding
obligations of the U.S. Government, obligations of domestic banks, and
repurchase agreements), but if it is deemed appropriate for the achievement of
its investment objective, up to 25% of the assets of the Fund (taken at market
value at the time of each investment) may be invested in any one industry;
provided, that nothing in this investment restriction shall affect the Fund's
ability to invest a portion or all of its assets in a corresponding investment
company with the same investment objective and policies.
THE TAX-EXEMPT MONEY FUND MAY NOT:
1. Purchase the securities of any issuer if as a result more than 5%
of the value of the Fund's total assets would be invested in the securities of
such issuer, except that up to 25% of the value of the Fund's total assets may
be invested without regard to this 5% limitation. Securities issued or
guaranteed by the United States Government or its agencies or instrumentalities
are not subject to this investment limitation. For purposes of this limitation
and the Fund's policy on concentration of investments set forth in the
Prospectus, a governmental agency, authority, instrumentality or other political
subdivision is deemed to be an issuer, separate from the government creating
such subdivision, if the security issued by such subdivision is backed only by
the assets and revenues of the subdivision, and a guarantee of a security is not
deemed to be a security issued by the guarantor, provided that no more than 10%
of the value of the Fund's total assets is invested in securities issued or
guaranteed by such guarantor.
2. Underwrite any issue of securities, except to the extent that the
purchase of securities directly from the issuer thereof in accordance with the
Fund's investment objective, policies and limitations may be deemed to be
underwriting.
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3. Purchase or sell real estate, except that the Fund may, to the
extent appropriate to its investment objective, invest in securities issued by
companies which invest in real estate or interests therein.
4. Purchase securities on margin, make short sales of securities or
maintain a short position.
5. Write or sell puts, calls, straddles, spreads or combinations
thereof.
6. Purchase or sell commodities or commodity contracts, or invest in
oil, gas or mineral exploration or development programs, except that the Fund
may, to the extent appropriate to its investment objective, invest in securities
issued by companies which purchase or sell commodities or commodity contracts or
which invest in such programs.
7. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization.
8. Make loans, except that the Fund may purchase or hold debt
obligations in accordance with its investment objective, policies and
limitations, and may enter into repurchase agreements with respect to
securities.
9. Purchase any securities which would cause 25% or more of the
value of its total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry; provided, however, that (a) there is no limitation with
respect to investments in Municipal Securities or obligations issued or
guaranteed by the Federal Government and its agencies and instrumentalities; (b)
although there is no limitation with respect to investments in certificates of
deposit and bankers' acceptances issued by domestic branches of United States
banks, no more than 10% of the total value of the Fund's assets at the time of
purchase may be invested in certificates of deposit and bankers' acceptances
issued by domestic branches of foreign banks and no more than 25% of the total
value of the Fund's assets at the time of purchase may be invested in
certificates of deposit and bankers' acceptances issued by domestic branches of
foreign banks and foreign branches of domestic banks; (c) each utility service
(such as gas, gas transmission, electric and telephone service) will be
considered a single industry for purposes of this policy; and (d) wholly-owned
finance companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents.
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THE CALIFORNIA TAX-EXEMPT MONEY MARKET FUND MAY NOT:
1. Invest in industrial revenue bonds where the payment of principal
and interest are the responsibility of a company (including its predecessors)
with less than three years of continuous operation.
2. Purchase or sell commodity contracts, or invest in oil, gas or
mineral exploration or development programs (however, the Fund may, to the
extent appropriate to its investment objective, purchase publicly traded
securities of companies engaging in whole or in part in such activities).
3. Purchase securities while its borrowings (including reverse
repurchase agreements) are outstanding.
4. Write or sell puts, calls, straddles, spreads, or combinations
thereof except that the Fund may acquire stand-by commitments with respect to
its Municipal Securities.
5. Purchase any securities which would cause 25% or more of the Fund's
total assets at the time of purchase to be invested in the securities of one or
more issuers conducting their principal business activities in the same
industry, provided that this limitation shall not apply to Municipal Securities
or governmental guarantees of Municipal Securities; and provided, further, that
for the purpose of this limitation only, industrial development bonds that are
backed only by the assets and revenues of a non-governmental user shall not be
deemed to be Municipal Securities.
* * *
If a percentage restriction is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in asset
value will not constitute a violation of such restriction.
For purposes of Investment Limitation P. 1 relating to the Prime Fund
in such Fund's Prospectus, Investment Limitation P. 6 relating to the Government
Fund and Treasury Only Fund in this Statement of Additional Information,
Investment Limitation P. 9 relating to the Tax-Exempt Money Fund in this
Statement of Additional Information and Investment Limitation P. 5 relating to
the California Tax-Exempt Money Market Fund only in this Statement of Additional
Information, these Funds treat, in accordance with the current views of the
staff of the Securities and Exchange Commission and as a matter of
non-fundamental policy that may be changed without a vote of shareholders, all
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supranational organizations as a single industry and each foreign government
(and all of its agencies) as a separate industry.
For purposes of Investment Limitation P. 6 of this Statement of
Additional Information with respect to the Prime Fund, Treasury Fund, and
California Tax-Exempt Money Market Fund, Investment Limitation P. 3 of this
Statement of Additional Information with respect to the Government Fund and
Treasury Only Fund and Investment Limitation P. 8 of this Statement of
Additional Information with respect to the Tax-Exempt Money Fund, the Funds may
hold debt instruments whether such instruments are part of a public offering or
privately negotiated.
In order to permit the sale of shares in certain states, a Fund may
make commitments more restrictive than the investment policies and limitations
described above. To permit the sale of the shares of the Funds in Texas, the
Company has agreed to the following additional restrictions:
1. The Funds will not invest in oil, gas or mineral leases.
2. The Funds will not invest more than 5% of their net assets in
warrants (valued at the lower of cost or market), of which not more than 2% may
be warrants which are not listed on the New York or American Stock Exchanges.
3. The Funds will not invest in real estate limited partnerships.
4. Any Horizon Shares of the Funds offered for sale to Texas
residents will generally be issued for cash only. Transactions involving the
issuance of Horizon Shares of such Funds for securities or assets other than
cash will meet the requirements of Section 123.2(4) of the Texas Blue Sky
Regulations.
Should a Fund determine that these commitments or any other
commitments are no longer in the best interests of the Fund, it will revoke such
commitments by terminating sales of its shares in the state involved.
PURCHASE AND REDEMPTION OF SHARES
IN GENERAL
The Company or its transfer agent may require any information
reasonably necessary to evidence that a redemption has been duly authorized.
Under the Investment Company Act of 1940 any of the Funds may suspend the right
of redemption or
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postpone the date of payment upon redemption for any period during which the New
York Stock Exchange is closed (other than customary weekend and holiday
closings), during which trading on such Exchange is restricted, during which an
emergency exists (as determined by the Securities and Exchange Commission by
rule or regulation) as a result of which disposal or valuation of portfolio
securities is not reasonably practicable or for such other periods as the
Securities and Exchange Commission may permit. A Fund may also suspend or
postpone the recordation of the transfer of its shares upon the occurrence of
any of the foregoing conditions.
In addition a Fund may redeem shares involuntarily in certain
instances if such redemption is appropriate to carry out the Company's
responsibilities under the Investment Company Act of 1940. If the Board of
Directors determines that conditions exist which make payment of redemption
proceeds wholly in cash unwise or undesirable, a Fund may make payment wholly or
partly in readily-marketable securities or other property. In such an event a
shareholder would incur transaction costs in selling the securities or other
property. See "Net Asset Value" below for an example of when such form of
payment might be appropriate. The Company has committed that it will pay all
redemption requests by a shareholder of record in cash, limited in amount with
respect to each shareholder during any ninety-day period to the lesser of
$250,000 or 1% of the Company's net asset value at the beginning of such period.
Any institution purchasing shares on behalf of separate accounts will
be required to hold the shares in a single nominee name (a "Master Account").
Institutions investing in more than one Fund must maintain a separate Master
Account for each Fund. Institutions may arrange with the Funds' transfer agent
for certain sub-accounting services (such as purchase, redemption and dividend
record keeping).
NATIONAL BANKING REGULATIONS
The Comptroller of the Currency has ruled that a national bank may
invest in shares of an investment company to the extent that the portfolio of
such company consists of investments in which the bank might invest directly. As
a national bank could invest directly without limitation in general obligations
of the U.S. Treasury and the portfolios of the Treasury Fund and Treasury Only
Fund are limited to such investments, national banks may acquire shares of the
Treasury Fund and Treasury Only Fund without limitation.
In addition, the regulations of the Comptroller of the Currency
provide that funds held in a fiduciary capacity by a national bank approved by
the Comptroller to exercise fiduciary
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powers must be invested in accordance with the instrument establishing the
fiduciary relationship and local law. In the opinion of the Company's counsel,
the purchase of shares of the Funds by such national banks acting on behalf of
their fiduciary accounts is not contrary to applicable regulations if consistent
with the particular account and proper under the law governing the
administration of the account. Prospective investors should consult their
advisers regarding the law applicable to their purchase of shares.
NET ASSET VALUE
IN GENERAL. Each Fund's net asset value per share is calculated by
dividing the total value of the assets belonging to the Fund, less the value of
any liabilities applicable to the Fund, by the total number of outstanding
shares of that Fund. Each Fund's net asset value is calculated separately from
each other Fund's net asset value. "Assets belonging to" a Fund consist of the
consideration received upon the issuance of shares representing interests in the
Fund together with all income, earnings, profits and proceeds derived from the
investment thereof, any proceeds from the sale, exchange or liquidation of such
investments, any funds or payments derived from any re-investment of such
proceeds, and a portion of any general assets of the Company not belonging to a
particular Fund. Each Fund is charged with the direct expenses of that Fund and
with a share of the general expenses of the Company. The determinations by the
Board of Directors as to direct and allocable expenses and the allocable portion
of general assets with respect to the various portfolios are conclusive. The
expenses that are charged to a Fund are borne equally by each share of the Fund
except for the payments to Service Organizations that are borne solely by
Horizon Service Shares and certain payments that are borne solely by Pacific
Horizon Shares as described in the Prospectuses for such Shares.
A "business day" for purposes of processing share purchases and
redemptions received by the Transfer Agent at its Columbus office is a day on
which both the Funds' custodian and the New York Stock Exchange are open for
trading, except a "business day" does not include Martin Luther King, Jr. Day,
Columbus Day or Veteran's Day. In 1996 the holidays on which the New York Stock
Exchange is closed are: New Year's Day, President's Day, Good Friday, Memorial
Day (observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
AMORTIZED COST METHOD. The Funds use the amortized cost method of
valuation in computing the net asset value of their shares for purposes of sales
and redemptions. Under this method a Fund values each of its portfolio
securities at cost on the date of purchase and thereafter assumes a constant
-44-
<PAGE> 76
proportionate amortization of any discount or premium until maturity of the
security. As a result the value of a portfolio security for purposes of
determining net asset value normally does not change in response to fluctuating
interest rates. While the amortized cost method seems to provide certainty in
portfolio valuation it may result in periods during which values, as determined
by amortized cost, are higher or lower than the amount such Fund would receive
if it sold its portfolio securities. The market value of the securities in the
Funds can be expected to vary inversely with changes in prevailing interest
rates. Thus, if interest rates have increased from the time a security was
purchased, such security, if sold, might be sold at a price less than its
amortized cost. Similarly, if interest rates have declined from the time a
security was purchased, such security, if sold, might be sold at a price greater
than its amortized cost. In either instance, if the security is held to
maturity, no gain or loss will be realized.
In connection with their use of amortized cost valuation, the Funds
limit the dollar-weighted average maturity of their portfolios to not more than
90 days and do not purchase any instrument with a remaining maturity of greater
than 397 calendar days. The Company's Board of Directors has also established,
pursuant to rules promulgated by the Securities and Exchange Commission,
procedures that are intended to stabilize each Fund's net asset value per share
for purposes of sales and redemptions at $1.00. Such procedures include the
determination, at such intervals as the Board deems appropriate, of the extent,
if any, to which a Fund's net asset value per share calculated by using
available market quotations deviates from $1.00 per share. In the event such
deviation exceeds 1/2 of 1% the Board will promptly consider what action, if
any, should be initiated. If the Board believes that the amount of any deviation
may result in material dilution or other unfair results to investors or existing
shareholders, it will take such steps as it considers appropriate to eliminate
or reduce to the extent reasonably practicable any such dilution or unfair
results. These steps may include selling portfolio instruments prior to
maturity, shortening a Fund's average portfolio maturity, withholding or
reducing dividends, reducing the number of a Fund's outstanding shares without
monetary consideration or determining net asset value per share by using
available market quotations. If a Fund reduces the number of its outstanding
shares without monetary consideration it will mail written notice to
shareholders at least three business days before the redemption and in the
notice will state the reason for the redemption and the fact that the redemption
may result in a capital loss to shareholders.
The Funds' administrator, Concord Holding Corporation (the
"Administrator"), may use a pricing service to value certain portfolio
securities where the prices provided are believed by
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<PAGE> 77
the Administrator pursuant to guidelines adopted by the Board of Directors to
reflect the fair value of such securities. In valuing a Fund's securities, the
pricing service would normally take into consideration such factors as yield,
risk, quality, maturity, type of issue, trading characteristics, special
circumstances and other factors it deems relevant in determining valuations for
normal institutional-sized trading units of debt securities and would not rely
on quoted prices. The methods used by the pricing service and the valuations so
established will be utilized under the general supervision of the Company's
Board of Directors. Additionally, in determining market-based net asset value
per share all portfolio securities for which market quotations (or appropriate
substitutes that reflect current market conditions) are not readily available
shall be valued at their fair value as determined by the valuation committee in
accordance with procedures established by the Board of Directors.
MANAGEMENT OF THE FUNDS
Directors and Officers
The directors and officers of the Company, their addresses, ages, and
principal occupations during the past five years are:
<TABLE>
<CAPTION>
Position with
Name and Address Age Company Principal Occupations
- ---------------- --- ------------- ---------------------
<S> <C> <C> <C>
Thomas M. Collins 61 Director Of counsel, law firm of
McDermott & Trayner McDermott & Trayner;
225 S. Lake Avenue Partner of the law firm
Suite 410 of Musick, Peeler &
Pasadena, CA 91101-3005 Garrett (until April,
1993); Trustee, Master
Investment Trust Series
I and Master Investment
Trust, Series II
(registered investment
companies) (since
1993); former Director,
Bunker Hill Income
Securities, Inc.
(registered investment
company) through 1991.
</TABLE>
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<PAGE> 78
<TABLE>
<CAPTION>
Position with
Name and Address Age Company Principal Occupations
- ---------------- --- ------------- ---------------------
<S> <C> <C> <C>
Douglas B. Fletcher 70 Vice Chairman Chairman of the Board
Fletcher Capital of the Board and Chief Executive
Advisors Incorporated Officer, Fletcher
4 Upper Newport Plaza Capital Advisors,
Suite 100 Incorporated, (registered
Newport Beach, CA 92660-2629 investment adviser)
1991 to date; Partner,
Newport Partners
(private venture
capital firm), 1981 to
date; Chairman of the
Board and Chief
Executive Officer,
First Pacific Advisors,
Inc. (registered
investment adviser) and
seven investment
companies under its
management, prior to
1983; former Allied
Member, New York Stock
Exchange; Chairman of
the Board of FPA
Paramount Fund, Inc.
through 1984; Director,
TIS Mortgage Investment
Company (real estate
investment trust);
Trustee and former Vice
Chairman of the Board,
Claremont McKenna
College; Chartered
Financial Analyst.
Robert E. Greeley 62 Director Chairman, Page Mill
Page Mill Asset Asset Management (a
Management private investment
433 California Street company) since 1991;
Suite 900 Manager, Corporate
San Francisco, CA 94104 Investments, Hewlett
Packard Company from
1979 to 1991; Trustee,
Master Investment
Trust, Series I and
Master Investment
Trust, Series II (since
1993); Director, Morgan
Grenfell Small Cap Fund
(since 1986); former
Director, Bunker Hill
Income Securities, Inc.
(since 1989)
(registered investment
companies); former
Trustee, SunAmerica
Fund Group
</TABLE>
-47-
<PAGE> 79
<TABLE>
<CAPTION>
Position with
Name and Address Age Company Principal Occupations
- ---------------- --- ------------- ---------------------
<S> <C> <C> <C>
(previously Equitec
Siebel Fund Group) from
1984 to 1992.
Kermit O. Hanson 79 Director Vice Chairman of the
17760 14th Ave., N.W. Advisory Board, 1988 to
Seattle, WA 98177 date, Executive
Director, 1977 to 1988,
Pacific Rim Bankers
Program (a non-profit
educational
institution); Dean
Emeritus, 1981 to date,
Dean, 1964-81, Graduate
School of Business
Administration,
University of
Washington; Director,
Washington Federal
Savings & Loan
Association; Trustee,
Seafirst Retirement
Funds (since 1993)
(registered investment
company).
Cornelius J. Pings* 66 Chairman of President, Association
Association of American the Board and of American
Universities President Universities, February
One DuPont Circle 1993 to date; Provost,
Suite 730 1982 to January
Washington, DC 20036 1993, Senior Vice
President for Academic
Affairs, 1981 to
January 1993,
University of Southern
California; Trustee,
Master Investment
Trust, Series I and
Master Investment
Trust, Series II (since
1995).
Kenneth L. Trefftzs 83 Director Private Investor;
11131 Briarcliff Drive formerly Distinguished
San Diego, CA 92131-1329 Emeritus Professor
of Finance and Chairman
of the Department of
Finance and Business
Economics of the
Graduate School of
Business of the
University of Southern
California; former
Director, Metro Goldwyn
Mayer, Inc.; Director,
</TABLE>
-48-
<PAGE> 80
<TABLE>
<CAPTION>
Position with
Name and Address Age Company Principal Occupations
- ---------------- --- ------------- ---------------------
<S> <C> <C> <C>
Fremont General
Corporation (insurance
and financial services
holding company);
Director, Source
Capital, Inc.
(closed-end investment
company); Director of
three open-end
investment companies
managed by First
Pacific Advisors, Inc.;
formerly Chairman of
the Board of Directors
(or Trustees) of
nineteen investment
companies managed by
American Capital Asset
Management, Inc.
Richard E. Stierwalt 40 Executive Chairman of the Board
125 W. 55th Street Vice President and Chief Executive
New York, NY 10019 Officer, July 1993 to
date, prior thereto
Senior Director,
Managing Director and
Chief Executive Officer
of the Administrator
and Distributor,
February 1987 to July
1993; President, Master
Investment Trust,
Series I, Master
Investment Trust,
Series II and Seafirst
Retirement Funds (since
1993); First Vice
President, Trust
Operation
Administration,
Security Pacific
National Bank,
1983-1987.
William B. Blundin 57 Executive Vice Vice Chairman, July 1993
125 W. 55th Street President to date, prior thereto
New York, NY 10019 Director and President
of the Administrator and
Distributor, February
1987 to July 1993;
Executive Vice
President, Master
Investment Trust, Series
II and Seafirst
Retirement Funds (since
1993); Senior Vice
President, Shearson
Lehman Brothers, 1978-
1987.
</TABLE>
-49-
<PAGE> 81
<TABLE>
<CAPTION>
Position with
Name and Address Age Company Principal Occupations
- ---------------- --- ------------- ---------------------
<S> <C> <C>
Irimga McKay 35 Vice Senior Vice President,
1230 Columbia Street President July 1993 to date, prior
5th FL thereto First Vice
San Diego, CA 92101 President of the
Administrator and
Distributor, November
1988 to July 1993; Vice
President, Master
Investment Trust,
Series II and Seafirst
Retirement Funds (since
1993); Regional Vice
President, Continental
Equities, June 1987 to
November 1988;
Assistant Wholesaler,
VMS Realty Partners (a
real estate limited
partnership), May 1986
to June 1987.
W. Eugene Spurbeck 39 Assistant Vice Manager of Client
BISYS Fund Services President Services of the
515 Figueroa Street Administrator (1933 to
Suite 335 date); Assistant Vice
Los Angeles, CA 92307 President, Master
Investment Trust,
Series II; Vice
President, Seafirst
Retirement Funds (since
1995); Vice President
of Retail Lending
Operations Banc One
(1989 to 1993).
Martin R. Dean 31 Treasurer Manager of Fund
3435 Stelzer Road Accounting of BISYS
Columbus, OH 43219 Fund Services, May 1994
to Present; Treasurer,
Master Investment
Trust, Series II and
Seafirst Retirement
Funds (since 1995);
Senior Manager at KPMG
Peat Marwick previously
1990-1994.
</TABLE>
-50-
<PAGE> 82
<TABLE>
<CAPTION>
Position with
Name and Address Age Company Principal Occupations
- ---------------- --- ------------- ---------------------
<S> <C> <C> <C>
W. Bruce McConnel, III 52 Secretary Partner of the law firm
1345 Chestnut Street of Drinker Biddle &
Philadelphia National Bank Reath. Secretary,
Building, Suite 1100 Master Investment Trust,
Philadelphia, PA 19107 Series I, Master
Investment Trust, Series
II and Seafirst
Retirement Funds
George O. Martinez 35 Assistant Senior Vice President
3435 Stelzer Road Secretary and Director of Legal
Columbus, OH 43219 and Compliance Services,
of the Administrator.
since April 1995;
Assistant Secretary,
Master Investment
Trust, Series II and
Seafirst Retirement
Funds (since 1995);
prior thereto, Vice
President and Associate
General Counsel,
Alliance Capital
Management, L.P.
</TABLE>
- --------------------
* Mr. Pings is an "interested director" of the Company as defined in the 1940
Act.
The Audit Committee of the Board is comprised of all directors and is
chaired by Dr. Trefftzs. The Board does not have an Executive Committee.
Each director is entitled to receive an annual fee of $25,000 plus
$1,000 for each day that a director participates in all or a part of a Board
meeting; the President receives an additional $20,000 per annum for his services
as President; Mr. Collins, in consideration of his years of service as President
and Chairman of the Board, receives an additional $40,000 per annum in
recognition of his years of service to the Company until February 28, 1997; each
member of a Committee of the Board is entitled to receive $1,000 for each
Committee meeting they participate in (whether or not held on the same day as a
Board meeting); and each Chairman of a Committee of the Board shall be entitled
to receive an annual retainer of $1,000 for his services as Chairman of the
Committee. The Funds, and each other fund of the Company, pays its proportionate
share of these amounts based on relative net asset values.
For the fiscal year ended February 28, 1995, the Company paid or
accrued for the account of its directors as a
-51-
<PAGE> 83
group for services in all capacities a total of $334,168; of this amount, the
following amounts of directors' compensation were allocated to the following
Funds: Treasury Fund - $22,408; Prime Fund - $23,318; Government Fund - $23,093;
Treasury Only Fund - $22,179; Tax-Exempt Money Fund - $21,538; and California
Tax-Exempt Money Market Fund - $23,388. Each director is also reimbursed for
out-of-pocket expenses incurred as a director. Drinker Biddle & Reath, of which
Mr. McConnel is a partner, receives legal fees as counsel to the Company. As of
the date of this Statement of Additional Information, the directors and officers
of the Company, as a group, own less than 1% of the outstanding shares of each
of the Company's investment portfolios.
Under a retirement plan approved by the Board of Directors, including
a majority of its directors who are not "interested persons" of the Company, a
director who dies or resigns after five years of service is entitled to receive
ten annual payments each equal to the greater of: (i) 50% of the annual
director's retainer that was payable by the Company during the year of his/her
death or resignation, or (ii) 50% of the annual director's retainer then in
effect for directors of the Company during the year of such payment. A director
who dies or resigns after nine years of service is entitled to receive ten
annual payments each equal to the greater of: (i) 100% of the annual director's
retainer that was payable by the Company during the year of his/her death or
resignation, or (ii) 100% of the annual director's retainer then in effect for
directors of the Company during the year of such payment. Further, the amount
payable each year to a director who dies or resigns is increased by $1,000 for
each year of service that the director provided as Chairman of the Board.
Years of service for purposes of calculating the benefit described
above are based upon service as a director or Chairman after February 28, 1994.
Retirement benefits in which a director has become vested may not be reduced by
later Board action.
In lieu of receiving ten annual payments, a director may elect to
receive substantially equivalent benefits through a single-sum cash payment of
the present value of such benefits paid by the Company within 45 days of the
death or resignation of the director. The present value of such benefits is to
be calculated (i) based on the retainer that was payable by the Company during
the year of the director's death or resignation (and not on any retainer payable
to directors thereafter), and (ii) using the interest rate in effect as of the
date of the director's death or resignation by the Pension Benefit Guaranty
Corporation (or any successor thereto) for valuing immediate annuities under
terminating defined benefit pension plans. A
-52-
<PAGE> 84
director's election to receive a single sum must be made in writing within the
30 calendar days after the date the individual is first elected as a director.
In addition to the foregoing, the Board of Directors may, in its
discretion and in recognition of a director's period of service before March 1,
1994 as a director and possibly as Chairman, authorize the Company to pay a
retirement benefit following the director's death or resignation (unless the
director has vested benefits as a result of completing nine years of service).
Any such action shall be approved by the Board and by a majority of the
directors who are not "interested persons" of the Company within 120 days
following the director's death or resignation and may be authorized as a single
sum cash payment or as not more than ten annual payments (beginning the first
anniversary of the director's date of death or resignation and continuing for
one or more anniversary date(s) thereafter).
The obligation of the Company to pay benefits to a former director is
neither secured nor funded by the Company but shall be binding upon its
successors in interest. The payment of benefits under the retirement plan has no
priority or preference over the lawful claims of the Company's creditors or
shareholders, and the right to receive such payments is not assignable or
transferable by a director (or former director) other than by will, by the laws
of descent and distribution, or by the director's written designation of a
beneficiary.
The following chart provides certain information about the
director/trustee fees of the Company as of February 28, 1995.
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM
RETIREMENT ESTIMATED REGISTRANT
AGGREGATE BENEFITS ANNUAL AND FUND
COMPENSATION ACCRUED AS BENEFITS COMPLEX(*)
NAME OF PERSON/ FROM THE PART OF FUND UPON PAID TO
POSITION COMPANY EXPENSES RETIREMENT DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas M. Collins $100,000 $0 $0 $110,000
Director(+)
- ----------------------------------------------------------------------------------------------------------------------------
Douglas B. Fletcher $ 57,500 $0 $0 $ 57,500
Vice Chairman of
the Board
- ----------------------------------------------------------------------------------------------------------------------------
Robert E. Greeley(**) $ 57,500 $0 $0 $ 65,781
Director
- ----------------------------------------------------------------------------------------------------------------------------
Kermit O. Hanson $ 57,500 $0 $0 $ 63,500
Director
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
-53-
<PAGE> 85
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM
RETIREMENT ESTIMATED REGISTRANT
AGGREGATE BENEFITS ANNUAL AND FUND
COMPENSATION ACCRUED AS BENEFITS COMPLEX*
NAME OF PERSON/ FROM THE PART OF FUND UPON PAID TO
POSITION COMPANY EXPENSES RETIREMENT DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cornelius J. Pings $57,500 $0 $0 $57,500
President and
Chairman of the
Board
- ----------------------------------------------------------------------------------------------------------------------------
Kenneth L. Trefftzs $57,500 $0 $0 $57,500
Director
============================================================================================================================
</TABLE>
- --------------
(*) The "Fund Complex" consists of the Company, Seafirst Retirement Funds,
Master Investment Trust, Series I and Master Investment Trust, Series II.
(**) Mr. Greeley became a director of the Company on April 25, 1994.
(+) Mr. Collins was President and Chairman of the Board of the Company until
August 31, 1995.
INVESTMENT ADVISER
Bank of America is the successor by merger to Security Pacific
National Bank ("Security Pacific"), which previously served as investment
adviser to each of the Funds, other than the Government and Treasury Only Funds,
since the commencement of their operations. In the investment advisory
agreement, Bank of America has agreed to provide investment advisory services as
described in the Prospectuses. Bank of America has also agreed to pay all
expenses incurred by it in connection with its activities under its agreement
other than the cost of securities, including brokerage commissions, if any,
purchased for the Company. In rendering its advisory services, Bank of America
may utilize Bank officers from one or more of the departments of the Bank which
are authorized to exercise the fiduciary powers of Bank of America with respect
to the investment of trust assets. In some cases, these officers may also serve
as officers, and utilize the facilities, of wholly-owned subsidiaries or other
affiliates of Bank of America or its parent corporation. For the services
provided and expenses assumed pursuant to the investment advisory agreement, the
Company has agreed to pay Bank of America fees, accrued daily and payable
monthly, at the following annual rates, with respect to the Funds: .10% of the
first $3 billion of each Fund's net assets, plus .09% of the next $2 billion of
each Fund's net assets, plus .08% of each Fund's net assets over $5 billion.
From time to time, Bank of America may waive fees or reimburse the Company for
expenses voluntarily or as required by certain state securities laws.
For the fiscal years ended February 28, 1993, February 28, 1994, and
February 28, 1995, Bank of America (and Securities Pacific prior to April 22,
1992) were paid in the
-54-
<PAGE> 86
aggregate, pursuant to the investment advisory agreements applicable to them,
advisory fees (net of waivers) of $8,106,253, $11,293,545, and $2,330,203,
respectively, by the Prime Fund, $2,841,285, $2,717,321, and $2,140,125,
respectively, by the Treasury Fund and $466,339, $472,766, and $501,956,
respectively, by the Tax-Exempt Money Fund. For the fiscal years ended February
28, 1993, February 28, 1994, and February 28, 1995, Bank of America (and
Security Pacific prior to April 22, 1992) were paid in the aggregate, pursuant
to the investment advisory agreements applicable to them, advisory fees (net of
waivers and expense reimbursements) of $22,306, $269,869, and $301,964,
respectively, by the California Tax-Exempt Money Market Fund. For the fiscal
years ended February 28, 1993, February 28, 1994, and February 28, 1995, Bank of
America (and Security Pacific prior to April 22, 1992) did not effect any fee
waivers or expense reimbursements with respect to the Treasury Fund but did
reimburse expenses or waive fees to the Prime Fund, in the aggregate, in the
amount of $0, $367,233, and $920,627, and the Tax-Exempt Money Fund, in the
amount of $3,692, $23,524, and $11,611, respectively. For the fiscal years ended
February 28, 1993, February 28, 1994, and February 28, 1995, Bank of America
(and Security Pacific prior to April 22, 1992) in the aggregate, waived fees and
reimbursed expenses with respect to the California Tax-Exempt Money Market Fund
in the amount of $82,350, $22,998, and $0, respectively.
For the fiscal year ended February 28, 1994, the Government Fund and
Treasury Only Fund paid Bank of America investment advisory fees (net of fee
waivers) of $877,515 and $68,888, respectively. For that same period Bank of
America waived fees and reimbursed the Government Fund and Treasury Only Fund in
the amounts of $6,537 and $127,607, respectively. For the fiscal year ended
February 28, 1995, the Government Fund and Treasury Only Fund paid Bank of
America investment advisory fees (net of fee waivers or expense reimbursements)
of $321,634 and $293,305, respectively. For that same period, Bank of America
waived fees of $8,313 for the Treasury Only Fund and waived fees of $313,740 and
reimbursed expenses to the Government Fund in the amount of $14,000. For the
fiscal year ended March 31, 1992 and the period April 1, 1992 through February
28, 1993, the Predecessor Treasury Only Funds bore investment advisory fees
pursuant to the investment advisory agreement then in effect of $70,579 and
$61,676, respectively, and the Predecessor Government Funds bore investment
advisory fees of $361,035 and $308,729, respectively. All of these fees were
paid to Seattle Capital Management Company (the "Former Adviser"), which is a
wholly-owned, indirect subsidiary of BankAmerica Corporation. For the periods
and fiscal year referenced above, the Former Adviser waived additional
investment advisory fees of $194,089 and $169,608, respectively, with respect to
the Predecessor Treasury
-55-
<PAGE> 87
Only Funds, and $227,281 and $154,364, respectively, with respect to the
Predecessor Government Funds.
The Company's investment advisory agreement for the Funds provides
that Bank of America shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Company in connection with the performance
of the investment advisory agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or negligence in the
performance of its duties or from reckless disregard by it of its duties and
obligations thereunder.
THE GLASS-STEAGALL ACT AND PROPOSED LEGISLATION
The Glass-Steagall Act, among other things, prohibits banks from
engaging in the business of underwriting securities, although national and
state-chartered banks generally are permitted to purchase and sell securities
upon the order and for the account of their customers. In 1971, the United
States Supreme Court held in Investment Company Institute v. Camp that the
Glass-Steagall Act prohibits a bank from operating a fund for the collective
investment of managing agency accounts. Subsequently, the Board of Governors of
the Federal Reserve System (the "Board") issued a regulation and interpretation
to the effect that the Glass-Steagall Act and such decision forbid a bank
holding company registered under the Federal Bank Holding Company Act of 1956
(the "Holding Company Act") or any non-bank affiliate thereof from sponsoring,
organizing or controlling a registered, open-end investment company continuously
engaged in the issuance of its shares, but do not prohibit such a holding
company or affiliate from acting as investment adviser, transfer agent and
custodian to such an investment company. In 1981, the United States Supreme
Court held in Board of Governors of the Federal Reserve System v. Investment
Company Institute that the Board did not exceed its authority under the Holding
Company Act when it adopted its regulation and interpretation authorizing bank
holding companies and their non-bank affiliates to act as investment advisers to
registered closed-end investment companies.
Bank of America believes that if the question were properly presented,
a court should hold that Bank of America may perform the services for the
Company contemplated by the investment advisory agreement, the Prospectuses, and
this Statement of Additional Information without violation of the Glass-Steagall
Act or other applicable banking laws or regulations. It should be noted,
however, that there have been no cases deciding whether a bank may perform
services comparable to those performed by Bank of America and future changes in
either federal or state statutes and regulations relating to
-56-
<PAGE> 88
permissible activities of banks or trust companies and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present and future statutes and regulations, could prevent
Bank of America from continuing to perform such services for the Company or from
continuing to purchase Company shares for the accounts of its customers.
For a discussion of the Glass-Steagall Act in connection with the
Company's Shareholder Services Plan, see "Shareholder Services Plan" in the
Prospectuses for Horizon Service Shares.
On the other hand, as described herein, the Funds are currently
distributed by the Distributor, and the Administrator, its parent, provides the
Company with administrative services. If current restrictions under the
Glass-Steagall Act preventing a bank from sponsoring, organizing, controlling or
distributing shares of an investment company were relaxed, the Company expects
that Bank of America would consider the possibility of offering to perform some
or all of the services now provided by the Administrator or the Distributor.
From time to time, legislation modifying such restriction has been introduced in
Congress which, if enacted, would permit a bank holding company to establish a
non-bank subsidiary having the authority to organize, sponsor and distribute
shares of an investment company. It is not possible, of course, to predict
whether or in what form such legislation might be enacted or the terms upon
which Bank of America or such a non-bank affiliate might offer to provide
services for consideration by the Company's Board of Directors.
ADMINISTRATOR
Concord Holding Corporation (the "Administrator"), with principal
offices at 125 West 55th Street, New York, New York 10019 and 3435 Stelzer Road,
Columbus, Ohio 43219, is a wholly-owned subsidiary of The BISYS Group, Inc. The
Administrator also serves as administrator to several other investment
companies.
The Administrator provides administrative services for the Funds as
described in their Prospectuses pursuant to a Basic Administrative Services
Agreement. The agreement will continue in effect with respect to each Fund until
October 31, 1996 and thereafter will be extended with respect to each Fund for
successive periods of one year, provided that each such extension is
specifically approved (a) by vote of a majority of those members of the
Company's Board of Directors who are not interested persons of any party to the
agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) the Company's Board of Directors or by vote of a majority of
the outstanding voting securities of such Fund. The agreement
-57-
<PAGE> 89
is terminable at any time without penalty by the Company's Board of Directors or
by a vote of a majority of a Fund's outstanding shares upon 60 days' notice to
the Administrator, or by the Administrator upon 90 days' notice to the Company.
For its services under the Basic Administrative Services Agreement,
the Administrator is entitled to receive an administration fee, accrued daily
and payable monthly, at the following annual rates: .10% of the first $7 billion
of each Fund's net assets, plus .09% of the next $3 billion of each Fund's net
assets, plus .08% of each Fund's net assets over $10 billion. From time to time,
the Administrator may waive fees or reimburse the Company for expenses, either
voluntarily or as required by certain state securities laws.
For the fiscal years ended February 28, 1993, February 28, 1994, and
February 28, 1995 the Administrator was paid, pursuant to the administration
agreement then in effect, administration fees (net of waivers) of $8,835,608,
$12,158,419, and $2,366,035, respectively, by the Prime Fund, $2,845,014,
$2,717,606, and $2,140,125, respectively, by the Treasury Fund and $466,339,
$472,766, and $501,956, respectively, by the Tax- Exempt Money Fund. For the
fiscal years ended February 28, 1993, February 28, 1994, and February 28, 1995,
the Administrator was paid, pursuant to the administration agreement then in
effect, administrative fees (net of waivers) of $104,656, $269,869, and
$301,618, respectively, by the California Tax-Exempt Money Market Fund. For the
fiscal years ended February 28, 1993, February 28, 1994, and February 28, 1995,
the Administrator did not effect any fee waivers or expense reimbursements with
respect to the Treasury Fund but did reimburse the Prime Fund and Tax-Exempt
Money Fund for expenses or waive fees in the amount of $0, $381,513 and $949,233
and $3,692, $23,524, and $11,611, respectively. For the fiscal years ended
February 28, 1993, February 28, 1994, and February 28, 1995 aggregate fee
waivers and expense reimbursements by the Administrator with respect to the
California Tax-Exempt Money Market Fund were $0, $22,998, and $0, respectively.
For the fiscal year ended February 28, 1994, the Government Fund and
Treasury Only Fund paid the Administrator (net of fee waivers), $877,515 and
$68,888, respectively. For this same period the Administrator waived fees due
from the Government Fund and Treasury Only Fund in the amounts of $6,537 and
$127,607, respectively and reimbursed the Funds $0 and $0, respectively. For the
fiscal year ended February 28, 1995, the Government Fund and Treasury Only Fund
paid the Administrator (net of fee waivers), $463,641 and $293,305,
respectively. For this same period the Administrator waived fees due from the
Government Fund and Treasury Only Fund in the amounts of $185,733 and $8,313,
respectively and reimbursed the Funds $0 and $0,
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respectively. For the fiscal year ended March 31, 1992 and the fiscal period
April 1, 1992 through February 28, 1993, pursuant to the administration
agreement then in effect, Signature Broker-Dealer Services, Inc., the former
administrator of the Predecessor Government and Treasury Only Funds (the "Former
Administrator"), accrued direct and indirect administrative fees of $252,708 and
$187,981, respectively, with respect to the Predecessor Government Fund of First
Cash Funds of America and $126,430 and $117,319, respectively, with respect to
the Predecessor Treasury Only Fund of First Cash Funds of America.
If total expenses borne by any Fund in any fiscal year exceed the
expense limitations imposed by applicable state securities regulations, the
Company may deduct from the payments to be made with respect to such Fund to
Bank of America and the Administrator, respectively, or Bank of America and the
Administrator each will bear, the amount of such excess to the extent required
by such regulations. Such amount, if any, will be estimated and accrued daily
and paid on a monthly basis. As of the date of this Statement of Additional
Information, the most restrictive expense limitation that may be applicable to
the Company limits aggregate annual expenses with respect to a Fund, including
management and advisory fees but excluding interest, taxes, brokerage
commissions, and certain other expenses, to 2 1/2% of the first $30 million of
its average daily net assets, 2% of the next $70 million and 1 1/2% of its
remaining average daily net assets. During the course of the Company's fiscal
year, the Administrator and Bank of America may assume certain expenses and/or
not receive payment of fees of one or more of the Company's Funds, while
retaining the ability to be reimbursed by such Funds for such amounts prior to
the end of the fiscal year. This will have the effect of increasing yield to
investors at the time such fees are not received or amounts are assumed and
decreasing yield when such fees or amounts are reimbursed.
The Administrator will bear all expenses in connection with the
performance of its services under the Basic Administrative Services Agreement
for the Funds with the exception of fees charged by The Bank of New York for
certain fund accounting services which are borne by the Funds. See "Custodian
and Transfer Agent" below. Expenses borne by the Company include taxes,
interest, brokerage fees and commissions, if any, fees of directors who are not
officers, directors, partners, employees or holders of 5% or more of the
outstanding voting securities of Bank of America or the Administrator or any of
their affiliates, Securities and Exchange Commission fees and state securities
qualification fees, advisory fees, administrative fees, fees payable to
Shareholder Organizations, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, outside auditing and legal
expenses, costs of maintaining corporate existence, costs
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attributable to investor services, including without limitation telephone and
personnel expenses, costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes, cost of shareholders' reports
and corporate meetings and any extraordinary expenses.
The Basic Administrative Services Agreement provides that the
Administrator shall not be liable for any error of judgment or mistake of law or
any loss suffered by any Fund in connection with the matters to which the
agreement relates, except a loss resulting from willful misfeasance, bad faith
or negligence in the performance of the Administrator's duties or from the
reckless disregard by the Administrator of its obligations and duties
thereunder.
Bank of America has received an option entitling it to purchase
approximately 4% of the Administrator's authorized common stock on or before
December 31, 1998.
DISTRIBUTOR
The Distributor acts as the exclusive distributor of the shares of
each of the Funds pursuant to a distribution agreement with the Company. Shares
are sold on a continuous basis by the Distributor as agent, although the
Distributor is not obliged to sell any particular amount of shares. No
compensation is payable by the Funds to the Distributor for its distribution
services. The distribution agreement shall continue in effect with respect to
each Fund until October 31, 1996. Thereafter, if not terminated, the
distribution agreement shall continue automatically for successive terms of one
year, provided that such continuance is specifically approved at least annually
(a) by a vote of a majority of those members of the Board of Directors of the
Company who are not parties to the distribution agreement or "interested
persons" of any such party, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the Board of Directors of the Company or
by vote of a "majority of the outstanding voting securities" of the Funds as to
which the distribution agreement is effective; provided, however, that the
distribution agreement may be terminated by the Company at any time, without the
payment of any penalty, by vote of a majority of the entire Board of Directors
of the Company or by a vote of a "majority of the outstanding voting securities"
of such Funds on 60 days' written notice to the Distributor, or by the
Distributor at any time, without the payment of any penalty, on 90 days' written
notice to the Company. This Agreement will automatically and immediately
terminate in the event of its "assignment."
For the period June 4, 1990 (commencement of operations) through March
31, 1991 (fiscal year end), the fiscal
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year ended March 31, 1992 and the period April 1, 1992 through February 28,
1993, Signature Broker-Dealer Services, Inc., which also served as the former
distributor of the Predecessor Government and Treasury Only Funds' shares, was
paid $2,814, $17,167 and $6,166, respectively by the Predecessor Government Fund
of First Cash Funds of America and $5,148, $5,746 and $2,680, respectively by
the Predecessor Treasury Only Fund of First Cash Funds of America as
reimbursement for expenses related to the distribution of such Predecessor
Funds' shares. No such fees will be charged to the Government Fund or the
Treasury Only Fund or to any other Fund.
CUSTODIAN AND TRANSFER AGENT
The Company has appointed The Bank of New York, 90 Washington Street,
New York, New York 10286, as custodian and Concord Financial Services, Inc., a
wholly-owned subsidiary of Concord Holding Corporation, located at First and
Market Building, 100 First Avenue, Suite 300, Pittsburgh, PA 15222, as transfer
and dividend disbursing agent for the Funds' Horizon Shares. BISYS Fund Services
Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-3035 serves as transfer and
dividend disbursing agent for the Funds' Horizon Service Shares. The Bank of New
York also provides the Company with certain accounting services pursuant to a
fund accounting services agreement with the Administrator. Under the fund
accounting services agreement, The Bank of New York has agreed to provide
certain accounting, bookkeeping, pricing, and dividend and distribution
calculation services with respect to the Company. The monthly fees charged by
the bank under the fund accounting agreement are borne by the Funds. The Company
and The Bank of New York have appointed Bank of America to act as sub-custodian
pursuant to a Sub-Custodian Agreement. As sub-custodian of the Company's assets,
Bank of America (i) maintains a separate account or accounts in the name of the
Company, (ii) holds and disburses portfolio securities on account of the
Company, (iii) makes receipts and disbursements of money on behalf of the
Company, (iv) collects and receives all income and other payments and
distributions on account of the Company's portfolio securities held by Bank of
America, (v) responds to correspondence from security brokers and others
relating to its duties, and (vi) makes periodic reports to the Company's Board
of Directors concerning its duties thereunder. Under the Sub-Custodian
Agreement, the Company will reimburse Bank of America for its costs and expenses
in providing services thereunder. Bank of America is the successor to Security
Pacific under the Sub-Custodian Agreement. For the fiscal years ended February
28, 1993, February 28, 1994 and February 28, 1995, Bank of America (and
Securities Pacific prior to April 22, 1992), in their capacity as sub-custodian,
did not hold any of the Company's assets and, accordingly, received no fees. For
its services as
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transfer and dividend disbursing agent to the Horizon Shares of the Prime,
Treasury, Government, Treasury Only, Tax-Exempt Money and California Tax-Exempt
Money Market Funds, Concord Financial Services, Inc. receives a fee, payable
monthly, at the annual rate of $15,000 per Fund. Each Fund also reimburses
Concord Financial Services, Inc. for any out-of-pocket expenses incurred as
transfer and dividend disbursing agent. For the fiscal year ended February 28,
1995, Concord Financial Services, Inc. received $27,063, $19,693, $17,873 and
$18,221 from the Prime Fund, Treasury Fund, Government Fund and Tax-Exempt
Fund, respectively, for services as transfer and dividend disbursing agent for
such funds Horizon Shares. Prior to March __, 1996, Horizon Shares of the
California Tax-Exempt Money Market Funds were not offered.
Bank of America and Seattle-First National Bank, an affiliate of Bank
of America, previously provided transfer agency, custodial and fund accounting
services for the Predecessor Government Funds and Predecessor Treasury Only
Funds. For the period June 4, 1990 (commencement of operations) through March
31, 1991 (fiscal year end), the fiscal year ended March 31, 1992 and the period
April 1, 1992 through February 28, 1993, Bank of America and Seattle-First
National Bank received directly and indirectly for such services $129,116,
$254,824 and $200,624, respectively, with respect to the Predecessor Government
Funds and $38,761, $114,630 and $100,225, respectively, with respect to the
Predecessor Treasury Only Funds.
TAXES
The following is only a summary of certain additional considerations
generally affecting the Funds and their shareholders that are not described in
the Prospectuses for the Funds. No attempt is made to present a detailed
explanation of the tax treatment of the Funds or their shareholders, and the
discussion here and in the Prospectuses is not intended as a substitute for
careful tax planning. Investors are advised to consult their tax advisers with
specific reference to their own tax situations.
ALL FUNDS
Each Fund will be treated as a separate corporate entity under the
Internal Revenue Code of 1986, as amended (the "Code"), and intends to qualify
as a "regulated investment company." By following this policy, each Fund expects
to eliminate or reduce to a nominal amount the federal income taxes to which it
may be subject. If for any taxable year a Fund of the Company does not qualify
for the special federal tax treatment afforded regulated investment companies,
all of the
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Fund's taxable income would be subject to tax at regular corporate rates
(without any deduction for distributions to shareholders). In such event, the
Fund's dividend distributions (including amounts derived from interest on
Municipal Securities in the case of the Tax-Exempt Money Fund and California
Tax- Exempt Money Market Fund) to shareholders would be taxable as ordinary
income to the extent of the current and accumulated earnings and profits of the
particular Fund and would be eligible for the dividends received deduction in
the case of corporate shareholders.
Qualification as a regulated investment company under the Code
requires, among other things, that each Fund distribute to its shareholders an
amount equal to at least the sum of 90% of its investment company taxable income
(if any) and 90% of its tax-exempt income (if any) net of certain deductions for
each taxable year. In general, a Fund's investment company taxable income will
be its taxable income, subject to certain adjustments and excluding the excess
of any net long-term capital gain for the taxable year over the net short-term
capital loss, if any, for such year. A Fund will be taxed on its undistributed
investment company taxable income, if any.
A Fund will not be treated as a regulated investment company under the
Code if 30% or more of the Fund's gross income for a taxable year is derived
from gains realized on the sale or other disposition of securities and certain
other investments held for less than three months (the "short-short test").
Interest (including original issue and accrued market discount) received by a
Fund upon maturity or disposition of a security held for less than three months
will not be treated as gross income derived from the sale or other disposition
of such security within the meaning of this requirement. However, any other
income that is attributable to realized market appreciation will be treated as
gross income from the sale or other disposition of securities for this purpose.
Any distribution of the excess of net long-term capital gains over net
short-term capital losses is taxable to shareholders as long-term capital gains,
regardless of how long the shareholder has held the distributing Fund's shares
and whether such gains are received in cash or additional Fund shares. The Fund
will designate such a distribution as a capital gain dividend in a written
notice mailed to shareholders after the close of the Fund's taxable year.
Ordinary income of individuals is taxable at a maximum nominal rate of
39.6%; however, because of limitations on itemized deductions otherwise
allowable and the phase-out of personal exemptions, the maximum effective
marginal rate of tax for some taxpayers may be higher. An individual's long-term
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capital gains are taxable at a maximum nominal rate of 28%. For corporations,
long-term capital gains and ordinary income are both taxable at a maximum
nominal rate of 35% (or at a maximum effective marginal rate of 39% in the case
of corporations having taxable income between $100,000 and $335,000).
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income for each calendar year and capital gain net income
(excess of capital gains over capital losses). Each Fund intends to make
sufficient distributions or deemed distributions of its ordinary taxable income
and any capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
The Company will be required in certain cases to withhold and remit to
the United States Treasury 31% of taxable dividends or gross sale proceeds paid
to shareholders (i) who have failed to provide a correct tax identification
number in the manner required, (ii) who are subject to withholding by the
Internal Revenue Service for failure to properly include on their return
payments of taxable interest or dividends or (iii) who have failed to certify to
the Company that they are not subject to backup withholding when required to do
so or that they are "exempt recipients."
At February 28, 1995, the Prime Fund, Treasury Fund, Government Fund,
Treasury Only Fund, Tax-Exempt Money Fund and California Tax-Exempt Money Market
Fund, had unused capital loss carryovers of approximately $2,764,492 (of which
$22,098 will expire in fiscal 1999, $1,171,786 will expire in fiscal 2002 and
$1,570,608 will expire in fiscal 2003), $239,007 (which will expire in fiscal
2002), $1,073,801 (of which $129,811 will expire in fiscal 2002 and $943,990
will expire in fiscal 2003), $113,421 (of which $21,276 will expire in fiscal
2002 and $92,145 will expire in fiscal 2003), $156,373 (of which $35,348 will
expire in fiscal 1997, $16,664 will expire in fiscal 1998, $14,011 will expire
in fiscal 2000, $71,218 will expire in fiscal 2002 and $19,132 will expire in
fiscal 2003) and $12,116 (of which $5,893 will expire in fiscal 2001 and $6,223
will expire in fiscal 2002) and $293,460 (of which $3,571 will expire in fiscal
2002 and $289,889 will expire in fiscal 2003), respectively, available for
federal income tax purposes to be applied against future capital gains, if any.
FEDERAL - TAX-EXEMPT MONEY FUND AND CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
The policy of the Tax-Exempt Money Fund and the California Tax-Exempt
Money Market Fund is to pay each year as exempt-interest dividends substantially
all the respective Fund's
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Municipal Securities interest income net of certain deductions. An
exempt-interest dividend is any dividend or part thereof (other than a capital
gains dividend) paid by a Fund and designated as an exempt-interest dividend in
a written notice mailed to shareholders after the close of the Fund's taxable
year. However, the aggregate amount of dividends so designated by the Fund
cannot exceed the excess of the amount of interest exempt from tax under Section
103 of the Code received by the Fund during the taxable year over any amounts
disallowed as deductions under Sections 265 and 171(a)(2) of the Code. The
percentage of total dividends paid for any taxable year which qualifies as
exempt-interest dividends will be the same for all shareholders receiving
dividends from the Fund for such year. In order for the Tax-Exempt Money Fund
and California Tax-Exempt Money Market Fund to pay exempt-interest dividends for
any taxable year, at the close of each quarter of the Fund's taxable year at
least 50% of the aggregate value of the Fund's assets must consist of
exempt-interest obligations.
Exempt-interest dividends may be treated by shareholders of the
Tax-Exempt Money Fund and the California Tax- Exempt Money Market Fund as items
of interest excludable from their gross income under Section 103(a) of the Code.
However, each shareholder is advised to consult his or her tax adviser with
respect to whether exempt-interest dividends would retain the exclusion under
Section 103(a) if such shareholder would be treated as a "substantial user" or a
"related person" to such user with respect to facilities financed through any of
the tax-exempt obligations held by the respective Funds. A "substantial user" is
defined under U.S. Treasury Regulations to include a non-exempt person who both
(1) regularly uses a part of such facilities in his or her trade or business and
(2) whose gross revenues derived with respect to the facilities financed by the
issuance of bonds are more than 5% of the total revenues derived by all users of
such facilities, who occupies more than 5% of the usable area of such facilities
or for whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. A "related person" includes certain related natural
persons, affiliated corporations, partners and partnerships and S corporations
and their shareholders. Interest on indebtedness incurred by a shareholder to
purchase or carry shares of the Fund generally is not deductible for federal
income tax purposes.
Income itself exempt from federal income taxation will be considered
in addition to adjusted gross income when determining whether Social Security
payments received by a shareholder are subject to federal income taxation.
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CALIFORNIA - CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
As a regulated investment company, the California Tax-Exempt Money
Market Fund will be relieved of liability for California state franchise and
corporate income tax to the extent the Fund's taxable income is distributed to
its shareholders. The Fund will be taxed on its undistributed taxable income. If
for any year the Fund does not qualify as a regulated investment company, all of
its taxable income (including interest income on California Municipal Securities
for franchise tax purposes only) may be subject to California state franchise or
income tax at regular corporate rates.
If, at the close of each quarter of its taxable year, at least 50% of
the value of the total assets of a regulated investment company, or series
thereof, consists of obligations the interest on which, if held by an
individual, is exempt from taxation by California ("California Exempt
Securities"), then the regulated investment company, or series of that company,
will be qualified to pay dividends exempt from California state personal income
tax to its non-corporate shareholders (hereinafter referred to as "California
exempt-interest dividends"). For this purpose, California Exempt Securities are
generally limited to California Municipal Securities and certain U.S. Government
and U.S. Possession obligations. "Series" of a regulated investment company is
defined as a segregated portfolio of assets, the beneficial interest in which is
owned by the holders of an exclusive class or series of stock of the company.
The California Tax-Exempt Money Market Fund intends to qualify under the above
requirements so that it can pay California exempt-interest dividends. If the
Fund does not so qualify, no part of its respective dividends to shareholders
will be exempt from the California state personal income tax.
Within sixty days after the close of its taxable year, the California
Tax-Exempt Money Market Fund will notify its respective shareholders of the
portion of the dividends paid by the Fund to each shareholder with respect to
such taxable year which is exempt from California state personal income tax. The
total amount of California exempt-interest dividends paid by the Fund with
respect to any taxable year cannot exceed the excess of the amount of interest
received by the Fund for such year on California Exempt Securities over any
amounts that, if the Fund were treated as an individual, would be considered
expenses related to tax exempt income or amortizable bond premium and would thus
not be deductible under federal income or California state personal income tax
law. The percentage of total dividends paid for any taxable year which qualifies
as California exempt- interest dividends will be the same for all shareholders
receiving dividends from the Fund for such year.
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In cases where shareholders are "substantial users" or "related
persons" with respect to California Exempt Securities held by the California
Tax-Exempt Money Market Fund, such shareholders should consult their tax
advisers to determine whether California exempt-interest dividends paid by the
Fund with respect to such obligations retain California state personal income
tax exclusion. In this connection rules similar to those regarding the possible
unavailability of federal exempt-interest dividend treatment to "substantial
users" are applicable for California state tax purposes. See "Additional
Information Concerning Taxes - Federal - Tax-Exempt Money Fund and California
Tax-Exempt Money Market Fund" above. Interest on indebtedness incurred by a
shareholder to purchase or carry California Tax-Exempt Money Market Fund shares
is not deductible for California state personal income tax purposes if the Fund
distributes California exempt-interest dividends during the shareholder's
taxable year.
The foregoing is only a summary of some of the important California
state personal income tax considerations generally affecting the California
Tax-Exempt Money Market Fund and its shareholders. No attempt is made to present
a detailed explanation of the California state personal income tax treatment of
the Fund or its shareholders, and this discussion is not intended as a
substitute for careful planning. Further, it should be noted that the portion of
any Fund dividends constituting California exempt-interest dividends is
excludable from income for California state personal income tax purposes only.
Any dividends paid to shareholders subject to California state franchise tax or
California state corporate income tax may therefore be taxed as ordinary or
capital gains dividends to such purchasers notwithstanding that all or a portion
of such dividends is exempt from California state personal income tax.
Accordingly, potential investors in the Fund, including, in particular,
corporate investors which may be subject to either California franchise tax or
California corporate income tax, should consult their tax advisers with respect
to the application of such taxes to the receipt of Fund dividends and as to
their own California state tax situation, in general.
OTHER INFORMATION
Depending upon the extent of activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business, a Fund
may be subject to the tax laws of such states or localities.
Exempt-interest dividends generally will be exempt from state and
local taxes as well. However, except as noted above with respect to California
state personal income tax, in some
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situations income distributions may be taxable to shareholders under state or
local law as dividend income even though all or a portion of such distributions
may be derived from interest on tax-exempt obligations or U.S. Government
obligations which, if realized directly, would be exempt from such income taxes.
Shareholders are advised to consult their tax advisers concerning the
application of state and local taxes.
The foregoing discussion is based on tax laws and regulations which
are in effect on the date of this Statement of Additional Information. Such laws
and regulations may be changed by legislative or administrative action.
YIELD INFORMATION
The "yields" and "effective yields" of each Fund are calculated
according to formulas prescribed by the Securities and Exchange Commission. The
standardized seven-day yield for each Fund's series of shares is computed
separately for each series by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account in the particular
Fund involved having a balance of one share at the beginning of the period,
dividing the net change in account value by the value of the account at the
beginning of the base period to obtain the base period return, and multiplying
the base period return by (365/7). The net change in the value of an account in
a Fund includes the value of additional shares purchased with dividends from the
original share, and dividends declared on both the original share and any such
additional shares, net of all fees, other than nonrecurring account or sales
charges, that are charged to all shareholder accounts in proportion to the
length of the base period and the Fund's average account size. The capital
changes to be excluded from the calculation of the net change in account value
are realized gains and losses from the sale of securities and unrealized
appreciation and depreciation. The effective annualized yields for each Fund are
computed by compounding a particular Fund's unannualized base period returns
(calculated as above) by adding 1 to the base period returns, raising the sums
to a power equal to 365 divided by 7, and subtracting 1 from the results. In
addition, the Tax-Exempt Money Fund and California Tax-Exempt Money Market Fund
may quote a standardized "tax-equivalent yield" for each of its series of shares
which is computed by: (a) dividing the portion of the Fund's yield (as
calculated above) for such series that is exempt from federal, or in the case of
the California Tax-Exempt Money Market Fund both federal and California state,
income tax by one minus a stated federal, or in the case of the California Tax-
Exempt Money Market Fund a combined federal and California state, income tax
rate; (b) with respect to the California Tax-Exempt Money Market Fund dividing
the portion of that Fund's yield (as
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calculated above) that is exempt from federal income tax only by one minus a
federal income tax rate, and (c) adding the figure resulting from (a) above
(with respect to the Tax-Exempt Money Fund) or from (a) and (b) above (with
respect to the California Tax-Exempt Money Market Fund) to that portion, if any,
of the Fund's yield for such series of shares that is not exempt from federal
income tax. The fees which may be imposed by institutions directly on their
customers for cash management services are not reflected in the Funds'
calculations of yields.
Based on the foregoing calculations, for the seven-day period ended
August 31, 1995, the yield (and effective yield) for Horizon Shares and the
Horizon Service Shares of the Prime Fund, Treasury Fund, Government Fund,
Treasury Only Fund, and Tax- Exempt Money Fund after fee waivers and expense
reimbursements by Bank of America and the Administrator, were as follows: Prime
Fund - Horizon Shares -- 5.64% (5.80%); Prime Fund - Horizon Service Shares --
5.39% (5.53%); Treasury Fund - Horizon Shares -- 5.52% (5.67%); Treasury Fund -
Horizon Service Shares -- 5.27% (5.41%); Government Fund - Horizon Shares --
5.40% (5.55%); Government Fund - Horizon Service Shares -- 5.15% (5.28%);
Treasury Only Fund - Horizon Service Shares -- 5.03% (5.16%); Tax-Exempt Money
Fund - Horizon Shares -- 3.48% (3.54%); and Tax-Exempt Money Fund - Horizon
Service Shares -- 3.23% (3.28%). For the same period, the tax-equivalent yield
for the Tax-Exempt Money Fund was 5.04% and 4.68% for Horizon Shares and for
Horizon Service Shares, respectively. The federal income tax rate used in
calculating the tax-equivalent yields of the Tax-Exempt Money Fund was 31%. The
annualized yield, effective yield and tax-equivalent yield (after fee waivers
and expense reimbursements) for Horizon Service Shares of the California Tax-
Exempt Money Market Fund was 3.14%, 3.19% and 4.81%, respectively for the
seven-day period ended August 31, 1995. The combined federal and California
income tax rate used in calculating the foregoing tax-equivalent yields was
34.70%. As of August 31, 1995, the Horizon Shares of the California Tax-Exempt
Money Market Fund had not been offered.
From time to time, the yields of the Funds may be quoted in and
compared to other mutual funds with similar investment objectives in
advertisements, shareholder reports or other communications to shareholders. The
Funds may also include calculations in such communications that describe
hypothetical investment results. (Such performance examples will be based on an
express set of assumptions and are not indicative of the performance of any
Fund.) Such calculations may from time to time include discussions or
illustrations of the effects of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on a Fund
investment are reinvested by being paid in additional Fund shares, any
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future income of a Fund would increase the value of the Fund investment more
quickly than if dividends or other distributions had been paid in cash. The
Funds may also include discussions or illustrations of the potential investment
goals of a prospective investor (including but not limited to tax and/or
retirement planning), investment management techniques, policies or investment
suitability of a Fund, economic conditions, legislative developments (including
pending legislation), the effects of inflation and historical performance of
various asset classes. From time to time advertisements or communications to
shareholders may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund), as well as the views
of the investment adviser as to current market, economic, trade and interest
rate trends, legislative, regulatory and monetary developments, investment
strategies and related matters believed to be of relevance to a Fund. The Funds
may also include in advertisements charts, graphs or drawings which illustrate
the potential risks and rewards of investment in various investment vehicles. In
addition, advertisements or shareholder communications may include a discussion
of certain attributes or benefits to be derived by an investment in a Fund and
may include testimonials as to the investment adviser's capabilities by clients.
Such advertisements or communications may include symbols, headlines or other
material which highlight or summarize the information discussed in more detail
therein. With proper authorization, a Fund may reprint articles (or excerpts)
written regarding the Fund and provide them to prospective shareholders.
Performance information with respect to the Funds is generally available by
calling (800) 346-2087.
In addition to the publications listed in the Funds' Prospectuses,
yield data as reported in the following publications may be used in comparing
the yields of the Funds to those of other mutual funds with similar investment
objectives: Business Week, Investor's Business Daily, Kiplinger, U.S. News,
Financial World, USA Today, Morningstar, Mutual Fund Monitor, and American
Banker.
GENERAL INFORMATION
Description of Shares
The Company is an open-end management investment company organized as
a Maryland corporation on October 27, 1982. The Fund's Charter authorizes the
Board of Directors to issue up to two hundred billion full and fractional shares
of capital stock. The Board of Directors has authorized the issuance of
twenty-two classes of stock - Classes A through W, Common Stock representing
interests in twenty-two separate investment
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portfolios. Each share of capital stock has a par value of $.001. This Statement
of Additional Information describes the Horizon and Horizon Service Shares of
the Prime, Treasury, Government, Treasury Only, Tax-Exempt Money and California
Tax-Exempt Money Market Funds.
Shares have no preemptive rights and only such conversion or exchange
rights as the Board may grant in its discretion. When issued for payment as
described in its prospectuses, the Company's shares will be fully paid and
non-assessable. For information concerning possible restrictions upon the
transferability of the Company's shares and redemption provisions with respect
to such shares, see "Purchase and Redemption Information" in this Statement of
Additional Information.
The Funds' Horizon Shares and Horizon Service Shares differ from
Pacific Horizon Shares in the following respects. Only Pacific Horizon Shares
are subject to the Special Management Services fee described in the prospectuses
for such shares, which is payable at the rate of .32% (on an annualized basis)
of the average daily net asset value of the Pacific Horizon Shares that are
outstanding from time to time. Only Horizon Service Shares bear the fees payable
under the Shareholder Services Plan described below, which are payable at the
rate of up to .25% (on an annualized basis) of the average daily net asset value
of the Horizon Service Shares that are outstanding from time to time. As a
result, at any given time, the net yield on a Fund's Horizon Shares will be
approximately .25% higher than the yield on that Fund's Horizon Service Shares
and .32% higher than the yield on the same Fund's Pacific Horizon Shares.
Standardized yield quotations will be computed separately for each series of
shares.
Holders of all outstanding shares of a particular Fund will vote
together in the aggregate and not by class on all matters, except that only
Horizon Service Shares of a Fund will be entitled to vote on matters submitted
to a vote of shareholders pertaining to the Fund's payments to Service
Organizations and only Pacific Horizon Shares of a Fund will be entitled to vote
on matters submitted to a vote of shareholders pertaining to the expenses that
are borne exclusively by such shares. Further, shareholders of all of the Funds,
as well as those of any other investment portfolio now or hereafter offered by
the Company, will vote together in the aggregate and not separately on a
Fund-by-Fund basis, except as otherwise required by law or when permitted by the
Board of Directors. Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted to the holders of the outstanding voting securities of
an investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by a majority of the outstanding shares
of each Fund affected by the matter. A
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Fund is affected by a matter unless it is clear that the interests of each Fund
in the matter are substantially identical or that the matter does not affect any
interest of the Fund. Under the Rule, the approval of an investment advisory
agreement or any change in a fundamental investment policy would be effectively
acted upon with respect to a Fund only if approved by a majority of the
outstanding shares of such Fund. However, the Rule also provides that the
ratification of independent public accountants, the approval of principal
underwriting contracts and the election of directors may be effectively acted
upon by shareholders of the Company voting in the aggregate without regard to
particular Funds.
Notwithstanding any provision of Maryland law requiring a greater vote
of the Company's common stock (or of the shares of a Fund voting separately as a
class) in connection with any corporate action, unless otherwise provided by law
(for example, by Rule 18f-2 discussed above) or by the Company's Charter, the
Company may take or authorize such action upon the favorable vote of the holders
of more than 50% of the outstanding common stock of the Company voting without
regard to class.
HORIZON SERVICE SHARES
As stated in the Prospectuses for such Shares, Horizon Service Shares
are sold to institutions ("Service Organizations") which enter into service
agreements requiring them to provide support services to their customers who
beneficially own Horizon Service Shares in consideration of the Funds' payment
of up to .25% (on an annualized basis) of the average daily net asset value of
the Horizon Service Shares beneficially owned by the customers. For the fiscal
years ended February 28, 1993, February 28, 1994, and February 28, 1995,
payments to Shareholder Organizations totalled $1,935,140, $2,029,346 and
$2,115,780, respectively, with respect to the Horizon Service Shares of the
Prime Fund, $758,331, $1,231,895 and $989,269, respectively, with respect to
Horizon Service Shares of the Treasury Fund, and $118,727, $118,946 and
$103,606, respectively, with respect to the Horizon Service Shares of the
Tax-Exempt Money Fund. Of these amounts, for the fiscal years indicated,
$1,578,092, $940,512 and $391,875, respectively, $716,174, $1,160,141 and
$224,434, respectively, and $95,544, $56,412 and $28,442, respectively, were
paid to Bank of America (Security Pacific prior to April 22, 1992) and/or its
(their) affiliates with respect to the Prime Fund, Treasury Fund and Tax-Exempt
Money Fund, respectively, and $0 was paid to the Administrator and/or its
affiliates with respect to the Prime Fund, Treasury Fund and Tax-Exempt Money
Fund, respectively.
For the fiscal year ended February 28, 1994, payments to Shareholder
Organizations totaled $884,419 and $323,937,
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respectively with respect to the Government Fund and Treasury Only Fund. Of
these amounts, $445,463 and $213,799, respectively was paid by the Government
Fund and Treasury Only Fund to Bank of America and/or its affiliates, and $0 and
$0, respectively was paid by the Government Fund and Treasury Only Fund to the
Administrator and/or its affiliates. In addition, during the same period, Bank
of America, the Administrator and Service Organizations waived fees totaling
$160,284 for the Government Fund and $171,993 for the Treasury Only Fund. For
the fiscal year ended February 28, 1995, payments to Shareholder Organizations
totaled $590,188 and $604,380, respectively, with respect to the Government Fund
and Treasury Only Fund. Of these amounts, $132,934 and $569,889, respectively,
were paid by the Government Fund and Treasury Only Fund to Bank of America
and/or its affiliates, and $0 was paid by the Government Fund and the Treasury
Only Fund to the Administrator and/or its affiliates.
Horizon Service Shares of the California Tax-Exempt Money Market Fund
were first offered on March 1, 1993. For the fiscal year ended February 28,
1994, payments to Service Organizations totalled $294,140. Of this amount
$226,495 was paid to Bank of America and/or its affiliates; and $0 was paid to
the Administrator and/or its affiliates. In addition, Bank of America, the
Administrator and/or its affiliates waived fees totaling $59,369. For the fiscal
year ended February 28, 1995, payments to Service Organizations totalled
$255,299 with respect to the California Tax-Exempt Money Market Fund. Of this
amount, $251,505 was paid to Bank of America and/or its affiliates, and $0 was
paid to the Administrator and/or its affiliates.
Services provided by Shareholder Organizations under service
agreements may include: (i) aggregating and processing purchase and redemption
requests for Horizon Service Shares from customers and placing net purchase and
redemption orders with the Distributor; (ii) providing customers with a service
that invests the assets of their accounts in Horizon Service Shares pursuant to
specific or pre-authorized instructions; (iii) processing dividend payments on
behalf of customers; (iv) providing information periodically to customers
showing their positions in Horizon Service Shares; (v) arranging for bank wires;
(vi) responding to customer inquiries relating to the services performed by the
Shareholder Organizations; (vii) providing subaccounting with respect to Horizon
Service Shares beneficially owned by customers or providing the information to
the Company necessary for subaccounting; (viii) if required by law, forwarding
shareholder communications from the Company (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to customers; (ix) forwarding to customers proxy statements and
proxies containing any proposals regarding the Company's
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arrangements with Shareholder Organizations; and (x) providing such other
similar services as requested by the Funds.
The Company's agreements with Shareholder Organizations are governed
by a Plan (called a "Shareholder Services Plan"). The Plan has been approved by
the Board of Directors of the Company, including a majority of the Directors who
are not "interested persons" of the Company as defined in the Investment Company
Act of 1940 and have no direct or indirect financial interest in the Plan or any
related service agreement (the "Disinterested Directors"). In approving the
Plan, the Directors determined that there was a reasonable likelihood that it
would be beneficial to each Fund and to the holders of its Horizon Service
Shares. The Plan will continue with respect to each Fund until October 31, 1996,
unless earlier terminated in accordance with its terms, and thereafter it will
continue in effect indefinitely provided that the Directors approve the Plan at
least annually in the manner described above.
Under the Plan, the Board of Directors must be provided with and must
review, at least quarterly, a written report of all amounts expended pursuant to
the Plan. The Plan and any service agreements implementing the Plan must be in
writing. The Plan may be terminated at any time with respect to any Fund by a
vote of the majority of the Disinterested Directors. Each service agreement
under the Plan is also terminable at any time without payment of any penalty by
a vote of a majority of the Disinterested Directors. Any material amendment of
the Plan must be approved by a majority vote of the Board of Directors and of
the Disinterested Directors cast in person at a meeting called for the purpose
of voting on the amendment.
With respect to the purchase or sale of portfolio securities and the
execution of portfolio transactions, no Fund will give preference to Shareholder
Organizations with which the Fund enters into service agreements.
First Cash Funds of America, pursuant to an Administrative Services
Plan, had previously entered into a shareholder servicing agreement with Bank of
America (and prior to that shareholder servicing agreement had entered into a
shareholder servicing agreement with Seattle-First National Bank, an affiliate
of Bank of America). Under the shareholder servicing agreement, Bank of America,
as shareholder servicing agent, or an affiliate of Bank of America pursuant to a
sub- shareholder servicing agreement, provided certain services to shareholders
in exchange for a fee from each Predecessor Fund of First Cash Funds of America
not in excess of .20% of the average daily net assets of such Predecessor Fund.
Such fees were actually incurred by the Predecessor Government Fund of First
Cash Funds of America at the effective annual rate of .12% of its
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average daily net assets and by the Predecessor Treasury Only Fund of First Cash
Funds of America at the effective annual rate of .06% of its average daily net
assets for the period ended February 28, 1993. For the period June 4, 1990
(commencement of operations) through March 31, 1991 (fiscal year end), the
fiscal year ended March 31, 1992 and the period April 1, 1992 through February
28, 1993, the Predecessor Government Fund and Predecessor Treasury Only Fund of
First Cash Funds of America, respectively, accrued shareholder servicing fees of
$269,126 (of which $46,068 was waived), $501,845 (of which $170,760 was waived)
and $378,058 (of which $138,771 was waived), respectively, and $76,982 (of which
$69,283 was waived), $253,503 (of which $164,166 was waived) and $234,373 (of
which $160,559 was waived), respectively.
COUNSEL
Drinker Biddle & Reath (of which W. Bruce McConnel, III, Secretary of
the Company, is a partner), 1345 Chestnut Street, Philadelphia National Bank
Building, Philadelphia, Pennsylvania 19107, serves as counsel to the Company and
will pass upon the legality of the shares offered hereby. O'Melveny & Myers, 400
South Hope Street, Los Angeles, California 90071, acts as special California
counsel for the Company and has reviewed the portions of the Prospectus and
Statement of Additional Information for the California Tax-Exempt Money Market
Fund concerning California taxes and the description of the special
considerations relating to California Municipal Securities.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, with offices at 1177 Avenue of the Americas, New
York, New York 10036, has been selected as independent accountants of each Fund
for the fiscal year ending February 28, 1996. Deloitte & Touche LLP served as
independent accountants for the Predecessor Government Funds and Predecessor
Treasury Only Funds for the 11-month period ended February 28, 1993, the fiscal
year ended March 31, 1992 and the period from June 4, 1990 (commencement of
operations) through March 31, 1991.
REPORTS
Each Fund will send its shareholders unaudited semi-annual reports
including a description of the Fund's investments, and annual financial
statements together with a report of independent accountants.
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SHAREHOLDER VOTE
As used in the Prospectuses and this Statement of Additional
Information, a "vote of a majority" of the outstanding shares of a Fund or a
particular series means, with respect to the approval of an investment advisory
agreement, a distribution plan or a change in a fundamental investment policy,
the affirmative vote of the lesser of (a) more than 50% of the outstanding
shares of the Fund or of the series, or (b) 67% of the shares of the Fund or of
the series present at a meeting at which more than 50% of the outstanding shares
of the Fund or series are represented in person or by proxy.
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Pacific Horizon Shares of
the Treasury Fund were as follows: Hare & Company, Bank of New York, Short Term
Investment Funds, Attn: Bimal Saha, One Wall Street, New York, NY 10286,
129,738,570.66 shares (9.91%); BA Investment Services, Inc., For the Benefit of
Clients, P.O. Box 7042, Attn: Unit #7852 - Bob Santilli, San Francisco, CA
94120, 187,236,422.96 shares (14.31%); and Bank of America State Trust Company,
299 N. Euclid Avenue, Pasadena, CA 91101, 879,468,871.56 shares (67.23%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Shares of the
Treasury Fund were as follows: Bank of America TTEE/Custodian For Investing in
Horizon Treasury Fund, Attn: Common Trust Funds Units, 8329, P.O. Box 3577
Terminal Annex, Los Angeles, CA 90051, 340,367,029.56 shares (11.76%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Service Shares of
the Treasury Fund were as follows: Omnibus Account Horizon for the Shareholder
Accounts Maintained By Concord Financial Services, Inc., Attn: Linda Zerbe,
First and Market Building, 100 First Avenue, Suite 300, Pittsburgh, PA 15222,
182,496,513.51 shares (17.82%); and Omnibus Account for the Shareholder Accounts
Maintained By Concord Financial Services, Inc., Attn: Linda Zerbe, First and
Market Building, 100 First Avenue, Suite 300, Pittsburgh, PA 15222,
321,226,413.93 shares (31.36%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Service Shares of
the California Tax-Exempt Money Market Fund were as follows: Omnibus Account For
the Shareholder Accounts Maintained By Concord Financial Services, Inc., Attn:
Linda Zerbe, First and Market Building, 100 First
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Avenue, Suite 300, Pittsburgh, PA 15222, 55,027,046.86 shares (33.60%); and BA
Investment Services, Inc., Attn: Bob Santilli, 185 Berry Street, 3rd Floor, Unit
7852, San Francisco, California 94107, 43,548,248.13 shares (7.21%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Pacific Horizon Shares of
the California Tax-Exempt Money Market Fund were as follows: Bank of America
National Trust and Savings Association, The Private Bank, Attn: Common Trust
Funds Unit #8329, P.O. Box 3577 Terminal Annex, Los Angeles, CA 90051,
30,906,970.67 shares (6.99%); and BA Investment Services, Inc., For the Benefit
of Clients, P.O. Box 7042, Attn: Unit #7852 - Bob Santilli, San Francisco, CA
94120, 370,355,176.96 shares (83.76%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Service Shares of
the Prime Fund were as follows: Omnibus Account For the Shareholder Accounts
Maintained By Concord Financial Services, Inc., Attn: Linda Zerbe, First and
Market Building, 100 First Avenue, Suite 300, Pittsburgh, PA 15222,
219,051,606.48 shares (15.53%); Omnibus Account for the Shareholder Accounts
Maintained By Concord Financial Services, Inc., Attn: Linda Zerbe, First and
Market Building, 100 First Avenue, Suite 300, Pittsburgh, PA 15222,
583,075,731.46 shares (41.34%); and Security Pacific Cash Management, c/o Bank
of America - GPO m/c 5533, 1850 Gateway Boulevard m/c 5533, Concord, CA 94520,
479,982,900 shares (9.59%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Shares of the Prime
Fund were as follows: Bank of America TTEE/Custodian For Investing in Horizon
Prime Funds, Attn: Common Trust Funds Unit 8329, P.O. Box 3577, Terminal Annex,
Los Angeles, CA 90051, 602,705,536.17 shares (20.83%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Pacific Horizon Shares of
the Prime Fund were as follows: Hare & Co. Bank of New York, Short Term
Investment Funds, Attn: Bimal Saha, One Wall Street, New York, NY 10286,
116,544,091.86 shares (6.05%); BA Investment Services, Inc., For the Benefit of
Clients, P.O. Box 7042, Attn: Unit #7852 - Bob Santilli, San Francisco, CA
94120, 1,314,518,652.69 shares (68.31%); and Bank of America State Trust
Company, 299 N. Euclid Avenue, Pasadena, CA 91101, 179,521,133.11 shares
(9.33%).
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At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Service Shares of
the Tax-Exempt Money Market Fund were as follows: Fatigue Technologies, Inc.,
Attn: Kevin Dooley, 100 Andover Park West, Seattle, WA 98138, 2,582,833.38
shares (5.36%); Bank of America Illinois Sweep, Attn: Jewel James, 231 South
LaSalle Street, Chicago, IL 60697, 5,000,000 shares (10.39%); Omnibus Account
for the Shareholder Accounts Maintained by Concord Financial Services, Inc.,
Attn: Linda Zerbe, First and Market Building, 100 First Avenue, Suite 300,
Pittsburgh, PA 15222, 21,318,681.46 shares (44.30%); Omnibus Account for the
Shareholder Accounts Maintained by Concord Financial Services, Inc., Attn: Linda
Zerbe, First and Market Building, 100 First Avenue, Suite 300, Pittsburgh, PA
15222, 3,038,268.73 shares (6.31%); and Bank of America Custodian for Investing
in Horizon Tax-Exempt Fund, Attn. Common Trust Funds. Unit 8329, P.O. Box 3577
Terminal Annex, Los Angeles, CA 90051, 115,395,847.74 shares (26.39%); and
Continental Bank Natl. Assn. Cust., FBO Cust & Co., Attn: Mary Chester, 231
South LaSalle Street 6Q, Chicago, IL 60697-0001, 174,128,061.4 shares (39.82%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Pacific Horizon Shares of
the Tax-Exempt Money Market Fund were as follows: BA Investment Services, Inc.,
For the Benefit of Clients, P.O. Box 7042, Attn: Unit #7852 - Bob Santilli, San
Francisco, California 94120, 49,103,295.68 shares (87.39%); and Bank of America
State Trust Company, 299 N. Euclid Avenue, Pasadena, California 91101,
5,534,888.99 shares (9.85%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Service Shares of
the Government Fund were as follows: COHU, Inc., 5755 Kearny Villa Road, San
Diego, CA 92123, 12,187,859.46 shares (5.60%); Perkins, Coie, Stone, Olsen &
Willi, Attn: Brennan J. Devine, 1201 Third Avenue, 40th FL, Seattle, WA 98101,
14,506,737.78 (6.67%); Toasty, Ltd., Leslie L. Alexander, One Greenway Plaza,
Suite 645, Houston, TX 77046, 12,847,594.83 shares (5.91%); Rocket Ball, Ltd.,
One Greenway Plaza, Suite 645, Houston, TX 77046, 15,022,454.78 shares (6.91%);
and Omnibus Account for the Shareholder Accounts Maintained By Concord Financial
Services, Inc., Attn: Linda Zerbe, First and Market Building, 100 First Avenue,
Suite 300, Pittsburgh, PA 15222, 38,579,041.68 shares (17.74%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Pacific Horizon Shares of
the Government Fund were as follows: Bank of America National Trust and Savings
Association, The Private Bank, Attn: ACI Unit #8329, P.O. Box 3577 Terminal
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Annex, Los Angeles, CA 90051, 65,616,870.55 shares (21.09%); and BA Investment
Services, Inc., For the Benefit of Clients, P.O. Box 7042, Attn: Unit #7852 -
Bob Santilli, San Francisco, California 94120, 198,966,023.95 shares (63.95%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Horizon Service Shares of
the Treasury Only Fund were as follows: National Home Mortgage Corp., Attn:
Mortgage Banking, Treasury Operations, 5565 Morehouse Drive 3rd FL, San Diego,
CA 92121, 12,801,637.68 shares (9.38%); Comcare, Inc., 4001 N. 3rd Street, Suite
120, Phoenix, AZ 85012, 18,619,366.33 shares (13.65%); Comcare, Inc., 4001 N.
3rd Street, Suite 120, Phoenix, AZ 85012, 7,425,544.39 shares (5.44%); Omnibus
Account for the Shareholder Accounts Maintained By Concord Financial Services,
Inc., Attn: Linda Zerbe, First and Market Building, 100 First Avenue, Suite 300,
Pittsburgh, PA 15222, 31,525,895.7 shares (23.12%); and BA Investment Services,
Inc., Attn: Bob Santilli, 185 Berry Street 3rd Floor Unit 7852, San Francisco,
CA 94107, 21,434,633.16 shares (5.38%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Pacific Horizon Shares of
the Treasury Only Fund were as follows: Bank of America National Trust and
Savings Association, The Private Bank, Attn: ACI Unit #8329, P.O. Box 3577
Terminal Annex, Los Angeles, CA 90051, 28,253,603.65 shares (10.85%); Bank of
America State Trust Co., 299 N. Euclid Avenue, Pasadena, CA 91101, 24,389,477.13
shares (9.37%); Hare & Co., Bank of New York, Short Term Investment Funds, Attn:
Bimal Saha, One Wall Street, New York, NY 10286, 24,091,542.54 shares (9.25%);
and BA Investment Services, Inc., For the Benefit of Clients, P.O. Box 7042,
Attn: Unit #7852 - Bob Santilli, San Francisco, CA 94120, 154,869,688.24 shares
(59.52%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Class A Shares of the
National Municipal Bond Fund were as follows: BA Investment Services, Inc., FBO
405084421, 555 California Street, 4th FL #2640, San Francisco, CA 94104,
56,270.593 shares (5.59%); and BA Investment Services, Inc., FBO 407021281, 185
Berry Street, 3rd FL #2640, San Francisco, CA 94104, 50,388,324 shares (5.00%).
At November 30, 1995, the name, address and share ownership of the
entities which held more than 5% of the outstanding Class A Shares of the
Corporate Bond Fund were as follows: Dean Witter Reynolds, Inc., Attn: Stanley
Worksman, Stock Record Dept. 5th, 5 World Trade Center, New York, NY 10048,
118,064 shares (5.96%); and Smith Barney, Inc. CUST,
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388 Greenwich 16th FL, New York, NY 10013, 128,824.633 shares (6.50%).
At such date, no other person was known by the Company to hold of
record or beneficially more than 5% of the outstanding shares of any investment
portfolio of the Company.
The Prospectuses relating to the Horizon Shares and Horizon Service
Shares and this Statement of Additional Information omit certain information
contained in the Company's registration statement filed with the Securities and
Exchange Commission. Copies of the registration statement, including
items omitted herein, may be obtained from the Commission by
paying the charges prescribed under its rules and regulations.
FINANCIAL STATEMENTS AND EXPERTS
The Annual Reports for each Fund for their fiscal year or periods
ended February 28, 1995 and the Semi-Annual Reports for the period ended August
31, 1995 (the "Annual Reports" and "Semi-Annual Reports" respectively) accompany
this Statement of Additional Information. The financial statements and notes
thereto in each Annual Report and Semi-Annual Report are incorporated into this
Statement of Additional Information by reference. The financial statements and
notes in each Annual Report have been audited by Price Waterhouse LLP, whose
report thereon also appears in each Annual Report and is also incorporated
herein by reference. Such financial statements have been incorporated herein in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The financial highlights and financial statements for the 11-month
period ended February 28, 1993, the fiscal year ended March 31, 1992 and the
period June 4, 1990 through March 31, 1991 of the Predecessor Government Fund
and Predecessor Treasury Only Fund of First Cash Funds of America, as well as
of the Government Money Trust and Treasury Money Trust in which said Funds
invested included in the Prospectus for the Government Fund and Treasury Only
Fund (with regard to the financial highlights) and incorporated by reference in
this Statement of Additional Information (with regard to the financial
statements), have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports, which are incorporated herein by reference.
The financial statements and financial highlights audited by Deloitte & Touche
LLP have been incorporated herein by reference (with regard to the financial
statements) and included herewith (with regard to the financial highlights) in
reliance on the report given on their authority as experts in accounting and
auditing.
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APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt considered short-term in the relevant
market. The following summarizes the rating categories used by Standard and
Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory. However,
the relative degree of safety is not as high as for issues designated "A-1."
"A-3" - Issue has an adequate capacity for timely payment. It is,
however, somewhat more vulnerable to the adverse effects of changes and
circumstances than an obligation carrying a higher designation.
"B" - Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are considered
to have a superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protection; broad margins in earning
coverage of fixed financial charges and high internal cash generation; and well
established access to a range of financial markets and assured sources of
alternate liquidity.
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"Prime-2" - Issuer or related supporting institutions are considered
to have a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
"D-3" - Debt possesses satisfactory liquidity, and other protection
factors qualify issue as investment grade. Risk
A-2
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factors are larger and subject to more variation. Nevertheless, timely payment
is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.
Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years. The following
summarizes the rating categories used by Fitch for short-term obligations:
"F-1+" - Securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues assigned
this rating reflect an assurance of timely payment only slightly less in degree
than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and "F-1" categories.
"F-3" - Securities possess fair credit quality. Issues assigned this
rating have characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause these
securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues assigned this
rating have characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial and
economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term ratings to
indicate that the rating is based upon a letter of credit issued by a commercial
bank.
Thomson BankWatch short-term ratings assess the likelihood of an
untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one
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year or less which is issued by United States commercial banks, thrifts and
non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the ratings used by Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's highest
rating category and indicates a very high degree of likelihood that principal
and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of safety
regarding timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment grade
category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
capacity to service principal and interest in a timely fashion is considered
adequate.
"TBW-4" - This designation indicates that the debt is regarded as
non-investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1+" - Obligations supported by the highest capacity for timely
repayment.
"A1" - Obligations are supported by the highest capacity for timely
repayment.
"A2" - Obligations are supported by a satisfactory capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
"A3" - Obligations are supported by a satisfactory capacity for timely
repayment. Such capacity is more susceptible to adverse changes in business,
economic or financial conditions than for obligations in higher categories.
"B" - Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial conditions.
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"C" - Obligations for which there is an inadequate capacity to ensure
timely repayment.
"D" - Obligations which have a high risk of default or which are
currently in default.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small degree.
"A" - Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but currently has
the capacity to meet interest payments and
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principal repayments. Adverse business, financial or economic conditions will
likely impair capacity or willingness to pay interest and repay principal. The
"B" rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BB" or "BB-" rating.
"CCC" - Debt has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no interest
is being paid.
"D" - Debt is in payment default. This rating is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S & P believes such payments
will be made during such grace period. "D" rating is also used upon the filing
of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid, and
certain other obligations that S & P believes may experience high volatility or
high variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are
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generally referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A" - Bonds possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in
default.
Con. (---) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the issuer ranks in the
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higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issuer ranks at the lower end of
its generic rating category.
The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt rated
"B" possesses the risk that obligations will not be met when due. Debt rated
"CCC" is well below investment grade and has considerable uncertainty as to
timely payment of principal, interest or preferred dividends. Debt rated "DD" is
a defaulted debt obligation, and the rating "DP" represents preferred stock with
dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong
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as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are
not significantly vulnerable to foreseeable future developments, short-term debt
of these issuers is generally rated "F-1+."
"A" - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - Bonds that possess
one of these ratings are considered by Fitch to be speculative investments. The
ratings "BB" to "C" represent Fitch's assessment of the likelihood of timely
payment of principal and interest in accordance with the terms of obligation for
bond issues not in default. For defaulted bonds, the rating "DDD" to "D" is an
assessment of the ultimate recovery value through reorganization or liquidation.
To provide more detailed indications of credit quality, the Fitch
ratings from and including "AA" to "C" may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major rating
categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk albeit not very significantly.
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"A" - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions may lead
to increased investment risk.
"BBB" - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial conditions
are more likely to lead to increased investment risk than for obligations in
higher categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one of
these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree of
speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating to
denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers. The following summarizes the
rating categories used by Thomson BankWatch for long-term debt ratings:
"AAA" - This designation represents the highest category assigned by
Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk compared
to issues rated in the highest category.
"A" - This designation indicates that the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB"
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are, however, more vulnerable to adverse developments (both internal and
external) than obligations with higher ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned by
Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
MUNICIPAL NOTE RATINGS
A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
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"MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality,
with margins of protection ample although not so large as in the preceding
group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
"SG" - Loans bearing this designation are of speculative quality and
lack margins of protection.
Fitch and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.
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FORM N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Included in Part A hereof:
Financial Highlights for:
- Tax-Exempt Money Fund
- California Tax-Exempt Money Market Fund
(2) Included in Part B hereof:
- The audited financial statements, related notes thereto
and the Auditor's reports thereon included in the
Registrant's Annual Report to Horizon and Horizon Service
Shareholders of the Prime, Treasury, Government, Treasury
Only, and Tax-Exempt Money Funds and Horizon Service
Shareholders of the California Tax-Exempt Money Market Fund
(the "Funds") dated February 28, 1995 are incorporated
herein by reference.
- The unaudited financial statements and related notes
thereto included in the Registrant's Semi-Annual Report to
Horizon and Horizon Service Shareholders of the Prime,
Treasury, Government, and Treasury Only Funds dated August
31, 1995 are incorporated herein by reference.
- The unaudited financial statements and related notes
thereto included in the Registrant's Semi-Annual Report to
Horizon and Horizon Service Shareholders of the Tax-Exempt
Money Fund and Horizon Service Shareholders of the
California Tax-Exempt Money Market Fund are incorporated
herein by reference.
(3) Incorporated by reference in Part B hereof with regards to
the Predecessor Government Fund and Predecessor Treasury
Only Fund:
First Funds of America - Treasury Money Fund
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- Statement of Assets and Liabilities - February 28, 1993
- Statement of Operations for the 11 month period ended
February 28, 1993
- Statements of Changes in Net Assets for the 11-month
period ended February 28, 1993 and the year ended March 31,
1992
- Per Share and Other Data for the 11-month period ended
February 28, 1993, the year ended March 31, 1992 and the
period from June 4, 1990 (commencement of operations) to
February 28, 1993
- Notes to Financial Statements
- 11 month period ended February 28, 1993, year ended March
31, 1992 and period from June 4, 1990 (commencement of
operations) to March 31, 1991
- Independent Auditors' Report March 1, 1993
First Cash Funds of America - Treasury Portfolio
- Statement of Assets and Liabilities - February 28, 1993
- Statement of Operations for the 11-month period ended
February 28, 1993
- Statements of Changes in Net Assets for the 11-month
period ended February 28, 1993 and the year ended March 31,
1992
- Per Share and Other Data for the 11-month period ended
February 28, 1993, the year ended March 31, 1992 and the
period from June 4, 1990 (commencement of operations) to
March 31, 1991 Notes to Financial Statements
- 11-month period ended February 28, 1993, year ended March
31, 1992 and period from June 4, 1990 (commencement of
operations) to March 31, 1991
- Independent Auditors' Report March 1, 1993
Treasury Money Trust
- Portfolio of Investments - February 28, 1993
- Statement of Assets and Liabilities - February 28, 1993
- Statement of Operations for the 11-month period ended
February 28, 1993
- Statements of Changes in Net Assets for the 11-month
period ended February 28, 1993 and year ended March 31,
1992
- Supplementary Data for the 11-month period ended February
28, 1993, the year ended March
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31, 1992 and the period from June 4, 1990 (commencement of
operations) to March 31, 1991 Notes to Financial Statements
- 11-month period ended February 28, 1993, year ended March
31, 1992 and period from June 4, 1990 (commencement of
operations) to March 31, 1991
- Independent Auditors' Report March 1, 1993
First Funds of America - Government Money Fund
- Statement of Assets and Liabilities February 28, 1993
- Statement of Operations for the 11-month period ended
February 28, 1993
- Statements of Changes in Net Assets for the 11-month
period ended February 28, 1993 and year ended March 31,
1992 Per Share and Other Data for the 11-month period ended
February 28, 1993, year ended March 31, 1992 and the period
from June 4, 1990 (commencement of operations) to March 31,
1991 Notes to Financial Statements
- 11-month period ended February 28, 1993, year ended March
31, 1992 and period from June 4, 1990 (commencement of
operations) to March 31, 1991
- Independent Auditors' Report March 1, 1993
First Cash Funds of America - Government Portfolio
- Statement of Assets and Liabilities February 28, 1993
- Statement of Operations for the 11-month period ended
February 28, 1993
- Statements of Changes in Net Assets for the 11-month
period ended February 28, 1993 and year ended March 31,
1992 Per Share and Other Data for the 11-month period ended
February 28, 1993, year ended March 31, 1992 and the period
from June 4, 1990 (commencement of operations) to March 31,
1991
Notes to Financial Statements
- 11-month period ended February 28, 1993, year ended March
31, 1992 and period from June 4, 1990 (commencement of
operations) to March 31, 1991
- Independent Auditors' Report March 1, 1993
Government Money Trust
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- Portfolio of Investments - February 28, 1993
- Statement of Assets and Liabilities February 28, 1993
- Statement of Operations for the 11-month period ended
February 28, 1993, Statements of Changes in Net Assets for
the 11-month period ended February 28, 1993 and year ended
March 31, 1992
- Supplementary Data for the 11-month period ended February
28, 1993, year ended March 31, 1992 and the period June 4,
1990 (commencement of operations) to March 31, 1991
Notes to Financial Statements
- 11-month period ended February 28, 1993, year ended March
31, 1992 and period from June 4, 1990 (commencement of
operations) to March 31, 1991
- Independent Auditors' Report March 1, 1993
(b) Exhibits:
(1) (a) Restated Articles of Incorporation filed November 22,
1983 are incorporated by reference to Exhibit (1) to
Pre-Effective Amendment No. 1 to the Registration
Statement of the Registrant on Form N-1A (No. 2-81110)
filed December 21, 1983 ("Pre-Effective Amendment No.
1").
(b) Articles Supplementary filed January 9, 1986 are
incorporated by reference to Exhibit (1)(b) to
Post-Effective Amendment No. 5 to the Registration
Statement of the Registrant on Form N-1A (No.2-81110)
filed April 29, 1988 ("Post-Effective Amendment No.
5").
(c) Articles Supplementary to increase authorized capital
stock filed August 31, 1989 are incorporated by
reference to Exhibit (1)(c) to Pre-Effective Amendment
No. 2 to the Registration Statement of the Registrant
on Form N-14 (No. 33-31539) filed on November 24, 1989
("Pre-Effective Amendment No. 2 on Form N-14").
(d) Articles Supplementary classifying shares filed August
31, 1989 are
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incorporated by reference to Exhibit (1)(d) to
Pre-Effective Amendment No. 2 on Form N-14.
(e) Articles Supplementary classifying shares filed June
3, 1991 are incorporated by reference to Exhibit
(1)(e) to Post-Effective Amendment No. 12 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed June 28, 1991 ("Post-Effective
Amendment No. 12").
(f) Articles Supplementary classifying and reclassifying
shares filed August 1, 1991 are incorporated by
reference to Exhibit (1)(f) to Post-Effective
Amendment No. 13 to the Registration Statement of the
Registrant on Form N-1A (No. 2-81110) filed August 30,
1991 ("Post-Effective Amendment No. 13").
(g) Articles Supplementary to increase authorized capital
stock filed August 16, 1991 are incorporated by
reference to Exhibit (1)(g) to Post-Effective
Amendment No. 13.
(h) Articles Supplementary classifying shares filed August
16, 1991 are incorporated by reference to Exhibit
(1)(h) to Post-Effective Amendment No. 13.
(i) Articles Supplementary classifying shares filed
November 25, 1991 are incorporated by reference to
Exhibit (1)(i) to Post-Effective Amendment No. 14 to
the Registration Statement of the Registrant on Form
N-1A (No. 2-81110) filed May 1, 1992 ("Post-Effective
Amendment No. 14").
(j) Articles Supplementary classifying shares filed May
11, 1992 are incorporated by reference to Exhibit
(1)(j) to Post-Effective Amendment No. 15 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed July 22, 1992 ("Post-Effective
Amendment No. 15").
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<PAGE> 129
(k) Articles Supplementary reclassifying shares filed May
15, 1992 are incorporated by reference to Exhibit
(1)(k) to Post-Effective Amendment No. 15.
(l) Articles Supplementary classifying shares filed July
20, 1992 are incorporated by reference to Exhibit
(1)(l) to Post-Effective Amendment No. 15.
(m) Articles Supplementary to increase authorized capital
stock filed August 6, 1992 are incorporated by
reference to Exhibit (1)(m) to the Registration
Statement of the Registrant on Form N-14 (No.
33-54052) filed October 30, 1992 ("1992 Form N-14 No.
1").
(n) Articles Supplementary classifying shares filed August
6, 1992 are incorporated by reference to Exhibit
(1)(n) to 1992 Form N-14 No. 1.
(o) Articles Supplementary classifying shares filed March
3, 1993 are incorporated by reference to Exhibit
(1)(o) to Post-Effective Amendment No. 21 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed April 30, 1993 ("Post-Effective
Amendment No. 21").
(p) Articles Supplementary reclassifying shares filed May
12, 1993 are incorporated by reference to Exhibit (1)
(p) to Post-Effective Amendment No. 22 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed May 17, 1993.
(q) Articles of Amendment eliminating restriction on
number of classes of shares filed May 8, 1990 are
incorporated by reference to Exhibit (1)(e) to
Post-Effective Amendment No. 11 to the Registration
Statement of the Registrant on Form N-1A (No. 2-81110)
filed May 31, 1990 ("Post-Effective Amendment No.
11").
(r) Articles of Amendment reclassifying shares filed on
July 9, 1993 are incorporated by reference to Exhibit
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<PAGE> 130
(1)(r) to Post-Effective Amendment No. 30 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed November 19, 1993 ("Post-Effective
Amendment No. 30").
(s) Articles Supplementary classifying shares filed
November 18, 1993 are incorporated by reference to
Exhibit (1)(s) to Post-Effective Amendment No. 30.
(t) Articles Supplementary reclassifying shares filed
November 18, 1993 are incorporated by reference to
Exhibit (1)(t) to Post-Effective Amendment No. 30.
(u) Articles Supplementary reclassifying shares filed
January 21, 1994 is incorporated herein by reference
to Exhibit 1(u) to Post-Effective Amendment No. 36 to
the Registrant's Registration Statement on Form N-1A
filed May 2, 1994.
(2) (a) Amended By-Laws dated January 15, 1987 are
incorporated by reference to Exhibit (2) to
Post-Effective Amendment No. 4 to the Registration
Statement of the Registrant on Form N-1A (No.
2-81110) filed April 30, 1987 ("Post-Effective
Amendment No. 4").
(b) Amendment to By-Laws dated July 17, 1987 as approved
byRegistrant's Board of Directors is incorporated by
reference to Exhibit 2(b) to Post-Effective Amendment
No. 5.
(c) Amendment to By-Laws as approved by the Registrant's
Board of Directors on March 30, 1989 is incorporated
by reference to Exhibit (2)(c) to Pre-Effective
Amendment No. 2 on Form N- 14.
(d) Amendment to By-Laws as approved by the Registrant's
Board of Directors on January 29, 1990 is incorporated
by reference to Exhibit (2)(d) to Post-Effective
Amendment No. 11.
(3) None.
C-7
<PAGE> 131
(4) (a) Specimen copy of share certificate for all Classes and
Series of Shares is incorporated by reference to
Exhibit (4)(a) to Post-Effective Amendment No. 37.
(5) (a) Investment Advisory Agreement dated as of April 22,
1992 between Registrant and Bank of America National
Trust and Savings Association (Money Market Funds) is
incorporated by reference to Exhibit (5)(a) to
Post-Effective Amendment No. 14.
(b) Investment Advisory Agreement dated as of April 22,
1992 between Registrant and Bank of America National
Trust and Savings Association (Non-Money Market Funds)
is incorporated by reference to Exhibit (5)(b) to
Post-Effective Amendment No. 14.
(c) Addendum to Investment Advisory Agreement dated as of
March 1, 1993 between Registrant and Bank of America
National Trust and Savings Association (Money Market
Funds - Prime Value Fund) is incorporated by reference
to Exhibit (5)(c) to Post-Effective Amendment No. 21.
(d) Addendum to Investment Advisory Agreement dated as of
March 1, 1993 between Registrant and Bank of America
National Trust and Savings Association (Money Market
Funds - Government and Treasury Only Funds) is
incorporated by reference to Exhibit (5)(d) to
Post-Effective Amendment No. 19.
(e) Investment Advisory Agreement dated November 1, 1994
between Registrant and Bank of America with respect to
the Capital Income Fund is incorporated by reference
to Exhibit 5(g) to Post-Effective Amendment No. 38 to
the Registration Statement of the Registrant on Form
N-1A (No. 2-81110) filed February 1, 1995
("Post-Effective Amendment No. 38").
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<PAGE> 132
(6) (a) Distribution Agreement between the Registrant and
Concord Financial Group, Inc is incorporated by
reference to Exhibit (6)(a) to Post-Effective
Amendment No. 37.
(b) Agreement relating to the Distribution Agreement
between Registrant and Concord Financial Group, Inc.
is incorporated by reference to Exhibit (6)(b) to
Post-Effective Amendment No. 40 to the Registration
Statement on Form N-1A (No.2-81110) filed June 21,
1995 ("Post-Effective Amendment No. 40")
(c) Form of Broker/Dealer Agreement is incorporated by
reference to Exhibit 15(a) to Post-Effective
Amendment No. 5.
(d) Form of Bank Agreement is incorporated by reference to
Exhibit 15(d) to Post-Effective Amendment No. 6 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed June 30, 1988 ("Post-Effective
Amendment No. 6").
(e) Form of Amended and Restated Distribution Agreement is
incorporated by reference to Exhibit (6)(e) to
Post-Effective Amendment No. 42 to the Registration
Statement of the Registrant on Form N-1A (No. 2-81110)
filed July 31, 1995 ("Post-Effective Amendment No.
42").
(7) Board Guidelines on Significant Governance Issues
(which includes a description of the Board of
Director's retirement policy and benefit) is
incorporated by reference to Exhibit 7 to
Post-Effective Amendment No. 39 to the Registration
Statement of the Registrant on Form N-1A (No. 2-81110)
Filed April 28, 1995 ("Post-Effective Amendment No.
39").
(8) (a) Custody Agreement between Registrant and The Bank of
New York dated as of April 3, 1989 is incorporated by
reference to Exhibit (8)(a) to Post-Effective
Amendment No. 11.
C-9
<PAGE> 133
(b) Amendment No. 1 to Custody Agreement between
Registrant and The Bank of New York dated as of March
30, 1990 is incorporated by reference to Exhibit
(8)(b) to Post-Effective Amendment No. 11.
(c) Custodian Services Agreement between Registrant and
PNC Bank, N.A. is incorporated by reference to Exhibit
(8)(c) to Post-Effective Amendment No. 37.
(d) Form of Transfer Agency Agreement between Registrant
and BISYS Fund Services Ohio, Inc. is incorporated by
reference to Exhibit 8(d) to Post-Effective Amendment
No. 43 to the Registration Statement of the Registrant
on Form N-1A (No. 2-81110) filed on December 15, 1995.
(e) Sub-Custodian Agreement between Registrant, The Bank
of New York, and Security Pacific National Bank dated
as of March 21, 1984 is incorporated by reference to
Exhibit 8(c) to Post-Effective Amendment No. 1 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed on October 12, 1984.
(f) Sub-Custodian Agreement between The Bank of New York
and Citibank, N.A. dated May 18, 1988 as approved by
Registrant's Board of Directors on March 27, 1990 is
incorporated by reference to Exhibit (8)(f) to
Post-Effective Amendment No. 11.
(g) Form of Sub-Custody Agreement between The Bank of New
York and Bank of America National Trust and Savings
Association is incorporated by reference to Exhibit
(8)(i) to Post-Effective Amendment No. 37.
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<PAGE> 134
(9) (a) Basic Administrative Services Agreement between
Registrant and Concord Holding Corporation (Money
Market Funds) dated as of November 13, 1989 is
incorporated by reference to Exhibit (13)(c) to
Pre-Effective Amendment No. 2 on Form N-14.
(b) Amendment No. 1 to Basic Administrative Services
Agreement between Registrant and Concord Holding
Corporation (Money Market Funds) dated November 1,
1991 is incorporated by reference to Exhibit (9)(b) to
Post-Effective Amendment No. 14.
(c) Amendment No. 2 to Basic Administrative Services
Agreement dated as of March 1, 1993 between Registrant
and Concord Holding Corporation (Money Market Funds)
is incorporated by reference to Exhibit (9)(c) to
Post-Effective Amendment No. 19.
(d) Amendment No. 3 to Basic Administrative Services
Agreement dated as of March 1, 1993 between Registrant
and Concord Holding Corporation is incorporated by
reference to Exhibit (9)(c) to Post-Effective
Amendment No. 21.
(e) Amendment No. 4 to Basic Administrative Services
Agreement dated November 1, 1993 between Registrant
and Concord Holding Corporation is incorporated by
reference to Exhibit (9)(w) to Post-Effective
Amendment No. 30.
(f) Agreement relating to the Basic Administrative
Services Agreement between Registrant and Concord
Holding Corporation is incorporated by reference to
Exhibit (9)(f) to Post-Effective Amendment No. 40.
(g) Special Management Services Agreement among
Registrant, Concord Holding Corporation and Bank of
America National Trust and Savings Association (Money
Market Funds) dated as of April 22, 1992 is
incorporated by reference to Exhibit (9)(d) to
Post-Effective Amendment No. 14.
C-11
<PAGE> 135
(h) Amendment No. 1 to Special Management Services
Agreement dated as of March 1, 1993 between
Registrant, Concord Holding Corporation and Bank of
America National Trust and Savings Association (Money
Market Funds) is incorporated by reference to Exhibit
(9)(f) to Post-Effective Amendment No. 19.
(i) Amendment No. 2 to Special Management Services
Agreement dated as of March 1, 1993 among Registrant,
Concord Holding Corporation and Bank of America
National Trust and Savings Association (Money Market
Funds) is incorporated by reference to Exhibit (9)(g)
to Post-Effective Amendment No. 21.
(f) Amendment No. 3 to Special Management Services
Agreement dated as of April 1, 1993 among Registrant,
Concord Holding Corporation and Bank of America
National Trust and Savings Association (Money Market
Funds) is incorporated by reference to Exhibit (9)(h)
to Post-Effective Amendment No. 21.
(g) Amendment No. 4 to Special Management Services
Agreement among Registrant, Concord Holding
Corporation and Bank of America National Trust and
Savings Association (Money Market Funds) is
incorporated by reference to Exhibit (9)(i) to
Post-Effective Amendment No. 37.
(h) Agreement relating to the Special Management Services
Agreement among Registrant, Concord Holding
Corporation and Bank of America National Trust and
Savings Association (Money Market Funds) is
incorporated by reference to Exhibit 9(l) to
Post-Effective Amendment No. 40.
(i) Administration Agreement between Registrant and
Concord Holding Corporation (Non-Money Market Funds)
dated as of November 13, 1989 is incorporated by
reference to Exhibit (13)(e) to Pre-Effective
Amendment No. 2 on Form N-14.
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<PAGE> 136
(j) Amendment No. 1 to Administration Agreement between
Registrant and Concord Holding Corporation (Aggressive
Growth Fund, U.S. Government Securities Fund, Capital
Income Fund and California Tax-Exempt Bond Fund) dated
as of November 1, 1991 is incorporated by reference to
Exhibit (9)(g) to Post-Effective Amendment No. 14.
(k) Proposed revised Amendment No. 2 to Administration
Agreement between Registrant and Concord Holding
Corporation (non-Money Market Funds) is incorporated
herein by reference to Exhibit (9)(l) of
Post-Effective Amendment No. 28 to the Registrant's
Registration Statement on Form N-1A filed on October
6, 1993.
(l) Amendment No. 3 to the Administration Agreement
between Registrant and Concord Holding Corporation
(non-Money Market Funds) is incorporated by reference
to Exhibit (9)(u) to Post-Effective Amendment No. 30.
(m) Amendment No. 4 to the Administration Agreement
between Registrant and Concord Holding Corporation
(non-Money Market Funds) is incorporated by reference
to Exhibit (9)(q) to Post-Effective Amendment No. 37.
(n) Agreement relating to the Administration Agreement
between Registrant and Concord Holding Corporation
(non-Money Market Funds) is incorporated by reference
to Exhibit (9)(r) to Post-Effective Amendment No. 40.
(o) Cash Management and Related Services Agreement
between Registrant and The Bank of New York (Horizon
Shares and Horizon Service Shares) dated as of May 1,
1990 is incorporated by reference to Exhibit (9)(d) to
Post-Effective Amendment No. 11.
(p) Amendment to Cash Management and Related Services
Agreement between Registrant and The Bank of New York
dated as of
C-13
<PAGE> 137
June 21, 1993 is incorporated by reference to Exhibit
9(m) to Post-Effective Amendment No. 24 filed on July
1, 1993.
(q) Accounting Services Agreement between the Registrant
and Provident Financial Processing Corp is
incorporated by reference to Exhibit (9)(o) to
Post-Effective Amendment No. 37.
(10)(1) Opinion of counsel that shares are validly issued,
fully paid and non-assessable.
(11) (a) Consent of Drinker Biddle & Reath.
(b) Consent of O'Melveny & Myers.
(c) Consent of Price Waterhouse, LLP.
(d) Consent of Deloitte & Touche LLP.
(12) None
(13) (a) Purchase Agreement between Registrant and The Dreyfus
Corporation is incorporated by reference to Exhibit
(13) to Pre-Effective Amendment No. 2 to the
Registration Statement of the Registrant on Form N-1A
(No. 2-81110) filed on March 29, 1984 ("Pre-Effective
Amendment No. 2").
(b) Purchase Agreement between Registrant and Hambrecht &
Quist Group, Inc. dated March 31, 1988 is incorporated
by reference to Exhibit (13)(b) to Post-Effective
Amendment No. 5.
(c) Investment Letter of Concord Financial Group, Inc. to
The Horizon Funds is incorporated by reference to
Exhibit (13) to the Registration Statement of
- -------------------------
(1) Filed with the SEC on April 28, 1995 under Rule 24f-2 as part of
Registrant's 24f-2 Notice.
C-14
<PAGE> 138
The Horizon Funds filed on March 10, 1987 (No.
33-12535).
(d) Purchase Agreement between Pacific Horizon Tax-Exempt
Money Market Portfolio, Inc. and Hambrecht & Quist
Group, Inc. is incorporated by reference to Exhibit
(13)(c) to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A of Pacific Horizon
Tax-Exempt Money Market Portfolio, Inc. filed on April
29, 1988 (No. 2-91975).
(e) Purchase Agreement between Pacific Horizon Tax-Exempt
Money Market Portfolio, Inc. and Pacific Horizon
Tax-Exempt Funds, Inc. is incorporated by reference to
Exhibit (8)(a) to Pre-Effective Amendment No. 1 to
Pacific Horizon Tax-Exempt Money Market Portfolio,
Inc.'s Registration Statement on Form N-1A in lieu of
S-14 filed November 6, 1984 (No. 2-91975).
(f) Purchase Agreement between Pacific Horizon Tax-Exempt
Money Market Portfolio, Inc. and The Dreyfus
Corporation is incorporated by reference to Exhibit
8(a) to Pre-Effective Amendment No. 1 to Pacific
Horizon Tax-Exempt Honey Market Portfolio, Inc.'s
Registration Statement on Form N-1A in lieu of S-14
filed November 6, 1984 (No. 2-91975).
(g) Purchase Agreement between Pacific Horizon California
Tax-Exempt Bond Portfolio, Inc. and Hambrecht & Quist
Group, Inc. is incorporated by reference to Exhibit
(13)(c) to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A of Pacific Horizon
California Tax-Exempt Bond Portfolio, Inc. filed on
April 29, 1988 (No. 2-83854).
(h) Purchase Agreement between Pacific Horizon California
Tax-Exempt Bond Portfolio, Inc. and The Dreyfus
Corporation is incorporated by reference to Exhibit 13
to Pre-Effective Amendment
C-15
<PAGE> 139
No. 2 to the Registration Statement of Pacific Horizon
California Tax-Exempt Bond Portfolio, Inc. filed on
March 27, 1984 (No. 2-83854).
(i) Purchase Agreement between Pacific Horizon California
Tax-Exempt Bond Portfolio, Inc. and Pacific Horizon
Tax-Exempt Funds, Inc. is incorporated by reference to
Exhibit (8)(a) to Pre-Effective Amendment No. 1 to
Pacific Horizon California Tax-Exempt Bond Portfolio,
Inc.'s Registration Statement on Form N-1A in lieu of
S-14 filed November 6, 1984 (No. 2-91975).
(j) Investment Letter of Concord Financial Group, Inc. to
The Horizon Capital Funds is incorporated by reference
to Exhibit (13) to the Registration Statement of The
Horizon Capital Funds filed on June 2, 1987 (No.
33-14721).
(14) (a) Individual Retirement Account and accompanying
Custodial Agreement, Disclosure Statement, IRA
Application and IRA Transfer/Rollover Request Form is
incorporated by reference to Exhibit (14)(a) to
Post-Effective Amendment No. 21.
(b) Appointment of Successor Custodian for Individual
Retirement Account dated as of August 3, 1990 is
incorporated by reference to Exhibit (14)(c) of
Post-Effective Amendment No. 12.
(15) (a) Shareholder Service Plan for Non-Money Market Funds is
incorporated by reference to Exhibit (15)(c) to
Post-Effective Amendment No. 30.
(b) Shareholder Services Plan for Horizon Service Shares
as modified by Registrant's Board of Directors on
January 29, 1993 is incorporated by reference to
Exhibit (15)(d) to Post-Effective Amendment No. 19.
(c) Revised Shareholder Servicing Agreement is
incorporated by reference to Exhibit
C-16
<PAGE> 140
(15)(f) to Post-Effective Amendment No. 18.
(d) Revised Shareholder Service Agreement as modified by
Registrant's Board of Directors on January 29, 1993 is
incorporated by reference to Exhibit (15)(g) to
Post-Effective Amendment No. 19.
(e) Revised Shareholder Servicing Agreement for Non-Money
Market Funds is incorporated by reference to Exhibit
(15)(h) to Post-Effective Amendment No. 30.
(f) Distribution and Services Plan and related
Administrative Servicing Agreement is incorporated by
reference to Exhibit (15)(f) to Post-Effective
Amendment No. 42.
(16) (a) Schedule for Computation of Performance Quotations
with respect to the Prime Fund, Treasury Fund,
Tax-Exempt Money Fund, Tax-Exempt Money Market Fund,
California Tax-Exempt Money Market Fund, Aggressive
Growth Fund, California Tax-Exempt Bond Fund, U.S.
Government Securities Fund (formerly known as the GNMA
Extra Fund) and Capital Income Fund (formerly known as
the Convertible Securities Fund) is incorporated by
reference to Exhibit (16) to Post-Effective Amendment
No. 12.
(b) Schedule for Computation of Performance Quotations
with respect to the Government Fund, Treasury Only
Fund and Prime Value Fund is incorporated by reference
to Exhibit (16)(b) of Post-Effective Amendment No. 24,
filed on July 1, 1993.
(c) Schedule for Computation of Performance Quotations
with respect to the Corporate Bond Fund, Flexible Bond
Fund, Blue Chip Fund, Asset Allocation Fund and
National Municipal Bond Fund is incorporated by
reference to Exhibit 16(c) to Post-Effective Amendment
No. 41 to the Registration Statement of the Registrant
C-17
<PAGE> 141
on Form N-1A (No. 2-81110) filed June 30, 1995
("Post-Effective Amendment No. 41").
(17) Financial Data Schedules.
(18) Amended and Restated Plan Pursuant to Rule 18f-3 for
Operation of a Multi-Class System is incorporated by
reference to Exhibit (18) to Post-Effective Amendment
No. 42.
24(a) The audited financial statements, related notes
thereto and the Auditor's reports included in the
Annual Report dated February 28, 1995 for the Horizon
and Horizon Service Shares of the Prime Fund, Treasury
Fund, Government Fund, Treasury Only Fund, Tax-Exempt
Money Fund and Horizon Service Shares of the
California Tax-Exempt Money Market Fund.
24(b) The unaudited financial statements and related notes
thereto included in the Semi-Annual Report dated
August 31, 1995 for the Horizon and Horizon Service
Shares of the Prime Fund, Treasury Fund, Government
Fund, and Treasury Only Fund.
24(c) The unaudited financial statements and related notes
thereto included in the Semi-Annual Report dated
August 31, 1995 for the Horizon and Horizon Service
Shares of the Tax-Exempt Money Fund and Horizon
Service Shares of the California Tax-Exempt Money
Market Fund.
Item 25. Persons Controlled by or under
Common Control with Registrant
Registrant is controlled by its Board of Directors.
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<PAGE> 142
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record
Holders as of
Title of Class October 31, 1995
-------------- ----------------
<S> <C>
Class A Common Stock 1,147
Class A Common Stock -
Special Series 1 491
Class A Common Stock -
Special Series 2 99
Class B Common Stock 12,132
Class B Common Stock -
Special Series 1 898
Class B Common Stock -
Special Series 2 188
Class D Common Stock 14,190
Class E Common Stock 4,764
Class F Common Stock 16,163
Class G Common Stock 4,519
Class H Common Stock
Class I Common Stock 166
Class I Common Stock -
Special Series 1 51
Class I Common Stock -
Special Series 2 19
Class J Common Stock 560
Class J Common Stock -
Special Series 1 190
Class K Common Stock 595
Class K Common Stock -
Special Series 1 127
Class K Common Stock -
Special Series 2 2
Class L Common Stock 138
Class L Common Stock -
Special Series 1 186
Class L Common Stock -
Special Series 2 35
Class M Common Stock 410
Class N Common Stock 4,016
Class O Common Stock 1,429
Class P Common Stock 0
Class P Common Stock -
Special Series 1 0
Class P Common Stock -
Special Series 2 0
Class Q Common Stock 295
Class R Common Stock 0
Class S Common Stock 0
Class T Common Stock 0
Class U Common Stock 0
Class V Common Stock 0
Class W Common Stock 2,621
</TABLE>
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<PAGE> 143
Item 27. Indemnification
Article VII, Section 3, of Registrant's Restated Articles of
Incorporation, incorporated herein by reference as Exhibit (1)(a) hereto, and
Article VI, Section 2, of Registrant's By-Laws, incorporated herein by
reference as Exhibit (2)(a) hereto, provide for the indemnification of
Registrant's directors and officers. Indemnification of the Fund's principal
underwriter, custodians, sub-custodians, transfer agent and sub-transfer agent
is provided for, respectively, in Article V of the Distribution Agreement,
incorporated by reference as Exhibit (6)(a), Article XV (and in Article V of
the amended and restated Distribution Agreement incorporated by reference as
Exhibit (6)(e)), Section 15 of the Custody Agreement incorporated by reference
as Exhibit (8)(a) hereto (and in Section 10 of the Custody Agreement
incorporated by reference as Exhibit (8)(c)), Article XII, Section 14 of the
Sub-Custodian Agreement, incorporated herein by reference as Exhibit (8)(f)
hereto, and Section 8 of the form of Sub-Custody Agreement incorporated by
reference as Exhibit (8)(g), Article VIII, Section 7, of the form of Transfer
Agency Agreement included herewith as Exhibit (8)(d), and Article VI, Section
3, of the Cash Management and Related Services Agreement incorporated by
reference as Exhibit (9)(o) hereto. Registrant has obtained from a major
insurance carrier a directors and officers' liability policy covering certain
types of errors and omissions. In no event will Registrant indemnify any of
its directors, officers, employees or agents against any liability to which
such person would otherwise be subject by reason of his willful misfeasance,
bad faith or gross negligence in the performance of his duties or by reason of
his reckless disregard of the duties involved in the conduct of his office or
under his agreement with Registrant. Registrant will comply with Rule 484
under the Securities Act of 1933 and Release 11330 under the Investment Company
Act of 1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
C-20
<PAGE> 144
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
Item 28. Business and Other Connections of Investment Adviser
Bank of America National Trust and Savings Association ("Bank of
America") performs investment advisory services for Registrant. Bank of America
and its predecessors have been in the business of managing the investments of
fiduciary and other accounts since 1904. In addition to its trust business,
Bank of America provides commercial and consumer banking services.
To the knowledge of Registrant, none of the directors or officers of
Bank of America, except those set forth below, is or has been, at any time
during the past two calendar years, engaged in any other business, profession,
vocation or employment of a substantial nature, except that certain directors
and officers of Bank of America also hold various positions with, and engage in
business for, BankAmerica Corporation, which owns all the outstanding stock of
Bank of America, or other subsidiaries of BankAmerica Corporation. Set forth
below are the names and principal businesses of the directors of Bank of America
and the directors and certain of the senior executive officers of Bank of
America who are engaged in any other business, profession, vocation or
employment of a substantial nature, other than with BankAmerica Corporation.
<TABLE>
<S> <C> <C> <C>
Director . . . . Joseph F. Alibrandi Chairman of the Manufacturer of
Board and Chief Aerospace and
Executive Officer, Biotechnology
Whittaker Products
Corporation
Director . . . . Jill Elikann Barad President and Chief Toy manufacturer
Operating Officer,
Mattel, Inc.
Director . . . . Peter B. Bedford Chairman and CEO, California based
Bedford Property Real Estate Dev-
Investors, Inc. elopment and In-
vestment Firm
</TABLE>
C-21
<PAGE> 145
<TABLE>
<CAPTION>
Position with
Bank of America
National Trust
and Savings Principal Type of
Association Name Occupation Business
- -------------- ---- ---------- --------
<S> <C> <C> <C>
Director. . . . . Andrew F. Brimmer President, Consulting
Brimmer & Co., Inc.
Director . . . . Richard A. Clarke Chairman of the Utility Company
Board, Pacific
Gas and Electric
Company
President and
Director. . . . David A. Coulter President, Bank Banking
America Corporation
and Bank of America
National Trust &
Savings Association;
effective January 1,
1996, Chief
Executive Officer,
Bank America
Corporation and Bank
of America National
Trust & Savings
Association
Director . . . . Timm F. Crull Chairman of the Food and Related
Board, Nestle Products
USA, Inc.
Director . . . . Kathleen Feldstein President, Economic
Economics Consulting
Studies, Inc.
Director . . . . Donald E. Guinn Chairman Emeritus, Telecommuni-
Pacific Telesis cations and
Group Diversified
Holding Com-
pany
Director . . . . Philip M. Hawley Retired Chairman Retail
and Chief Executive Department
Officer, Carter Stores
Hawley Hale
Stores, Inc.
Director . . . . Frank L. Hope, Jr. Consulting Architectural
Architect and Engineering
Consulting
Director . . . . Ignacio E. Lozano, Editor-In-Chief, Newspaper
Jr. "La Opinion" Publishing
</TABLE>
C-22
<PAGE> 146
<TABLE>
<CAPTION>
Position with
Bank of America
National Trust
and Savings Principal Type of
Association Name Occupation Business
- -------------- ---- ---------- --------
<S> <C> <C>
Director . . . . . Walter E. Massey, Provost and Senior Higher
Ph.D. Vice President for Education
Academic Affairs
for the University
of California
Director . . . . . John M. Richman Counsel, Wachtell, Law firm
Lipton, Rosen &
Katz
Chief Executive
Officer and
Director. . . . . Richard M. Rosenberg Chief Executive Banking
Officer, Bank
America Corporation
and Bank of America
National Trust &
Savings Association
untilJanuary 1, 1996;
effective January 1,
1996, Chairman of
the Board, Bank of
America National
Trust & Savings
Association
Director . . . . . A. Michael Spence Dean of the Higher
Graduate School of Education
Business, Stanford
University
</TABLE>
Item 29. Principal Underwriters
(a) Principal underwriter (exclusive distributor) also acts as
principal underwriter or exclusive distributor for The Infinity Funds, Inc.,
The Pilot Funds, Seafirst Retirement Funds, Time Horizon Funds and The Victory
Funds.
(b) For information as to the business, profession, vocation or
employment of a substantial nature of each of the principal underwriter, its
officers and directors, reference is made to their Form BD File No. 8-37601
filed by the principal underwriter. For information, as to the positions or
offices of
C-23
<PAGE> 147
each of the principal underwriter, its officers and directors, reference is
made to the section entitled "Management" in the Statements of Additional
Information. Both the principal underwriter's Form BD and the Registrants
Statements of Additional Information are incorporated by reference herein.
(c) Not Applicable.
Item 30. Location of Accounts and Records
(1) Concord Holding Corporation, 125 West 55th Street, New York,
New York 10019 (records relating to the administrator).
(2) Concord Financial Group, Inc., 125 West 55th Street, New York,
New York 10019 (records relating to the distributor).
(3) Concord Management (Ireland) Limited, ITI House, 23 Earlsfort
Terrace, Dublin 2, Ireland (records relating to the
administrator for the Funds it services).
(4) Bank of America National Trust and Savings Association, 555
California Street, San Francisco, California 94104 (records
relating to the investment adviser).
(5) Bank of America National Trust and Savings Association, 555
California Street, San Francisco, California 94104 (records
relating to the Sub-Custodian for the Funds it services).
(6) The Bank of New York, 90 Washington Street, New York, New York
10286) (records relating to the custodian for the Funds it
services).
(7) BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus,
Ohio 43219 (records relating to the transfer agent for the
Funds it services).
(8) Drinker Biddle & Reath, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496
(Registrant's Charter, By-Laws and Minute Books).
(9) PNC Bank, N.A., Broad and Chestnut Streets, Philadelphia, PA
19101, (records relating to the custodian for the Funds it
services).
(10) PFPC, Inc. 103 Bellevue Parkway, Wilmington, DE 19809,
(records relating to the sub-administrator for the Funds it
services).
C-24
<PAGE> 148
(11) Concord Financial Services, Inc. First and Market Building,
100 First Avenue, Suite 300, Pittsburgh, PA 15222 (records
relating to the transfer agent for the class of shares it
services).
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940, as amended, as though such
provisions were applicable to it.
Registrant hereby undertakes to furnish its Annual Report to
Shareholders upon request and without charge to any person to whom a prospectus
is delivered.
C-25
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Philadelphia, and the Commonwealth of
Pennsylvania, on this 22nd day of December 1995 .
PACIFIC HORIZON FUNDS, INC.
Registrant
*/Cornelius John Pings
---------------------------
Cornelius John Pings
President
(Signature and Title)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
*/Cornelius John Pings Chairman of the Board December 22, 1995
- ----------------------
Cornelius John Pings and President
/s/Martin R. Dean Treasurer (Chief December 22, 1995
- ----------------------
Martin R. Dean Accounting and
Financial Officer)
*/Thomas M. Collins Director December 22, 1995
- ----------------------
Thomas M. Collins
*/Douglas B. Fletcher Director December 22, 1995
- ----------------------
Douglas B. Fletcher
*/Robert E. Greeley Director December 22, 1995
- ----------------------
Robert E. Greeley
*/Kermit O. Hanson Director December 22, 1995
- ----------------------
Kermit O. Hanson
*/Kenneth L. Trefftzs Director December 22, 1995
- ----------------------
Kenneth L. Trefftzs
</TABLE>
*By: /s/W. Bruce McConnel, III
-------------------------
W. Bruce McConnel, III
Attorney-in-fact
C-26
<PAGE> 150
PACIFIC HORIZON FUNDS, INC.
POWER OF ATTORNEY
Cornelius John Pings, whose signature appears below, does hereby
constitute and appoint W. Bruce McConnel, III, his true and lawful attorney and
agent, with power of substitution or resubstitution, to do any and all acts and
things and to execute any and all instruments which said attorney and agent may
deem necessary or advisable or which may be required to enable Pacific Horizon
Funds, Inc. (the "Fund"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to the Fund's Registration
Statement pursuant to said Acts, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name
and on behalf of the undersigned as a director and/or officer of the Fund any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney and agent
shall do or cause to be done by virtue hereof.
s/ Cornelius John Pings
---------------------------------
Cornelius John Pings
Date: December 6, 1995
<PAGE> 151
PACIFIC HORIZON FUNDS, INC.
POWER OF ATTORNEY
Thomas M. Collins, whose signature appears below, does hereby
constitute and appoint Cornelius John Pings and W. Bruce McConnel, III, and
either of them his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, or either of
them, may deem necessary or advisable or which may be required to enable
Pacific Horizon Funds, Inc. (the "Fund"), to comply with the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to the Fund's
Registration Statement pursuant to said Acts, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Fund any and all such amendments filed with the Securities and Exchange
Commission under said Acts, and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, or either of them, shall do or cause to be done by virtue
hereof.
s/ Thomas M. Collins
---------------------------------
Thomas M. Collins
Date: December 7, 1995
<PAGE> 152
PACIFIC HORIZON FUNDS, INC.
POWER OF ATTORNEY
Douglas, B. Fletcher, whose signature appears below, does hereby
constitute and appoint Cornelius John Pings and W. Bruce McConnel, III, and
either of them his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, or either of
them, may deem necessary or advisable or which may be required to enable
Pacific Horizon Funds, Inc. (the "Fund"), to comply with the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to the Fund's
Registration Statement pursuant to said Acts, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Fund any and all such amendments filed with the Securities and Exchange
Commission under said Acts, and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, or either of them, shall do or cause to be done by virtue
hereof.
s/ Douglas B. Fletcher
---------------------------------
Douglas B. Fletcher
Date: December 7, 1995
<PAGE> 153
PACIFIC HORIZON FUNDS, INC.
POWER OF ATTORNEY
Robert E. Greeley, whose signature appears below, does hereby
constitute and appoint Cornelius John Pings and W. Bruce McConnel, III, and
either of them his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, or either of
them, may deem necessary or advisable or which may be required to enable
Pacific Horizon Funds, Inc. (the "Fund"), to comply with the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to the Fund's
Registration Statement pursuant to said Acts, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Fund any and all such amendments filed with the Securities and Exchange
Commission under said Acts, and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, or either of them, shall do or cause to be done by virtue
hereof.
s/Robert E. Greeley
---------------------------------
Robert E. Greeley
Date: December 7, 1995
<PAGE> 154
PACIFIC HORIZON FUNDS, INC.
POWER OF ATTORNEY
Kermit O. Hanson, whose signature appears below, does hereby
constitute and appoint Cornelius John Pings and W. Bruce McConnel, III, and
either of them his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, or either of
them, may deem necessary or advisable or which may be required to enable
Pacific Horizon Funds, Inc. (the "Fund"), to comply with the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to the Fund's
Registration Statement pursuant to said Acts, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Fund any and all such amendments filed with the Securities and Exchange
Commission under said Acts, and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, or either of them, shall do or cause to be done by virtue
hereof.
s/ Kermit O. Hanson
---------------------------------
Kermit O. Hanson
Date: December 6, 1995
<PAGE> 155
PACIFIC HORIZON FUNDS, INC.
POWER OF ATTORNEY
Kenneth L. Trefftzs, whose signature appears below, does hereby
constitute and appoint Cornelius John Pings and W. Bruce McConnel, III, and
either of them his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, or either of
them, may deem necessary or advisable or which may be required to enable
Pacific Horizon Funds, Inc. (the "Fund"), to comply with the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments (including post-effective amendments) to the Fund's
Registration Statement pursuant to said Acts, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director and/or officer
of the Fund any and all such amendments filed with the Securities and Exchange
Commission under said Acts, and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, or either of them, shall do or cause to be done by virtue
hereof.
s/ Kenneth L. Trefftzs
---------------------------------
Kenneth L. Trefftzs
Date: December 6, 1995
<PAGE> 156
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- ------------
11 (a) Consent of Drinker Biddle & Reath.
(b) Consent of O'Melveny & Myers.
(c) Consent of Price Waterhouse, LLP.
(d) Consent of Deloitte & Touche LLP.
17 Financial Data Schedules.
24 (a) The audited financial statements, related notes
thereto and the Auditor's reports included in
the Annual Report dated February 28, 1995 for
the Horizon and Horizon Service Shares of the
Prime Fund, Treasury Fund, Government Fund,
Treasury Only Fund, Tax-Exempt Money Fund and
Horizon Service Shares of the California
Tax-Exempt Money Market Fund.
(b) The unaudited financial statements and related
notes thereto included in the Semi-Annual Report
dated August 31, 1995 for the Horizon and
Horizon Service Shares of the Prime Fund,
Treasury Fund, Government Fund, and Treasury
Only Fund.
(c) The unaudited financial statements and related
notes thereto included in the Semi-Annual Report
dated August 31, 1995 for the Horizon and
Horizon Service Shares of the Tax-Exempt Money
Fund and Horizon Service Shares of the
California Tax-Exempt Money Market Fund.
<PAGE> 1
EXHIBIT 11(A)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference to our
Firm under the caption "Counsel" in the Statement of Additional Information that
is included in Post-Effective Amendment No. 44 to the Registration Statement
(No. 2-81110) on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, of Pacific Horizon Funds, Inc. This consent
does not constitute a consent under section 7 of the Securities Act of 1933, and
in consenting to the use of our name and the references to our Firm under such
caption we have not certified any part of the Registration Statement and do not
otherwise come within the categories of persons whose consent is required under
said section 7 or the rules and regulations of the Securities and Exchange
Commission thereunder.
/s/Drinker Biddle & Reath
------------------------------------
DRINKER BIDDLE & REATH
Philadelphia, Pennsylvania
December 22, 1995
<PAGE> 1
EXHIBIT 11(B)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference to our
Firm under the caption "Counsel" in the Statement of Additional Information
included in Post-Effective Amendment No. 44 to the Registration Statement (No.
2-81110) on Form N-1A under the Securities Act of 1933, as amended, of Pacific
Horizon Funds, Inc.
/S/ O'Melveny & Myers
------------------------------------
Los Angeles, California
December 19, 1995
<PAGE> 1
EXHIBIT 11(C)
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 44 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated April
21, 1995, relating to the financial statements and financial highlights of the
Pacific Horizon Prime Fund, Pacific Horizon Treasury Fund, Pacific Horizon
Treasury Only Fund, Pacific Horizon Government Fund, Pacific Horizon Tax-Exempt
Money Fund, and Pacific Horizon California Tax-Exempt Money Market Fund, six of
the portfolios constituting the Pacific Horizon Funds, Inc., which appear in
such Statement of Additional Information, and to the incorporation by reference
of our report into the Statement of Additional Information and Prospectus
which constitutes part of this Registration Statement for the Pacific Horizon
Tax-Exempt Money Fund and Pacific Horizon California Tax-Exempt Money Market
Fund. We also consent to the references to us under the heading "Financial
Highlights" in the Prospectus and under the heading "Independent Accountants"
and "Financial Statements and Experts" in the Statement of Additional
Information.
/s/ Price Waterhouse LLP
- -----------------------
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
December 20, 1995
<PAGE> 1
EXHIBIT 11(D)
We consent to the use in post-effective Amendment No. 44 to the Registration
Statement No. 2-81110 of Pacific Horizon Funds, Inc. on Form N-1A of our
reports dated March 1, 1993, relating to the financial statements and selected
per share data and ratios of First Cash Funds of America - Government Portfolio
and Treasury Portfolio; First Funds of America - Government Money Fund and
Treasury Money Fund and Government Money Trust and Treasury Money Trust
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement.
We also consent to the references to us under the headings "Independent
Accountants" and "Financial Statements and Experts" the Statement of Additional
Information, which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
- ------------------------
DELOITTE & TOUCHE LLP
Seattle, Washington
December 20, 1995
<PAGE> 1
Exhibit 24(a)
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATING
ASSIGNED BY PRINCIPAL
N.R.S.R.O. MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ---------------------------------- ------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 100.3%
COMMERCIAL PAPER -- 27.9%
DOMESTIC -- 22.0%
AUTOMOBILES -- 1.9%
Ford Motor Credit Co. ........... A1/P1 6.15%b 5/15/95 $ 50,000 $ 49,359,375
--------------
BANKING -- 1.9%
Abbey National North America..... A1+/P1 6.05%b 4/18/95 50,000 49,596,667
--------------
BROKERAGE -- 3.8%
Merrill Lynch & Co., Inc.,
Monthly Variable Rate (final
maturity date 7/28/95)a........ A1+/P1 6.058% 3/28/95 100,000 100,000,000
--------------
CONGLOMERATES -- 3.8%
General Electric Capital Corp.... A1+/P1 6.25%b 5/16/95 100,000 98,680,555
--------------
FINANCE COMPANIES -- 4.9%
Asset Securitization Cooperative
Corp.*++....................... A1+/P1 6.08%b 5/15/95 50,000 49,366,667
Ciesco, LP....................... A1+/P1 6.10%b 3/20/95 30,000 29,903,416
Countrywide Funding Corp......... A1/F1 6.05%b 3/09/95 50,000 49,932,779
--------------
129,202,862
--------------
LEASING -- 2.0%
Hertz Corp....................... A1/P1 6.20%b 6/21/95 25,000 24,517,778
Hertz Corp....................... A1/P1 6.09%b 5/09/95 29,000 28,661,497
--------------
53,179,275
--------------
PHARMACEUTICALS -- 1.2%
American Home Food Products
Inc.++......................... D1/P1 6.03%b 3/27/95 30,100 29,968,914
--------------
PHOTOGRAPHIC PRODUCTS -- 1.0%
Fuji Photo Film Finance USA,
Inc. .......................... A1+/P1 5.95%b 3/16/95 26,950 26,883,186
--------------
TELECOMMUNICATIONS -- 1.5%
AT&T Corp........................ A1+/P1 6.12%b 3/24/95 38,900 38,747,901
--------------
575,618,735
--------------
FOREIGN -- 5.9%
AGRICULTURE -- 1.5%
Wool International............... A1+/P1 6.13%b 3/30/95 40,000 39,802,478
--------------
</TABLE>
- ---------------
See Notes to Financial Statements.
9
<PAGE> 2
<TABLE>
<CAPTION>
RATING
ASSIGNED BY PRINCIPAL
N.R.S.R.O. MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ---------------------------------- ------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
AUTOMOBILES -- 1.9%
Renault Credit Internationale
S.A. Banque.................... F1/P1 6.15%b 4/18/95 $ 50,000 $ 49,590,000
--------------
OIL AND GAS -- 0.8%
Total Compagnie Francaise........ A1+/P1 5.90%b 3/01/95 20,000 20,000,000
--------------
PUBLISHING -- 1.7%
Reed Elsevier, Inc.*++........... A1+/P1 6.16%b 5/04/95 45,000 44,507,200
--------------
153,899,678
--------------
Total Commercial Paper
(amortized cost $729,518,413).... 729,518,413
--------------
BANK NOTES -- 15.3%
Bank One, Milwaukee N.A.,
Daily Variable Rate (final
maturity date 1/31/96)a...... A1+/P1 6.37% 3/01/95 100,000 100,000,000
Comerica Bank, Detroit, MI,
Weekly Variable Rate (final
maturity date 10/27/95)a..... A1/P1 6.02% 3/07/95 100,000 99,942,663
FCC National Bank,
Daily Variable Rate (final
maturity date 1/12/96)a...... A1/P1 6.17% 3/01/95 50,000 50,000,000
First National Bank of Boston.... D1/P1 6.18% 5/11/95 50,000 50,000,000
Huntington National Bank,
Columbus, Daily Variable
Rate (final maturity date
1/12/96)a...................... A1/P1 6.15% 3/01/95 50,000 49,982,340
PNC Bank, Delaware,
Weekly Variable Rate (final
maturity date 5/09/95)a...... A1/P1 6.01% 3/07/95 50,000 49,993,303
--------------
Total Bank Notes
(amortized cost $399,918,306).... 399,918,306
--------------
MASTER NOTES -- 9.2%
Goldman Sachs Group L.P. Daily
Variable Rate (final maturity
date 11/03/95)a................ A1+/P1 6.275% 3/01/95 120,000 120,000,000
Morgan Stanley Group, Inc. Daily
Variable Rate (final maturity
date 7/13/95)a................. A1+/P1 6.275% 3/01/95 120,000 120,000,000
--------------
Total Master Notes
(amortized cost $240,000,000).... 240,000,000
--------------
CORPORATE OBLIGATIONS -- 5.7%
BROKERAGE -- 3.8%
Bear Stearns Co., Inc., Series B,
Monthly Variable Rate (final
maturity date 2/02/96)a........ A1/P1 6.225% 3/03/95 100,000 100,000,000
--------------
</TABLE>
- ---------------
See Notes to Financial Statements.
10
<PAGE> 3
<TABLE>
<CAPTION>
RATING
ASSIGNED BY PRINCIPAL
N.R.S.R.O. MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ---------------------------------- ------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
FINANCE COMPANIES -- 1.9%
Ciesco L.P.,
Monthly Variable Rate (final
maturity date 8/11/95)++a...... A1+/P1 6.039% 3/10/95 $ 50,000 $ 49,993,301
--------------
Total Corporate Obligations
(amortized cost $149,993,301).... 149,993,301
--------------
CERTIFICATES OF DEPOSIT -- 5.5%
U.S. BRANCHES OF FOREIGN
BANKS -- 5.5%
ABN-AMRO Bank, N.V., New York.... A1+/P1 6.35% 6/01/95 20,000 20,000,834
Banque Nationale de Paris, New
York........................... A1+/P1 6.15% 3/06/95 50,000 50,000,069
Banque Paribas, New York......... A1/P1 6.55% 5/22/95 25,000 25,012,970
Commerzbank A.G., New York....... A1+/P1 6.12% 3/06/95 50,000 50,000,137
--------------
Total Certificates of Deposit
(amortized cost $145,014,010).... 145,014,010
--------------
U.S. GOVERNMENT AGENCY
NOTES -- 3.6%
Federal Farm Credit Bank,
Daily Variable Rate (final
maturity date 5/06/96)a...... A1+/P1! 6.30% 3/01/95 50,000 49,970,438
Federal Home Loan Bank,
Daily Variable Rate (final
maturity date 5/17/95)a...... A1+/P1! 6.25% 3/01/95 45,000 44,998,006
--------------
Total U.S. Government Agency Notes
(amortized cost $94,968,444)..... 94,968,444
--------------
Total Investments in Securities
(amortized cost
$1,759,412,474).................. 1,759,412,474
--------------
REPURCHASE AGREEMENTS -- 33.1%
Repurchase agreement with BT
Securities, Inc., dated
2/28/95, with a maturity value
of $120,020,067.
(See Footnote A)............... 6.02% 3/01/95 120,000 120,000,000
Repurchase agreement with C.S.
First Boston Corp., dated
2/28/95, with a maturity value
of $35,006,028.
(See Footnote B)............... 6.20% 3/01/95 35,000 35,000,000
Repurchase agreement with First
Chicago Capital Markets, dated
2/28/95, with a maturity value
of $120,020,267.
(See Footnote C)............... 6.08% 3/01/95 120,000 120,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
11
<PAGE> 4
<TABLE>
<CAPTION>
RATING
ASSIGNED BY PRINCIPAL
N.R.S.R.O. MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ---------------------------------- ------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Repurchase agreement with Goldman
Sachs and Co., dated 2/28/95,
with a maturity value of
$120,020,167.
(See Footnote D)............... 6.05% 3/01/95 $ 120,000 $ 120,000,000
Repurchase agreement with HSBC
Securities, Inc., dated
2/28/95, with a maturity value
of $120,019,890.
(See Footnote E)............... 6.00% 3/01/95 120,000 120,000,000
Repurchase agreement with J.P.
Morgan, Inc., dated 2/28/95,
with a maturity value of
$120,020,167.
(See Footnote F)............... 6.05% 3/01/95 120,000 120,000,000
Repurchase agreement with Nomura
Securities International, dated
2/28/95, with a maturity value
of $109,832,516.
(See Footnote G)............... 6.07% 3/01/95 109,814 109,814,000
Repurchase agreement with
Prudential Securities, Inc.,
dated 2/28/95, with a maturity
value of $120,020,667.
(See Footnote H)............... 6.20% 3/01/95 $ 120,000 $ 120,000,000
--------------
Total Repurchase Agreements
(amortized cost $864,814,000).... 864,814,000
--------------
TOTAL INVESTMENTS (AMORTIZED COST
$2,624,226,474) -- 100.3%........ 2,624,226,474
Liabilities in excess of other
assets -- (0.3%)................. (8,799,076)
--------------
NET ASSETS -- 100%................ $2,615,427,398
================
</TABLE>
- ---------------
<TABLE>
<S> <C> <C>
N.R.S.R.O. -- Nationally Recognized Statistical Rating Organization. Rating agencies that are
included within the N.R.S.R.O. category are: S&P, Moody's, Fitch Investor
Services, Duff & Phelps and IBCA.
A1 -- Highest rating assigned by S&P and IBCA.
P1 -- Highest rating assigned by Moody's.
F1 -- Highest rating assigned by Fitch Investor Services.
D1 -- Highest rating assigned by Duff & Phelps.
</TABLE>
! Implied short-term rating
* Illiquid security.
a Variable rate security. Interest rates are stated as of February 28, 1995.
Maturity date reflects the later of the next interest rate change date or the
next put date.
b Effective yield.
++ Private placement security.
(footnotes continue on next page)
See Notes to Financial Statements.
12
<PAGE> 5
(footnotes continued from previous page)
<TABLE>
<S> <C> <C>
Footnote A -- Collateralized by $125,970,000 U.S. Treasury Notes, with various coupon rates and
maturities ranging from 7/31/96 through 5/31/98; with an aggregate value of
$122,403,135.
Footnote B -- Collateralized by $27,195,000 U.S. Treasury Bond, 11.875%, due 11/15/03; with a
value of $36,069,384.
Footnote C -- Collateralized by $123,830,000 U.S. Treasury Bill, due 5/11/95; with a value of
$122,401,003.
Footnote D -- Collateralized by $17,601,000 U.S. Treasury Bills, with maturities ranging from
3/02/95 through 1/11/96, $48,600,000 U.S. Treasury Bonds, with various coupon
rates and maturities ranging from 6/15/00 through 11/15/22 and $49,473,000 U.S.
Treasury Notes, with various coupon rates and maturities ranging from 4/15/95
through 2/15/05; with an aggregate value of $122,400,826.
Footnote E -- Collateralized by $50,000,000 U.S. Treasury Bond, 9.875%, due 11/15/15 and
$59,750,000 U.S. Treasury Notes, with various coupon rates and maturities ranging
from 5/15/97 through 11/30/97; with an aggregate value of $122,626,150.
Footnote F -- Collateralized by $121,091,000 U.S. Treasury Notes, with various coupon rates and
maturities ranging from 2/29/96 through 5/15/97; with an aggregate value of
$122,525,546.
Footnote G -- Collateralized by $21,485,000 U.S. Treasury Bonds, with various coupon rates and
maturities ranging from 11/15/21 through 2/15/25 and $88,246,000 U.S. Treasury
Notes, with various coupon rates and maturities ranging from 9/30/95 through
8/15/02; with an aggregate value of $112,029,300.
Footnote H -- Collateralized by $122,925,000 Federal National Mortgage Association Discount
Notes, due 3/01/95; with an aggregate value of $122,900,415.
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 6
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- ------------------------------------------------- ----- -------- --------- --------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 95.0%
U.S. TREASURY OBLIGATIONS -- 46.9%
U.S. TREASURY NOTES -- 12.2%
U.S. Treasury Note.............................. 5.875% 5/15/95 $ 115,000 $ 114,906,106
U.S. Treasury Note.............................. 4.125% 5/31/95 75,000 74,641,300
U.S. Treasury Note.............................. 4.250% 7/31/95 50,000 49,567,057
--------------
239,114,463
--------------
U.S. TREASURY BILLS -- 34.7%
U.S. Treasury Bill.............................. 5.94%* 4/13/95 225,000 223,455,882
U.S. Treasury Bill.............................. 6.00%* 4/27/95 190,000 188,242,975
U.S. Treasury Bill.............................. 6.04%* 5/04/95 150,000 148,437,333
U.S. Treasury Bill.............................. 6.35%* 8/10/95 125,000 121,578,875
--------------
681,715,065
--------------
Total U.S. Treasury Obligations
(amortized cost $920,829,528)................... 920,829,528
--------------
REPURCHASE AGREEMENTS -- 48.1%
Repurchase agreement with Barclays De Zoete Wedd
Securities, Inc., dated 2/28/95,
with a maturity value of $95,016,044.
(See Footnote A).............................. 6.08% 3/01/95 95,000 95,000,000
Repurchase agreement with C.S. First Boston
Corp., dated 2/28/95, with a maturity value of
$95,015,965. (See Footnote B)................. 6.05% 3/01/95 95,000 95,000,000
Repurchase agreement with First Chicago Capital
Markets, dated 2/28/95, with a maturity value
of $95,016,044. (See Footnote C).............. 6.08% 3/01/95 95,000 95,000,000
Repurchase agreement with First National Bank of
Chicago, dated 2/28/95, with a maturity value
of $20,087,392. (See Footnote D).............. 6.08% 3/01/95 20,084 20,084,000
Repurchase agreement with Goldman Sachs and Co.,
dated 2/28/95, with a maturity value of
$95,015,965. (See Footnote E)................. 6.05% 3/01/95 95,000 95,000,000
Repurchase agreement with HSBC Securities, Inc.,
dated 2/28/95, with a maturity value of
$70,011,667. (See Footnote F)................. 6.00% 3/01/95 70,000 70,000,000
Repurchase agreement with JP Morgan Securities,
Inc., dated 2/28/95, with a maturity value of
$95,015,965. (See Footnote G)................. 6.05% 3/01/95 95,000 95,000,000
Repurchase agreement with Merrill Lynch
Government Securities, Inc., dated 2/28/95,
with a maturity value of $95,015,965.
(See Footnote H).............................. 6.05% 3/01/95 95,000 95,000,000
Repurchase agreement with Nomura Securities
International, Inc., dated 2/28/95, with
a maturity value of $95,016,018.
(See Footnote I).............................. 6.07% 3/01/95 95,000 95,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
14
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- ------------------------------------------------- ----- -------- --------- --------------
<S> <C> <C> <C> <C>
Repurchase agreement with Prudential Securities,
Inc., dated 2/28/95, with a maturity value of
$95,015,965. (See Footnote J)................. 6.05% 3/01/95 $ 95,000 $ 95,000,000
Repurchase agreement with Smith Barney, Inc.,
dated 2/28/95, with a maturity value of
$95,015,965. (See Footnote K)................. 6.05% 3/01/95 95,000 95,000,000
--------------
Total Repurchase Agreements
(amortized cost $945,084,000)................... 945,084,000
--------------
TOTAL INVESTMENTS (AMORTIZED COST
$1,865,913,528) -- 95.0%........................ 1,865,913,528
Other assets in excess of liabilities -- 5.0%.... 99,142,322
--------------
NET ASSETS -- 100%............................... $1,965,055,850
================
</TABLE>
- ---------------
* Effective yield.
Footnote A -- Collateralized by $54,739,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 2/15/96 through 5/15/04, $3,228,000
U.S. Treasury Bond, 10.75%, due 8/15/05, $30,915,000 U.S. Treasury Bills with
maturities ranging from 3/30/95 through 6/01/95 and $43,215,000 U.S. Treasury
Strips with maturities ranging from 8/15/01 through 8/15/23; with an aggregate
value of $96,900,510.
Footnote B -- Collateralized by $91,705,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 2/15/99 through 2/15/00; with an
aggregate value of $97,395,926.
Footnote C -- Collateralized by $98,222,000 U.S. Treasury Bills with maturities
ranging from 5/18/95 through 5/25/95; with an aggregate value of $96,902,614.
Footnote D -- Collateralized by $11,936,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 4/30/95 through 2/15/05, $4,000,000
U.S. Treasury Bonds with various coupon rates and maturities ranging from
11/15/24 through 2/15/25 and $4,640,000 U.S. Treasury Bills with maturities
ranging from 12/14/95 through 1/11/96; with an aggregate value of $20,488,334.
Footnote E -- Collateralized by $17,680,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 5/15/95 through 8/31/97, $52,840,000
U.S. Treasury Bonds with various coupon rates and maturities ranging from
5/15/95 through 11/15/15 and $13,742,000 U.S. Treasury Bills with maturities
ranging from 5/25/95 through 9/21/95; with an aggregate value of $96,901,021.
Footnote F -- Collateralized by $69,710,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 5/31/96 through 7/31/96; with an
aggregate value of $71,480,938.
Footnote G -- Collateralized by $101,876,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 5/31/97 through 11/30/98; with an
aggregate value of $96,901,795.
Footnote H -- Collateralized by $102,345,000 U.S. Treasury Bill, due 1/11/96,
with a value of $96,902,292.
Footnote I -- Collateralized by $57,288,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 1/31/96 through 8/15/01, $31,125,000
U.S. Treasury Bond, 8.875%, due 8/15/17 and $1,937,000 U.S. Treasury Bill, due
2/08/96; with an aggregate value of $96,900,368.
Footnote J -- Collateralized by $95,579,000 U.S. Treasury Notes with various
coupon rates and maturities ranging from 12/31/96 through 8/15/03; with an
aggregate value of $96,900,469.
Footnote K -- Collateralized by $10,000,000 U.S. Treasury Note, 6.875%, due
8/31/99 and $301,900,000 U.S. Treasury STRIPS with maturities ranging from
8/15/95 through 5/15/20; with an aggregate value of $96,900,557.
See Notes to Financial Statements.
15
<PAGE> 8
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS!
S&P/ PRINCIPAL
MOODY'S MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- --------- ------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 100.2%
U.S. GOVERNMENT AGENCY NOTES -- 53.0%
Federal Farm Credit Bank,
Discount Note....................... A1+/P1... 5.88%** 3/16/95 $ 18,000 $ 17,956,875
Federal Home Loan Bank,
Discount Note....................... A1+/P1... 6.18%** 4/06/95 16,500 16,400,670
Federal Home Loan Bank,
Discount Note....................... A1+/P1... 5.98%** 3/22/95 25,000 24,914,833
Federal Home Loan Mortgage Corp.,
Discount Note....................... A1+/P1... 6.18%** 4/18/95 26,925 26,710,310
Federal Home Loan Mortgage Corp.,
Discount Note....................... A1+/P1... 6.17%** 5/02/95 56,500 55,916,167
Federal Home Loan Mortgage Corp.,
Discount Note....................... A1+/P1... 6.17%** 5/12/95 19,125 18,895,882
Federal Home Loan Mortgage Corp.,
Discount Note....................... A1+/P1... 6.16%** 4/05/95 15,000 14,912,500
Federal Home Loan Mortgage Corp.,
Discount Note....................... A1+/P1... 6.11%** 5/01/95 36,307 35,940,955
Federal Home Loan Mortgage Corp.,
Discount Note....................... A1+/P1... 6.07%** 4/18/95 10,000 9,920,264
Federal National Mortgage Association,
Daily Variable Rate (final maturity
date 1/26/96)*...................... A1+/P1 5.90% 3/01/95 20,000 19,989,118
Federal National Mortgage Association,
Discount Note....................... A1+/P1 6.18%** 4/17/95 25,400 25,202,677
Federal National Mortgage Association,
Discount Note....................... A1+/P1 6.17%** 4/03/95 25,000 24,862,042
Federal National Mortgage Association,
Discount Note....................... A1+/P1 6.17%** 4/20/95 50,000 49,584,028
Federal National Mortgage Association,
Discount Note....................... A1+/P1 6.08%** 4/17/95 30,000 29,766,941
Federal National Mortgage Association,
Monthly Variable Rate (final
maturity date 10/30/95)*............ A1+/P1 5.936% 3/30/95 20,000 19,991,848
Federal National Mortgage Association,
Weekly Variable Rate (final maturity
date 2/16/96) *..................... A1+/P1 6.01% 3/07/95 25,000 25,000,000
Student Loan Marketing Association,
Monthly Variable Rate (final
maturity date 12/01/95)*............ A1+/P1 5.893% 3/01/95 40,000 39,958,911
Student Loan Marketing Association,
Series AX, Weekly Variable Rate
(final maturity date 3/27/95)*...... A1+/P1 6.51% 3/07/95 10,000 10,003,516
------------
Total U.S. Government Agency Notes
(amortized cost $465,927,537)......... 465,927,537
------------
U.S. GOVERNMENT AGENCY GUARANTEE NOTES -- 6.3%
Fidelity Federal Bank
(LOC -- Federal Home Loan Bank, San
Francisco).......................... A1+/P1... 6.13%** 3/01/95 40,000 40,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS!
S&P/ PRINCIPAL
MOODY'S MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- --------- ------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Nebraska Higher Education Loan
Program, Inc., Weekly Variable Rate
(LOC -- Student Loan Marketing
Association) (final maturity date
3/15/95)*........................... A1+/P1 6.16% 3/07/95 $ 15,000 $ 15,000,000
------------
Total U.S. Government Agency Guarantee
Notes (amortized cost $55,000,000).... 55,000,000
------------
Total Investments in Securities
(amortized cost $520,927,537)......... 520,927,537
------------
REPURCHASE AGREEMENTS -- 40.9%
Repurchase agreement with BT
Securities, Inc., dated 2/28/95,
with a maturity value of
$40,006,689.
(See Footnote A).................... 6.02% 3/01/95 40,000 40,000,000
Repurchase agreement with Barclays de
Zoete Wedd Securities, Inc., dated
2/28/95, with a maturity value of
$40,006,756. (See Footnote B)....... 6.08% 3/01/95 40,000 40,000,000
Repurchase agreement with First
Chicago Capital Markets, Inc., dated
2/28/95, with a maturity value of
$40,006,756. (See Footnote C)....... 6.08% 3/01/95 40,000 40,000,000
Repurchase agreement with Goldman
Sachs and Co., dated 2/28/95, with a
maturity value of $40,006,722.
(See Footnote D).................... 6.05% 3/01/95 40,000 40,000,000
Repurchase agreement with JP Morgan
Securities, Inc., dated 2/28/95,
with a maturity value of
$40,006,722.
(See Footnote E).................... 6.05% 3/01/95 40,000 40,000,000
Repurchase agreement with Merrill
Lynch Government Securities, Inc.,
dated 2/28/95, with a maturity value
of $40,006,722. (See Footnote F).... 6.05% 3/01/95 40,000 40,000,000
Repurchase agreement with Nomura
Securities International, Inc.,
dated 2/28/95, with a maturity value
of $79,312,371. (See Footnote G).... 6.07% 3/01/95 79,299 79,299,000
Repurchase agreement with Smith
Barney, Inc., dated 2/28/95, with a
maturity value of $40,006,722.
(See Footnote H).................... 6.05% 3/01/95 40,000 40,000,000
------------
Total Repurchase Agreements (amortized
cost $359,299,000).................... 359,299,000
------------
TOTAL INVESTMENTS (AMORTIZED COST
$880,226,537) -- 100.2%............... 880,226,537
Liabilities in excess of other
assets -- (0.2%)...................... (1,304,827)
------------
NET ASSETS -- 100%..................... $878,921,710
==============
</TABLE>
(footnotes on following page)
- ---------------
See Notes to Financial Statements.
17
<PAGE> 10
(footnotes from previous page)
- ---------------
Note: S&P and Moody's ratings have been used for consistency. Portfolio
securities may be rated by other services as well.
! Implied Short-Term Rating.
LOC -- Letter of credit.
* Variable rate security. Interest rates stated are as of February 28, 1995.
Maturity date reflects the later of the next rate change date or the next put
date.
** Effective yield.
<TABLE>
<S> <C> <C>
Footnote A -- Collateralized by $39,690,000 U.S. Treasury Note, 8.00%, due 1/15/97; with a value
of $40,801,320.
Footnote B -- Collateralized by $41,122,000 U.S. Treasury Bill, due 6/22/95 and $450,000 Federal
Farm Credit Consolidated Systemwide Bond, 6.76%, due 2/28/96; with an aggregate
value of $40,800,668.
Footnote C -- Collateralized by $41,296,000 U.S. Treasury Bills with maturities ranging from
5/11/95 through 5/18/95; with an aggregate value of $40,800,258.
Footnote D -- Collateralized by $18,402,000 U.S. Treasury Notes with various coupon rates and
maturities ranging from 5/15/95 through 1/15/99, $12,270,000 U.S. Treasury Bonds
with various coupon rates and maturities ranging from 2/15/07 through 8/15/14 and
$8,169,000 U.S. Treasury Bill, due 6/08/95; with an aggregate value of $40,800,983.
Footnote E -- Collateralized by $41,265,000 U.S. Treasury Bill, due 5/04/95; with a value of
$40,800,769.
Footnote F -- Collateralized by $43,095,000 U.S. Treasury Bill, due 1/11/96; with a value of
$40,803,208.
Footnote G -- Collateralized by $74,140,000 U.S. Treasury Notes with various coupon rates and
maturities ranging from 5/31/96 through 2/15/05 and $8,250,000 U.S. Treasury Bill,
due 7/27/95; with an aggregate value of $80,885,861.
Footnote H -- Collateralized by $114,303,000 U.S. Treasury STRIPS with maturities ranging from
2/15/08 through 5/15/09; with an aggregate value of $40,800,027.
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 11
PACIFIC HORIZON TREASURY ONLY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- ------------------------------------------------------ ----- -------- -------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 99.4%
U.S. TREASURY OBLIGATIONS -- 99.4%
U.S. TREASURY NOTES -- 31.5%
U.S. Treasury Note................................... 3.875% 3/31/95 $ 11,235 $ 11,221,834
U.S. Treasury Note................................... 8.375% 4/15/95 47,505 47,632,191
U.S. Treasury Note................................... 5.875% 5/15/95 2,915 2,914,383
U.S. Treasury Note................................... 4.125% 5/31/95 28,100 27,965,221
------------
89,733,629
------------
U.S. TREASURY BILLS -- 67.9%
U.S. Treasury Bill................................... 5.30%* 3/02/95 8,498 8,496,772
U.S. Treasury Bill................................... 5.58%* 3/09/95 32,088 32,049,129
U.S. Treasury Bill................................... 5.28%* 3/23/95 34,941 34,830,360
U.S. Treasury Bill................................... 5.30%* 3/30/95 12,408 12,358,285
U.S. Treasury Bill................................... 5.65%* 4/06/95 45,943 45,688,312
U.S. Treasury Bill................................... 5.57%* 4/13/95 11,885 11,807,632
U.S. Treasury Bill................................... 5.80%* 4/20/95 20,215 20,055,711
U.S. Treasury Bill................................... 5.98%* 4/27/95 8,250 8,174,237
U.S. Treasury Bill................................... 5.95%* 5/11/95 20,000 19,771,814
------------
193,232,252
------------
TOTAL INVESTMENTS
(AMORTIZED COST $282,965,881) -- 99.4%............... 282,965,881
Other assets in excess of liabilities -- 0.6%......... 1,734,865
------------
NET ASSETS -- 100%.................................... $284,700,746
==============
</TABLE>
- ---------------
* Effective yield.
See Notes to Financial Statements.
19
<PAGE> 12
HORIZON TAX-EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 98.0%
ALABAMA -- 1.4%
Port City Medical Clinic Board Revenue
Bond, Mobile Infirmary Association, VMIG1/A1
Ser. 1992-A......................... A1/A+ 4.25% 6/23/95 $ 6,475 $ 6,475,000
------------
ARIZONA -- 3.6%
Maricopa County, Pollution Control
Revenue Bond, Southern California
Edison Co., Palo Verde Proj., Ser. P1/A1
E................................... A1/A 4.30% 5/12/95 1,600 1,600,000
Salt River Proj., Arizona Agriculture
Impt. & Power Dist., Ser. C
(LC -- Banque Nationale De Paris) VMIG1/Aa
(final maturity date 1/01/09)*...... NR/AA 4.15% 3/07/95 14,840 14,840,000
------------
16,440,000
------------
CALIFORNIA -- 9.8%
California Pollution Control Revenue
Bond, Southern California Edison,
Ser. A (final maturity date VMIG1/A2
2/28/08)*........................... A1+/A+ 4.00% 3/01/95 4,000 4,000,000
California Revenue Anticipation Notes,
Ser. B (final maturity date MIG1/NR
6/28/95)*........................... SP1+/NR 4.14% 3/07/95 7,000 7,000,000
California State General Obligation
Bond, Ser. B (LC -- International
Nederlanden Funding, New York) VMIG1/Aa2
(final maturity date 11/01/08)*..... A/NR 4.10% 3/07/95 5,000 5,000,000
Los Angeles County, Metropolitan
Transportation Auth., Union Station
Gateway, Tax and Revenue
Anticipation Notes, Ser. A (FSA
Insured) (final maturity date VMIG1/Aaa
7/01/25)*........................... NR/AAA 4.15% 3/07/95 8,000 8,000,000
Los Angeles County, Unified School
District, Tax and Revenue MIG1/NR
Anticipation Notes.................. SP1+/NR 4.50% 7/10/95 10,000 10,032,545
Newport Beach Hospital Revenue Bond,
Hoag Memorial Presbyterian Hospital VMIG1/A1
(final maturity date 10/01/22)*..... A1+/AA 3.75% 3/01/95 900 900,000
San Francisco City & County, Tax and MIG1/NR
Revenue Anticipation Notes.......... SP1+/NR 4.25% 7/15/95 10,000 10,021,455
------------
44,954,000
------------
COLORADO -- 2.1%
Arapahoe County, Capital Improvement
TRFD Highway Revenue Bond, Ser. D
(LC -- Union Bank of Switzerland) NR/NR
(final maturity date 8/31/26)*...... A1+/AAA 4.45% 8/31/95 7,000 7,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
20
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Arapahoe County, Capital Improvement
TRFD Highway Revenue Bond, Ser. G NR/NR
(final maturity date 8/31/26)*...... SP1+/NR 4.45% 8/31/95 $ 2,500 $ 2,500,000
------------
9,500,000
------------
DISTRICT OF COLUMBIA -- 1.7%
District of Columbia, General
Obligation Bond, Ser. A-4
(LC -- Toronto Dominion Bank) (final VMIG1/Aa2
maturity date 10/01/07)*............ A1+/AA 4.40% 3/01/95 6,500 6,500,000
District of Columbia, General
Obligation Bond, Ser. B (LC -- Union
Bank of Switzerland) (final maturity VMIG1/Aaa
date 6/01/03)*...................... A1+/AAA 4.50% 3/01/95 1,300 1,300,000
------------
7,800,000
------------
FLORIDA -- 8.6%
Florida State Board of Education,
Capital Outlay (final maturity date NR/Aa
6/01/23)*........................... NR/AA 4.30% 6/01/95 10,500 10,500,000
St. Lucie County, Pollution Control
Rev., Florida Power & Light Co. VMIG1/A2
Proj., Ser. 1994 A.................. A1/A+ 4.20% 4/17/95 2,000 2,000,000
St. Lucie County, Pollution Control
Rev., Florida Power & Light Co. VMIG1/A2
Proj., Ser. 1994 A.................. A1/A+ 3.95% 4/06/95 15,000 15,000,000
St. Lucie County, Pollution Control
Rev., Florida Power & Light Co. VMIG1/A2
Proj., Ser. 1994 B.................. A1/A+ 4.20% 4/17/95 7,000 7,000,000
St. Lucie County, Pollution Control
Rev., Florida Power & Light Co. VMIG1/A2
Proj., Ser. 1994 B.................. A1/A+ 3.95% 3/01/95 5,000 5,000,000
------------
39,500,000
------------
HAWAII -- 2.0%
Hawaii State General Obligation Bonds,
Ser. CC (LC -- Banque Nationale De
Paris) (final maturity date VMIG1/Aa
2/01/02)*........................... NR/AA 4.15% 3/07/95 8,920 8,920,000
------------
ILLINOIS -- 11.0%
Chicago O'Hare International Airport,
American Airlines, Ser. C
(LC -- Societe Generale) (final VMIG1/Aa2
maturity date 1/01/18)*............. A1+/AA 4.00% 3/07/95 5,600 5,600,000
Chicago O'Hare International Airport,
American Airlines, Ser. C
(LC -- Sanwa Bank, Ltd.) (final P1/Aa3
maturity date 12/01/17)*............ NR/NR 3.95% 3/01/95 6,900 6,900,000
Chicago O'Hare International Airport,
American Airlines, Ser. D
(LC -- Sanwa Bank, Ltd.) (final P1/Aa3
maturity date 12/01/17)*............ NR/NR 3.95% 3/01/95 7,500 7,500,000
Illinois Health Facility Auth.,
Elmhurst Memorial Hospital, Ser. B VMIG1/A1
(final maturity date 1/01/20)*...... NR/NR 3.80% 3/01/95 5,175 5,175,000
</TABLE>
- ---------------
See Notes to Financial Statements.
21
<PAGE> 14
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Illinois Health Facility Auth.,
Franciscan Sisters Health (final VMIG1/A
maturity date 1/01/18)*............. NR/NR 3.80% 3/01/95 $ 4,880 $ 4,880,000
Illinois Housing Development Auth.
Rev., Homeowner Mortgage, Ser. C-1 VMIG1/Aa
(final maturity date 8/01/26)*...... SP1+/NR 4.00% 5/01/95 8,290 8,290,000
Illinois State Development Finance
Authority, Pollution Control Rev.,
Illinois Power Co. Proj., Ser. A
(LC -- Canadian Imperial Bank of VMIG1/Aa3
Commerce)........................... A1+/AA- 4.00% 4/07/95 2,000 2,000,000
Illinois State General Obligation MIG1/NR
Certificates........................ SP1+/NR 4.75% 6/15/95 10,000 10,019,413
------------
50,364,413
------------
INDIANA -- 1.9%
Mt. Vernon City, Pollution Control &
Solid Waste Disposal Revenue Bond,
General Electric Co. Proj., Ser. P1/Aaa
1989 A.............................. A1+/AAA 4.15% 4/07/95 4,950 4,950,000
Mt. Vernon City, Pollution Control &
Solid Waste Disposal Revenue Bond,
General Electric Co. Proj., Ser. P1/Aaa
1989 A.............................. A1+/AAA 3.80% 3/24/95 3,690 3,690,000
------------
8,640,000
------------
KANSAS -- 0.2%
Burlington County Pollution Control
Rev., Kansas City Electric Power
Corp., Ser. 1985C-1 (LC -- Societe P1/Aa3
Generale)........................... A1+/AA- 4.20% 4/17/95 1,015 1,015,000
------------
KENTUCKY -- 1.6%
Boone County, Industrial Development
Auth., Square D Co. Proj., Ser. A
(LC -- Societe Generale) (final NR/NR
maturity date 3/01/03)*............. A1+/AA 4.10% 3/07/95 1,000 1,000,000
Trimble County, Pollution Control
Rev., Louisville Gas & Electric Co., VMIG1/Aa2
Ser. A.............................. A1+/AA 3.75% 3/07/95 6,285 6,285,000
------------
7,285,000
------------
LOUISIANA -- 2.5%
Louisiana State General Obligation
Bonds, Tax Exempt Eagle Trust, Ser.
1994 (AMBAC Insured) (final maturity NR/NR
date 5/01/09)*...................... A1/AA 4.24% 3/07/95 11,600 11,600,000
------------
MARYLAND -- 7.0%
Maryland State Community Dev. Admin.,
Department of Housing and Community
Dev., Single Family Housing Prog., VMIG1/Aa
Second Ser. (MHF Pool Ins.)**....... NR/NR 3.30% 3/30/95 4,700 4,700,000
</TABLE>
- ---------------
See Notes to Financial Statements.
22
<PAGE> 15
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Maryland State Health & Higher
Educational Facility Revenue Bonds,
Ser. A (LC -- First National Bank of
Chicago) (final maturity date VMIG1/A1
4/01/35)*........................... NR/NR 4.35% 3/07/95 $ 27,200 $ 27,200,000
------------
31,900,000
------------
MASSACHUSETTS -- 2.1%
Massachusetts State Ind. Finance
Agency, Pollution Control Rev., New VMIG1/A1
England Power Co. Proj., Ser. 1992.. A1/A+ 4.05% 4/05/95 8,700 8,700,000
Massachusetts State Water Resource NR/Aaa
Authority, Ser. A................... NR/AAA 6.70% 4/01/95 1,110 1,112,380
------------
9,812,380
------------
MICHIGAN -- 0.5%
Northville Development Corp., Thrifty
Proj. (LC -- Bankers Trust) (final P1/A1
maturity date 5/01/14)*............. A1/A+ 4.375% 3/07/95 2,400 2,400,000
------------
MISSOURI -- 0.6%
Columbia Missouri Special Obligation
Revenue Bonds, Ser. A (LC -- Toronto
Dominion Bank) (final maturity date VMIG1/Aa2
6/01/08)*........................... NR/NR 4.00% 3/07/95 2,600 2,600,000
------------
NEVADA -- 3.8%
Clarke County, Nevada Airport Imp.
Rev., Ser. A (MBIA Insured) (final VMIG1/Aaa
maturity date 7/01/12)*............. A1+/AAA 3.95% 3/07/95 6,700 6,700,000
Clarke County, Nevada Airport Imp.
Rev., Ser. A-1 (LC -- Toronto
Dominion Bank) (final maturity date VMIG1/Aa2
7/01/25)*........................... A1+/AA+ 4.00% 3/07/95 7,500 7,500,000
Nevada Housing Division, Multi-Unit
Park Vista Apartments, Ser. A
(LC -- Sumitomo Trust & Bank,
California) (final maturity date NR/NR
10/01/10)*.......................... A1/A+ 4.10% 3/07/95 3,200 3,200,000
------------
17,400,000
------------
NEW YORK -- 5.9%
New York City General Obligation
Bonds, Subser. A-8 (LC -- Sanwa
Bank, Ltd., Chicago) (final maturity VMIG1/Aa3
date 8/01/17)*...................... A1+/AA- 4.05% 3/01/95 2,000 2,000,000
New York City Revenue Anticipation MIG1/NR
Notes, Ser. A....................... SP1/NR 4.50% 4/12/95 10,000 10,009,155
New York City Revenue Anticipation MIG1/NR
Notes, Ser. B....................... SP1/NR 4.75% 6/30/95 5,000 5,012,347
New York City Water Eagle Trust, Ser.
94C-2 (MBIA Insured) (final maturity NR/NR
date 6/15/18)*...................... A1/AA 4.24% 3/07/95 10,000 10,000,000
------------
27,021,502
------------
OHIO -- 4.8%
Montgomery County, Miami Valley P1/A1
Hospital, Ser. B (LC -- Fuji Bank).. A1/A+ 3.75% 3/01/95 9,525 9,525,000
</TABLE>
- ---------------
See Notes to Financial Statements.
23
<PAGE> 16
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Montgomery County, Miami Valley P1/A1
Hospital, Ser. C (LC -- Fuji Bank).. A1/A+ 3.85% 3/02/95 $ 6,625 $ 6,625,000
Student Loan Funding Corp.,
Cincinnati, Ser. 1983A (LC -- Fuji
Bank) (final maturity date VMIG1/A1
12/29/98)*.......................... NR/NR 4.00% 3/07/95 6,000 6,000,000
------------
22,150,000
------------
OREGON -- 0.3%
Multinomah County, Oregon School
District No 1J, Portland, Tax MIG1/NR
Anticipation Notes.................. SP1+/NR 3.75% 6/29/95 1,500 1,500,714
------------
PENNSYLVANIA -- 10.9%
Allegheny County, Industrial
Development Authority, Pollution
Control Rev., Duquesne Light Co.,
Ser. A (LC -- Canadian Imperial Bank
of Commerce) (final maturity date P1/NR
9/01/11)*........................... A1+/AA- 4.75% 9/01/95 7,500 7,500,000
Allegheny County, Tender Option
Certificates, Custodial Receipt
Med., Ser. BT-63 (AMBAC Insured) VMIG1/Aaa
(final maturity date (9/01/04)*..... NR/AAA 4.10% 3/07/95 3,000 3,000,000
Delaware County, Industrial Dev.
Authority, Solid Waste Rev., Scott
Paper Co., Ser. A (LC -- Fuji Bank) P1/A1
(final maturity date 12/01/18)*..... A1/A+ 4.10% 3/07/95 3,100 3,100,000
Delaware Valley, Regional Fin.
Authority, Ser. B (LC -- Marine
Midland Bank, Hong Kong and Shanghai
Bank) (final maturity date VMIG1/A3
12/01/20)*.......................... A2/A- 4.10% 3/07/95 6,000 6,000,000
Delaware Valley, Regional Fin.
Authority Ser. D (LC -- Marine
Midland Bank, Hong Kong and Shanghai
Bank) (final maturity date VMIG1/A3
12/01/20)*.......................... A2/A- 4.10% 3/07/95 21,900 21,900,000
Emmaus General Authority Revenue Bond,
Subser. E-4 (LC -- Canadian Imperial
Bank of Commerce) (final maturity NR/NR
date 3/01/24)*...................... SP1/A1+ 4.05% 3/07/95 1,000 1,000,000
Pennsylvania State, Tax Anticipation MIG1/NR
Notes, First Ser. .................. SP1+/NR 5.00% 6/30/95 7,500 7,525,396
------------
50,025,396
------------
TENNESSEE -- 1.2%
Rutherford County, Industrial
Development Authority, Square D Co.
Proj. (LC -- Societe Generale) NR/NR
(final maturity date 4/01/17)*...... A1+/AA 4.10% 3/07/95 5,600 5,600,000
------------
TEXAS -- 2.8%
Austin County, Industrial Development
Corp., Justin Industries Inc. Proj.
(LC -- Citibank, New York) (final P1/A2
maturity date 12/01/14)*............ NR/NR 4.05% 3/07/95 3,300 3,300,000
</TABLE>
- ---------------
See Notes to Financial Statements.
24
<PAGE> 17
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Grapevine Industrial Devel. Corp.
Revenue Bond, American Airlines,
Ser. B-2 (LC -- Morgan Guaranty
Trust) (final maturity date P1/Aa1
12/01/24)*.......................... NR/NR 3.90% 3/01/95 $ 3,200 $ 3,200,000
Texas Department of Housing &
Community Affairs, Single Family NR/NR
Housing (FGIC Insured).............. A1+/NR 4.50% 4/03/95 1,150 1,149,993
West Side Calhoun County Development
Corp., Pollution Control Rev., Sohio
Chemical Co. Proj. (final maturity P1/A1
date 12/01/15)*..................... A1+/AA- 3.75% 3/01/95 5,200 5,200,000
------------
12,849,993
------------
UTAH -- 3.3%
Intermountain Power Supply Agency VMIG1/Aa
Revenue Bond, Ser. F................ A1+/AA- 4.20% 4/17/95 1,000 1,000,000
Intermountain Power Supply Agency VMIG1/A1
Revenue Bond, Ser. F................ A1/AA- 4.00% 4/07/95 2,700 2,700,000
Utah State Housing Finance Agency,
Single Family Mortgage, Issue C VMIG1/Aa
(final maturity date 1/01/27)*...... NR/NR 4.10% 3/07/95 1,300 1,300,000
Utah State Housing Finance Agency,
Single Family Mortgage, Issue D VMIG1/Aa
(final maturity date 7/01/16)*...... NR/NR 4.10% 3/07/95 9,900 9,900,000
------------
14,900,000
------------
WASHINGTON -- 4.5%
Port Woodland, Washington Industrial
Devel. Corp., Columbia River
Carbonates (LC -- Swiss Bank, NY) NR/NR
(final maturity date 9/30/95)*...... NR/NR 3.85% 3/01/95 1,000 1,000,000
Washington State General Aa/NR
Obligation Bond..................... NR/AA 8.00% 10/01/95 3,000 3,060,565
Washington State Healthcare Facility
Authority, Sisters of Providence,
Ser. B (final maturity date VMIG1/A1
10/01/05)*.......................... A1+/AA- 3.95% 3/01/95 1,400 1,400,000
Washington State Healthcare Facility
Authority, Sisters of Providence,
Ser. C (final maturity date VMIG1/A1
10/01/05)*.......................... A1+/AA- 3.95% 3/01/95 3,800 3,800,000
Washington State Public Power Supply
Sys., Nuclear Proj. No. 1, Ser. 1A-2
(LC -- Industrial Bank of Japan,
Ltd.) (final maturity date VMIG1/A1
7/01/17)*........................... A1+/AA- 4.05% 3/07/95 1,800 1,800,000
Washington State, Ser. R-94A
(LC -- Banque Francaise) (final VMIG1/Aa
maturity date 8/01/02)*............. A1+/AA 4.15% 3/07/95 9,370 9,370,000
------------
20,430,565
------------
WISCONSIN -- 3.9%
Milwaukee County, Revenue Anticipation MIG1/NR
Notes............................... NR/NR 4.25% 6/30/95 15,000 15,033,620
</TABLE>
- ---------------
See Notes to Financial Statements.
25
<PAGE> 18
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- --------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Wisconsin State Health Facility
Authority, Franciscan Health Care,
Ser. A-2 (LC -- Toronto Dominion
Bank) (final maturity date VMIG1/Aa2
1/01/16)*........................... A1+/AA+ 3.80% 3/07/95 $ 3,000 $ 3,000,000
------------
18,033,620
------------
TOTAL INVESTMENTS (AMORTIZED
COST $449,117,583) -- 98.0%........... 449,117,583
Other assets in excess of
liabilities -- 2.0%................... 9,305,119
------------
NET ASSETS -- 100.0%................... $458,422,702
==============
</TABLE>
- ---------------
AMBAC -- American Municipal Bond Assurance Corporation.
FGIC -- Financial Guaranty Insurance Company.
FSA -- Financial Securities Association.
LC -- Letter of credit.
MBIA -- Municipal Bond Insurance Association.
NR -- No rating available.
+ The ratings provided consist of short-term and long-term ratings for both
Moody's and S&P. The first row consists of the short-term/long-term Moody's
ratings and the second row consists of short-term/long-term S&P ratings.
* Variable rate security. Interest rates stated are as of February 28, 1995.
Maturity date reflects the later of the next rate change date or the next
put date.
** Maturity date reflects the next put date.
See Notes to Financial Statements.
26
<PAGE> 19
PACIFIC HORIZON
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ------------------------------------ ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 99.3%
CALIFORNIA -- 99.3%
Anaheim Certificates of
Participation, 1993 Refund Project
(AMBAC Insured) (LC -- Ind. Bank of
Japan Ltd.) (final maturity date VMIG1/A
8/01/19)*.......................... A1/AAA 3.90% 3/07/95 $ 8,300 $ 8,300,000
California Alternative Energy Source
Financing Auth., Cogeneration Rev. P1/Aaa
(final maturity date 10/01/20)*.... A1+/AAA 3.95% 3/07/95 3,500 3,500,000
California General Obligation
(LC -- International Nederlanden,
NY) (final maturity date VMIG1/Aa2
11/01/08)*......................... A/NR 4.10% 3/01/95 5,200 5,200,000
California General Obligation Bond, NR/Aaa
Ser. 92A-2 (FGIC Insured).......... NR/AAA 4.10% 5/01/95 10,000 10,000,000
California General Obligation,
Various Purpose Certificates of
Participation (MBIA Insured) (final
maturity P1/Aaa
date 2/01/06)*..................... A1+/AAA 4.19% 3/07/95 10,000 10,000,000
California Health Facs. Finance
Auth., St. Francis Memorial
Hospital (LC -- Ind. Bank of Japan
Ltd.) (final maturity NR/NR
date 11/01/19)*.................... NR/NR 3.75% 3/01/95 4,625 4,625,000
California Health Facs. Finance
Auth., St. Joseph's Health Syst.,
Series A (final maturity VMIG1/Aa
date 7/01/13)*..................... A1+/AA 3.70% 3/01/95 1,505 1,505,000
California Health Facs. Finance
Auth., St. Joseph's Health Syst.,
Series B (final maturity VMIG1/Aa
date 7/01/09)*..................... A1+/AA 3.70% 3/01/95 1,300 1,300,000
California Housing Finance Auth.,
Multi-Unit Rent Housing Rev. (MBIA
Insured) (final maturity date VMIG1/Aa
8/01/16)*.......................... A1+/AAA 4.20% 5/01/95 5,000 5,000,000
California Pollution Control Finance
Auth., Chevron USA Proj., P1/Aa2
Ser. 84-B*......................... NR/AA 3.70% 6/15/95 1,000 1,000,000
California Pollution Control Finance
Auth., Dow Chemical, Commercial P1/Aa2
Paper.............................. A1+/AAA 3.95% 5/22/95 1,000 1,000,000
California Pollution Control Finance
Auth., Dow Chemical, Commercial P1/Aa2
Paper.............................. A1+/AAA 3.85% 3/09/95 1,000 1,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
27
<PAGE> 20
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ------------------------------------ ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
California Pollution Control Finance
Auth., Occidental Geothermal
(LC -- ABN-AMRO Bank) (final NR/NR
maturity date 9/01/13)*............ A1+/AA- 3.75% 3/07/95 $ 2,100 $ 2,100,000
California Pollution Control Finance
Auth., Pacific Gas & Electric, P1/Aa2
Commercial Paper................... A1+/AAA 4.25% 5/12/95 10,000 10,000,000
California Pollution Control Finance
Auth., Pacific Gas & Electric,
Commercial Paper P1/Aa2
(LC -- Swiss Bank)................. A1+/AAA 4.05% 4/03/95 5,000 5,000,000
California Pollution Control Finance
Auth., Pacific Gas & Electric, P1/Aa2
Commercial Paper................... A1+/AAA 3.90% 4/13/95 3,000 3,000,000
California Pollution Control Finance
Auth., Solid Waste Disposal Revenue
Bond, Shell Oil (final maturity VMIG1/Aa2
date 10/01/24)*.................... NR/NR 3.95% 3/01/95 3,500 3,500,000
California Pollution Control Finance
Auth., So. Cal. Edison, Commercial P1/Aa2
Paper.............................. A1+/AAA 4.10% 3/29/95 2,000 2,000,000
California Pollution Control Finance
Auth., So. Cal. Edison, Commercial P1/Aa2
Paper.............................. A1+/AAA 4.20% 5/11/95 3,600 3,600,000
California Pollution Control Finance
Auth., So. Cal. Edison, Commercial P1/Aa2
Paper.............................. A1+/AAA 4.00% 3/09/95 2,900 2,900,000
California Pollution Control Finance
Auth., So. Cal. Edison, Commercial P1/Aa2
Paper.............................. A1+/AAA 3.95% 5/25/95 4,000 4,000,000
California Pollution Control Finance
Auth., So. Cal. Edison, Series A VMIG1/A2
(final maturity date 2/28/08)*..... A/A1 4.00% 3/01/95 1,300 1,300,000
California Pollution Control Finance
Auth., So. Cal. Edison, Series B VMIG1/A2
(final maturity date 2/28/08)*..... A/A1 4.00% 3/01/95 1,200 1,200,000
California Pollution Control Finance
Auth., So. Cal. Edison, Series C VMIG1/A2
(final maturity date 2/28/08)*..... A/A1 4.00% 3/01/95 500 500,000
California Pollution Control Finance
Auth., So. Cal. Edison, Series D VMIG1/A2
(final maturity date 2/28/08)*..... A/A1 4.00% 3/01/95 2,700 2,700,000
California Revenue Anticipation
Notes, Libor Index FRN (final MIG1/NR
maturity date 6/28/95)*............ SP1+/NR 4.365% 3/01/95 9,000 9,000,000
California Revenue Anticipation MIG1/NR
Notes, Ser. A...................... SP1/NR 5.00% 6/28/95 7,730 7,752,515
California Revenue Anticipation
Notes, Ser. B (final maturity date MIG1/NR
6/28/95)*.......................... SP1+/NR 4.14% 3/07/95 8,500 8,498,544
California Statewide Comm. Dev.
Auth., Certificates of
Participation, St. Joseph's Health VMIG1/Aa
(final maturity date 7/01/24)*..... A1+/AA 3.70% 3/01/95 2,000 2,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
28
<PAGE> 21
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ------------------------------------ ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
California Statewide Comm. Dev.
Auth., Certificates of
Participation, Uni Health (AMBAC
Insured) (final maturity date VMIG1/Aa
8/04/00)*.......................... A1/AAA 4.10% 3/07/95 $ 3,000 $ 3,000,000
California Statewide Comm. Dev.
Auth., Solid Waste Facilities Rev.
Bonds (AMT) (final maturity date NR/NR
12/15/24)*......................... A1/AAA 3.95% 3/01/95 5,000 5,000,000
P1/Aa2
Chula Vista, Commercial Paper....... A1+/AAA 4.15% 3/30/95 3,000 3,000,000
Chula Vista Industrial Development
Rev., San Diego Gas and Electric
Co., Ser. B (AMT) (final maturity VMIG1/A1
date 12/01/27)*.................... A1/A+ 4.05% 3/07/95 11,000 11,000,000
Intercomm. Hosp. Finance Auth.
Certificates of Participation
(Prerefunded 8/1/95 at 103) (final NR/NR
maturity date 8/01/15)............. NR/AAA 9.75% 5/05/95 4,000 4,204,229
Kern County, Board of Education, Tax NR/NR
and Revenue Anticipation Notes..... SP1+/NR 4.25% 6/30/95 10,000 10,017,560
Long Beach Memorial Health Facs.
Rev., Memorial Health Services VMIG1/A1
(final maturity date 10/01/16)*.... A1+/AA- 3.90% 3/07/95 1,400 1,400,000
Los Angeles Certificates of
Participation, Simon Wiesenthal
Ctr., Series S (LC -- National
Australia Bank) (final maturity VMIG1/A
date 6/01/95)*..................... NR/NR 3.95% 3/07/95 2,700 2,700,000
Los Angeles County Tax and Revenue VMIG1/NR
Anticipation Notes................. A1+/NR 4.50% 6/30/95 6,750 6,750,610
Los Angeles County Tax and Revenue VMIG1/NR
Anticipation Notes................. A1+/NR 4.50% 7/10/95 5,800 5,818,071
Los Angeles County Tax and Revenue
Commercial Paper (LC -- National P1/Aa2
Westminister)...................... A1+/AAA 4.10% 5/10/95 3,800 3,800,000
Los Angeles County Transportation
Comm., Sales Tax Rev., Ser. A VMIG1/Aa
(final maturity date 7/01/12)*..... A1+/AAA 3.70% 3/07/95 10,500 10,500,000
Los Angeles County Transportation
Comm., Sales Tax Rev., Ser. A, VMIG1/Aa
Commercial Paper................... A1+/NR 3.85% 3/07/95 5,000 5,000,000
Newport Beach Health Facility, Hoag
Memorial Hospital (final maturity VMIG1/A1
date 10/01/22)*.................... A1/AA 3.75% 3/01/95 2,755 2,755,000
Orange County Improvement Bond,
Dist. 88-1 (LC -- Industrial Bank
of Japan and Fuji Bank) (final VMIG1/A1
maturity date 9/02/18)*............ A1+/A+ 4.20% 3/01/95 9,000 9,000,000
Orange County Tax and Revenue
Anticipation Notes, Ser. B*
(LC -- Bank of America) (final NR/NR
maturity date 8/10/95)++........... SP3/NR 4.24% 3/01/95 4,500 4,500,000
</TABLE>
- ---------------
See Notes to Financial Statements.
29
<PAGE> 22
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ------------------------------------ ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Pico Rivera Redevelopment Agency,
Crossroads Plaza Project
(LC -- Wachovia Bank, Atlanta) NR/NR
(final maturity date 12/01/10)*.... A1/AA+ 3.75% 3/07/95 $ 1,600 $ 1,600,000
Riverside, California P1/Aa2
Transportation, Commercial Paper... A1+/AAA 3.80% 3/08/95 5,000 5,000,000
San Diego County, P1/Aa2
Commercial Paper................... A1+/AAA 3.90% 3/03/95 4,000 4,000,000
San Diego County Regional
Transmission, Sales Tax Rev., Ser.
A (FGIC Insured) (final maturity VMIG1/Aaa
date 4/01/08)*..................... A1+/AAA 3.90% 3/07/95 10,000 10,000,000
San Diego Housing Auth.,
La Cima Apartments, Ser. K
(LC -- Daiwa Bank, Ltd.) (final VMIG2/A3
maturity date 12/01/08)*........... NR/NR 4.50% 3/07/95 5,000 5,000,000
San Diego Housing Auth., Multifamily
Housing (LC -- Citibank, NY) (final VMIG1/A2
maturity date 12/01/08)*........... A2/NR 3.90% 3/07/95 4,000 4,000,000
San Francisco City and County,
Multifamily Housing
(LC -- Citibank, NY) (final NR/NR
maturity date 6/01/06)*............ A+/A1 3.75% 3/07/95 1,700 1,700,000
San Francisco City and County Tax MIG1/NR
and Revenue Anticipation Notes..... SP1+/NR 4.25% 7/15/95 5,000 5,010,727
San Joaquin County Trans. Auth.,
Sales Tax Revenue (LC -- Sumitomo
Bank, LTD) (final maturity date VMIG1/A1
4/01/11)*.......................... A+/A1 3.90% 3/07/95 2,200 2,200,000
Santa Clara Electric Rev.,
Ser. A (LC -- National Westminster
Bank, PLC) (final maturity date VMIG1/A2
7/01/10)*.......................... NR/NR 3.80% 3/07/95 1,000 1,000,000
Simi Valley Multifamily Housing
Rev., Cochran Street Project, Issue NR/NR
A (final maturity date 2/15/08)*... NR/NR 3.95% 3/07/95 4,000 4,000,000
Southern California Public Power
Auth., Power Project Rev. (final VMIG1/Aa
maturity date 7/01/04)*............ NR/NR 4.10% 3/07/95 6,500 6,500,000
Southern California Public Power
Auth., Trans. Proj. Rev.
(LC -- Swiss Bank) (final maturity VMIG1/Aaa
date 7/01/19)*..................... A1+/AAA 3.70% 3/07/95 9,600 9,600,000
</TABLE>
- ---------------
See Notes to Financial Statements.
30
<PAGE> 23
<TABLE>
<CAPTION>
RATINGS+
MOODY'S/ PRINCIPAL
S&P MATURITY AMOUNT VALUE
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
- ------------------------------------ ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Vallejo Industrial Development
Auth., Meyer Cookmare Ind., Ser. A
(LC -- Mitsubishi Bank Ltd.) (AMT) NR/NR
(final maturity date 12/01/23)*.... A1+/AA 4.35% 3/07/95 $ 3,300 $ 3,300,000
------------
TOTAL INVESTMENTS (AMORTIZED COST
$272,837,256) -- 99.3%............. 272,837,256
Other assets in excess of
liabilities -- 0.7%................ 1,808,189
------------
NET ASSETS -- 100.0%................ $274,645,445
==============
</TABLE>
- ---------------
LC -- Letter of credit.
AMT -- Subject to Alternative Minimum Tax.
AMBAC -- American Municipal Bond Assurance Corporation.
FGIC -- Financial Guaranty Insurance Company.
FRN -- Floating rate note.
MBIA -- Municipal Bond Insurance Association.
* Variable rate security. Interest rates stated are as of February 28, 1995.
Maturity date reflects the later of the next rate change date or the next put
date.
+ The ratings provided consist of short-term and long-term ratings for both
Moody's and S&P. The first row consists of the short-term/long-term Moody's
ratings and the second row consists of short-term/long-term S&P ratings.
++ The Portfolio's investment adviser issued a letter of credit for this
security, the market value of which was $675,000 at February 28, 1995. See
Note 3 to Financial Statements.
See Notes to Financial Statements.
31
<PAGE> 24
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME
FUND
--------------
<S> <C>
ASSETS
Investments in securities, at value (amortized cost
$1,759,412,474, $920,829,528, $520,927,537, $282,965,881,
$449,117,583 and $272,162,256, respectively).................. $1,759,412,474
Repurchase agreements (amortized cost $864,814,000,
$945,084,000, $359,299,000, $0, $0 and $0, respectively)...... 864,814,000
Cash............................................................ --
Receivable for investment securities sold....................... --
Receivable for portfolio shares sold............................ --
Interest receivable............................................. 6,338,971
Deferred organization costs and prepaid expenses................ 132,764
--------------
Total assets...................................................... 2,630,698,209
--------------
LIABILITIES
Advisory fees payable........................................... 200,830
Administration fees payable..................................... 200,830
Special management services fees payable (Pacific Horizon
Shares)....................................................... 261,931
Service Organization fees payable (Horizon Service Shares)...... 164,506
Dividends payable............................................... 6,834,382
Due to custodian................................................ 479,832
Payable for portfolio shares redeemed........................... 6,409,566
Payable for investment securities purchased..................... --
Accrued legal fees.............................................. 5,087
Other accrued expenses.......................................... 713,847
--------------
Total liabilities................................................. 15,270,811
--------------
NET ASSETS........................................................ $2,615,427,398
==============
Shares Outstanding ($0.001 par value)
Pacific Horizon Shares.......................................... 1,130,071,352
Horizon Shares.................................................. 622,973,633
Horizon Service Shares.......................................... 864,561,312
--------------
Total Shares Outstanding.......................................... 2,617,606,297
==============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE.... $1.00
====
COMPOSITION OF NET ASSETS:
Shares of common stock, at par.................................. $ 2,617,606
Additional paid-in capital...................................... 2,614,772,683
Accumulated undistributed net investment income................. 983,944
Accumulated net realized losses................................. (2,946,835)
Unrealized depreciation of investments.......................... --
--------------
NET ASSETS, FEBRUARY 28, 1995..................................... $2,615,427,398
==============
</TABLE>
- ---------------
See Notes to Financial Statements.
32
<PAGE> 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
TREASURY TAX-EXEMPT TAX-EXEMPT
TREASURY GOVERNMENT ONLY MONEY MONEY MARKET
FUND FUND FUND FUND FUND
-------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 920,829,528 $520,927,537 $282,965,881 $449,117,583 $272,837,256
945,084,000 359,299,000 -- -- --
94,972,531 -- 5,857 4,421,069 --
-- -- -- 12,112,644 4,011,008
9,098,217 -- -- -- --
3,099,077 1,296,432 2,016,082 3,679,790 2,095,853
116,768 213,286 147,196 32,543 21,751
-------------- ------------ ------------ ------------ ------------
1,973,200,121 881,736,255 285,135,016 469,363,629 278,965,868
-------------- ------------ ------------ ------------ ------------
150,574 -- 24,539 36,970 21,067
150,574 16,666 24,539 36,970 21,067
276,993 85,116 22,531 9,500 46,857
63,741 50,250 39,178 7,877 17,400
7,440,151 2,466,041 252,415 1,066,553 61,052
-- 93,908 -- -- 4,064,019
-- -- -- -- --
-- -- -- 9,711,008 --
4,640 4,821 4,769 4,709 5,703
57,598 97,743 66,299 67,340 83,258
-------------- ------------ ------------ ------------ ------------
8,144,271 2,814,545 434,270 10,940,927 4,320,423
-------------- ------------ ------------ ------------ ------------
$1,965,055,850 $878,921,710 $284,700,746 $458,422,702 $274,645,445
============== ============ ============ ============ ============
1,132,768,968 355,202,069 90,373,860 37,463,587 186,654,642
468,922,381 235,532,896 -- 381,910,056 --
363,911,318 289,114,358 194,441,752 39,168,103 88,008,624
-------------- ------------ ------------ ------------ ------------
1,965,602,667 879,849,323 284,815,612 458,541,746 274,663,266
============== ============ ============ ============ ============
$1.00 $1.00 $1.00 $1.00 $1.00
==== ==== ==== ==== ====
$ 1,965,603 $ 879,849 $ 284,816 $ 458,542 $ 274,663
1,962,661,377 878,969,474 284,530,796 458,083,204 274,999,483
667,877 148,038 -- -- 62,301
(239,007) (1,075,651) (114,866) (119,044) (16,002)
-- -- -- -- (675,000)
-------------- ------------ ------------ ------------ ------------
$1,965,055,850 $878,921,710 $284,700,746 $458,422,702 $274,645,445
============== ============ ============ ============ ============
</TABLE>
33
<PAGE> 26
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Operations
For the year ended February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME
FUND
------------
<S> <C>
INVESTMENT INCOME
Interest........................................................ $150,199,956
------------
Expenses
Advisory fees................................................... 3,250,830
Administration fees............................................. 3,315,268
Special management services fees
(Pacific Horizon Shares)...................................... 3,464,984
Service Organization fees
(Horizon Service Shares)...................................... 2,115,780
Custodian fees and expenses..................................... 301,640
Transfer agent fees and expenses................................ 295,181
Registration fees............................................... 143,892
Insurance expense............................................... 131,123
Membership fees................................................. 90,323
Audit fees...................................................... 57,443
Legal fees...................................................... 48,539
Reports to shareholders......................................... 43,521
Directors' fees................................................. 23,318
Amortization of organization costs.............................. --
Other expenses.................................................. 17,573
------------
13,299,415
Less: Fee waivers and expense reimbursements...................... (1,869,860)
------------
11,429,555
------------
Net Investment Income............................................. 138,770,401
REALIZED (LOSS) GAIN ON INVESTMENTS
Net realized (loss) gain on securities transactions............. (70,528,584)
Net change in unrealized depreciation of investments............ --
------------
Net realized (loss) gain on investments........................... (70,528,584)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. $ 68,241,817
============
</TABLE>
- ---------------
See Notes to Financial Statements.
34
<PAGE> 27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT
TREASURY TAX-EXEMPT MONEY
TREASURY GOVERNMENT ONLY MONEY MARKET
FUND FUND FUND FUND FUND
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$97,394,843 $31,025,824 $13,378,512 $15,869,219 $9,295,308
----------- ----------- ----------- ----------- ----------
2,140,125 649,374 301,618 513,567 301,964
2,140,125 649,374 301,618 513,567 301,964
3,830,002 774,259 191,572 135,034 639,503
989,269 590,188 604,380 103,606 255,299
326,857 147,722 77,719 100,521 78,788
56,762 83,054 64,178 75,450 66,926
91,034 -- 24,880 52,871 --
73,454 17,535 10,027 14,952 9,749
40,447 -- 1,284 3,989 2,209
44,754 27,481 32,013 45,198 53,534
23,875 27,770 20,951 42,790 22,480
30,000 28,114 28,792 51,019 24,283
22,408 23,093 22,179 21,538 23,388
-- -- 26,543 -- 5,106
13,963 6,567 8,926 23,892 4,492
----------- ----------- ----------- ----------- ----------
9,823,075 3,024,531 1,716,680 1,697,994 1,789,685
-- (513,473) (16,626) (23,222) --
----------- ----------- ----------- ----------- ----------
9,823,075 2,511,058 1,700,054 1,674,772 1,789,685
----------- ----------- ----------- ----------- ----------
87,571,768 28,514,766 11,678,458 14,194,447 7,505,623
505,457 (6,104,207) (48,264) (29,085) 31,226
-- -- -- -- (675,000)
----------- ----------- ----------- ----------- ----------
505,457 (6,104,207) (48,264) (29,085) (643,774)
----------- ----------- ----------- ----------- ----------
$88,077,225 $22,410,559 $11,630,194 $14,165,362 $6,861,849
=========== =========== =========== =========== ==========
</TABLE>
35
<PAGE> 28
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME FUND
--------------------------------------
YEAR ENDED
--------------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 1994
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income............................ $ 138,770,401 $ 426,788,773
Net realized (loss) gain on securities
transactions................................... (70,528,584) (9,624,856)
---------------- -----------------
Net increase in net assets resulting from
operations....................................... 68,241,817 417,163,917
---------------- -----------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME
Pacific Horizon Shares........................... (45,136,378) (33,987,808)
Horizon Shares................................... (56,633,687) (368,842,704)
Horizon Service Shares........................... (36,337,275) (23,826,386)
---------------- -----------------
Total dividends to shareholders from net
investment income................................ (138,107,340) (426,656,898)
---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED
GAINS
Pacific Horizon Shares........................... -- (28,939)
Horizon Shares................................... -- (240,001)
Horizon Service Shares........................... -- (19,780)
---------------- -----------------
Total distributions to shareholders from net
realized gains................................... -- (288,720)
---------------- -----------------
PORTFOLIO SHARE TRANSACTIONS
(at $1.00 per share) (Note 5)
Net proceeds from shares subscribed.............. 22,779,590,840 127,421,725,627
Net asset value of shares issued to shareholders
in reinvestment of dividends and
distributions.................................. 44,544,475 57,806,131
Cost of shares redeemed.......................... (26,110,723,254) (133,660,879,565)
---------------- -----------------
Net (decrease) increase in net assets from
Portfolio share transactions................... (3,286,587,939) (6,181,347,807)
---------------- -----------------
Increase due to capital contribution from
investment advisor (Note 3).................... 77,411,877 --
---------------- -----------------
TOTAL (DECREASE) INCREASE......................... (3,279,041,585) (6,191,129,508)
NET ASSETS
Beginning of year................................ 5,894,468,983 12,085,598,491
---------------- -----------------
End of year (Including undistributed net
investment income of $983,944 and $320,883,
respectively, for the Prime Fund, $667,877 and
$667,877, respectively, for the Treasury Fund,
and $148,038 and $0, respectively, for the
Government Fund)............................... $ 2,615,427,398 $ 5,894,468,983
=============== ================
</TABLE>
- ---------------
See Notes to Financial Statements.
36
<PAGE> 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY FUND GOVERNMENT FUND
----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED
----------------------------------- -----------------------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
1995 1994 1995 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 87,571,768 $ 73,382,362 $ 28,514,766 $ 27,035,580
505,457 (613,607) (6,104,207) (471,444)
--------------- --------------- --------------- ---------------
88,077,225 72,768,755 22,410,559 26,564,136
--------------- --------------- --------------- ---------------
(47,797,370) (43,438,611) (10,270,344) (3,676,002)
(23,889,473) (16,671,193) (7,955,039) (12,774,440)
(15,884,925) (13,272,558) (10,141,345) (10,585,138)
--------------- --------------- --------------- ---------------
(87,571,768) (73,382,362) (28,366,728) (27,035,580)
--------------- --------------- --------------- ---------------
-- -- -- --
-- -- -- --
-- -- -- --
--------------- --------------- --------------- ---------------
-- -- -- --
--------------- --------------- --------------- ---------------
8,879,909,861 12,103,081,433 5,672,050,494 6,629,378,510
9,576,672 7,176,901 9,946,142 10,124,130
(9,531,263,412) (12,228,498,572) (5,652,649,134) (5,789,000,819)
--------------- --------------- --------------- ---------------
(641,776,879) (118,240,238) 29,347,502 850,501,821
--------------- --------------- --------------- ---------------
-- -- 5,500,000 --
--------------- --------------- --------------- ---------------
(641,271,422) (118,853,845) 28,891,333 850,030,377
2,606,327,272 2,725,181,117 850,030,377 --
--------------- --------------- --------------- ---------------
$ 1,965,055,850 $ 2,606,327,272 $ 878,921,710 $ 850,030,377
============== ============== ============== ==============
</TABLE>
37
<PAGE> 30
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY ONLY FUND
----------------------------------
YEAR ENDED
----------------------------------
FEBRUARY 28, FEBRUARY 28,
1995 1994
--------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income................................. $ 11,678,458 $ 5,237,768
Net realized (loss) gain on securities transactions... (48,264) (66,602)
Net change in unrealized depreciation of
investments......................................... -- --
--------------- --------------
Net increase in net assets resulting from
operations.......................................... 11,630,194 5,171,166
--------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME
Pacific Horizon Shares................................ (2,335,606) (1,701,974)
Horizon Shares........................................ -- --
Horizon Service Shares................................ (9,342,852) (3,535,794)
--------------- --------------
Total dividends to shareholders from net investment
income................................................ (11,678,458) (5,237,768)
--------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS
Pacific Horizon Shares................................ -- --
Horizon Shares........................................ -- --
Horizon Service Shares................................ -- --
--------------- --------------
Total distributions to shareholders from net realized
gains................................................. -- --
--------------- --------------
PORTFOLIO SHARE TRANSACTIONS
(at $1.00 per share) (Note 5)
Net proceeds from shares subscribed................... 1,440,503,813 1,310,804,062
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions......... 9,877,274 4,117,763
Cost of shares redeemed............................... (1,509,340,461) (971,146,839)
--------------- --------------
Net (decrease) increase in net assets from Portfolio
share transactions.................................. (58,959,374) 343,774,986
--------------- --------------
Increase due to capital contribution from
investment advisor (Note 3)......................... -- --
--------------- --------------
TOTAL (DECREASE) INCREASE.............................. (59,007,638) 343,708,384
NET ASSETS
Beginning of year..................................... 343,708,384 --
--------------- --------------
End of year (Including undistributed net investment
income of $62,301 and $62,301, respectively, for the
California Tax-Exempt Money Market Fund)............ $ 284,700,746 $ 343,708,384
============== =============
</TABLE>
- ---------------
See Notes to Financial Statements.
38
<PAGE> 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA TAX-EXEMPT
TAX-EXEMPT MONEY FUND MONEY MARKET FUND
----------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
----------------------------------- -------------------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
1995 1994 1995 1994
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
$ 14,194,447 $ 10,932,468 $ 7,505,623 $ 5,585,153
(29,085) (75,030) 31,226 (5,858)
-- -- (675,000) --
--------------- --------------- ------------- -------------
14,165,362 10,857,438 6,861,849 5,579,295
--------------- --------------- ------------- -------------
(1,041,419) (559,450) (4,948,021) (3,258,550)
(12,086,919) (9,443,879) -- --
(1,066,109) (929,139) (2,557,602) (2,326,603)
--------------- --------------- ------------- -------------
(14,194,447) (10,932,468) (7,505,623) (5,585,153)
--------------- --------------- ------------- -------------
-- (483) -- --
-- (5,706) -- --
-- (652) -- --
--------------- --------------- ------------- -------------
-- (6,841) -- --
--------------- --------------- ------------- -------------
2,768,641,200 2,445,465,664 826,241,285 1,015,146,224
2,002,123 1,173,533 6,810,381 5,326,222
(2,924,830,407) (2,267,453,580) (885,907,562) (821,444,729)
--------------- --------------- ------------- -------------
(154,187,084) 179,185,617 (52,855,896) 199,027,717
--------------- --------------- ------------- -------------
-- -- 675,000 --
--------------- --------------- ------------- -------------
(154,216,169) 179,103,746 (52,824,670) 199,021,859
612,638,871 433,535,125 327,470,115 128,448,256
--------------- --------------- ------------- -------------
$ 458,422,702 $ 612,638,871 $ 274,645,445 $ 327,470,115
============== ============== ============ ============
</TABLE>
39
<PAGE> 32
PACIF IC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 -- GENERAL
Pacific Horizon Funds, Inc. (the "Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end management investment company. At February 28, 1995, the Fund
operated as a series company comprising sixteen portfolios. The accompanying
financial statements and notes are those of the Pacific Horizon Prime Fund (the
"Prime Fund"), Pacific Horizon Treasury Fund (the "Treasury Fund"), Pacific
Horizon Government Fund (the "Government Fund"), Pacific Horizon Treasury Only
Fund (the "Treasury Only Fund"), Horizon Tax-Exempt Money Fund (the "Tax-Exempt
Fund") and Pacific Horizon California Tax-Exempt Money Market Fund (the
"California Tax-Exempt Fund") (collectively, the "Portfolios") only.
On March 1, 1993, the First Funds of America -- Money Market Fund (the
"Money Market Fund") and the First Cash Funds of America -- Money Market
Portfolio (the "Money Market Portfolio") were reorganized with the Prime Fund,
in a tax-free reorganization. In addition, the First Funds of America -- Eagle
California Tax-Free Money Fund (the "Eagle Fund") and the First Cash Funds of
America -- California Tax-Free Portfolio (the "Tax-Free Portfolio") were
reorganized with the California Tax-Exempt Fund, in a tax-free reorganization.
Pursuant to the terms of the reorganization, the Money Market Fund and the Money
Market Portfolio transferred all of their assets and liabilities to the Prime
Fund in exchange for Pacific Horizon Shares and Horizon Service Shares,
respectively, of the Prime Fund with a value equivalent to the net value of the
assets and liabilities so transferred, and the Eagle Fund and the Tax-Free
Portfolio transferred all of their assets and liabilities to the California
Tax-Exempt Fund in exchange for Pacific Horizon Shares and Horizon Service
Shares, respectively, of the California Tax-Exempt Fund with a value equivalent
to the net value of the assets and liabilities so transferred. In connection
with the reorganization, the Money Market Fund's shareholders received
111,317,819 Pacific Horizon Shares of the Prime Fund, the Money Market
Portfolio's shareholders received 117,295,030 Horizon Service Shares of the
Prime Fund, the Eagle Fund's shareholders received 38,542,853 Pacific Horizon
Shares of the California Tax-Exempt Fund and the Tax-Free Portfolio's
shareholders received 122,765,767 Horizon Service Shares of the California
Tax-Exempt Fund. The aggregate net assets of the Money Market Fund, Money Market
Portfolio and the Prime Fund immediately prior to the reorganization were
$111,303,842, $117,286,909 and $12,085,598,491, respectively, while the
aggregate net assets of the California Tax-Exempt Fund, Eagle Fund and Tax Free
Portfolio immediately prior to the reorganization were $128,448,256, $38,540,835
and $122,760,649, respectively. Immediately following the reorganization, the
net assets of the Prime Fund and the California Tax-Exempt Fund were
$12,314,189,242 and $289,749,740,
40
<PAGE> 33
respectively. As a result of this reorganization, the California Tax-Exempt Fund
began offering two classes of shares -- Pacific Horizon Shares and Horizon
Service Shares.
Also on March 1, 1993, the First Funds of America -- Government Money Fund
(the "Government Money Fund") and the First Cash Funds of America -- Government
Portfolio (the "Government Portfolio") were reorganized with the Government
Fund, a new portfolio of the Fund, in a tax-free reorganization. Additionally,
the First Funds of America -- Treasury Money Fund (the "Treasury Money Fund")
and the First Cash Funds of America -- Treasury Portfolio (the "Treasury
Portfolio") were reorganized with the Treasury Only Fund, a new portfolio of the
Fund, in a tax-free reorganization. Pursuant to the terms of the reorganization,
the Government Money Fund and the Government Portfolio transferred all of their
assets and liabilities to the Government Fund in exchange for Pacific Horizon
Shares and Horizon Service Shares, respectively, of the Government Fund, and the
Treasury Money Fund and the Treasury Portfolio transferred all of their assets
and liabilities to the Treasury Only Fund in exchange for Pacific Horizon Shares
and Horizon Service Shares, respectively, of the Treasury Only Fund with values
equivalent to the net values of the assets and liabilities so transferred.
Pursuant to the terms of these reorganizations, the Government Money Fund's
shareholders received 102,576,278 Pacific Horizon Shares of the Government Fund,
the Government Portfolio's shareholders received 228,679,171 Horizon Service
Shares of the Government Fund, the Treasury Money Fund's shareholders received
35,556,959 Pacific Horizon Shares of the Treasury Only Fund and the Treasury
Portfolio's shareholders received 123,669,191 Horizon Service Shares of the
Treasury Only Fund. The aggregate net assets of the Government Money Fund,
Government Portfolio and the Government Fund immediately before the
reorganization were $102,576,278, $228,679,191 and $0, respectively, while the
aggregate net assets of the Treasury Money Fund, Treasury Portfolio and the
Treasury Only Fund immediately before the reorganization were $35,556,959,
$123,669,191 and $0, respectively. Immediately following the reorganization, the
net assets of the Government Fund and the Treasury Only Fund were $331,255,469
and $159,226,150, respectively.
On July 9, 1993, the Pacific Horizon Tax-Exempt Money Market Fund (the
"Pacific Horizon Tax-Exempt Fund") was reorganized with the Tax-Exempt Fund, in
a tax-free reorganization. Pursuant to the terms of the reorganization, the
Pacific Horizon Tax-Exempt Fund transferred all of its assets and liabilities to
the Tax-Exempt Fund in exchange for Pacific Horizon Shares of the Tax-Exempt
Fund. In connection with the reorganization, the Pacific Horizon Tax-Exempt
Fund's shareholders received 81,863,804 Pacific Horizon Shares of the Tax-Exempt
Fund. The aggregate net assets of the Tax-Exempt Fund and Pacific Horizon
Tax-Exempt Fund immediately before the reorganization were $433,140,827 and
$81,797,662, respectively. Immediately following the reorganization, the net
assets of the Tax-Exempt Fund were $514,938,489. As a result of this
reorganization the Tax-Exempt Fund began issuing three classes of
shares -- Pacific Horizon Shares, Horizon Shares and Horizon Service Shares.
41
<PAGE> 34
The Prime Fund, the Government Fund, the Treasury Fund and the Tax-Exempt
Fund issue three classes of shares (Pacific Horizon Shares, Horizon Shares and
Horizon Service Shares) while the Treasury Only Fund and the California
Tax-Exempt Fund issue two classes of shares (Pacific Horizon Shares and Horizon
Service Shares). Pacific Horizon Shares, Horizon Shares and Horizon Service
Shares are substantially the same except that Pacific Horizon Shares bear the
fees payable under the Fund's Special Management Services Agreement at an annual
rate of 0.32% of the average daily net asset value of the outstanding Pacific
Horizon Shares while Horizon Service Shares bear the fees payable, under the
Shareholder Services Plan, to institutions ("Service Organizations"), that
provide support services to their clients who beneficially own such shares. Such
fees are payable at an annual rate of 0.25% of the average daily net asset value
of the outstanding Horizon Service Shares.
Bank of America National Trust and Savings Association ("Bank of America"),
a subsidiary of BankAmerica Corporation, serves as the Fund's investment
adviser. Concord Holding Corporation ("Concord") serves as the Fund's
administrator and Concord Financial Group, Inc. (the "Distributor"), a
wholly-owned subsidiary of Concord, serves as the distributor of the Fund's
shares.
Prior to April 22, 1992, Security Pacific National Bank ("Security Pacific")
served as the Fund's investment adviser. On that date, Security Pacific's parent
corporation, Security Pacific Corporation, merged with BankAmerica Corporation,
and contemporaneously with that merger Security Pacific merged with Bank of
America. As a result of these mergers, Bank of America began providing such
investment advisory services to the Fund as of April 22, 1992. Bank of America
and Security Pacific provide or provided such investment advisory services to
the Portfolios on substantially identical terms (including the same fees rates)
as described below in Note 3.
On March 29, 1995, a merger agreement was approved by the Shareholders of
Concord whereby Concord became BISYS Investment Services, Inc., a wholly owned
subsidiary of the BISYS Group, Inc. ("BISYS"). BISYS serves as administrator and
distributor to the Fund on substantially identical terms as described below in
Note 3.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Each Portfolio seeks to maintain a net asset value per share of $1.00,
although there is no assurance that it will be able to do so on a continuous
basis, and has adopted certain investment, portfolio valuation and dividend and
distribution policies designed to enable it to do so.
A) PORTFOLIO VALUATIONS:
Portfolio securities are valued at amortized cost, which approximates market
value. The amortized cost method involves valuing a security at its cost on the
date of purchase and thereafter assuming a constant amortization to maturity of
the difference between the principal amount due at maturity and cost.
42
<PAGE> 35
B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on a trade date basis. Realized gains
and losses from securities transactions are recorded on the identified cost
basis. Interest income, including accretion of discount (for the Prime Fund,
Treasury Fund, Government Fund and Treasury Only Fund only) and amortization of
premium, is accrued daily.
C) REPURCHASE AGREEMENTS (PRIME FUND, TREASURY FUND, AND GOVERNMENT FUND):
The Fund's custodian and other banks acting in a subcustodian capacity take
possession of the collateral pledged for investments in repurchase agreements.
The underlying collateral is valued daily on a mark-to-market basis to determine
that the value, including accrued interest, is not less than 102% of the
repurchase price, including accrued interest. In the event of the seller's
default of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
D) DIVIDENDS TO SHAREHOLDERS:
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and paid monthly. Distributions of net
realized gains, if any, will be paid at least annually. However, to the extent
that net realized gains of any Portfolio can be offset by capital loss
carryovers from that Portfolio, such gains will not be distributed. Dividends
and distributions are recorded by each Portfolio on the ex-dividend date.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
E) FEDERAL INCOME TAXES:
For federal income tax purposes, each Portfolio is treated as a separate
entity for the purpose of determining the Portfolio's qualification as a
regulated investment company under the Internal Revenue Code (the "Code"). It is
the policy of the Fund that each Portfolio comply with the requirements of the
Code applicable to regulated investment companies, including the requirement
that each Portfolio distribute substantially all of its taxable income to
shareholders. Therefore, no federal income tax provision is required. It is the
policy of the Tax-Exempt Fund and the California Tax-Exempt Fund to qualify as
regulated investment companies which can distribute tax-exempt dividends by
complying with the requirements of the Code. At February 28, 1995, the cost of
securities in each Portfolio for federal income tax purposes was substantially
the same as for financial reporting purposes.
43
<PAGE> 36
At February 28, 1995, the following Portfolios had the following capital
loss carryovers:
<TABLE>
<CAPTION>
CAPITAL
LOSS
FUND CARRYOVER EXPIRATION DATE
- -------------------------------------------------- ---------- ----------------
<S> <C> <C>
Prime Fund........................................ $ 22,098 1999
1,171,786 2002
1,570,608 2003
----------
$2,764,492
==========
Treasury Fund..................................... $ 239,007 2002
==========
Government Fund................................... $ 129,811 2002
943,990 2003
----------
$1,073,801
==========
Treasury Only Fund................................ $ 21,276 2002
92,145 2003
----------
$ 113,421
==========
Tax-Exempt Fund................................... $ 35,348 1997
16,664 1998
14,011 2000
71,218 2002
19,132 2003
----------
$ 156,373
==========
California Tax-Exempt Fund........................ $ 5,893 2001
6,223 2002
----------
$ 12,116
==========
</TABLE>
To the extent these capital loss carryovers are used to offset future net
realized gains on securities transactions, the gains so offset will not be
distributed to shareholders, to the extent provided by the regulations under the
Code. Capital losses incurred after October 31, 1994 and within the fiscal year
are deemed to arise on the first business day of the following fiscal year. The
Government Fund, California Tax-Exempt Fund and Tax-Exempt Money Fund incurred
and elected to defer such losses of $2,264, $4,545 and $11,080, respectively.
Additionally, the Treasury Fund and California Tax-Exempt Fund utilized $21,681
and $35,692, respectively, of capital loss carryovers during the year ended
February 28, 1995.
F) OTHER:
The Fund accounts separately for the assets, liabilities and operations of
each Portfolio. Expenses directly attributable to each Portfolio are charged to
that Portfolio, while expenses which are attributable to more than one portfolio
of the Fund are allocated among the respective portfolios. The investment income
and the expenses (other than expenses incurred
44
<PAGE> 37
under the Special Management Services Agreement and Shareholder Services Plan)
of each Portfolio are allocated to the separate classes of shares based upon
their relative net asset value.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Portfolios have an Investment Advisory Agreement with Bank of America
and a Basic Administrative Services Agreement with Concord. Bank of America is
entitled to a fee from each Portfolio, which is accrued daily and payable
monthly, at an annual rate of 0.10% of each Portfolio's first $3 billion of net
assets, plus 0.09% of each Portfolio's next $2 billion of net assets, plus 0.08%
of each Portfolio's net assets in excess of $5 billion. Concord is entitled to a
fee from each Portfolio, which is accrued daily and payable monthly, at an
annual rate of 0.10% of each Portfolio's first $7 billion of net assets, plus
0.09% of each Portfolio's next $3 billion of net assets plus 0.08% of each
Portfolio's net assets in excess of $10 billion. For the year ended February 28,
1995, Bank of America and Concord voluntarily waived fees from the Prime Fund,
the Government Fund, the Treasury Only Fund and the Tax-Exempt Fund in the
following amounts:
<TABLE>
<CAPTION>
BANK OF
AMERICA CONCORD
--------- ---------
<S> <C> <C>
Prime Fund....................................................... $ 920,627 $ 949,233
Government Fund.................................................. 313,740 185,733
Treasury Only Fund............................................... 8,313 8,313
Tax-Exempt Fund.................................................. 11,611 11,611
</TABLE>
In addition, for the year ended February 28, 1995, Bank of America agreed to
reimburse other operating expenses of the Government Fund in the amount of
$14,000.
The agreements provide that if, in any fiscal year, the aggregate expenses
of any Portfolio (generally excluding interest, taxes, brokerage commissions and
extraordinary expenses) exceed the most restrictive expense limitation of any
state having jurisdiction over that Portfolio, then Bank of America and Concord
will reimburse the Portfolio for any such excess expenses. As of February 28,
1995, the most restrictive expense limitation is believed to limit expenses to
2.5% of the first $30 million of each Portfolio's average daily net assets, plus
2.0% of the next $70 million of such assets plus 1.5% of such assets in excess
of $100 million. The agreements provide that such reimbursements will be
estimated and paid on a monthly basis. No reimbursement was required for the
year ended February 28, 1995.
The Portfolios have entered into a Special Management Service Agreement
("Services Agreement") pursuant to which they have agreed to pay Bank of America
and Concord a fee for various services relating to the Pacific Horizon Shares.
The special management services fee is accrued daily at an annual rate of 0.32%
of the average daily net asset value of the outstanding Pacific Horizon Shares
of each Portfolio, and is borne solely by the Pacific Horizon Shares. For the
year ended February 28, 1995, the Portfolios were advised that
45
<PAGE> 38
Concord, Bank of America and their affiliates earned the following amounts
pursuant to the Services Agreement:
<TABLE>
<CAPTION>
AFFILIATES OF
BANK OF AFFILIATES BANK OF
FUND AMERICA CONCORD OF CONCORD AMERICA
- ------------------------------------------ ------- ------- ---------- -------------
<S> <C> <C> <C> <C>
Prime Fund................................ $18,906 $65,326 $268,593 $ 3,112,159
Treasury Fund............................. 9,031 28,381 40,665 3,751,925
Government Fund........................... -- 135 -- 774,124
Treasury Only Fund........................ 1,581 1,779 287 187,925
Tax-Exempt Fund........................... 1,062 8,273 -- 125,664
California Tax-Exempt Fund................ 2,892 9,701 21,474 605,436
</TABLE>
The Portfolios have also adopted a Shareholder Services Plan (the "Horizon
Service Plan") pursuant to which Service Organizations agree to provide certain
services to their clients who are the beneficial owners of Horizon Service
Shares in return for payment by the Portfolios of a fee at an annual rate of
0.25% of the average daily net asset value of the Horizon Service Shares
outstanding from time to time. These payments are borne solely by the Horizon
Service Shares. Service Organizations may include the Distributor, Bank of
America and their affiliates. For the year ended February 28, 1995, the
Portfolios were advised that affiliates of Bank of America earned the following
amounts pursuant to the Horizon Service Plan:
<TABLE>
<CAPTION>
FUND
- -------------------------------------------------------------------------
<S> <C>
Prime Fund............................................................... $ 391,875
Treasury Fund............................................................ 224,434
Government Fund.......................................................... 132,934
Treasury Only Fund....................................................... 569,889
Tax-Exempt Fund.......................................................... 28,442
California Tax-Exempt Fund............................................... 251,505
</TABLE>
During the period from May 6, 1994 through July 12, 1994, the advisor
voluntarily contributed capital to the Prime Fund and the Government Fund in the
aggregate amount of approximately $77.4 million and $5.5 million, respectively.
The adviser received no shares of common stock or other consideration in
exchange for these contributions which increased net asset value. For tax
purposes, these capital contributions were applied against the realized losses
for the year ended February 28, 1995. Accordingly, such amounts have been
reclassified from additional paid-in capital against accumulated net realized
losses in the Statement of Assets and Liabilities.
During the year ended February 28, 1995, Bank of America issued a letter of
credit which guaranteed California Tax-Exempt Fund the payment of principal and
interest by an issuer of a security issued by Orange County California that was
held by the California Tax-Exempt Fund. This letter of credit enabled the
security, together with the letter of credit, to be valued
46
<PAGE> 39
at par, which was approximately $675,000 in excess of the security's fair market
value on the date of issuance of the letter of credit. As this letter of credit
was issued by Bank of America, the increase in value is deemed to be a voluntary
contribution of capital. Bank of America received no consideration for the
issuance of this letter of credit.
For the year ended February 28, 1995, the Treasury Fund, Prime Fund,
Government Fund, Treasury Only Fund, Tax-Exempt Fund and California Tax-Exempt
Fund incurred legal charges totaling $23,875, $48,539, $27,770, $20,951, $42,790
and $22,480, respectively, which were earned by a law firm, a partner of which
serves as Secretary to the Fund. Certain officers of the Fund are "affiliated
persons" (as defined in the Act) of Concord.
Concord Financial Services Inc., a wholly owned subsidiary of Concord
Holding Corp., acts as transfer agent for the Horizon class of shares for the
Portfolios. For the year ended February 28, 1995 Concord Financial Services
received $27,063, $19,693, $17,873 and $18,221, respectively, from the Prime
Fund, Treasury Fund, Government Fund and Tax-Exempt Fund.
NOTE 4 -- DIRECTORS' COMPENSATION
For services as a director to all of the Fund's 16 investment portfolios,
last year through October 31, 1994 each director was entitled to receive a
retainer determined at the annual rate of $60,000 and the Chairman of the Board
was entitled to receive an additional annual retainer of $40,000. Effective
November 1, 1994, the annual retainer for the Chairman was increased to $50,000
and all directors (including the Chairman) agreed to waive $10,000 of their
annual retainer. This waiver remained in effect until February 28, 1995. Total
charges for directors' fees incurred for the year ended February 28, 1995 by the
Portfolios were as follows:
<TABLE>
<S> <C>
Prime Fund....................................................... $ 23,318
Treasury Fund.................................................... 22,408
Government Fund.................................................. 23,093
Treasury Only Fund............................................... 22,179
Tax-Exempt Fund.................................................. 21,538
California Tax-Exempt Fund....................................... 23,388
</TABLE>
As of March 1, 1995, each director is entitled to an annual retainer of
$25,000, plus $1,000 for each day the director participates in all or part of a
Board or Committee meeting and the Chairman of each Committee receives a
retainer of $1,000 for services as Chairman of the Committee. In addition, the
Fund's President is entitled to an annual salary of $40,000 for services as
President.
The Board also established a retirement plan (the "Retirement Plan") for
Directors. The Retirement Plan provides that each Director who dies or resigns
after five years of service as a director will be entitled to receive ten annual
payments each equal to the greater of: (i) 50% of the annual Director's retainer
that was payable during the year of that Director's death or resignation, or
(ii) 50% of the annual Director's retainer then in effect for Directors of the
47
<PAGE> 40
Fund during the year of such payment. A Director who dies or resigns after nine
years of service as a director will be entitled to receive ten annual payments
equal to the greater of: (i) 100% of the annual Director's retainer that was
payable during the year of that Director's death or resignation, or (ii) 100% of
the annual Director's retainer then in effect for Directors of the Fund during
the year of such payment. In addition, the amount payable each year to a
Director who dies or resigns shall be increased by $1,000 for each year of
service that the Director served as Chairman of the Board. Each Director may
receive any benefits payable under the Retirement Plan, at his or her election,
either in one lump sum payment or ten annual installments. A Director's years of
service for the purpose of calculating the payments described above shall be
based upon service as a Director or Chairman after February 28, 1994.
NOTE 5 -- CONCENTRATION OF CREDIT RISK
The Prime Fund invests substantially all of its assets in a diversified
portfolio of high quality U.S. dollar-denominated money market instruments as
disclosed in the portfolio of investments by security type. The issuers'
abilities to meet their obligations may be affected by domestic and foreign
economic, regional and political developments.
The Prime Fund had the following concentrations by industry sector at
February 28, 1995 (as a percentage of total investment):
<TABLE>
<S> <C>
Repurchase Agreements.............................................. 33.0%
Banking............................................................ 22.6
Brokerage Services................................................. 16.8
Finance Companies.................................................. 6.8
Automobiles........................................................ 3.8
Conglomerates...................................................... 3.8
Federal Agency Notes............................................... 3.6
Leasing............................................................ 2.0
Publishing......................................................... 1.7
Agriculture........................................................ 1.5
Telecommunications................................................. 1.5
Pharmaceuticals.................................................... 1.1
Photographic Products.............................................. 1.0
Oil and Gas........................................................ 0.8
-----
100.0%
=====
</TABLE>
The Tax-Exempt Fund invests substantially all of its assets in a diversified
portfolio of tax-exempt debt obligations. The California Tax-Exempt Fund invests
substantially all of its assets in a nondiversified portfolio of tax-exempt debt
obligations primarily consisting of issuers in the state of California. The
issuers' abilities to meet their obligations may be affected by economic,
regional or political developments.
48
<PAGE> 41
The Tax-Exempt Fund and the California Tax-Exempt Fund had the following
concentrations by industry sector at February 28, 1995 (as a percentage of total
investments):
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
FUND FUND
----- -----
<S> <C> <C>
Revenue Anticipation
Notes.................................................... 24.9% 21.1%
General Obligations........................................ 13.7 9.2
Pollution Control.......................................... 11.6 17.4
Education Facilities....................................... 9.7 --
Power Projects............................................. 9.2 7.5
Health and Medical
Facilities............................................... 8.6 5.7
Industrial Developments.................................... 5.7 9.7
Housing Developments....................................... 4.5 6.5
Airport Facilities......................................... 3.3 --
Air Transportation......................................... 2.7 --
Water Projects............................................. 2.5 --
Transit Projects........................................... 1.8 9.1
Hospital Supplies.......................................... 1.2 --
Health Care & Hospital Management.......................... 0.3 --
Tax and Revenue Anticipation Notes......................... 0.3 --
Transportation............................................. -- 8.0
Certificates of Participation.............................. -- 5.8
----- -----
100.0% 100.0%
===== =====
</TABLE>
49
<PAGE> 42
NOTE 6 -- CAPITAL SHARE TRANSACTIONS
At February 28, 1995, there were 200 billion shares of the Fund's $0.001
par value Common Stock authorized, of which 44.4 billion shares were classified
as Class A Common Stock (Treasury Fund -- 15 billion Pacific Horizon Shares,
14.4 billion Horizon Shares and 15 billion Horizon Service Shares), 58 billion
shares were classified as Class B Common Stock (Prime Fund -- 15 billion Pacific
Horizon Shares, 28 billion Horizon Shares and 15 billion Horizon Service
Shares), 37 billion shares were classified as Class L Common Stock (Government
Fund -- 15 billion Pacific Horizon Shares, 7 billion Horizon Shares and 15
billion Horizon Service Shares), 37 billion shares were classified as Class K
Common Stock (Treasury Only Fund -- 15 billion Pacific Horizon Shares, 7 billion
Horizon Shares and 15 billion Horizon Service Shares), 2 billion shares were
classified as Class J Common Stock (California Tax-Exempt Fund -- 1 billion
Pacific Horizon Shares and 1 billion Horizon Service Shares) and 7.5 billion
shares were classified as Class I Common Stock (Tax-Exempt Fund -- 1.5 billion
Pacific Horizon Shares, 3 billion Horizon Shares and 3 billion Horizon Service
Shares).
Transactions in shares of each Portfolio (at $1.00 per share) for the
periods indicated are summarized below:
<TABLE>
<CAPTION>
YEAR ENDED PRIME TREASURY GOVERNMENT
FEBRUARY 28, 1995 FUND FUND FUND
- --------------------------------------------- --------------- -------------- --------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES:
Shares sold................................. 5,272,091,603 3,121,913,879 2,002,378,412
Shares issued to shareholders in
reinvestment of dividends................. 19,756,810 3,689,780 2,572,553
Shares redeemed............................. (5,379,915,571) (3,570,873,713) (1,804,183,343)
--------------- -------------- --------------
Net (decrease) increase in Pacific Horizon
Shares...................................... (88,067,158) (445,270,054) 200,767,622
--------------- -------------- --------------
HORIZON SHARES
Shares sold................................. 9,961,911,460 3,341,778,010 1,775,658,648
Shares issued to shareholders in
reinvestment of dividends................. 11,806,370 2,245,214 4,881,402
Shares redeemed............................. (13,196,902,924) (3,362,768,467) (1,914,876,241)
--------------- -------------- --------------
Net decrease in Horizon Shares............... (3,223,185,094) (18,745,243) (134,336,191)
--------------- -------------- --------------
HORIZON SERVICE SHARES
Shares sold................................. 7,545,587,777 2,416,217,972 1,894,013,434
Shares issued to shareholders in
reinvestment of dividends................. 12,981,295 3,641,678 2,492,187
Shares redeemed............................. (7,533,904,759) (2,597,621,232) (1,933,589,550)
--------------- -------------- --------------
Net increase (decrease) in Horizon Service
Shares...................................... 24,664,313 (177,761,582) (37,083,929)
--------------- -------------- --------------
Total (decrease) increase in Portfolio
shares...................................... (3,286,587,939) (641,776,879) 29,347,502
================= ================ ================
</TABLE>
50
<PAGE> 43
<TABLE>
<CAPTION>
CALIFORNIA
YEAR ENDED TREASURY ONLY TAX-EXEMPT TAX-EXEMPT
FEBRUARY 28, 1995 FUND FUND FUND
- ----------------------------------------------- -------------- -------------- ------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES
Shares sold................................... 362,313,215 341,854,376 502,909,799
Shares issued to shareholders in reinvestment
of dividends................................ 1,251,054 374,200 4,297,456
Shares redeemed............................... (345,324,334) (354,420,485) (524,307,461)
-------------- -------------- ------------
Net increase (decrease) in Pacific Horizon
Shares........................................ 18,239,935 (12,191,909) (17,100,206)
-------------- -------------- ------------
HORIZON SHARES
Shares sold................................... -- 2,300,191,836 --
Shares issued to shareholders in reinvestment
of dividends................................ -- 782,137 --
Shares redeemed............................... -- (2,433,802,141) --
-------------- -------------- ------------
Net decrease in Horizon Shares................. -- (132,828,168) --
-------------- -------------- ------------
HORIZON SERVICE SHARES
Shares sold................................... 1,078,190,598 126,594,988 323,331,486
Shares issued to shareholders in reinvestment
of dividends................................ 8,626,220 845,786 2,512,925
Shares redeemed............................... (1,164,016,127) (136,607,781) (361,600,101)
-------------- -------------- ------------
Net decrease in Horizon Service Shares......... (77,199,309) (9,167,007) (35,755,690)
-------------- -------------- ------------
Total decrease in Portfolio shares............. (58,959,374) (154,187,084) (52,855,896)
================ ================ ==============
</TABLE>
51
<PAGE> 44
<TABLE>
<CAPTION>
YEAR ENDED PRIME TREASURY GOVERNMENT
FEBRUARY 28, 1994 FUND FUND FUND
- -------------------------------------------- ---------------- -------------- --------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES
Shares sold................................ 8,017,483,077 5,331,697,632 820,860,014
Shares issued to shareholders in
reinvestment of dividends and
distributions............................ 11,261,343 1,974,933 1,030,462
Shares issued in connection with
reorganization with First Funds
of America............................... 111,317,819 -- 102,576,278
Shares redeemed............................ (7,913,818,777) (5,501,668,245) (770,032,307)
---------------- -------------- --------------
Net increase (decrease) in Pacific Horizon
Shares..................................... 226,243,462 (167,995,680) 154,434,447
---------------- -------------- --------------
HORIZON SHARES
Shares sold................................ 112,481,847,902 3,284,109,100 3,342,731,411
Shares issued to shareholders in
reinvestment of dividends and
distributions............................ 36,815,808 685,591 6,359,268
Shares redeemed............................ (118,972,967,917) (3,395,487,378) (2,979,221,592)
---------------- -------------- --------------
Net (decrease) increase in Horizon
Shares..................................... (6,454,304,207) (110,692,687) 369,869,087
---------------- -------------- --------------
HORIZON SERVICE SHARES
Shares sold................................ 6,693,781,799 3,487,274,701 2,134,531,616
Shares issued to shareholders in
reinvestment dividends and
distributions............................ 9,728,980 4,516,376 2,734,399
Shares issued in connection with
reorganization with First Cash Funds
of America............................... 117,295,030 -- 228,679,191
Shares redeemed............................ (6,774,092,871) (3,331,342,948) (2,039,746,919)
---------------- -------------- --------------
Net increase in Horizon Service Shares...... 46,712,938 160,448,129 326,198,287
---------------- -------------- --------------
Total (decrease) increase in Portfolio
shares..................................... (6,181,347,807) (118,240,238) 850,501,821
================== ================ ================
</TABLE>
52
<PAGE> 45
<TABLE>
<CAPTION>
TREASURY CALIFORNIA
YEAR ENDED ONLY TAX-EXEMPT TAX-EXEMPT
FEBRUARY 28, 1994 FUND FUND FUND
- ------------------------------------------------ ------------ -------------- ------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES
Shares sold.................................... 492,252,432 209,089,937 454,189,650
Shares issued to shareholders in reinvestment
of dividends and distributions............... 910,697 143,859 3,026,362
Shares issued in connection with reorganization
with First Funds of America.................. 35,556,959 -- 38,542,853
Shares issued in connection with reorganization
with Pacific Horizon Tax-Exempt Fund......... -- 81,863,804 --
Shares redeemed................................ (456,586,163) (241,442,104) (420,495,461)
------------ -------------- ------------
Net increase in Pacific Horizon Shares.......... 72,133,925 49,655,496 75,263,404
------------ -------------- ------------
HORIZON SHARES
Shares sold.................................... -- 1,924,190,837 --
Shares issued to shareholders in reinvestment
of dividends and distributions............... -- 433,468 --
Shares redeemed................................ -- (1,793,734,224) --
------------ -------------- ------------
Net increase in Horizon Shares.................. -- 130,890,081 --
------------ -------------- ------------
HORIZON SERVICE SHARES
Shares sold.................................... 658,934,591 230,321,086 399,647,954
Shares issued to shareholders in reinvestment
dividends and distributions.................. 3,207,065 596,205 2,299,860
Shares issued in connection with reorganization
with First Cash Funds of America............. 123,669,191 -- 122,765,767
Shares redeemed................................ (514,169,786) (232,277,252) (400,949,268)
------------ -------------- ------------
Net increase (decrease) in Horizon Service
Shares......................................... 271,641,061 (1,359,961) 123,764,313
------------ -------------- ------------
Total increase in Portfolio shares.............. 343,774,986 179,185,616 199,027,717
============== ================ ==============
</TABLE>
53
<PAGE> 46
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income............... 0.0424 0.0287 0.0340 0.0558 0.0762
Net realized (loss) gain on
securities........................ (0.0227) (0.0016) 0.0000 0.0005 (0.0001)
-------- --------- --------- --------- ---------
Total income from investment
operations.......................... 0.0197 0.0271 0.0340 0.0563 0.0761
Less dividends from net investment
income.............................. (0.0422) (0.0287) (0.0341) (0.0557) (0.0762)
Increase due to voluntary capital
contribution from investment advisor
(Note 3)............................ 0.0233 0.0000 0.0000 0.0000 0.0000
-------- --------- --------- --------- ---------
Net change in net asset value
per share........................... 0.0008 (0.0016) (0.0001) 0.0006 (0.0001)
-------- --------- --------- --------- ---------
Net asset value per share, end
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return......................... 4.30%** 2.91% 3.45% 5.72% 7.89%
Ratios/Supplemental Data:
Net assets, end of year
(millions)........................ $ 1,129 $ 1,216 $ 992 1,413 $ 1,086
Ratio of expenses to average net
assets............................ 0.51%* 0.52%* 0.55% 0.56% 0.56%
Ratio of net investment income to
average net assets................ 4.19%* 2.86%* 3.42% 5.51% 7.61%
</TABLE>
- ---------------
++ Security Pacific National Bank served as investment advisor through April
21, 1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.05% for the year ended
February 28, 1995 and 0.01% for the year ended February 28, 1994.
** Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
See Notes to Financial Statements.
54
<PAGE> 47
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HORIZON SHARES
Net asset value per share, beginning
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income............... 0.0461 0.0319 0.0372 0.0590 0.0794
Net realized (loss) gain on
securities........................ (0.0232) (0.0016) 0.0000 0.0005 (0.0001)
--------- --------- --------- --------- ---------
Total income from investment
operations.......................... 0.0229 0.0303 0.0372 0.0595 0.0793
Less dividends from net investment
income.............................. (0.0454) (0.0319) (0.0372) (0.0589) (0.0794)
Increase due to voluntary capital
contribution from investment advisor
(Note 3)............................ 0.0233 0.0000 0.0000 0.0000 0.0000
--------- --------- --------- --------- ---------
Net change in net asset value
per share........................... 0.0008 (0.0016) 0.000 0.0006 (0.0001)
--------- --------- --------- --------- ---------
Net asset value per share, end
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return......................... 4.63%** 3.24% 3.78% 6.06% 8.23%
Ratios/Supplemental Data:
Net assets, end of year
(millions)........................ $ 622 $ 3,840 $ 10,301 $ 2,855 $ 487
Ratio of expenses to average net
assets............................ 0.16%* 0.20%* 0.23% 0.24% 0.24%
Ratio of net investment income to
average net assets................ 4.11%* 3.19%* 3.59% 5.59% 7.91%
</TABLE>
- ---------------
++ Security Pacific National Bank served as investment advisor through April
21, 1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.07% for the year ended
February 28, 1995 and 0.01% for the year ended February 28, 1994.
** Total return includes the effect of the voluntary capital contribution from
the investment advisor (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
See Notes to Financial Statements.
55
<PAGE> 48
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income............... 0.0431 0.0294 0.0345 0.0565 0.0769
Net realized (loss) gain on
securities........................ (0.0227) (0.0016) 0.0000 0.0005 (0.0001)
-------- --------- --------- --------- ---------
Total income from investment
operations.......................... 0.0204 0.0278 0.0345 0.0570 0.0768
Less dividends from net investment
income.............................. (0.0429) (0.0294) (0.0347) (0.0564) (0.0769)
Increase due to voluntary capital
contribution from investment advisor
(Note 3)............................ 0.0233 0.0000 0.0000 0.0000 0.0000
-------- --------- --------- --------- ---------
Net change in net asset value
per share........................... 0.0008 (0.0016) (0.0002) 0.0006 (0.0001)
-------- --------- --------- --------- ---------
Net asset value per share, end
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return......................... 4.37%** 2.98% 3.53% 5.79% 7.96%
Ratios/Supplemental Data:
Net assets, end of year
(millions)........................ $ 864 $ 839 $ 793 $ 859 $ 560
Ratio of expenses to average net
assets............................ 0.44%* 0.45%* 0.48% 0.49% 0.49%
Ratio of net investment income to
average net assets................ 4.31%* 2.94%* 3.49% 5.58% 7.64%
</TABLE>
- ---------------
++ Security Pacific National Bank served as investment advisor through April
21, 1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.04% for the year ended
February 28, 1995 and 0.01% for the year ended February 28, 1994.
** Total return includes the effect of the voluntary capital contribution from
the investment advisor (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
See Notes to Financial Statements.
56
<PAGE> 49
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income............... 0.0405 0.0262 0.0309 0.0512 0.0731
Net realized gain (loss) on
securities........................ 0.0001 (0.0002) 0.0000 0.0002 0.0006
--------- --------- --------- --------- ---------
Total income from investment
operations.......................... 0.0406 0.0260 0.0309 0.0514 0.0737
Less dividends from net investment
income.............................. (0.0405) (0.0262) (0.0311) (0.0513) (0.0733)
--------- --------- --------- --------- ---------
Net change in net asset value
per share........................... 0.0001 (0.0002) (0.0002) 0.0001 0.0004
--------- --------- --------- --------- ---------
Net asset value per share, end of
year................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return......................... 4.13% 2.65% 3.15% 5.25% 7.58%
Ratios/Supplemental Data:
Net assets, end of year
(millions)........................ $ 1,132 $ 1,577 $ 1,746 $ 2,300 $ 1,663
Ratio of expenses to average
net assets........................ 0.55% 0.55% 0.56% 0.56% 0.55%
Ratio of net investment income to
average net assets................ 3.99% 2.62% 3.11% 5.07% 7.29%
</TABLE>
- ---------------
* Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
See Notes to Financial Statements.
57
<PAGE> 50
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HORIZON SHARES
Net asset value per share, beginning
of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income............... 0.0437 0.0294 0.0341 0.0543 0.0764
Net realized gain (loss) on
securities........................ 0.0001 (0.0002) 0.0002 0.0003 0.0005
--------- --------- --------- --------- ---------
Total income from investment
operations........................ 0.0438 0.0292 0.0343 0.0546 0.0769
Less dividends from net investment
income.............................. (0.0437) (0.0294) (0.0343) (0.0545) (0.0765)
--------- --------- --------- --------- ---------
Net change in net asset value
per share........................... 0.0001 (0.0002) 0.0000 0.0001 0.0004
--------- --------- --------- --------- ---------
Net asset value per share, end of
year................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return......................... 4.46% 2.98% 3.48% 5.59% 7.92%
Ratios/Supplemental Data:
Net assets, end of year
(millions)........................ $ 469 $ 487 $ 598 $ 432 $ 455
Ratio of expenses to average net
assets............................ 0.23% 0.23% 0.24% 0.24% 0.23%
Ratio of net investment income to
average net assets................ 4.36% 2.94% 3.38% 5.44% 7.57%
</TABLE>
- ---------------
* Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
See Notes to Financial Statements.
58
<PAGE> 51
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning
of year.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------
Income from Investment Operations:
Net investment income................ 0.0412 0.0269 0.0316 0.0517 0.0739
Net realized gain (loss) on
securities......................... 0.0001 (0.0002) 0.0002 0.0004 0.0005
--------- --------- --------- --------- --------
Total income from investment
operations........................... 0.0413 0.0267 0.0318 0.0521 0.0744
Less dividends from net investment
income............................... (0.0412) (0.0269) (0.0318) (0.0520) (0.0740)
--------- --------- --------- --------- --------
Net change in net asset value
per share............................ 0.0001 (0.0002) 0.0000 0.0001 0.0004
--------- --------- --------- --------- --------
Net asset value per share, end of
year................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========
Total return.......................... 4.20% 2.72% 3.23% 5.33% 7.65%
Ratios/Supplemental Data:
Net assets, end of year (millions)... $ 364 $ 541 $ 369 $ 381 $ 304
Ratio of expenses to average net
assets............................. 0.48% 0.48% 0.49% 0.49% 0.48%
Ratio of net investment income to
average net assets................. 4.01% 2.69% 3.28% 5.13% 7.31%
</TABLE>
- ---------------
* Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
See Notes to Financial Statements.
59
<PAGE> 52
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
FEBRUARY FEBRUARY
28, 1995 28, 1994
--------- ---------
<S> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning of year.......... $ 1.00 $ 1.00
--------- ---------
Income from Investment Operations:
Net investment income............................... 0.0421 0.0288
Net realized loss on securities..................... (0.0091) (0.0006)
--------- ---------
Total income from investment operations............. 0.0330 0.0282
Less dividends from net investment income............. (0.0420) (0.0288)
Increase due to voluntary capital contribution from
investment adviser (Note 3)......................... 0.0085 0.0000
--------- ---------
Net change in net asset value per share............... (0.0005) (0.0006)
--------- ---------
Net asset value per share, end of year................ $ 1.00 $ 1.00
======== ========
Total return.......................................... 4.28%** 2.92%
Ratios/Supplemental Data:
Net assets, end of year (000)....................... $ 354,828 $ 154,349
Ratio of expenses to average net assets*............ 0.50% 0.60%
Ratio of net investment income to average net
assets*........................................... 4.27% 2.88%
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.08% and 0.002%,
respectively.
** Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
See Notes to Financial Statements.
60
<PAGE> 53
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED
ENDED FEBRUARY
FEBRUARY 28,
28, 1995 1994**
--------- --------
<S> <C> <C>
HORIZON SHARES
Net asset value per share, beginning of period......... $ 1.00 $ 1.00
--------- --------
Income from Investment Operations:
Net investment income................................ 0.0454 0.0227
Net realized loss on securities...................... (0.0092) (0.0006)
--------- --------
Total income from investment operations.............. 0.0362 0.0221
Less dividends from net investment income.............. (0.0452) (0.0227)
Increase due to voluntary capital contribution from
investment adviser (Note 3).......................... 0.0085 0.0000
--------- --------
Net change in net asset value per share................ (0.0005) (0.0006)
--------- --------
Net asset value per share, end of period............... $ 1.00 $ 1.00
======== ========
Total return........................................... 4.61%++ 2.29%++++
Ratios/Supplemental Data:
Net assets, end of period (000)...................... $ 235,285 $369,664
Ratio of expenses to average net assets*............. 0.17% 0.28%+
Ratio of net investment income to average net
assets*............................................ 4.67% 3.17%+
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 0.08% and 0.002%
(annualized), respectively.
** For the period June 14, 1993 (initial issuance of Horizon Shares) through
February 28, 1994.
+ Annualized.
++ Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
++++ Not annualized.
See Notes to Financial Statements.
61
<PAGE> 54
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
FEBRUARY FEBRUARY
28, 1995 28, 1994
--------- ---------
<S> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning of year.......... $ 1.00 $ 1.00
--------- ---------
Income from Investment Operations:
Net investment income............................... 0.0429 0.0300
Net realized loss on securities..................... (0.0092) (0.0006)
--------- ---------
Total income from investment operations............... 0.0337 0.0294
Less dividends from net investment income............. (0.0427) (0.0300)
Increase due to voluntary capital contribution from
investment adviser (Note 3)......................... 0.0085 0.0000
--------- ---------
Net change in net asset value per share............... (0.0005) (0.0006)
--------- ---------
Net asset value per share, end of year................ $ 1.00 $ 1.00
======== ========
Total return.......................................... 4.35%** 3.04%
Ratios/Supplemental Data:
Net assets, end of year (000)....................... $ 288,809 $ 326,017
Ratio of expenses to average net assets*............ 0.43% 0.53%
Ratio of net investment income to average net
assets*........................................... 4.32% 2.99%
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.08% and 0.05%,
respectively.
** Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
See Notes to Financial Statements.
62
<PAGE> 55
PACIFIC HORIZON TREASURY ONLY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
FEBRUARY FEBRUARY
28, 1995 28, 1994
--------- ---------
<S> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning of year.......... $ 1.00 $ 1.00
--------- ---------
Income from Investment Operations:
Net investment income............................... 0.0384 0.0254
Net realized loss on securities..................... (0.0002) (0.0002)
--------- ---------
Total income from investment operations............... 0.0382 0.0252
--------- ---------
Less dividends from net investment income............. (0.0384) (0.0254)
--------- ---------
Net change in net asset value per share............... (0.0002) (0.0002)
--------- ---------
Net asset value per share, end of year................ $ 1.00 $ 1.00
======== ========
Total return.......................................... 3.90% 2.57%
Ratios/Supplemental Data:
Net assets, end of year (000)....................... $ 90,337 $ 72,120
Ratio of expenses to average net assets*............ 0.62% 0.56%
Ratio of net investment income to average net
assets*........................................... 3.90% 2.54%
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.01% and 0.16%, respectively.
See Notes to Financial Statements.
63
<PAGE> 56
PACIFIC HORIZON TREASURY ONLY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
FEBRUARY FEBRUARY
28, 1995 28, 1994
--------- ---------
<S> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning of year.......... $ 1.00 $ 1.00
--------- ---------
Income from Investment Operations:
Net investment income............................... 0.0391 0.0273
Net realized loss on securities..................... (0.0002) (0.0002)
--------- ---------
Total income from investment operations............... 0.0389 0.0271
--------- ---------
Less dividends from net investment income............. (0.0391) (0.0273)
--------- ---------
Net change in net asset value per share............... (0.0002) (0.0002)
--------- ---------
Net asset value per share, end of year................ $ 1.00 $ 1.00
======== ========
Total return.......................................... 3.98% 2.76%
Ratios/Supplemental Data:
Net assets, end of year (000)....................... $ 194,363 $ 271,588
Ratio of expenses to average net assets*............ 0.55% 0.39%
Ratio of net investment income to average net
assets*........................................... 3.86% 2.73%
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.01% and 0.25%, respectively.
See Notes to Financial Statements.
64
<PAGE> 57
HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
FEBRUARY FEBRUARY
28, 28,
1995 1994*
--------- ---------
<S> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning of period...... $ 1.00 $ 1.00
--------- ---------
Income from Investment Operations:
Net investment income............................. 0.0253 0.0124
Less dividends from net investment income........... (0.0253) (0.0124)
--------- ---------
Net change in net asset value per share............. 0.0000 0.0000
--------- ---------
Net asset value per share, end of period............ $ 1.00 $ 1.00
======== ========
Total return........................................ 2.56% 1.25%++++
Ratios/Supplemental Data:
Net assets, end of period (000)................... $ 37,454 $ 49,648
Ratio of expenses to average net assets........... 0.60% 0.60%+**
Ratio of net investment income to average
net assets...................................... 2.47% 1.95%+**
</TABLE>
- ---------------
* For the period July 9, 1993 (initial offering date) through February 28,
1994.
** Net of fee waivers which had the effect of reducing the ratio of expenses
to average net assets and increasing the ratio of net investment income to
average net assets by 0.01% (annualized).
+ Annualized.
++++ Not annualized.
See Notes to Financial Statements.
65
<PAGE> 58
HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HORIZON SHARES
Net asset value per share, beginning
of year............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income.............. 0.0285 0.0225 0.0269 0.0410 0.0557
Less dividends from net investment
income............................. (0.0285) (0.0225) (0.0269) (0.0410) (0.0557)
--------- --------- --------- --------- ---------
Net change in net asset value per
share.............................. 0.0000 0.0000 0.0000 0.0000 0.0000
--------- --------- --------- --------- ---------
Net asset value per share, end of
year............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return........................ 2.89% 2.27% 2.72% 4.18% 5.71%
Ratios/Supplemental Data:
Net assets, end of year (000)...... $ 381,811 $ 514,663 $ 383,848 $ 345,221 $ 428,127
Ratio of expenses to average net
assets........................... 0.28% 0.28%* 0.28% 0.28% 0.27%*
Ratio of net investment income to
average net assets............... 2.81% 2.25%* 2.69% 4.12% 5.54%*
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.01% and 0.02% for the years ended February 28, 1994
and February 28, 1991, respectively.
++ Security Pacific National Bank served as investment advisor through April 21,
1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
See Notes to Financial Statements.
66
<PAGE> 59
HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share beginning of
year................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................ 0.0260 0.0200 0.0244 0.0385 0.0532
Less dividends from net investment
income............................... (0.0260) (0.0200) (0.0244) (0.0385) (0.0532)
-------- -------- -------- -------- --------
Net change in net asset value per
share................................ 0.0000 0.0000 0.0000 0.0000 0.0000
-------- -------- -------- -------- --------
Net asset value per share, end of
year................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return.......................... 2.63% 2.02% 2.47% 3.92% 5.45%
Ratios/Supplemental Data:
Net assets, end of year (000)........ $ 39,158 $ 48,328 $ 49,695 $ 47,230 $ 53,732
Ratio of expenses to average net
assets............................. 0.53% 0.53%* 0.53% 0.53% 0.52%*
Ratio of net investment income to
average net assets................. 2.57% 2.04%* 2.42% 3.88% 5.29%*
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.04% and 0.02% for the years ended February 28, 1994
and February 28, 1991, respectively.
++ Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
See Notes to Financial Statements.
67
<PAGE> 60
PACIFIC HORIZON
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 28, 28, 29, 28,
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share,
beginning of year................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income............. 0.0249 0.0186 0.0224 0.0364 0.0495
Net realized gain (loss) on
securities...................... (0.0001) 0.0002 (0.0002) 0.0000 (0.0001)
-------- -------- -------- -------- --------
Total income from investment
operations........................ 0.0248 0.0188 0.0222 0.0364 0.0494
Less dividends from net investment
income............................ (0.0249) (0.0186) (0.0224) (0.0364) (0.0495)
-------- -------- -------- -------- --------
Net change in net asset value per
share............................. (0.0001) 0.0002 (0.0002) 0.0000 (0.0001)
-------- -------- -------- -------- --------
Net asset value per share,
end of year....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return....................... 2.52% 1.88% 2.27% 3.70% 5.06%
Ratios/Supplemental Data:
Net assets, end of year (000)..... $186,643 $203,724 $128,448 $107,424 $118,816
Ratio of expenses to average net
assets.......................... 0.62% 0.66%** 0.66%** 0.57%** 0.55%**
Ratio of net investment income to
average net assets.............. 2.48% 1.86%** 2.21%** 3.62%** 4.81%**
</TABLE>
- ---------------
** Net of fee waivers and expense reimbursements by the Adviser and
Administrator which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.02%, 0.08%, 0.13% and 0.22%, for the years ended
February 28, 1994, February 28, 1993, February 29, 1992 and February 28,
1991, respectively.
++ Security Pacific National Bank served as investment adviser through April
21, 1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
See Notes to Financial Statements.
68
<PAGE> 61
PACIFIC HORIZON
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
FEBRUARY FEBRUARY
28, 1995 28, 1994
--------- --------
<S> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning of year........ $ 1.00 $ 1.00
--------- --------
Income from Investment Operations:
Net investment income............................. 0.0256 0.0198
Net realized loss on securities................... (0.0001) (0.0001)
--------- --------
Total income from investment operations............. 0.0255 0.0197
Less dividends from net investment income........... (0.0256) (0.0198)
--------- --------
Net change in net asset value per share............. (0.0001) (0.0001)
--------- --------
Net asset value per share, end of year.............. $ 1.00 $ 1.00
======== ========
Total return........................................ 2.59% 2.00%
Ratios/Supplemental Data:
Net assets, end of year (000)..................... $ 88,003 $123,746
Ratio of expenses to average net assets........... 0.55% 0.53%*
Ratio of net investment income to average
net assets...................................... 2.50% 1.98%*
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements by the Adviser and Administrator
which had the effect of reducing the ratio of expenses to average net assets
and increasing the ratio of net investment income to average net assets by
0.07%.
See Notes to Financial Statements.
69
<PAGE> 62
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors
and Shareholders of
Pacific Horizon Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Pacific Horizon Prime Fund, Pacific
Horizon Treasury Fund, Pacific Horizon Government Fund, Pacific Horizon Treasury
Only Fund, Horizon Tax-Exempt Money Fund and California Tax-Exempt Money Market
Fund (six of the portfolios constituting the Pacific Horizon Funds, Inc.,
hereafter referred to as the "Funds") at February 28, 1995, the results of each
of their operations for the year then ended, the changes in each of their net
assets and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at February 28, 1995 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
April 21, 1995
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX STATUS OF DIVIDENDS (UNAUDITED)
-------------------------------------------------------------
Pacific Horizon Prime Fund, Pacific Horizon Treasury Fund, Pacific Horizon
Treasury Only Fund and Pacific Horizon Government Fund have determined
that all dividends paid during the year ended February 28, 1995 were paid
from net investment income and are subject to Federal income tax. All
dividends paid during the year ended February 28, 1995 by the Tax-Exempt
Fund and the California Tax-Exempt Fund are exempt-interest dividends for
federal income tax purposes.
- --------------------------------------------------------------------------------
70
<PAGE> 1
Exhibit 24(b)
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS PRINCIPAL
ASSIGNED BY MATURITY AMOUNT VALUE
DESCRIPTION N.R.S.R.O. RATE DATE (000) (NOTE 2)
- -------------------------------- ------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 102.1%
COMMERCIAL PAPER -- 54.1%
DOMESTIC -- 42.6%
AGRICULTURE -- 1.5%
Cargill, Inc. ................. A1+/P1 5.77% 9/25/95 $ 20,000 $ 19,923,067
Cargill, Inc. ................. A1+/P1 5.51% 12/04/95 25,000 24,640,319
Cargill, Inc. ................. A1+/P1 5.50% 12/05/95 25,000 24,637,153
------------
69,200,539
------------
AUTOMOBILES -- 5.9%
American Honda Finance Corp. .. F1/P1 5.78% 9/22/95 25,000 24,915,708
American Honda Finance Corp. .. F1/P1 5.76% 9/18/95 36,000 35,902,080
American Honda Finance Corp. .. F1/P1 5.75% 10/27/95 24,000 23,785,333
American Honda Finance Corp. .. F1/P1 5.74% 11/28/95 18,000 17,747,440
American Honda Finance Corp. .. F1/P1 5.72% 11/08/95 30,000 29,675,867
Daimler Benz North America,
Inc. ........................ A1+/P1 5.74% 10/13/95 35,000 34,765,617
Daimler Benz North America,
Inc. ........................ A1+/P1 5.57% 3/15/96 25,000 24,241,861
Ford Motor Credit Company...... A1/P1 5.77% 9/08/95 12,000 12,000,000
Ford Motor Credit Company...... A1/P1 5.699% 10/10/95 25,000 25,000,000
Ford Motor Credit Company...... A1/P1 5.62% 11/17/95 50,000 49,398,972
------------
277,432,878
------------
BANKING -- 6.9%
Abbey National North America... A1+/P1 5.70% 9/11/95 20,000 19,968,333
Abbey National North America... A1+/P1 5.68% 11/09/95 50,000 49,455,667
ABN AMRO N.A. ................. A1+/P1 5.65% 12/27/95 25,000 24,540,938
Bankers Trust, New York
Corp. ....................... A1/P1 5.70% 10/20/95 25,000 24,806,042
Deutche Bank Financial,
Inc. ........................ A1+/P1 5.67% 9/25/95 15,000 14,943,300
Generale Bank, Inc. ........... A1/P1 5.63% 3/15/96 50,000 48,467,389
J.P. Morgan & Co. ............. A1+/P1 5.59% 1/22/96 50,000 48,889,764
Kredietbank N.A. Finance
Corp. ....................... A1/P1 5.63% 1/16/96 20,000 19,571,494
Norwest Corp. ................. A1+/P1 5.70% 10/20/95 20,000 19,844,833
Norwest Corp. ................. A1+/P1 5.58% 11/09/95 15,000 14,839,575
Toronoto Dominion Holdings USA,
Inc. ........................ A1+/P1 5.77% 9/29/95 20,000 19,910,244
Westpac Capital Corp. ......... A1/P1 5.62% 2/07/96 25,000 24,379,458
------------
329,617,037
------------
BROKERAGE -- 4.3%
Bear Stearns Co., Inc. ........ A1/P1 5.71% 11/17/95 25,000 24,694,674
C.S. First Boston Corp. ....... A1/P1 5.77% 9/13/95 25,000 24,951,917
C.S. First Boston Corp. ....... A1/P1 5.69% 12/08/95 25,000 24,612,764
Merrill Lynch & Co., Inc. ..... A1+/P1 5.77% 9/15/95 80,000 79,820,488
Merrill Lynch & Co., Inc. ..... A1+/P1 5.74% 10/02/95 50,000 49,752,861
------------
203,832,704
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
6
<PAGE> 2
<TABLE>
<CAPTION>
RATINGS PRINCIPAL
ASSIGNED BY MATURITY AMOUNT VALUE
DESCRIPTION N.R.S.R.O. RATE DATE (000) (NOTE 2)
- -------------------------------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
CHEMICALS -- 1.0%
AKZO Nobel, Inc. .............. A1/P1 5.67% 11/10/95 $ 15,000 $ 14,834,625
AKZO Nobel, Inc. .............. A1/P1 5.65% 1/12/96 31,000 30,352,918
------------
45,187,543
------------
CONGLOMERATES -- 3.0%
General Electric Capital
Corp. ....................... A1+/P1 5.88% 9/05/95 20,000 19,986,933
General Electric Capital
Corp. ....................... A1+/P1 5.87% 9/22/95 50,000 49,828,792
General Electric Capital
Corp. ....................... A1+/P1 5.63% 12/27/95 50,000 49,085,125
General Electric Capital
Service Corp. ............... A1+/P1 5.72% 11/14/95 25,000 24,706,056
------------
143,606,906
------------
CONSUMER -- NON-DURABLES -- 1.1%
Colgate Palmolive Co.*++....... A1/P1 5.74% 12/07/95 25,000 24,613,347
Colgate Palmolive Co.*++....... A1/P1 5.68% 11/10/95 30,000 29,668,667
------------
54,282,014
------------
FINANCE COMPANIES -- 8.7%
American Express Credit
Corp. ....................... A1/P1 5.70% 9/08/95 30,000 29,966,750
American Express Credit
Corp. ....................... A1/P1 5.57% 12/15/95 25,000 24,593,854
American Express Credit
Corp. ....................... A1/P1 5.50% 12/08/95 50,000 49,251,389
Asset Securitization
Cooperative Corp.*++......... A1+/P1 5.75% 10/17/95 25,000 24,816,319
Asset Securitization
Cooperative Corp.*++......... A1+/P1 5.75% 10/18/95 20,000 19,849,861
Asset Securitization
Cooperative Corp.*++......... A1+/P1 5.70% 11/27/95 36,500 35,997,212
Associates Corporation of North
America...................... A1+/P1 5.895% 9/01/95 15,000 15,000,000
Bank One Funding Corp.*++...... A1/P1 5.75% 10/02/95 34,819 34,646,598
Bank One Funding Corp.*++...... A1/P1 5.73% 10/20/95 35,000 34,727,029
Bank One Funding Corp.*++...... A1/P1 5.72% 11/21/95 30,000 29,613,900
BHF Finance (DEL).............. A1/P1 5.67% 10/10/95 25,000 24,846,438
Ciesco L.P. ................... A1+/P1 5.70% 9/26/95 16,798 16,731,508
Countrywide Funding Corp....... A1/F1 5.79% 9/06/95 50,000 49,959,792
Household Finance Corp. ....... A1/P1 5.72% 11/22/95 25,000 24,674,278
------------
414,674,928
------------
HOUSEHOLD FURNITURE &
APPLIANCES -- 2.1%
Whirlpool Financial Corp. ..... A1/D1 5.75% 10/17/95 50,000 49,632,639
Whirlpool Financial Corp. ..... A1/D1 5.73% 9/08/95 50,000 49,944,292
------------
99,576,931
------------
INSURANCE -- 2.2%
Transamerica Finance Corp. .... A1/P1 5.70% 12/05/95 30,000 29,548,750
Transamerica Finance Corp. .... A1/P1 5.62% 1/05/96 25,000 24,508,250
Transamerica Finance Corp. .... A1/P1 5.60% 12/21/95 30,000 29,482,000
Transamerica Finance Corp. .... A1/P1 5.50% 12/11/95 19,050 18,756,048
------------
102,295,048
------------
LEASING -- 1.0%
Hertz Corp. ................... A1/P1 5.69% 11/03/95 25,000 24,751,063
Hertz Corp. ................... A1/P1 5.68% 12/15/95 25,000 24,585,833
------------
49,336,896
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
7
<PAGE> 3
<TABLE>
<CAPTION>
RATINGS PRINCIPAL
ASSIGNED BY MATURITY AMOUNT VALUE
DESCRIPTION N.R.S.R.O. RATE DATE (000) (NOTE 2)
- -------------------------------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
PHARMACEUTICALS -- 0.4%
Sherwood Medical Company,
Inc. ........................ D1/P1 5.91% 9/05/95 $ 20,000 $ 19,986,867
------------
RELOCATION SERVICES -- 0.5%
PHH Corp. ..................... A1/P1 5.75% 10/11/95 25,000 24,840,278
------------
TELECOMMUNICATIONS -- 2.9%
Alcatel Alsthom, Inc. ......... A1+/P1 5.69% 10/27/95 29,000 28,743,318
Alcatel Alsthom, Inc. ......... A1+/P1 5.62% 3/01/96 22,000 21,374,931
AT&T Corp. .................... A1+/P1 5.63% 12/07/95 50,000 49,241,514
AT&T Corp. .................... A1+/P1 5.50% 12/06/95 25,000 24,633,333
AT&T Corp. .................... A1+/P1 5.50% 12/07/95 15,000 14,777,708
------------
138,770,804
------------
UTILITIES -- 1.1%
National Rural Utilities
Cooperative.................. A1+/P1 5.92% 9/21/95 20,000 19,934,222
Southern California Gas Co. ... A1/P1 5.57% 5/03/96 25,000 24,052,326
Southwestern Bell Capital
Corp. ....................... A1/P1 5.56% 1/18/96 10,000 9,785,322
------------
53,771,870
------------
2,026,413,243
------------
FOREIGN -- 11.5%
AGRICULTURE -- 0.5%
Canadian Wheat Board........... A1+/P1 5.67% 12/04/95 24,000 23,644,680
------------
AUTOMOBILES -- 2.4%
Renault Credit Internationale
S.A. Banque.................. F1/P1 5.75% 3/01/96 16,000 15,534,889
Renault Credit Internationale
S.A. Banque.................. F1/P1 5.72% 10/24/95 24,200 23,996,209
Renault Credit Internationale
S.A. Banque.................. F1/P1 5.68% 10/17/95 50,000 49,637,111
Renault Credit Internationale
S.A. Banque.................. F1/P1 5.62% 11/20/95 25,000 24,687,778
------------
113,855,987
------------
BANKING -- 2.7%
Barclays Bank of Canada........ A1+/P1 5.62% 3/01/96 15,000 14,573,817
Bradford & Bingley Building
Society...................... A1/P1 5.70% 11/06/95 40,000 39,582,000
Bradford & Bingley Building
Society...................... A1/P1 5.67% 11/24/95 50,000 49,338,500
Bradford & Bingley Building
Society...................... A1/P1 5.61% 10/18/95 25,000 24,816,896
------------
128,311,213
------------
CONGLOMERATES -- 3.3%
BTR Dunlop Finance, Inc.*++.... A1+/P1 5.65% 12/15/95 50,000 49,176,042
Hanson Finance (UK) PLC........ A1/P1 5.72% 11/15/95 15,000 14,821,250
Hanson Finance (UK) PLC........ A1/P1 5.72% 11/20/95 25,000 24,682,222
Hanson Finance (UK) PLC........ A1/P1 5.70% 10/19/95 10,000 9,924,000
Hanson Finance (UK) PLC........ A1/P1 5.68% 10/31/95 24,000 23,772,800
Hanson Finance (UK) PLC........ A1/P1 5.64% 10/13/95 21,000 20,861,820
Hanson Finance (UK) PLC........ A1/P1 5.63% 10/13/95 12,000 11,921,180
------------
155,159,314
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
8
<PAGE> 4
<TABLE>
<CAPTION>
RATINGS PRINCIPAL
ASSIGNED BY MATURITY AMOUNT VALUE
DESCRIPTION N.R.S.R.O. RATE DATE (000) (NOTE 2)
- -------------------------------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
OIL & GAS -- 0.5%
Repsol International Finance
B.V. ........................ A1+/P1 6.00% 10/02/95 $ 25,000 $ 24,870,833
------------
SOVEREIGN -- 0.5%
Province of Ontario............ A1+/P1 5.73% 11/14/95 25,000 24,705,542
------------
TEXTILES -- 0.9%
Wool International............. A1+/P1 5.65% 2/16/96 25,000 24,340,833
Wool International............. A1+/P1 5.64% 2/21/96 20,000 19,457,934
------------
43,798,767
------------
UTILITIES -- 0.7%
Ontario Hydro.................. A1+/P1 5.90% 9/01/95 31,000 31,000,000
------------
545,346,336
------------
Total Commercial Paper
(amortized cost
$2,571,759,579)................ 2,571,759,579
------------
BANK NOTES -- 11.0%
American Express Centurion Bank
Monthly, Variable Rate
(final maturity date
6/20/96)+.................... A1/P1 5.927% 9/20/95 50,000 50,000,000
Bank One, Milwaukee N.A., Daily
Variable Rate
(final maturity date
1/31/96)+.................... A1+/P1 6.12% 9/01/95 100,000 100,000,000
Bankers Trust New York Corp.
Daily Variable Rate
(final maturity date
12/07/95)+................... A1/P1 6.00% 9/01/95 50,000 50,000,000
Comercia Bank, Detroit MI,
Weekly Variable Rate
(final maturity date
10/27/95)+................... A1/P1 5.61% 9/01/95 100,000 99,986,621
Comercia Bank, Detroit MI,
Weekly Variable Rate
(final maturity date
11/22/95)+................... A1/P1 5.61% 9/01/95 15,000 14,991,514
FCC National Bank, Daily
Variable Rate
(final maturity date
1/12/96)+.................... A1/P1 6.08% 9/01/95 50,000 50,000,000
First Union National Bank of
North Carolina, Daily
Variable Rate (final maturity
date 5/15/96)+............... A1/P1 5.96% 9/01/95 50,000 49,982,304
Huntington National Bank,
Columbus, Daily Variable Rate
(final maturity date
1/12/96)+.................... A1/P1 6.06% 9/01/95 50,000 49,992,591
Huntington National Bank,
Columbus..................... A1/P1 5.80% 11/27/95 30,000 30,010,716
</TABLE>
- ---------------
See Notes to Financial Statements.
9
<PAGE> 5
<TABLE>
<CAPTION>
RATINGS PRINCIPAL
ASSIGNED BY MATURITY AMOUNT VALUE
DESCRIPTION N.R.S.R.O. RATE DATE (000) (NOTE 2)
- -------------------------------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
BANK NOTES -- (CONTINUED)
Wachovia Bank of North America,
Daily Variable Rate
(final maturity date
5/02/96)+.................... A1+/P1 5.825% 9/05/95 $ 25,000 $ 25,001,483
------------
Total Bank Notes
(amortized cost $519,965,229).. 519,965,229
------------
MASTER NOTES -- 8.4%
Goldman Sachs Group L.P., Daily
Variable Rate
(final maturity date
11/03/95)+ .................. A1+/P1 5.962% 9/01/95 200,000 200,000,000
Morgan Stanley Group, Inc.,
Daily Variable Rate
(final maturity date
4/08/96)+ ................... A1+/P1 5.912% 9/01/95 200,000 200,000,000
------------
Total Master Notes
(amortized cost $400,000,000).. 400,000,000
------------
CORPORATE OBLIGATIONS -- 8.1%
AUTOMOBILES -- 0.0%
Ford Motor Credit Corp. ....... A1/P1 9.40% 10/09/95 1,000 1,003,389
Ford Motor Credit Corp. ....... A1/P1 9.35% 9/05/95 100 100,035
------------
1,103,424
------------
BROKERAGE -- 2.3%
Bear Stearns Co., Inc., Series
B,
Monthly Variable Rate
(final maturity date
2/02/96)+.................... A1/P1 5.975% 9/01/95 100,000 100,000,000
Merrill Lynch & Co., Inc.,
Monthly Variable Rate
(final maturity date
9/07/95)+.................... A1+/P1 5.899% 9/07/95 10,000 9,999,993
------------
109,999,993
------------
BUSINESS EQUIPMENT &
SERVICES -- 1.2%
IBM Credit Corp.,
Daily Variable Rate
(final maturity date
9/29/95)+.................... A1/P1 5.799% 9/01/95 30,000 29,999,590
------------
IBM Credit Corp.,
Daily Variable Rate
(final maturity date
10/06/95)+................... A1/P1 5.799% 9/01/95 25,000 24,986,350
------------
54,996,750
CONGLOMERATES -- 0.4%
General Electric Capital Corp.,
Daily Variable Rate
(final maturity date
2/16/96)+.................... A1+/P1 6.025% 9/01/95 20,000 19,997,772
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
10
<PAGE> 6
<TABLE>
<CAPTION>
RATINGS PRINCIPAL
ASSIGNED BY MATURITY AMOUNT VALUE
DESCRIPTION N.R.S.R.O. RATE DATE (000) (NOTE 2)
- -------------------------------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
FINANCE COMPANIES -- 3.0%
Associates Corporation of North
America...................... A1+/P1 8.75% 2/01/96 $ 1,180 $ 1,187,284
Ciesco L.P.,
Monthly Variable Rate (final
maturity date 8/14/96)+ ++... A1+/P1 5.839% 9/14/96 75,000 74,985,738
CIT Group Holdings, Inc. ...... A1+/P1 5.65% 11/15/95 10,000 9,993,030
Household Finance Corp. ....... A1/P1 9.625% 3/11/96 1,250 1,264,922
Household Finance Corp. ....... A1/P1 9.375% 2/15/96 500 504,532
Household Finance Corp. ....... A1/P1 9.00% 9/01/95 6,500 6,500,000
Household Finance Corp.,
Monthly Variable Rate
(final maturity date
8/27/96)+ ++................. A1/P1 5.927% 9/25/95 50,000 50,000,000
Norwest Financial, Inc. ....... A1+/P1 4.625% 9/15/95 100 99,949
------------
144,535,455
------------
OIL AND GAS -- 0.0%
Shell Oil Company.............. A1+/P1 7.70% 2/01/96 300 300,473
------------
RELOCATION SERVICES -- 0.7%
PHH Corp., Monthly Variable
Rate
(final maturity date
9/05/95)+ ++................. A1/P1 5.828% 9/05/95 30,000 29,999,840
------------
TELECOMMUNICATIONS -- 0.4%
AT&T Capital Corp., Daily
Variable Rate
(final maturity date
12/15/95)+ ++................ A1/P1 5.848% 12/15/95 20,000 20,000,000
------------
TRUCKING -- 0.1%
Paccar Financial Corp. ........ A1+/P1 4.18% 9/15/95 5,000 4,996,947
------------
Total Corporate Obligations
(amortized cost $385,930,654).. 385,930,654
------------
CERTIFICATES OF DEPOSIT -- 2.5%
U.S. BRANCHES OF FOREIGN
BANKS -- 2.5%
Banque National de Paris, New
York......................... A1/P1 5.75% 12/11/95 25,000 24,991,149
Banque Paribas, New York....... A1/P1 5.76% 10/17/95 20,000 20,000,504
Societe Generale, New York..... A1+/P1 5.90% 9/06/95 20,000 20,000,165
Societe Generale, New York..... A1+/P1 5.89% 9/12/95 15,000 15,000,091
Societe Generale, New York..... A1+/P1 5.88% 3/07/96 40,000 40,018,248
------------
Total Certificates of Deposit
(amortized cost $120,010,157).. 120,010,157
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
11
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS PRINCIPAL
ASSIGNED BY MATURITY AMOUNT VALUE
DESCRIPTION N.R.S.R.O. RATE DATE (000) (NOTE 2)
- -------------------------------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
FEDERAL AGENCY NOTES -- 1.1%
Federal Farm Credit Bank,
Quarterly Variable Rate
(final maturity date
5/06/96)+.................... A1+/P1! 5.71% 9/08/95 $ 500 $ 499,241
Federal Home Loan Bank,
Daily Variable Rate
(final maturity date
3/08/96)+.................... A1+/P1! 6.05% 9/01/95 50,000 49,983,029
------------
Total Federal Agency Notes
(amortized cost $50,482,270)... 50,482,270
------------
BANKERS' ACCEPTANCES -- 0.3%
Bank of New York............... A1/P1 5.61%** 10/05/95 5,000 4,973,508
Chemical Bank.................. A1/P1 5.65%** 9/27/95 2,300 2,290,615
Chemical Bank.................. A1/P1 5.59%** 10/30/95 2,120 2,595,544
Chemical Bank.................. A1/P1 5.47%** 12/20/95 2,500 2,458,215
Chemical Bank.................. A1/P1 5.47%** 12/27/95 3,000 2,946,668
------------
Total Bankers' Acceptances
(amortized cost $15,264,550)... 15,264,550
------------
Total Investments in Securities
(amortized cost
$4,063,412,439).............. 4,063,412,439
------------
REPURCHASE AGREEMENTS -- 16.6%
Repurchase agreement with First
Chicago Capital Markets,
Inc., dated 8/31/95, with a
maturity value of
$150,024,583.
(See Footnote A)............. 5.90% 9/01/95 150,000 150,000,000
Repurchase agreement with First
Chicago Capital Markets,
Inc., dated 8/31/95, with a
maturity value of
$38,511,300.
(See Footnote B)............. 5.89% 9/01/95 38,505 38,505,000
Repurchase agreement with Fuji
Securities, dated 8/31/95,
with a maturity value of
$150,025,208.
(See Footnote C)............. 6.05% 9/01/95 150,000 150,000,000
Repurchase agreement with Fuji
Securities, dated 8/31/95,
with a maturity value of
$150,024,479.
(See Footnote D)............. 5.875% 9/01/95 150,000 150,000,000
Repurchase agreement with J.P.
Morgan Securities, Inc.,
dated 8/31/95, with a
maturity value of
$150,024,375.
(See Footnote E)............. 5.85% 9/01/95 150,000 150,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- -------------------------------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- (CONTINUED)
Repurchase agreement with
Nomura Securities
International, Inc., dated
8/31/95, with a maturity
value of $150,024,375.
(See Footnote F).............. 5.85% 9/01/95 $ 150,000 $ 150,000,000
--------------
TOTAL REPURCHASE AGREEMENTS
(amortized cost
$788,505,000)................... 788,505,000
--------------
TOTAL INVESTMENTS (AMORTIZED
COST $4,851,917,439) --
102.1%.......................... 4,851,917,439
Liabilities in excess of other
assets -- (2.1%)................ (101,975,470)
--------------
NET ASSETS -- 100%............... $4,749,941,969
==============
</TABLE>
- ---------------
<TABLE>
<S> <C> <C>
N.R.S.R.O. -- Nationally Recognized Statistical Rating Organization. Rating agencies that are
included within the N.R.S.R.O. category are: S&P, Moody's, Fitch Investor Services,
Duff & Phelps and IBCA.
A1 -- Highest rating assigned by S&P and IBCA.
P1 -- Highest rating assigned by Moody's.
F1 -- Highest rating assigned by Fitch Investors.
D1 -- Highest rating assigned by Duff & Phelps.
! Implied short-term rating
* Illiquid security.
+ Variable rate security. Interest rates are stated as of August 31, 1995. Maturity date
reflects the later of the next interest rate change date or the next put date.
++ Private placement security.
** Effective yield.
</TABLE>
(footnotes continue on next page)
- ---------------
See Notes to Financial Statements.
13
<PAGE> 9
(footnotes continued from previous page)
<TABLE>
<S> <C>
Footnote A -- Collateralized by $154,595,000 U.S. Treasury Note, 4.375%, due 8/15/96, with a
value of $153,004,551.
Footnote B -- Collateralized by $39,685,,000 U.S. Treasury Note, 4.375%, due 8/15/96, with a
value of $39,276,727.
Footnote C -- Collateralized by $12,711,000 U.S. Treasury Notes, with various coupon rates and
maturities ranging from 8/31/96 through 5/15/01, $13,102,000 U.S. Treasury Strip
Principal Note, due 8/15/01, $2,814,000 U.S. Treasury Bond, 13.125%, due 5/15/01,
$11,320,000 U.S. Treasury Bill, due 1/04/96, $627,000 Resolution Funding
Corporation Strip Interest Note, due 1/15/04, $36,177,500 Federal National Mortgage
Backed Securities, with various coupon rates and maturities ranging from 10/11/95
through 12/09/03, $67,673,000 Federal Home Loan Mortgage Association Discount
Notes, with various maturities ranging from 10/02/95 through 11/22/95 and
$12,500,000 Federal Farm Credit Discount Note, due 1/09/96; with an aggregate value
of $153,000,402.
Footnote D -- Collateralized by $12,711,000 U.S. Treasury Notes, with various coupon rates and
maturities ranging from 8/31/96 through 5/15/01, $13,102,000 U.S. Treasury Strip
Principal Note, due 8/15/01, $2,814,000 U.S. Treasury Bond, 13.125%, due 5/15/01,
$11,320,000 U.S. Treasury Bill, due 1/04/96, $627,000 Resolution Funding
Corporation Strip Interest Note, due 1/15/04, $36,177,500 Federal National Mortgage
Backed Securities, with various coupon rates and maturities ranging from 10/11/95
through 12/09/03, $67,673,000 Federal Home Loan Mortgage Association Discount
Notes, with various maturities ranging from 10/02/95 through 11/22/95 and
$12,500,000 Federal Farm Credit Discount Note, due 1/09/96; with an aggregate value
of $153,000,402.
Footnote E -- Collateralized by $154,906,747 Government National Mortgage Association Securities,
with various coupon rates and maturities ranging from 1/01/00 through 7/20/25; with
an aggregate value of $153,941,293.
Footnote F -- Collateralized by $12,600,000 Resolution Funding Corporation Strip Interest Note,
due 7/15/05, $24,025,000 Federal National Mortgage Association Medium Term Notes,
with various coupon rates and maturities ranging from 3/15/00 through 5/20/24,
$32,445,000 Federal National Mortgage Debentures, with various coupon rates and
maturities ranging from 11/15/95 through 8/12/19, $67,385,000 Federal Home Loan
Mortgage Debenture Bonds, with various coupon rates and maturities ranging from
2/23/01 through 5/11/05, $20,000,000 Federal Home Loan Mortgage Discount Notes,
with various maturities ranging from 10/03/95 through 11/02/95; with an aggregate
value of $153,028,547.
</TABLE>
- ---------------
See Notes to Financial Statements.
14
<PAGE> 10
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- -------------------------------------------------- ----- --------- --------- --------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 100.2%
U.S. TREASURY OBLIGATIONS -- 32.5%
U.S. TREASURY NOTES -- 27.2%
U.S. Treasury Note............................... 3.875% 10/31/95 $ 60,000 $ 59,817,582
U.S. Treasury Note............................... 5.125% 11/15/95 65,000 64,891,060
U.S. Treasury Note............................... 8.500% 11/15/95 25,000 25,123,180
U.S. Treasury Note............................... 9.250% 1/15/96 278,150 281,704,303
U.S. Treasury Note............................... 4.000% 1/31/96 75,000 74,499,786
U.S. Treasury Note............................... 4.625% 2/15/96 25,000 24,872,054
U.S. Treasury Note............................... 7.875% 2/15/96 95,000 95,880,944
U.S. Treasury Note............................... 8.750% 2/15/96 50,000 50,682,470
--------------
677,471,379
--------------
U.S. TREASURY BILLS -- 5.3%
U.S. Treasury Bill............................... 5.53%* 9/21/95 15,000 14,954,958
U.S. Treasury Bill............................... 5.67%* 10/05/95 50,000 49,739,806
U.S. Treasury Bill............................... 5.97%* 11/02/95 50,000 49,506,583
U.S. Treasury Bill............................... 6.80%* 11/16/95 2,000 1,972,978
U.S. Treasury Bill............................... 5.54%* 12/07/95 15,000 14,783,165
--------------
130,957,490
--------------
Total U.S. Treasury Obligations
(amortized cost $808,428,869).................... 808,428,869
--------------
REPURCHASE AGREEMENTS -- 67.7%
Repurchase agreement with Barclay's De Zoate Wedd
Securities, Inc., dated 8/31/95, with a
maturity value of $110,017,569.
(See Footnote A)............................... 5.75% 9/01/95 110,000 110,000,000
Repurchase agreement with C.S. First Boston
Corp., dated 8/31/95, with a maturity value of
$210,033,833. (See Footnote B)................. 5.80% 9/01/95 210,000 210,000,000
Repurchase agreement with First Chicago Capital
Markets Inc., dated 8/31/95, with a maturity
value of $110,017,906. (See Footnote C)........ 5.86% 9/01/95 110,000 110,000,000
Repurchase agreement with First National Bank of
Chicago, dated 8/31/95, with a maturity value
of $78,173,723. (See Footnote D)............... 5.86% 9/01/95 78,161 78,161,000
Repurchase agreement with Fuji Securities Inc.,
dated 8/31/95, with a maturity value of
$210,034,125. (See Footnote E)................. 5.85% 9/01/95 210,000 210,000,000
Repurchase agreement with Goldman Sachs and Co.,
dated 8/31/95, with a maturity value of
$110,017,569. (See Footnote F)................. 5.75% 9/01/95 110,000 110,000,000
Repurchase agreement with HSBC Securities, Inc.,
dated 8/31/95, with a maturity value of
$210,033,950. (See Footnote G)................. 5.82% 9/01/95 210,000 210,000,000
Repurchase agreement with Merrill Lynch, dated
8/31/95, with a maturity value of $110,017,631.
(See Footnote H)............................... 5.77% 9/01/95 110,000 110,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
15
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- -------------------------------------------------- ---- -------- --------- --------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- (CONTINUED)
Repurchase agreement with Morgan Stanley, Inc.,
dated 8/31/95, with a maturity value of
$210,033,833. (See Footnote I)................. 5.80% 9/01/95 $ 210,000 $ 210,000,000
Repurchase agreement with Nomura Securities
International, Inc., dated 8/31/95, with a
maturity value of $110,017,783.
(See Footnote J)............................... 5.82% 9/01/95 110,000 110,000,000
Repurchase agreement with Smith Barney Inc.,
dated 8/31/95, with a maturity value of
$220,035,414. (See Footnote K)................. 5.795% 9/01/95 220,000 220,000,000
--------------
Total Repurchase Agreements
(amortized cost $1,688,161,000).................. 1,688,161,000
--------------
TOTAL INVESTMENTS (AMORTIZED COST
$2,496,589,869) -- 100.2%........................ 2,496,589,869
Other liabilities in excess of assets -- (0.2%)... (4,047,575)
--------------
NET ASSETS -- 100%................................ $2,492,542,294
==============
</TABLE>
- ---------------
* Effective yield.
<TABLE>
<S> <C>
Footnote A -- Collateralized by $92,482,000 U.S. Treasury Strips, with maturities ranging from 2/15/01
through 2/15/23, $66,071,000 U.S. Treasury Notes with various coupon rates and maturities
ranging from 2/28/97 through 7/31/98, and $32,704,000 U.S. Treasury Non-Callable Strips,
with maturities ranging from 11/15/00 through 11/15/22; with an aggregate value of
$112,200,792.
Footnote B -- Collateralized by $208,647,000 U.S. Treasury Bonds, with various coupon rates and
maturities ranging from 8/15/22 through 8/15/25; with an aggregate value of $215,210,927.
Footnote C -- Collateralized by $113,370,000 U.S. Treasury Note, 4.375%, due 8/15/96, with a value of
$112,203,667.
Footnote D -- Collateralized by $3,316,000 U.S. Treasury Bills, with maturities ranging from 9/21/95
through 10/19/95, $4,208,000 U.S. Treasury Bonds, with various coupon rates and maturities
ranging from 5/15/03 through 2/15/19, $61,304,000 U.S. Treasury Notes, with various coupon
rates and maturities ranging from 5/31/96 through 8/15/03, and a $82,530,000 U.S. Treasury
Strip, due 8/15/03; with an aggregate value of $79,728,827.
Footnote E -- Collateralized by $7,450,000 U.S. Treasury Notes, with various coupon rates and maturities
ranging from 10/31/97 through 2/15/98, $208,155,000 U.S. Treasury Bills, with maturities
ranging from 10/19/95 to 12/7/95; with an aggregate value of $214,200,891.
Footnote F -- Collateralized by $176,822,000 U.S. Treasury Strips, with maturities ranging from 11/15/97
through 11/15/11, and $29,450,000 U.S. Treasury Non-Callable Strip, due 11/15/04; with an
aggregate value of $112,200,254.
Footnote G -- Collateralized by $80,030,000 U.S. Treasury Notes, with various coupon rates and maturities
ranging from 7/31/00 to 2/15/03, $154,529,000 U.S. Treasury Strips, with maturities ranging
from 11/15/95 through 5/15/24, and $84,580,000 U.S. Treasury Non-Callable Strips, with
maturities ranging from 11/15/95 through 8/15/23; with an aggregate value of $214,200,252.
Footnote H -- Collateralized by $107,667,000 U.S. Treasury Notes, with various coupon rates and
maturities ranging from 2/28/97 through 5/15/97, with an aggregate value of $112,203,693.
Footnote I -- Collateralized by $220,777,000 U.S. Treasury Strips with maturities ranging from 11/15/95
through 2/15/23, a $93,380,000 U.S. Treasury Note, 6.25%, due 12/31/96, and $70,068,000
U.S. Treasury Non-Callable Strips, with maturities ranging from 5/15/97 through 2/15/23;
with an aggregate value of $214,562,328.
Footnote J -- Collateralized by $111,489,000 U.S. Treasury Notes, with various coupon rates and
maturities ranging from 3/31/97 through 2/15/03; with an aggregate value of $112,200,517.
Footnote K -- Collateralized by $30,547,000 U.S. Treasury Strips, with maturities ranging from 11/15/97
through 11/15/10, $91,598,000 U.S. Treasury Notes, with various coupon rates and maturities
ranging from 9/30/95 through 11/15/97, $75,000,000 U.S. Treasury Bond, 9.00%, due 11/15/10,
and $63,552,000 U.S. Treasury Non-Callable Strip, due 11/15/21; with an aggregate value of
$224,400,260.
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE> 12
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- -------------------------------------------------- ------- --------- -------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 103.7%
U.S. GOVERNMENT AGENCY NOTES -- 71.6%
Federal Farm Credit Bank,
Discount Note.................................. 5.81% 2/13/96 $ 25,000 $ 24,361,771
Federal Home Loan Bank,
Daily Variable Rate
(final maturity date 5/24/96)*................. 5.90% 9/01/95 25,000 24,992,999
Federal Home Loan Bank,
Discount Note.................................. 5.82% 2/16/96 8,950 8,716,942
Federal Home Loan Bank,
Discount Note.................................. 5.70% 10/02/95 7,000 6,966,546
Federal Home Loan Bank,
Discount Note.................................. 5.70% 10/03/95 25,000 24,876,667
Federal Home Loan Bank,
Discount Note.................................. 5.78% 11/17/95 15,000 14,819,692
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.74% 10/16/95 44,631 44,319,582
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.74% 10/31/95 25,000 24,767,500
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.81% 2/08/96 15,000 14,629,333
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.70% 9/05/95 25,000 24,984,500
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.70% 11/06/95 6,775 6,705,071
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.70% 11/21/95 25,000 24,689,500
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.69% 10/03/95 25,000 24,876,889
Federal Home Loan Mortgage Corp.,
Discount Note.................................. 5.77% 11/27/95 25,000 24,661,062
Federal National Mortgage Association,
Daily Variable Rate
(final maturity date 1/26/96)*................. 5.51% 9/01/95 20,000 19,995,167
Federal National Mortgage Association,
Discount Note.................................. 5.83% 12/11/95 25,000 24,604,417
Federal National Mortgage Association,
Monthly Variable Rate
(final maturity date 10/30/95)*................ 5.725% 9/30/95 20,000 19,998,021
Federal National Mortgage Association,
Weekly Variable Rate
(final maturity date 2/16/96)*................. 5.60% 9/06/95 25,000 25,000,000
Student Loan Marketing Association,
Monthly Variable Rate
(final maturity date 12/01/95)................. 5.705% 9/01/95 40,000 39,986,403
------------
Total U.S. Government Agency Notes
(amortized cost $423,952,062).................... 423,952,062
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
17
<PAGE> 13
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- -------------------------------------------------- ------- --------- -------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY GUARANTEE NOTES -- 5.8%
Western Financial Savings Bank (LOC -- Federal
Home Loan Bank, San Francisco)................. 5.76% 9/01/95 $ 14,300 $ 14,300,000
Western Financial Savings Bank (LOC -- Federal
Home Loan Bank, San Francisco)................. 5.75% 9/28/95 20,000 19,914,500
------------
Total U.S. Government Agency Guarantee Notes
(amortized cost $34,214,500)..................... 34,214,500
------------
Total Investments in Securities
(amortized cost $458,166,562).................... 458,166,562
------------
REPURCHASE AGREEMENTS -- 26.3%
Repurchase agreement with Dean Witter Reynolds,
Inc., dated 8/31/95, with a maturity value of
$25,004,080. (See Footnote A).................. 5.875% 9/01/95 25,000 25,000,000
Repurchase agreement with First Chicago Capital
Markets, Inc., dated 8/31/95, with a maturity
value of $30,441,980. (See Footnote B)......... 5.89% 9/01/95 30,437 30,437,000
Repurchase agreement with Fuji Securities, Inc.,
dated 8/31/95, with a maturity value of
$25,004,080. (See Footnote C).................. 5.875% 9/01/95 25,000 25,000,000
Repurchase agreement with HSBC Securities, Inc.,
dated 8/31/95, with a maturity value of
$25,004,063. (See Footnote D).................. 5.85% 9/01/95 25,000 25,000,000
Repurchase agreement with JP Morgan Securities,
Inc., dated 8/31/95, with a maturity value of
$25,004,063. (See Footnote E).................. 5.85% 9/01/95 25,000 25,000,000
Repurchase agreement with Prudential Securities,
Inc., dated 8/31/95, with a maturity value of
$25,004,080. (See Footnote F).................. 5.875% 9/01/95 25,000 25,000,000
------------
Total Repurchase Agreements
(amortized cost $155,437,000).................... 155,437,000
------------
TOTAL INVESTMENTS
(AMORTIZED COST $613,603,562) -- 103.7%.......... 613,603,562
Liabilities in excess of other assets -- (3.7%)... (21,904,158)
------------
NET ASSETS -- 100%................................ $591,699,404
============
</TABLE>
- ---------------
LOC -- Letter of credit.
* Variable rate security. Maturity date reflects the later of the next rate
change date or the next put date.
(footnotes on following page)
See Notes to Financial Statements.
18
<PAGE> 14
(footnotes from previous page)
<TABLE>
<S> <C>
Footnote A -- Collateralized by $669,000 U.S. Treasury Notes with various coupon rates and
maturities ranging from 11/15/95 through 6/30/99; $343,000 U.S. Treasury Bonds with
various coupon rates and maturities ranging from 11/15/01 through 5/15/16; $296,000
U.S. Treasury Bill, due 2/22/96; $31,901,833 Federal National Mortgage Backed
Securities with various coupon rates and maturities ranging from 5/01/97 through
6/01/25; $17,898,732 Federal Home Loan Mortgage Corporation Participation
Certificates with various coupon rates and maturities ranging from 10/31/95 through
5/31/24; with an aggregate value of $25,500,704.
Footnote B -- Collateralized by $15,875,000 U.S. Treasury Note, 4.375%, due 8/15/96; $210,000
Federal Home Loan Bank Consolidated Bond, 6.125%, due 8/05/96; $10,150,000 Federal
Home Loan Mortgage Debenture Bonds with various coupon rates and maturities ranging
from 3/01/01 through 12/16/03; $6,581,000 U.S. Treasury Strips with maturities
ranging from 5/15/99 through 2/15/07; $1,609,000 U.S. Treasury Non-Callable Strips
with various coupon rates and maturities ranging 5/15/05 through 5/15/20; with an
aggregate value of $31,048,451.
Footnote C -- Collateralized by $5,073,000 U.S. Treasury Note, 8.875%, due 11/15/98; $3,140,000
Federal Home Loan Mortgage Fixed Rate Note, 7.36%, due 9/29/99; $11,660,000 Federal
Home Loan Mortgage Debenture Bonds with various coupon rates and maturities ranging
from 5/25/05 through 9/13/05; $4,406,000 Federal Home Loan Mortgage Discount Note,
due 9/01/95; with an aggregate value of $25,501,394.
Footnote D -- Collateralized by $30,745,000 Resolution Funding Corp. Strips with maturities
ranging from 4/15/96 through 10/15/98; with an aggregate value of $25,501,135.
Footnote E -- Collateralized by $25,713,165 Government National Mortgage Association Notes with
various coupon rates and maturities ranging from 6/15/10 through 8/20/25; with an
aggregate value of $25,506,639.
Footnote F -- Collateralized by $4,273,000 Tennessee Valley Authority Bonds with various coupon
rates and maturities ranging from 3/04/96 through 7/15/45; $317,000 Resolution
Funding Corp. Non-callable Principal Strips with maturities ranging from 7/15/20
through 1/15/30; $6,907,000 Resolution Funding Corp. Strips with maturities ranging
from 10/15/95 through 4/15/30; $95,000 Resolution Funding Corporate Bonds with
various coupon rates and maturities ranging from 10/15/19 through 1/15/21; $317,000
Financing Corp. Strip Interest Payments with maturities ranging from 8/03/96
through 8/30/17; $20,000 Financing Corp. Bonds with various coupon rates and
maturities ranging from 10/06/17 through 2/08/18; $5,015,000 Federal National
Mortgage Medium Term Notes with various coupon rates and maturities ranging from
9/01/95 through 5/10/21; $8,005,000 Federal National Mortgage Debentures with
various coupon rates and maturities ranging from 11/15/95 through 11/10/20;
$4,781,000 Federal Home Loan Mortgage Debenture Bonds with various coupon rates and
maturities ranging from 2/28/96 through 11/27/07; $335,000 Federal Farm Credit
Systemwide Bond, 6.76%, due 2/28/96; $275,000 Federal Home Loan Mortgage Fixed Rate
Notes with various coupon rates and maturities ranging from 9/15/95 through
2/15/00; with an aggregate value of $25,502,377.
</TABLE>
See Notes to Financial Statements.
19
<PAGE> 15
PACIFIC HORIZON TREASURY ONLY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
DESCRIPTION RATE DATE (000) (NOTE 2)
- ------------------------------------------------- ------- --------- -------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 99.3%
U.S. TREASURY OBLIGATIONS -- 99.3%
U.S. TREASURY NOTES -- 57.1%
U.S. Treasury Note.............................. 8.625% 10/15/95 $ 52,000 $ 52,169,656
U.S. Treasury Note.............................. 3.875% 10/31/95 51,360 51,214,963
U.S. Treasury Note.............................. 5.125% 11/15/95 25,665 25,634,073
U.S. Treasury Note.............................. 8.500% 11/15/95 22,380 22,499,889
U.S. Treasury Note.............................. 4.250% 11/30/95 26,820 26,731,499
U.S. Treasury Note.............................. 9.250% 1/15/96 13,430 13,599,017
U.S. Treasury Note.............................. 4.000% 1/31/96 260 258,229
U.S. Treasury Note.............................. 7.875% 2/15/96 1,035 1,044,801
------------
193,152,127
------------
U.S. TREASURY BILLS -- 42.2%
U.S. Treasury Bill.............................. 5.51%* 9/21/95 65,815 65,617,353
U.S. Treasury Bill.............................. 5.66%* 10/05/95 7,509 7,469,959
U.S. Treasury Bill.............................. 5.55%* 10/19/95 49,328 48,971,825
U.S. Treasury Bill.............................. 5.426%* 11/24/95 20,934 20,675,849
------------
142,734,986
------------
TOTAL INVESTMENTS (AMORTIZED COST
$335,887,113) -- 99.3%.......................... 335,887,113
Other assets in excess of liabilities -- 0.7%.... 2,371,808
------------
NET ASSETS -- 100%............................... $338,258,921
============
</TABLE>
- ---------------
* Effective yield.
See Notes to Financial Statements.
20
<PAGE> 16
(This page intentionally left blank)
21
<PAGE> 17
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME
FUND
--------------
<S> <C>
ASSETS:
Investments in securities, at value (amortized cost
$4,063,412,439, $808,428,869, $458,166,562 and $335,887,113,
respectively)................................................. $4,063,412,439
Repurchase agreements (amortized cost $788,505,000,
$1,688,161,000, $155,437,000 and $0, respectively)............ 788,505,000
Receivable from advisor......................................... 265,007
Cash............................................................ --
Interest receivable............................................. 9,105,144
Deferred organization costs and prepaid expenses................ 130,577
--------------
Total assets...................................................... 4,861,418,167
--------------
LIABILITIES:
Advisory fees payable........................................... 384,781
Administration fees payable..................................... 416,798
Special management fees payable (Pacific Horizon Shares)........ 467,065
Service Organization fees payable (Horizon Service Shares)...... 300,327
Due to custodian................................................ 2,470
Dividends payable............................................... 17,564,415
Payable for investment securities purchased..................... 91,501,885
Accrued legal fees.............................................. 56,203
Other accrued expenses.......................................... 782,254
--------------
Total liabilities................................................. 111,476,198
--------------
NET ASSETS........................................................ $4,749,941,969
==============
Shares Outstanding ($0.001 par value)
Pacific Horizon Shares.......................................... 1,727,526,761
Horizon Shares.................................................. 1,744,656,091
Horizon Service Shares.......................................... 1,280,734,442
--------------
Total Shares Outstanding 4,752,917,294
==============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE.... $1.00
====
COMPOSITION OF NET ASSETS:
Shares of common stock, at par.................................. $ 4,752,917
Additional paid-in capital...................................... 4,747,948,369
Accumulated undistributed net investment income................. 1,297,567
Accumulated net realized losses................................. (4,056,884)
--------------
NET ASSETS, AUGUST 31, 1995....................................... $4,749,941,969
==============
</TABLE>
- ---------------
See Notes to Financial Statements.
22
<PAGE> 18
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
TREASURY GOVERNMENT ONLY
FUND FUND FUND
-------------- ------------ ------------
<S> <C> <C>
$ 808,428,869 $458,166,562 $335,887,113
1,688,161,000 155,437,000 --
123,796 -- --
-- 536 71,789
6,857,429 840,820 3,778,669
171,689 248,861 124,551
-------------- ------------ ------------
2,503,742,783 614,693,779 339,862,122
-------------- ------------ ------------
192,555 53,005 27,447
208,135 53,005 27,447
334,400 82,890 46,510
140,048 58,255 30,008
760 -- --
10,098,918 2,720,162 1,371,448
-- 19,914,500 --
55,890 15,223 17,853
169,783 97,335 82,488
-------------- ------------ ------------
11,200,489 22,994,375 1,603,201
-------------- ------------ ------------
$2,492,542,294 $591,699,404 $338,258,921
============== ============ ============
1,182,787,663 282,788,744 188,594,333
669,693,469 63,801,554 --
640,517,077 245,802,988 149,748,437
-------------- ------------ ------------
2,492,998,209 592,393,286 338,342,770
============== ============ ============
$1.00 $1.00 $1.00
===== ===== =====
$ 2,492,998 $ 592,393 $ 338,343
2,489,529,524 591,800,893 338,004,427
667,877 340,540 --
(148,105) (1,034,422) (83,849)
-------------- ------------ ------------
$2,492,542,294 $591,699,404 $338,258,921
============== ============ ============
</TABLE>
23
<PAGE> 19
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Operations
For the six months ended August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
PRIME TREASURY GOVERNMENT ONLY
FUND FUND FUND FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest......................... $95,586,299 $62,929,744 $23,202,670 $8,818,426
----------- ----------- ----------- ----------
EXPENSES:
Advisory fees.................... 1,565,958 1,053,759 385,005 153,800
Administration fees.............. 1,559,594 1,053,759 385,005 153,800
Special management service fees
(Pacific Horizon Shares)....... 2,176,728 1,909,645 542,295 237,824
Service Organization fees
(Horizon Service Shares)....... 1,327,473 522,213 321,343 198,699
Custodian fees and expenses...... 215,702 202,138 105,246 46,737
Transfer agent fees and
expenses....................... 156,613 47,033 51,020 35,039
Insurance expense................ 61,846 48,729 10,208 6,359
Membership fees.................. 54,435 46,062 24,226 26,416
Directors' fees.................. 49,365 36,846 18,283 9,124
Audit fees....................... 27,661 26,493 13,148 7,996
Legal fees....................... 20,397 23,207 20,090 22,772
Reports to shareholders.......... 12,919 1,658 7,975 6,486
Registration fees................ 12,392 71,135 87,507 7,867
Amortization of organization
costs.......................... -- 2,262 16,334 13,380
Other expenses................... 12,085 4,519 4,260 4,075
----------- ----------- ----------- ----------
7,253,168 5,049,458 1,991,945 930,374
Less: Fee waivers and expense
reimbursements................... -- -- (463,529) --
----------- ----------- ----------- ----------
7,253,168 5,049,458 1,528,416 930,374
----------- ----------- ----------- ----------
Net Investment Income.............. 88,333,131 57,880,286 21,674,254 7,888,052
REALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on
securities transactions........ (1,110,049) 90,617 41,229 31,017
----------- ----------- ----------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........ $87,223,082 $57,970,903 $21,715,483 $7,919,069
=========== =========== =========== ==========
</TABLE>
- ---------------
See Notes to Financial Statements.
24
<PAGE> 20
(This page intentionally left blank)
25
<PAGE> 21
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME FUND
-------------------------------------
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, 1995 FEBRUARY 28,
(UNAUDITED) 1995
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS
Net investment income............................. $ 88,333,131 $ 138,770,401
Net realized gain (loss) on securities
transactions.................................... (1,110,049) (70,528,584)
---------------- ----------------
Net increase in net assets resulting from
operations........................................ 87,223,082 68,241,817
---------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Pacific Horizon Shares............................ (37,494,201) (45,136,378)
Horizon Shares.................................... (20,839,531) (56,633,687)
Horizon Service Shares............................ (29,685,776) (36,337,275)
---------------- ----------------
Total dividends to shareholders from net investment
income............................................ (88,019,508) (138,107,340)
---------------- ----------------
PORTFOLIO SHARE TRANSACTIONS:
(AT $1.00 PER SHARE) (NOTE 4)
Net proceeds from shares subscribed............... 12,197,520,811 22,779,590,840
Net asset value of shares issued to shareholders
in reinvestment of dividends.................... 34,500,110 44,544,475
Cost of shares redeemed........................... (10,096,709,924) (26,110,723,254)
---------------- ----------------
Net increase (decrease) in net assets from
Portfolio share transactions...................... 2,135,310,997 (3,286,587,939)
---------------- ----------------
Increase due to capital contribution from
investment advisor (Note 3)....................... -- 77,411,877
---------------- ----------------
TOTAL INCREASE (DECREASE).......................... 2,134,514,571 (3,279,041,585)
NET ASSETS:
Beginning of year................................. 2,615,427,398 5,894,468,983
---------------- ----------------
End of year (including undistributed net
investment income of $1,297,567 and $983,944,
respectively, for the Prime Fund, $667,877 and
$667,877, respectively, for the Treasury Fund
and $340,540 and $148,038, respectively, for the
Government Fund................................. $ 4,749,941,969 $ 2,615,427,398
================ ================
</TABLE>
- ---------------
See Notes to Financial Statements.
26
<PAGE> 22
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY FUND GOVERNMENT FUND
--------------------------------------- -------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
AUGUST 31, 1995 YEAR ENDED AUGUST 31, 1995 YEAR ENDED
(UNAUDITED) FEBRUARY 28, 1995 (UNAUDITED) FEBRUARY 28, 1995
--------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
$ 57,880,286 $ 87,571,768 $ 21,674,254 $ 28,514,766
90,617 505,457 41,229 (6,104,207)
--------------- --------------- ----------------- ---------------
57,970,903 88,077,225 21,715,483 22,410,559
--------------- --------------- ----------------- ---------------
(32,251,238) (47,797,370) (9,277,319) (10,270,344)
(14,214,391) (23,889,473) (5,094,245) (7,955,039)
(11,414,657) (15,884,925) (7,110,188) (10,141,345)
--------------- --------------- ----------------- ---------------
(57,880,286) (87,571,768) (21,481,752) (28,366,728)
--------------- --------------- ----------------- ---------------
5,640,667,830 8,879,909,861 2,818,362,848 5,672,050,494
7,308,280 9,576,672 11,828,907 9,946,142
(5,120,580,283) (9,531,263,412) (3,117,647,792) (5,652,649,134)
--------------- --------------- ----------------- ---------------
527,395,827 (641,776,879) (287,456,037) 29,347,502
--------------- --------------- ----------------- ---------------
-- -- -- 5,500,000
--------------- --------------- ----------------- ---------------
527,486,444 (641,271,422) (287,222,306) 28,891,333
1,965,055,850 2,606,327,272 878,921,710 850,030,377
--------------- --------------- ----------------- ---------------
$ 2,492,542,294 $ 1,965,055,850 $ 591,699,404 $ 878,921,710
============== =============== ================= ===============
</TABLE>
27
<PAGE> 23
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY ONLY FUND
-----------------------------------------
SIX MONTHS
ENDED
AUGUST 31, 1995 YEAR ENDED
(UNAUDITED) FEBRUARY 28, 1995
----------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS
Net investment income.............................. $ 7,888,052 $ 11,678,458
Net realized gain (loss) on securities
transactions..................................... 31,017 (48,264)
------------- ---------------
Net increase in net assets resulting from
operations......................................... 7,919,069 11,630,194
------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Pacific Horizon Shares............................. (3,779,402) (2,335,606)
Horizon Shares..................................... -- --
Horizon Service Shares............................. (4,108,650) (9,342,852)
------------- ---------------
Total dividends to shareholders from net investment
income............................................. (7,888,052) (11,678,458)
------------- ---------------
PORTFOLIO SHARE TRANSACTIONS:
(AT $1.00 PER SHARE) (NOTE 6)
Net proceeds from shares subscribed................ 978,885,250 1,440,503,813
Net asset value of shares issued to shareholders in
reinvestment of dividends........................ 4,600,642 9,877,274
Cost of shares redeemed............................ (929,958,734) (1,509,340,461)
------------- ---------------
Net increase (decrease) in net assets from Portfolio
share transactions................................. 53,527,158 (58,959,374)
------------- ---------------
TOTAL INCREASE (DECREASE)........................... 53,558,175 (59,007,638)
NET ASSETS:
Beginning of year.................................. 284,700,746 343,708,384
------------- ---------------
End of year........................................ $ 338,258,921 $ 284,700,746
============= ===============
</TABLE>
- ---------------
See Notes to Financial Statements.
28
<PAGE> 24
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 -- GENERAL
Pacific Horizon Funds, Inc. (the "Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end management investment company. At August 31, 1995, the Fund operated
as a series company comprising sixteen portfolios. The accompanying financial
statements and notes are those of the Pacific Horizon Prime Fund (the "Prime
Fund"), Pacific Horizon Treasury Fund (the "Treasury Fund"), Pacific Horizon
Government Fund (the "Government Fund") and Pacific Horizon Treasury Only Fund
(the "Treasury Only Fund") (collectively, the "Portfolios") only.
The Prime Fund, the Government Fund and the Treasury Fund issue three
classes of shares (Pacific Horizon Shares, Horizon Shares and Horizon Service
Shares) while the Treasury Only Fund issues two classes of shares (Pacific
Horizon Shares and Horizon Service Shares). Pacific Horizon Shares, Horizon
Shares and Horizon Service Shares are substantially the same except that Pacific
Horizon Shares bear the fees payable under the Fund's Special Management
Services Agreement at an annual rate of 0.32% of the average daily net asset
value of the outstanding Pacific Horizon Shares while Horizon Service Shares
bear the fees payable, under the Shareholder Services Plan, to institutions
("Service Organizations"), that provide support services to their clients who
beneficially own such shares. Such fees are payable at an annual rate of 0.25%
of the average daily net asset value of the outstanding Horizon Service Shares.
Bank of America National Trust and Savings Association ("Bank of America"),
a subsidiary of BankAmerica Corporation, serves as the Fund's investment
adviser. Concord Holding Corporation ("Concord") serves as the Fund's
administrator and Concord Financial Group, Inc. (the "Distributor"), a
wholly-owned subsidiary of Concord, serves as the distributor of the Fund's
shares.
On March 29, 1995, a merger agreement was approved by the Shareholders of
Concord whereby Concord became a wholly owned subsidiary of the BISYS Group,
Inc. ("BISYS") and continues to serve as administrator and distributor to the
Fund on substantially identical terms as described below in Note 3.
On August 25, 1995, a special meeting of the shareholders of the 231 Funds
was held to consider the approval of an Agreement and Plan of Reorganization
whereby the two series portfolios were reorganized into corresponding series of
the Pacific Horizon Funds, Inc.
29
<PAGE> 25
Agreement and Plan of Reorganization -- the shareholders of each portfolio
approved an Agreement and Plan of Reorganization with respect to each portfolio
as follows:
<TABLE>
<CAPTION>
BROKER
IN FAVOR OPPOSED ABSTAIN NON-VOTES
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Prime Fund....... 815,483,528 1,680,064 14,766,808 0
Treasury Fund.... 103,015,140 0 0 0
</TABLE>
As a result on August 28, 1995, the 231 Prime Fund -- Institutional Shares
(the "231 Prime Institutional Shares") and the 231 Prime Fund -- Service Shares
(the "231 Prime Service Shares") were reorganized with the Prime Fund, in a
tax-free reorganization. In addition, the 231 Treasury Fund -- Institutional
Shares (the "231 Treasury Institutional Shares") and the 231 Treasury
Fund -- Service Shares (the "231 Treasury Service Shares") were reorganized with
the Treasury Fund, in a tax-free reorganization. Pursuant to the terms of the
reorganization, the 231 Prime Institutional Shares and 231 Prime Service Shares
transferred all of their assets and liabilities to the Prime Fund in exchange
for Horizon Shares and Horizon Service Shares, respectively, of the Prime Fund
with a value equivalent to the net value of the assets and liabilities so
transferred and the 231 Treasury Institutional Shares and 231 Treasury Service
Shares transferred all of their assets and liabilities to the Treasury Fund in
exchange for Horizon Shares and Horizon Service Shares, respectively, of the
Treasury Fund with a value equivalent to the net value of the assets and
liabilities so transferred. In connection with the reorganization, the 231 Prime
Fund Institutional Shares shareholders received 971,168,989 Horizon Shares of
the Prime Fund, the 231 Prime Fund Service Shares shareholders received
140,144,817 Service Shares of the Prime Fund, the 231 Treasury Fund
Institutional Shares shareholders received 117,280,359 Horizon Shares of the
Treasury Fund and the 231 Treasury Service Shares shareholders received
138,004,108 Service Shares of the Treasury Fund. The aggregate net assets of the
231 Prime Fund and the Prime Fund immediately prior to the reorganization were
$1,110,157,724 and $3,755,249,822, respectively, while the aggregate net assets
of the 231 Treasury Fund and the Treasury Fund were $255,284,467 and
$2,230,899,555, respectively. Immediately following the reorganization the net
assets of the Prime Fund and the Treasury Fund were $4,846,823,637 and
$2,480,722,991, respectively.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Each Portfolio seeks to maintain a net asset value per share of $1.00,
although there is no assurance that it will be able to do so on a continuous
basis, and has adopted certain investment, portfolio valuation and dividend and
distribution policies designed to enable it to do so.
A) PORTFOLIO VALUATIONS:
Portfolio securities are valued at amortized cost, which approximates market
value. The amortized cost method involves valuing a security at its cost on the
date of purchase and
30
<PAGE> 26
thereafter assuming a constant amortization to maturity of the difference
between the principal amount due at maturity and cost.
B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on a trade date basis. Realized gains
and losses from securities transactions are recorded on the identified cost
basis. Interest income, including accretion of discount and amortization of
premium, is accrued daily.
C) REPURCHASE AGREEMENTS (PRIME FUND, TREASURY FUND, AND GOVERNMENT FUND):
The Fund's custodian and other banks acting in a subcustodian capacity take
possession of the collateral pledged for investments in repurchase agreements.
The underlying collateral is valued daily on a mark-to-market basis to determine
that the value, including accrued interest, is not less than 102% of the
repurchase price, including accrued interest. In the event of the seller's
default of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
D) DIVIDENDS TO SHAREHOLDERS:
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and paid monthly. Distributions of net
realized gains, if any, will be paid at least annually. However, to the extent
that net realized gains of any Portfolio can be offset by capital loss
carryovers from that Portfolio, such gains will not be distributed. Dividends
and distributions are recorded by each Portfolio on the ex-dividend date.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
E) FEDERAL INCOME TAXES:
For federal income tax purposes, each Portfolio is treated as a separate
entity for the purpose of determining the Portfolio's qualification as a
regulated investment company under the Internal Revenue Code (the "Code"). It is
the policy of the Fund that each Portfolio comply with the requirements of the
Code applicable to regulated investment companies, including the requirement
that each Portfolio distribute substantially all of its taxable income to
shareholders. Therefore, no federal income tax provision is required. At
February 28, 1995, the cost of securities in each Portfolio for federal income
tax purposes was substantially the same as for financial reporting purposes.
31
<PAGE> 27
At February 28, 1995, the following Portfolios had the following capital
loss carryovers:
<TABLE>
<CAPTION>
CAPITAL
LOSS
FUND CARRYOVER EXPIRATION DATE
---- ---------- ----------------
<S> <C> <C>
Prime Fund........................................ $ 22,098 1999
1,171,786 2002
1,570,608 2003
----------
$2,764,492
==========
Treasury Fund..................................... $ 239,007 2002
==========
Government Fund................................... $ 129,811 2002
943,990 2003
----------
$1,073,801
==========
Treasury Only Fund................................ $ 21,276 2002
92,145 2003
----------
$ 113,421
==========
</TABLE>
To the extent these capital loss carryovers are used to offset future net
realized gains on securities transactions, the gains so offset will not be
distributed to shareholders, to the extent provided by the regulations under the
Code. Capital losses incurred after October 31, 1994 and within the fiscal year
are deemed to arise on the first business day of the following fiscal year. The
Government Fund incurred and elected to defer such losses of $2,264.
F) OTHER:
The Fund accounts separately for the assets, liabilities and operations of
each Portfolio. Expenses directly attributable to each Portfolio are charged to
that Portfolio, while expenses which are attributable to more than one portfolio
of the Fund are allocated among the respective portfolios. The investment income
and the expenses (other than expenses incurred under the Special Management
Services Agreement and Shareholder Services Plan) of each Portfolio are
allocated to the separate classes of shares based upon their relative net asset
value.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Portfolios have an Investment Advisory Agreement with Bank of America
and a Basic Administrative Services Agreement with Concord. Bank of America is
entitled to a fee from each Portfolio, which is accrued daily and payable
monthly, at an annual rate of 0.10% of each Portfolio's first $3 billion of net
assets, plus 0.09% of each Portfolio's next $2 billion of net assets, plus 0.08%
of each Portfolio's net assets in excess of $5 billion. Concord is entitled to a
fee from each Portfolio, which is accrued daily and payable monthly, at an
annual rate of 0.10% of each Portfolio's first $7 billion of net assets, plus
0.09% of each Portfolio's next $3 billion of net assets plus 0.08% of each
Portfolio's net assets in excess of $10 billion. For the
32
<PAGE> 28
six months ended August 31, 1995, Bank of America and Concord voluntarily waived
fees from the Government Fund in the amount of $276,490 and $182,261,
respectively.
In addition, for the six months ended August 31, 1995, Bank of America
agreed to reimburse other operating expenses of the Government Fund in the
amount of $4,778.
The agreements provide that if, in any fiscal year, the aggregate expenses
of any Portfolio (generally excluding interest, taxes, brokerage commissions and
extraordinary expenses) exceed the most restrictive expense limitation of any
state having jurisdiction over that Portfolio, then Bank of America and Concord
will reimburse the Portfolio for any such excess expenses. As of August 31,
1995, the most restrictive expense limitation is believed to limit expenses to
2.5% of the first $30 million of each Portfolio's average daily net assets, plus
2.0% of the next $70 million of such assets plus 1.5% of such assets in excess
of $100 million. The agreements provide that such reimbursements will be
estimated and paid on a monthly basis. No reimbursement was required for the six
months ended August 31, 1995.
The Portfolios have entered into a Special Management Service Agreement
("Services Agreement") pursuant to which they have agreed to pay Bank of America
and Concord a fee for various services relating to the Pacific Horizon Shares.
The special management services fee is accrued daily at an annual rate of 0.32%
of the average daily net asset value of the outstanding Pacific Horizon Shares
of each Portfolio, and is borne solely by the Pacific Horizon Shares. For the
six months ended August 31, 1995, the Portfolios were advised that Concord, Bank
of America and their affiliates earned the following amounts pursuant to the
Services Agreement:
<TABLE>
<CAPTION>
AFFILIATES OF
BANK OF AFFILIATES BANK OF
FUND AMERICA CONCORD OF CONCORD AMERICA
---- ------- ------- ---------- -------------
<S> <C> <C> <C> <C>
Prime Fund............................... $7,687 $28,228 $182,285 $ 1,958,208
Treasury Fund............................ 2,879 10,798 30,278 1,865,648
Government Fund.......................... -- 90 -- 542,291
Treasury Only Fund....................... 1,376 1,483 3,308 231,589
</TABLE>
The Portfolios have also adopted a Shareholder Services Plan (the "Horizon
Service Plan") pursuant to which Service Organizations agree to provide certain
services to their clients who are the beneficial owners of Horizon Service
Shares in return for payment by the Portfolios of a fee at an annual rate of
0.25% of the average daily net asset value of the Horizon Service Shares
outstanding from time to time. These payments are borne solely by the Horizon
Service Shares. Service Organizations may include the Distributor, Bank of
America and their affiliates. For the six months ended August 31, 1995, the
Portfolios were
33
<PAGE> 29
advised that affiliates of Bank of America earned the following amounts pursuant
to the Horizon Service Plan:
<TABLE>
<CAPTION>
FUND
----
<S> <C>
Prime Fund.............................................................. $1,137,025
Treasury Fund........................................................... 502,886
Government Fund......................................................... 283,079
Treasury Only Fund...................................................... 168,747
</TABLE>
During the period from May 6, 1994 through July 12, 1994, the advisor
voluntarily contributed capital to the Prime Fund and the Government Fund in the
aggregate amount of approximately $77.4 million and $5.5 million, respectively.
The adviser received no shares of common stock or other consideration in
exchange for these contributions which increased net asset value. For tax
purposes, these capital contributions were applied against the realized losses
for the year ended February 28, 1995. Accordingly, such amounts have been
reclassified from additional paid-in capital against accumulated net realized
losses in the Statement of Assets and Liabilities.
For the six months ended August 31, 1995, the Prime Fund, Treasury Fund,
Government Fund and Treasury Only Fund incurred legal charges totaling $20,397,
$25,207, $20,090 and $22,772, respectively, which were earned by a law firm, a
partner of which serves as Secretary to the Fund. Certain officers of the Fund
are "affiliated persons" (as defined in the Act) of Concord.
Concord Financial Services Inc., a wholly owned subsidiary of Concord, acts
as transfer agent for the Horizon class of shares for the Portfolios. For the
six months ended August 31, 1995 Concord Financial Services received $10,018,
$8,342 and $7,718, respectively, from the Prime Fund, Treasury Fund and
Government Fund.
NOTE 4 -- DIRECTORS' COMPENSATION
As of March 1, 1995, each director is entitled to an annual retainer of
$25,000, plus $1,000 for each day the director participates in all or part of a
Board or Committee meeting and the Chairman of each Committee receives a
retainer of $1,000 for services as Chairman of the Committee. In addition, the
Fund's President is entitled to an annual salary of $40,000 for services as
President.
The Board also established a retirement plan (the "Retirement Plan") for
Directors. The Retirement Plan provides that each Director who dies or resigns
after five years of service as a director will be entitled to receive ten annual
payments each equal to the greater of: (i) 50% of the annual Director's retainer
that was payable during the year of that Director's death or resignation, or
(ii) 50% of the annual Director's retainer then in effect for Directors of the
Fund during the year of such payment. A Director who dies or resigns after nine
years of service as a director will be entitled to receive ten annual payments
equal to the greater of:
34
<PAGE> 30
(i) 100% of the annual Director's retainer that was payable during the year of
that Director's death or resignation, or (ii) 100% of the annual Director's
retainer then in effect for Directors of the Fund during the year of such
payment. In addition, the amount payable each year to a Director who dies or
resigns shall be increased by $1,000 for each year of service that the Director
served as Chairman of the Board. Each Director may receive any benefits payable
under the Retirement Plan, at his or her election, either in one lump sum
payment or ten annual installments. A Director's years of service for the
purpose of calculating the payments described above shall be based upon service
as a Director or Chairman after February 28, 1994.
NOTE 5 -- CONCENTRATION OF CREDIT RISK
The Prime Fund invests substantially all of its assets in a diversified
portfolio of high quality U.S. dollar-denominated money market instruments as
disclosed in the portfolio of investments by security type. The issuers'
abilities to meet their obligations may be affected by domestic and foreign
economic, regional and political developments.
35
<PAGE> 31
The Prime Fund had the following concentrations by industry sector at August
31, 1995 (as a percentage of total investment):
<TABLE>
<S> <C>
Banking...................................................................... 23.0%
Repurchase Agreements........................................................ 16.3
Brokerage Services........................................................... 14.7
Finance Companies............................................................ 11.5
Automobiles.................................................................. 8.1
Conglomerates................................................................ 6.6
Telecommunications........................................................... 3.3
Insurance.................................................................... 2.1
Household Furniture & Appliances............................................. 2.1
Agriculture.................................................................. 1.9
Utilities.................................................................... 1.7
Relocation Services.......................................................... 1.1
Business Equipment & Services................................................ 1.1
Consumer-Non Durables........................................................ 1.1
Federal Agency Notes......................................................... 1.1
Leasing...................................................................... 1.0
Chemicals.................................................................... 0.9
Textiles..................................................................... 0.9
Sovereign.................................................................... 0.5
Oil and Gas.................................................................. 0.5
Pharmaceuticals.............................................................. 0.4
Trucking..................................................................... 0.1
-----
100.0%
=====
</TABLE>
NOTE 6 -- CAPITAL SHARE TRANSACTIONS
At August 31, 1995, there were 200 billion shares of the Fund's $0.001 par
value Common Stock authorized, of which 44.4 billion shares were classified as
Class A Common Stock (Treasury Fund -- 15 billion Pacific Horizon Shares, 14.4
billion Horizon Shares and 15 billion Horizon Service Shares), 58 billion shares
were classified as Class B Common Stock (Prime Fund -- 15 billion Pacific
Horizon Shares, 28 billion Horizon Shares and 15 billion Horizon Service
Shares), 37 billion shares were classified as Class L Common Stock (Government
Fund -- 15 billion Pacific Horizon Shares, 7 billion Horizon Shares and 15
billion Horizon Service Shares) and 37 billion shares were classified as Class K
Common Stock (Treasury Only Fund -- 15 billion Pacific Horizon Shares, 7 billion
Horizon Shares and 15 billion Horizon Service Shares).
36
<PAGE> 32
Transactions in shares of each Portfolio (at $1.00 per share) for the
periods indicated are summarized below:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31, 1995 PRIME TREASURY GOVERNMENT
(UNAUDITED) FUND FUND FUND
---------------- --------------- -------------- --------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES:
Shares sold................................. 2,937,338,015 1,783,305,872 730,553,806
Shares issued to shareholders in
reinvestment of dividends................. 18,384,796 3,304,591 4,367,486
Shares redeemed............................. (2,358,267,402) (1,736,591,768) (807,334,617)
--------------- -------------- --------------
Net increase (decrease) in Pacific Horizon
Shares...................................... 597,455,409 50,018,695 (72,413,325)
--------------- -------------- --------------
HORIZON SHARES:
Shares sold................................. 2,554,005,547 1,845,314,844 568,005,612
Shares issued to shareholders in
reinvestment of dividends................. 4,712,516 1,100,494 3,048,912
Shares issued in connection with
reorganization with 231 Funds............. 971,168,989 117,280,643 --
Shares redeemed............................. (2,408,204,594) (1,762,924,609) (742,785,866)
--------------- -------------- --------------
Net increase (decrease) in Horizon Shares.... 1,121,682,458 200,771,372 (171,731,342)
--------------- -------------- --------------
HORIZON SERVICE SHARES:
Shares sold................................. 5,594,863,443 1,756,762,363 1,519,803,430
Shares issued to shareholders in
reinvestment of dividends................. 11,402,798 2,903,195 4,412,509
Shares issued in connection with
reorganization with 231 Funds............. 140,144,817 138,004,108 --
Shares redeemed............................. (5,330,237,928) (1,621,063,906) (1,567,527,309)
--------------- -------------- --------------
Net increase (decrease) in Horizon Service
Shares...................................... 416,173,130 276,605,760 (43,311,370)
--------------- -------------- --------------
Total increase (decrease) in Portfolio
shares...................................... 2,135,310,997 527,395,827 (287,456,037)
=============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
TREASURY ONLY
FUND
--------------
<S> <C>
PACIFIC HORIZON SHARES:
Shares sold.................................. 450,920,059
Shares issued to shareholders in reinvestment
of dividends............................... 1,535,428
Shares redeemed.............................. (354,235,014)
-------------
Net increase in Pacific Horizon Shares........ 98,220,473
-------------
HORIZON SERVICE SHARES:
Shares sold.................................. 527,965,191
Shares issued to shareholders in reinvestment
of dividends............................... 3,065,214
Shares redeemed.............................. (575,723,720)
-------------
Net decrease in Horizon Service Shares........ (44,693,315)
-------------
Total increase in Portfolio shares............ 53,527,158
=============
</TABLE>
37
<PAGE> 33
<TABLE>
<CAPTION>
YEAR ENDED PRIME TREASURY GOVERNMENT
FEBRUARY 28, 1995 FUND FUND FUND
----------------- --------------- -------------- --------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES:
Shares sold................................. 5,272,091,603 3,121,913,879 2,002,378,412
Shares issued to shareholders in
reinvestment of dividends................. 19,756,810 3,689,780 2,572,553
Shares redeemed............................. (5,379,915,571) (3,570,873,713) (1,804,183,343)
--------------- -------------- --------------
Net (decrease) increase in Pacific Horizon
Shares...................................... (88,067,158) (445,270,054) 200,767,622
--------------- -------------- --------------
HORIZON SHARES:
Shares sold................................. 9,961,911,460 3,341,778,010 1,775,658,648
Shares issued to shareholders in
reinvestment of dividends................. 11,806,370 2,245,214 4,881,402
Shares redeemed............................. (13,196,902,924) (3,362,768,467) (1,914,876,241)
--------------- -------------- --------------
Net decrease in Horizon Shares............... (3,223,185,094) (18,745,243) (134,336,191)
--------------- -------------- --------------
HORIZON SERVICE SHARES:
Shares sold................................. 7,545,587,777 2,416,217,972 1,894,013,434
Shares issued to shareholders in
reinvestment of dividends................. 12,981,295 3,641,678 2,492,187
Shares redeemed............................. (7,533,904,759) (2,597,621,232) (1,933,589,550)
--------------- -------------- --------------
Net increase (decrease) in Horizon Service
Shares...................................... 24,664,313 (177,761,582) (37,083,929)
--------------- -------------- --------------
Total (decrease) increase in Portfolio
shares...................................... (3,286,587,939) (641,776,879) 29,347,502
=============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
TREASURY ONLY
FUND
--------------
<S> <C>
PACIFIC HORIZON SHARES:
Shares sold................................... 362,313,215
Shares issued to shareholders in reinvestment
of dividends................................ 1,251,054
Shares redeemed............................... (345,324,334)
--------------
Net increase in Pacific Horizon
Shares........................................ 18,239,935
--------------
HORIZON SERVICE SHARES:
Shares sold................................... 1,078,190,598
Shares issued to shareholders in reinvestment
of dividends................................ 8,626,220
Shares redeemed............................... (1,164,016,127)
--------------
Net decrease in Horizon Service Shares......... (77,199,309)
--------------
Total decrease in Portfolio shares............. (58,959,374)
==============
</TABLE>
38
<PAGE> 34
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, --------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning
of period.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income.............. 0.0279 0.0424 0.0287 0.0340 0.0558 0.0762
Net realized gain (loss) on
securities....................... 0.0002 (0.0227) (0.0016) 0.0000 0.0005 (0.0001)
------ ------- ------- ------- ------- -------
Total income from investment
operations....................... 0.0281 0.0197 0.0271 0.0340 0.0563 0.0761
Less dividends from net investment
income............................. (0.0279) (0.0422) (0.0287) (0.0341) (0.0557) (0.0762)
Increase due to voluntary capital
contribution from investment
advisor (Note 3)................... 0.0000 0.0233 0.0000 0.0000 0.0000 0.0000
------ ------- ------- ------- ------- -------
Net change in net asset value per
share.............................. 0.0002 0.0008 (0.0016) (0.0001) 0.0006 (0.0001)
------ ------- ------- ------- ------- -------
Net asset value per share, end of
period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======= ======= ======= ======= =======
Total return........................ 2.82%# 4.30%+ 2.91% 3.45% 5.72% 7.89%
Ratios/Supplemental Data:
Net assets, end of period
(millions)....................... $ 1,726 $ 1,129 $ 1,216 $ 992 $ 1,413 $ 1,086
Ratio of expenses to average net
assets........................... 0.56%** 0.51%* 0.52%* 0.55% 0.56% 0.56%
Ratio of net investment income to
average net assets............... 5.53%** 4.19%* 2.86%* 3.42% 5.51% 7.61%
</TABLE>
- ---------------
++ Security Pacific National Bank served as investment advisor through April 21,
1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.06% for the year ended
February 28, 1995 and 0.01% for the year ended February 28, 1994.
+ Total return includes the effect of the voluntary capital contribution from
the investment advisor (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
** Annualized.
# Not annualized.
See Notes to Financial Statements.
39
<PAGE> 35
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, -------------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
----------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
HORIZON SHARES
Net asset value per share,
beginning of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ --------- --------- --------- --------- ---------
Income from Investment
Operations:
Net investment income......... 0.0290 0.0461 0.0319 0.0372 0.0590 0.0794
Net realized gain (loss) on
securities.................. 0.0002 (0.0232) (0.0016) 0.0000 0.0005 (0.0001)
------ --------- --------- --------- --------- ---------
Total income from investment
operations.................. 0.0292 0.0229 0.0303 0.0372 0.0595 0.0793
Less dividends from net
investment income............. (0.0290) (0.0454) (0.0319) (0.0372) (0.0589) (0.0794)
Increase due to voluntary
capital contribution from
investment advisor (Note 3)... 0.0000 0.0233 0.0000 0.0000 0.0000 0.0000
------ --------- --------- --------- --------- ---------
Net change in net asset value
per share..................... 0.0002 0.0008 (0.0016) 0.0000 0.0006 (0.0001)
------ --------- --------- --------- --------- ---------
Net asset value per share, end
of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ========= ========= ========= ========= =========
Total return................... 2.98%# 4.63%+ 3.24% 3.78% 6.06% 8.23%
Ratios/Supplemental Data:
Net assets, end of period
(millions).................. $ 1,744 $ 622 $ 3,840 $ 10,301 $ 2,855 $ 487
Ratio of expenses to average
net assets.................. 0.24%** 0.16%* 0.20%* 0.23% 0.24% 0.24%
Ratio of net investment income
to average net assets....... 5.89%** 4.09%* 3.19%* 3.59% 5.59% 7.91%
</TABLE>
- ---------------
++ Security Pacific National Bank served as investment advisor through April 21,
1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.06%, for the years ended
February 28, 1995 and 0.01% for the year ended February 28, 1994.
+ Total return includes the effect of the voluntary capital contribution from
the investment advisor (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
** Annualized.
# Not annualized.
See Notes to Financial Statements.
40
<PAGE> 36
PACIFIC HORIZON PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, -----------------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
----------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share,
beginning of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income........... 0.0282 0.0431 0.0294 0.0345 0.0565 0.0769
Net realized gain (loss) on
securities.................... 0.0002 (0.0227) (0.0016) 0.0000 0.0005 (0.0001)
------ ------- ------- ------- ------- -------
Total income from investment
operations.................... 0.0284 0.0204 0.0278 0.0345 0.0570 0.0768
Less dividends from net
investment income............... (0.0282) (0.0429) (0.0294) (0.0347) (0.0564) (0.0769)
Increase due to voluntary capital
contribution from investment
advisor (Note 3)................ 0.0000 0.0233 0.0000 0.0000 0.0000 0.0000
------ ------- ------- ------- ------- -------
Net change in net asset value per
share........................... 0.0002 0.0008 (0.0016) (0.0002) 0.0006 (0.0001)
------ ------- ------- ------- ------- -------
Net asset value per share, end of
period.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======= ======= ======= ======= =======
Total return..................... 2.86%# 4.37%+ 2.98% 3.53% 5.79% 7.96%
Ratios/Supplemental Data:
Net assets, end of period
(millions).................... $ 1,280 $ 864 $ 839 $ 793 $ 859 $ 560
Ratio of expenses to average net
assets........................ 0.49%** 0.44%* 0.45%* 0.48% 0.49% 0.49%
Ratio of net investment income
to average net assets......... 5.61%** 4.31%* 2.94%* 3.49% 5.58% 7.64%
</TABLE>
- ---------------
++ Security Pacific National Bank served as investment advisor through April 21,
1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.06% for the year ended
February 28, 1995 and 0.01% for the year ended February 28, 1994.
+ Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
** Annualized.
# Not annualized.
See Notes to Financial Statements.
41
<PAGE> 37
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEAR ENDED
AUGUST 31, --------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
--------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning of
period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................. 0.0273 0.0405 0.0262 0.0309 0.0512 0.0731
Net realized gain (loss) on
securities.......................... 0.0000 0.0001 (0.0002) 0.0000 0.0002 0.0006
-------- -------- -------- -------- -------- --------
Total income from investment
operations......................... 0.0273 0.0406 0.0260 0.0309 0.0514 0.0737
Less dividends from net investment
income................................ (0.0273) (0.0405) (0.0262) (0.0311) (0.0513) (0.0733)
-------- -------- -------- -------- -------- --------
Net change in net asset value
per share............................. 0.0000 0.0001 (0.0002) (0.0002) 0.0001 0.0004
-------- -------- -------- -------- -------- --------
Net asset value per share, end of
period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return........................... 2.76%# 4.13% 2.65% 3.15% 5.25% 7.58%
Ratios/Supplemental Data:
Net assets, end of period
(millions).......................... $ 1,182 $ 1,132 $ 1,577 $ 1,746 $ 2,300 $ 1,663
Ratio of expenses to average
net assets.......................... 0.56%++ 0.55% 0.55% 0.56% 0.56% 0.55%
Ratio of net investment income to
average net assets.................. 4.27%++ 3.99% 2.62% 3.11% 5.07% 7.29%
</TABLE>
- ---------------
* Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
++ Annualized.
# Not annualized.
See Notes to Financial Statements.
42
<PAGE> 38
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEAR ENDED
AUGUST 31, --------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
--------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
HORIZON SHARES
Net asset value per share, beginning of
period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income................. 0.0289 0.0437 0.0294 0.0341 0.0543 0.0764
Net realized gain (loss) on
securities.......................... 0.0000 0.0001 (0.0002) 0.0002 0.0003 0.0005
--------- --------- --------- --------- --------- ---------
Total income from investment
operations......................... 0.0289 0.0438 0.0292 0.0343 0.0546 0.0769
Less dividends from net investment
income................................ (0.0289) (0.0437) (0.0294) (0.0343) (0.0545) (0.0765)
--------- --------- --------- --------- --------- ---------
Net change in net asset value
per share............................. 0.0000 0.0001 (0.0002) 0.0000 0.0001 0.0004
--------- --------- --------- --------- --------- ---------
Net asset value per share, end of
period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return........................... 2.92%# 4.46% 2.98% 3.48% 5.59% 7.92%
Ratios/Supplemental Data:
Net assets, end of period
(millions).......................... $ 670 $ 469 $ 487 $ 598 $ 432 $ 455
Ratio of expenses to average net
assets.............................. 0.24%++ 0.23% 0.23% 0.24% 0.24% 0.23%
Ratio of net investment income to
average net assets.................. 4.75%++ 4.36% 2.94% 3.38% 5.44% 7.57%
</TABLE>
- ---------------
* Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
++ Annualized.
# Not annualized.
See Notes to Financial Statements.
43
<PAGE> 39
PACIFIC HORIZON TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEAR ENDED
AUGUST 31, --------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning
of period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income............... 0.0276 0.0412 0.0269 0.0316 0.0517 0.0739
Net realized gain (loss) on
securities........................ 0.0000 0.0001 (0.0002) 0.0002 0.0004 0.0005
--------- --------- --------- --------- --------- ---------
Total income from investment
operations....................... 0.0276 0.0413 0.0267 0.0318 0.0521 0.0744
Less dividends from net investment
income.............................. (0.0276) (0.0412) (0.0269) (0.0318) (0.0520) (0.0740)
--------- --------- --------- --------- --------- ---------
Net change in net asset value
per share........................... 0.0000 0.0001 (0.0002) 0.0000 0.0001 0.0004
--------- --------- --------- --------- --------- ---------
Net asset value per share, end of
period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return......................... 2.79%# 4.20% 2.72% 3.23% 5.33% 7.65%
Ratios/Supplemental Data:
Net assets, end of period
(millions)........................ $ 641 $ 364 $ 541 $ 369 $ 381 $ 304
Ratio of expenses to average net
assets............................ 0.49%++ 0.48% 0.48% 0.49% 0.49% 0.48%
Ratio of net investment income to
average net assets................ 4.30%++ 4.01% 2.69% 3.28% 5.13% 7.31%
</TABLE>
- ---------------
* Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
++ Annualized.
# Not annualized.
See Notes to Financial Statements.
44
<PAGE> 40
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ---------------------------
1995 FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning of
period................................. $ 1.00 $ 1.00 $ 1.00
---------- -------- --------
Income from Investment Operations:
Net investment income.................. 0.0276 0.0421 0.0288
Net realized loss on securities........ (0.0002) (0.0091) (0.0006)
--------- -------- --------
Total income from investment
operations........................... 0.0274 0.0330 0.0282
Less dividends from net investment
income................................. (0.0275) (0.0420) (0.0288)
Increase due to voluntary capital
contribution from investment adviser
(Note 3)............................... 0.0000 0.0085 0.0000
--------- -------- --------
Net change in net asset value per
share.................................. (0.0001) (0.0005) (0.0006)
--------- -------- --------
Net asset value per share, end of
period................................. $ 1.00 $ 1.00 $ 1.00
========= ======== ========
Total return............................. 3.23%# 4.28%** 2.92%
Ratios/Supplemental Data:
Net assets, end of period (000)........ $ 282,457 $354,828 $154,349
Ratio of expenses to average net
assets*.............................. 0.50%+ 0.50% 0.60%
Ratio of net investment income to
average net assets*.................. 5.47%+ 4.27% 2.88%
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.12% (annualized), 0.08%
and 0.002%, respectively.
** Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
+ Annualized.
# Not annualized.
See Notes to Financial Statements.
45
<PAGE> 41
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
AUGUST 31, YEAR ENDED ENDED
1995 FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994**
----------- ----------- ------------
<S> <C> <C> <C>
HORIZON SHARES
Net asset value per share, beginning of
period................................. $ 1.00 $ 1.00 $ 1.00
--------- -------- --------
Income from Investment Operations:
Net investment income.................. 0.0293 0.0454 0.0227
Net realized loss on securities........ (0.0003) (0.0092) (0.0006)
--------- -------- --------
Total income from investment
operations........................... 0.0290 0.0362 0.0221
Less dividends from net investment
income................................. (0.0291) (0.0452) (0.0227)
Increase due to voluntary capital
contribution from investment adviser
(Note 3)............................... 0.0000 0.0085 0.0000
--------- -------- --------
Net change in net asset value per
share.................................. (0.0001) (0.0005) (0.0006)
--------- -------- --------
Net asset value per share, end of
period................................. $ 1.00 $ 1.00 $ 1.00
========= ======== ========
Total return............................. 3.42%# 4.61%++ 2.29%
Ratios/Supplemental Data:
Net assets, end of period (000)........ $ 63,727 $235,285 $369,664
Ratio of expenses to average net
assets*.............................. 0.15%+ 0.17% 0.28%+
Ratio of net investment income to
average net assets*.................. 5.86%+ 4.67% 3.17%+
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.14% (annualized), 0.08%
and 0.002% (annualized), respectively.
** For the period June 14, 1993 (initial issuance of Horizon Shares) through
February 28, 1994.
+ Annualized.
++ Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
# Not annualized.
See Notes to Financial Statements.
46
<PAGE> 42
PACIFIC HORIZON GOVERNMENT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ----------------------------
1995 FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning of
period................................. $ 1.00 $ 1.00 $ 1.00
--------- -------- --------
Income from Investment Operations:
Net investment income.................. 0.0279 0.0429 0.0300
Net realized loss on securities........ (0.0002) (0.0092) (0.0006)
--------- -------- --------
Total income from investment
operations............................. 0.0277 0.0337 0.0294
Less dividends from net investment
income................................. (0.0278) (0.0427) (0.0300)
Increase due to voluntary capital
contribution from investment adviser
(Note 3)............................... 0.0000 0.0085 0.0000
--------- -------- --------
Net change in net asset value per
share.................................. (0.0001) (0.0005) (0.0006)
--------- -------- --------
Net asset value per share, end of
period................................. $ 1.00 $ 1.00 $ 1.00
========= ======== ========
Total return............................. 3.27%# 4.35%** 3.04%
Ratios/Supplemental Data:
Net assets, end of period (000)........ $ 245,515 $288,809 $326,017
Ratio of expenses to average net
assets*.............................. 0.43%+ 0.43% 0.53%
Ratio of net investment income to
average net assets*.................. 5.53%+ 4.32% 2.99%
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the ratio
of net investment income to average net assets by 0.11% (annualized), 0.08%
and 0.05%, respectively.
** Total return includes the effect of the voluntary capital contribution from
the investment adviser (see Note 3 to Financial Statements). Without this
capital contribution, the total return would have been lower.
+ Annualized.
# Not annualized.
See Notes to Financial Statements.
47
<PAGE> 43
PACIFIC HORIZON TREASURY ONLY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ----------------------------
1995 FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning of
period................................. $ 1.00 $ 1.00 $ 1.00
---------- ---------- --------
Income from Investment Operations:
Net investment income.................. 0.0257 0.0384 0.0254
Net realized gain (loss) on
securities........................... 0.0001 (0.0002) (0.0002)
---------- ---------- --------
Total income from investment
operations............................. 0.0258 0.0382 0.0252
---------- ---------- --------
Less dividends from net investment
income................................. (0.0257) (0.0384) (0.0254)
---------- ---------- --------
Net change in net asset value per
share.................................. 0.0001 (0.0002) (0.0002)
---------- ---------- --------
Net asset value per share, end of
period................................. $ 1.00 $ 1.00 $ 1.00
========== ========== ========
Total return............................. 2.60%# 3.90% 2.57%
Ratios/Supplemental Data:
Net assets, end of period (000)........ $ 188,548 $ 90,337 $72,120
Ratio of expenses to average net
assets*.............................. 0.64%** 0.62% 0.56%
Ratio of net investment income to
average net assets*.................. 5.08%** 3.90% 2.54%
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.00%, 0.01% and 0.16%, respectively.
** Annualized.
# Not annualized.
See Notes to Financial Statements.
48
<PAGE> 44
PACIFIC HORIZON TREASURY ONLY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ----------------------------
1995 FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning of
period................................. $ 1.00 $ 1.00 $ 1.00
---------- ---------- --------
Income from Investment Operations:
Net investment income.................. 0.0260 0.0391 0.0273
Net realized gain (loss) on
securities........................... 0.0001 (0.0002) (0.0002)
---------- ---------- --------
Total income from investment
operations............................. 0.0261 0.0389 0.0271
---------- ---------- --------
Less dividends from net investment
income................................. (0.0260) (0.0391) (0.0273)
---------- ---------- --------
Net change in net asset value per
share.................................. 0.0001 (0.0002) (0.0002)
---------- ---------- --------
Net asset value per share, end of
period................................. $ 1.00 $ 1.00 $ 1.00
========== ========== ========
Total return............................. 2.63%# 3.98% 2.76%
Ratios/Supplemental Data:
Net assets, end of period (000)........ $ 149,711 $194,363 $271,588
Ratio of expenses to average net
assets*.............................. 0.57%** 0.55% 0.39%
Ratio of net investment income to
average net assets*.................. 5.18%** 3.86% 2.73%
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.00%, 0.01% and 0.25%, respectively.
** Annualized.
# Not annualized.
See Notes to Financial Statements.
49
<PAGE> 1
Exhibit 24(c)
HORIZON TAX-EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
MOODY'S/ MATURITY AMOUNT VALUE
DESCRIPTION S&P RATE DATE (000) (NOTE 2)
- ----------------------------------------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT
INVESTMENTS -- 103.4%
ALABAMA -- 0.7%
Birmingham Medical Clinic Board Revenue
Bond (LC -- Morgan Guaranty Trust &
J.P. Morgan) NR/NR
(final maturity date 12/01/26)*....... A1+/AAA 3.50% 9/01/95 $ 1,000 $ 1,000,000
Phenix County Industrial Development
Board, Environmental Improvement
Revenue Bond, Georgia Kraft Project
(LC -- Canadian Imperial Bank of
Commerce) P1/NR
(final maturity date 12/01/15)*....... NR/NR 3.40% 9/01/95 2,000 2,000,000
------------
3,000,000
------------
ARIZONA -- 4.0%
Maricopa County, Pollution Control P1/A3
Revenue, Ser. F....................... A1/A 3.85% 10/27/95 1,100 1,100,000
Maricopa County, Pollution Control Rev.
(LC -- Morgan Guaranty Trust) P1/NR
(final maturity date 5/01/29)*........ A1+/AAA 3.50% 9/01/95 1,300 1,300,000
Salt River Proj., Agriculture Impt. &
Power Dist., Ser. C (LC -- Banque
Nationale De Paris) VMIG1/Aa
(final maturity date 1/01/09)*........ NR/AA 3.171% 9/07/95 14,840 14,840,000
------------
17,240,000
------------
CALIFORNIA -- 2.6%
Irvine Ranch Water District,
Consolidated Boards, Ser. B
(LC -- Sumitomo Bank, Ltd.) NR/NR
(final maturity date 10/01/04)*....... A1/NR 3.60% 9/01/95 1,100 1,100,000
Los Angeles County Unified School
District, Tax and Revenue Anticipation MIG1/NR
Notes................................. SP1+/NR 4.50% 7/03/96 10,000 10,064,479
------------
11,164,479
------------
DELAWARE -- 2.3%
Delaware State, Health Facilities Auth.,
Franciscan Elder Care Corp.
(LC -- Societe Generale) VMIG1/Aa2
(final maturity date 7/01/21)*........ NR/NR 3.65% 9/07/95 9,800 9,800,000
------------
DISTRICT OF COLUMBIA -- 3.9%
District of Columbia, General Obligation
Bond, Ser. A-2
(LC -- Bank of Nova Scotia) VMIG1/Aa3
(final maturity date 10/01/07)*....... A1+/AA- 3.70% 9/01/95 1,900 1,900,000
District of Columbia, General Obligation
Bond, Ser. A-4
(LC -- Toronto Dominion Bank) VMIG1/Aa2
(final maturity date 10/01/07)*....... A1+/AA 3.70% 9/01/95 6,700 6,700,000
</TABLE>
- ---------------
See Notes to Financial Statements.
6
<PAGE> 2
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
MOODY'S/ MATURITY AMOUNT VALUE
DESCRIPTION S&P RATE DATE (000) (NOTE 2)
- ----------------------------------------- -------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
DISTRICT OF COLUMBIA -- (CONTINUED)
District of Columbia, General Obligation
Bond, Ser. A-5
(LC -- Bank of Nova Scotia) VMIG1/Aa3
(final maturity date 10/01/07)*....... A1+/AA- 3.70% 9/01/95 $ 2,700 $ 2,700,000
District of Columbia, General Obligation
Bond, Ser. B-1
(LC -- Union Bank of Switzerland) VMIG1/Aaa
(final maturity date 6/01/03)*........ A1+/AAA 4.20% 9/01/95 1,300 1,300,000
District of Columbia, General Obligation
Bond, Ser. B-2
(LC -- Westdeutsche Landesbank) VMIG1/Aa1
(final maturity date 6/01/03)*........ A1+/AA+ 4.20% 9/01/95 4,100 4,100,000
------------
16,700,000
------------
FLORIDA -- 10.3%
Florida State Board of Education,
Capital Outlay NR/Aa
(final maturity date 6/01/23)*........ NR/AA 4.00% 11/01/95 5,385 5,385,000
Florida State Board of Education,
Capital Outlay NR/Aa
(final maturity date 6/01/23)*........ NR/AA 4.00% 11/01/95 5,115 5,115,000
P1/NR
Jacksonville Electrical Authority....... A1+/NR 3.85% 10/26/95 6,500 6,500,000
Jacksonville Health Facility Authority,
Riv. Garden Proj.
(LC -- Banque Paribas) NR/NR
(final maturity date 2/01/18)*........ A1/A 3.60% 9/01/95 1,300 1,300,000
Pinellas County Housing Finance
Authority, Multi-Family Housing
Revenue Bond, Foxbridge Apartments,
Ser. A NR/NR
(final maturity date 6/15/25)*........ A1+/AAA 3.60% 9/07/95 9,000 9,000,000
VMIG1/A2
St. Lucie County Pollution Control...... A1+/A+ 3.60% 9/25/95 15,000 15,000,000
St. Lucie County, Pollution Control
Revenue Bond, Florida Power & Light
Co. Proj. VMIG1/A1
(final maturity date 1/01/26)*........ A1+/A+ 3.50% 9/01/95 2,000 2,000,000
------------
44,300,000
------------
HAWAII -- 1.8%
Hawaii State General Obligation, Ser. CC
(LC -- Banque Nationale de Paris) VMIG1/Aa
(final maturity date 2/01/02)*........ NR/AA 3.171% 9/07/95 7,620 7,620,000
------------
ILLINOIS -- 5.1%
Chicago O'Hare International Airport,
American Airlines, Ser. A
(LC -- Westdeutsche Landesbank) (final P1/Aa1
maturity date 12/01/17)*.............. NR/NR 3.40% 9/01/95 2,100 2,100,000
Illinois Health Facility Authority,
Elmhurst Memorial Hospital, Ser. B NR/NR
(final maturity date 1/01/20)*........ NR/NR 3.55% 9/01/95 2,500 2,500,000
Illinois Housing Development Auth. Rev.,
Homeowner Mortgage, Ser. C, Subser.
C-1 VMIG1/Aa
(final maturity date 8/01/26)*........ NR/AA 4.30% 2/01/96 6,000 6,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
7
<PAGE> 3
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
MOODY'S/ MATURITY AMOUNT VALUE
DESCRIPTION S&P RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
ILLINOIS -- (CONTINUED)
Illinois State Revenue Anticipation MIG1/NR
Notes................................. SP1+/NR 4.50% 6/10/96 $ 10,000 $ 10,050,569
Joliet Regional Port. Dist. Industrial
Building Revenue Bonds P1/A2
(final maturity date 7/15/03)*........ NR/NR 3.60% 9/01/95 1,400 1,400,000
------------
22,050,569
------------
INDIANA -- 1.0%
Rockport Pollution Control Revenue Bond,
Michigan Power Co., Proj. B (AMBAC
Insured) NR/Aaa
(final maturity date 6/01/25)*........ NR/AAA 3.60% 9/07/95 4,500 4,500,000
------------
KENTUCKY -- 4.0%
Kentucky Economic Development Finance
Authority, Sisters of Charity (final VMIG1/A1
maturity date 11/01/20)*.............. A1+/A+ 3.55% 9/01/95 10,850 10,850,000
Trimble County, Pollution Control Rev.,
Louisville Gas & Electric Co., Ser. VMIG1/Aa2
A..................................... A1+/AA 3.60% 9/22/95 6,285 6,285,000
------------
17,135,000
------------
LOUISIANA -- 5.3%
Louisiana State General Obligation
Bonds, Tax Exempt Eagle Trust, Ser.
1994 (AMBAC Insured) NR/NR
(final maturity date 5/01/09)*........ A1/AA 3.72% 9/07/95 11,600 11,600,000
West Baton Rouge Parish, Indl. Devel. P1/A1
Auth., Dow Chemical Co. Proj.......... A1/A 3.80% 12/05/95 10,050 10,050,000
West Baton Rouge Parish, Pollution
Control Revenue, Dow Chemical Co. P1/A1
Proj. ................................ NR/NR 3.80% 12/05/95 1,400 1,400,000
------------
23,050,000
------------
MARYLAND -- 4.6%
Maryland State Health & Higher
Educational Facility, Revenue Bonds,
Ser. B
(LC -- First National Bank of Chicago) VMIG1/A1
(final maturity date 4/01/35)*........ NR/NR 3.60% 9/07/95 20,000 20,000,000
------------
MASSACHUSETTS -- 0.9%
Massachusetts State General Obligation
Bond, Ser. D (LC -- Banque Nationale
De Paris) (MBIA Insured) VMIG1/Aaa
(final maturity date 5/01/06)*........ A1+/AAA 3.60% 9/07/95 3,900 3,900,000
------------
MICHIGAN -- 1.9%
Michigan Strategic Fd., Pollution P1/A1
Control Rev., Dow Chemical............ NR/A 4.20% 9/11/95 3,000 3,000,000
Michigan Strategic Fd., Pollution P1/A1
Control Rev., Dow Chemical............ NR/NR 3.70% 10/05/95 2,700 2,700,000
Northville Development Corp., Thrifty
Proj. (LC -- Bankers Trust) P1/A1
(final maturity date 5/01/14)*........ A1/A+ 3.75% 9/07/95 2,400 2,400,000
------------
8,100,000
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
8
<PAGE> 4
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
MOODY'S/ MATURITY AMOUNT VALUE
DESCRIPTION S&P RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
MISSISSIPPI -- 0.2%
Jackson County, Pollution Control
Revenue Bond, Chevron U.S.A. Inc.
Project VMIG1/Aa2
(final maturity date 12/01/16)*....... NR/NR 3.35% 9/01/95 $ 900 $ 900,000
------------
MISSOURI -- 0.6%
Columbia Missouri Special Obligation
Revenue Bonds, Ser. A (LC -- Toronto
Dominion Bank) VMIG1/Aa2
(final maturity date 6/01/08)*........ NR/NR 3.50% 9/07/95 2,600 2,600,000
------------
NEVADA -- 1.6%
Clarke County, Airport Imtp. Rev., Ser.
A (MBIA Insured) VMIG1/Aaa
(final maturity date 7/01/12)*........ A1/AAA 3.45% 9/07/95 6,700 6,700,000
------------
NEW YORK -- 10.5%
New York City General Obligation Bond,
Ser. A-8 (LC -- Sanwa Bank, Chicago) VMIG1/Aa3
(final maturity date 8/01/17)*........ A1+/AA- 3.40% 9/01/95 2,000 2,000,000
New York City General Obligation Bond,
Ser. B, Subser. B-3 (MBIA Insured) VMIG1/Aaa
(final maturity date 8/15/04)*........ A1+/AAA 3.35% 9/01/95 6,700 6,700,000
New York City General Obligation Bond,
Ser. C, Subser. C-4 (LC -- Fuji Bank,
Ltd.) VMIG1/A1
(final maturity date 8/01/96)*........ A1/A+ 3.50% 9/01/95 2,500 2,500,000
New York City General Obligation Bond,
Ser. E-3 (LC -- Fuji Bank, Ltd.) VMIG1/A1
(final maturity date 5/15/96)*........ A1/A+ 3.50% 9/01/95 5,000 5,000,000
New York City General Obligation Bond,
Ser. E-3 (LC -- Industrial Bank of
Japan, Ltd.) VMIG1/A1
(final maturity date 5/15/97)*........ A1+/AA- 3.50% 9/01/95 2,700 2,700,000
New York City Municipal Water Finance
Authority, Water & Sewer Systems
Revenue Bond, Ser. C (FGIC Insured) VMIG1/Aaa
(final maturity date 6/15/23)*........ A1+/AAA 3.35% 9/01/95 1,700 1,700,000
New York City Tax-Exempt Water Eagle
Trust, Ser. 94C-2 (MBIA Insured) NR/NR
(final maturity date 6/15/18)*........ A1/AA 3.72% 9/07/95 10,000 10,000,000
New York State Energy Research &
Development Authority, Pollution
Control Revenue Bond, Niagara Mohawk
Power Corp., Ser. B (LC -- Toronto
Dominion Bank) NR/Aa2
(final maturity date 12/01/25)*....... NR/NR 3.45% 9/01/95 1,300 1,300,000
New York State Energy Research &
Development Authority, Pollution
Control Revenue Bond, Niagara Mohawk
Power Corp., Ser. C (LC -- Canadian
Imperial Bank of Commerce) P1/Aa3
(final maturity date 12/01/25)*....... NR/NR 3.45% 9/01/95 3,200 3,200,000
</TABLE>
- ---------------
See Notes to Financial Statements.
9
<PAGE> 5
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
MOODY'S/ MATURITY AMOUNT VALUE
DESCRIPTION S&P RATE DATE (000) (NOTE 2)
- ----------------------------------------- -------- ------ -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
NEW YORK -- (CONTINUED)
New York State Medical Care Facility,
Mercy Medical Center Proj., Ser. A NR/NR
(final maturity date 10/10/04)*....... A1/AAA 3.70% 9/07/95 $ 10,000 $ 10,000,000
------------
45,100,000
------------
NORTH DAKOTA -- 0.2%
Grand Forks Hospital Facilities, United
Hospital Obligation Group Project
(LC -- Fuji Bank, Ltd.) VMIG1/A1
(final maturity date 12/01/16)*....... NR/NR 3.55% 9/01/95 1,000 1,000,000
------------
PENNSYLVANIA -- 16.6%
Allegheny County, Industrial Development
Authority, Pollution Control Rev.,
Duquesne Light Co. (LC -- Canadian
Imperial Bank of Commerce) P1/NR
(final maturity date 9/01/11)*........ A1+/AA- 4.75% 11/30/95 7,500 7,500,000
Delaware Valley, Regional Fin.
Authority, Ser. D (LC -- Marine
Midland Bank and Hong Kong and
Shanghai Bank) (final maturity date VMIG1/A3
12/01/20)*............................ A2/A- 3.60% 9/07/95 21,900 21,900,000
Emmaus General Auth. Rev., Subser. E-7 NR/NR
(final maturity date 3/01/24)*........ NR/NR 3.70% 9/07/95 15,000 15,000,000
Philadelphia General Obligation Bond VMIG1/A1
(LC -- Fuji Bank)..................... A/A+ 3.80% 11/20/95 12,000 12,000,000
Philadelphia Tax and Revenue MIG1/NR
Anticipation Notes, Ser. A............ SP1/NR 4.50% 6/27/96 15,000 15,065,168
------------
71,465,168
------------
SOUTH CAROLINA -- 2.5%
South Carolina Public Service, Ser. F NR/NR
(final maturity date 6/16/14)*........ NR/NR 3.75% 9/07/95 11,000 11,000,000
------------
TENNESSEE -- 2.0%
Bristol Health and Education, Bristol
Memorial Hospital, Ser. 95A
(FGIC Insured) NR/NR
(final maturity date 2/28/14)*........ A1/AAA 3.75% 9/07/95 8,500 8,500,000
------------
TEXAS -- 11.2%
Austin County, Industrial Development
Corp., Justin Industries Inc. Proj.
(LC-Citibank, New York) P1/A2
(final maturity date 12/01/14)*....... NR/NR 3.50% 9/07/95 3,300 3,300,000
Brazos River, Harbor Nav. Dist., Dow P1/A1
Chemical.............................. NR/NR 4.20% 9/11/95 1,950 1,950,000
Brazos River, Harbor Nav. Dist., Dow P1/A1
Chemical.............................. NR/NR 3.85% 10/24/95 3,450 3,450,000
Brazos River, Harbor Nav. Dist., Dow P1/A1
Chemical.............................. NR/NR 3.75% 9/11/95 200 200,000
Dallas Texas Waterworks & Sewer P1/Aa
System................................ A1+/AA 3.85% 10/27/95 3,330 3,330,000
Port Arthur Navigational Dist. Indl.,
Revenue Bonds (LC -- Sumitomo Bank,
NY) A1/NR
(final maturity date 5/01/03)*........ NR/NR 3.60% 9/01/95 2,300 2,300,000
</TABLE>
- ---------------
See Notes to Financial Statements.
10
<PAGE> 6
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
MOODY'S/ MATURITY AMOUNT VALUE
DESCRIPTION S&P RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
TEXAS -- (CONTINUED)
Texas Department of Housing & Community
Affairs, Single Family Hsg. (FGIC NR/NR
Insured).............................. A1+/NR 3.80% 9/15/95 $ 3,910 $ 3,910,144
Texas Department of Housing & Community
Affairs, Single Family Hsg. (FGIC NR/NR
Insured).............................. A1+/NR 3.80% 10/10/95 3,390 3,390,000
Texas State Tax & Revenue Anticipation MIG1/NR
Notes, Ser. A......................... SP1+/NR 4.75% 8/30/96 17,500 17,619,976
P1/NR
University of Texas, Board of Regents... A1+/NR 3.80% 10/23/95 9,000 9,000,000
------------
48,450,120
------------
UTAH -- 2.9%
Salt Lake City, Pooled Hospital Finance P1/A1
Proj. (LC -- Fuji Bank)............... A1/A+ 3.70% 9/20/95 12,530 12,530,000
------------
VERMONT -- 0.8%
Vermont Educational & Health Buildings,
Middlebury College, Proj. A NR/NR
(final maturity date 5/01/28)......... A1+/AA 4.35% 5/01/96 3,500 3,500,000
------------
VIRGINIA -- 1.9%
Virginia Educational Loan Authority,
Guaranteed Student Loan Program, Ser.
A NR/NR
(final maturity date 9/01/01)*........ NR/NR 4.00% 5/01/96 8,410 8,410,000
------------
WASHINGTON -- 0.9%
Washington State Health Care Facilities
Authority, Fred Hutchinson Cancer,
Ser. C (LC -- Morgan Guaranty Trust) VMIG1/Aa1
(final maturity date 1/01/18)*........ NR/NR 3.55% 9/01/95 1,000 1,000,000
Washington State General Obligation Aa/NR
Bond.................................. AA/NR 8.00% 10/01/95 3,000 3,008,490
------------
4,008,490
------------
WISCONSIN -- 2.9%
MIG1/NR
Wisconsin State Operating Notes......... SP1+/NR 4.50% 6/17/96 12,500 12,584,129
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
11
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
MOODY'S/ MATURITY AMOUNT VALUE
DESCRIPTION S&P RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
WYOMING -- 0.2%
Platte County Pollution Control Revenue
Bond, Tri-State G&T, Ser. A
(LC -- Societe Generale) P1/Aa1
(final maturity date 7/01/14)*........ NR/NR 3.50% 9/01/95 $ 1,100 $ 1,100,000
------------
TOTAL INVESTMENTS (AMORTIZED
COST $446,407,955) -- 103.4%............ 446,407,955
Liabilities in excess of other
assets -- (3.4)%........................ (14,815,173)
------------
NET ASSETS -- 100.0%..................... $431,592,782
============
</TABLE>
- ---------------
AMBAC -- American Municipal Bond Assurance Corporation.
FGIC -- Financial Guaranty Insurance Company.
LC -- Letter of credit.
MBIA -- Municipal Bond Insurance Company.
NR -- No rating available.
+ The ratings provided consist of short-term and long-term ratings for both
Moody's and S&P. The first row consists of the short-term/long-term Moody's
ratings and the second row consists of short-term/long-term S&P ratings.
* Variable rate security. Maturity date reflects the later of the next rate
change date or the next put date.
See Notes to Financial Statements.
12
<PAGE> 8
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
(MOODY'S) MATURITY AMOUNT VALUE
DESCRIPTION (S&P) RATE DATE (000) (NOTE 2)
- ----------------------------------------- ---------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT
INVESTMENTS -- 100.8%
ABAG Finance Authority, Lucille Salter
Packard Proj. (AMBAC Insured) VMIG1/Aaa
(final maturity date 8/01/23)*.......... A1/AAA 3.20% 9/07/95 $ 6,300 $ 6,300,000
Anaheim Certificates of Participation
(AMBAC Insured)
(LC -- Industrial Bank of Japan) VMIG1/Aaa
(final maturity date 8/01/19)*.......... A1/AAA 3.25% 9/07/95 13,300 13,300,000
California Alternative Energy Source
Financing Auth., Cogeneration Rev. NR/Aaa
(final maturity date 10/01/20)*......... A1+/AAA 3.65% 9/07/95 3,500 3,500,000
California Community College Fin. Auth.
Pooled Tax and Revenue Anticipation NR/NR
Notes, Series B......................... SP1+/NR 5.00% 8/30/96 6,000 6,028,542
California General Obligation, Various
Purpose Certificates of Participation
(MBIA Insured) P1/Aaa
(final maturity date 2/01/06)*.......... A1+/AAA 3.72% 9/07/95 10,000 10,000,000
California State General Obligation Bond,
(FGIC & MBIA Insured) NR/Aaa
(final maturity date 11/01/07)*......... NR/AAA 4.25% 11/01/95 15,000 15,000,000
California Health Facs Finance Auth.,
Huntington Memorial Hospital
(LC -- Morgan Guaranty Trust) NR/NR
(final maturity date 11/01/10)*......... A1+/AAA 3.35% 9/07/95 5,300 5,300,000
California Health Facs Finance Auth. St.
Joseph Health Systems, Series B VMIG1/Aa
(final maturity date 7/01/09)*.......... A1+/AA- 3.60% 9/01/95 2,000 2,000,000
California Housing Finance Auth., Multi-
Unit Rent Housing Rev. (MBIA Insured) NR/Aaa
(final maturity date 8/01/16)*.......... NR/AAA 3.75% 11/01/95 5,000 5,000,000
California Housing Finance Auth., Home
Mortgage, Series E (AMT) VMIG1/Aa
(final maturity date 8/01/27)........... A1+/AA- 4.60% 2/01/96 4,865 4,865,000
California Pollution Control Finance
Auth., Dow Chemical Co. Proj., P1/A1
Commercial Paper........................ NR/NR 4.15% 9/11/95 2,000 2,000,000
California Pollution Control Finance
Auth., Dow Chemical Co. Proj., NR/NR
Commercial Paper........................ NR/NR 3.80% 10/24/95 2,300 2,300,000
California Pollution Control Finance
Auth., Pacific Gas and Electric, Ser.
88-A, Commercial Paper (LC -- Swiss Bank P1/Aa1
Corp.) (AMT)............................ A1+/AA+ 3.55% 9/13/95 5,000 5,000,000
California Pollution Control Finance
Auth., Pacific Gas and Electric, Ser.
88-A, Commercial Paper (LC -- Swiss Bank P1/Aa1
Corp.) (AMT)............................ A1+/AA+ 3.65% 9/19/95 10,700 10,700,000
California Pollution Control Finance
Auth., Pacific Gas and Electric, Ser.
88-C, Commercial Paper P1/Aa2
(LC -- Credit Suisse)................... A1+/AA+ 3.65% 10/20/95 2,705 2,705,000
</TABLE>
- ---------------
See Notes to Financial Statements.
13
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
(MOODY'S) MATURITY AMOUNT VALUE
DESCRIPTION (S&P) RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
California Pollution Control Finance
Auth., Pacific Gas and Electric, Ser.
88-C, Commercial Paper P1/Aa1
(LC -- Credit Suisse)................... A1+/AA+ 3.60% 9/13/95 $ 10,000 $ 10,000,000
California Pollution Control Finance
Auth., Pacific Gas and Electric, Ser.
88-E, Commercial Paper (LC -- Morgan P1/Aa1
Guaranty)............................... A1+/AAA 3.70% 10/11/95 4,000 4,000,000
California Pollution Control Finance
Auth., So. Cal. Edison, Commercial P1/Aa2
Paper................................... A1/A+ 3.70% 11/16/95 4,900 4,900,000
California Pollution Control Finance
Auth., So. Cal. Edison, Series 85-D, P1/Aa2
Commercial Paper........................ A1/A+ 3.70% 10/27/95 3,600 3,600,000
California Pollution Control Finance
Auth., So. Cal Edison Series D VMIG1/A2
(final maturity date 2/28/08)*.......... A1+/A!+ 3.45% 9/01/95 4,100 4,100,000
California Pollution Control Finance
Auth., Solid Waste Disp. Rev. Bond,
Shell Oil, Series A VMIG1/Aa2
(final maturity date 10/01/24)*......... NR/NR 3.60% 9/01/95 10,900 10,900,000
California Pollution Control Finance
Auth., Solid Waste Disp. Rev. Bond,
Shell Oil, Series B VMIG1/Aa2
(final maturity date 12/01/24)*......... A1+/AAA 3.60% 9/01/95 11,400 11,400,000
California Pollution Control Finance
Auth., Solid Waste Disp. Rev. Bond,
Taormina Inds., Series B VMIG1/Aa3
(final maturity date 8/01/14)*.......... NR/NR 3.50% 9/07/95 1,285 1,285,000
California Pollution Control Finance
Auth., Atlantic Richfield Co. Project,
Series A (AMT) VMIG1/A2
(final maturity date 12/01/24).......... A1/A 3.65% 9/01/95 5,600 5,600,000
California Pollution Control Finance
Auth., Res. Recovery Rev., Delano Proj.
(AMT) (LC -- ABN AMRO Bank) (final NR/Aa1
maturity date 8/01/19)*................. NR/NR 3.50% 9/01/95 900 900,000
California Pollution Control Finance
Auth., San Diego Gas and Elec. Series A NR/A1
(final maturity date 12/01/07)*......... NR/A+ 3.95% 8/01/96 2,900 2,900,000
California State Muni. Tr. Rcpts., Series
B (LC -- International Nederlanden) VMIG1/Aa2
(final maturity date 11/01/08)*......... NR/A 3.70% 9/07/95 10,200 10,200,000
California Statewide Comm. Dev. Auth.,
Apartment Dev Rev., Subseries A-2 (final NR/NR
maturity date 5/15/25)*................. A1+/AAA 3.35% 9/07/95 15,000 15,000,000
California Statewide Comm. Dev. Auth.,
Apartment Dev Rev., Subseries A-5 (final NR/NR
maturity date 5/15/25)*................. A1+/AAA 3.45% 9/07/95 13,080 13,080,000
California Statewide Comm. Dev. Auth.,
Apartment Dev. Rev., Subseries A-6 NR/NR
(final maturity date 5/15/25)*.......... A1+/AAA 3.45% 9/07/95 8,005 8,005,000
California Statewide Comm. Dev. Auth.,
Solid Waste Rev. (AMT) P1/NR
(final maturity date 12/15/24)*......... Aa2/NR 3.60% 9/01/95 600 600,000
California State Dept. of Water Res.,
Central Valley Proj. Rev., Ser. N-V1
(LC -- Canadian Imperial Bank) VMIG1/Aa3
(final maturity date 12/01/25)*......... A1+/AA 3.45% 9/07/95 5,200 5,200,000
</TABLE>
- ---------------
See Notes to Financial Statements.
14
<PAGE> 10
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
(MOODY'S) MATURITY AMOUNT VALUE
DESCRIPTION (S&P) RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
California State Dept. of Water Res.,
Central Valley Proj. Rev., Ser. N-V2
(LC -- Canadian Imperial Bank) VMIG1/Aa3
(final maturity date 12/01/25)*......... A1+/AA 3.35% 9/07/95 $ 2,500 $ 2,500,000
California State Dept. of Water, P1/NR
Commercial Paper........................ A1+/NR 3.70% 9/06/95 6,100 6,100,000
California State Transportation
Commission San Francisco Bay Toll Bridge NR/A1
Rev., Series A.......................... NR/AA- 7.00% 9/01/95 1,000 1,000,000
Chula Vista Industrial Development Rev.,
San Diego Gas and Electric Co., Series
92-C, P1/A1
Commercial Paper (AMT).................. A1/A+ 3.75% 11/17/95 3,000 3,000,000
Chula Vista Industrial Development Rev.,
San Diego Gas and Electric Co., Ser. B VMIG1/A1
(final maturity date 12/01/27)*......... A1/A+ 3.60% 9/07/95 11,000 11,000,000
Chula Vista Multi Family Housing Rev.,
Terra Nova Assoc. Project, Series A
(LC -- Ind. Bank of Japan, Ltd.) NR/NR
(final maturity date 3/01/05)*.......... NR/A+ 3.70% 9/07/95 6,940 6,940,000
Eastern Muni. Water District, Water and
Sewer Revenue Certificates of
Participation, Series B
(LC -- Ind. Bank of Japan, Ltd.) VMIG1/Aaa
(final maturity date 7/01/20)*.......... A1+/AAA 3.35% 9/07/95 9,000 9,000,000
Foothill / Eastern Transportation
Corridor Agency, California Toll Road
Revenue, Series B
(LC -- Morgan Guaranty Trust) NR/NR
(final maturity date 1/02/35)*.......... A1+/AAA 3.35% 9/07/95 12,900 12,900,000
Foothill / Eastern Transportation
Corridor Agency, California Toll Road
Revenue, Series C (LC -- Credit Suisse) NR/NR
(final maturity date 1/02/35)*.......... A1+/AAA 3.30% 9/07/95 10,000 10,000,000
Fremont Multifamily Housing Rev. Mission
Wells Project, Series E
(LC -- Industrial Bank of Japan, Ltd.) NR/NR
(final maturity date 9/01/07)*.......... A1/A+ 3.65% 9/07/95 1,900 1,900,000
Irvine Improvement Bond Assessment
District No 94-15
(LC- Dai-Ichi Kangyo Bank) VMIG1/A1
(final maturity date 9/02/20)*.......... A1/AA+ 3.45% 9/01/95 3,834 3,834,000
Irvine Ranch Water District, Series B
(LC -- Sumitomo Bank, Ltd.) NR/NR
(final maturity date 10/01/04)*......... A1/NR 3.60% 9/01/95 1,400 1,400,000
Irvine Ranch Water District, Impt. Dist.
No. 2 84, Series A
(LC -- Sumitomo Bank, Ltd.) NR/NR
(final maturity date 11/15/13)*......... A1/A+ 3.60% 9/01/95 1,000 1,000,000
Irvine Ranch Water District, Impt. Dist.
No. 2 84, Series A
(LC -- Sumitomo Bank, Ltd.) VMIG1/Aa2
(final maturity date 9/02/15)*.......... A1+/AA 3.35% 9/01/95 3,055 3,055,000
Los Angeles County Unified School
District, Tax and Revenue Anticipation MIG1/NR
Notes................................... SP1+/NR 4.50% 7/03/96 10,000 10,064,479
</TABLE>
- ---------------
See Notes to Financial Statements.
15
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
(MOODY'S) MATURITY AMOUNT VALUE
DESCRIPTION (S&P) RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Los Angeles County Trans. Sales Tax
Revenue, Ser. A, Commercial Paper
(LC -- ABN Bank, Banque Nationale De
Paris, National Westminster Bk.,
Canadian Imperial Bank of Commerce, Bank P1/NR
of California).......................... A1/NR 3.65% 9/07/95 $ 9,061 $ 9,061,000
Los Angeles County Trans. Sales Tax
Revenue, Commercial Paper (LC -- ABN
Bank, Banque Nationale De Paris,
National Westminster Bk., Canadian
Imperial Bank of Commerce, Bank of P1/NR
California)............................. A1/NR 3.65% 10/20/95 1,000 1,000,000
Los Angeles County Trans. Sales Tax
Revenue, Commercial Paper (LC -- ABN
Bank, Banque Nationale De Paris,
National Westminster Bk., Canadian
Imperial Bank of Commerce, Bank of P1/NR
California)............................. A1/NR 3.50% 9/20/95 5,000 5,000,000
Los Angeles County Trans. Sales Tax
Revenue, Commercial Paper (LC -- ABN
Bank, Banque Nationale De Paris,
National Westminster Bk., Canadian
Imperial Bank of Commerce, Bank of P1/NR
California)............................. A1/NR 3.50% 9/21/95 3,800 3,800,000
Los Angeles County Multifamily Mtg. Rev.,
Valencia Proj., Series C
(LC -- Ind. Bank of Japan, Ltd.) NR/NR
(final maturity date 10/01/14)*......... A1/A+ 3.70% 9/07/95 5,700 5,700,000
Los Angeles County Met. Trans. Auth.
Rev., Union Station Gateway Proj., (FSA
Insured) VMIG1/Aaa
(final maturity date 7/01/25)*.......... NR/AAA 3.50% 9/07/95 11,100 11,100,000
Los Angeles County Met. Trans. Auth.
Rev., Revenue Anticipation Notes, Ser. A MIG1/NR
(LC -- Swiss Bank, NY).................. NR/NR 5.00% 4/25/96 10,000 10,049,679
Los Angeles County Trans. Comm. Sales Tax
Rev., Series A (FGIC Insured) (final VMIG1/Aaa
maturity 7/01/12)*...................... A1/AAA 3.20% 9/07/95 6,100 6,100,000
Los Angeles Wastewater System Revenue,
Series D NR/NR
(final maturity date 6/01/20)*.......... NR/NR 3.70% 9/07/95 16,000 16,000,000
Los Angeles Wastewater System Revenue,
Series H NR/NR
(final maturity date 6/01/20)*.......... A1+/AAA 3.70% 9/07/95 11,500 11,500,000
Monterey Regional Waste Management Auth.
Rev., Integrated Waste Mgmt. -- Series A NR/NR
(final maturity 4/01/15)*............... A1/A+ 3.60% 9/07/95 3,000 3,000,000
Newport Beach Health Facility, Hoag
Memorial Hospital VMIG1/A1
(final maturity date 10/01/22)*......... A1+/AA 3.45% 9/01/95 14,855 14,855,000
Oceanside Community Dev. Lease Rev.,
Oceanside Civic Center Project NR/A
(final maturity date 8/01/19)*.......... NR/AAA 8.00% 7/31/96 1,000 1,056,188
Ontario Multifamily Revenue, Vineyard
Vlg. Project
(LC -- Industrial Bank of Japan) VMIG1/A1
(final maturity date 12/01/05)*......... NR/NR 3.70% 9/07/95 2,600 2,600,000
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE> 12
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
(MOODY'S) MATURITY AMOUNT VALUE
DESCRIPTION (S&P) RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Orange County Improvement Bond
Assessment, Dist. 88-1 (LC -- Industrial
Bank of Japan and Fuji Bank) VMIG1/A1
(final maturity date 9/02/18)*.......... A1/A+ 3.90% 9/01/95 $ 7,000 $ 7,000,000
Orange County LIBOR Floater, Tax and
Revenue Anticipation Notes, Ser. B NR/NR
(LC -- PNC Bank)*....................... NR/NR 4.11% 6/30/96 4,500 4,500,000
Puerto Rico Commonwealth Tender Option
Certificates, Series B NR/Baa1
(final maturity date 7/01/22)*.......... NR/A 3.65% 9/07/95 13,250 13,250,000
Riverside Trans. Comm. Sales Tax Revenue
Commercial Paper (LC -- Industrial Bank P1/A1
of Japan)............................... A1/A+ 3.75% 10/12/95 3,000 3,000,000
Sacramento County Multifamily Housing
Rev., Series A
(LC -- Dai-Ichi Kangyo Bank) VMIG1/A1
(final maturity date 4/15/07)*.......... A1/A+ 3.60% 9/07/95 4,900 4,900,000
Sacramento County Multifamily Housing
Rev., River Oaks Apts., Series E
(LC -- Dai-Ichi Kangyo Bank) VMIG1/A1
(final maturity date 9/15/07)*.......... NR/NR 3.60% 9/07/95 2,100 2,100,000
Sacramento Municipal Utility Revenue,
Series Q NR/Aaa
(final maturity date 5/01/16)*.......... NR/AAA 7.50% 5/01/96 5,000 5,201,794
San Diego Housing Auth., Multifamily
Housing Rev. (LC -- Citibank, NY) (final VMIG1/A2
maturity date 12/01/08)*................ NR/NR 3.50% 9/07/95 4,000 4,000,000
San Diego Open Space Park Facs. Dist.,
Series 86A
(final maturity date 1/01/07) NR/NR
(Prerefunded 1/01/96 @102).............. NR/AA+ 7.60% 1/01/96 5,000 5,152,680
San Diego Tax Anticipation Notes, Series MIG1/NR
A....................................... Sp1/NR 4.75% 7/03/96 7,500 7,551,259
San Diego Tax Anticipation Notes
(LC -- National Westminster PLC and MIG1/NR
Banque Nationale De Paris).............. Sp1/NR 4.50% 9/30/96 8,000 8,038,143
San Francisco City and County Multifamily
Housing, Winterland Proj. Series 85C
(LC -- Citibank, NY) NR/NR
(final maturity date 6/01/06)*.......... A1+/AA- 3.45% 9/07/95 1,700 1,700,000
San Francisco City and County,
Redevelopment Financing Auth. Rev.,
Yerba Buena Garden
(LC -- Bank of Tokyo, Ltd.) VMIG1/Aa3
(final maturity date 9/01/06)*.......... A1/A+ 3.70% 9/07/95 5,000 5,000,000
San Joaquin County Trans. Auth., Sales
Tax Revenue
(LC -- Sumitomo Bank, Ltd.) VMIG1/A1
(final maturity date 4/01/11)*.......... A1/A+ 3.50% 9/07/95 2,200 2,200,000
Santa Ana Unified School District,
Certificates of Participation
(LC -- Sanwa Bank) VMIG1/Aa3
(final maturity date 7/01/15)*.......... NR/NR 4.00% 9/07/95 4,400 4,400,000
Santa Clara Electric Rev., Ser. A
(LC -- National Westminster Bank, PLC) VMIG1/Aa2
(final maturity date 7/01/10)*.......... NR/NR 3.30% 9/07/95 1,000 1,000,000
Santa Clara County, Tax and Revenue MIG1/NR
Anticipation Notes...................... SP1+/NR 4.50% 8/02/96 5,000 5,035,227
</TABLE>
- ---------------
See Notes to Financial Statements.
17
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS+ PRINCIPAL
(MOODY'S) MATURITY AMOUNT VALUE
DESCRIPTION (S&P) RATE DATE (000) (NOTE 2)
- ----------------------------------------- --------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Santa Clara County Housing Auth.,
Multifamily Housing Rev., Foxchase
Apartments, Ser. E (FGIC Insured) (final VMIG1/Aaa
maturity date 11/01/07)*................ A1+/AAA 3.55% 9/07/95 $ 3,000 $ 3,000,000
Santa Clara County Trans. Auth., Series
1985 A (LC -- Sumitomo Bank) (final VMIG1/A1
maturity date 6/01/15)*................. NR/NR 3.50% 9/01/95 4,100 4,100,000
Simi Valley Multifamily Housing Rev.,
Cochran Street Project, Issue A NR/NR
(final maturity date 11/15/04)*......... NR/NR 3.45% 9/07/95 4,000 4,000,000
Southern California Public Power Auth.,
Transmission Proj. Rev. (AMBAC Insured)
(LC -- Swiss Bank) VMIG1/Aaa
(final maturity date 7/01/19)*.......... A1+/AAA 3.15% 9/07/95 6,200 6,200,000
Vallejo Industrial Development Auth.,
Meyer Cookmare Ind. Proj., Ser. A (AMT)
(LC -- Mitsubishi Bank Ltd.) (final NR/NR
maturity date 12/01/23)*................ A1+/AA 3.90% 9/07/95 3,300 3,300,000
------------
TOTAL INVESTMENTS (AMORTIZED COST
$494,812,991) -- 100.8%................. 494,812,991
Liabilities in excess of other
assets -- (0.8%)........................ (4,021,348)
------------
NET ASSETS -- 100.0%..................... $490,791,643
============
</TABLE>
- ---------------
LC -- Letter of credit
AMT -- Alternative Minimum Tax.
FGIC -- Financial Guaranty Insurance Company.
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Insurance Company.
* Variable rate security. Maturity date reflects the later of the next rate
change date or the next put date.
+ The ratings provided consist of short-term and long-term ratings for both
Moody's and S&P. The first row consists of the short-term/long-term Moody's
ratings and the second row consists of short-term/long-term S&P ratings.
See Notes to Financial Statements.
18
<PAGE> 14
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
MONEY MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (amortized cost $446,407,955
and $494,812,991, respectively)................................ $446,407,955 $494,812,991
Receivable for investment securities sold........................ 6,004,258 --
Cash............................................................. -- 270,552
Interest receivable.............................................. 2,231,956 2,417,977
Deferred organization costs and prepaid expenses................. 39,172 24,946
------------ ------------
Total assets...................................................... 454,683,341 497,526,466
------------ ------------
LIABILITIES:
Advisory fees payable............................................ 37,416 41,047
Administration fees payable...................................... 37,416 41,047
Special management fees payable (Pacific Horizon Shares)......... 14,557 100,162
Service Organization fees payable (Horizon Service Shares)....... 10,817 34,471
Due to custodian................................................. 53,725 --
Dividends payable................................................ 1,299,176 1,291,285
Payable for investment securities purchased...................... 21,519,975 5,122,121
Accrued legal fees............................................... 18,529 17,445
Other accrued expenses........................................... 98,948 87,245
------------ ------------
Total liabilities................................................. 23,090,559 6,734,823
------------ ------------
NET ASSETS........................................................ $431,592,782 $490,791,643
------------ ------------
Shares Outstanding ($0.001 par value) Pacific Horizon Shares...... 51,598,411 376,581,049
Horizon Shares................................................... 330,806,258 --
Horizon Service Shares........................................... 49,326,786 114,249,004
------------ ------------
Total Shares Outstanding.......................................... 431,731,455 490,830,053
============ ============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE.... $1.00 $1.00
===== =====
COMPOSITION OF NET ASSETS:
Shares of common stock, at par................................... $ 431,731 $ 490,830
Additional paid-in capital....................................... 431,299,724 490,950,103
Accumulated undistributed net investment income.................. -- 62,301
Accumulated net realized losses.................................. (138,673) (36,591)
Unrealized depreciation of investments........................... -- (675,000)
------------ ------------
NET ASSETS, AUGUST 31, 1995....................................... $431,592,782 $490,791,643
============ ============
</TABLE>
- ---------------
See Notes to Financial Statements.
19
<PAGE> 15
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Operations
For the six months ended August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
MONEY MONEY MARKET
FUND FUND
---------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest......................................... $8,623,034 $7,422,725
---------- ------------
EXPENSES:
Advisory fees.................................... 217,853 191,248
Administration fees.............................. 217,853 191,248
Special management service fees
(Pacific Horizon Shares)....................... 65,776 448,324
Service Organization fees
(Horizon Service Shares)....................... 55,823 127,868
Custodian fees and expenses...................... 64,130 43,445
Transfer agent fees and expenses................. 48,860 33,972
Registration fees................................ 29,798 7,854
Audit fees....................................... 27,326 16,825
Legal fees....................................... 23,508 21,430
Reports to shareholders.......................... 15,647 10,257
Amortization of organization costs............... 13,380 --
Insurance expense................................ 11,517 7,104
Directors' fees.................................. 11,222 8,507
Membership fees.................................. 9,708 5,690
Other expenses................................... 4,310 4,259
---------- ------------
Total Expenses................................... 803,331 1,120,605
---------- ------------
Net Investment Income.............................. 7,819,703 6,302,120
REALIZED LOSS ON INVESTMENTS:
Net realized loss on securities transactions..... (19,629) (20,589)
---------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $7,800,074 $6,281,531
========== ===========
</TABLE>
- ---------------
See Notes to Financial Statements.
20
<PAGE> 16
(This page intentionally left blank)
21
<PAGE> 17
Pacific HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY FUND
---------------------------------------
SIX MONTHS
ENDED
AUGUST 31, 1995 YEAR ENDED
(UNAUDITED) FEBRUARY 28, 1995
--------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS
Net investment income.............................. $ 7,819,703 $ 14,194,447
Net realized gain (loss) on securities
transactions..................................... (19,629) (29,085)
Net change in unrealized depreciation of
investments...................................... -- --
------------- ---------------
Net increase in net assets resulting from
operations......................................... 7,800,074 14,165,362
------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Pacific Horizon Shares............................. (678,759) (1,041,419)
Horizon Shares..................................... (6,380,374) (12,086,919)
Horizon Service Shares............................. (760,570) (1,066,109)
------------- ---------------
Total dividends to shareholders from net investment
income............................................. (7,819,703) (14,194,447)
------------- ---------------
PORTFOLIO SHARE TRANSACTIONS:
(AT $1.00 PER SHARE) (NOTE 6)
Net proceeds from shares subscribed................ 958,539,707 2,768,641,200
Net asset value of shares issued to shareholders in
reinvestment of dividends........................ 1,279,501 2,002,123
Cost of shares redeemed............................ (986,629,499) (2,924,830,407)
------------- ---------------
Net increase (decrease) in net assets from Portfolio
share transactions................................. (26,810,291) (154,187,084)
------------- ---------------
Increase due to capital infusion from investment
advisor (Note 3)................................... -- --
------------- ---------------
TOTAL INCREASE (DECREASE)........................... (26,829,920) (154,216,169)
NET ASSETS:
Beginning of year.................................. 458,422,702 612,638,871
------------- ---------------
End of year (Including undistributed net investment
income of $62,301 and $62,301, respectively, for
the California Tax-Exempt Money Market Fund)..... $ 431,592,782 $ 458,422,702
============= ===============
</TABLE>
- ---------------
See Notes to Financial Statements.
22
<PAGE> 18
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------
SIX MONTHS
ENDED
AUGUST 31, 1995 YEAR ENDED
(UNAUDITED) FEBRUARY 28, 1995
- --------------- -----------------
<S> <C>
$ 6,302,120 $ 7,505,623
(20,589) 31,226
-- (675,000)
------------- -------------
6,281,531 6,861,849
------------- -------------
(4,587,493) (4,948,021)
-- --
(1,714,627) (2,557,602)
------------- -------------
(6,302,120) (7,505,623)
------------- -------------
712,591,473 826,241,285
4,538,133 6,810,381
(500,962,819) (885,907,562)
------------- -------------
216,166,787 (52,855,896)
------------- -------------
-- 675,000
------------- -------------
216,146,198 (52,824,670)
274,645,445 327,470,115
------------- -------------
$ 490,791,643 $ 274,645,445
============= =============
</TABLE>
23
<PAGE> 19
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 -- GENERAL
Pacific Horizon Funds, Inc. (the "Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end management investment company. At August 31, 1995, the Fund operated
as a series company comprising sixteen portfolios. The accompanying financial
statements and notes are those of the Horizon Tax-Exempt Money Fund (the
"Tax-Exempt Fund") and Pacific Horizon California Tax-Exempt Money Market Fund
(the "California Tax-Exempt Fund") (collectively, the "Portfolios") only.
The Tax-Exempt Fund issues three classes of shares (Pacific Horizon Shares,
Horizon Shares and Horizon Service Shares) while the California Tax-Exempt Fund
issues two classes of shares (Pacific Horizon Shares and Horizon Service
Shares). Pacific Horizon Shares, Horizon Shares and Horizon Service Shares are
substantially the same except that Pacific Horizon Shares bear the fees payable
under the Fund's Special Management Services Agreement at an annual rate of
0.32% of the average daily net asset value of the outstanding Pacific Horizon
Shares while Horizon Service Shares bear the fees payable, under the Shareholder
Services Plan, to institutions ("Service Organizations"), that provide support
services to their clients who beneficially own such shares. Such fees are
payable at an annual rate of 0.25% of the average daily net asset value of the
outstanding Horizon Service Shares.
Bank of America National Trust and Savings Association ("Bank of America"),
a subsidiary of BankAmerica Corporation, serves as the Fund's investment
adviser. Concord Holding Corporation ("Concord") serves as the Fund's
administrator and Concord Financial Group, Inc. (the "Distributor"), a
wholly-owned subsidiary of Concord, serves as the distributor of the Fund's
shares.
On March 29, 1995, a merger agreement was approved by the Shareholders of
Concord whereby Concord became a wholly owned subsidiary of the BISYS Group,
Inc. ("BISYS") and continues to serve as administrator and distributor to the
Fund on substantially identical terms as described below in Note 3.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Each Portfolio seeks to maintain a net asset value per share of $1.00,
although there is no assurance that it will be able to do so on a continuous
basis, and has adopted certain investment, portfolio valuation and dividend and
distribution policies designed to enable it to do so.
24
<PAGE> 20
A) PORTFOLIO VALUATIONS:
Portfolio securities are valued at amortized cost, which approximates market
value. The amortized cost method involves valuing a security at its cost on the
date of purchase and thereafter assuming a constant amortization to maturity of
the difference between the principal amount due at maturity and cost.
B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on a trade date basis. Realized gains
and losses from securities transactions are recorded on the identified cost
basis. Interest income and amortization of premium, is accrued daily.
C) DIVIDENDS TO SHAREHOLDERS:
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and paid monthly. Distributions of net
realized gains, if any, will be paid at least annually. However, to the extent
that net realized gains of any Portfolio can be offset by capital loss
carryovers from that Portfolio, such gains will not be distributed. Dividends
and distributions are recorded by each Portfolio on the ex-dividend date.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
D) FEDERAL INCOME TAXES:
For federal income tax purposes, each Portfolio is treated as a separate
entity for the purpose of determining the Portfolio's qualification as a
regulated investment company under the Internal Revenue Code (the "Code"). It is
the policy of the Fund that each Portfolio comply with the requirements of the
Code applicable to regulated investment companies, including the requirement
that each Portfolio distribute substantially all of its taxable and tax-exempt
income to shareholders. Therefore, no federal income tax provision is required.
At February 28, 1995, the cost of securities in each Portfolio for federal
income tax purposes was substantially the same as for financial reporting
purposes.
25
<PAGE> 21
At February 28, 1995, the Portfolios had the following capital loss
carryovers:
<TABLE>
<CAPTION>
CAPITAL
LOSS
FUND CARRYOVER EXPIRATION DATE
---- ---------- ---------------
<S> <C> <C>
Tax-Exempt Fund................................... $ 35,348 1997
16,664 1998
14,011 2000
71,218 2002
19,132 2003
----------
$ 156,373
==========
California Tax-Exempt Fund........................ $ 5,893 2001
6,223 2002
----------
$ 12,116
==========
</TABLE>
To the extent these capital loss carryovers are used to offset future net
realized gains on securities transactions, the gains so offset will not be
distributed to shareholders, to the extent provided by the regulations under the
Code. Capital losses incurred after October 31, 1994 and within the fiscal year
are deemed to arise on the first business day of the following fiscal year. The
California Tax-Exempt Fund and Tax-Exempt Money Fund incurred and elected to
defer such losses of $4,545 and $11,080, respectively.
E) OTHER:
The Fund accounts separately for the assets, liabilities and operations of
each Portfolio. Expenses directly attributable to each Portfolio are charged to
that Portfolio, while expenses which are attributable to more than one portfolio
of the Fund are allocated among the respective portfolios. The investment income
and the expenses (other than expenses incurred under the Special Management
Services Agreement and Shareholder Services Plan) of each Portfolio are
allocated to the separate classes of shares based upon their relative net asset
value.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Portfolios have an Investment Advisory Agreement with Bank of America
and a Basic Administrative Services Agreement with Concord. Bank of America is
entitled to a fee from each Portfolio, which is accrued daily and payable
monthly, at an annual rate of 0.10% of each Portfolio's first $3 billion of net
assets, plus 0.09% of each Portfolio's next $2 billion of net assets, plus 0.08%
of each Portfolio's net assets in excess of $5 billion. Concord is entitled to a
fee from each Portfolio, which is accrued daily and payable monthly, at an
annual rate of 0.10% of each Portfolio's first $7 billion of net assets, plus
0.09% of each Portfolio's next $3 billion of net assets plus 0.08% of each
Portfolio's net assets in excess of $10 billion.
26
<PAGE> 22
The agreements provide that if, in any fiscal year, the aggregate expenses
of any Portfolio (generally excluding interest, taxes, brokerage commissions and
extraordinary expenses) exceed the most restrictive expense limitation of any
state having jurisdiction over that Portfolio, then Bank of America and Concord
will reimburse the Portfolio for any such excess expenses. As of August 31,
1995, the most restrictive expense limitation is believed to limit expenses to
2.5% of the first $30 million of each Portfolio's average daily net assets, plus
2.0% of the next $70 million of such assets plus 1.5% of such assets in excess
of $100 million. The agreements provide that such reimbursements will be
estimated and paid on a monthly basis. No reimbursement was required for the six
months ended August 31, 1995.
The Portfolios have entered into a Special Management Service Agreement
("Services Agreement") pursuant to which they have agreed to pay Bank of America
and Concord a fee for various services relating to the Pacific Horizon Shares.
The special management services fee is accrued daily at an annual rate of 0.32%
of the average daily net asset value of the outstanding Pacific Horizon Shares
of each Portfolio, and is borne solely by the Pacific Horizon Shares. For the
six months ended August 31, 1995, the Portfolios were advised that Concord, Bank
of America and their affiliates earned the following amounts pursuant to the
Services Agreement:
<TABLE>
<CAPTION>
AFFILIATES OF
BANK OF AFFILIATES BANK OF
FUND AMERICA CONCORD OF CONCORD AMERICA
---- ------- ------- ---------- -------------
<S> <C> <C> <C> <C>
Tax-Exempt Fund.......................... 25 2,649 -- 63,087
California Tax-Exempt Fund............... 2,089 5,341 21,967 418,930
</TABLE>
The Portfolios have also adopted a Shareholder Services Plan (the "Horizon
Service Plan") pursuant to which Service Organizations agree to provide certain
services to their clients who are the beneficial owners of Horizon Service
Shares in return for payment by the Portfolios of a fee at an annual rate of
0.25% of the average daily net asset value of the Horizon Service Shares
outstanding from time to time. These payments are borne solely by the Horizon
Service Shares. Service Organizations may include the Distributor, Bank of
America and their affiliates. For the six months ended August 31, 1995, the
Portfolios were advised that affiliates of Bank of America earned the following
amounts pursuant to the Horizon Service Plan:
<TABLE>
<CAPTION>
FUND
----
<S> <C>
Tax-Exempt Fund......................................................... 37,627
California Tax-Exempt Fund.............................................. 127,841
</TABLE>
During the six months ended August 31, 1995, PNC Bank issued a letter of
credit which guaranteed California Tax-Exempt Fund the payment of principal and
interest by an issuer of a security issued by Orange County California that was
held by the California Tax-Exempt Fund. This letter of credit enabled the
security, together with the letter of credit, to be valued
27
<PAGE> 23
at par, which was approximately $675,000 in excess of the security's fair market
value on the date of issuance of the letter of credit. As this letter of credit
was issued by PNC Bank, the increase in value is deemed to be a voluntary
contribution of capital. PNC Bank received no consideration for the issuance of
this letter of credit.
For the six months ended August 31, 1995, the Tax-Exempt Fund and California
Tax-Exempt Fund incurred legal charges totaling $23,508 and $21,430,
respectively, which were earned by a law firm, a partner of which serves as
Secretary to the Fund. Certain officers of the Fund are "affiliated persons" (as
defined in the Act) of Concord.
Concord Financial Services Inc., a wholly owned subsidiary of Concord, acts
as transfer agent for the Horizon class of shares for the Portfolios. For the
six months ended August 31, 1995 Concord Financial Services received $7,406 from
the Tax-Exempt Fund.
NOTE 4 -- DIRECTORS' COMPENSATION
As of March 1, 1995, each director is entitled to an annual retainer of
$25,000, plus $1,000 for each day the director participates in all or part of a
Board or Committee meeting and the Chairman of each Committee receives a
retainer of $1,000 for services as Chairman of the Committee. In addition, the
Fund's President is entitled to an annual salary of $40,000 for services as
President.
The Board also established a retirement plan (the "Retirement Plan") for
Directors. The Retirement Plan provides that each Director who dies or resigns
after five years of service as a director will be entitled to receive ten annual
payments each equal to the greater of: (i) 50% of the annual Director's retainer
that was payable during the year of that Director's death or resignation, or
(ii) 50% of the annual Director's retainer then in effect for Directors of the
Fund during the year of such payment. A Director who dies or resigns after nine
years of service as a director will be entitled to receive ten annual payments
equal to the greater of: (i) 100% of the annual Director's retainer that was
payable during the year of that Director's death or resignation, or (ii) 100% of
the annual Director's retainer then in effect for Directors of the Fund during
the year of such payment. In addition, the amount payable each year to a
Director who dies or resigns shall be increased by $1,000 for each year of
service that the Director served as Chairman of the Board. Each Director may
receive any benefits payable under the Retirement Plan, at his or her election,
either in one lump sum payment or ten annual installments. A Director's years of
service for the purpose of calculating the payments described above shall be
based upon service as a Director or Chairman after February 28, 1994. Aggregate
costs to the Tax-Exempt Fund and California Tax-Exempt Fund pursuant to the
Retirement Plan amounted to $1,466 and $1,061, respectively, for the six months
ended August 31, 1995.
28
<PAGE> 24
NOTE 5 -- CONCENTRATION OF CREDIT RISK
The Tax-Exempt Fund invests substantially all of its assets in a diversified
portfolio of tax-exempt debt obligations. The California Tax-Exempt Fund invests
substantially all of its assets in a nondiversified portfolio of tax-exempt debt
obligations primarily consisting of issuers in the state of California. The
issuers' abilities to meet their obligation may be affected by economic,
regional or political developments.
The Tax-Exempt Fund and the California Tax-Exempt Fund had the following
concentrations by industry sector at August 31, 1995 (as a percentage of total
investments):
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
FUND FUND
---------- ----------
<S> <C> <C>
Revenue Anticipation Notes................................. 32.5% 22.8%
General Obligations........................................ 16.2 8.2
Pollution Control.......................................... 10.1 21.4
Education Facilities....................................... 11.5 1.4
Power Projects............................................. 5.4 4.0
Health and Medical Facilities.............................. 0.7 3.4
Industrial Developments.................................... 1.7 6.5
Housing Developments....................................... 5.0 13.8
Airport Facilities......................................... 0.5 --
Air Transportation......................................... 1.5 --
Water Projects............................................. 4.4 4.9
Waste Management........................................... 3.0 --
Transit Projects........................................... -- 5.3
Hospital Supplies.......................................... 7.5 1.1
Health Care & Hospital Management.......................... -- --
Tax and Revenue Anticipation Notes......................... -- --
Transportation............................................. -- 7.2
Certificates of Participation.............................. -- --
----- -----
100.0% 100.0%
===== =====
</TABLE>
NOTE 6 -- CAPITAL SHARE TRANSACTIONS
At August 31, 1995, there were 200 billion shares of the Fund's $0.001 par
value Common Stock authorized, of which 2 billion shares were classified as
Class J Common Stock (California Tax-Exempt Fund -- 1 billion Pacific Horizon
Shares and 1 billion Horizon Service Shares) and 7.5 billion shares were
classified as Class I Common Stock (Tax-Exempt Fund -- 1.5 billion Pacific
Horizon Shares, 3 billion Horizon Shares and 3 billion Horizon Service Shares).
29
<PAGE> 25
Transactions in shares of each Portfolio (at $1.00 per share) for the
periods indicated are summarized below:
<TABLE>
<CAPTION>
SIX MONTHS ENDED CALIFORNIA
AUGUST 31, 1995 TAX-EXEMPT TAX-EXEMPT
(UNAUDITED) FUND FUND
- ---------------------------------------------------------------- -------------- ------------
<S> <C> <C>
PACIFIC HORIZON SHARES:
Shares sold.................................................... 143,501,738 420,668,562
Shares issued to shareholders in reinvestment of dividends..... 341,937 3,209,730
Shares redeemed................................................ (129,708,851) (233,951,885)
-------------- ------------
Net increase in Pacific Horizon Shares.......................... 14,134,824 189,926,407
-------------- ------------
HORIZON SHARES:
Shares sold.................................................... 711,825,065 --
Shares issued to shareholders in reinvestment of dividends..... 440,369 --
Shares redeemed................................................ (763,369,232) --
-------------- ------------
Net decrease in Horizon Shares.................................. (51,103,798) --
-------------- ------------
HORIZON SERVICE SHARES:
Shares sold.................................................... 103,212,904 291,922,911
Shares issued to shareholders in reinvestment of dividends..... 497,195 1,328,403
Shares redeemed................................................ (93,551,416) (267,010,934)
-------------- ------------
Net increase in Horizon Service Shares.......................... 10,158,683 26,240,380
-------------- ------------
Total (decrease) increase in Portfolio shares................... (26,810,291) 216,166,787
============== ============
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA
YEAR ENDED TAX-EXEMPT TAX-EXEMPT
FEBRUARY 28, 1995 FUND FUND
- ---------------------------------------------------------------- -------------- ------------
<S> <C> <C>
PACIFIC HORIZON SHARES:
Shares sold.................................................... 341,854,376 502,909,799
Shares issued to shareholders in reinvestment
of dividends................................................. 374,200 4,297,456
Shares redeemed................................................ (354,420,485) (524,307,461)
-------------- ------------
Net decrease in Pacific Horizon Shares.......................... (12,191,909) (17,100,206)
-------------- ------------
HORIZON SHARES:
Shares sold.................................................... 2,300,191,836 --
Shares issued to shareholders in reinvestment
of dividends................................................. 782,137 --
Shares redeemed................................................ (2,433,802,141) --
-------------- ------------
Net decrease in Horizon Shares.................................. (132,828,168) --
-------------- ------------
HORIZON SERVICE SHARES:
Shares sold.................................................... 126,594,988 323,331,486
Shares issued to shareholders in reinvestment
of dividends................................................. 845,786 2,512,925
Shares redeemed................................................ (136,607,781) (361,600,101)
-------------- ------------
Net decrease in Horizon Service Shares.......................... (9,167,007) (35,755,690)
-------------- ------------
Total decrease in Portfolio shares.............................. (154,187,084) (52,855,896)
============== ============
</TABLE>
30
<PAGE> 26
HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
AUGUST 31, YEAR ENDED ENDED
1995 FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994*
----------- ------------ ------------
<S> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share, beginning of
period................................ $ 1.00 $ 1.00 $ 1.00
--------- -------- -------
Income from Investment Operations:
Net investment income................. 0.0168 0.0253 0.0124
Less dividends from net investment
income................................ (0.0168) (0.0253) (0.0124)
--------- -------- -------
Net change in net asset value per
share................................. 0.0000 0.0000 0.0000
--------- -------- --------
Net asset value per share, end of
period................................ $ 1.00 $ 1.00 $ 1.00
========= ======== =======
Total return............................ 1.95% 2.56% 1.25%#
Ratios/Supplemental Data:
Net assets, end of period (000)....... $ 51,581 $ 37,454 $49,648
Ratio of expenses to average net
assets.............................. 0.63%+ 0.60% 0.60%+**
Ratio of net investment income to
average net assets.................. 3.30%+ 2.47% 1.95%+**
</TABLE>
- ---------------
* For the period July 9, 1993 (initial offering date) through February 28,
1994.
** Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.01%.
+ Annualized.
# Not annualized.
See Notes to Financial Statements.
31
<PAGE> 27
HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ------------------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
------------ -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
HORIZON SHARES
Net asset value per share,
beginning of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ------- -------
Income from Investment
Operations:
Net investment income...... 0.0184 0.0285 0.0225 0.0269 0.0410 0.0557
Less dividends from net
investment income.......... (0.0184) (0.0285) (0.0225) (0.0269) (0.0410) (0.0557)
-------- -------- -------- -------- ------- -------
Net change in net asset
value per share............ 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
-------- -------- -------- -------- ------- -------
Net asset value per share,
end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return................ 2.14%# 2.89% 2.27% 2.72% 4.18% 5.71%
Ratios/Supplemental Data:
Net assets, end of period
(000).................... $330,701 $381,811 $514,663 $383,848 $345,221 $428,127
Ratio of expenses to
average net assets....... 0.31%+ 0.28% 0.28%* 0.28% 0.28% 0.27%*
Ratio of net investment
income to average net
assets................... 3.65%+ 2.81% 2.25%* 2.69% 4.12% 5.54%*
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.01% and 0.02% for the years ended February 28, 1994
and February 28, 1991, respectively.
++ Security Pacific National Bank served as investment advisor through April 21,
1992. Bank of America National Trust and Savings Association served as
investment advisor commencing April 22, 1992.
+ Annualized.
# Not annualized.
See Notes to Financial Statements.
32
<PAGE> 28
HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ------------------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
------------ -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share
beginning of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income...... 0.0172 0.0260 0.0200 0.0244 0.0385 0.0532
Less dividends from net
investment income.......... (0.0172) (0.0260) (0.0200) (0.0244) (0.0385) (0.0532)
-------- -------- -------- -------- -------- --------
Net change in net asset
value per share............ 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
-------- -------- -------- -------- -------- --------
Net asset value per share,
end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return................ 1.99%# 2.63% 2.02% 2.47% 3.92% 5.45%
Ratios/Supplemental Data:
Net assets, end of period
(000).................... $ 49,311 $ 39,158 $ 48,328 $ 49,695 $ 47,230 $ 53,732
Ratio of expenses to
average net assets....... 0.56%+ 0.53% 0.53%* 0.53% 0.53% 0.52%*
Ratio of net investment
income to average net
assets................... 3.41%+ 2.57% 2.04%* 2.42% 3.88% 5.29%*
</TABLE>
- ---------------
* Net of fee waivers which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.04% and 0.02% for the years ended February 28, 1994
and February 28, 1991, respectively.
++ Security Pacific National Bank served as investment adviser through April 21,
1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
+ Annualized.
# Not annualized.
See Notes to Financial Statements.
33
<PAGE> 29
PACIFIC HORIZON
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights+++
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ------------------------------------------------------------------------------
1995 FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
(UNAUDITED) 1995 1994 1993 1992 1991
------------ -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share,
beginning of period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------
Income from Investment
Operations:
Net investment income..... 0.0166 0.0249 0.0186 0.0224 0.0364 0.0495
Net realized gain (loss)
on securities........... (0.0001) (0.0001) 0.0002 (0.0002) 0.0000 (0.0001)
-------- -------- -------- -------- -------- -------
Total income from
investment operations..... 0.0165 0.0248 0.0188 0.0222 0.0364 0.0494
Less dividends from net
investment income......... (0.0166) (0.0249) (0.0186) (0.0224) (0.0364) (0.0495)
-------- -------- -------- -------- -------- -------
Net change in net asset
value per share........... (0.0001) (0.0001) 0.0002 (0.0002) 0.0000 (0.0001)
-------- -------- -------- -------- -------- -------
Net asset value per share,
end of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return............... 1.68%# 2.52% 1.88% 2.27% 3.70% 5.06%
Ratios/Supplemental Data:
Net assets, end of period
(000)................... $376,552 $186,643 $203,724 $128,448 $107,424 $118,816
Ratio of expenses to
average net assets...... 0.61%++ 0.62% 0.66%** 0.66%** 0.57%** 0.55%**
Ratio of net investment
income to average net
assets.................. 3.28%++ 2.48% 1.86%** 2.21%** 3.62%** 4.81%**
</TABLE>
- ---------------
** Net of fee waivers and expense reimbursements by the Adviser and
Administrator which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.02%, 0.08%, 0.13% and 0.22%, for the years ended
February 28, 1994, February 28, 1993, February 29, 1992 and February 28,
1991, respectively.
+++ Security Pacific National Bank served as investment adviser through April
21, 1992. Bank of America National Trust and Savings Association served as
investment adviser commencing April 22, 1992.
++ Annualized.
# Not annualized.
See Notes to Financial Statements.
34
<PAGE> 30
PACIF IC HORIZON
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ----------------------------
1995 FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning of
period............................... $ 1.00 $ 1.00 $ 1.00
--------- -------- ---------
Income from Investment Operations:
Net investment income................ 0.0170 0.0256 0.0198
Net realized loss on securities...... (0.0001) (0.0001) (0.0001)
--------- -------- ---------
Total income from investment
operations........................... 0.0169 0.0255 0.0197
Less dividends from net investment
income............................... (0.0170) (0.0256) (0.0198)
--------- -------- ---------
Net change in net asset value per
share................................ (0.0001) (0.0001) (0.0001)
--------- -------- ---------
Net asset value per share, end of
period............................... $ 1.00 $ 1.00 $ 1.00
========= ======== =========
Total return........................... 1.71%# 2.59% 2.00%
Ratios/Supplemental Data:
Net assets, end of period (000)...... $ 114,240 $ 88,003 $ 123,746
Ratio of expenses to average net
assets............................. 0.54%++ 0.55% 0.53%*
Ratio of net investment income to
average net assets................. 3.36%++ 2.50% 1.98%*
</TABLE>
- ---------------
* Net of fee waivers and expense reimbursements by the Adviser and
Administrator which had the effect of reducing the ratio of expenses to
average net assets and increasing the ratio of net investment income to
average net assets by 0.07%.
++ Annualized.
# Not annualized.
See Notes to Financial Statements.
35
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> PRIME FUND - HORIZON SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,759,412,474
<INVESTMENTS-AT-VALUE> 1,759,412,474
<RECEIVABLES> 6,338,971
<ASSETS-OTHER> 864,946,764
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,630,698,209
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,270,811
<TOTAL-LIABILITIES> 15,270,811
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,617,390,289
<SHARES-COMMON-STOCK> 622,973,633
<SHARES-COMMON-PRIOR> 2,600,211,461
<ACCUMULATED-NII-CURRENT> 983,944
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 2,946,835
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,615,427,398
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 150,199,956
<OTHER-INCOME> 0
<EXPENSES-NET> 11,429,555
<NET-INVESTMENT-INCOME> 138,770,401
<REALIZED-GAINS-CURRENT> (70,528,584)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 68,241,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 138,107,340
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22,779,590,840
<NUMBER-OF-SHARES-REDEEMED> 26,110,723,254
<SHARES-REINVESTED> 44,554,475
<NET-CHANGE-IN-ASSETS> (3,278,996,585)
<ACCUMULATED-NII-PRIOR> 320,883
<ACCUMULATED-GAINS-PRIOR> (9,830,128)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,280,830
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,299,415
<AVERAGE-NET-ASSETS> 2,615,427,398
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> (0.02)
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> PRIME FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,759,412,474
<INVESTMENTS-AT-VALUE> 1,759,412,474
<RECEIVABLES> 6,338,971
<ASSETS-OTHER> 864,946,764
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,630,698,209
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,270,811
<TOTAL-LIABILITIES> 15,270,811
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,617,390,289
<SHARES-COMMON-STOCK> 864,561,312
<SHARES-COMMON-PRIOR> 2,422,026,627
<ACCUMULATED-NII-CURRENT> 983,944
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 2,946,835
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,615,427,398
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 150,199,956
<OTHER-INCOME> 0
<EXPENSES-NET> 11,429,555
<NET-INVESTMENT-INCOME> 138,770,401
<REALIZED-GAINS-CURRENT> (70,528,584)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 68,241,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 138,107,340
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22,779,590,840
<NUMBER-OF-SHARES-REDEEMED> 26,110,723,254
<SHARES-REINVESTED> 44,554,475
<NET-CHANGE-IN-ASSETS> (3,278,996,585)
<ACCUMULATED-NII-PRIOR> 320,883
<ACCUMULATED-GAINS-PRIOR> (9,830,128)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,280,830
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,299,415
<AVERAGE-NET-ASSETS> 2,615,427,398
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> (0.02)
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> TREASURY FUND - HORIZON SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 920,829,528
<INVESTMENTS-AT-VALUE> 920,829,528
<RECEIVABLES> 12,197,294
<ASSETS-OTHER> 1,040,173,299
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,973,200,121
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,144,271
<TOTAL-LIABILITIES> 8,144,271
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,964,626,980
<SHARES-COMMON-STOCK> 468,922,381
<SHARES-COMMON-PRIOR> 487,667,624
<ACCUMULATED-NII-CURRENT> 667,877
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 239,007
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,965,055,850
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 97,394,843
<OTHER-INCOME> 0
<EXPENSES-NET> 9,823,075
<NET-INVESTMENT-INCOME> 87,571,768
<REALIZED-GAINS-CURRENT> 505,457
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 88,077,225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 87,571,768
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,879,909,861
<NUMBER-OF-SHARES-REDEEMED> 9,531,263,412
<SHARES-REINVESTED> 9,576,672
<NET-CHANGE-IN-ASSETS> (641,271,422)
<ACCUMULATED-NII-PRIOR> 667,877
<ACCUMULATED-GAINS-PRIOR> (744,464)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,140,125
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,823,075
<AVERAGE-NET-ASSETS> 1,965,055,850
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> TREASURY FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 920,829,528
<INVESTMENTS-AT-VALUE> 920,829,528
<RECEIVABLES> 12,197,294
<ASSETS-OTHER> 1,040,173,299
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,973,200,121
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,144,271
<TOTAL-LIABILITIES> 8,144,271
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,964,626,980
<SHARES-COMMON-STOCK> 363,911,318
<SHARES-COMMON-PRIOR> 1,005,688,197
<ACCUMULATED-NII-CURRENT> 667,877
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 239,007
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,965,055,850
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 97,394,843
<OTHER-INCOME> 0
<EXPENSES-NET> 9,823,075
<NET-INVESTMENT-INCOME> 87,571,768
<REALIZED-GAINS-CURRENT> 505,457
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 88,077,225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 87,571,768
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,879,909,861
<NUMBER-OF-SHARES-REDEEMED> 9,531,263,412
<SHARES-REINVESTED> 9,576,672
<NET-CHANGE-IN-ASSETS> (641,271,422)
<ACCUMULATED-NII-PRIOR> 667,877
<ACCUMULATED-GAINS-PRIOR> (744,464)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,140,125
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,823,075
<AVERAGE-NET-ASSETS> 1,965,055,850
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> GOVERNMENT FUND - HORIZON SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 520,927,537
<INVESTMENTS-AT-VALUE> 520,927,537
<RECEIVABLES> 1,296,432
<ASSETS-OTHER> 359,512,286
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 811,736,255
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 878,921,710
<TOTAL-LIABILITIES> 878,921,710
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 879,849,323
<SHARES-COMMON-STOCK> 235,532,896
<SHARES-COMMON-PRIOR> 369,869,087
<ACCUMULATED-NII-CURRENT> 148,038
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,075,651
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 878,921,710
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 31,025,824
<OTHER-INCOME> 0
<EXPENSES-NET> 2,511,058
<NET-INVESTMENT-INCOME> 28,514,766
<REALIZED-GAINS-CURRENT> (6,104,207)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 22,410,559
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 87,571,768
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,879,909,861
<NUMBER-OF-SHARES-REDEEMED> 9,531,263,412
<SHARES-REINVESTED> 9,576,672
<NET-CHANGE-IN-ASSETS> (641,271,422)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (471,444)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 679,374
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,024,531
<AVERAGE-NET-ASSETS> 1,965,055,850
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> GOVERNMENT FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 520,927,537
<INVESTMENTS-AT-VALUE> 520,927,537
<RECEIVABLES> 1,296,432
<ASSETS-OTHER> 359,512,286
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 881,736,255
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 878,921,710
<TOTAL-LIABILITIES> 878,921,710
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 879,849,323
<SHARES-COMMON-STOCK> 289,114,358
<SHARES-COMMON-PRIOR> 259,766,856
<ACCUMULATED-NII-CURRENT> 148,038
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,075,651
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 878,921,710
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 31,025,824
<OTHER-INCOME> 0
<EXPENSES-NET> 2,511,058
<NET-INVESTMENT-INCOME> 28,514,766
<REALIZED-GAINS-CURRENT> (6,104,207)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 22,410,559
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 87,571,768
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,879,909,861
<NUMBER-OF-SHARES-REDEEMED> 9,531,263,412
<SHARES-REINVESTED> 9,576,672
<NET-CHANGE-IN-ASSETS> (641,271,422)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (471,444)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 679,374
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,024,531
<AVERAGE-NET-ASSETS> 1,965,055,850
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> TREASURY ONLY - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 282,965,881
<INVESTMENTS-AT-VALUE> 282,965,881
<RECEIVABLES> 2,016,082
<ASSETS-OTHER> 153,050
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 285,135,013
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 284,700,746
<TOTAL-LIABILITIES> 284,700,746
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 284,815,612
<SHARES-COMMON-STOCK> 194,441,752
<SHARES-COMMON-PRIOR> 253,401,126
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 114,866
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 284,700,746
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,378,512
<OTHER-INCOME> 0
<EXPENSES-NET> 1,700,054
<NET-INVESTMENT-INCOME> 11,678,458
<REALIZED-GAINS-CURRENT> (48,264)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 11,630,194
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,678,458
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,440,503,813
<NUMBER-OF-SHARES-REDEEMED> 1,509,340,461
<SHARES-REINVESTED> 9,877,274
<NET-CHANGE-IN-ASSETS> (59,007,638)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (66,602)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 301,618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,716,680
<AVERAGE-NET-ASSETS> 1,965,055,850
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> TAX-EXEMPT MONEY FUND - HORIZON SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 449,117,583
<INVESTMENTS-AT-VALUE> 449,117,583
<RECEIVABLES> 15,792,434
<ASSETS-OTHER> 4,453,612
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 469,363,629
<PAYABLE-FOR-SECURITIES> 9,711,008
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,229,919
<TOTAL-LIABILITIES> 10,940,927
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 458,541,746
<SHARES-COMMON-STOCK> 381,910,056
<SHARES-COMMON-PRIOR> 514,738,224
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 119,044
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 458,422,702
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 15,869,219
<OTHER-INCOME> 0
<EXPENSES-NET> 1,674,772
<NET-INVESTMENT-INCOME> 14,194,447
<REALIZED-GAINS-CURRENT> (29,085)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 14,165,362
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,194,447
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,768,641,200
<NUMBER-OF-SHARES-REDEEMED> 2,924,830,407
<SHARES-REINVESTED> 2,002,123
<NET-CHANGE-IN-ASSETS> (154,216,169)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (89,959)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 513,567
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,697,994
<AVERAGE-NET-ASSETS> 458,422,702
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> TAX-EXEMPT MONEY FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 449,117,583
<INVESTMENTS-AT-VALUE> 449,117,583
<RECEIVABLES> 15,792,434
<ASSETS-OTHER> 4,453,612
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 469,363,629
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<TOTAL-LIABILITIES> 10,940,927
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 458,541,746
<SHARES-COMMON-STOCK> 39,463,587
<SHARES-COMMON-PRIOR> 193,650,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 119,044
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 458,422,702
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15,869,219
<OTHER-INCOME> 0
<EXPENSES-NET> 1,674,772
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<REALIZED-GAINS-CURRENT> (29,085)
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<DISTRIBUTIONS-OF-INCOME> 14,194,447
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 2,768,641,200
<NUMBER-OF-SHARES-REDEEMED> 2,924,830,407
<SHARES-REINVESTED> 2,002,123
<NET-CHANGE-IN-ASSETS> (154,216,169)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (89,959)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,697,994
<AVERAGE-NET-ASSETS> 458,422,702
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> CA TAX-EXEMPT MMF - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 272,837,256
<INVESTMENTS-AT-VALUE> 272,837,256
<RECEIVABLES> 6,106,861
<ASSETS-OTHER> 21,751
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 278,965,868
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,320,423
<TOTAL-LIABILITIES> 4,320,423
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 275,274,146
<SHARES-COMMON-STOCK> 88,008,624
<SHARES-COMMON-PRIOR> 140,894,520
<ACCUMULATED-NII-CURRENT> 62,301
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 16,002
<ACCUM-APPREC-OR-DEPREC> (675,000)
<NET-ASSETS> 274,645,445
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,295,308
<OTHER-INCOME> 0
<EXPENSES-NET> 1,789,685
<NET-INVESTMENT-INCOME> 7,505,623
<REALIZED-GAINS-CURRENT> 31,226
<APPREC-INCREASE-CURRENT> (675,000)
<NET-CHANGE-FROM-OPS> 6,861,849
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,505,623
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 826,241,285
<NUMBER-OF-SHARES-REDEEMED> 885,907,562
<SHARES-REINVESTED> 6,810,381
<NET-CHANGE-IN-ASSETS> (52,824,670)
<ACCUMULATED-NII-PRIOR> 62,301
<ACCUMULATED-GAINS-PRIOR> (47,228)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 301,964
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,789,685
<AVERAGE-NET-ASSETS> 274,645,445
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> PRIME FUND - HORIZON SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 4,063,412,439
<INVESTMENTS-AT-VALUE> 4,063,412,439
<RECEIVABLES> 9,370,151
<ASSETS-OTHER> 788,635,577
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,861,418,167
<PAYABLE-FOR-SECURITIES> 91,501,885
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,974,313
<TOTAL-LIABILITIES> 111,476,198
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,752,710,286
<SHARES-COMMON-STOCK> 1,744,656,091
<SHARES-COMMON-PRIOR> 622,973,633
<ACCUMULATED-NII-CURRENT> 1,297,567
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 4,056,884
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,749,941,969
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 95,586,299
<OTHER-INCOME> 0
<EXPENSES-NET> 7,253,168
<NET-INVESTMENT-INCOME> 88,333,131
<REALIZED-GAINS-CURRENT> (1,110,049)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 87,223,082
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 88,019,508
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,197,520,811
<NUMBER-OF-SHARES-REDEEMED> 10,096,709,924
<SHARES-REINVESTED> 34,500,110
<NET-CHANGE-IN-ASSETS> 2,134,514,571
<ACCUMULATED-NII-PRIOR> 983,944
<ACCUMULATED-GAINS-PRIOR> (2,946,835)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,565,958
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,253,168
<AVERAGE-NET-ASSETS> 4,749,941,969
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> PRIME FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 4,063,412,439
<INVESTMENTS-AT-VALUE> 4,063,412,439
<RECEIVABLES> 9,370,151
<ASSETS-OTHER> 788,635,577
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,861,418,167
<PAYABLE-FOR-SECURITIES> 91,501,885
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,974,313
<TOTAL-LIABILITIES> 111,476,198
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,752,701,286
<SHARES-COMMON-STOCK> 1,280,734,442
<SHARES-COMMON-PRIOR> 864,561,312
<ACCUMULATED-NII-CURRENT> 1,297,569
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 4,056,884
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,749,941,969
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 95,586,299
<OTHER-INCOME> 0
<EXPENSES-NET> 7,253,168
<NET-INVESTMENT-INCOME> 88,333,131
<REALIZED-GAINS-CURRENT> (1,110,049)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 87,223,082
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 88,019,508
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,197,520,811
<NUMBER-OF-SHARES-REDEEMED> 10,096,709,924
<SHARES-REINVESTED> 34,500,110
<NET-CHANGE-IN-ASSETS> 2,134,514,571
<ACCUMULATED-NII-PRIOR> 983,944
<ACCUMULATED-GAINS-PRIOR> (2,946,835)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,565,958
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,253,168
<AVERAGE-NET-ASSETS> 4,749,941,969
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.03
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> TREASURY FUND - HORIZON SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 808,428,869
<INVESTMENTS-AT-VALUE> 808,428,869
<RECEIVABLES> 687,429
<ASSETS-OTHER> 1,694,626,485
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,503,742,783
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,200,489
<TOTAL-LIABILITIES> 11,200,489
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,492,022,522
<SHARES-COMMON-STOCK> 669,693,469
<SHARES-COMMON-PRIOR> 468,922,381
<ACCUMULATED-NII-CURRENT> 667,877
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 148,105
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,492,542,294
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 62,929,744
<OTHER-INCOME> 0
<EXPENSES-NET> 5,049,458
<NET-INVESTMENT-INCOME> 57,880,286
<REALIZED-GAINS-CURRENT> 90,617
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 57,970,903
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 57,880,286
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 5,640,667,830
<NUMBER-OF-SHARES-REDEEMED> 5,120,580,283
<SHARES-REINVESTED> 7,308,280
<NET-CHANGE-IN-ASSETS> 527,486,444
<ACCUMULATED-NII-PRIOR> 1,962,661,377
<ACCUMULATED-GAINS-PRIOR> (239,007)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,053,759
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,049,458
<AVERAGE-NET-ASSETS> 2,492,542,294
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> TREASURY FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 808,428,869
<INVESTMENTS-AT-VALUE> 808,428,869
<RECEIVABLES> 687,429
<ASSETS-OTHER> 1,694,626,485
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,503,472,783
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,200,489
<TOTAL-LIABILITIES> 11,200,489
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,492,022,522
<SHARES-COMMON-STOCK> 640,517,077
<SHARES-COMMON-PRIOR> 363,911,318
<ACCUMULATED-NII-CURRENT> 667,877
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 148,105
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,492,542,294
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 62,929,744
<OTHER-INCOME> 0
<EXPENSES-NET> 5,049,458
<NET-INVESTMENT-INCOME> 57,880,286
<REALIZED-GAINS-CURRENT> 90,617
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 57,980,903
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 57,880,286
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,640,667,830
<NUMBER-OF-SHARES-REDEEMED> 5,120,580,283
<SHARES-REINVESTED> 7,308,280
<NET-CHANGE-IN-ASSETS> 527,486,444
<ACCUMULATED-NII-PRIOR> 1,962,661,377
<ACCUMULATED-GAINS-PRIOR> (239,007)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,053,759
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,049,458
<AVERAGE-NET-ASSETS> 2,492,542,294
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> GOVERNMENT FUND - HORIZON SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 458,166,562
<INVESTMENTS-AT-VALUE> 458,166,562
<RECEIVABLES> 840,820
<ASSETS-OTHER> 155,686,397
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 614,693,779
<PAYABLE-FOR-SECURITIES> 19,914,500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 571,754,904
<TOTAL-LIABILITIES> 591,669,404
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 592,393,286
<SHARES-COMMON-STOCK> 63,801,554
<SHARES-COMMON-PRIOR> 235,532,896
<ACCUMULATED-NII-CURRENT> 340,540
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,034,422
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 591,699,404
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23,202,670
<OTHER-INCOME> 0
<EXPENSES-NET> 1,528,416
<NET-INVESTMENT-INCOME> 21,674,254
<REALIZED-GAINS-CURRENT> 41,229
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 21,715,483
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<DISTRIBUTIONS-OF-INCOME> 21,481,752
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,640,667,830
<NUMBER-OF-SHARES-REDEEMED> 5,120,580,283
<SHARES-REINVESTED> 7,308,280
<NET-CHANGE-IN-ASSETS> 527,486,444
<ACCUMULATED-NII-PRIOR> 148,038
<ACCUMULATED-GAINS-PRIOR> (1,075,651)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 385,005
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,991,945
<AVERAGE-NET-ASSETS> 591,669,404
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.03
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<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> GOVERNMENT FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 458,166,562
<INVESTMENTS-AT-VALUE> 458,166,562
<RECEIVABLES> 840,820
<ASSETS-OTHER> 155,686,397
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 614,693,779
<PAYABLE-FOR-SECURITIES> 19,914,500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 571,754,904
<TOTAL-LIABILITIES> 591,669,404
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 592,393,286
<SHARES-COMMON-STOCK> 245,802,988
<SHARES-COMMON-PRIOR> 289,114,358
<ACCUMULATED-NII-CURRENT> 340,540
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,034,422
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 591,699,404
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23,202,670
<OTHER-INCOME> 0
<EXPENSES-NET> 1,528,416
<NET-INVESTMENT-INCOME> 21,674,254
<REALIZED-GAINS-CURRENT> 41,229
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 21,715,483
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21,481,752
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,640,667,830
<NUMBER-OF-SHARES-REDEEMED> 5,120,580,283
<SHARES-REINVESTED> 7,308,280
<NET-CHANGE-IN-ASSETS> 527,486,444
<ACCUMULATED-NII-PRIOR> 148,038
<ACCUMULATED-GAINS-PRIOR> (1,075,651)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 385,005
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,991,945
<AVERAGE-NET-ASSETS> 591,669,404
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> TREASURY ONLY FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 335,887,113
<INVESTMENTS-AT-VALUE> 335,887,113
<RECEIVABLES> 3,778,669
<ASSETS-OTHER> 196,340
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 339,862,122
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 338,258,921
<TOTAL-LIABILITIES> 338,258,921
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 338,342,770
<SHARES-COMMON-STOCK> 149,748,437
<SHARES-COMMON-PRIOR> 88,008,624
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<NET-ASSETS> 338,258,921
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> TAX-EXEMPT MONEY FUND - HORIZON SHARES
<S> <C>
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<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 3
<NAME> TAX-EXEMPT MONEY FUND - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> CA TAX-EXEMPT MMF - HORIZON SERVICE SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
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<ACCUMULATED-GAINS-PRIOR> (16,002)
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</TABLE>
