<PAGE> 1
--------------------------------------------------
You may obtain the current 7-day yield by calling (800) 346-2087.
<TABLE>
<S> <C>
-------------------------------------
THE AVERAGE ANNUAL TOTAL RETURN:
<CAPTION>
PRIME FUND
----------
<S> <C>
One Year (as of 9/30/96) 5.14%
Five Year (as of 9/30/96) 4.23%
Ten Year (as of 9/30/96) 5.81%
</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 $13 billion
in mutual funds.
8. HOW CAN I PURCHASE PACIFIC HORIZON SHARES?
Complete the application 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. Capital gains, if any, are
paid at least annually. You can have your distributions sent to you
directly, or you can have the dividends reinvested in the Fund to
increase your holdings. Income and net short-term capital gain
distributions are taxable to shareholders as ordinary income.
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.
THIS PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. IF YOU WOULD LIKE
MORE INFORMATION BEFORE YOU INVEST, PLEASE CONSULT THE FUND'S
ACCOMPANYING PROSPECTUS. FOR DETAILS ABOUT THE FUND'S HOLDINGS OR RECENT
INVESTMENT STRATEGIES, PLEASE REVIEW THE FUND'S MOST RECENT ANNUAL OR
SEMIANNUAL REPORT. THE PROSPECTUS AND REPORTS MAY BE OBTAINED AT NO COST
BY CALLING (800) 332-3863.
COPPRMMPROF
PRIME FUND
FUND PROFILE
OCTOBER 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 attempts to maintain a $1 per share price, but 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. (However, a load of up
to 4.5% will be charged for exchanges into Pacific Horizon or Time Horizon Funds
that do impose a load on initial purchases, if applicable.) 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
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 operating expenses and 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:
86 6.5%
87 6.5%
88 7.3%
89 9.0%
90 8.0%
91 6.2%
92 3.7%
93 2.9%
94 3.9%
95 5.6%
Past performance is no guarantee of future results.
SEC 7-day yield as of 9/30/96: 4.97%
<PAGE> 3
------------------------------------------------------------
<TABLE>
<S> <C>
SEC 30-day yield as of 9/30/96: 3.07%
------------------------------------------------------------
THE AVERAGE ANNUAL TOTAL RETURN:
<CAPTION>
CAPITAL INCOME CAPITAL INCOME
FUND 4.50% FUND
SALES LOAD NO LOAD
-------------- --------------
<S> <C> <C>
One Year
(as of 9/30/96) 12.34% 17.67%
Five Year
(as of 9/30/96) 14.83% 15.89%
Since Inception
(9/25/87 to
9/30/96) 13.91% 14.49%
</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 $13 billion
in mutual funds. Ed Cassens, Vice President and Senior Portfolio Manager
of BofA Capital Management, Inc. (a wholly owned subsidiary of Bank of
America) is primarily responsible for the day-to-day investment
activities of the Fund. Mr. Cassens has been the Fund's manager since
November 1994 and has been associated with Seattle First National Bank,
a wholly owned subsidiary of Seafirst Corporation, which is controlled
by BankAmerica Corporation (both of which are bank holding companies)
since 1966.
8. HOW CAN I PURCHASE A SHARES?
Complete the application 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. Capital gains, if any, are
paid at least annually. You can have your distributions sent to you
directly, or you can have the dividends reinvested in the Fund to
increase your holdings. Income and net short-term capital gains
distributions are taxable to shareholders as ordinary income. Net
long-term capital gains distributions, if any, are treated as capital
gains for tax purposes.
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.
THIS PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. IF YOU WOULD LIKE
MORE INFORMATION BEFORE YOU INVEST, PLEASE CONSULT THE FUND'S
ACCOMPANYING PROSPECTUS. FOR DETAILS ABOUT THE FUND'S HOLDINGS OR RECENT
INVESTMENT STRATEGIES, PLEASE REVIEW THE FUND'S MOST RECENT ANNUAL OR
SEMIANNUAL REPORT. THE PROSPECTUS AND REPORTS MAY BE OBTAINED AT NO COST
BY CALLING (800) 332-3863.
COPCAPNPROF
CAPITAL INCOME FUND
FUND PROFILE
OCTOBER 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 Securities"). 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?
Like all investment companies, loss of money is a risk of investing in the Fund.
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
that offered by bonds alone, have the capacity to absorb 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 like shares of any Time Horizon
Fund, 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 Fees & Exchange None
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. Absent expenses paid by third parties, "Other
Expenses" would be 0.36% and "Total Operating Expenses" would be 1.26%.
* There is no front-end sales load on combined purchases of 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"). Shares purchased under the
Large Purchase Exemption are subject to contingent deferred sales charge of
1.00% and 0.50%, respectively, on redemptions within one and two years after
purchase. The contingent deferred sales charge is paid to the Fund's
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 operating expenses and example should not be considered a
representation of past future investment returns and operating expenses. Actual
investment returns and operating expenses may be more or less than those shown.
The example assumes the deduction at the time of purchase of the maximum
applicable front-end sales charge but does not assume the deduction at
redemption of the 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:
89 27.9%
90 -4.3%
91 38.2%
92 21.4%
93 22.7%
94 -5.9%
95 24.1%
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 9/30/96: 4.49%
---------------------------------------------------
THE AVERAGE ANNUAL TOTAL RETURN:
<CAPTION>
CALIFORNIA TAX CALIFORNIA TAX
EXEMPT BOND EXEMPT BOND
4.50% SALES LOAD NO LOAD
---------------- --------------
<S> <C> <C>
One Year
(as of 9/30/96) 1.57% 6.35%
Five Year
(as of 9/30/96) 5.79% 6.77%
Ten Year
(as of 9/30/96) 6.37% 6.86%
</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 $13 billion
in mutual funds. Kim Michalski, the Fund's portfolio manager, is
primarily responsible for the day-to-day management of the Fund's
investment portfolio. Ms. Michalski has been the Fund's portfolio
manager since September of 1989 and has been associated with Bank of
America (and Security Pacific National Bank before it merged with Bank
of America) since 1983.
8. HOW CAN I PURCHASE A SHARES?
Complete the application 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. Capital gains, if any,
are paid at least annually. You can have your distributions sent to you
directly, or you can have the dividends reinvested in the Fund to
increase your holdings. Dividends derived from interest on municipal
securities typically will not be subject to federal income tax.
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.
THIS PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. IF YOU WOULD LIKE
MORE INFORMATION BEFORE YOU INVEST, PLEASE CONSULT THE FUND'S
ACCOMPANYING PROSPECTUS. FOR DETAILS ABOUT THE FUND'S HOLDINGS OR RECENT
INVESTMENT STRATEGIES, PLEASE REVIEW THE FUND'S MOST RECENT ANNUAL OR
SEMIANNUAL REPORT. THE PROSPECTUS AND REPORTS MAY BE OBTAINED AT NO COST
BY CALLING (800) 332-3863.
COPCATEPROF
CALIFORNIA TAX-EXEMPT
BOND FUND
FUND PROFILE
OCTOBER 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?
Like all investment companies, loss of money is a risk of investing in the Fund.
In addition, the Fund's concentration in obligations of California governmental
issuers presents greater risks than investing in a less geographically
concentrated investment portfolio. In the past, regional economic factors such
as reduction in defense spending and a decline in tourism have had an adverse
effect on the California economy. These factors may affect the ability of
governmental entities to repay debt. In addition, the Fund may invest up to 25%
of its total assets in municipal securities rated below investment grade 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 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 moderate returns, and have the
capacity to absorb fluctuations in their investment.
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 like shares of any Time Horizon
Fund, 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
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 combined purchases 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 Funds equals or
exceeds $1,000,000. ("Large Purchase Exemption"). Shares purchased under the
Large Purchase Exemption are subject to contingent deferred sales charge of
1.00% and 0.50%, respectively, on redemptions within one and two years after
purchase. The contingent deferred sales charge is paid to the Fund's
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 operating expenses and 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 the deduction at the time of purchase of the maximum
applicable front-end sales charge but does not assume the deduction at
redemption of the 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:
86 18.5%
87 -1.4%
88 8.7%
89 9.3%
90 6.2%
91 11.1%
92 8.6%
93 12.5%
94 -6.1%
95 16.5%
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.
