<PAGE> 1
--------------------------------------------------
You may obtain the current 7-day yield by calling (800) 346-2087.
7. WHO IS THE INVESTMENT ADVISER?
Bank of America NT&SA, the investment adviser, and its affiliates have
over $48 billion in assets under management, including over $12 billion
in mutual funds.
8. HOW CAN I PURCHASE PACIFIC HORIZON SHARES?
Complete the application in the Prospectus enclosed and attach a check
for as little as $500, or $50 per month with automatic investment.
9. HOW CAN I REDEEM PACIFIC HORIZON SHARES?
Redemptions can be made by sending a written request to the Prime Fund,
c/o Pacific Horizon Funds, Inc., P.O. Box 80221, Los Angeles, California
90080-9909, by writing a check on the account, or by requesting a wire.
The minimum for a wire redemption is $1,000.
10. HOW OFTEN ARE DISTRIBUTIONS MADE?
Dividends are accrued daily and paid monthly. You can have your
distributions sent to you directly, or you can have the dividends
reinvested in the Fund to increase your holdings.
11. WHAT OTHER SERVICES ARE AVAILABLE?
Pacific Horizon Funds, Inc. provides a whole host of services to better
serve shareholders including fund performance reporting, automated
investment and withdrawal plans, and retirement plans. Please call for
information on the entire family of Pacific Horizon Funds by dialing
1-800-332-3863.
THIS FUND PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. MORE DETAILS
APPEAR IN THE FUND'S ACCOMPANYING PROSPECTUS.
COPPRMMPROF
PRIME FUND
FUND PROFILE
JULY 1, 1996
NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE
BANK OF AMERICA, NT&SA
INVESTMENT ADVISER
CONCORD FINANCIAL GROUP, INC.,
DISTRIBUTOR, MEMBER NASD
PACIFIC HORIZON MUTUAL FUNDS
<PAGE> 2
- ------------------------------------------------------
INFORMATION SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund is a money market fund which seeks to provide high current income and
stability of principal.
2. IN WHAT DOES THE FUND INVEST?
The Fund invests in a diversified portfolio of short-term U.S.
dollar-denominated money market instruments, including bank certificates of
deposit and bankers' acceptances, commercial paper and repurchase agreements,
obligations issued or guaranteed by the U.S. government or its agencies and
instrumentalities, and in bank obligations and commercial paper of foreign
issuers, with remaining maturities of thirteen months or less from the date of
purchase.
3. WHAT ARE THE RISKS?
The Fund is not insured by the FDIC, and while it attempts to maintain a $1 per
share price, there are no guarantees that it will be able to do so. The Prime
Fund may purchase certificates of deposit and bankers' acceptances issued or
supported by the credit of foreign branches of domestic banks, domestic branches
of foreign banks and foreign branches of foreign banks, as well as commercial
paper issued by foreign issuers, which present greater risk than funds investing
only in U.S. debt obligations. Such risks include future political and economic
developments.
4. IS THE FUND APPROPRIATE FOR ME?
This Fund is appropriate for investors seeking relative safety and accessibility
of their investment. A money market fund compared to other fixed income or
equity mutual funds, over time, has offered investors the least amount of
principal risk, as well as the least amount of return potential.
5. WHAT ARE THE FEES OR EXPENSES?
NO LOAD or sales commission is charged to invest in the Fund or reinvest
dividends. No fees will be charged for reinvested dividends, exchanges between
other Pacific Horizon funds or redemptions from the Fund. Additionally there are
no 12b-1 fees. The operating expenses, as a percentage of average net assets,
charged directly by the Fund are described in the fee table below:
<TABLE>
<S> <C> <C>
- ------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSE
Maximum Sales Load on Purchases None
Sales Load on Reinvested Dividends None
Deferred Sales Load* None
Redemption and Exchange Fees None
ESTIMATED ANNUAL OPERATING EXPENSES
(as a percentage of Average Net Assets)
Management Fees 0.20%
All other Expenses
Special Management Fees 0.32%
Other Expenses 0.03%
Total Other Expenses 0.35%
------
Total Fund Operating Expenses 0.55%
======
- ------------------------------------------------------
</TABLE>
The investment adviser and administrator may voluntarily waive a portion of
their respective fees from time to time.
* No contingent deferred sales charge ("CDSC") is charged, except that shares of
the Fund acquired through exchange of Class B shares of Time Horizon Funds
will be subject to a CDSC of up to 5%.
EXAMPLE**
You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YR 5 YR 10 YR
- ---- ---- ---- -----
<S> <C> <C> <C>
$6 $ 18 $ 31 $69
</TABLE>
Note: The preceding example should not be considered a representation of past or
future investment returns and operating expenses. Actual investment returns and
operating expenses may be more or less than those shown.
** The Example does not include deduction at redemption of a CDSC for shares of
the Fund acquired through exchange of Class B shares of Time Horizon Funds.
6. THE FOLLOWING IS A BAR GRAPH THAT SHOWS THE PERFORMANCE OF THE FUND OVER THE
PAST TEN (10) CALENDAR YEARS:
LOGO
Past performance is no guarantee of future results.
SEC 7-day yield as of 6/30/96: 5.22%
<PAGE> 3
--------------------------------------------------
<TABLE>
<S> <C>
SEC 30-day yield as of 6/30/96: 3.22%
------------------------------------
THE AVERAGE ANNUAL COMPOUND TOTAL RETURN:
One Year (as of 6/30/96) 13.81%
Five Year (as of 6/30/96) 15.15%
Since Inception 13.74%
</TABLE>
7. WHO IS THE INVESTMENT ADVISER?
Bank of America NT&SA, the investment adviser, and its affiliates have
over $48 billion in assets under management, including over $12 billion
in mutual funds.
8. HOW CAN I PURCHASE A SHARES?
Complete the application in the Prospectus enclosed and attach a check
for as little as $500 ($200 for BankAmericard holders with an
appropriate award certificate from BankAmeriChoice Program), or $50 per
month with automatic investment.
9. HOW CAN I REDEEM A SHARES?
Redemptions can be made by sending a written request to the Capital
Income Fund, c/o Pacific Horizon Funds, Inc., P.O. Box 80221, Los
Angeles, California 90080-9909, or by requesting a wire. The minimum for
a wire redemption is $1,000.
10. HOW OFTEN ARE DISTRIBUTIONS MADE?
Dividends are declared and paid quarterly. You can have your
distributions sent to you directly, or you can have the dividends
reinvested in the Fund to increase your holdings.
11. WHAT OTHER SERVICES ARE AVAILABLE?
Pacific Horizon Funds, Inc. provides a whole host of services to better
serve shareholders including fund performance reporting, automated
investment and withdrawal plans, and retirement plans. Please call for
information on the entire family of Pacific Horizon Funds by dialing
1-800-332-3863.
THIS FUND PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. MORE DETAILS
APPEAR IN THE FUND'S ACCOMPANYING PROSPECTUS.
COPCAPNPROF
CAPITAL INCOME FUND
FUND PROFILE
JULY 1, 1996
NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE
BANK OF AMERICA, NT&SA
INVESTMENT ADVISER
CONCORD FINANCIAL GROUP, INC.,
DISTRIBUTOR, MEMBER NASD
PACIFIC HORIZON MUTUAL FUNDS
<PAGE> 4
- ------------------------------------------------------
INFORMATION SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks total investment return comprised of capital appreciation and
current income consistent with prudent investment risk.
2. IN WHAT DOES THE FUND INVEST?
The Fund invests in a diversified portfolio of convertible bonds and preferred
stock ("Convertible Stock"). This Fund maintains at least a 65% position in
convertible securities. To further maximize performance the Fund also invests in
common stocks and cash equivalents. Securities are selected primarily for
capital appreciation with yield as a secondary objective.
3. WHAT ARE THE RISKS?
The Fund is not insured by the FDIC. In addition, while any investment carries
some risk, the risk of loss through default is greater with lower-rated
convertible securities than with investment grade securities because these lower
rated securities are often unsecured and subordinate to an issuer's other
obligations. Consequently, the market price of these securities and the net
asset value of the Fund's shares may be quite volatile.
4. IS THE FUND APPROPRIATE FOR ME?
This Fund is appropriate for investors who seek to capture higher growth than
offered by bonds alone, have the capacity to absorb minor fluctuations in their
investment, and want a balance of growth and income with moderate returns. This
Fund seeks to provide investors with returns comprised of current income and
capital appreciation with prudent investment risk.
5. WHAT ARE THE FEES OR EXPENSES?
A maximum Front-End Sales Load of 4.5% is a shareholder transaction expense
charged on the initial investment into A Shares of the Fund unless an exemption
is otherwise provided. No fees will be charged for reinvested dividends,
exchanges between other Pacific Horizon funds or (other than described below for
Large Purchase Exemption) redemptions from the Fund. Additionally there are no
12b-1 fees. The operating expenses, as a percentage of average net assets,
charged directly by the Fund are described in the fee table below:
<TABLE>
<S> <C> <C>
- ------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSE
Maximum Sales Load on Purchases 4.50%
Sales Load on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees & Exchange None*
ESTIMATED ANNUAL OPERATING EXPENSES
(as a % of Average Net Assets)
Management Fees 0.65%
All other Expenses
Shareholder Servicing Payments 0.25%
Other Expenses 0.33%
Total Other Expenses 0.58%
------
Total Fund Operating Expenses 1.23%
======
- ------------------------------------------------------
</TABLE>
The above expenses represent full fees charged to the Fund without waivers. The
investment adviser and administrator may voluntarily waive a portion of their
respective fees from time to time.
*There is no front-end sales load on A Shares you purchase if you have either a
combined purchase of A Shares of the Company of $1,000,000 or more or if the
aggregate value of A Shares that you beneficially own in any Pacific Horizon
Fund or Time Horizon Fund equals or exceeds $1,000,000 ("Large Purchase
Exemption"). A Shares purchased under the Large Purchase Exemption (except A
Shares purchased under the Daily Advantage or Advantage Plus Programs) are
subject to a contingent deferred sales charge of 1.00% and 0.50% respectively,
on redemption within one and two years after purchase. The contingent deferred
sales charge is paid to the Distributor. A Shares cannot be purchased under the
Large Purchase Exemption if there is another no-load exemption available.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YR 5 YR 10 YR
- ---- ---- ---- -----
<S> <C> <C> <C>
$57 $82 $110 $187
</TABLE>
Note: The preceding example should not be considered a representation of past or
future investment returns and operating expenses. Actual investment returns and
operating expenses may be more or less than those shown. The example assumes
deduction at time of purchase of maximum applicable front-end sales charge but
does not assume deduction at redemption of maximum applicable contingent
deferred sales charge under the Large Purchase Exemption.
6. THE FOLLOWING IS A BAR GRAPH THAT SHOWS THE PERFORMANCE OF THE FUND FOR THE
PAST SEVEN CALENDAR YEARS:
LOGO
Past performance is no guarantee of future results. The total return figures
presented above do not reflect the maximum 4.5% sales load or the contingent
deferred sales charge under the Large Purchase Exemption.
<PAGE> 5
--------------------------------------------------
<TABLE>
<S> <C> <C>
SEC 30-day yield as of 6/30/96: 4.67%
--------------------------
THE AVERAGE ANNUAL COMPOUND TOTAL RETURN:
One Year (as of 6/30/96) 1.22%
Five Year (as of 6/30/96) 6.09%
Ten Year (as of 6/30/96) 6.57%
</TABLE>
7. WHO IS THE INVESTMENT ADVISER?
Bank of America NT&SA, the investment adviser, and its affiliates have
over $48 billion in assets under management, including over $12 billion
in mutual funds.
8. HOW CAN I PURCHASE A SHARES?
Complete the application in the Prospectus enclosed and attach a check
for as little as $500 ($200 for BankAmericard holders with an
appropriate award certificate from BankAmeriChoice Program), or $50 per
month with automatic investment.
9. HOW CAN I REDEEM A SHARES?
Redemptions can be made by sending a written request to the California
Tax-Exempt Bond Fund, c/o Pacific Horizon Funds, Inc., P.O. Box 80221,
Los Angeles, California 90080-9909, by writing a check on the account,
or by requesting a wire. The minimum for a wire redemption is $1,000.
10. HOW OFTEN ARE DISTRIBUTIONS MADE?
Dividends are declared daily and paid monthly. You can have your
distributions sent to you directly, or you can have the dividends
reinvested in the Fund to increase your holdings.
11. WHAT OTHER SERVICES ARE AVAILABLE?
Pacific Horizon Funds, Inc. provides a whole host of services to better
serve shareholders including fund performance reporting, automated
investment and withdrawal plans. Please call for information on the
entire family of Pacific Horizon Funds by dialing 1-800-332-3863.
THIS FUND PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. MORE DETAILS
APPEAR IN THE FUND'S ACCOMPANYING PROSPECTUS.
COPCATEPROF
CALIFORNIA TAX-EXEMPT
BOND FUND
FUND PROFILE
JULY 1, 1996
NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE
BANK OF AMERICA, NT&SA
INVESTMENT ADVISER
CONCORD FINANCIAL GROUP, INC.,
DISTRIBUTOR, MEMBER NASD
PACIFIC HORIZON MUTUAL FUNDS
<PAGE> 6
- ------------------------------------------------------
INFORMATION SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks to provide as high a level of current interest income free from
Federal and California state personal income tax as is consistent with prudent
investment management and preservation of capital.
2. IN WHAT DOES THE FUND INVEST?
The Fund invests in a diversified portfolio of mainly investment grade
tax-exempt obligations and notes issued by California and other states or
territories of the U.S.
3. WHAT ARE THE RISKS?
The Fund is not insured by the FDIC. In addition, the Fund's concentration in
obligations of California governmental issuers presents greater risks than
investing in a less geographically concentrated investment portfolio. Economic
factors such as reduction in defense spending, a decline in tourism and high
levels of unemployment have had an adverse effect on the California economy.
These factors affect the ability of governmental entities to repay debt. In
addition, the Fund may invest up to 25% of its total assets in lower-rated
municipal securities or "junk bonds." While any investment carries some risk,
the risk of loss through default is greater with lower-rated securities than
with investment grade securities because these lower-rated securities are often
unsecured and subordinate to an issuers, other obligations. Consequently, the
market price of these securities and the net asset value of the Fund's shares
may be quite volatile.
4. IS THE FUND APPROPRIATE FOR ME?
This Fund is appropriate for investors who seek moderate returns, have the
capacity to absorb minor fluctuations in their investment, and who seek
after-tax income that may be higher than many taxable bond funds.
5. WHAT ARE THE FEES OR EXPENSES?
A maximum Front-End Sales Load of 4.5% is a shareholder transaction expense
charged on the initial investment into A shares of the Fund unless an exemption
is otherwise provided. No fees will be charged for reinvested dividends,
exchanges between other Pacific Horizon funds or (other than described below for
the large Purchase Exemption) redemptions from the Fund. Additionally there are
no 12b-1 fees. The operating expenses, as a percentage of average net assets,
charged directly by the Fund are described in the fee table below.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSE
Maximum Sales Load on Purchases 4.50%
Sales Load on Reinvested Dividends None
Deferred Sales Load None*
Redemption and Exchange Fees None
ESTIMATED ANNUAL OPERATING EXPENSES
(as a percentage of Average Net Assets)
Management Fees 0.50%
All other Expenses
Shareholder Servicing Payments 0.25%
Other Expenses 0.19%
Total Other Expenses 0.44%
------
Total Fund Operating Expenses 0.94%
======
- ------------------------------------------------------
</TABLE>
Management fees include fee waivers. Without fee waivers management fees would
be 0.70%. Total Operating expenses without waivers would equal 1.14%.
* There is no front-end sales load on A shares you purchase if you have either a
combined purchase of A Shares of the Company of $1,000,000 or more or if the
aggregate value of A Shares that you beneficially own in any Pacific Horizon
Fund or Time Horizon Fund equals or exceeds $1,000,000 ("Large Purchase
Exemption"). A Shares purchased under the Large Purchase Exemption (except A
Shares purchased under the Daily Advantage# or Advantage Plus# Programs) are
subject to a contingent deferred sales charge of 1.00% and 0.50% respectively,
on redemption within one and two years after purchase. The contingent deferred
sales charge is paid to the Distributor. A Shares cannot be purchased under the
Large Purchase Exemption if there is another no-load exemption available.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YR 5 YR 10 YR
- ----- ---- ---- -----
<S> <C> <C> <C>
$ 54 $74 $95 $155
</TABLE>
Note: The preceding example should not be considered a representation of past or
future investment returns and operating expenses. Actual investment returns and
operating expenses may be more or less than those shown. The example assumes
deduction at time of purchase of maximum applicable front-end sales charge but
does not assume deduction at redemption of maximum applicable contingent
deferred sales charge under the Large Purchase Exemption.
6. THE FOLLOWING IS A BAR GRAPH THAT SHOWS THE PERFORMANCE OF THE FUND OVER THE
PAST TEN (10) CALENDAR YEARS:
LOGO
Past performance is no guarantee of future results. The total return figures
presented above do not reflect the maximum 4.5% sales load or the contingent
deferred sales charge under the Large Purchase Exemption.
