<PAGE> 1
PACIFIC HORIZON TAX-EXEMPT MONEY MARKET FUNDS
SEMI-ANNUAL REPORT
AUGUST 31, 1996
TAX-EXEMPT MONEY FUND
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
INVESTING FOR ALL
THE TIMES OF YOUR LIFE
NOT FDIC INSURED
<PAGE> 2
PACIFIC HORIZON FUNDS, INC.
3435 Stelzer Road, Columbus, OH 43219
1-800-332-3863
INVESTMENT ADVISER INDEPENDENT ACCOUNTANTS
Bank of America National Trust Price Waterhouse LLP
and Savings Association 1177 Avenue of the Americas
555 California Street New York, NY 10036
San Francisco, CA 94104
ADMINISTRATOR FUND COUNSEL
Concord Holding Corporation Drinker Biddle & Reath
3435 Stelzer Road 1345 Chestnut Street
Columbus, OH 43219 Philadelphia, PA 19107
DISTRIBUTOR
Concord Financial Group, Inc.
3435 Stelzer Road
Columbus, OH 43219
FUND SHARES ARE NOT FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR
OTHERWISE ENDORSED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENTAL AGENCY.
The Pacific Horizon Funds, Inc. are sponsored and distributed by Concord
Financial Group, Inc., which is unaffiliated with the Bank of America. Bank of
America serves as investment adviser to the Funds and receives fees for such
services. From time to time, Bank of America may provide other services to the
Funds for additional fees, as disclosed in the Funds' prospectuses.
There can be no assurance that the Funds will be able to maintain a net asset
value of $1.00 per share and Fund shares are not insured or guaranteed by the
U.S. Government or its agencies.
A portion of the Funds' income may be subject to Federal Alternative Minimum Tax
and certain investors may be subject to such tax and to some state and local
taxes.
This material must be preceded or accompanied by a current prospectus.
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
<PAGE> 3
Contents
<TABLE>
<S> <C>
FUND FACTS 2-3
UNDERSTANDING YOUR SHAREHOLDER
REPORT 4-6
ECONOMIC REVIEW FROM THE
INVESTMENT ADVISER 8-9
INTERVIEW WITH YOUR
INVESTMENT MANAGER 10-11
PORTFOLIO OF INVESTMENTS 12-24
STATEMENTS OF ASSETS
AND LIABILITIES 25
STATEMENTS OF OPERATIONS 26
STATEMENTS OF CHANGES
IN NET ASSETS 28-29
NOTES TO FINANCIAL STATEMENTS 30-36
FINANCIAL HIGHLIGHTS 37-41
</TABLE>
<PAGE> 4
PACIFIC HORIZON FUND FACTS
The Pacific Horizon Family of Funds offers a variety of mutual funds with
different investment objectives to help you diversify your portfolio and meet
your investment goals. Some Funds offer greater growth potential, while others,
the money market funds, strive to maintain a stable net asset value but offer no
growth potential.
<TABLE>
<CAPTION>
<S> <C>
<CAPTION>
- ------------------------------------------------------------------------------------
FUND NAME INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------------
<S> <C>
International Equity Long-Term Capital Growth
.....................................................................................
Aggressive Growth Maximum Capital Appreciation
.....................................................................................
Blue Chip Long-Term Capital Appreciation
.....................................................................................
Capital Income Total Investment Return
.....................................................................................
Asset Allocation Long-Term Growth
.....................................................................................
Corporate Bond High Current Income
.....................................................................................
Intermediate Bond Income and Capital Appreciation
.....................................................................................
U.S. Government Securities High Level of Current Income
.....................................................................................
Short-Term Government High Current Income with Relative
Stability of Principal
.....................................................................................
National Municipal Bond* High Level of Federal Tax-Free
Current Income
.....................................................................................
California Tax-Exempt Bond* High Level of Federal and California
Tax-Free Current Income
.....................................................................................
Money Market Funds+ High Current Income Plus Principal
- Prime Stability
- Treasury
- Government
- Treasury Only
.....................................................................................
Tax-Exempt Money Market Funds*+
- Tax-Exempt Money High Level of Federal Tax-Free Current
Income Plus Principal Stability
- California Tax-Exempt Money Market High Level of Federal and California
Tax-Free Current Income Plus Principal
Stability
<FN>
- --------------------------------------------------------------------------------
* Certain investors may be subject to the Federal Alternative Minimum Tax and to
certain state and local taxes.
+ There can be no assurance that the Funds will be able to maintain a stable net
asset value of $1.00 per share. Fund shares are not insured or guaranteed by
the U.S. Government.
</TABLE>
2
<PAGE> 5
With the help of an investment professional, you can develop a strategy tailored
to meet your goals. To receive any of the Funds' prospectuses, which include
more complete information such as charges and expenses, call your investment
specialist or the Pacific Horizon Funds. Read the prospectus carefully before
investing or sending money.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
<S> <C>
<CAPTION>
PORTFOLIO CONSISTS PRIMARILY OF ... APPROPRIATE FOR INVESTORS WHO SEEK
- ------------------------------------------------------------------------------------
<S> <C>
Foreign Equity Securities Diversification into foreign equity markets with
associated risk.
................................................................................................
Small Capitalization Stocks Higher-than-average long-term growth potential with
higher-than-average risk.
................................................................................................
Blue Chip Stocks Long-term growth potential from investments in the
stocks of well-established companies.
................................................................................................
Convertible Bonds and Convertible Combined potential for current income and capital
Preferred Stocks appreciation.
................................................................................................
Stocks, Bonds and Cash Equivalents Long-term growth potential and current income from
stocks and bonds.
................................................................................................
Investment-Grade Corporate Debt High monthly income potential with reasonable
investment risk.
................................................................................................
Investment-Grade Corporate and U.S. Regular monthly income from a diversified portfolio
Government Securities of investment-grade securities.
................................................................................................
GNMAs and Other U.S. Government High monthly income potential and low credit risk.
Securities
................................................................................................
U.S. Government and Government Agency Monthly income and relative stability of investment.
Securities
................................................................................................
Investment-Grade Municipal Debt Monthly tax-free income.
Securities
................................................................................................
Investment-Grade California High monthly double tax-free income.
Municipal Securities
................................................................................................
High-Quality Corporate and/or U.S. A flexible, convenient way to manage or accumulate
Government Short-Term Obligations cash while waiting for other investment
opportunities.
................................................................................................
Short-Term Municipal Obligations A tax-free way to manage or accumulate cash while
waiting for other investment opportunities.
Short-Term California Municipal A tax-free way to manage or accumulate cash while
Obligations waiting for other investment opportunities.
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE> 6
UNDERSTANDING YOUR SHAREHOLDER REPORT
As a mutual fund shareholder, you receive two financial reports a year that
contain important information about your investment. The financial statements
and financial highlights included in annual reports are audited by an
independent public accounting firm and cover the activity for the past fiscal
year. The independent public accountant provides an opinion letter in each
audited report. A semi-annual report is a six-month interim report that includes
financial statements that are generally not audited by an independent public
accounting firm.
This guide will help you extract the information from
the report.
The TABLE OF CONTENTS helps
you locate the information you
want.
The ECONOMIC REVIEW FROM THE
INVESTMENT ADVISER provides a
brief overview of the economy [ARTWORK]
and how it affects the
financial markets.
The INTERVIEW WITH YOUR
INVESTMENT MANAGER enables you
to gain insight into the
Fund's investments and learn
more about the Fund manager's
strategies.
Because a picture or chart can help clarify the
text, the investment management team may have
[ARTWORK] illustrated the most important features of the Fund.
The illustrations may represent the portfolio
composition, the largest holdings or a
simplification of the investment adviser's
investment style.
4
<PAGE> 7
The financial statements summarize and describe the Fund's financial
transactions. They are broken down into four different statements, which are
illustrated below:
The PORTFOLIO OF INVESTMENTS lists each investment holding in the Fund as of the
date of the report. Investments may be grouped by category (by industry or
security type, for example). The percentage of the Fund's net assets represented
by these groupings is also disclosed.
TYPE OF SECURITY
INDUSTRY SECTOR AND PERCENTAGE OF THE FUND'S
[ARTWORK] NET ASSETS REPRESENTED BY INVESTMENTS IN THAT
SECTOR (IF APPLICABLE)
ACTUAL PORTFOLIO HOLDINGS WITH SHARES AND
MARKET VALUE AS OF REPORT DATE
The STATEMENT OF ASSETS AND LIABILITIES lists all the assets and liabilities of
the Fund as of the date of the statement. This is an individual fund's "balance
sheet." Also disclosed in this statement are the Fund's net asset value per
share and its maximum offering price per share as of the date of the statement.
The statement also lists the accounts that comprise the Fund's
net assets (capital stock, undistributed
income, etc.).
SUMMARY OF THE FUND'S INVESTMENTS AND ALL
OTHER ASSETS OWNED BY THE FUND, INCLUDING
AMOUNTS OWED TO THE FUND BY OUTSIDE PARTIES
SUMMARY OF ALL AMOUNTS OWED TO OUTSIDE PARTIES
[ARTWORK] BY THE FUND
NET RESULTS OF ASSETS LESS LIABILITIES
THE MARKET VALUE OF THE FUND'S TOTAL NET
ASSETS DIVIDED BY THE NUMBER OF SHARES
OUTSTANDING
THE CURRENT NET ASSET VALUE PER SHARE PLUS SALES CHARGE, IF ANY
5
<PAGE> 8
The STATEMENT OF OPERATIONS shows the amount of dividend and interest income
earned from the Fund's investments, the expenses incurred by the Fund from its
operations and any
gains or losses realized and not yet realized
by the Fund from holding and/or selling any
investments.
ANY INCOME EARNED FROM THE FUND'S INVESTMENTS
OPERATING EXPENSES INCURRED BY THE FUND DURING
THE PERIOD
[ARTWORK]
GAINS OR LOSSES REALIZED UPON THE SALE OF THE
FUND'S INVESTMENTS AND ANY CHANGE IN
UNREALIZED GAINS OR LOSSES ON FUND HOLDINGS
DURING THE PERIOD
NET CHANGE IN NET ASSETS DUE TO FUND
OPERATIONS
The STATEMENTS OF CHANGES IN NET ASSETS shows the changes in the net assets of
the Fund during each of the two most recent reporting periods. The changes in
net assets are generally
broken down into four distinct sections:
OPERATIONS: SEE STATEMENT OF OPERATIONS
DIVIDENDS TO SHAREHOLDERS: TOTAL INCOME
DIVIDENDS PAID TO SHAREHOLDERS DURING THE
PERIODS
[ARTWORK] DISTRIBUTIONS TO SHAREHOLDERS: TOTAL REALIZED
GAINS DISTRIBUTED TO SHAREHOLDERS DURING THE
PERIODS
FUND SHARE TRANSACTIONS: DOLLAR VALUE OF FUND
SHARES PURCHASED, REDEEMED OR REINVESTED
DURING THE PERIODS
The NOTES TO FINANCIAL STATEMENTS are footnotes to the statements listed above.
These notes include information on accounting methods used by the Fund,
contractual arrangements between the Fund and its service providers, certain
transactions effected by the Fund and other general information about the Fund.
The FINANCIAL HIGHLIGHTS shows, for a single share outstanding throughout each
period presented, the net investment income, the realized and unrealized gains
and losses and the dividends and distributions of the Fund. It also shows key
data and ratios (such as the total investment return for each period), the
portfolio turnover rate for Funds other than money market mutual funds, the
ratio of expenses to average net assets and the ratio of net investment income
to average net assets.
6
<PAGE> 9
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7
<PAGE> 10
ECONOMIC REVIEW
FROM THE INVESTMENT ADVISER
The financial markets were volatile during the six-month period ended August 31,
1996, due to uncertainty about the economy, interest rates and corporate
earnings. As the period began, strong corporate earnings encouraged investors to
expect higher stock prices. But during the summer investors were confronted with
relatively poor early announced earnings reports as compared to the same quarter
the previous year.
At the same time, there were signs that the economy was growing much faster than
expected. Some factors that restrained economic growth during the early part of
1996 were behind us -- in particular, the General Motors and Boeing strikes, the
government shutdown and bad weather -- and the economy grew at a surprisingly
strong rate of 4.7% during the second quarter. As a result, investors worried
that the Federal Reserve would increase short-term interest rates to slow growth
and keep a tight rein on inflation.
MIXED SIGNALS
IN THE MARKETS
Meanwhile, other economic indicators, including a high level of inventory
buildup and relatively weak retail sales figures, suggested that the economy
might be losing steam. The result: Stocks and bonds declined sharply in July,
but rebounded somewhat in August. For the period, the Standard & Poor's 500
Stock Index gained 2.96%. Also, the bellwether 30-year Treasury bond was down
5.12%.
The best-performing stock market sectors during the recent period were capital
goods and selected technology issues, both of which gained more than 13%. More
defensive sectors of the market also performed well. These included stocks in
the consumer staples sector and the financial services sector, where stocks
gained roughly 10% during the period.
We expect corporate earnings to grow at a rate of about 7% for 1996 -- slower
than the double-digit growth of last year, but still strong in absolute terms.
That said, profit growth at many firms will look modest compared to their gains
of a year ago. As a result, many companies may pre-announce any disappointing
third-quarter earnings expectations to prevent their stock prices from stumbling
too much when they announce the actual numbers.
Although inflation does not appear too threatening -- apart from some concerns
about rising wages -- we expect the Federal Reserve to debate the question of
whether to raise rates through year end. We expect the economy to slow down a
bit, returning to a more sustainable growth rate of around 2% to 2.5% as
calendar year 1996 nears its close. Some reasons for the projected slower growth
include increased corporate downsizing, rising consumer debt from credit cards
and loans, a general buildup of company inventories and some slower than
expected growth in overseas economics.
GOOD VALUES IN
SELECTED SECTORS
Looking ahead, we are slightly more bullish about stocks than bonds over the
next six months. Some specific equity sectors that we like include capital
goods, health care and select areas of technology. We believe that all of these
sectors represent good value and have reasonable earnings outlooks over the next
six months.
Our fixed-income outlook is also positive. We believe the yield curve may
flatten, with short-term rates rising more than long-term rates.
Therefore, we expect our bond funds to take a barbell approach to investing,
with portfolios that concentrate heavily on both short- and long-term issues.
This will provide us the potential to pick up extra yield on both long- and
short-term bonds, while positioning the Funds to pick up some capital gains when
long-term rates ease. We will
8
<PAGE> 11
also emphasize high-quality, highly liquid fixed-income issues.
A wild card in the outlook for the financial markets is the Congressional and
Presidential elections in November. Most investors expect the Republican party
to remain in control of Congress. If they are proven wrong, we may see fiscal
policy changes that might lead to increased volatility in the markets.
Sincerely,
Keith Wirtz
Drew Brahos
Bank of America NT&SA,
Investment Advisers
to the Pacific Horizon Funds
9
<PAGE> 12
PACIFIC HORIZON
TAX-EXEMPT MONEY MARKET FUNDS
KIMBERLEE WILT
Portfolio Manager
Tax-Exempt Money Market Funds
Bank of America NT&SA
GOAL:
The Pacific Horizon Tax-Exempt Money Fund seeks to provide as high a level of
current interest income exempt from federal income taxes as is consistent with
relative stability of principal and daily liquidity. In addition, the California
Tax-Exempt Money Market Fund seeks to provide income that is also exempt from
California state income taxes.*
INVESTMENTS:
The Funds invest primarily in short-term municipal securities with maturities of
thirteen months or less.
APPROPRIATE FOR:
Investors seeking monthly tax-exempt interest income along with daily liquidity.
SIZE OF FUNDS AS OF
AUGUST 31, 1996:
Tax-Exempt Money Fund:
Over $396 million
California Tax-Exempt Money Market
Fund: Over $826 million
- ---------------
* Certain investors may be subject to the Federal alternative minimum tax and to
certain state and local taxes.
TAX-EXEMPT MONEY FUND
CALIFORNIA TAX-EXEMPT
MONEY MARKET FUND
Q
WHAT FACTORS AFFECTED SHORT-TERM INTEREST RATES DURING THE RECENT SIX-MONTH
PERIOD, AND HOW DID YOU RESPOND?
A
During most of the period, the economy appeared to be gaining strength, so
investors tended to stay in the shorter range of maturities. We were a bit
shorter than most -- in the 42-day area. Later in the period, there were fewer
signs of economic strength, so investors extended their average maturities. We
lengthened the Funds' average maturities to about 55 days, roughly in line with
other tax-exempt money funds.
Q
WHAT OTHER FACTORS AFFECTED THE TAX-EXEMPT MONEY MARKETS?
A
Over the past two years, we have seen a declining trend in new issuance of
tax-exempt issues while, at the same time, investors have been putting more
money into tax-exempt money market funds. This combination of factors has tended
to support prices and dampen yields. The supply shortage was particularly great
for California paper, so issues from that state typically yielded about 20 basis
points -- two-tenths of a percentage point -- more than other short-term issues
in the municipal sector.
Q
WHAT DID YOU DO TO BOOST THE FUNDS' YIELDS IN THIS ENVIRONMENT?
A
In prior years, we employed a laddered structure, which typically includes a
series of issues with different maturities. But during the recent period,
variable-rate issues -- those with very short maturities -- were increasingly
stable. As a result,
10
<PAGE> 13
we felt comfortable positioning the Funds in a barbell structure. This strategy
combines a heavy commitment to very short-term, variable issues with a
significant investment in much longer-term one-year securities. The idea is to
capture the higher yields on longer-term issues while carefully controlling a
portfolio's overall potential volatility.
Q
WHAT IS YOUR OUTLOOK FOR THE MARKET AND YOUR STRATEGY GOING FORWARD?
A
For now, it seems possible -- although not certain -- that the Federal
Reserve Board will act to increase short-term rates by the end of 1996. Thus, we
will avoid taking a more aggressive approach for now. Instead, we will likely
maintain our current barbell structure until the end of the year. But we may
revert to a laddered approach in early 1997. The reason: Many bonds mature
during January, and investors put that cash to work in the short-term,
variable-rate sector. As that sector becomes more expensive, a laddered strategy
becomes more economical.
CURRENT SEVEN-DAY YIELDS
AS OF AUGUST 31, 1996*
- ---------------------------------------
<TABLE>
<S> <C>
Tax-Exempt Money Fund 2.88%
.......................................
California Tax-Exempt
Money Market Fund 2.88%
- ---------------------------------------
<FN>
- ------------
* Past performance is no guarantee of future results. Yields will fluctuate with
the market. The Funds' income may be subject to certain state and local taxes
and, depending on your tax status, the Federal Alternative Minimum Tax.
Investments in money market funds are neither insured nor guaranteed by the
U.S. Government, and there can be no assurance that the Funds will be able to
maintain a stable net asset value of $1.00 per share.
</TABLE>
11
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PACIFIC HORIZON TAX-EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 99.2%
ALASKA -- 2.3%
Anchorage Telephone Utility Revenue NR/Aaa
Bonds (AMBAC insured)................ NR/AAA 3.50% 12/01/96 $ 1,000 $ 1,000,112
VMIG1/A2
Valdez Marine Term Revenue............. A1/A 3.65% 09/19/96 8,300 8,300,000
------------
9,300,112
------------
ARIZONA -- 2.1%
Apache County Industrial Development,
Tucson Electric Power, Series 83-A
(LOC -- Barclays Bank PLC) (final VMIG1/Aa3
maturity 12/15/18)*.................. A1+/AA 3.50% 09/04/96 5,900 5,900,000
Pinal County Pollution Control, Magma
Copper Company Project (LOC -- Banque
Natl de Paris) (final maturity VMIG1/Aa1
12/1/11)*............................ A1/A+ 3.60% 09/04/96 2,400 2,400,000
------------
8,300,000
------------
ARKANSAS -- 0.6%
Arkansas State Mortgage Backed
Securities Program, Series C NR/NR
(LOC -- Bayerishe Landesbank)........ Sp1+/NR 3.70% 02/28/97 2,600 2,600,000
------------
CALIFORNIA -- 6.4%
California Housing Agency, Multifamily NR/NR
Housing (final maturity 7/15/13)*.... A1+/AAA 3.30% 09/04/96 5,400 5,400,000
California Pollution Control, Pacific
Gas and Electric, Series F
(LOC -- Banque Natl de Paris) (final NR/NR
maturity 11/1/26)*................... A1+/AA+ 3.65% 09/03/96 200 200,000
California Revenue Anticipation Notes MIG1/NR
Series A............................. Sp1+/NR 4.50% 06/30/97 5,000 5,021,085
California Statewide Community
Development (final maturity NR/NR
5/15/25)*............................ NR/AAA 3.35% 09/04/96 2,500 2,500,000
California Statewide Community
Development North California Ret
Officers (LOC -- Dresdner Bank AG) VMIG1/Aaa
(final maturity 6/1/26)*............. NR/NR 3.75% 09/03/96 2,100 2,100,000
Los Angeles County Public Works, Series NR/Aaa
A (MBIA insured)..................... NR/AAA 4.50% 09/01/97 4,600 4,627,603
Orange County Improvement Board
Assessment, District 88-1
(LOC -- Societe Generale, Kredietbank VMIG1/A1
N.V.) (final maturity 9/2/18)*....... A1+/AA- 3.65% 09/03/96 200 200,000
Rocklin Unified School District (FGIC NR/NR
insured)............................. Sp1+/NR 4.45% 09/04/97 3,700 3,718,426
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE> 15
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
CALIFORNIA -- (CONTINUED)
San Jose Redevelopment Agency, Merged
Area Redevelopment, Series B
(LOC -- Morgan Guaranty Trust) (final NR/NR
maturity 7/1/26)*.................... A1+/AAA 3.65% 09/03/96 $ 1,500 $ 1,500,000
------------
25,267,114
------------
COLORADO -- 1.3%
Colorado State Tax and Revenue NR/NR
Anticipation Notes, Series A......... SP1+/NR 4.50% 06/27/97 5,000 5,025,634
------------
DISTRICT OF COLUMBIA -- 0.9%
District of Columbia, Series A-3
(LOC -- Toronto Dominion Bank) (final VMIG1/Aa2
maturity 10/1/07)*................... A-1+/AA 3.95% 09/03/96 1,300 1,300,000
District of Columbia, Series A-6
(LOC -- National Westminster PLC) VMIG1/Aa2
(final maturity 10/1/07)*............ A-1+/AA 3.95% 09/03/96 2,200 2,200,000
------------
3,500,000
------------
FLORIDA -- 12.7%
Dade County Industrial Development
Dolphins Stadium Project Series B
(LOC -- Societe Generale) (final NR/NR
maturity 1/1/16)*.................... A1+/AA- 3.50% 09/04/96 1,600 1,600,000
Florida State Board of Education
Capital Outlay (final maturity NR/Aa
6/1/23)*............................. NR/AA 3.65% 12/01/96 5,115 5,115,000
Florida State Board of Education
Capital Outlay (final maturity NR/Aa
6/1/23)*............................. NR/AA 3.60% 12/01/96 5,385 5,385,000
Indian Trace Community Development,
Basin I Water Management (MBIA VMIG1/Aaa
insured) (final maturity 5/1/10)*.... A1+/AAA 3.35% 09/04/96 1,400 1,400,000
Jacksonville Electric P1/NR
Authority............................ A1+/NR 3.65% 10/25/96 6,500 6,500,000
Jacksonville Hospital Revenue, Baptist
Medical Center Project (LOC -- First
Union National Inc) (final maturity NR/NR
6/1/09)*............................. A1/A+ 3.40% 09/05/96 7,500 7,500,000
Jacksonville Hospital Revenue,
University Medical Center Project
(LOC -- Sumitomo Bank) (final VMIG1/A1
maturity 2/1/18)*.................... NR/NR 3.60% 09/03/96 2,200 2,200,000
Pinellas County Housing Authority,
Foxbridge Apartments, Series A (final NR/NR
maturity 6/15/25)*................... A1+/AAA 3.50% 09/04/96 8,000 8,000,000
Sarasota County VMIG1/A1
Hospital............................. NR/NR 3.50% 09/19/96 12,700 12,700,000
------------
50,400,000
------------
GEORGIA -- 4.2%
Burke County Development Authority,
Oglethorpe Power, Series A (FGIC VMIG1/Aaa
insured) (final maturity 1/1/19)*.... NR/AAA 3.35% 09/04/96 2,800 2,800,000
</TABLE>
- ---------------
See Notes to Financial Statements.
13
<PAGE> 16
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
GEORGIA -- (CONTINUED)
Georgia Municipal NR/NR
Authority............................ A1+/AA+ 3.55% 11/06/96 $ 6,000 $ 5,997,195
Municipal Gas P1/Aa2
Authority............................ A1+/AA+ 3.65% 10/28/96 7,800 7,800,000
------------
16,597,195
------------
HAWAII -- 0.6%
Hawaii State Department Special
Purpose, Adventist Health System
(LOC -- Union Bank of CA) (final VMIG1/A1
maturity 3/1/08)*.................... A1/A 3.40% 09/04/96 2,300 2,300,000
------------
IDAHO -- 0.8%
Idaho Health Facility, St. Lukes
Regional Medical Center
(LOC -- Credit Suisse, NY) (final VMIG1/Aa2
maturity 5/1/22)*.................... NR/NR 3.85% 09/03/96 3,115 3,115,000
------------
ILLINOIS -- 5.8%
Chicago Illinois Tender Notes VMIG1/AAA
(LOC -- Landesbank Hessen, NY)....... A1+/Aaa 3.10% 02/04/97 6,300 6,300,000
Illinois Health Facilities, Elmhurst
Memorial Hospital (final maturity VMIG1/A1
1/1/20)*............................. NR/NR 3.90% 09/03/96 8,800 8,800,000
Illinois Health Facilities, Franciscan
Sisters Health (final maturity VMIG1/A
1/1/18)*............................. NR/NR 3.90% 09/03/96 7,815 7,815,000
------------
22,915,000
------------
INDIANA -- 3.4%
Rockport Pollution Control, Michigan
Power Company Project (AMBAC insured) NR/Aaa
(final maturity 6/1/25)*............. NR/AAA 3.45% 09/04/96 13,500 13,500,000
------------
KENTUCKY -- 0.6%
Kentucky Development Finance Authority
(FGIC insured) (final maturity VMIG2/Aaa
12/1/15)............................. A1+/AAA 3.40% 09/04/96 2,355 2,355,000
------------
LOUISIANA -- 5.3%
Ascension Parish Louisiana, Bordon Inc
Project (LOC -- Credit Suisse) (final VMIG1/Aa2
maturity 12/1/09)*................... A1+/AA+ 3.50% 09/04/96 5,500 5,500,000
Louisiana State General Obligation
Bonds, Tax Exempt Eagle Trust Series
1994 (AMBAC insured) (final maturity NR/NR
5/1/09)*............................. A1/AA 3.61% 09/04/96 11,600 11,600,000
Plaquemines Port Harbor and Term
District, Chevron Pipe Line Company NR/Aa3
(final maturity 9/1/08)*............. NR/AA 3.85% 09/03/96 4,000 4,000,000
------------
21,100,000
------------
MINNESOTA -- 1.3%
New Ulm Minnesota Hospital Facilities,
Health Center System
(LOC -- Northwest Bank) (final NR/NR
maturity 8/1/14)*.................... A1+/AA 3.30% 09/04/96 5,100 5,100,000
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
14
<PAGE> 17
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
MISSOURI -- 2.4%
Independence Industrial Development,
Resthaven Project (LOC -- Credit
Local De France) (final maturity NR/NR
2/1/25)*............................. A1+/AAA 3.50% 09/04/96 $ 3,900 $ 3,900,000
Kansas City Industrial Development,
Resh Health Svcs System (LOC -- MBIA
insured) (final maturity VMIG1/Aaa
10/15/15)*........................... A1/AAA 3.90% 09/03/96 1,300 1,300,000
Kansas City Industrial Development,
Resh Health Svcs System (LOC -- MBIA
insured) (final maturity VMIG1/Aaa
10/15/14)*........................... A1/AAA 3.90% 09/03/96 1,900 1,900,000
Missouri State Health and Educational
Authority, Barnes Hospital Project
(LOC -- Morgan Guaranty Trust) (final VMIG1/Aa1
maturity 12/1/15)*................... A1+/AAA 3.40% 09/04/96 2,400 2,400,000
------------
9,500,000
------------
MONTANA -- 0.3%
Forsyth Montana Pollution Control
Revenue, Portland General Electric
Series (LOC -- Banque Natl de Paris) P1/Aa3
(final maturity 6/1/13)*............. A1/A+ 3.50% 09/04/96 1,100 1,100,000
------------
NEBRASKA -- 3.4%
Nebraska Educational Facilities (FGIC VMIG1/Aaa
insured) (final maturity 12/1/00)*... A1/AAA 3.50% 09/04/96 3,435 3,435,000
Nebraska Higher Education Series E
(MBIA insured) (final maturity VMIG1/Aaa
12/1/15)*............................ NR/AAA 3.40% 09/04/96 10,000 10,000,000
------------
13,435,000
------------
NEW MEXICO -- 7.1%
Hurley Pollution Control (final NR/Aa3
maturity 12/1/15)*................... A1+/AA 3.85% 09/03/96 1,000 1,000,000
Los Alamos County New Mexico, Series NR/NR
A.................................... NR/NR 7.75% 01/01/97 15,000 15,509,723
University of New Mexico (AMBAC VMIG1/Aaa
insured) (final maturity 6/1/06)*.... A1+/AAA 3.35% 09/04/96 11,625 11,625,000
------------
28,134,723
------------
NEW YORK -- 7.9%
New York City Tax-Exempt Water Eagle
Trust Series 94C-2 (MBIA insured) NR/NR
(final maturity 6/15/18)*............ A1/AA 3.56% 09/05/96 10,000 10,000,000
New York City Series F-5
(LOC -- Landesbank Hessen) (final VMIG1/Aaa
maturity 2/15/16)*................... A1+/AAA 3.40% 09/04/96 15,000 15,000,000
New York State Pollution Control,
Niagara Mohawk Power, Series C
(LOC -- Canadian Imperial Bank) P1/Aa3
(final maturity 12/1/25)*............ NR/NR 3.85% 09/03/96 6,400 6,400,000
------------
31,400,000
------------
</TABLE>
- ---------------
See Notes to Financial Statements.
15
<PAGE> 18
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
NORTH CAROLINA -- 3.2%
North Carolina Medical Care, Pooled
Equipment Financing Project (MBIA VMIG1/Aaa
insured) (final maturity 12/1/25)*... A2/AAA 3.65% 09/03/96 $ 8,800 $ 8,800,000
North Carolina Municipal P1/NR
Power................................ A1+/NR 3.50% 10/25/96 3,800 3,800,000
------------
12,600,000
------------
NORTH DAKOTA -- 0.8%
Grand Forks North Dakota Health Care,
United Hospital Group (LOC -- LaSalle
Natl Bank) (final maturity VMIG1/A1
12/1/16)*............................ NR/NR 3.85% 09/03/96 3,200 3,200,000
------------
OHIO -- 4.2%
Clermont County Ohio Hospital
Facilities, Mercy Health Care System,
Series B (MBIA insured) (final VMIG1/Aaa
maturity 12/1/15)*................... A1+/AAA 3.45% 09/04/96 4,734 4,734,000
Cuyahoga County Hospital, Cleveland
Clinic, Series A (LOC -- Morgan
Guaranty Trust) (final maturity VMIG1/Aa1
1/1/26)*............................. A1+/AAA 3.40% 09/04/96 5,200 5,200,000
Ohio State Air Quality Development
Authority, Timken Project
(LOC -- Credit Suisse) (final P1/NR
maturity 6/1/01)*.................... A1+/AA+ 3.45% 09/04/96 2,800 2,800,000
Ohio State Water Development Authority,
Honda America (LOC -- Industrial Bank
of Japan Trust) (final maturity NR/NR
1/1/97)*............................. NR/NR 3.40% 09/04/96 3,900 3,900,000
------------
16,634,000
------------
PENNSYLVANIA -- 3.5%
Allegheny County Pollution Control,
Duquesne Light Company
(LOC -- Canadian Imperial Bank of P1/NR
Commerce)............................ A1+/AA- 3.75% 11/07/96 8,225 8,225,000
Emmaus Pennsylvania General Authority,
Series D-12 (final maturity NR/NR
3/1/24)*............................. A1+/NR 3.55% 09/04/96 5,500 5,500,000
------------
13,725,000
------------
TENNESSEE -- 1.2%
Bristol Health and Education, Bristol
Memorial Hospital, Series 95-A (FGIC NR/NR
insured) (final maturity 3/1/14)*.... A1/AAA 3.60% 09/04/96 5,000 5,000,000
------------
TEXAS -- 11.8%
Angelina and Neches River Authority,
Solid Waste Revenue, Series B
(LOC -- Credit Suisse) (final P1/Aa2
maturity 5/1/14)*.................... NR/NR 3.75% 09/03/96 5,200 5,200,000
Angelina and Neches River Authority,
Solid Waste Revenue, Series C
(LOC -- Credit Suisse) (final P1/Aa2
maturity 5/1/14)*.................... NR/NR 3.75% 09/03/96 2,000 2,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE> 19
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
TEXAS -- (CONTINUED)
Grand Prairie Housing, Lincoln Property NR/NR
Company (final maturity 6/1/10)*..... A1+/AAA 3.50% 09/04/96 $ 6,700 $ 6,700,000
Sulphur Springs Texas Industrial
Development, Hon Inds Inc Project
(LOC -- Credit Suisse) (final NR/NR
maturity 12/1/13)*................... NR/NR 3.55% 09/04/96 5,400 5,400,000
Texas Department of Housing and NR/NR
Community Affairs (FGIC insured)..... A1+/NR 3.70% 10/10/96 7,535 7,535,000
Texas Tax and Revenue Anticipation MIG1/NR
Notes................................ Sp1+/NR 4.75% 08/29/97 20,000 20,154,944
------------
46,989,944
------------
UTAH -- 2.9%
Intermountain Power Agency Utah, Power
Supply Revenue, Series E VMIG1/Aa1
(LOC -- Morgan Guaranty Trust)....... A1+/AAA 3.95% 06/16/97 5,000 5,000,000
Intermountain Power Agency Utah, Power
Supply Revenue, Series F VMIG1/Aa1
(LOC -- Suisse Bank)................. A1+/AA 3.35% 09/15/96 6,500 6,500,000
------------
11,500,000
------------
WASHINGTON -- 2.2%
Port Anacortes Commercial P1/A1
Paper................................ A1/A+ 3.65% 09/05/96 3,690 3,690,000
Washington State General Obligation VMIG1/Aa
(final maturity 6/1/20)*............. A1+/AA 3.50% 09/04/96 5,100 5,100,000
------------
8,790,000
------------
TOTAL INVESTMENTS (AMORTIZED
COST $393,383,722)(A) -- 99.2%......... 393,383,722
Other assets in excess of
liabilities -- 0.8%.................... 3,070,821
------------
NET ASSETS -- 100.0%.................... $396,454,543
============
<FN>
- ---------------
Percentages indicated are based on net assets of $396,454,543.
(a) Cost for federal income tax and financial reporting purposes is
substantially the same.
AMBAC -- American Municipal Bond Assurance Corporation.
FGIC -- Financial Guaranty Insurance Company.
LOC -- Letter of credit.
MBIA -- Municipal Bond Insurance Association.
NR -- No rating available.
+ The ratings provide 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.
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 20
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT
MONEY MARKET FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 99.7%
CALIFORNIA -- 99.7%
Alameda County Tax and Revenue MIG1/NR
Anticipation Notes...................... Sp1+/NR 4.50% 06/30/97 $10,500 $ 10,545,949
California Alternative Energy Source
(AMT) GE Capital Corporation (final NR/Aaa
maturity 10/1/20)*...................... A1+/AAA 3.30% 09/04/96 4,660 4,660,000
P1/Aa
California Department of Water........... A1+/AA- 3.30% 09/27/96 5,000 5,000,000
California General Obligation, Class A
Various Purpose Certificates of
Participation (MBIA Insured) (final P-1/Aaa
maturity 2/1/06)*....................... A1+/AAA 3.51% 09/05/96 10,000 10,000,000
VMIG1/Aa
California HFA Home Mortgage, Series D... A1+/AA- 3.55% 04/01/97 4,000 4,000,000
California HFA Multi-Unit Housing (MBIA NR/Aaa
insured) (final maturity 8/1/16)*....... NR/AAA 3.70% 09/04/96 5,000 5,000,000
California Pollution Control Finance P1/A2
Authority............................... A1/A1+ 3.30% 09/27/96 2,000 2,000,000
California Pollution Control Finance
Authority, Atlantic Richfield Project VMIG1/A2
(final maturity 12/1/24)*............... A1/A 3.85% 09/03/96 8,800 8,800,000
California Pollution Control Finance NR/Aa2
Authority, Chevron USA, Inc. Project.... NR/AA 4.00% 11/15/96 2,720 2,726,864
California Pollution Control Finance
Authority, (AMT) Colmac Energy Project,
Series A (LOC -- Swiss Bank) (final NR/NR
maturity 12/1/16)*...................... A1+/AA+ 3.30% 09/04/96 2,300 2,300,000
California Pollution Control Finance
Authority, (AMT) Delano Power Project
(LOC -- Algemene Bank Nederland) (final NR/Aa1
maturity 8/1/19)*....................... NR/NR 3.90% 09/03/96 1,100 1,100,000
California Pollution Control Finance
Authority, (AMT) Delano Power Project
(LOC -- Algemene Bank Nederland) (final NR/NR
maturity 8/1/19)*....................... NR/NR 3.90% 09/03/96 2,600 2,600,000
California Pollution Control Finance P1/A1
Authority, Dow Chemical................. A1/A 3.40% 10/15/96 2,300 2,300,000
California Pollution Control Finance
Authority, HL Power Company Project
(LOC -- Banque Natl de Paris) (final NR/Aa3
maturity 9/1/18)*....................... NR/NR 3.90% 09/03/96 2,900 2,900,000
California Pollution Control Finance
Authority, Pacific Gas and Electric,
Series B (LOC -- Rabobank Nederland) NR/NR
(final maturity 12/1/16)*............... A1+/AAA 3.35% 09/04/96 5,000 5,000,000
California Pollution Control Finance
Authority, Pacific Gas and Electric
(LOC -- Banque Natl Paris) (final NR/NR
maturity 11/1/26)*...................... A1+/AA+ 3.65% 09/03/96 7,200 7,200,000
</TABLE>
- ---------------
See Notes to Financial Statements.
18
<PAGE> 21
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
California Pollution Control Finance
Authority, Pacific Gas and Electric
(LOC -- Swiss Bank) (final maturity NR/NR
12/1/16)*............................... A1+/AAA 3.45% 09/04/96 $30,500 $ 30,500,000
California Pollution Control Finance
Authority, (AMT) Shell Oil Co. Martinez VMIG1/Aa2
PJ-A (final maturity 10/1/24)*.......... NR/NR 3.80% 09/03/96 11,200 11,200,000
California Pollution Control Finance P1/A2
Authority, Southern California Edison... A1/AA 3.40% 09/19/96 3,600 3,600,000
California Pollution Control Finance
Authority PJ, Series B Taormina
Industries Solid Waste Disposal
(LOC -- Sanwa Bank Los Angeles, Sanwa VMIG1/Aa3
Bank, Ltd.) (final maturity 8/1/14)*.... NR/NR 3.55% 09/04/96 1,285 1,285,000
California Pollution Control Finance
Authority, Taormina Industries Solid
Waste Disposal (LOC -- Sanwa Bank Los
Angeles, Sanwa Bank, Ltd.) (final VMIG1/Aa3
maturity 8/1/14)*....................... NR/NR 3.55% 09/04/96 5,600 5,600,000
MIG1/NR
California Revenue Anticipation Notes.... Sp1+/NR 4.50% 06/30/97 18,200 18,277,702
California Statewide Community
Development Authority, Apartment
Development Revenue, Series A-2 (final NR/NR
maturity 5/15/25)*...................... NR/AAA 3.30% 09/04/96 16,100 16,100,000
California Statewide Community
Development Authority, Calsonic Project NR/NR
(final maturity 8/1/08)*................ NR/NR 3.60% 09/04/96 7,000 7,000,000
California Statewide Community
Development Authority, North California
Retired Officers (LOC -- Dresdner Bank VMIG1/Aaa
AG) (final maturity 6/1/26)*............ NR/NR 3.75% 09/03/96 26,200 26,200,000
California Statewide Community
Development Authority, Series A-1 (final NR/NR
maturity 5/15/25)*...................... NR/AAA 3.30% 09/04/96 3,800 3,800,000
California Statewide Community
Development Authority, Series A-4 (final NR/NR
maturity 5/15/25)*...................... NR/AAA 3.35% 09/04/96 10,000 10,000,000
California Statewide Community
Development Authority, Series A-5 (final NR/NR
maturity 5/15/25)*...................... NR/AAA 3.35% 09/04/96 19,125 19,125,000
California Statewide Community
Development Authority, Series A-6 (final NR/NR
maturity 5/15/25)*...................... NR/AAA 3.35% 09/04/96 1,000 1,000,000
California Statewide Community
Development Authority, (AMT) Series A-7 NR/NR
(final maturity 5/15/25)*............... NR/AAA 3.40% 09/04/96 2,800 2,800,000
California Statewide Community
Development Authority, Sutter Health
Obligation Group (AMBAC insured) (final VMIG1/Aaa
maturity 7/1/15)*....................... A1/AAA 3.75% 09/03/96 7,200 7,200,000
California Statewide Community
Development Authority, Tax and Revenue MIG1/NR
Anticipation Notes, Series A............ Sp1+/NR 4.75% 06/30/97 10,000 10,059,653
California Statewide Community
Development Corporation, Delimex Project
Series D (LOC -- Union Bank of Canada) NR/NR
(final maturity 10/1/20)*............... A1/A 3.50% 09/04/96 2,000 2,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
19
<PAGE> 22
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Campbell California Elementary School
District, Tax and Revenue Anticipation MIG1/NR
Notes................................... NR/NR 4.50% 07/02/97 $ 2,000 $ 2,008,001
P1/A1
Chula Vista Industrial Development....... A1/A1+ 3.40% 09/27/96 3,000 3,000,000
Chula Vista Industrial Development, San
Diego Gas and Electric Series A (final VMIG1/A2
maturity 7/1/21)*....................... A1/A 3.65% 09/03/96 2,500 2,500,000
Chula Vista Industrial Development, (AMT)
San Diego Gas and Electric Series B VMIG1/A1
(final maturity 12/1/27)*............... A1/A+ 3.40% 09/04/96 11,000 11,000,000
Chula Vista Multifamily Housing, Terra
Nova Association Project Series A
(LOC -- Ind. Bank of Japan, Ltd.) (final NR/NR
maturity 3/1/05)*....................... A1/A+ 3.50% 09/04/96 5,000 5,000,000
Contra Costa County California
Multifamily Housing (AMT)
(LOC -- Sumitomo Bank, Ltd.) (final NR/NR
maturity 8/1/32)*....................... A1/A+ 3.60% 09/04/96 8,000 8,000,000
Foothill Eastern Toll Road, Series B
(LOC -- Morgan Guaranty Trust) (final NR/NR
maturity 1/2/35)*....................... A1+/AAA 3.20% 09/05/96 6,500 6,500,000
Foothill Eastern Toll Road, Series D
(LOC -- Industrial Bank of Japan) (final NR/NR
maturity 1/2/35)*....................... A1/A 3.35% 09/05/96 13,500 13,500,000
Fremont California Certificates of
Participation, Building and Equipment
Project (LOC -- Sumitomo Bank, Ltd.) NR/NR
(final maturity 7/1/15)*................ A1/A 3.45% 09/05/96 4,250 4,250,000
Fremont California Multifamily Housing,
Creekside Village Apartments, Series D
(LOC -- Fuji Bank, Ltd.) (final maturity VMIG1/Aa2
9/1/07)*................................ NR/AAA 3.20% 09/05/96 10,000 10,000,000
Huntington Beach Multifamily Housing,
Huntington Breakers, Series A
(LOC -- Sumitomo Bank, Ltd.) (final VMIG1/A1
maturity 7/1/14)*....................... NR/NR 3.50% 09/04/96 10,300 10,300,000
Indio California Multifamily Housing,
Western Federal Savings Project
(LOC -- Wells Fargo Bank SF) (final NR/NR
maturity 6/1/05)*....................... A1/A 3.50% 09/05/96 3,055 3,055,000
Irvine Improvement Board Act 1915,
District 89-10 (LOC -- National
Westminster PLC) (final maturity VMIG1/Aa2
9/2/15)*................................ A1+/AA 3.75% 09/03/96 1,100 1,100,000
Irvine Improvement Board Act 1915,
District 94-15 (LOC -- Dai-Ichi Kangyo, VMIG1/A1
LA) (final maturity 9/2/20)*............ A-1/A 3.80% 09/03/96 7,900 7,900,000
Irvine Ranch Water District
(LOC -- Landesbank Hessen NY) (final NR/NR
maturity 10/1/05)*...................... A1/NR 3.80% 09/03/96 1,100 1,100,000
Irvine Ranch Water District, Series B
(LOC -- Landesbank Hessen NY) (final NR/NR
maturity 10/1/04)*...................... A1/NR 3.70% 09/03/96 2,500 2,500,000
Kern High School District, Tax and NR/NR
Revenue Anticipation Notes.............. Sp1+/NR 4.50% 07/31/97 10,000 10,052,786
Los Angeles Community Multifamily
Housing, Grand Promenade Project
(LOC -- Tokai Bank, LA and Barclays Bank NR/NR
PLC) (final maturity 12/1/10)*.......... A1+/AAA 3.25% 09/05/96 15,000 15,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
20
<PAGE> 23
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
P1/NR
Los Angeles County....................... A1/NR 3.50% 09/30/96 $ 3,500 $ 3,500,000
P1/NR
Los Angeles County....................... A1/NR 3.50% 09/19/96 2,000 2,000,000
Los Angeles County Metropolitan P1/NR
Transportation Authority................ A1/NR 3.55% 10/18/96 3,000 3,000,000
Los Angeles County Metropolitan P1/NR
Transportation Authority................ A1/NR 3.45% 09/05/96 5,600 5,600,000
Los Angeles County Metropolitan
Transportation Authority (MBIA insured) VMIG1/Aaa
(final maturity 7/1/20)*................ A1+/AAA 3.20% 09/05/96 11,500 11,500,000
Los Angeles County Multifamily Housing,
(AMT) Sand Canyon Villas
(LOC -- Industrial Bank of Japan) (final VMIG1/A1
maturity 11/1/09)*...................... NR/NR 3.60% 09/04/96 2,000 2,000,000
Los Angeles County Pension Obligation,
Series A (AMBAC insured) (final maturity VMIG1/Aaa
6/30/07)*............................... A1+/AAA 3.20% 09/04/96 27,200 27,200,000
Los Angeles County Public Works, Series A
(MBIA insured) (final maturity NR/Aaa
9/1/97)*................................ NR/AAA 4.50% 09/01/97 5,000 5,030,004
Los Angeles Multifamily Housing, (AMT)
Channel Gateway Apartments, Series B
(LOC -- Fuji Bank, Ltd.) (final maturity VMIG1/A1
8/1/19)*................................ NR/NR 3.70% 09/05/96 1,700 1,700,000
Los Angeles Unified School District, Tax
and Revenue Anticipation Notes MIG1/NR
Series A................................ Sp1+/NR 4.50% 06/30/97 11,000 11,061,329
Los Angeles Unified School District, Tax
and Revenue Anticipation Notes MIG1/NR
Series B................................ Sp1+/NR 4.50% 09/30/97 2,500 2,516,127
P1/NR
Los Angeles Wastewater System............ A1/NR 3.45% 09/12/96 4,750 4,750,000
Metropolitan Water District Southern
California Waterworks, Series A (AMBAC VMIG1/Aaa
insured) (final maturity 6/1/23)*....... A1+/AAA 3.20% 09/05/96 18,600 18,600,000
Midway School District Certificates of
Participation Capital Project
(LOC -- Union Bank of CA) (final NR/NR
maturity 2/1/17)*....................... A1/A+ 3.40% 09/05/96 3,715 3,715,000
Monterey County Financing Authority,
Reclamation and Distribution Projects
(LOC -- Dai-Ichi Kangyo, LA) (final VMIG1/A1
maturity 9/1/36)*....................... NR/NR 3.50% 09/05/96 4,100 4,100,000
Monterey Peninsula Water Management
District, Reclamation Project (LOC
Sumitomo Bank)(final maturity VMG1/A1
7/1/22)*................................ A1/A+ 3.50% 09/05/96 12,300 12,300,000
M-S-R Public Power Agency, Series B, San
Juan Project (AMBAC insured) (final VMIG1/Aaa
maturity 7/1/22)*....................... A1+/AAA 3.30% 09/05/96 2,000 2,000,000
Newport Beach Hoag Memorial Hospital VMIG1/A1
(final maturity 10/1/22)*............... A1+/AA 3.70% 09/03/96 22,850 22,850,000
Orange County Apartment Development, Bear
Brand Apartments (LOC -- Fuji Bank, VMIG1/Aa2
Ltd.) (final maturity 11/1/07)*......... NR/NR 3.30% 09/05/96 7,000 7,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
21
<PAGE> 24
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Orange County Apartment Development,
Laguna Summit Apartments (LOC -- Tokai VMIG2/A2
Bank, Ltd.) (final maturity 11/1/08)*... NR/NR 3.40% 09/03/96 $ 7,500 $ 7,500,000
Orange County Housing Authority, Costa
Partner Development BB (LOC -- Tokai VMIG2/A2
Bank, NY) (final maturity 12/1/09)*..... NR/NR 3.45% 09/04/96 4,500 4,500,000
Orange County Improvement Board Irvine
Coast District 88-1 (LOC -- Societe
Generale, Kredietbank N.V.) (final VMIG1/Aa2
maturity 9/2/18)*....................... A1+/AA- 3.65% 09/03/96 34,682 34,682,000
Orange County Pointe Niguel Project,
Series C (LOC -- First Interstate VMIG1/Aa3
Bancorp) (final maturity 11/1/05)*...... NR/NR 3.70% 09/05/96 13,000 13,000,000
Orange County Sanitation District 1, 2 &
3 Certificates of Participation (AMBAC VMIG1/Aaa
Insured) (final maturity 8/1/13)*....... A1+/AAA 3.20% 09/05/96 16,700 16,700,000
P1/AAA
Orange County Water...................... A1+/AAA 3.55% 09/10/96 4,000 4,000,000
Palm Springs Industrial Development
Authority Revenue, BP Hldgs Project
Series A (LOC -- Union Bank of CA) NR/NR
(final maturity 8/5/19)*................ A1/A 3.55% 09/05/96 4,600 4,600,000
Placer Unified High School District (FGIC MIG1/NR
insured)................................ Sp1+/NR 4.45% 09/07/97 3,700 3,718,426
Redlands Certificates of Participation
(FGIC insured) (final maturity VMIG1/Aaa
9/1/17)*................................ A1+/AAA 3.30% 09/04/96 3,735 3,735,000
Riverside County Community Facilities
District, California Oaks NR/NR
Project No 85-2......................... NR/NR 8.30% 09/01/96 8,375 8,542,500
Riverside County Industrial Development,
(AMT) Advanced Business Forms Inc
Project (LOC -- First National Bank) VMIG1/Aaa
(final maturity 4/1/14)*................ NR/NR 3.30% 09/05/96 1,500 1,500,000
Riverside County Industrial Development,
(AMT) Cryogenic Project Issue B
(LOC -- Rabobank Nederland) (final VMIG1/Aaa
maturity 7/5/14)*....................... NR/NR 3.30% 09/05/96 1,400 1,400,000
Riverside County Industrial Development,
(AMT) Riverfront/Crest Steel
(LOC -- First Natl Bank) (final maturity VMIG1/Aaa
4/1/09)*................................ NR/NR 3.30% 09/05/96 3,050 3,050,000
Riverside County Tax and Revenue P1/A1
Anticipation............................ A1/A 3.70% 09/04/96 1,500 1,500,000
P1/A1
Riverside County Tax Anticipation........ A1/A 3.60% 09/05/96 3,000 3,000,000
Sacramento County Multifamily Housing
Revenue, Series C (LOC -- Dai Ichi VMIG1/A1
Kangyo) (final maturity 4/15/07)*....... A1/A+ 3.50% 09/05/96 1,600 1,600,000
Sacramento County Multifamily Housing
Woodbridge Apartments, Series 85-A
(LOC -- Dai Ichi Kangyo) (final maturity VMIG1/A1
4/15/07)*............................... A1/A+ 3.50% 09/05/96 15,400 15,400,000
San Bernardino County Certificates of
Participation (LOC -- Canadian Imperial VMIG1/Aa3
Bank) (final maturity 7/1/15)*.......... NR/NR 3.30% 09/04/96 4,000 4,000,000
</TABLE>
- ---------------
See Notes to Financial Statements.
22
<PAGE> 25
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
San Bernardino County Tax and Revenue
Anticipation Notes (LOC -- Toronto
Dominion Bank, Landesbank MIG1/NR
Hessen, NY)............................. Sp1+/NR 4.50% 06/30/97 $ 6,000 $ 6,029,868
San Diego Housing Authority Country Hills NR/NR
Apartments (final maturity 8/15/13)*.... A1+/AAA 3.30% 09/04/96 3,300 3,300,000
San Diego Housing Authority La Cima
Apartments (LOC -- Citibank) (final VMIG1/A2
maturity 12/1/08)*...................... NR/NR 3.25% 09/05/96 1,000 1,000,000
San Diego Housing Authority Series 1985 L
Multifamily Housing Noble Court
Apartments (LOC -- Citibank)(final VMIG1/Aa3
maturity 12/1/08)*...................... NR/NR 3.25% 09/05/96 3,915 3,915,000
San Diego County Tax and Revenue
Anticipation Notes (LOC -- Bank of MIG1/NR
Paris, National Westminster)............ Sp1/NR 4.50% 09/30/96 15,000 15,014,656
San Diego County Tax and Revenue
Anticipation Notes (LOC -- Commerzbank
Aktiengeself) (final maturity MIG1/NR
9/30/97)*............................... Sp1+/NR 4.38% 09/30/97 10,000 10,053,300
San Diego Unified School District Tax and
Revenue Anticipation Notes Series A MIG1/NR
(LOC -- Westdeutsche Landesbank)........ NR/NR 4.75% 10/10/96 2,000 2,002,796
San Francisco City and County Multifamily
Housing, Fillmore Center, Series B-1
(LOC -- Bank of Nova Scotia) (final NR/NR
maturity 12/1/17)*...................... A1+/AA- 3.40% 09/04/96 5,000 5,000,000
San Francisco City and County Multifamily
Housing, Winterland Project, Series 85-C
(LOC -- Citibank, NY) (final maturity NR/NR
6/1/06)*................................ A1+/AA- 3.45% 09/03/96 1,600 1,600,000
San Francisco City and County Tax and MIG1/NR
Revenue Anticipation Notes.............. SP1+/NR 4.75% 09/19/96 21,265 21,273,684
Santa Ana Unified School District,
Certificates of Participation
(LOC -- Banque Natl de Paris) (final VMIG1/Aa3
maturity 7/1/15)*....................... NR/NR 3.40% 09/04/96 4,400 4,400,000
Santa Clara Electric Revenue, Series A
(LOC -- National Westminster Bank, PLC) VMIG1/Aa2
(final maturity 7/1/10)*................ NR/NR 3.30% 09/04/96 1,000 1,000,000
Santa Clara County Housing Authority
Foxchase Apartments (FGIC insured) VMIG1/Aaa
(final maturity 11/1/07)*............... A1+/AAA 3.20% 09/05/96 3,000 3,000,000
Santa Cruz County Office of Education Tax NR/NR
and Revenue Anticipation Notes.......... Sp1+/NR 4.50% 06/30/97 22,150 22,264,621
Santa Cruz Industrial Development
Authority, (AMT) Wilson Entitles LTD
Project (LOC -- Bank of Tokyo) (final NR/NR
maturity 11/1/18)*...................... A1/A+ 3.50% 09/04/96 1,575 1,575,000
Simi Valley Multifamily Housing Lincoln
Wood Ranch (LOC -- Sumitomo Bank, Ltd.) NR/NR
(final maturity 6/1/10)*................ A1/A 3.45% 09/05/96 7,500 7,500,000
Southeast Recovery Facility, Series A
(AMT) (LOC -- Industrial Bank of Japan, VMIG1/A1
Ltd.) (final maturity 12/1/18)*......... A1/A+ 3.55% 09/04/96 10,000 10,000,000
Southeast Recovery Facility, Series B
(AMT) (LOC -- Industrial Bank of Japan, VMIG1/A1
Ltd.) (final maturity 12/1/18)*......... A1/A 3.60% 09/04/96 3,300 3,300,000
</TABLE>
- ---------------
See Notes to Financial Statements.
23
<PAGE> 26
<TABLE>
<CAPTION>
MOODY'S/
S&P PRINCIPAL AMORTIZED
RATINGS+ MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2)
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Southern California Metropolitan Water P1/NR
District................................ A1+/NR 3.45% 09/12/96 $ 5,700 $ 5,700,000
Southern California Metropolitan Water P1/NR
District................................ A1+/NR 3.45% 09/05/96 3,000 3,000,000
Southern California Public Power
Authority, Palo Verde Project (AMBAC VMIG1/Aaa
insured)................................ A1+/AAA 3.30% 09/04/96 25,000 25,000,000
Tahoe-Truckee Unified School District NR/NR
(FGIC insured).......................... Sp1+/NR 4.45% 09/04/97 4,000 4,019,920
Vallejo Industrial Development Authority,
Meyer Cookware Project Series. A (AMT)
(LOC -- Mitsubishi Bank, Ltd.) (final NR/NR
maturity 12/1/23)*...................... A1+/AA 3.70% 09/04/96 3,300 3,300,000
Washington Township Hospital Series A
(LOC -- Industrial Bank of Japan) (final VMIG1/A1
maturity 1/1/16)*....................... NR/NR 3.45% 09/05/96 9,100 9,100,000
------------
TOTAL INVESTMENTS (AMORTIZED COST
$823,845,186)(A) -- 99.7%............... 823,845,186
Other assets in excess of
liabilities -- 0.3%..................... 2,745,498
------------
NET ASSETS -- 100%....................... $826,590,684
============
<FN>
- ---------------
Percentages indicated are based on net assets of $826,590,684.
(a) Cost for federal income tax and financial reporting is substantially the
same.
LOC -- Letter of Credit.
AMT -- Interest on securities subject to Federal Alternative Minimum Tax.
AMBAC -- American Municipal Bond Assurance Corporation.
FGIC -- Financial Guaranty Insurance Company.
MBIA -- Municipal Bond Insurance Association.
+ 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.
</TABLE>
See Notes to Financial Statements.
24
<PAGE> 27
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
August 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
MONEY MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investment in securities, at value (amortized cost
$393,383,722 and $823,845,186, respectively)...... $393,383,722 $823,845,186
Receivable for Portfolio shares sold................ 632,982 12,304,426
Cash................................................ -- 200,479
Interest receivable................................. 2,341,497 4,749,467
Receivable for investment securities sold........... 37,000,000 25,095,000
Deferred organization costs......................... -- --
Prepaid expenses.................................... 207 164
------------ ------------
Total assets.......................................... 433,358,408 866,194,722
------------ ------------
LIABILITIES:
Cash overdraft...................................... 196,128 --
Administration fees payable......................... 34,985 70,592
Payable to Administrator............................ -- 5,000
Advisory fees payable............................... 34,985 70,592
Special management fees payable
(Pacific Horizon Shares).......................... 13,218 133,226
Service organization fees payable
(Horizon Service Shares).......................... 23,907 72,397
Due to custodian.................................... 45,167 44,659
Dividends payable................................... 1,088,382 2,093,543
Payable for Portfolio shares redeemed............... 3,389,861 4,450,514
Payable for investment securities purchased......... 31,974,226 32,391,646
Other accrued expenses.............................. 103,006 271,869
------------ ------------
Total liabilities..................................... 36,903,865 39,604,038
------------ ------------
NET ASSETS............................................ $396,454,543 $826,590,684
============ ============
Net Assets:
Pacific Horizon Shares.............................. $ 46,573,508 $467,736,410
Horizon Shares...................................... 241,808,072 --
Horizon Service Shares.............................. 108,072,963 358,854,274
------------ ------------
$396,454,543 $826,590,684
============ ============
Shares Outstanding ($0.001 par value):
Pacific Horizon Shares.............................. 46,591,831 467,716,587
Horizon Shares...................................... 241,924,940 --
Horizon Service Shares.............................. 108,084,841 358,860,957
------------ ------------
Total Shares Outstanding.............................. 396,601,612 826,577,544
============ ============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE.......................... $1.00 $1.00
---- ----
---- ----
COMPOSITION OF NET ASSETS:
Shares of common stock, at par...................... $ 396,602 $ 826,578
Additional paid-in capital.......................... 396,205,010 825,686,846
Accumulated net realized gains (losses)............. (147,069) 14,959
Accumulated undistributed net investment income..... -- 62,301
------------ ------------
NET ASSETS, AUGUST 31, 1996........................... $396,454,543 $826,590,684
============ ============
</TABLE>
- ---------------
See Notes to Financial Statements.
25
<PAGE> 28
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statements of Operations
For the six months ended August 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
MONEY MONEY MARKET
FUND FUND
---------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................... $7,031,855 $13,005,722
---------- -----------
EXPENSES:
Advisory fees.......................................... 203,528 388,910
Administration fees.................................... 203,528 388,910
Special management fees
(Pacific Horizon Shares)............................. 80,657 852,582
Service organization fees
(Horizon Service Shares)............................. 88,407 306,196
Custodian fees and expenses............................ 60,949 70,415
Transfer agent fees and expenses....................... 20,065 22,266
Insurance expense...................................... 6,884 10,903
Directors' fees........................................ 5,733 11,388
Audit fees............................................. 27,791 26,601
Legal fees............................................. 10,298 17,774
Reports to shareholders................................ 7,191 30,582
Registration fees...................................... 31,595 30,945
Other expenses......................................... 2,669 1,902
---------- -----------
Total Expenses......................................... 749,295 2,159,374
---------- -----------
Net Investment Income.................................... 6,282,560 10,846,348
REALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on securities
transactions......................................... (1,528) 51,548
---------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................................ $6,281,032 $10,897,896
========== ===========
</TABLE>
- ---------------
See Notes to Financial Statements.
26
<PAGE> 29
[This page intentionally left blank.]
27
<PAGE> 30
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY FUND
---------------------------------
SIX MONTHS
ENDED
AUGUST 31, YEAR ENDED
1996 FEBRUARY 29,
(UNAUDITED) 1996
------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................. $ 6,282,560 $ 15,492,137
Net realized gains (losses) on securities
transactions........................................ (1,528) (26,497)
------------- ---------------
Net increase in net assets resulting from operations... 6,281,032 15,465,640
------------- ---------------
Dividends to Shareholders from Net Investment Income:
Pacific Horizon Shares................................ (719,697) (1,537,268)
Horizon Shares........................................ (4,535,888) (12,434,866)
Horizon Service Shares................................ (1,026,975) (1,520,003)
------------- ---------------
Total dividends to shareholders from net investment
income................................................ (6,282,560) (15,492,137)
------------- ---------------
Fund Share Transactions:
(at $1.00 per share) (Note 6)
Net proceeds from shares subscribed................... 780,246,580 1,664,730,698
Net asset value of shares issued to shareholders in
reinvestment of dividends........................... 1,001,997 2,933,894
Cost of shares redeemed............................... (771,798,272) (1,739,055,031)
------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions........................................ 9,450,305 (71,390,439)
------------- ---------------
Total Increase (Decrease).............................. 9,448,777 (71,416,936)
NET ASSETS:
Beginning of period................................... 387,005,766 458,422,702
------------- ---------------
End of period (Including undistributed net investment
income of $62,301 and $62,301, respectively, for the
California Tax-Exempt Money Market Fund)............ $ 396,454,543 $ 387,005,766
================ =================
</TABLE>
- ---------------
See Notes to Financial Statements.
28
<PAGE> 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
------------------------------------------------
SIX MONTHS
ENDED
AUGUST 31, YEAR ENDED
1996 FEBRUARY 29,
(UNAUDITED) 1996
--------------- ---------------
<C> <C>
$ 10,846,348 $ 16,385,527
51,548 (20,587)
--------------- ---------------
10,897,896 16,364,940
--------------- ---------------
(7,362,327) (11,850,877)
-- --
(3,484,021) (4,534,650)
--------------- ---------------
(10,846,348) (16,385,527)
--------------- ---------------
1,181,662,328 1,662,493,881
7,573,690 15,008,295
(1,094,092,442) (1,220,731,474)
--------------- ---------------
95,143,576 456,770,702
--------------- ---------------
95,195,124 456,750,115
731,395,560 274,645,445
--------------- ---------------
$ 826,590,684 $ 731,395,560
=============== ===============
</TABLE>
29
<PAGE> 32
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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, 1996, the Fund operated
as a series company comprising seventeen portfolios. The accompanying financial
statements and notes are those of the Pacific 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
Portfolios seek to achieve their objectives through investment in variety of
money market instruments. See "Pacific Horizon Tax-Exempt Money Market Funds"
found in the "Interview with Your Portfolio Manager" section of this report, for
the Portfolios' respective investment objectives.
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). The California Tax-Exempt Fund is authorized to issue a third and
fourth class of shares (Horizon and X Shares). Pacific Horizon Shares, Horizon
Shares, Horizon Service Shares and X 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 at an annual rate of 0.25% of the
average daily net asset value of the outstanding Horizon Service Shares. The
California Tax-Exempt Fund has adopted a Distribution and Services Plan under
which the Fund pays the Distributor and Service Organizations for the provision
of support services with respect to the beneficial owners of X Shares. Payments
for distribution expenses and shareholder servicing expenses may not exceed the
annual rate of 0.30% and 0.25%, respectively, of the average daily net assets of
such Fund's X Shares. For the period ended August 31, 1996, there were no
payments made under the Distribution and Services Plan.
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.
Effective March 29, 1995, Concord became a wholly
30
<PAGE> 33
owned subsidiary of The BISYS Group, Inc. ("BISYS").
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Portfolios in the preparation of their financial statements. The policies
are in conformity with generally accepted accounting policies. The preparation
of financial statements requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
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 principal amount due at maturity and cost. In addition,
the portfolios may not (a) purchase any instrument with a remaining maturity
greater than thirteen months unless such instrument is subject to a demand
feature, or (b) maintain a dollar-weighted average portfolio maturity which
exceeds 90 days.
B) SECURITY TRANSACTIONS AND
INVESTMENT INCOME:
Securities transactions are recorded on trade date basis. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Interest income, including the accretion of discount 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 the Portfolio, such gains will not be distributed. Dividends and
distributions are recorded by each Portfolio on the ex-dividend date.
The amount 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. There-
31
<PAGE> 34
fore, no federal income tax provision is required. At August 31, 1996, the cost
of securities in each Portfolio for federal income tax purposes was
substantially the same as for financial reporting purposes.
At February 29, 1996, the Portfolios had the following capital loss
carryovers:
<TABLE>
<CAPTION>
CAPITAL
LOSS EXPIRATION
FUND CARRYOVER DATE
- ------------------------- --------- ----------
<S> <C> <C>
Tax-Exempt Fund.......... $ 35,348 1997
16,664 1998
14,011 2000
71,218 2002
19,132 2003
36,425 2004
---------
$192,798
---------
California Tax-Exempt
Fund.................... $ 5,893 2001
6,223 2002
25,132 2004
---------
$ 37,248
---------
</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, 1995 and within the fiscal year
are deemed to arise on the first business day of the following fiscal year. The
Tax-Exempt Fund incurred and elected to defer such losses of $3,837.
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 Fund 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 shares.
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.
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,
1996, the most restrictive expense limitation is believed to limit expenses to
2.5% of the first $30 million of each Portfolio's average daily
32
<PAGE> 35
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 on a monthly basis. No reimbursement was
required for the six months ended August 31, 1996.
The Portfolios have entered into a Special Management Service Agreement
("Services Agreement") pursuant to which they agree to pay Bank of America and
Concord a fee for various services relating to 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 this is borne solely by the Pacific Horizon Shares. For the
six months ended August 31, 1996, 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 BANK OF
FUND AMERICA CONCORD AMERICA
- ------------------------ ------- ------- -------------
<S> <C> <C> <C>
Tax-Exempt Fund......... $54,490 $2,709 $ 7,983
California Tax-Exempt
Fund................... 409,618 3,982 30,991
</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 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 assets of the Horizon Service Shares. Service Organizations
may include the Distributor, Bank of America and their affiliates. For the six
months ended August 31, 1996, 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................... $ 87,241
California Tax-Exempt Fund........ 274,454
</TABLE>
The California Tax-Exempt Fund has adopted a Distribution and Services Plan
under which the Fund pays the Distributor and service organizations for the
provision of support services with respect to the beneficial owners of X Shares.
Payments for distribution expenses and shareholder servicing expenses may not
exceed the annual rate of 0.30% and 0.25%, respectively, of the average daily
net assets of such Fund's X Shares. For the period ended August 31, 1996, there
were no payments made under the Distribution and Services Plan.
Prior to February 29, 1996,
BankAmerica Corporation obtained a letter of credit issued by a third-party
financial institution which guaranteed the payment of principal and interest 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 at par. BankAmerica Corporation has agreed to
reimburse the third-party financial institution to the extent any portion of
this letter of credit is drawn down. During the period ended August 31, 1996,
this letter of credit expired. The
33
<PAGE> 36
Orange County California securities previously held by the California Tax-Exempt
Fund were substituted with new issues from Orange County, which do not require
such letter of credit.
For the six months ended August 31, 1996, the Tax-Exempt Fund and California
Tax-Exempt Fund incurred legal charges totaling $10,298 and $17,774
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 BISYS.
Concord Financial Services, Inc., a wholly owned subsidiary of Concord, acts
as transfer agent for the Horizon class of shares for the Tax-Exempt Fund. For
the six months ended August 31, 1996 Concord Financial Services, Inc. earned
$14,483 from the Tax-Exempt Fund.
Effective December 11, 1995, BISYS Fund Services, also a wholly owned
subsidiary of BISYS, serves the Fund as transfer agent and dividend disbursing
agent for the Pacific Horizon Shares and Horizon Service Shares of each
Portfolio. In this capacity for the Portfolios, BISYS Fund Services earned
$6,838 and $10,667 from the Tax-Exempt Fund and California Tax-Exempt Fund,
respectively, for the period from December 11, 1995 through February 29, 1996.
Prior to December 11, 1995, an unaffiliated party provided these services.
NOTE 4 -- DIRECTORS' COMPENSATION
Each Director of the Fund 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 $20,000 for services as President.
The former President and Chairman of the Funds receives an additional $40,000
per year through February 28, 1997 in consideration for his years of service.
Total charges for Directors' fees incurred for the six months ended August 31,
1996 were $5,733 and $11,388 for the Tax-Exempt Fund and California Tax-Exempt
Fund, respectively.
The Board has also established a retirement plan (the "Retirement Plan") for
the 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
34
<PAGE> 37
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 $2,576 and $1,840, respectively, for the six months ended
August 31, 1996.
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 obligations 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, 1996 ( as a percentage of total
investments):
<TABLE>
<CAPTION>
CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
FUND FUND
---------- ----------
<S> <C> <C>
Airport Facilities...... -- 0.91%
Certificates of
Participation.......... -- 2.07
Educational
Facilities............. 6.12% 3.36
General Obligations..... 8.69 2.85
Health Care & Hospital
Management............. 5.83 --
Health & Medical
Facilities............. 6.02 2.26
Housing Development..... 7.04 1.63
Industrial
Development............ 5.91 1.90
Leasing................. -- 2.27
Pollution Control &
Waste Facilities....... 2.71 9.42
Power Projects.......... 2.79 2.92
Property Development
Project................ -- 1.42
Public Facilities....... -- 2.48
Revenue................. 30.11 36.89
Sales Tax Revenue....... -- 3.75
Sewer Projects.......... -- 3.53
Transit Projects........ -- 2.87
Utility Projects........ 3.45 4.10
Water Projects.......... 2.91 13.51
Other................... 18.42 1.86
----- -----
100.00% 100.00%
====== ======
</TABLE>
NOTE 6 -- CAPITAL SHARE TRANSACTIONS
At August 31, 1996, there were 200 billion shares of the Fund's $0.001 par
value Common Stock authorized, of which 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) and 2 billion
shares were classified as Class J Common Stock (California Tax-Exempt Fund -- 1
billion Pacific Horizon Shares, 500 million Horizon Shares, 500 million Horizon
Service Shares and 1 billion X Shares).
35
<PAGE> 38
Transactions in shares of each Portfolio (at $1.00 per share) for the
periods indicated are summarized below:
<TABLE>
<CAPTION>
SIX MONTHS ENDED AUGUST CALIFORNIA
31, 1996 TAX-EXEMPT TAX-EXEMPT
(UNAUDITED) FUND FUND
- ----------------------- ------------ ------------
<S> <C> <C>
Pacific Horizon Shares:
Shares sold........... 83,589,207 560,880,091
Shares issued to
shareholders in
reinvestment of
dividends........... 536,759 5,549,519
Shares redeemed....... (87,170,731) (826,535,706)
------------ ------------
Net decrease in Pacific
Horizon Shares........ (3,044,765) (60,106,096)
------------ ------------
Horizon Shares:
Shares sold........... 526,465,753 --
Shares issued to
shareholders in
reinvestment of
dividends........... 54,257 --
Shares redeemed....... (587,412,797) --
------------ ------------
Net decrease in Horizon
Shares................ (60,892,787) --
------------ ------------
Horizon Service Shares:
Shares sold........... 170,191,620 620,782,237
Shares issued to
shareholders in
reinvestment of
dividends........... 410,981 2,024,171
Shares redeemed....... (97,214,744) (467,556,736)
------------ ------------
Net increase in Horizon
Service Shares........ 73,387,857 155,249,672
------------ ------------
Total increase in
Portfolio shares...... 9,450,305 95,143,576
============ ============
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA
YEAR ENDED FEBRUARY TAX-EXEMPT TAX-EXEMPT
29, 1996 FUND FUND
- ---------------------- -------------- ------------
<S> <C> <C>
Pacific Horizon
Shares:
Shares sold.......... 235,312,433 933,156,275
Shares issued to
shareholders in
reinvestment of
dividends.......... 1,213,275 10,635,100
Shares redeemed...... (224,352,700) (602,410,729)
-------------- -----------
Net increase in
Pacific Horizon
Shares............... 12,173,008 341,380,646
-------------- -----------
Horizon Shares:
Shares sold.......... 1,284,276,610 --
Shares issued to
shareholders in
reinvestment of
dividends.......... 517,254 --
Shares redeemed...... (1,363,886,192) --
-------------- -----------
Net decrease in
Horizon Shares....... (79,092,328) --
-------------- -----------
Horizon Service
Shares:
Shares sold.......... 145,141,655 729,337,606
Shares issued to
shareholders in
reinvestment of
dividends.......... 1,203,365 4,373,195
Shares redeemed...... (150,816,139) (618,320,745)
-------------- -----------
Net increase
(decrease) in Horizon
Service Shares....... (4,471,119) 115,390,056
-------------- -----------
Total increase
(decrease) in
Portfolio shares..... (71,390,439) 456,770,702
============== ===========
</TABLE>
36
<PAGE> 39
PACIFIC HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED PERIOD
AUGUST 31, --------------------------- ENDED
1996 FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1996 1995 1994(A)
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
PACIFIC HORIZON SHARES
Net asset value per share,
beginning of year............... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Income from Investment Operations:
Net investment income........... 0.0144 0.0327 0.0253 0.0124
Less dividends from net investment
income.......................... (0.0144) (0.0327) (0.0253) (0.0124)
------- ------- ------- -------
Net change in net asset value per
share........................... -- -- -- --
------- ------- ------- -------
Net asset value per share,
end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total return...................... 1.45%++ 3.32% 2.56% 1.25%++
Ratios/Supplemental Data:
Net assets, end of period
(000s)........................ $46,574 $ 49,618 $ 37,454 $ 49,648
Ratio of expenses to average net
assets........................ 0.61%+ 0.63% 0.60% 0.60%+
Ratio of net investment income
to average net assets......... 2.86%+ 3.26% 2.47% 1.95%+
Ratio of expenses to average net
assets*....................... (b) (b) (b) 0.61%+
Ratio of net investment income
to average net assets*........ (b) (b) (b) 1.94%+
<FN>
- ---------------
(a) For the period July 9, 1993 (initial offering date) through February 28,
1994.
(b) There were no fee waivers or expense reimbursements during the period.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
+ Annualized.
++ Not annualized.
</TABLE>
See Notes to Financial Statements.
37
<PAGE> 40
PACIFIC HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights**
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ---------------------------------------------------------
1996 FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<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............. 0.0160 0.0359 0.0285 0.0225 0.0269
Less dividends from net investment
income............................ (0.0160) (0.0359) (0.0285) (0.0225) (0.0269)
-------- -------- -------- -------- --------
Net change in net asset value per
share............................. -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value per share, end of
period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return....................... 1.61%++ 3.65% 2.89% 2.27% 2.72%
Ratios/Supplemental Data:
Net assets, end of period
(000s).......................... $241,808 $302,704 $381,811 $514,663 $383,848
Ratio of expenses to average net
assets.......................... 0.29%+ 0.31% 0.28% 0.28% 0.28%
Ratio of net investment income to
average net assets.............. 3.18%+ 3.58% 2.81% 2.25% 2.69%
Ratio of expenses to average net
assets*......................... (a) (a) (a) 0.29% (a)
Ratio of net investment income to
average net assets*............. (a) (a) (a) 2.24% (a)
<FN>
- ---------------
(a) There were no fee waivers or expense reimbursements during the period.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** 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.
</TABLE>
See Notes to Financial Statements.
38
<PAGE> 41
PACIFIC HORIZON TAX EXEMPT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights**
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ---------------------------------------------------------
1996 FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <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
-------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income............... 0.0148 0.0334 0.0260 0.0200 0.0244
Less dividends from net investment
income.............................. (0.0148) (0.0334) (0.0260) (0.0200) (0.0244)
-------- ------- ------- ------- -------
Net change in net asset value
per share........................... -- -- -- -- --
-------- ------- ------- ------- -------
Net asset value per share,
end of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= =======
Total return......................... 1.49%++ 3.39% 2.63% 2.02% 2.47%
Ratios/Supplemental Data:
Net assets, end of period (000s).... $108,073 $ 34,684 $ 39,158 $ 48,328 $ 49,695
Ratio of expenses to average net
assets............................ 0.53%+ 0.56% 0.53% 0.53% 0.53%
Ratio of net investment income to
average net assets................ 2.91%+ 3.34% 2.57% 2.04% 2.42%
Ratio of expenses to average net
assets*........................... (a) (a) (a) 0.57% (a)
Ratio of net investment income to
average net assets*............... (a) (a) (a) 2.00% (a)
<FN>
- ---------------
(a) There were no fee waivers or expense reimbursements during the period.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** 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.
</TABLE>
See Notes to Financial Statements.
39
<PAGE> 42
PACIFIC HORIZON
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights**
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ------------------------------------------------------------
1996 FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1996 1995 1994 1993
----------- ------------ ------------ ------------ ------------
<S> <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
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................... 0.0140 0.0324 0.0249 0.0186 0.0224
Net realized and unrealized gains
(losses) on
securities............................. -- (0.0001) (0.0001) 0.0002 (0.0002)
-------- -------- -------- -------- --------
Total income from investment operations... 0.0140 0.0323 0.0248 0.0188 0.0222
Less dividends from net investment
income................................... (0.0140) (0.0324) (0.0249) (0.0186) (0.0224)
-------- -------- -------- -------- --------
Net change in net asset value per share... -- (0.0001) (0.0001) 0.0002 (0.0002)
-------- -------- -------- -------- --------
Net asset value per share, end of
period................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return.............................. 1.41%++ 3.29% 2.52% 1.88% 2.27%
Ratios/Supplemental Data:
Net assets, end of period (000s)......... $ 467,736 $528,008 $186,643 $203,724 $128,448
Ratio of expenses to average net
assets................................. 0.58%+ 0.62% 0.62% 0.66% 0.66%
Ratio of net investment income to average
net assets............................. 2.77%+ 3.35% 2.48% 1.86% 2.21%
Ratio of expenses to average net
assets*................................ (a) 0.63%*** (a) 0.68% 0.74%
Ratio of net investment income to average
net assets*............................ (a) 3.35% (a) 1.84% 2.13%
<FN>
- ---------------
(a) There were no fee waivers or expense reimbursements during the period.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** 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.
*** During the year ended February 29, 1996 the Portfolio received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Unannualized.
</TABLE>
See Notes to Financial Statements.
40
<PAGE> 43
PACIFIC HORIZON
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
AUGUST 31, ------------------------------------------
1996 FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
(UNAUDITED) 1996 1995 1994
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
HORIZON SERVICE SHARES
Net asset value per share, beginning of
period................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ------- --------
Income from Investment Operations:
Net investment income.................. 0.0143 0.0331 0.0256 0.0198
Net realized and unrealized gains
(losses) on securities............... -- 0.0001 (0.0001) (0.0001)
-------- -------- ------- --------
Total income from investment
operations............................. 0.0143 0.0332 0.0255 0.0197
Less dividends from net investment
income................................. (0.0143) (0.0331) (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 $ 1.00
======== ======== ======= ========
Total return............................ 1.44%++ 3.36% 2.59% 2.00%
Ratios/Supplemental Data:
Net assets, end of period (000s)....... $ 358,854 $203,388 $ 88,003 $123,746
Ratio of expenses to average net
assets............................... 0.51%+ 0.55% 0.55% 0.53%
Ratio of net investment income to
average net assets................... 2.85%+ 3.43% 2.50% 1.98%
Ratio of expenses to average net
assets*.............................. (a) 0.55%** (a) 0.60%
Ratio of net investment income to
average net assets*.................. (a) 3.42% (a) 1.91%
<FN>
- ---------------
(a) There were no fee waivers or expense reimbursements during the period.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** During the year ended February 29, 1996 the Portfolio received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Unannualized.
</TABLE>
See Notes to Financial Statements.
41
<PAGE> 44
For more information, complete the following form and mail it to:
Pacific Horizon Funds
1230 Columbia Street, Suite 500
San Diego, CA 92101
...............................................................................
First Name Last Name
...............................................................................
Street Address
...............................................................................
City State Zip Code
...............................................................................
Area Code and Telephone Number
PLEASE CHECK ONE OF THE TWO BOXES BELOW SO WE CAN BETTER MEET YOUR NEED FOR
SERVICE.
[ ] A broker assisted me with the purchase of my Pacific Horizon Fund.
...............................................................................
Name of Broker
...............................................................................
Name of Brokerage Firm
[ ] I purchased my Pacific Horizon Fund without the assistance of a broker.
Please send me a free investing kit on the Pacific Horizon Fund(s) checked
below. The kit includes a prospectus, which has more complete information on
the Fund(s) such as charges and expenses. Read the prospectus carefully
before investing or sending money.
PACIFIC HORIZON FUNDS
<TABLE>
<S> <C>
[ ] International Equity Fund [ ] Intermediate Bond Fund
[ ] Aggressive Growth Fund [ ] U.S. Government Securities Fund
[ ] Blue Chip Fund [ ] Short-Term Government Fund
[ ] Capital Income Fund [ ] National Municipal Bond Fund
[ ] Asset Allocation Fund [ ] California Tax-Exempt Bond Fund
[ ] Corporate Bond Fund
Money Market Funds
[ ] Prime Fund [ ] Treasury Only Fund
[ ] Treasury Fund [ ] Tax-Exempt Money Fund
[ ] Government Fund [ ] California Tax-Exempt Money Market Fund
</TABLE>
Additional Comments:
...............................................................................
...............................................................................
...............................................................................
...............................................................................
...............................................................................
...............................................................................
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
<PAGE> 45
[PACIFIC HORIZON FUNDS LOGO]
Concord Financial Group, Inc., Distributor
TXM-0011
