<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PACIFIC HORIZON FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 3
PACIFIC HORIZON FUNDS, INC.
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809
Dear Shareholder:
You are cordially invited to attend an Annual Meeting of Shareholders of
Pacific Horizon Funds, Inc. (the "Company") to be held on Friday, June 19, 1998
at 9:00 A.M., Eastern Time, at 400 Bellevue Parkway, Wilmington, Delaware.
At the Meeting, shareholders will be asked to vote on the following
matters: (1) election of directors, (2) approval or disapproval of an advisory
agreement between the Company and Bank of America National Trust and Savings
Association, (3) approval or disapproval of a sub-advisory agreement between
Bank of America National Trust and Savings Association and Wellington Management
Company, LLP with respect to the International Equity Fund, (4) approval or
disapproval of an amendment to the Company's Charter, (5) approval or
disapproval of changes to the fundamental investment objectives, policies and/or
limitations of each fund of the Company, and (6) ratification or rejection of
the selection of Price Waterhouse LLP as the Company's independent accountants
for the fiscal year ending February 28, 1999.
Whether or not you plan to be present at the Meeting, your vote is needed.
If you do not plan to be present at the Meeting, please complete, sign and
return the enclosed proxy card(s) promptly. A postage paid envelope is enclosed
for this purpose. In the alternative, you may vote by phone or fax through D.F.
King, our proxy solicitor. To vote by fax, sign the proxy card and fax both
sides to (212) 269-2796 or simply call 800-848-3374.
We look forward to seeing you at the Meeting or receiving your proxy
card(s) so your shares may be voted at the Meeting.
Sincerely yours,
DR. CORNELIUS J. PINGS
President
SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY CARD(S)
IN THE ENCLOSED ENVELOPE.
<PAGE> 4
PACIFIC HORIZON FUNDS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
May , 1998
To the Shareholders of Pacific Horizon Funds, Inc.:
An Annual Meeting of Shareholders of Pacific Horizon Funds, Inc. (the
"Company") will be held on June 19, 1998, at 9:00 A.M. Eastern Time, at the
offices of the Company at 400 Bellevue Parkway, Wilmington, Delaware. The Funds
of the Company are: Prime Fund, Treasury Fund, Treasury Only Fund, Government
Fund, Tax-Exempt Money Fund, California Tax-Exempt Money Market Fund,
Intermediate Bond Fund, Corporate Bond Fund, U.S. Government Securities Fund,
Capital Income Fund, National Municipal Bond Fund, California Tax-Exempt Bond
Fund, Short Term Government Fund, Asset Allocation Fund, Blue Chip Fund,
International Equity Fund and Aggressive Growth Fund. The Meeting will be held
for the following purposes:
(1) To elect Messrs. Edward S. Bottum, William P. Carmichael, Thomas
M. Collins, Douglas B. Fletcher, Robert E. Greeley, and Cornelius J. Pings,
Directors of the Company;
(2) With respect to each Fund except the Blue Chip and Intermediate
Bond Funds, to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America National Trust and Savings
Association;
(3) With respect to the International Equity Fund, to approve or
disapprove a new Sub-Advisory Agreement between Bank of America National
Trust and Savings Association and Wellington Management Company, LLP;
(4) To approve or disapprove an amendment to the Company's Charter;
(5) To approve or disapprove changes to the following fundamental
investment limitations of each Fund of the Company:
(a) limitation on underwriting of securities;
(b) limitation on real estate transactions;
(c) limitation on commodity transactions;
(d) limitation on industry concentration;
(e) limitation on lending;
(f) limitation on borrowing and issuance of senior securities; and
(g) limitation on issuer concentration.
(6) To approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to make
all of such policies and limitations non-fundamental:
(a) with respect to each Fund, the limitation on short sales and
purchasing securities on margin;
(b) with respect to the National Municipal Bond, Aggressive
Growth, California Tax-Exempt Bond, Prime, Treasury and California
Tax-Exempt Money Market Funds, the limitation on purchasing securities
of companies for the purpose of exercising control;
(c) with respect to each Fund except the Government and Treasury
Only Funds, the limitation on purchasing securities of other investment
companies;
(d) with respect to each Fund except the Aggressive Growth,
Short-Term Government, Prime, Treasury, Government and Treasury Only
Funds, the limitation on put, call, straddle and spread transactions;
(e) with respect to each Fund except the National Municipal Bond,
International Equity, Corporate Bond, Short-Term Government and
California Tax-Exempt Money Market Funds, the limitation on illiquid
securities;
<PAGE> 5
(f) with respect to the Intermediate Bond, Blue Chip and Asset
Allocation Funds, the limitation on transactions in certain securities
by Board members;
(g) with respect to the U.S. Government Securities, Capital
Income, California Tax-Exempt Bond and California Tax-Exempt Money
Market Funds, the limitation on unseasoned issuers;
(h) with respect to the Aggressive Growth Fund, the policy on
investment in equity securities;
(i) with respect to the U.S. Government Securities Fund, the
policy with respect to investment in certificates of the Government
National Mortgage Association ("GNMA");
(j) with respect to the Capital Income Fund, the policy with
respect to investment in convertible securities;
(k) with respect to the California Tax-Exempt Bond Fund, the
policy with respect to investment in California municipal securities;
(l) with respect to the Tax-Exempt Money Fund, the policy with
respect to investment in municipal securities; and
(m) with respect to the California Tax-Exempt Money Market Fund,
the policy with respect to investment in California municipal
securities;
(7) To approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective of the following funds:
National Municipal Bond, International Equity, Corporate Bond, Intermediate
Bond, Blue Chip, Asset Allocation, Aggressive Growth, U.S. Government
Securities, Capital Income, California Tax-Exempt Bond, Short-Term
Government, Prime, Treasury, Tax-Exempt Money and California Tax-Exempt
Money Market Funds;
(8) To approve or disapprove a new fundamental investment limitation
of the Prime Fund with regard to industry concentration (Prime Fund only);
(9) To ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending February 28,
1999; and
(10) The transaction of such other business as may properly come
before the meeting or any adjournment thereof.
The proposals referred to above are discussed in the Proxy Statement
attached to this Notice. Each shareholder is invited to attend the Special
Meeting of Shareholders in person. Shareholders of record at the close of
business on March 24, 1998 have the right to vote at the meeting. If you cannot
be present at the meeting, we urge you to fill in, sign and promptly return the
enclosed proxy in order that the meeting can be held and a maximum number of
shares may be voted.
By Order of the Board of Directors
W. BRUCE MCCONNEL, III
Secretary
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL.
BY LAW, THE ANNUAL MEETING OF SHAREHOLDERS OF THE FUND SCHEDULED FOR JUNE 19,
1998 WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A
MAJORITY OF THE SHARES ELIGIBLE TO VOTE ARE REPRESENTED. IN THAT EVENT, THE
COMPANY WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM.
CLEARLY, YOUR VOTE COULD BE CRITICAL IN ALLOWING THE COMPANY TO HOLD THE MEETING
AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY.
<PAGE> 6
PACIFIC HORIZON FUNDS, INC.
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Pacific Horizon Funds, Inc. (the "Company")
for use at an Annual Meeting of Shareholders of the Company to be held at 400
Bellevue Parkway, Wilmington, Delaware, on June 19, 1998, at 9:00 A.M. Eastern
Time (such meeting and any adjournment thereof is referred to as the "Meeting").
The Funds of the Company are the Prime Fund, Treasury Fund, Treasury Only Fund,
Government Fund, Tax-Exempt Money Fund, California Tax-Exempt Money Market Fund,
Intermediate Bond Fund, Corporate Bond Fund, U.S. Government Securities Fund,
Capital Income Fund, National Municipal Bond Fund, California Tax-Exempt Bond
Fund, Short-Term Government Fund, Asset Allocation Fund, Blue Chip Fund,
International Equity Fund and Aggressive Growth Fund (each a "Fund" and
collectively, the "Funds"). It is expected that the solicitation of proxies will
be primarily by mail. The Company's officers and service contractors may also
solicit proxies by telephone, telegraph, facsimile, personal interview or the
Internet. In connection with the solicitation of certain shareholders, the
Company's service contractors have retained D.F. King to assist in the
solicitation of proxies at a cost of approximately $122,400. The Company and
Bank of America National Trust and Savings Association will each bear a portion
of the proxy solicitation costs. Any shareholder giving a proxy may revoke it at
any time before it is exercised by submitting to the Company a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
electing to vote in person. This Proxy Statement and the enclosed Proxy are
expected to be distributed to shareholders on or about May , 1998.
The following table summarizes the proposals to be voted on at the Meeting
and indicates those shareholders who are being solicited with respect to each
proposal.
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C>
1. To elect Messrs. Edward S. Bottum, The Shareholders of all Funds of the Company
William P. Carmichael, Thomas M. Collins, will vote together.
Douglas B. Fletcher, Robert E. Greeley
and Cornelius J. Pings, Directors of the
Company.
2. To approve or disapprove a new Investment The shareholders of each Fund, except the
Advisory Agreement between the Company Blue Chip and Intermediate Bond Funds (which
and Bank of America National Trust and will not vote), will vote separately on a
Savings Association. Fund by Fund basis. All classes of shares of
the same Fund will vote together.
3. To approve or disapprove a new The shareholders of the International Equity
Sub-Advisory Agreement between Bank of Fund will vote separately. All classes of
America National Trust and Savings shares of the Fund will vote together.
Association and Wellington Management
Company, LLP.
4. To approve or disapprove an amendment to The shareholders of all Funds of the Company
the Company's Charter. will vote together.
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C>
5. To approve or disapprove changes to the
following fundamental investment
limitations of each Fund of the Company:
(a) limitation on underwriting of The shareholders of each Fund will vote
securities; (b) limitation on real estate separately on a Fund by Fund basis on each
transactions; (c) limitation on commodity investment limitation. All classes of shares
transactions; (d) limitation on industry of the same Fund will vote together.
concentration; (e) limitation on lending;
(f) limitation on borrowing and issuance
of senior securities; and (g) limitation
on issuer concentration;
6. To approve or disapprove certain changes
to the following fundamental investment
policies and limitations, including a
change to make all of such policies and
limitations non-fundamental:
(a) limitation on short sales and The shareholders of each Fund will vote
purchasing securities on margin; separately on a Fund by Fund basis. All
classes of shares of the same Fund will vote
together.
(b) limitation on purchasing securities of The shareholders of each of the following
companies for the purpose of exercising funds will vote separately on a Fund by Fund
control; basis: National Municipal Bond Fund,
Aggressive Growth Fund, California Tax-Exempt
Bond Fund, Prime Fund, Treasury Fund and
California Tax-Exempt Money Market Fund. All
classes of shares of the same Fund will vote
together.
(c) limitation on purchasing securities of The shareholders of each Fund, except the
other investment companies; Government and Treasury Only Funds (which
will not vote), will vote separately on a
Fund by Fund basis. All classes of shares of
the same Fund will vote together.
(d) limitation on put, call, straddle and The shareholders of each Fund, except the
spread transactions; Aggressive Growth, Short-Term Government,
Prime, Treasury, Government and Treasury Only
Funds (which will not vote), will vote
separately on a Fund by Fund basis. All
classes of shares of the same Fund will vote
together.
(e) limitation on illiquid securities; The shareholders of each Fund, except the
National Municipal Bond, International
Equity, Corporate Bond, Short-Term
Government, and California Tax-Exempt Money
Market Funds (which will not vote), will vote
separately on a Fund by Fund basis. All
classes of shares of the same Fund will vote
together.
(f) limitation on transactions in certain The shareholders of each of the Intermediate
securities by Board members; Bond Fund, Blue Chip Fund and Asset
Allocation Funds will vote separately on a
Fund by Fund basis. All classes of shares of
the same Fund will vote together.
</TABLE>
2
<PAGE> 8
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C>
(g) limitation on unseasoned issuers; The shareholders of each of the U.S.
Government Securities, Capital Income,
California Tax-Exempt Bond and California
Tax-Exempt Money Market Funds will vote
separately on a Fund by Fund basis. All
classes of shares of the same Fund will vote
together.
(h) policy on investment in equity The shareholders of the Aggressive Growth
securities; Fund will vote separately. All classes of
shares of the Fund will vote together.
(i) policy on investment in GNMA The shareholders of the U.S. Government
certificates; Securities Fund will vote separately. All
classes of shares of the Fund will vote
together.
(j) policy on investment in convertible The shareholders of the Capital Income Fund
securities; will vote separately. All classes of shares
of the Fund will vote together.
(k) policy on investment in California The shareholders of the California Tax-Exempt
municipal securities; Bond Fund will vote separately. All classes
of shares of the Fund will vote together.
(l) policy on investment in municipal The shareholders of the Tax-Exempt Money Fund
securities; will vote separately. All classes of shares
of the Fund will vote together.
(m) policy on investment in California The shareholders of the California Tax-Exempt
municipal securities; Money Market Fund will vote separately. All
classes of the Fund will vote together.
7. To approve or disapprove a change in the The shareholders of each Fund, except the
fundamental investment objective to a Government and Treasury Only Funds (which
non-fundamental investment objective; will not vote), will vote separately on a
Fund by Fund basis. All classes of the same
Fund will vote together.
8. To approve or disapprove a new The shareholders of the Prime Fund will vote
fundamental investment limitation of the separately. All classes of the Fund will vote
Prime Fund regarding investment together.
concentration; and
9. To ratify or reject the selection of The shareholders of all Funds of the Company
Price Waterhouse LLP as the Company's will vote together.
independent accountant for the fiscal
year ending February 28, 1999.
</TABLE>
A Proxy is enclosed with respect to the shares you own in the Company. If
the Proxy is executed properly and returned, the shares represented by it will
be voted at the Meeting in accordance with the instructions thereon. Each full
share is entitled to one vote and each fractional share to a proportionate
fractional vote. If you do not expect to be present at the Meeting and wish your
shares to be voted, please complete the enclosed Proxy and mail it in the
enclosed reply envelope.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
EACH PROPOSAL DESCRIBED IN THIS PROXY STATEMENT.
3
<PAGE> 9
INTRODUCTION
On April 13, 1998, BankAmerica Corporation ("BankAmerica") and NationsBank
Corporation ("NationsBank") announced a definitive agreement to merge and form a
new holding company to be named BankAmerica Corporation (the "Merger"). The
Merger is anticipated to close by the end of 1998, however, it is subject to a
number of approvals including shareholder and regulatory approvals.
Bank of America National Trust and Savings Association ("Bank of America"),
a subsidiary of BankAmerica and the investment adviser to the Company, will
continue to serve as investment adviser to the Company after the Merger. The
Merger, however, represents a change in ownership of the parent corporation of
Bank of America and, as such, may have the effect under the Investment Company
Act of 1940 (the "1940 Act") of terminating the existing advisory agreements
between the Company and Bank of America and the sub-advisory agreement between
Bank of America and Wellington Management Company, LLP ("Wellington") on behalf
of the International Equity Fund (collectively, the "Existing Agreements") at
the date of the consummation of the Merger.
As a consequence of the Merger and in order to facilitate the investment
management of the Funds, the Board of Directors (the "Board") has proposed for
your approval a new investment advisory agreement with Bank of America and a new
sub-advisory agreement with Wellington. The election of directors, amendment of
the Company's Charter, ratification of accountants and changes to certain
fundamental investment limitations, objectives and policies are also on the
agenda for the Meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
(ALL FUNDS)
At the Meeting, shareholders will be asked to consider the election of six
Directors, who will constitute the entire Board of the Company. If elected, each
Director will hold office until the next Annual Meeting of Shareholders and
until his successor is elected and qualified.
The election of the six directors is part of a restructuring of the boards
of the registered investment companies advised by BankAmerica affiliates (the
"Bank of America Complex") into essentially the same board for each investment
company in the Bank of America Complex. The restructuring is intended to
centralize board decision-making. The Board, including a majority of the
Directors who are not "interested persons" as defined under the 1940 Act,
approved the proposed restructuring of the Board at a meeting on April 28, 1998.
Therefore, the Board is proposing that, at the Meeting, shareholders elect the
six (6) nominees listed below to serve as Directors of the Company. Messrs.
Collins, Fletcher and Pings were last elected to the Board of the Company by
public shareholders of the Company on January 21, 1988. Messrs. Bottum,
Carmichael, and Greeley, are recommended for election by shareholders for the
first time. Kermit O. Hanson will continue to serve as Director until
shareholder approval of the nominees.
It is intended that the voting instructions/proxies will be voted for the
election of the nominees as Directors described in the table below. All of the
nominees have consented to serve as Directors of the Company, if elected. In
case any nominee shall be unable or shall fail to act as a Director by virtue of
an
4
<PAGE> 10
unexpected occurrence, the voting instructions/proxies may be voted for such
other person(s) as shall be determined by the persons acting under the voting
instructions/proxies in their discretion.
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL YEAR FIRST
OCCUPATION AND AFFILIATIONS BECAME A DIRECTOR
--------------------------- -----------------
<S> <C>
Edward S. Bottum (64) Nominee
Managing Director, Chase Franklin Corporation (venture
capital firm) (since 1990); Director, Kellwood Corporation
(women's apparel manufacturer); Trustee, Time Horizon
Funds (registered investment company) (since 1995);
Trustee and Chairman, Pacific Innovations Trust
(registered investment company) (since 1997); formerly
Vice Chairman of Continental Bank N.A. (retired 1990);
formerly Trustee, 231 Funds (registered investment
company) (1993 to 1995).
William P. Carmichael (53) Nominee
Senior Vice President, Sara Lee Corporation (1991 to
1993); Treasurer, Senior Vice President and Chief
Financial Officer, Beatrice Company (1987 to 1990);
Trustee, Time Horizon Funds (registered investment
company) (since 1995); Trustee, Pacific Innovations Trust
(registered investment company) (since 1997); Trustee, 231
Funds (registered investment company) (1993 to 1995).
Thomas M. Collins (63) 1982
Of counsel, law firm of McDermott & Trayner; Partner of
the law firm of Musick, Peeler & Garrett (until April,
1993); Chairman of the Board and Trustee, Master
Investment Trust, Series I (registered investment company)
(since 1993); Member, Fund Directions Advisory Board
(since July 1993); President and Chairman of the Board of
Pacific Horizon Funds, Inc. (1982 to August 31, 1995);
former Trustee, Master Investment Trust, Series II
(registered investment company) (1993 to 1997); former
Director, Bunker Hill Income Securities, Inc. (registered
investment company) through 1991.
Douglas B. Fletcher (73) 1985
Chairman of the Board and Chief Executive Officer,
Fletcher Capital Advisors, Incorporated (registered
investment advisor) (since 1991); Partner, Newport
Partners (private venture capital firm) (since 1981);
Director, FCA Securities, Inc. (registered broker/dealer)
(since 1993); Chairman of the Board and Chief Executive
Officer, First Pacific Advisors, Inc. (registered
investment adviser) and seven investment companies under
its management (prior to 1983); former Allied Member, New
York Stock Exchange; Chairman of the Board of FPA
Paramount Fund, Inc. (through 1984); Chairman, TIS
Mortgage Investment Company (real estate investment trust)
(since 1988); Trustee and former Vice Chairman of the
Board, Claremont McKenna College; Chartered Financial
Analyst.
Robert E. Greeley (66) 1993
Chairman, Page Mill Asset Management (a private investment
company) (since 1987); Morgan Grenfell Small Cap Fund
(since 1986); Trustee, Master Investment Trust Series I
(registered investment company) (since 1993); Master
Investment Trust, Series II (registered investment
company) (1993 to 1997); Time Horizon Funds (registered
investment company) (since 1995); Trustee and President,
Pacific Innovations Trust (registered investment company)
(since 1996); formerly Director, Bunker Hill Income
Securities, Inc. (from 1989 to 1994); Trustee, SunAmerica
Fund Group (previously Equitec Siebel Fund Group)
(registered investment companies) (from 1984 to 1992);
formerly Director, Manager, Corporate Investments, Hewlett
Packard Company (from 1979 to 1991).
</TABLE>
5
<PAGE> 11
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL YEAR FIRST
OCCUPATION AND AFFILIATIONS BECAME A DIRECTOR
--------------------------- -----------------
<S> <C>
*Cornelius J. Pings (69) 1982
President, Association of American Universities (since
February 1993); Provost (from 1982 to 1993) and Senior
Vice President for Academic Affairs (from 1981 to 1993);
University of Southern California; Trustee, Master
Investment Trust, Series I (since 1995); former Trustee,
Master Investment Trust, Series II (from 1995 to 1997);
Director, Farmers Group, Inc. (insurance company) (since
1991).
</TABLE>
- ---------------
* "Interested Person" as defined in the 1940 Act. Mr. Pings is an "interested"
person solely by reason of his position as President of the Company.
The term of office of each person elected as a Director will be until the
next Annual Meeting of Shareholders after his election and until his successor
shall have been duly elected and qualified.
Mr. Bottum is a director of Chase Franklin Corporation ("Chase Franklin")
and Mr. Fletcher is a director of FCA Securities, Inc. Chase Franklin and FCA
Securities, Inc. are broker-dealers registered with the Securities and Exchange
Commission. Chase Franklin and FCA Securities, Inc. do not execute portfolio
transactions for any of the Funds nor do they engage in principal transactions
with or act as distributor for any of the Funds. Messrs. Bottum and Fletcher
have advised the Company that Chase Franklin and FCA Securities, Inc.,
respectively, will not execute portfolio transactions for, engage in principal
transactions with, or act as distributor for, any of the Funds during any period
when he is affiliated with the particular broker-dealer and is a Director of the
Company. The Board has determined that none of the Funds nor their shareholders
will be adversely affected as a result of Franklin Chase and FCA Securities,
Inc. not executing such transactions for the Funds or engaging in such principal
transactions with or acting as distributor for the Funds. Accordingly, Mr.
Bottum and Mr. Fletcher will not be considered interested persons of the Company
due to their relationship with Chase Franklin and FCA Securities, Inc.,
respectively.
In the fiscal year of the Company ended February 28, 1998, the Directors
met nine times. Each of the current Directors attended 75% or more of the
meetings of the Board.
The Board has an audit committee, contract review committee, nominating
committee, and a valuation committee. Each member of the Board is also a member
of the audit and contract review committees. Messrs. Fletcher, Greeley, Hanson
and Collins are members of the nominating committee. Messrs. Collins, Fletcher
and Greeley are members of the valuation committee and Mr. Hanson serves as an
alternate. The audit committee is responsible for reviewing the results of the
audit of the Company by its independent public accountant. The contract review
committee is responsible for reviewing the performance of the Company's service
providers in connection with the renewal of the Company's service contracts. The
nominating committee is responsible for reviewing the credentials of proposed
nominees for the Company's Board and for selecting and nominating those
directors who are not "interested persons" (as defined in the 1940 Act) of the
Company. The valuation committee is responsible for handling issues arising out
of the pricing of securities. For the fiscal year ended February 28, 1998, the
audit committee met twice, the valuation committee and contact review committee
met once, and the nominating committee did not meet. The nominating committee
will not consider names recommended by the Company's shareholders.
For his services as Director of the Company, each Director currently
receives an annual retainer of $50,000 with a fee of $1,000 for each day of
board meetings in which he participates. Dr. Pings receives an additional
$40,000 per annum as Chairman of the Board. Each member of a committee of the
Board is entitled to receive $1,000 for each committee meeting in which he
participates, and each Chairman of a committee of the Board is entitled to
receive an annual retainer of $1,000 for his services as Chairman of the
committee. Each Director will also be reimbursed for out-of-pocket expenses
incurred as a Director. The following table sets forth (i) the aggregate
compensation paid by the Company for the fiscal year ended February 28, 1998 to
the Directors and the nominees for Director, and (ii) the aggregate compensation
paid to
6
<PAGE> 12
such Directors and nominees for services on the Company's Board and that of all
other funds in the "Fund Complex" (as defined in Schedule 14A under the
Securities Exchange Act of 1934):
<TABLE>
<CAPTION>
PENSION OR ESTIMATED TOTAL
AGGREGATE RETIREMENT ANNUAL COMPENSATION
COMPENSATION BENEFITS ACCRUED BENEFITS FROM THE
FROM THE AS PART OF UPON COMPANY AND
NAME COMPANY FUND EXPENSES RETIREMENT FUND COMPLEX(1)
- ---- -------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Edward S. Bottum(2)....... Not Applicable Not Applicable Not Applicable $ 29,125
William P.
Carmichael(2)........... Not Applicable Not Applicable Not Applicable $ 27,625
Thomas M. Collins(4)...... $46,750 $16,199 $34,428 $ 97,377
Douglas B. Fletcher....... $36,750 $23,195 $49,295 $109,240
Robert E. Greeley(3)...... $36,750 $16,220 $33,010 $116,730
Kermit O. Hanson*......... $35,750 $28,422 * $133,575
Cornelius J. Pings(4)..... $69,250 $26,984 $56,285 $152,019
</TABLE>
- ---------------
(1) The "Fund Complex" consists of the Company, Master Investment Trust, Series
I, Time Horizon Funds, Pacific Innovations Trust, and Seafirst Retirement
Funds (which were merged into the Company on June 23, 1997).
(2) Nominee. Messrs. Bottum and Carmichael currently serve as Trustees of the
Pacific Innovations Trust and Time Horizon Funds.
(3) Mr. Greeley currently also serves as Trustee for the Time Horizon Funds,
Pacific Innovations Trust, and Master Investment Trust, Series I.
(4) Mr. Collins and Dr. Pings also serve as Trustees for Master Investment
Trust, Series I.
* Mr. Hanson will continue to serve as Director until shareholder approval
of the nominees. Assuming the Meeting is held on June 19, 1998: Mr. Hanson will
be entitled to retirement benefits of $170,995 (0.002%), $53,533 (0.002%),
$7,516 (0.002%), $8,456 (0.002%), $12,527 (0.002%), $25,054 (0.002%), $1,253
(0.002%), $626 (0.002%), $1,253 (0.002%), $626 (0.002%), $313 (0.002%), $3,758
(0.002%), $6,890 (0.002%), $4,384 (0.002%), $3,758 (0.002%), $11,588 (0.002%)
and $626 (0.001%) from the Prime, Treasury, Treasury Only, Government,
Tax-Exempt Money, California Tax-Exempt Money Market, Intermediate Bond,
Corporate Bond, U.S. Government Securities, Short-Term Government, National
Municipal Bond, California Tax-Exempt Bond, Capital Income, Asset Allocation,
Aggressive Growth, Blue Chip and International Equity Funds, respectively. Bank
of America has agreed to reimburse the Company $ in the aggregate relating
to these benefits. The foregoing retirement benefits will be payable to Mr.
Hanson promptly after his successor is elected.
Under the retirement plan approved by the Board of Directors, including a
majority of its Directors who are not "interested persons" of the Company, a
Director who has been in office for the entire period from February 28, 1994 to
March 18, 1998 who dies or resigns is entitled to receive ten annual payments
each equal to the greater of (i) the "Applicable Percentage" set forth below of
the annual Director's retainer that was
7
<PAGE> 13
payable by the Company during the year of his death or resignation, or (ii) the
Applicable Percentage of the annual Director's retainer then in effect for
Directors of the Company during the year of such payment:
<TABLE>
<CAPTION>
YEARS OF SERVICE APPLICABLE
AFTER FEBRUARY 28, 1994 PERCENTAGE*
----------------------- -----------
<S> <C>
Fewer than 5............................................. 0**
5 but fewer than 6....................................... 50
6 but fewer than 7....................................... 60
7 but fewer than 8....................................... 70
8 but fewer than 9....................................... 80
9 but fewer than 10...................................... 90
10 or more............................................... 100
</TABLE>
- ---------------
* For service that includes a fractional year, a Director's years of service is
rounded to the nearest quarter of a year of service, and the Director's
Applicable Percentage is rounded to the nearest 0.25%.
** A Director who either resigns in good standing or dies before completing five
years of service as a director is assigned an Applicable Percentage of 50
percent.
Such Director is also entitled to receive an additional retirement benefit
following his death or resignation equal to an additional percentage of the
annual Director's retainer described above in this paragraph. The additional
percentage equals one-half of the difference between 100 percent and the
Director's Applicable Percentage. The Director's additional retirement benefit
is paid at the same time and in the same manner as the regular retirement
benefit.
The amount payable each year to a Director who dies or resigns is increased
by $1,000 for each year of service that the Director served as Chairman of the
Board since the Company's inception in 1982. The retirement benefit in which a
Director has become vested may not be reduced by later Board action.
In lieu of receiving ten annual payments, a Director may elect to receive
substantially equivalent benefits through a single-sum cash payment of the
present value of such benefits to be paid by the Company within 45 days of the
death or resignation of the Director. The present value of such benefits shall
be calculated (i) based on the retainer that was payable by the Company during
the year of the Director's death or resignation (and not on any retainer payable
to Directors thereafter), and (ii) using the interest rate in effect as of the
date of the Director's death or resignation by the Pension Benefit Guaranty
Corporation (or any successor thereto) for valuing immediate annuities under
terminating defined benefit pension plans.
The obligation of the Company to pay benefits to a former Director is
neither secured nor funded by the Company but shall be binding upon its
successors in interest. The payment of benefits under the retirement plan has no
priority or preference over the lawful claims of the Company's creditors or
shareholders, and the right to receive such payments is not assignable or
transferable by a Director (or former Director) other than by will, by the laws
of descent and distribution, or by the Director's written designation of a
beneficiary.
In order for Proposal 1 to be adopted, it must be approved by a plurality
of votes cast by shareholders of the Company. For more information, see "Voting
Information -- Quorum."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH NOMINEE FOR DIRECTOR OF THE COMPANY.
8
<PAGE> 14
PROPOSALS 2 AND 3: APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
(WITH RESPECT TO THE INVESTMENT ADVISORY AGREEMENT
ALL FUNDS EXCEPT THE BLUE CHIP AND INTERMEDIATE BOND FUNDS)
(WITH RESPECT TO THE SUB-ADVISORY AGREEMENT, INTERNATIONAL EQUITY FUND ONLY)
At the Meeting, shareholders of each of the Funds (except for the Blue Chip
and Intermediate Bond Funds) will be asked to vote on the approval of a new
investment advisory agreement (the "New Advisory Agreement") and shareholders of
the International Equity Fund will also be asked to vote on the approval of a
new sub-advisory agreement (the "New Sub-Advisory Agreement"), which are
summarized below. A copy of the New Advisory and Sub-Advisory Agreements are
attached to this Proxy Statement as Appendices A and B, and the description of
the Agreements which follows is qualified in its entirety by reference to
Appendices A and B.
As mentioned above, the Merger of BankAmerica with NationsBank by the end
of 1998 represents a change in ownership of the parent corporation of the
Company's investment adviser, Bank of America and, as such, may have the effect
under the 1940 Act of terminating the existing advisory agreements between the
Company and Bank of America and the existing sub-advisory agreement between Bank
of America and Wellington at the date of the consummation of the Merger.
NationsBank is a North Carolina-based, bank holding company subject to the
Bank Holding Company Act of 1956, as amended, and the rules and regulations
promulgated thereunder (the "BHCA"). Through its full-service banking
subsidiaries, NationsBank provides a wide range of commercial and retail banking
services and trust services in Maryland, Virginia, North Carolina, South
Carolina, Georgia, Florida, Kentucky, Tennessee, Arkansas, Kansas and Oklahoma.
The principal executive offices of NationsBank are located at One NationsBank
Plaza, Charlotte, North Carolina 28255, and its telephone number is (704)
374-6365.
The merger of NationsBank and BankAmerica will create a company with $570
billion in assets, $45 billion in shareholders' equity and a market
capitalization of $133 billion which operates in 22 states and 38 other
countries.
As required by the 1940 Act, the Existing Agreements provide for their
automatic termination upon "assignment." Consummation of the Merger may be
deemed to be an assignment (as defined in the 1940 Act) of the Existing
Agreements resulting in the termination of the Existing Agreements in accordance
with their terms. In anticipation of the consummation of the Merger, and to
provide continuity in investment advisory services, the Company's Board of
Directors, including a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) at a meeting held on April 28, 1998,
approved and directed that there be submitted to shareholders for approval a new
investment advisory agreement between the Company and Bank of America and a new
sub-advisory agreement between Bank of America and Wellington on behalf of the
International Equity Fund.
Section 15(f) of the 1940 Act provides that when a change in the control of
an investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as two
conditions are satisfied. First, no "unfair burden" may be imposed on the
investment company as a result of the transaction relating to the change of
control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden," as defined in the 1940 Act,
includes any arrangement during the two-year period after the change in control
whereby the investment adviser (or predecessor or successor adviser), or any
interested person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than fees for bona fide principal underwriting services). No such
compensation arrangements are in effect or contemplated insofar as the Fund is
concerned.
The second condition is that, during the three-year period immediately
following consummation of the transaction, at least 75% of the investment
company's board of directors must not be "interested persons" of
9
<PAGE> 15
the investment adviser within the meaning of the 1940 Act. At present and
following the merger of BankAmerica and NationsBank, none of the Funds'
directors out of the six directors, are and will be, interested persons of Bank
of America. The Company expects to comply with Section 15(f).
If the Merger is not completed but the proposed advisory agreement (or
sub-advisory agreement with respect to the International Equity Fund) is
approved by shareholders, Bank of America will still operate under the New
Advisory Agreement and Wellington will operate under the New Sub-Advisory
Agreement. In the event the proposed advisory agreement (or sub-advisory
agreement with respect to the International Equity Fund) is not approved by
shareholders, the Board will promptly seek to enter into new advisory
arrangements for the Funds, subject to approval by the Funds' shareholders.
Currently, the Company has various advisory agreements on behalf of
different Funds with Bank of America. The New Advisory Agreement would replace
the various advisory agreements with a single agreement between the Company and
Bank of America. Shareholders of the Blue Chip and Intermediate Bond Funds are
not being asked to approve the New Advisory Agreement. Currently, these Funds do
not have an investment advisory agreement because they invest all of their
respective assets in the Blue Chip Portfolio and Investment Grade Bond Portfolio
of Master Investment Trust, Series I ("MIT, I") which in turn is subject to a
separate investment advisory agreement with Bank of America (the "MIT, I
Agreement").
DESCRIPTION OF THE EXISTING AGREEMENTS
The Existing Agreements were last approved by shareholders as follows:
<TABLE>
<CAPTION>
FUND DATE OF AGREEMENT APPROVAL
---- ----------------- --------
<S> <C> <C>
Prime................................ April 22, 1992 By public shareholders on
Treasury December 2, 1991
Tax-Exempt Money California Tax-
Exempt Money Market
Treasury Only
Government........................... March 1 1993 By sole shareholder on February 27,
1993
Aggressive Growth.................... April 22, 1992 By public shareholders on
U.S. Government Securities December 2, 1991
California Tax-Exempt Bond
Capital Income....................... November 1, 1994 By public shareholders on December 29
1994
National Municipal Bond+............. July 1, 1996 By sole interestholder of the National
Municipal Bond Portfolio of Master
Investment Trust, Series II ("MIT,
II") on January 20, 1994
Short-Term Government................ July 30, 1996 By sole shareholder on August 1, 1996
Corporate Bond+...................... September 1, 1996 By sole interestholder of the Corporate
Bond Portfolio of MIT, I on December
3, 1993
International Equity*................ January 1, 1997 By public shareholders on December 23,
1996
Asset Allocation+.................... June 23, 1997 By public shareholders on April 28,
1995
</TABLE>
- ---------------
+ Prior to July 1, 1996, September 1, 1996 and June 23, 1997, the National
Municipal Bond Fund, Corporate Bond Fund and Asset Allocation Fund operated in
a master-feeder structure and invested all of their respective assets in the
National Municipal Bond Portfolio of MIT, II, Corporate Bond Portfolio of MIT,
I
10
<PAGE> 16
and Asset Allocation Portfolio of MIT, I. On July 1, 1996, September 1, 1996
and June 23, 1997, respectively, the National Municipal Bond Fund, Corporate
Bond Fund and Asset Allocation Fund withdrew their investments from such
portfolios and invested directly in portfolio securities. The shareholders of
the National Municipal Bond Fund, Corporate Bond Fund and Asset Allocation
Fund did not approve the new investment advisory agreements pursuant to a
position of the staff of the Securities and Exchange Commission ("SEC") which
permitted feeder funds to reorganize into a managed portfolio without such
approvals.
* The International Equity Fund is subadvised by Wellington pursuant to a
sub-advisory agreement dated and approved on the same dates as those with
respect to the Agreement with Bank of America.
In each of the Existing Agreements, Bank of America and Wellington (with
respect to the International Equity Fund) has agreed, subject to Board
oversight, to provide a continuous investment program and to be responsible for,
make decisions with respect to and place orders for all purchases and sales of
each Fund's securities.
UNLESS A DIFFERENCE IS SPECIFICALLY DISCUSSED BELOW IN "DESCRIPTION OF
PROPOSED ADVISORY AND SUB-ADVISORY AGREEMENTS," THE TERMS OF THE NEW ADVISORY
AND SUB-ADVISORY AGREEMENTS ARE SUBSTANTIALLY THE SAME AS THOSE IN THE EXISTING
AGREEMENTS AND THERE ARE NO OTHER MATERIAL DIFFERENCES. THE ADVISORY FEES
PROVIDED FOR IN THE EXISTING AGREEMENTS WILL REMAIN THE SAME AND NOT CHANGE IN
THE NEW ADVISORY AND SUB-ADVISORY AGREEMENTS.
For the services provided and expenses assumed pursuant to the Existing
Agreement with respect to the Prime, Treasury, Government, Treasury Only,
Tax-Exempt Money and California Tax-Exempt Money Market Funds, Bank of America
is entitled to fees, computed daily and payable monthly, at the annual rate of
.10% of the first $3 billion of net assets of each such Fund, .09% of the next
$2 billion of net assets of each such Fund, plus .08% of the amount over $5
billion of net assets of each such Fund. For the services provided and expenses
assumed pursuant to the Existing Agreements, Bank of America is entitled to
fees, computed daily and payable monthly, at the annual rate of .25% with
respect to the Short-Term Government Fund; .30% with respect to the California
Tax-Exempt Bond Fund; .35% with respect to the U.S. Government Securities and
National Municipal Bond Funds; .40% with respect to the Asset Allocation Fund;
.45% with respect to the Capital Income and Corporate Bond Funds; .60% with
respect to the Aggressive Growth Fund; and .75% with respect to the
International Equity Fund. For the services provided and expenses assumed
pursuant to the Existing Agreement with respect to the International Equity
Fund, Wellington is entitled to a sub-advisory fee payable quarterly in arrears
at the following annual rate of .40% of the first $50 million; .30% of the next
$100 million; .25% of the next $350 million and .20% of the amount over $500
million. For the fiscal year
11
<PAGE> 17
ended February 28, 1998, the Company and paid Bank of America and Bank of
America voluntarily waived the following amounts:
<TABLE>
<CAPTION>
TOTAL ADVISORY TOTAL ADVISORY
FUND FEES PAID FEES WAIVED*
---- -------------- --------------
<S> <C> <C>
Prime..................................................... $7,234,054 --
Treasury.................................................. 2,708,981 --
Government................................................ 460,263 $210,869
Treasury Only............................................. 439,545 --
Tax-Exempt Money.......................................... 636,863 --
California Tax-Exempt Money Market........................ 1,149,877 --
Asset Allocation.......................................... 581,916 --
Corporate Bond............................................ 164,104 164,104
Short-Term Government..................................... 64,249 64,249
National Municipal Bond................................... 48,653 48,653
California Tax-Exempt Bond................................ 828,272 194,717
U.S. Government Securities................................ 257,392 211,393
Capital Income............................................ 1,637,658 --
Aggressive Growth......................................... 1,239,141 --
International Equity...................................... 232,581 232,581
</TABLE>
- ---------------
* Under the Existing Agreements, Bank of America may terminate, reduce or
increase its fee waivers at any time.
For the fiscal year ended February 28, 1998, Bank of America paid
Wellington $37,274 in sub-advisory fees and Wellington waived $86,973 in
sub-advisory fees.
Effective September 15, 1997, Bank of America became administrator to the
Funds of the Company. For the period from September 15, 1997 to February 28,
1998, the Company paid Bank of America administration fees and Bank of America
voluntarily waived the following amounts:
<TABLE>
<CAPTION>
ADMINISTRATION ADMINISTRATION
FUND FEES PAID FEES WAIVED
---- -------------- --------------
<S> <C> <C>
Prime.................................................... $3,929,655 --
Treasury................................................. 1,359,676 --
Government............................................... 210,009 --
Treasury Only............................................ 190,516 --
Tax-Exempt Money......................................... 322,955 --
California Tax-Exempt Money Market....................... 575,369 --
Asset Allocation......................................... 160,798 --
Corporate Bond........................................... 34,608 $34,608
Intermediate Bond........................................ 51,576 3,867
Short-Term Government.................................... 27,820 27,820
National Municipal Bond.................................. 12,713 12,713
California Tax-Exempt Bond............................... 249,745 43,399
U.S. Government Securities............................... 66,773 49,554
Capital Income........................................... 355,132 --
Aggressive Growth........................................ 294,171 --
Blue Chip................................................ 406,555 --
International Equity..................................... 33,933 33,932
</TABLE>
12
<PAGE> 18
For the fiscal year ended February 28, 1998, Bank of America and its
affiliates received the following fees relating to Pacific Horizon Shares of the
following Funds pursuant to the Special Management Services Plan:
<TABLE>
<CAPTION>
BANK OF AMERICA
FUND AND ITS AFFILIATES
---- ------------------
<S> <C>
Prime....................................................... $6,742,687
Treasury.................................................... $ 789,384
Treasury Only............................................... $ 607,979
Government.................................................. $ 427,718
Tax-Exempt Money............................................ $ 377,885
California Tax-Exempt Money Market.......................... $1,676,744
</TABLE>
For the fiscal year ended February 28, 1998, Bank of America and its
affiliates received the following fees relating to Horizon Service Shares of the
following Funds pursuant to the Shareholder Services Plan:
<TABLE>
<CAPTION>
BANK OF AMERICA
FUND AND ITS AFFILIATES
---- ------------------
<S> <C>
Prime....................................................... $7,381,916
Treasury.................................................... $3,668,245
Treasury Only............................................... $ 432,402
Government.................................................. $ 586,936
Tax-Exempt Money............................................ $ 422,932
California Tax-Exempt Money Market.......................... $1,187,827
</TABLE>
For the fiscal year ended February 28, 1998, Bank of America and its
affiliates received the following fees relating to X, S, and Y Shares of the
following Funds pursuant to the Distribution and Service Plan:
<TABLE>
<CAPTION>
BANK OF AMERICA
FUND AND ITS AFFILIATES
---- ------------------
<S> <C>
Prime Fund
X Shares.................................................. $2,468,893
S Shares.................................................. $ 950,478
Y Shares.................................................. $ 399,384
Treasury Fund
X Shares.................................................. $ 345,956
S Shares.................................................. $ 0
Y Shares.................................................. $ 246,527
Tax-Exempt Money
S Shares.................................................. $ 41,847
California Tax-Exempt Money Market Fund
X Shares.................................................. $ 200,290
S Shares.................................................. $ 266,540
</TABLE>
13
<PAGE> 19
For the fiscal year ended February 28, 1998, Bank of America and its
affiliates received the following fees relating to A and SRF Shares of the
following Funds pursuant to the Shareholder Service Plan:
<TABLE>
<CAPTION>
BANK OF
AMERICA
FUND AND ITS AFFILIATES
---- ------------------
<S> <C>
Corporate Bond
A Shares.................................................. $ 18,541
U.S. Government Securities
A Shares.................................................. $129,541
Short-Term Government
A Shares.................................................. $ 0
Capital Income
A Shares.................................................. $772,752
Intermediate Bond
A Shares.................................................. $ 40,786
SRF Shares................................................ $ 55,252
National Municipal Bond
A Shares.................................................. $ 2,159
California Tax-Exempt Bond
A Shares.................................................. $313,116
Asset Allocation
A Shares.................................................. $ 86,340
SRF Shares................................................ $313,527
Blue Chip
A Shares.................................................. $476,702
SRF Shares................................................ $139,317
Aggressive Growth
A Shares.................................................. $209,931
International Equity
A Shares.................................................. $ 1,787
</TABLE>
For the fiscal year ended February 28, 1998, affiliates of Bank of America
received the following fees relating to K Shares of the following Funds pursuant
to the Distribution Plan:
<TABLE>
<CAPTION>
AFFILIATES OF
BANK OF AMERICA
---------------
<S> <C>
Corporate Bond.............................................. $ 0
U.S. Government Securities.................................. $ 0
Capital Income.............................................. $660
Intermediate Bond........................................... $ 0
National Municipal Bond..................................... $ 0
California Tax-Exempt Bond.................................. $ 0
Asset Allocation............................................ $ 0
Blue Chip................................................... $ 0
Aggressive Growth........................................... $ 0
International Equity........................................ $ 0
</TABLE>
Bank of America received no fees under the Distribution Plan.
14
<PAGE> 20
For the fiscal year ended February 28, 1998, Bank of America and its
affiliates received the following fees from K Shares of the following Funds
pursuant to the Administrative and Shareholder Services Plan:
<TABLE>
<CAPTION>
BANK OF
AMERICA
AND ITS AFFILIATES
------------------
<S> <C>
Corporate Bond.............................................. $ 0
U.S. Government Securities.................................. $ 0
Capital Income.............................................. $330
Intermediate Bond........................................... $ 0
National Municipal Bond..................................... $ 0
California Tax-Exempt Bond.................................. $ 0
Asset Allocation............................................ $ 0
Blue Chip................................................... $ 0
Aggressive Growth........................................... $ 0
International Equity........................................ $ 0
</TABLE>
From March 1, 1997 through February 28, 1998, no Funds of the Company paid
brokerage commissions to affiliated brokers.
DESCRIPTION OF THE PROPOSED ADVISORY AND SUB-ADVISORY AGREEMENTS
The New Advisory Agreement would consolidate the advisory relationship with
all Funds of the Company other than the Blue Chip and Intermediate Bond Funds.
The New Advisory Agreement, similar to certain Existing Agreements, would
provide that Bank of America could provide advisory services through its own
employees or the employees of an affiliated company that also is under the
common control of BankAmerica, as long as such employees function as part of an
organized group of persons that is managed at all times by authorized officers
of Bank of America.
As mentioned above, the terms of the New Advisory and Sub-Advisory
Agreements are substantially the same as those in the Existing Agreements, and
the advisory and sub-advisory fees remain unchanged.
The New Advisory Agreement, like the Existing Agreements, provides that
Bank of America may from time to time employ or associate itself with a
sub-adviser. The New Advisory Agreement provides, in addition, that
notwithstanding the employment of any sub-adviser, Bank of America with respect
to the International Equity Fund, will: (i) establish and monitor general
investment criteria and policies for the Fund; (ii) review and analyze on a
periodic basis the Fund's portfolio holdings and transactions in order to
determine their appropriateness in light of the Fund's respective shareholder
bases; and (iii) review and analyze on a periodic basis the policies established
by any sub-adviser for the Fund with respect to the placement of orders for the
purchase and sale of portfolio securities.
The New Advisory and Sub-Advisory Agreements, like the Existing Agreements,
provide that, subject to the supervision of the Board (and Bank of America with
respect to any sub-adviser), Bank of America or Wellington (with respect to the
International Equity Fund) will provide a continuous investment program for the
Funds, including investment research and management with respect to all
securities, investments, and cash equivalents in the Funds. Bank of America or
Wellington (with respect to the International Equity Fund) will determine from
time to time what securities and other investments will be purchased, retained
or sold by the Funds. Bank of America or Wellington (with respect to the
International Equity Fund) will provide the services rendered by it under the
New Advisory and Sub-Advisory Agreements in accordance with the investment
objectives, policies and restrictions as stated in the Company's currently
effective Registration Statement, resolutions of the Board, and, with respect to
any sub-adviser, the investment criteria and policies established from time to
time for any Fund advised by Bank of America. Bank of America agrees in the New
Advisory Agreement to review, monitor and report to the Board regarding the
performance and investment procedures of any sub-adviser employed by the Board.
15
<PAGE> 21
Pursuant to the New Advisory or Sub-Advisory Agreements, Bank of America
and Wellington (with respect to the International Equity Fund) further agree
that they will, among other things, (i) conform with all applicable rules and
regulations of the SEC and will conduct their activities under their respective
agreements in accordance with other applicable law; (ii) place orders for the
purchase and sale of portfolio securities for the Funds with brokers or dealers
selected by Bank of America (or, with respect to any sub-adviser such as
Wellington, in accordance with the policy set forth in the affected Fund's
Registration Statement or as Bank of America or the Board may direct); and (iii)
not purchase any securities from or sell any securities to Bank of America, any
sub-adviser, administrator, sub-administrator or distributor of the Company or
any of their affiliates acting as principal or broker, except as permitted by
law. Bank of America or Wellington (with respect to the International Equity
Fund) also agree to maintain such books and records regarding the securities
transactions with respect to the Funds as may be required or otherwise requested
by the Company and the Board, and to supply the Company and the Board with
reports, statistical data and economic information as requested.
Like the Existing Agreements, under the New Advisory Agreement, Bank of
America agrees to maintain a policy and practice of conducting its investment
advisory operations independently of any of its commercial banking operations.
Bank of America or Wellington (with respect to the International Equity
Fund) agree in the New Advisory and Sub-Advisory Agreements, as they did in the
Existing Agreements, to treat confidentially and as proprietary information of
the Company all records and other information relative to the Company and prior
or present Company shareholders or those persons or entities who respond to
inquires concerning investment in the Company, and agree not to use such records
and information for any purpose other than performance of their responsibilities
and duties under the New Agreement, except after prior notification to and
approval in writing by the Company.
The New Advisory and Sub-Advisory Agreements, like the Existing Agreements,
provides that Bank of America or Wellington (with respect to the International
Equity Fund) will pay all expenses incurred by it in connection with their
activities under the New Advisory and Sub-Advisory Agreements other than the
cost of securities (including brokerage commissions, if any) purchased or sold
with respect to the Funds.
The New Advisory and Sub-Advisory Agreements, like the Existing Agreements,
provide that in executing portfolio transactions and selecting brokers or
dealers, Bank of America or Wellington (with respect to the International Equity
Fund) will use its best efforts to seek on behalf of the Funds the best overall
terms available. In assessing the best overall terms available for any
transaction, Bank of America or Wellington (with respect to the International
Equity Fund) will consider all factors that it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. In evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, Bank of
America or Wellington (with respect to the International Equity Fund) may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided with
respect to a Fund, and/or other accounts over which Bank of America or
Wellington (with respect to the International Equity Fund) or its affiliates
exercise investment discretion. Bank of America or Wellington (with respect to
the International Equity Fund) is authorized, subject to the prior approval of
the Board, to negotiate and pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction with respect to a Fund that is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if,
but only if, Bank of America or Wellington (with respect to the International
Equity Fund) determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer -- viewed in terms of that particular transaction or in terms
of the overall responsibilities of Bank of America or Wellington (with respect
to the International Equity Fund) to the Fund and to the Company. Bank of
America or Wellington (with respect to the International Equity Fund), however,
is not required to seek prior approval from the Board, so long as the broker or
dealer selected by Bank of America or Wellington (with respect to the
International Equity Fund) obtains the best price and execution on a particular
transaction.
16
<PAGE> 22
In executing portfolio transactions with respect to a Fund, Bank of America
or Wellington (with respect to the International Equity Fund) may, but is not
obligated to, to the extent permitted by applicable laws and regulations,
aggregate the securities to be sold or purchased with those of its other clients
where such aggregation is not inconsistent with the policies set forth in the
Company's Registration Statement. In such event, Bank of America or Wellington
(with respect to the International Equity Fund) will allocate the securities so
purchased or sold, and the expenses incurred in the transaction, in the manner
it considers to be most equitable and consistent with its fiduciary obligations
to such Fund and such other clients.
The New Advisory and Sub-Advisory Agreements, like the Existing Agreements,
provide that Bank of America or Wellington (with respect to the International
Equity Fund) will not be liable for any error of judgment or mistake of law or
for any loss suffered by the Company in connection with the performance of the
New Advisory or Sub-Advisory Agreements, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services or
any loss resulting from willful misfeasance, bad faith or negligence on the part
of Bank of America or Wellington (with respect to the International Equity Fund)
in the performance of its duties or from reckless disregard by it of its
obligations and duties under the New Advisory or Sub-Advisory Agreements.
If approved by a majority of the outstanding shares (as defined below) of
each Fund, the New Advisory and Sub-Advisory Agreements will continue in effect
until October 31, 1999. Thereafter, if not terminated, the New Advisory or
Sub-Advisory Agreements shall continue in effect for successive annual periods,
provided such continuance is approved at least annually (i) by the vote of a
majority of those members of the Board who are not "interested persons" of any
party to the New Advisory or Sub-Advisory Agreements (as that term is defined in
the 1940 Act), cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Board or by vote of a majority of the outstanding
voting securities of each Fund.
EVALUATION BY THE BOARD OF DIRECTORS OF THE COMPANY.
The New Advisory and Sub-Advisory Agreements were unanimously approved by
the Board and by a majority of those members of the Board who were not
"interested persons" (as that term is defined in the 1940 Act) of any party to
the Agreement at meetings held on March 18, 1998 and April 28, 1998. The Board
considered the Merger. The Board also considered that the New Advisory and
Sub-Advisory Agreements are substantially the same as the Company's Existing
Agreements (except as noted above) and that the contractual advisory fee rate
payable by each Fund under the New Advisory and Sub-Advisory Agreements would be
identical to that payable under the Existing Agreements. The Board also
considered the benefits which Bank of America and Wellington may derive from the
New Advisory and Sub-Advisory Agreements. Based on its evaluation, the Board
concluded that approval of the New Advisory and Sub-Advisory Agreements would be
in the best interests of the Company and its shareholders.
INFORMATION ABOUT THE PROPOSED ADVISER AND SUB-ADVISER.
BANK OF AMERICA. Bank of America, which has principal offices located at
555 California Street, San Francisco, California 94104, serves as investment
adviser to the Funds pursuant to the Existing Agreements. Bank of America is a
wholly-owned subsidiary of BankAmerica, a registered bank holding company.
Formed in 1904, Bank of America is a national banking association that provides
commercial banking and trust business through an extensive system of branches
across the western United States. Bank of America's principal banking affiliates
operate branches in ten U.S. states as well as corporate banking, business
credit and thrift offices in major U.S. cities. In addition, it has branches,
corporate offices and representative offices in 36 foreign countries.
The name and principal occupation of the principal executive officer and
each director of Bank of America as of April 28, 1998 were as follows: David A.
Coulter (Chairman, Chief Executive Officer and President of Bank of America and
BankAmerica); Joseph F. Alibrandi (Chairman of the Board of Whittaker
Corporation); Peter Bedford (Chairman and Chief Executive Officer of Bedford
Property Investors, Inc.); Richard A. Clarke (Retired Chairman of the Board of
Pacific Gas & Electric Company); Timm F. Crull (Retired Chairman of the Board of
Nestle USA, Inc.); Kathleen Feldstein (President of Economics Studies,
17
<PAGE> 23
Inc.); Donald E. Guinn (Chairman Emeritus of Pacific Telesis Group); Frank L.
Hope, Jr. (Consulting Architect); Walter E. Massey, Ph.D. (President of
Morehouse College); John M. Richman (Of Counsel Wachtell, Lipton, Rosen & Katz);
Richard M. Rosenberg (Director and Retired Chairman of the Board of Bank of
America and BankAmerica); A. Michael Spence (Dean of the Graduate School of
Business of Stanford University) and Solomon D. Trujillo (President and CEO of
U.S. West Communications Group). It is possible that the persons listed above
may change as a result of the Merger.
The above persons may be reached c/o Bank of America, 555 California
Street, San Francisco, California 94104.
Bank of America also serves as investment adviser to the following
registered investment company portfolios, which have investment objectives
similar to the Funds of the Company. These portfolios, their approximate net
assets (as of April 2, 1998) and the annual advisory fees payable to the
portfolio of Bank of America are as follows:
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS SCHEDULE OF FEES
NAME OF FUND AS OF APRIL 2, 1998 NET ASSETS/ANNUAL RATE
------------ ---------------------- -----------------------
<S> <C> <C>
Pacific Innovations Trust Money Market Fund........ $6,345,666 .22%
Pacific Innovations Trust Managed Bond Fund........ $1,340,513 .37%
Pacific Innovations Trust Capital Income Fund...... $1,711,707 .48%
Pacific Innovations Trust Blue Chip Fund........... $ 948,642 .53%
Pacific Innovations Trust Aggressive Growth Fund... $ 923,687 .61%
Pacific Innovations Trust International Fund....... $ 937,994 .66%
</TABLE>
No officer or director of the Company is an officer, employee, or general
partner of Bank of America.
AUTHORITY TO ACT AS INVESTMENT ADVISER. Banking laws and regulations
currently prohibit a bank holding company registered under the BHCA or any
affiliate thereof from sponsoring, organizing or controlling a registered
open-end investment company continuously engaged in the issuance of its shares,
and prohibit banks generally from underwriting, selling or distributing
securities, but in general do not prohibit such a holding company or affiliate
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company or from purchasing shares of such a company as
agent for and upon the order of customers. Bank of America is subject to such
laws and regulations, but believes that it may perform the services contemplated
by the New Advisory Agreement without violating the Glass-Steagall Act or other
applicable banking laws or regulations. Future changes in legal requirements
relating to the permissible activities of banks and their affiliates, as well as
future interpretations of current requirements, could prevent Bank of America
from continuing to perform such services for the Fund. If it was prohibited from
acting as investment adviser to the Fund, it is expected that the Board would
recommend that shareholders approve a new investment advisory agreement with
another qualified firm.
WELLINGTON. Wellington is a Massachusetts limited liability partnership,
with headquarters at 75 State Street, Boston, Massachusetts 02109. Wellington is
a professional investment counseling firm which provides investment services to
investment companies, employee benefit plans, endowments, foundations and other
institutions and individuals. Wellington's predecessor organizations have
provided investment advisory services for over 60 years.
Wellington is managed by its active partners. The managing partners of
Wellington as of March 31, 1998 were Robert W. Doran, Duncan M. McFarland and
John R. Ryan. The following individuals were general partners and Senior Vice
Presidents of Wellington as of March 31, 1998, and may be reached at the
principal offices of the firm: Kenneth L. Abrams, Nicholas C. Adams, Rand L.
Alexander, Deborah L. Allinson, Nancy T. August, James H. Averill, Karl E.
Bandtel, Marie-Claude Bernal, William N. Booth, Paul Braverman, Robert A. Bruno,
Pamela Dippel, Robert W. Doran, Charles T. Freeman, Laurie A. Gabriel, Frank J.
Gilday, John H. Gooch, Nicholas P. Greville, Paul J. Hamel, William C.S. Hicks,
Paul D. Kaplan, John C. Keogh, George C. Lodge, Jr., Nancy T. Lukitsh, Mark T.
Lynch, Christine S. Manfredi, Patrick J. McCloskey, Earl
18
<PAGE> 24
E. McEvoy, Duncan M. McFarland, Paul M. Mecray, III, Matthew E. Megargel, James
N. Mordy, Diane C. Nordin, Stephen T. O'Brien, Edward P. Owens, Saul J. Pannell,
Thomas L. Pappas, David M. Parker, Jonathan M. Payson, Stephen M. Pazuk, Robert
D. Rands, Eugene E. Record, Jr., John R. Ryan, Joseph H. Schwartz, David W.
Scudder, Binkley C. Shorts, Trond Skramstad, Catherine A. Smith, Stephen A.
Soderberg, Harriet T. Taggart, Perry M. Traquina, Gene R. Tremblay, Mary Ann
Tynan, Clare Villari, Ernst H. von Metzsch, James L. Walters, Kim Williams and
Frank V. Wisneski.
Wellington also serves as investment sub-adviser to the following
registered investment company portfolios, which have investment objectives
similar to the International Equity Fund. These portfolios, their approximate
net assets (as of March 31, 1998) and the annual sub-advisory fees payable by
the portfolios to Wellington are as follows:
<TABLE>
<CAPTION>
APPROXIMATE NET
ASSETS SCHEDULE OF FEES
NAME OF FUND AS OF 3/31/98 NET ASSETS/ANNUAL RATE
------------ --------------- ---------------------------
<S> <C> <C>
Hartford International Advisers Fund, Inc.(a)..... $235.55 million First $ 50 million/0.400%
Next $100 million/0.300%
Next $350 million/0.250%
Over $500 million/0.200%
Hartford International Opportunities Fund,
Inc.(a)......................................... $ 1.20 million First $ 50 million/0.400%
Next $100 million/0.300%
Next $350 million/0.250%
Over $500 million/0.200%
The Hartford Mutual Funds, Inc.: International
Opportunities Fund(b)*.......................... $ 37.44 million First $500 million/0.850%
Next $500 million/0.750%
Over $1,000 million/0.700%
Anchor Series Trust: Foreign Securities
Portfolio(c).................................... $ 37.21 million First $ 50 million/0.400%
Next $100 million/0.275%
Next $350 million/0.200%
Over $500 million/0.150%
Anchor Series Trust: Strategic Multi-Asset
Portfolio(c).................................... $ 55.62 million First $ 50 million/0.300%
Next $100 million/0.200%
Next $350 million/0.175%
Over $500 million/0.150%
Pacific Innovations Trust: Pacific Innovations
International Fund(d)........................... $ 10.34 million First $ 50 million/0.400%
Next $100 million/0.300%
Next $350 million/0.250%
Next $500 million/0.200%
The Pillar Funds: International Growth Fund....... $ 15.54 million First $ 50 million/0.600%
Next $ 50 million/0.450%
Over $150 million/0.300%
</TABLE>
- ---------------
(a) A mutual fund used as an investment vehicle for a variable annuity product
offered by Hartford Financial Services Group, Inc. ("Hartford"), a
Connecticut insurance holding company. Wellington serves as investment
sub-adviser for approximately $26.18 billion in assets for mutual funds
sponsored by Hartford.
(b) A mutual fund publicly offered by Hartford. Wellington serves as investment
sub-adviser for approximately $2.29 billion in assets for mutual funds
sponsored by Hartford.
19
<PAGE> 25
(c) A mutual fund used as an investment vehicle for a variable annuity product
offered by SunAmerica, Inc. ("SunAmerica"), a financial services company.
Wellington serves as investment sub-adviser for approximately $2.29 billion
in assets for mutual funds sponsored by SunAmerica.
(d) A mutual fund used as an investment vehicle for a variable annuity product
offered by Pacific Mutual Life Insurance Company.
* Subject to certain fee waivers.
No officer or director of the Company is an officer, employee, general
partner or shareholder of Wellington.
The approval of the New Advisory Agreement requires the affirmative vote of
the holders of a "majority of the outstanding shares" of each Fund to which it
would apply (as defined by the 1940 Act), which means the lesser of (a) the
holders of 67% or more of the shares of each Fund present at the Meeting if the
holders of more than 50% of the outstanding shares of such Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of such Fund.
This voting requirement is hereafter referred to as a "majority of the
outstanding shares." For more information, see "Voting Information -- Quorum."
If the New Advisory Agreement is approved by the shareholders of each Fund,
then the corresponding Existing Agreement will terminate with respect to such
Fund upon the execution of the New Advisory Agreement. If the New Advisory
Agreement is not approved with respect to any Fund, then the Board will promptly
seek to enter into a new advisory arrangement for the Fund, subject to approval
by the Fund's shareholders.
The New Sub-Advisory Agreement must be approved by a "majority of the
outstanding shares" of the International Equity Fund. If the New Sub-Advisory
Agreement is approved by shareholders of the Fund, then the Existing Agreement
will terminate upon the execution of the New Sub-Advisory Agreement. If the New
Sub-Advisory Agreement is not approved with respect to the Fund, then the Board
will promptly seek to enter into a new sub-advisory arrangement for the Fund,
subject to approval by the Fund's shareholders.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE NEW ADVISORY AND SUB-ADVISORY AGREEMENTS.
PROPOSAL 4: APPROVAL OF AMENDMENT TO
THE COMPANY'S CHARTER
(ALL FUNDS)
At the Meeting, shareholders will be asked to approve a change to the
Company's Charter. As currently written, the Company's Charter and By-Laws
provide that a quorum for a meeting of shareholders requires the presence,
either in person or by proxy, of a majority of shareholders entitled to vote on
a matter. If approved by shareholders, the Charter would be amended to provide
that a quorum for a meeting of shareholders requires the presence, either in
person or by proxy, of at least thirty percent of the outstanding shares
entitled to vote on a matter. The language that would be added to the Charter is
as follows:
ARTICLE X
* * *
(5) The presence in person or by proxy of stockholders of the Corporation
entitled to cast at least thirty percent (30%) of all of the votes entitled to
be cast at the meeting shall constitute a quorum at any meeting of stockholders,
except that with respect to any matter that under applicable statutes or
regulatory requirements requires approval by a separate vote of one or more
classes of stock, the presence in person or by proxy of stockholders of the
Corporation entitled to cast at least thirty percent (30%) of the votes of the
particular class of stock required to be voted separately on the matter shall
constitute a quorum with respect to that class of stock.
The proposed Charter amendment would permit shareholder action to proceed
based upon a proportion of shareholders notwithstanding the lack of
participation by a majority of shareholders. Such amendment
20
<PAGE> 26
would reduce the costs associated with attempting to obtain a higher quorum and
with the adjournment of shareholder meetings when faced with a lack of quorum.
The Board may amend the Company's By-Laws without shareholder approval.
Subject to the approval of this Proposal by shareholders, the Board at a meeting
on March 18, 1998 approved an amendment to the By-Laws' provision with respect
to quorum in order to be consistent with the Charter amendment.
In order for Proposal 4 to be adopted, it must be approved by a majority of
the total number of votes entitled to be cast on this proposal. For more
information, see "Voting Information -- Quorum."
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE CHARTER AMENDMENT.
PROPOSALS 5(a)-(g): APPROVAL OF CHANGES
TO FUNDAMENTAL INVESTMENT LIMITATIONS
(EACH FUND ON A FUND-BY-FUND BASIS)
Certain investment policies and limitations of the Funds are matters of
fundamental policy and may not be changed with respect to a particular Fund
without the approval of its shareholders. Many fundamental policies with respect
to particular matters differ from one Fund to the next. The Company's adviser
has recommended to the Board that the Funds' fundamental investment limitations
relating to (1) the underwriting of securities; (2) real estate transactions;
(3) commodity transactions; (4) industry concentration; (5) lending; (6)
borrowing; and (7) issuer concentration be amended to make them uniform among
all the Funds of the Company.
Approval of Proposals 5(a)-(g) would provide for a uniform set of
fundamental limitations that would apply to the Funds of the Company. The
proposed changes also would provide for the greatest flexibility of such
policies to the extent permitted by law.
Unlike the other Funds of the Company, the California Tax-Exempt Money
Market Fund is a non-diversified fund. Accordingly, although its limitation on
issuer concentration is proposed to be revised, it will remain different from
the issuer concentration policy of the other Funds. In addition, the California
Tax-Exempt Money Market Fund's limitation on issuer concentration is proposed to
be redesignated as non-fundamental.
Attached as Appendix C to this Proxy Statement are charts for each Fund of
the Company which list each Fund's current fundamental investment limitation and
its proposed replacement. In order for the proposals comprising Proposals
5(a)-(g) to be adopted for a particular Fund, they each must be approved by a
"majority of the outstanding shares" of that Fund. Shares of each Fund affected
will be voted separately on a Fund-by-Fund basis on Proposals 5(a)-(g).
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE CHANGING OF THE FUNDAMENTAL INVESTMENT LIMITATIONS AS SET FORTH IN PROPOSALS
5(a)-(g).
PROPOSALS 6(a)-(m)
(EACH FUND ON A FUND-BY-FUND BASIS)
Proposals 6(a)-(m) would, upon the approval of shareholders, change certain
fundamental investment policies and limitations of the Funds to non-fundamental
policies and limitations. Unlike a fundamental policy or limitation, a
non-fundamental investment policy or limitation may be changed without the
approval of shareholders. These proposals would avoid the delay and expense of a
shareholder vote in the event that it is decided that the investment policy or
limitation should be changed. Neither the 1940 Act nor state securities laws
require such policies to be fundamental. Upon the approval of Proposals 6(a)-(m)
by shareholders, the Board would revise the newly non-fundamental policies as
shown in Appendix C to provide for consistency and flexibility among each of the
Funds.
21
<PAGE> 27
Because of the lack of uniformity of the fundamental investment limitations
among the Funds of the Company, not every Fund will vote on each proposal to
change each fundamental investment limitation. To the extent that a Fund is not
currently subject to a certain fundamental investment limitation, it will not
need to vote on a change to that particular limitation. A chart beginning on
page 1 of this Proxy Statement summarizes which Funds will need to vote on a
particular limitation. In addition, Appendix C to this Proxy Statement lists
each Fund's current fundamental investment limitation and its proposed
non-fundamental replacement.
In order for the proposals comprising Proposal 6(a)-(m) to be adopted for a
particular Fund, to the extent that a proposal applies to a particular Fund, it
must be approved by a "majority of the outstanding shares" of that Fund. Shares
of each Fund affected will be voted separately on a Fund-by-Fund basis on
Proposals 6(a)-(m). For more information, see "Voting Information -- Quorum."
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
CHANGING OF THE FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS TO
NON-FUNDAMENTAL POLICIES AND LIMITATIONS AS SET FORTH IN PROPOSALS 6(a)-(m).
PROPOSAL 7: APPROVAL OF CERTAIN CHANGES TO THE
FUNDAMENTAL INVESTMENT OBJECTIVES OF CERTAIN FUNDS
(CERTAIN FUNDS ON A FUND-BY-FUND BASIS)
Proposal 7 would, upon approval of shareholders, change the fundamental
investment objectives of the National Municipal Bond, International Equity,
Corporate Bond, Intermediate Bond, Blue Chip, Asset Allocation, Aggressive
Growth, U.S. Government Securities, Capital Income, California Tax-Exempt Bond
and Short-Term Government Fund to non-fundamental investment objectives. In
addition, upon approval of shareholders of the Prime, Treasury, Tax-Exempt Money
and California Tax-Exempt Money Market Funds, the fundamental investment
objectives would change to non-fundamental investment objectives as follows:
<TABLE>
<CAPTION>
FUND REVISED OBJECTIVE
---- -----------------
<S> <C>
Prime and Treasury Fund.............. The Funds seek current income, a stable share price and
daily liquidity.
California Tax-Exempt Money Market
Fund............................... The Fund seeks current income free of federal income tax and
California state personal tax, a stable share price, and
daily liquidity.
Tax-Exempt Money Fund................ The Fund seeks current income exempt from federal income
taxes, a stable share price and daily liquidity.
</TABLE>
Unlike a fundamental investment objective, a non-fundamental investment
objective may be changed without approval of shareholders. This proposal would
avoid the delay and expense of a shareholder vote in the event that it was
decided that a Fund's investment objective should be changed. Neither the 1940
Act nor state securities laws require a fund's investment objective to be
fundamental.
Attached as Appendix C to this Proxy Statement are charts for each Fund of
the Company which list each Fund's current fundamental investment objective and
limitations and its proposed replacement.
In order for Proposal 7 to be adopted with respect to an affected Fund, it
must be approved by a "majority of the outstanding shares" of that Fund. For
more information, see "Voting Information -- Quorum."
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
CHANGING OF CERTAIN FUNDAMENTAL INVESTMENT OBJECTIVES OF CERTAIN FUNDS AS SET
FORTH IN PROPOSAL 7.
22
<PAGE> 28
PROPOSAL 8: APPROVAL OF A NEW FUNDAMENTAL
INVESTMENT LIMITATION OF THE PRIME FUND
(PRIME FUND)
Proposal 8 would, upon approval of shareholders, revise the industry
concentration limitation to the Company's Prime Fund. Bank of America has
recommended to the Board that the Fund adopt a policy to concentrate (invest
more than 25% of its total assets) in obligations of one or more issuers
conducting their principal business activity in the banking and finance
industry. Bank of America believes the ability to concentrate the Prime Fund's
investments in the above listed investments will provide greater investment
flexibility and may enhance the Fund's performance potential.
Appendix C attached to this Proxy Statement lists each of the Prime Fund's
current fundamental investment limitations and their proposed replacements.
In order for Proposal 8 to be adopted with respect to the Prime Fund, it
must be approved by a "majority of the outstanding shares" of that Fund. For
more information, see "Voting-Information-Quorum."
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
APPROVAL OF A NEW FUNDAMENTAL INVESTMENT LIMITATION OF THE PRIME FUND AS SET
FORTH IN PROPOSAL 8.
PROPOSAL 9: RATIFICATION OF INDEPENDENT ACCOUNTANTS
(ALL FUNDS)
Shareholders are also being asked to vote upon the ratification or
rejection of the selection of Price Waterhouse LLP ("Price Waterhouse") as
independent accountants for the Company's fiscal year ending February 28, 1999.
The Board, including all of the Directors who are not "interested persons"
of the Company (as defined in the 1940 Act), selected Price Waterhouse as the
Company's independent accountants for the fiscal year ending February 28, 1999
at a meeting to be held on March 18, 1998. Price Waterhouse has stated that it
has no material direct or indirect financial interest in the Company. Price
Waterhouse, with offices at 1177 Avenue of the Americas, New York, New York has
served as the Company's independent accountants since 1989.
A representative of Price Waterhouse is expected to be available by
telephone at the Meeting should any matter arise requiring consultation with the
accountants, and Price Waterhouse will be given the opportunity to make a
statement if it chooses.
In order for Proposal 9 to be adopted, it must be approved by a "majority
of the outstanding shares" of the Company. For more information, see "Voting
Information -- Quorum." Unless instructed otherwise, the persons named as
proxies in the accompanying Proxy will vote for Price Waterhouse.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF THE SELECTION OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS OF THE COMPANY.
23
<PAGE> 29
VOTING INFORMATION
Record Date. Only shareholders of record at the close of business on March
24, 1998 will be entitled to vote at the Meeting. On that date, the number of
outstanding shares were as follows:
<TABLE>
<CAPTION>
PORTFOLIO AND NUMBER OF
CLASS OF SHARES SHARES OUTSTANDING
- --------------- ------------------
<S> <C>
Prime Fund
Pacific Horizon Shares................................. 2,487,858,458.94
Horizon Shares......................................... 2,240,566,013.35
Horizon Service Shares................................. 3,599,821,697.41
X Shares............................................... 954,534,723.43
Y Shares............................................... 139,556,652.13
S Shares............................................... 669,112,671.84
Treasury Fund
Pacific Horizon Shares................................. 329,427,526.25
Horizon Shares......................................... 718,101,326.50
Horizon Service Shares................................. 1,794,032,887.14
X Shares............................................... 247,368,64.08
Y Shares............................................... 73,049,036.71
S Shares............................................... -0-
Treasury Only Fund
Pacific Horizon Shares................................. 206,568,163.31
Horizon Shares......................................... 35,461,651.67
Horizon Service Shares................................. 189,181,402.68
Government Fund
Pacific Horizon Shares................................. 154,690,600.54
Horizon Shares......................................... 62,422,176.06
Horizon Service Shares................................. 279,099,318.99
Tax-Exempt Money Fund
Pacific Horizon Shares................................. 150,710,100.67
Horizon Shares......................................... 336,713,237.88
Horizon Service Shares................................. 194,932,071.85
S Shares............................................... 29,798,616.46
California Tax-Exempt Money Market Fund
Pacific Horizon Shares................................. 599,923,209.23
Horizon Shares......................................... -0-
Horizon Service Shares................................. 550,906,686.77
S Shares............................................... 153,648,372.71
X Shares............................................... 30,129,521.19
Intermediate Bond Fund
A Shares............................................... 4,349,206.03
K Shares............................................... 55,528.71
SRF Shares............................................. 3,199,191.29
Corporate Bond Fund
A Shares............................................... 2,303,496.47
K Shares............................................... 19,753.58
U.S. Government Securities Fund
A Shares............................................... 7,445,319.85
K Shares............................................... 100,312.15
</TABLE>
24
<PAGE> 30
<TABLE>
<CAPTION>
PORTFOLIO AND NUMBER OF
CLASS OF SHARES SHARES OUTSTANDING
- --------------- ------------------
<S> <C>
Short-Term Government Fund
A Shares............................................... 3,277,391.78
National Municipal Bond Fund
A Shares............................................... 1,511,389.60
K Shares............................................... -0-
California Tax-Exempt Bond Fund
A Shares............................................... 28,230,943.81
K Shares............................................... -0-
Capital Income Fund
A Shares............................................... 22,880,071.66
K Shares............................................... 169,448.78
Asset Allocation Fund
A Shares............................................... 2,429,300.09
K Shares............................................... 75,884.78
SRF Shares............................................. 11,783,835.70
Aggressive Growth Fund
A Shares............................................... 9,446,947.37
K Shares............................................... 145,592.00
Blue Chip Fund
A Shares............................................... 10,099,194.92
K Shares............................................... 247,729.94
SRF Shares............................................. 13,945,805.47
International Equity Fund
A Shares............................................... 3,962,207.17
K Shares............................................... 57,680.95
</TABLE>
With the exception of Proposals 2, 4, 5, 6 and 7, for which shares of each
Fund will vote on a Fund-by Fund basis, all shares of the Company will vote in
the aggregate and not by class or Fund at the Meeting.
If you do not plan to be present at the Meeting, you should send your vote
in by one of the following methods:
1. Complete, sign and return the enclosed proxy card(s) promptly in
the postage paid envelope;
2. Sign the proxy card and fax both sides to D.F. King, the proxy
solicitor, at (212) 269-2796; or
3. Vote by phone by calling (800) 848-3374.
Quorum. A quorum is constituted with respect to the Company, and, for
Proposals 2, 3, 5, 6, 7 and 8, with respect to each Fund, by the presence in
person or by proxy of the holders of more than 50% of the outstanding shares
entitled to vote. For purposes of determining the presence of a quorum,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owners or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power), will
be treated as shares that are present at the Meeting but which have not been
voted. Abstentions and broker "non-votes" will have the effect of a "no" vote
for purposes of obtaining the requisite approval of each proposal.
In the event that a quorum is not present at the Meeting or at any
adjournment thereof, or in the event that a quorum is present at the Meeting but
sufficient votes to approve any of the proposals are not received, the persons
named as proxies, or their substitutes, may propose and vote for one or more
adjournments of the Meeting to permit the further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those shares
affected by the adjournment that are represented at the Meeting in person or by
25
<PAGE> 31
proxy. If a quorum is present, the persons named as proxies will vote those
proxies which they are entitled to vote FOR any of the proposals in favor of
such adjournments, and will vote those proxies required to be voted AGAINST all
proposals against any such adjournments. A shareholder vote may be taken with
respect to the Company or one or more of the Funds on any of the (but not all)
Proposals prior to any such adjournment as to which sufficient votes have been
received for approval.
Other Shareholder Information. At the record date for the Meeting, Bank of
America and its affiliates held of record approximately 71.64%, 70.79%, 93.06%,
87.35%, 99.75%, 96.63%, 97.14%, 44.61%, 85.96%, 91.25%, 99.75%, 98.47%, 61.74%,
97.39%, 47.61%, 92.68% and 97.11% of the outstanding shares of the Prime,
Treasury, Treasury Only, Government, Tax-Exempt Money, California Tax-Exempt
Money Market, Intermediate Bond, Corporate Bond, Capital Income, U.S. Government
Securities, Short-Term Government, National Municipal Bond, California
Tax-Exempt Bond, Asset Allocation, Aggressive Growth, Blue Chip and
International Equity Funds, respectively, as agent or custodian for their
customers. In addition, at that date, Bank of America and its affiliates held
investment and/or voting power with respect to a majority of the Company's
outstanding shares on behalf of their customers. The Company has been advised by
Bank of America that subject to their fiduciary responsibilities, Bank of
America and its affiliates intend to vote the shares over which it has voting
power FOR, ABSTAIN and AGAINST each proposal presented at the Meeting in the
same proportions as the total votes that are cast FOR, ABSTAIN, and AGAINST the
proposal by other shareholders of the Company that have shares over which
neither Bank of America nor its affiliates have voting power.
The name, address and share ownership of each person who may have possessed
sole or shared voting or investment power with respect to more than 5% of the
Company's outstanding shares at that record date were:
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
PRIME FUND -- PACIFIC HORIZON SHARES
BA Investment Services, Inc. .............................. 2,033,770,259.690 81.7%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
BancAmerica Robertson Stephens............................. 250,011,895.890 10.0%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
PRIME FUND -- HORIZON SHARES
Bank of America NT&SA...................................... 814,340,340.870 36.3%
Private Bank
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
PRIME FUND -- HORIZON SERVICE SHARES
Bank of America NT&SA...................................... 855,684,546.380 41.3%
Financial Management and Trust Services
P.O. Box 513577 -- Terminal Annex
Los Angeles, CA 90051
BA Investment Services, Inc. .............................. 335,308,311.150 16.2%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
Security Pacific Cash Management........................... 761,751,200.000 36.8%
c/o Bank of America
1850 Gateway Blvd.
Concord, CA 94520
</TABLE>
26
<PAGE> 32
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
PRIME FUND -- X SHARES
BA Investment Services, Inc. .............................. 497,303,729.110 52.1%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
Paul G. Allen.............................................. 56,541,496.870 5.9%
110 -- 110th Avenue N.E., Suite 550
Bellevue, WA 98004
PRIME FUND -- Y SHARES
BA Arizona................................................. 8,361,520.430 6.0%
2044 Franklin Street
Oakland, CA 94612
Anodizing, Inc............................................. 7,580,731.240 5.4%
7933 NE 21st Avenue
Portland, OR 97211
E TEK Dynamics, Inc........................................ 24,196,541.990 17.3%
1885 Lundy Avenue
San Jose, CA 95131
PRIME FUND -- S SHARES
BA Investment Services, Inc. .............................. 666,621,134.190 99.6%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
TREASURY FUND -- PACIFIC HORIZON SHARES
HARE & Co., Bank of New York............................... 85,260,292.390 25.9%
and Short Term Investment Funds
One Wall Street
New York, NY 10286
BA Investment Services, Inc. .............................. 185,471,561.450 56.3%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
Hellman & Friedman Capital................................. 20,082,279.790 6.1%
Partners III, Limited Partnership
1 Maritime Plaza, 12th Floor
San Francisco, CA 94111
TREASURY FUND -- HORIZON SHARES
Bank of America NT&SA...................................... 292,337,915.270 40.7%
Private Banking
Attn: Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
HARE & Co.................................................. 90,181,808.910 12.6%
c/o Bank of New York
One Wall Street, 5th Floor
New York, NY 10286
KPMG Peat Marwick LLP...................................... 50,000,000.000 7.0%
3 Chestnut Ridge Road
Montvale, NJ 07645
</TABLE>
27
<PAGE> 33
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
Los Angeles Department of Airports......................... 38,770,620.050 5.4%
515 South Flower Street
Los Angeles, CA 90071
Century Theatres Inc. ..................................... 57,863,412.550 8.1%
150 Pelican Way
San Rafael, CA 94901
TREASURY FUND -- HORIZON SERVICE SHARES
HARE & Co. ................................................ 73,037,698.540 12.8%
c/o Bank of New York
One Wall Street, 5th Floor
New York, NY 10286
Security Pacific Cash Management........................... 179,767,500.000 30.7%
c/o Bank of America
1850 Gateway Blvd.
Concord, CA 94520
Bank of America FM&TS...................................... 300,097,553.060 51.2%
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
TREASURY FUND -- X SHARES
BA Investment Services, Inc. .............................. 14,366,165.450 5.8%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
Bank of America California................................. 29,845,549.770 12.1%
2044 Franklin Street
Oakland, CA 94612
Victoria Partners.......................................... 13,593,481.090 5.5%
d/b/a Monte Carlo Resort & Casino
3770 Las Vegas Blvd.
Las Vegas, NV 89109
Lyondell Petrochemical Co. ................................ 32,111,779.440 13.0%
1221 McKinney Street, Ste. 1600
Houston, TX 77253
New V Studios LLC.......................................... 20,047,879.080 8.1%
100 Universal City Plaza Bldg
Universal City, CA 91608
TREASURY FUND -- Y SHARES
Bank of America California................................. 5,000,000.000 6.8%
2044 Franklin Street
Oakland, CA 94612
BA Arizona................................................. 7,395,857.780 10.1%
2044 Franklin Street
Oakland, CA 94612
BA Nevada.................................................. 5,285,864.850 7.2%
2044 Franklin Street
Oakland, CA 94612
CCC TA Welfare Benefit Trust............................... 6,315,494.540 8.6%
2950 E. Richelle Ave
Las Vegas, NV 89121
Collectron AZ.............................................. 4,383,321.650 6.0%
P.O. Box 1931
Nogabs, AZ 85628
</TABLE>
28
<PAGE> 34
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
TREASURY ONLY FUND -- PACIFIC HORIZON SHARES
HARE & Co., Bank of New York and Short..................... 20,091,400.950 9.7%
Term Investment Funds
One Wall Street
New York, NY 10286
BA Investment Services, Inc. .............................. 108,219,463.160 52.4%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
BancAmerica Robertson Stephens............................. 71,340,694.310 34.5%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
TREASURY ONLY FUND -- HORIZON SHARES
Bank of America Illinois................................... 6,409,149.550 18.1%
231 S. LaSalle Street
Chicago, IL 60697
Bank of America NT&SA...................................... 21,808,462.940 61.5%
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
Hoff Companies, Inc. ...................................... 2,480,942.930 7.0%
280E Corporate Drive
Suite 200
Meridian, ID 83642
City and County of San Francisco........................... 4,048,541.520 11.4%
Mayors Office of Community
25 Van Ness Avenue, Suite 700
San Francisco, CA 94102
TREASURY ONLY FUND -- HORIZON SERVICE SHARES
The Torrance Company....................................... 13,801,090.940 7.3%
3 Del Amo Fashion Center
Torrance, CA 90503
Bank of America NT&SA...................................... 48,016,044.780 25.4%
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
BA Investment Services, Inc. .............................. 19,426,454.620 10.3%
FBO Customers
P.O. Box 7042
San Francisco, CA 94120
GOVERNMENT -- PACIFIC HORIZON SHARES
HARE & Co., Bank of New York and Short..................... 10,480,100.560 6.8%
Term Investment Funds
One Wall Street
New York, NY 10286
BA Investment Services, Inc. .............................. 93,221,381.710 60.3%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
</TABLE>
29
<PAGE> 35
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
BancAmerica Robertson Stephens............................. 27,647,083.820 17.9%
FBO Customers
P.O. Box 7042
San Francisco, CA 94120
GOVERNMENT FUND -- HORIZON SHARES
Sunquest Information Systems, Inc. ........................ 20,830,581.570 33.4%
1407 Eisenhower Blvd
Johnstown, PA 15904
Kaiser Aluminum & Chemical Co. ............................ 5,668,000.000 9.1%
5847 San Felipe
Houston, TX 77057
Bank of America NT&SA...................................... 7,812,660.390 12.5%
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
New Life Science Products, Inc. ........................... 7,557,426.510 12.1%
549 Albany Street
Boston, MA 02118
Skinner Corporation........................................ 7,662,092.800 12.3%
1326 Fifth Avenue, Suite 711
Seattle, WA 98101
Imperial Thrift & Loan Assoc............................... 3,304,158.100 5.3%
700 N. Central Ave
Glendale, CA 91203
GOVERNMENT FUND -- HORIZON SERVICE SHARES
Good Health Plan of Washington............................. 16,242,669.860 5.8%
1501 4th Avenue, Suite 500
Seattle, WA 98101
The Salvation Army......................................... 22,607,649.960 8.1%
10 W. Algonquin
Des Plains, IL 60016
Bank of America NT&SA ..................................... 37,347,398.430 13.4%
Trust, Financial Management & Trust Services
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
Security Pacific Cash Management........................... 15,388,300.000 5.5%
c/o Bank of America
1850 Gateway Blvd
Concord, CA 94520
TAX EXEMPT MONEY FUND -- PACIFIC HORIZON SHARES
BA Investment Services, Inc. .............................. 144,567,774.110 95.9%
FBO Customers Unit 17852
P.O. Box 7042
San Francisco, CA 94120
TAX EXEMPT MONEY FUND -- HORIZON SHARES
Bank of America NT&SA...................................... 331,920,607.570 98.6%
The Private Bank
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
</TABLE>
30
<PAGE> 36
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
TAX EXEMPT MONEY FUND -- HORIZON SERVICE SHARES
BA Investment Services, Inc. .............................. 30,264,776.490 15.5%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
Bank of America............................................ 131,372,590.550 67.3%
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
TAX EXEMPT MONEY FUND -- S SHARES
BA Investment Services, Inc. .............................. 29,798,616.460 100%
FBO Customers
P.O. Box 7042
San Francisco, CA 94120
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND -- PACIFIC HORIZON
SHARES
BA Investment Services, Inc. .............................. 321,856,893.670 53.7%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
BancAmerica Robertson Stephens............................. 249,805,327.070 41.6%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND -- HORIZON SERVICE
SHARES
Bank of America NT&SA...................................... 368,254,524.030 56.6%
Attn: Common Trust Funds Unit
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
BA Investment Services, Inc. .............................. 183,143,168.490 28.1%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND -- X SHARES
BA Investment Services, Inc. .............................. 30,129,521.110 100%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
CALIFORNIA TAX EXEMPT MONEY MARKET FUND -- S SHARES
BA Investment Services, Inc. .............................. 153,648,372.710 100%
FBO Customers
Unit 17852
P.O. Box 7042
San Francisco, CA 94120
</TABLE>
31
<PAGE> 37
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
INTERMEDIATE BOND FUND -- A SHARES
PACO -- Attn: Mutual Funds................................. 540,599.937 12.4%
P.O. Box 513577
Los Angeles, CA 90051
Bank of America NT&SA...................................... 2,323,909.838 53.5%
The Private Bank
Attn: Common Trust Funds Unit 38329
P.O. Box 3577
Terminal Annex
Los Angeles, CA 90051
PACO....................................................... 450,133.989 10.4%
P.O. Box 513577
Los Angeles, CA 90051
INTERMEDIATE BOND FUND -- K SHARES
Corelink Financial, Inc. .................................. 55,755.075 100%
P.O. Box 4054
Concord, CA 94524
INTERMEDIATE BOND FUND -- SRF SHARES
PFPC, Inc. ................................................ 3,199,184.025 100%
400 Bellevue Parkway
Wilmington, DE 19809
CORPORATE BOND FUND -- A SHARES
PACO....................................................... 202,812.363 8.8%
Attn: Mutual Fund
P.O. Box 513577
Los Angeles, CA 90051
Bank of America NT&SA...................................... 476,847.574 20.8%
The Private Bank
Attn: Common Trust Funds Unit 38329
P.O. Box 3577
Terminal Annex
Los Angeles, CA 90051
CORPORATE BOND FUND -- K SHARES
Corelink Financial, Inc. .................................. 19,735.291 100%
P.O. Box 4054
Concord, CA 94524
U.S. GOVERNMENT SECURITIES FUND -- K SHARES
Corelink Financial, Inc. .................................. 99,093.067 100%
P.O. Box 4054
Concord, CA 94524
SHORT-TERM GOVERNMENT FUND -- A SHARES
Bank of America NT&SA...................................... 3,080,906.697 94%
The Private Bank
Attn: Common Trust Funds Unit 38329
P.O. Box 3577
Terminal Annex
Los Angeles, CA 90051
NATIONAL MUNICIPAL BOND FUND -- A SHARES
BA Investment Services, Inc. .............................. 77,228.754 5.4%
185 Berry Street
3rd Floor
San Francisco, CA 94104
</TABLE>
32
<PAGE> 38
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
CALIFORNIA TAX-EXEMPT BOND FUND -- A SHARES
Bank of America NT&SA...................................... 2,987,918.520 10.6%
The Private Bank
Attn: Common Trust Funds Unit 38329
P.O. Box 3577
Terminal Annex
Los Angeles, CA 90051
CAPITAL INCOME FUND -- K SHARES
Corelink Financial, Inc. .................................. 153,560.735 91.2%
P.O. Box 4054
Concord, CA 94524
ASSET ALLOCATION FUND -- A SHARES
Corelink Financial, Inc. .................................. 240,277.340 10.0%
P.O. Box 4054
Concord, CA 94524
Bank of America NT&SA...................................... 147,497.446 6.1%
FBO PACO
Attn: Mutual Funds Unit
P.O. Box 3577
Terminal Annex
Los Angeles, CA 90051
ASSET ALLOCATION FUND -- K SHARES
Corelink Financial, Inc. .................................. 76,967.847 100%
P.O. Box 4054
Concord, CA 94524
ASSET ALLOCATION -- SRF SHARES
PFPC Inc. ................................................. 11,770,615.432 100%
400 Bellevue Parkway
Wilmington, DE 19809
AGGRESSIVE GROWTH FUND -- K SHARES
Corelink Financial Inc. ................................... 145,217.613 100%
P.O. Box 4054
Concord, CA 94524
BLUE CHIP FUND -- A SHARES
Bank of America NT&SA...................................... 902,886.782 9.1%
The Private Bank
Attn: Common Trust Funds Unit 38329
P.O. Box 513577
Terminal Annex
Los Angeles, CA 90051
BLUE CHIP FUND -- K SHARES
Corelink Financial Inc. ................................... 246,347.392 99.5%
P.O. Box 4054
Concord, CA 94524
BLUE CHIP FUND -- SRF SHARES
PFPC Inc. ................................................. 13,944,812.211 100%
400 Bellevue Parkway
Wilmington, DE 19809
INTERNATIONAL EQUITY FUND -- A SHARES
PACO....................................................... 729,145.018 18.4%
Attn: Mutual Funds
P.O. Box 513577
Los Angeles, CA 90051
</TABLE>
33
<PAGE> 39
<TABLE>
<CAPTION>
% OF
# OF OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
----------------- ----------------
<S> <C> <C>
Bank of America NT&SA...................................... 905,092.465 22.8%
The Private Bank
Attn: Common Trust Funds Unit 38329
P.O. Box 3577
Terminal Annex
Los Angeles, CA 90051
PACO....................................................... 1,399,995.053 35.3%
Attn: Mutual Funds
P.O. Box 513577
Los Angeles, CA 90051
INTERNATIONAL EQUITY FUND -- K SHARES
Corelink Financial, Inc. .................................. 57,454.492 100%
P.O. Box 4054
Concord, CA 94524
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company.
34
<PAGE> 40
ADDITIONAL INFORMATION
Officers. Officers of the Company are elected by the Directors and hold
office until they resign, are removed or are otherwise disqualified to serve.
The following table sets forth certain information about the Company's officers
who are not also Directors.
<TABLE>
<CAPTION>
OFFICER POSITION WITH THE PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS AND
NAME AND ADDRESS AGE SINCE COMPANY OTHER AFFILIATIONS
---------------- --- ------- ------------------- ---------------------------------------------
<S> <C> <C> <C> <C>
Stephen M. Wynne.......... 41 1997 Vice President Executive Vice President and Chief Accounting
Executive Vice President Officer (since 1993) and Senior Vice
PFPC Inc. President and Chief Accounting Officer (1991
400 Bellevue Parkway to 1993), PFPC Inc.; Executive Vice
Wilmington, DE 19809 President, PFPC International (since 1995);
Vice President and Chief Accounting Officer,
PNC Institutional Management Corp. (since
1987).
Jay F. Nusblatt........... 36 1997 Treasurer Vice President and Director of Fund
Vice President Accounting and Administration, PFPC Inc.
PFPC Inc. (since 1993); formerly Assistant Vice
103 Bellevue Parkway President, Fund/Plan Services, Inc. (1989 to
Wilmington, DE 19809 1993).
W. Bruce McConnel, III.... 55 1983 Secretary Partner of the law firm of Drinker Biddle &
1345 Chestnut Street Reath LLP.
Philadelphia National Bank
Building, Suite 1100
Philadelphia, PA 19107
Gary M. Gardner........... 46 1997 Assistant Secretary Chief Counsel-Mutual Funds, PNC Bank (since
Chief Counsel-Mutual Funds 1994); Associate General Counsel, The Boston
PNC Bank Company, Inc. (1992 to 1994); General
1600 Market Street Counsel, SunAmerica Asset Management Inc.
28th Fl. (1986 to 1992).
Philadelphia, PA 19103
J. Robert Dugan........... 32 1997 Assistant Secretary Counsel-Mutual Funds, Secretary PNC Bank
Counsel-Mutual Funds (since 1993); Associate, Drinker Biddle &
PNC Bank Reath LLP (1990 to 1993).
1600 Market Street
28th Fl.
Philadelphia, PA 19103
</TABLE>
The officers of the Company receive no compensation directly from the
Company for performing the duties of their offices. PFPC Inc., of which Messrs.
Wynne and Nusblatt are employees, receives fees for sub-administrative services
provided for the Company. PNC Bank, of which Messrs. Gardner and Dugan are
employees, serves as custodian of certain of the Funds and receives fees for
such custodial services provided for the Company. PNC Bank is also an affiliate
of PFPC Inc. Drinker Biddle & Reath LLP, of which Mr. McConnel is a partner,
receives legal fees for services provided to the Company.
Investment Adviser and Sub-Adviser. Bank of America, the Company's
adviser, has its principal offices located at 555 California Street, San
Francisco, California 94104. Wellington, the sub-adviser to the Company's
International Equity Fund, has its principal offices at 75 State Street, Boston,
Massachusetts 02109.
Administrator and Distributor. Bank of America, 555 California Street, San
Francisco, California 94104, serves as the Company's administrator, and PFPC
Inc., 400 Bellevue Parkway, Wilmington, Delaware
35
<PAGE> 41
19809 (the "Sub-Administrator"), serves as the Company's sub-administrator.
Provident Distributors, Inc., Four Falls Corporate Center, 6th Floor, West
Conshohocken, Pennsylvania 19428 (the "Distributor"), serves as the exclusive
distributor of the shares of the Company. The Sub-Administrator is an indirect,
wholly-owned subsidiary of PNC Bank Corp., a registered bank holding company.
OTHER MATTERS
The Company does not intend to hold Annual Meetings of Shareholders except
to the extent that such meetings may be required under the 1940 Act or state
law. Shareholders who wish to submit proposals for inclusion in the Proxy
Statement for a subsequent shareholder meeting should send their written
proposals to the Company at its principal office within a reasonable time before
such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment of the Meeting, the persons
named in the enclosed Proxy will vote thereon according to their best judgment
in the interests of the Company.
Dated: May , 1998
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO COMPLETE THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. SHAREHOLDERS MAY ALSO VOTE BY PHONE OR FAX THROUGH D.F. KING, OUR PROXY
SOLICITOR. TO VOTE BY FAX, SIGN THE PROXY CARD AND FAX BOTH SIDES TO (212)
269-2796 OR SIMPLY CALL 800-848-3374.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, COPIES OF THE COMPANY'S ANNUAL
AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS DATED FEBRUARY 28, 1998 AND AUGUST 31,
1997, RESPECTIVELY, TO ANY SHAREHOLDER UPON REQUEST. THE COMPANY'S ANNUAL AND
SEMI-ANNUAL REPORTS TO SHAREHOLDERS MAY BE OBTAINED FROM THE COMPANY BY WRITING
TO THE COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE 19809.
36
<PAGE> 42
APPENDIX A
PACIFIC HORIZON FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of , 1998 between PACIFIC HORIZON
FUNDS, INC., a Maryland corporation (herein called the "Company"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Adviser").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Company desires to retain the Adviser to furnish investment
advisory services to the investment portfolios of the Company listed on Schedule
A and any other investment portfolios which may be organized in the future and
listed on Schedule A (the "Funds") ;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
A. Appointment.
1. The Company hereby appoints the Adviser to act as investment adviser to
each Fund for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided. The Adviser may, in its discretion,
provide such services through its own employees or the employees of one or more
affiliated companies that are qualified to act as investment adviser to the
Company under applicable law and are under the common control of BankAmerica
Corporation provided (i) that all persons, when providing services hereunder,
are functioning as part of an organized group of persons, and (ii) that such
organized group of persons is managed at all times by authorized officers of the
Adviser.
2. In the event that the Company establishes one or more investment
portfolios other than the Funds with respect to which it desires to retain the
Adviser to act as investment adviser hereunder, it shall notify the Adviser in
writing. If the Adviser is willing to render such services under this Agreement
it shall so notify the Company in writing whereupon such investment portfolio
shall become a "Fund" hereunder and shall be subject to the provisions of this
Agreement to the same extent as the Funds except to the extent that said
provisions (including those relating to the compensation payable by the Funds to
the Adviser) are modified with respect to such Fund in writing by the Company
and the Adviser at the time. The Funds and any additional investment portfolios
established hereunder in accordance with this paragraph are sometimes
collectively referred to herein as the "Funds" and individually as a "Fund."
B. Services. Subject to the supervision of the Company's Board of
Directors (the "Board"), the Adviser, in consultation with any Sub-Adviser
appointed pursuant to Section 3 hereof with respect to a particular Fund, will
provide a continuous investment program for each of the Funds, including
investment research and management with respect to all securities and
investments and cash equivalents in the Funds. The Adviser will determine from
time to time what securities and other investments will be purchased, retained
or sold by the Company with respect to each Fund. The Adviser will provide the
services under this Agreement in accordance with each Fund's investment
objective, policies and restrictions as stated in the Company's registration
statement, as from time to time amended, and resolutions of the Board. The
Adviser further agrees that it:
1. Will conform with all applicable rules and regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law,
including but not limited to banking law.
2. Will review, monitor and report to the Board of Directors
regarding the performance and investment procedures of any Sub-Adviser (as
defined in Section 3 of this Agreement).
A-1
<PAGE> 43
3. Will assist and consult with any Sub-Adviser appointed with
respect to a particular Fund in connection with that Fund's continuous
investment program (as defined in Section 3 of this Agreement).
4. Will place all orders for the purchase and sale of portfolio
securities for the account of each Fund with brokers or dealers selected by
the Adviser. In executing portfolio transactions and selecting brokers or
dealers, the Adviser will use its best efforts to seek on behalf of the
Company and each Fund the best overall terms available. In assessing the
best overall terms available for any transaction the Adviser shall consider
all factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, the Adviser may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided
to any Fund and/or other accounts over which the Adviser or any affiliate
of the Adviser exercises investment discretion. The Adviser is authorized,
subject to the prior approval of the Board, to negotiate and pay to a
broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for any Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable in relation to
the value of the brokerage and research services provided by such broker or
dealer viewed in terms of that particular transaction or in terms of the
overall responsibilities of the Adviser to the particular Fund and to the
Company. No prior approval by the Board, however, shall be required so long
as the broker or dealer selected by the Adviser obtains best price and
execution on a particular transaction. In no instance will portfolio
securities be purchased from or sold to the Adviser, any Sub-Adviser, any
administrator, sub-administrator or distributor of the Company, or an
affiliated person of any of them acting as principal or as broker, except
as permitted by law. In executing portfolio transactions for any Fund, the
Adviser may, but shall not be obligated to, to the extent permitted by
applicable laws and regulations, aggregate the securities to be sold or
purchased with those of other Funds and its other clients where such
aggregation is not inconsistent with the policies set forth in the
Company's registration statement. In such event, the Adviser will allocate
the securities so purchased or sold, and the expenses incurred in the
transaction, pursuant to any applicable law or regulation and in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and such other clients.
In performing the investment advisory services hereunder, the Adviser
is authorized to purchase, sell or otherwise deal with securities or other
instruments for which (a) the Adviser, (b) any affiliate of the Adviser,
(c) an entity in which the Adviser or an affiliate of the Adviser has a
direct or indirect interest, or (d) another member of a syndicate or other
intermediary (where an entity referred to in (a), (b) or (c) above was a
member of the syndicate), has acted, now acts or in the future will act as
an underwriter, syndicate member, market-maker, dealer, broker or in any
other similar capacity, whether the purchase, sale or other dealing occurs
during the life of the syndicate or after the close of the syndicate,
provided such purchase, sale or dealing is permitted under the 1940 Act and
the rules thereunder. Insofar as permitted by law any rules of or under
applicable law prohibiting or restricting in any way an agent or fiduciary
from dealing with itself or from dealing with respect to any matter in
which it may or does have a personal interest shall not apply to the
Adviser, to the extent its actions are authorized under this paragraph.
5. Will maintain all books and records with respect to the securities
transactions for the Funds, keep books of account with respect to such
Funds and furnish the Board such periodic special reports as the Board may
request.
6. Will maintain a policy and practice of conducting its investment
advisory operations independently of its commercial banking operations.
When the Adviser makes investment recommendations for a Fund, its
investment advisory personnel will not inquire or take into consideration
whether the issuer of securities proposed for purchase or sale for the
Fund's account are customers of its commercial
A-2
<PAGE> 44
department. In dealing with commercial customers, the Adviser's commercial
department will not inquire or take into consideration whether securities
of those customers are held by the Funds.
7. Will treat confidentially and as proprietary information of the
Company all records and other information relative to the Company and prior
or present Company shareholders or those persons or entities who respond to
inquiries concerning investment in the Company, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder or under any other agreement with the
Company except after prior notification to and approval in writing by the
Company, which approval shall not be unreasonably withheld and may not be
withheld where the Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit the Adviser from
advertising to or soliciting the public generally with respect to other
products or services, including, but not limited to, any advertising or
marketing via radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement or solicitation may
coincidentally include prior or present Company shareholders or those
persons or entities who have responded to inquiries regarding the Company.
C. Sub-Adviser. It is understood that the Adviser may from time to time
employ or associate with itself such person or persons as the Adviser believes
to be fitted to assist it in the performance of this Agreement (each a
"Sub-Adviser"); provided, however, that the compensation of such person or
persons shall be paid by the Adviser and that the Adviser shall be as fully
responsible to the Company for the acts and omissions of any such person as it
is for its own acts and omissions; and provided further, that the retention of
any Sub-Adviser shall be approved as may be required by the 1940 Act.
Notwithstanding any such employment or association, the Adviser with respect to
the International Equity Fund, shall itself (a) establish and monitor general
investment criteria and policies for such Fund, (b) review and analyze on a
periodic basis such Fund's portfolio holdings and transactions in order to
determine their appropriateness in light of the Fund's shareholder base, and (c)
review and analyze on a periodic basis the policies established by any Sub-
Adviser for such Fund with respect to the placement of orders for the purchase
and sale of portfolio securities. In the event that any Sub-Adviser appointed
hereunder is terminated, the Adviser may provide investment advisory services
pursuant to this Agreement to the Funds without further shareholder approval.
D. Services Not Exclusive. The Adviser will for all purposes herein be
deemed to be an independent contractor and will, unless otherwise expressly
provided herein or authorized by the Board from time to time, have no authority
to act for or represent the Company in any way or otherwise be deemed its agent.
The investment management services furnished by the Adviser hereunder are not
deemed exclusive, and the Adviser will be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
E. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any such records upon the Company's request.
The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31-1 under the
1940 Act.
F. Expenses. During the term of this Agreement, the Adviser will pay all
expenses incurred by it in connection with its activities under the Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Company.
G. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Company will pay the Adviser and the Adviser
will accept as full compensation therefor a fee, computed daily and paid monthly
(in arrears) for the Funds and at the annual rates set forth on Schedule B. Such
fee as is attributable to a Fund will be a separate charge to each such Fund and
will be the several (and not joint or joint and several) obligation of each such
Fund.
H. Limitation of Liability. Subject to the provisions of Section 3 hereof
concerning the Adviser's responsibility for the acts and omissions of persons
employed by or associated with the Adviser, the Adviser
A-3
<PAGE> 45
will not be liable for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
I. Duration and Termination. This Agreement will become effective with
respect to each Fund as of the date first above written, provided that the
shareholders of each such Fund have previously approved the Agreement in
accordance with the requirements of the 1940 Act. This Agreement will become
effective with respect to any additional Fund on the date of receipt by the
Company of notice from the Adviser in accordance with Section 1(b) hereof that
the Adviser is willing to serve as investment adviser with respect to such Fund,
provided that this Agreement (as supplemented by the terms specified in any
notice and agreement pursuant to Section 1(b) hereof) shall have been approved
by the shareholders of such Fund in accordance with the requirements of the 1940
Act.
Unless sooner terminated as provided herein, this Agreement will continue
in effect until October 31, 1999. Thereafter, if not terminated, this Agreement
shall continue in effect as to a particular Fund for successive annual periods,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Board who are not interested persons
of any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board or by vote of a
majority of the outstanding voting securities of such Fund. Notwithstanding the
foregoing, this Agreement may be terminated as to any Fund at any time, without
the payment of any penalty, by the Company (by vote of the Board or by vote of a
majority of the outstanding voting securities of such Fund), or by the Adviser,
on sixty days' written notice. This Agreement will immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as the meaning of such terms in the 1940 Act.)
J. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement will be
effective as to a particular Fund until approved by vote of a majority of the
outstanding voting securities of such Fund.
K. Notices. Notices of any kind to be given to the Adviser hereunder by
the Company will be in writing and will be duly given if mailed or delivered to
the Adviser at 555 California Street, San Francisco, California 94104, or at
such other address or to such individuals as will be so specified by the Adviser
to the Company. Notices of any kind to be given to the Company hereunder by the
Adviser will be in writing and will be duly given if mailed or delivered to the
Company at 400 Bellevue Parkway, Suite 108, Wilmington, Delaware 19809 (with a
copy to Association of American Universities, 1200 New York Avenue, N.W., Suite
550, Washington, D.C. 20005, Attention: Dr. Cornelius J. Pings), or at such
other address or to such individual as will be so specified by the Company to
the Adviser.
L. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and will inure to the benefit of
the parties hereto and their respective successors and will be governed by the
internal laws, and not the law of conflicts, of the State of Maryland; provided
that nothing herein will be construed in a manner inconsistent with the 1940
Act, the Investment Advisers Act of 1940, as amended, or any rule or regulation
of the Securities and Exchange Commission thereunder. This Agreement may be
executed in two or more parts which together shall constitute a single
Agreement.
A-4
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PACIFIC HORIZON FUNDS, INC.
By:
------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
------------------------------------
Name:
Title:
A-5
<PAGE> 47
<TABLE>
<S> <C>
SCHEDULE A
FUNDS
Prime
Treasury
Treasury Only
Government
Tax-Exempt Money
California Tax-Exempt Money Market
Aggressive Growth
U.S. Government Securities
Capital Income
California Tax-Exempt Bond
Asset Allocation
National Municipal Bond
International Equity
Short-Term Government
Corporate Bond
</TABLE>
A-6
<PAGE> 48
SCHEDULE B
<TABLE>
<CAPTION>
FEE AS A PERCENTAGE
FUND OF EACH FUND'S NET ASSETS
- ---- -------------------------
<S> <C>
Prime, Treasury, Treasury Only, Government, Tax-Exempt Money
and California Tax-Exempt Money Market Funds.............. .10% of the first $3 billion; .09%
of the next $2 billion; plus .08%
of the amount over $5 billion
Short-Term Government Fund.................................. .25%
California Tax-Exempt Bond Fund............................. .30%
U.S. Government Securities Fund............................. .35%
National Municipal Bond Fund................................ .35%
Asset Allocation Fund....................................... .40%
Capital Income Fund......................................... .45%
Corporate Bond Fund......................................... .45%
Aggressive Growth Fund...................................... .60%
International Equity Fund................................... .75%
</TABLE>
A-7
<PAGE> 49
APPENDIX B
SUB-ADVISORY AGREEMENT
AGREEMENT made as of , 1998 between Bank of America National
Trust and Savings Association, a national banking association (herein called the
"Adviser"), and Wellington Management Company, LLP, a Massachusetts limited
liability partnership (herein called the "Sub-Adviser").
WHEREAS, Pacific Horizon Funds, Inc., a Maryland corporation (hereinafter
called the "Company"), is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, pursuant to an Investment Advisory Agreement dated
, 1998 (hereinafter called the "Investment Advisory Agreement"),
by and between the Company and the Adviser, the Adviser has agreed to furnish
investment advisory services to the Company with respect to its International
Equity Fund (the "Fund"); and
WHEREAS, the Investment Advisory Agreement specifically authorizes the
Adviser to sub-contract investment advisory services on behalf of the Fund to a
sub-adviser pursuant to a sub-advisory agreement agreeable to the Company and
approved in accordance with the provisions of the 1940 Act; and
WHEREAS, the Board of Directors of the Company and the shareholders of the
Fund approved this Agreement, and the Sub-Adviser is willing to furnish such
services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT.
The Adviser hereby appoints the Sub-Adviser to act as sub-investment
adviser with respect to the Fund, for the period and on the terms set forth in
this Agreement. The Sub-Adviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
2. SERVICES OF SUB-ADVISER.
Subject to the oversight and supervision of the Adviser and the Company's
Board of Directors, the Sub-Adviser will provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities and investments and cash equivalents in the Fund. The Sub-Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold by the Fund. The Sub-Adviser will provide the
services rendered by it under this Agreement in accordance with the investment
criteria and policies established from time to time for the Fund by the Adviser,
the investment objective, policies and restrictions as stated in the Company's
currently effective Registration Statement with respect to the Fund, and
resolutions of the Company's Board of Directors. Without limiting the generality
of the foregoing, the Sub-Adviser further agrees that it will maintain such
books and records regarding the securities transactions with respect to the Fund
as may be required or otherwise requested by the Company and its Board of
Directors and the Sub-Adviser will also supply the Company and its Board of
Directors with reports, statistical data and economic information as requested.
3. OTHER COVENANTS.
The Sub-Adviser agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will use the same skill and care in providing services under this
Agreement as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
B-1
<PAGE> 50
(c) will place orders pursuant to its investment determinations with
respect to the Fund with brokers or dealers in accordance with the policy
set forth in the Fund's Registration Statement or as the Adviser or Board
of Directors may direct from time to time. In executing portfolio
transactions and selecting brokers or dealers, the Sub-Adviser will use its
best efforts to seek on behalf of the Fund the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both
for specific transactions and on a continuing basis. In evaluating the best
overall terms available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Adviser may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided with respect to the
Fund, other investment portfolios or other accounts over which the
Sub-Adviser or an affiliate of the Sub-Adviser exercises investment
discretion. The Sub-Adviser is authorized, subject to the prior approval of
the Adviser and the Company's Board of Directors, to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction with respect to the Fund that is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Sub-Adviser
determines in good faith that such commission was reasonable in relation to
the value of the brokerage and research services provided by such broker or
dealer -- viewed in terms of that particular transaction or in terms of the
overall responsibilities of the Sub-Adviser to the Fund and to the Company.
No prior approval by the Adviser or the Company's Board of Directors,
however, shall be required so long as the broker or dealer selected by the
Sub-Adviser obtains best price and execution on a particular transaction.
In no instance will portfolio securities be purchased from or sold to the
Adviser, the Sub-Adviser, or any administrator, sub-administrator or
distributor of the Company, or any affiliated person of any of them acting
as principal or broker, except as permitted by law. In executing portfolio
transactions with respect to the Fund, the Sub-Adviser may, but is not
obligated to, to the extent permitted by applicable laws and regulations,
aggregate the securities to be sold or purchased with those of its other
clients where such aggregation is not inconsistent with the policies set
forth in the Company's currently effective Registration Statement. In such
event the Sub-Adviser will allocate the securities so purchased or sold,
and the expenses incurred in the transaction, in the manner it considers to
be most equitable and consistent with its fiduciary obligations to the
Fund, such other portfolios and such other clients.
(d) will treat confidentially and as proprietary information of the
Company all records and other information relative to the Company and prior
or present Company shareholders ("Investors") or those persons or entities
who respond to inquiries concerning investment in the Company, and will not
use such records and information for any purpose other than performance of
its responsibilities and duties hereunder or under any other agreement with
the Company except after prior notification to and approval in writing by
the Company, which approval shall not be unreasonably withheld and may not
be withheld where the Sub-Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit the Sub-Adviser
from advertising to or soliciting the public generally with respect to
other procedures or services, including but not limited to, any advertising
or marketing via radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement or solicitation may
coincidentally include prior or present Investors or those persons or
entities who have responded to inquiries regarding the Company.
(e) will not purchase any securities from or sell any securities to
the Adviser, the Company's administrator or either of their affiliates on
behalf of the Fund except as permitted by law. Nothing in this subsection
shall in any way prohibit the Sub-Adviser or any of its affiliates from
purchasing securities from, selling securities to or engaging in any other
financial transactions with the Adviser or any of its affiliates on behalf
of any other accounts managed by the Sub-Adviser.
B-2
<PAGE> 51
(f) will provide the Fund's Custodian on each business day with
information relating to all transactions concerning the Fund's assets and
shall provide the Adviser with such information upon request.
(g) on a monthly basis, will provide information regarding investment
strategy to be employed by the Sub-Adviser on behalf of the Fund and
information regarding the Fund's performance against its benchmark and will
provide such other information as the Adviser may reasonably request from
time to time.
4. SERVICES NOT EXCLUSIVE.
The services furnished by the Sub-Adviser hereunder are deemed not to be
exclusive, and the Sub-Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
The Sub-Adviser will for all purposes herein be deemed to be an independent
contractor and will, unless otherwise expressly authorized by the Board from
time to time, have no authority to act for or represent the Company or the
Adviser in any way or otherwise be deemed their agent.
5. BOOKS AND RECORDS.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees that all records that it maintains with respect to the
Fund are the property of the Company and further agrees to surrender promptly to
the Company any of such records upon the Company's request; provided however
that the Sub-Adviser may retain a copy of such records. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
6. EXPENSES.
During the term of this Agreement, the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities (including brokerage commissions and other transaction
costs, if any) purchased or sold with respect to the Fund.
7. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser will accept
as full compensation therefor, a fee, payable quarterly (in arrears), at the
following annual rates based on the average month-end net assets of the Fund as
follows:
<TABLE>
<CAPTION>
FUND ASSETS RATE OF SUB-ADVISORY FEE
----------- ------------------------
<S> <C> <C>
First $50 million ....................................... 0.40%
Next $100 million ....................................... 0.30%
Next $350 million ....................................... 0.25%
Over $500 million ....................................... 0.20%
</TABLE>
The Sub-Adviser acknowledges that it shall not be entitled to any further
compensation from the Adviser in respect of the services provided and expenses
assumed by it under this Agreement. The Sub-Adviser understands and agrees that
the Company and the Fund shall have no liability for payment of the Sub-
Adviser's fees hereunder, and that the Sub-Adviser's sole recourse for payment
of such fees shall be to the Adviser.
8. LIMITATION OF LIABILITY.
The Sub-Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Company in connection with the performance
of this Agreement, except that the Sub-Adviser shall be liable to the Company
and the Adviser for any loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or any loss resulting from
willful misfeasance, bad faith or negligence on the part of the Sub-Adviser in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. The Sub-Adviser acknowledges and
agrees that the performance of this Agreement is for the benefit of the Company,
that the Sub-Adviser is therefore directly liable and responsible
B-3
<PAGE> 52
to the Company for the performance of its obligations hereunder, and that the
Company may enforce in its own name and for itself such liability and
responsibility.
9. DURATION AND TERMINATION.
This Agreement will become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue in effect until October 31,
1999. Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods ending on October 31, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Company's Board of Directors who are not interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the Company's Board of Directors or by
vote of a majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated at any time,
without the payment of any penalty, by the Adviser or by the Company (in the
case of the Company, by vote of the Company's Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund) on sixty days'
written notice to the Sub-Adviser, or by the Sub-Adviser, on sixty days' written
notice to the Company, provided that in each such case, notice shall be given
simultaneously to the Adviser. In addition, notwithstanding anything herein to
the contrary, in the event of the termination of the Investment Advisory
Agreement with respect to the Fund for any reason (whether by the Company, by
the Adviser or by operation of law) this Agreement shall terminate upon the
effective date of such termination of the Investment Advisory Agreement. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meanings as such terms
have in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. No amendment of this Agreement shall be effective until approved by vote
of a majority of the outstanding voting securities of the Fund.
11. MISCELLANEOUS.
The captions in the Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by the internal laws, and not the
law of conflicts, of the State of Maryland; provided that nothing herein will be
construed in a manner inconsistent with the 1940 Act, the Investment Advisers
Act of 1940, as amended, or any rule or regulation of the Securities and
Exchange Commission thereunder.
This Agreement may be executed in two or more parts which together shall
constitute a single Agreement.
B-4
<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
--------------------------------------
Name:
Title:
WELLINGTON MANAGEMENT COMPANY, LLP
By:
--------------------------------------
Name:
Title:
B-5
<PAGE> 54
APPENDIX C
FUNDAMENTAL
INVESTMENT LIMITATION
COMPARISON CHART
NATIONAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Fund may not underwrite the 1. A Fund may not underwrite any issue of
securities of other issuers except that securities within the meaning of the
all of the assets of the Fund may be Securities Act of 1933 (the "1933 Act")
invested in another investment company. except when it might technically be
deemed to be an underwriter either (a)
in connection with the disposition of a
portfolio security, or (b) in connection
with the purchase of securities directly
from the issuer thereof in accordance
with its investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Fund may not purchase or sell real 2. A Fund may not purchase or sell real
estate (However, the Fund may, to the estate, except a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, purchase securities issued by invest in real estate and may purchase
the U.S. Government, its agencies and securities which are secured by real
instrumentalities, purchase securities estate or interests in real estate.
issued by or on behalf of the States,
territories, and possessions of the
United States, the District of Columbia
and their respective authorities,
agencies, instrumentalities and
political subdivisions, the interest on
which, in the opinion of bond counsel to
the issuer, is exempt from regular
Federal income tax ("Municipal
Securities") which are secured by real
estate or interests therein or
securities issued by companies investing
in real estate or interests therein).
LIMITATION ON COMMODITY TRANSACTIONS
3. The Fund may not purchase or sell 3. A Fund may not purchase or sell
commodity contracts, or invest in oil, commodities, except that a Fund may to the
gas or mineral exploration or extent consistent with its investment
development programs. However, the objective, invest in securities of
National Municipal Bond Fund may, to the companies that purchase or sell
extent appropriate to its investment commodities or which invest in such
objective, purchase publicly traded programs, and purchase and sell options,
securities of companies engaging in forward contracts, futures contracts,
whole or in part in such activities, but and options on futures contracts. This
may enter into futures contracts and limitation does not apply to foreign
options thereon in accordance with its currency transactions including without
Prospectus. limitation forward currency contracts.
</TABLE>
C-1
<PAGE> 55
NATIONAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
4. The Fund may not invest 25% or more of 4. A Fund may not purchase any securities
its total assets in the securities of which would cause 25% or more of the value
one or more issuers conducting their of its total assets at the time of
principal business activities in the purchase to be invested in the
same industry, except that this securities of one or more issuers
limitation shall not apply to Municipal conducting their principal business ac-
Securities or governmental guarantees of tivities in the same industry, provided
the Municipal Securities and that all of that (a) there is no limitation with
the assets of the Fund may be invested respect to obligations issued or
in another investment company. guaranteed by the U.S. government, any
state or territory of the United States,
or any of their agencies, instru-
mentalities or political subdivisions,
and (b) notwithstanding this limitation
or any other fundamental investment
limitation, assets may be invested in
the securities of one or more
diversified management investment com-
panies to the extent permitted by the
Investment Company Act of 1940 and the
rules and regulations thereunder (the
"1940 Act").
LIMITATION ON LENDING
5. The Fund may not make loans except that 5. A Fund may not make loans, except to the
the Fund may purchase or hold debt extent permitted by the 1940 Act.
instruments and enter into repurchase
agreements pursuant to its investment
objective and policies.
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Fund may not borrow money except 6. A Fund may not borrow money, issue
from banks or through reverse repurchase senior securities or mortgage, pledge or
agreements to meet redemptions and other hypothecate its assets except to the
temporary purposes in amounts of up to extent permitted under the 1940 Act.
25% of its total assets at the time of
such borrowing. The National Municipal
Bond Fund will not purchase securities
while its borrowings (including reverse
repurchase agreements) are outstanding.
</TABLE>
C-2
<PAGE> 56
NATIONAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON ISSUER CONCENTRATION
7. The Fund may not purchase securities of 7. A Fund may not purchase securities
any one issuer (except securities issued (except securities issued or guaranteed by
by the U.S. Government, its agencies or the U.S. Government, its agencies or
instrumentalities) if, immediately after instrumentalities) of any one issuer if,
and as a result, more than 5% of its as a result, more than 5% of its total
total assets will be invested in the assets would be invested in the
securities of such issuer, except that securities of such issuer or it would
up to 25% of its total assets may be own more than 10% of the voting
invested without regard to this 5% securities of such issuer, except that
limitation and that all of the assets of (a) up to 25% of its total assets may be
the Fund may be invested in another invested without regard to these
investment company. limitations and (b) a Fund's assets may
be invested in the securities of one or
more diversified management investment
companies to the extent permitted by the
1940 Act.
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
8. The Fund may not sell securities short 8. Designate as non-fundamental and restate
or purchase securities on margin, except as follows:
such short-term credits as are necessary
for the clearance of transactions. For A Fund may not sell securities short,
this purpose, the deposit or payment by maintain a short position, or purchase
the National Municipal Bond Fund for securities on margin, except for such
initial or maintenance margin in short-term credits as are necessary for
connection with future contracts is not the clearance of transactions. For this
considered to be the purchase or sale of purpose, a deposit or payment by a Fund
a security on margin. for initial or maintenance margin in
connection with futures contracts is not
considered to be the purchase or sale of
a security on margin.
LIMITATION ON PURCHASING SECURITIES OF
COMPANIES FOR THE PURPOSE OF EXERCISING
CONTROL
9. The Fund may not purchase securities of 9. Designate as non-fundamental and leave
companies for the purpose of exercising unchanged.
control.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
10. The Fund may not acquire any other 10. Designate as non-fundamental and restate
investment company or investment company as follows:
security except as provided for in the A Fund may not purchase securities of
1940 Act provided that all of the assets other investment companies except as
of the Fund may be invested in another permitted by the 1940 Act.
investment company.
</TABLE>
C-3
<PAGE> 57
NATIONAL MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON PUT, CALL, STRADDLE AND SPREAD
TRANSACTIONS
11. The Fund may not write or sell puts, 11. Designate as non-fundamental and restate
calls, straddles, spreads or as follows:
combinations thereof except that the A Fund may not write or sell puts,
National Municipal Bond Fund may acquire calls, straddles, spreads or
standby commitments with respect to its combinations thereof except that a Fund
Municipal Securities and may enter into may acquire standby commitments and may
futures contracts and options thereon to enter into futures contracts and options
the extent disclosed in the Prospectus in accordance with its investment
and the Statement of Additional Informa- objective.
tion.
INVESTMENT OBJECTIVE
12. The Fund seeks as high a level of 12. Designate as non-fundamental and leave
current interest income free of Federal unchanged.
income tax as is consistent with prudent
investment management and preservation
of capital.
</TABLE>
C-4
<PAGE> 58
INTERNATIONAL EQUITY AND CORPORATE BOND FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Funds may not underwrite the 1. A Fund may not underwrite any issue of
securities of other issuers, provided securities within the meaning of the
that all of the assets of the Funds may 1933 Act except when it might
be invested in their respective Master technically be deemed to be an
Portfolio or another investment company. underwriter either (a) in connection
with the disposition of a portfolio
security, or (b) in connection with the
purchase of securities directly from the
issuer thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Funds may not purchase or sell real 2. A Fund may not purchase or sell real
estate, except that each Fund may, to estate, except a Fund may purchase
the extent appropriate to its investment securities of issuers which deal or
objective, invest in securities and invest in real estate and may purchase
instruments guaranteed by agencies or securities which are secured by real
instrumentalities of the U.S. Government estate or interests in real estate.
and securities issued by companies which
invest in real estate or interests
therein.
LIMITATION ON COMMODITY TRANSACTIONS
3. The Funds may not purchase or sell 3. A Fund may not purchase or sell
commodities or commodity contracts, or commodities, except that a Fund may to the
invest in oil, gas or mineral extent consistent with its investment
exploration or development programs, objective, invest in securities of
except that: (a) it may, to the extent companies that purchase or sell
appropriate to its investment objective, commodities or which invest in such
invest in securities issued by companies programs, and purchase and sell options,
which purchase or sell commodities or forward contracts, futures contracts and
commodity contracts or which invest in options on futures contracts. This
such programs; and (b) it may purchase limitation does not apply to foreign
and sell futures contracts and options currency transactions including without
on futures contracts. limitation forward currency contracts.
LIMITATION ON INDUSTRY CONCENTRATION
4. The Funds may not purchase any 4. A Fund may not purchase any securities
securities which would cause 25% or more which would cause 25% or more of the value
of the value of its total assets at the of its total assets at the time of
time of such purchase to be invested in purchase to be invested in the
the securities of one or more issuers securities of one or more issuers
conducting their principal business ac- conducting their principal business ac-
tivities in the same industry; provided, tivities in the same industry, provided
however, that (a) there is no limitation that (a) there is no limitation with
with respect to investments in respect to obligations issued or
obligations issued or guaranteed by the guaranteed by the U.S. government, any
federal government and its agencies and state or territory of the United States,
instrumentalities; (b) each utility or any of their agencies, instru-
(such as gas, gas transmission, electric mentalities or political subdivisions,
and telephone service) will be and (b) notwithstanding this limitation
considered a single industry for or any other fundamental investment
purposes of this policy; and (c) limitation, assets may be invested in
wholly-owned finance companies will be the securities of one or more
considered to be in the industries of diversified management investment com-
their parents if their activities are panies to the extent permitted by the
primarily related to financing the 1940 Act.
activities of their parents.
</TABLE>
C-5
<PAGE> 59
INTERNATIONAL EQUITY AND CORPORATE BOND FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON LENDING
5. The Funds may not make loans, except 5. A Fund may not make loans, except to the
that with respect to the International extent permitted by the 1940 Act.
Equity Fund it may invest in debt
securities, repurchase agreements and
securities loans and with respect to the
Corporate Bond Fund, it may purchase or
hold debt obligations in accordance with
its investment objective, policies and
limitations; may enter into repurchase
agreements with respect to securities;
and may lend portfolio securities
against collateral consisting of cash or
securities of the U.S. Government and
its agencies and instrumentalities which
are consistent with its permitted
investments.
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Funds may not borrow money for the 6. A Fund may not borrow money, issue
purpose of obtaining investment leverage senior securities or mortgage, pledge or
or issue senior securities (as defined hypothecate its assets except to the
in the 1940 Act), provided that each extent permitted under the 1940 Act.
Fund and the respective Master Portfolio
may borrow from banks for temporary
purposes and in an amount not exceeding
10% of the value of the total assets of
each Fund or the respective Master
Portfolio; or mortgage, pledge or
hypothecate any assets, except in
connection with any such borrowing and
in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of
the value of its total assets at the
time of such borrowing. This restriction
shall not apply to (a) the sale of
portfolio securities accompanied by a
simultaneous agreement as to their
repurchase, or (b) transactions in
currency, options, futures contracts and
options on futures contracts, or forward
commitment transactions.
</TABLE>
C-6
<PAGE> 60
INTERNATIONAL EQUITY AND CORPORATE BOND FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON ISSUER CONCENTRATION
7. The Funds may not purchase securities 7. A Fund may not purchase securities
(except securities issued by the U.S. (except securities issued or guaranteed by
Government, its agencies or the U.S. Government, its agencies or
instrumentalities) if, as a result more instrumentalities) of any one issuer if,
than 5% of its total assets will be as a result, more than 5% of its total
invested in the securities of any one assets would be invested in the
issuer, except that up to 25% of its securities of such issuer or it would
total assets may be invested without own more than 10% of the voting
regard to this 5% limitation; provided securities of such issuer, except that
that all of the assets of the Funds may (a) up to 25% of its total assets may be
be invested in their respective Master invested without regard to these
Portfolio or another investment com- limitations; and (b) a Fund's assets may
pany. The Funds may not purchase be invested in the securities of one or
securities of any issuer if as a result more diversified management investment
it would own more than 10% of the voting companies to the extent permitted by the
securities of such issuer; provided that 1940 Act.
all of the assets of each Fund may be
invested in the respective Master
Portfolio or another investment company.
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES OR MARGIN
8. The Funds may not purchase securities on 8. Designate as non-fundamental and restate
margin (except for such short-term as follows:
credits as may be necessary for the A Fund may not sell securities short,
clearance of transactions), make short maintain a short position or purchase
sales of securities or maintain a short securities on margin, except for such
position. For this purpose, the deposit short-term credits as may be necessary
or payment by a Fund for initial or for the clearance of transactions. For
maintenance margin in connection with this purpose, the deposit or payment by
futures contracts is not considered to a Fund for initial or maintenance margin
be the purchase or sale of a security on in connection with futures contracts is
margin. not considered to be the purchase or
sale of a security on margin.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
9. The Funds may not purchase securities of 9. Designate as non-fundamental and restate
other investment companies to the extent as follows:
prohibited by the 1940 Act, except that A Fund may not purchase securities of
the Corporate Bond Fund may purchase other investment companies except as
securities of other investment companies permitted by the 1940 Act.
in connection with a merger,
consolidation, acquisition or
reorganization; or as may otherwise be
permitted by the 1940 Act; provided that
all of the assets of the Corporate Bond
Fund may be invested in the Corporate
Bond Master Portfolio or another
investment company.
</TABLE>
C-7
<PAGE> 61
INTERNATIONAL EQUITY AND CORPORATE BOND FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON PUT, CALL, STRADDLE AND SPREAD
TRANSACTIONS
10. The Funds may not write or sell puts, 10. Designate as non-fundamental and restate
calls, straddles, spreads or as follows:
combinations thereof, except that it may A Fund may not write or sell puts,
engage in options transactions. calls, straddles, spreads or
combinations thereof except that a Fund
may acquire standby commitments and may
enter into futures contracts and options
in accordance with its investment
objective.
INVESTMENT OBJECTIVE
INTERNATIONAL EQUITY FUND
11. The Fund seeks long-term capital growth 11. Designate as non-fundamental and leave
by investing primarily in foreign equity unchanged.
securities.
CORPORATE BOND FUND
12. The Fund seeks to provide investors with 12. Designate as non-fundamental and leave
high current income consistent with unchanged.
reasonable investment risk.
</TABLE>
C-8
<PAGE> 62
INTERMEDIATE BOND, BLUE CHIP AND ASSET ALLOCATION FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Funds may not underwrite any issue 1. A Fund may not underwrite any issue of
of securities, provided, however, that a securities within the meaning of the
Fund may invest all its assets in a 1933 Act except when it might be
diversified, open-end management technically deemed to be an underwriter
investment company, or a series thereof, either (a) in connection with the
having substantially the same invest- disposition of a portfolio security or
ment objectives, policies and (b) in connection with the purchase of
restrictions as such Fund, without securities directly from the issuer
regard to the limitations set forth in thereof in accordance with its
this paragraph. investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Funds may not purchase or sell real 2. A Fund may not purchase or sell real
estate or real estate mortgage loans, estate, except a Fund may purchase
but this shall not prevent investments securities of issuers which deal or
in instruments secured by real estate or invest in real estate and may purchase
interests therein or in marketable securities which are secured by real
securities of issuers that engage in estate or interests in real estate.
real estate operations.
LIMITATION ON COMMODITY TRANSACTIONS
3. The Funds may not purchase or sell 3. A Fund may not purchase or sell
commodities contracts, except that any commodities, except that a Fund may, to the
Fund may purchase or sell futures extent consistent with its investment
contracts on financial instruments, such objective, invest in securities of
as bank certificates of deposit and U.S. companies that purchase or sell
Government securities, foreign commodities or which invest in such
currencies and stock indexes and options programs, and purchase and sell options,
on any such futures if such options are forward contracts, futures contracts,
written by other persons and if (i) the and options on futures contracts. This
futures or options are listed on a limitation does not apply to foreign
national securities or commodities currency transactions including without
exchange, (ii) the aggregate premiums limitation forward currency contracts.
paid on all such options that are held
at any time do not exceed 20% of the
total net assets of that Fund, and (iii)
the aggregate margin deposits required
on all such futures or options thereon
held at any time do not exceed 5% of the
total assets of the Fund.
</TABLE>
C-9
<PAGE> 63
INTERMEDIATE BOND, BLUE CHIP AND ASSET ALLOCATION FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
4. The Funds may not purchase any 4. A Fund may not purchase any securities
securities for any Fund that would cause which would cause 25% or more of the value
more than 25% of the value of the Fund's of its total assets at the time of
total assets at the time of such purchase to be invested in the
purchase to be invested in the securi- securities of one or more issuers
ties of one or more issuers conducting conducting their principal business ac-
their principal activities in the same tivities in the same industry, provided
industry; provided that there is no that (a) there is no limitation with
limitation with respect to investments respect to obligations issued or
in obligations issued or guaranteed by guaranteed by the U.S. government, any
the United States Government, its state or territory of the United States,
agencies and instrumentalities; and or any of their agencies, instru-
provided further that a Fund may invest mentalities or political subdivisions,
all its assets in a diversified, and (b) notwithstanding this limitation
open-end management investment company, or any other fundamental investment
or a series thereof, with substantially limitation, assets may be invested in
the same investment objectives, policies the securities of one or more
and restrictions as the Fund without diversified management investment com-
regard to the limitations set forth in panies to the extent permitted by the
this paragraph. 1940 Act.
LIMITATION ON LENDING
5. The Funds may not make loans to other 5. A Fund may not make loans, except to the
persons, except that a Fund may make extent permitted by the 1940 Act.
time or demand deposits with banks,
provided that time deposits shall not
have an aggregate value in excess of 10%
of a Fund's net assets, and may purchase
bonds, debentures or similar obligations
that are publicly distributed, may loan
portfolio securities not in excess of
10% of the value of the total assets of
such Fund, and may enter into repurchase
agreements as long as repurchase
agreements maturing in more than seven
days do not exceed 10% of the value of
the total assets of a Fund.
</TABLE>
C-10
<PAGE> 64
INTERMEDIATE BOND, BLUE CHIP AND ASSET ALLOCATION FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Funds may not borrow money for any 6. A Fund may not borrow money, issue
Fund except for temporary emergency pur- senior securities or mortgage, pledge or
poses and then only in an amount not hypothecate its assets except to the
exceeding 5% of the value of the total extent permitted under the 1940 Act.
assets of that Fund. Borrowing shall,
for purposes of this paragraph, include
reverse repurchase agreements. Any
borrowings, other than reverse
repurchase agreements, will be from
banks. Pacific Horizon will repay all
borrowings in any Fund before making
additional investments for that Fund and
interest paid on such borrowings will
reduce income.
The Funds may not pledge, mortgage or
hypothecate the assets of any Fund to
any extent greater than 10% of the value
of the total assets of that Fund.
The Funds may not issue senior
securities.
LIMITATION ON ISSUER CONCENTRATION
7. The Funds may not purchase securities 7. A Fund may not purchase securities
(except securities issued by the U.S. (except securities issued or guaranteed by
Government, its agencies or the U.S. Government, its agencies or
instrumentalities) if, as a result, more instrumentalities) of any one issuer if,
than 5% of its total assets will be as a result, more than 5% of its total
invested in the securities of any one assets would be invested in the
issuer or it would own more than 10% of securities of such issuer or it would
the voting securities of such issuer, own more than 10% of the voting
except that up to 25% of its total securities of such issuer, except that
assets may be invested without regard to (a) up to 25% of its total assets may be
these limitations; and provided that all invested without regard to these
of its assets may be invested in a limitations; and (b) a Fund's assets may
diversified, open-end management be invested in the securities of one or
investment company, or a series thereof, more diversified, management investment
with substantially the same investment companies to the extent permitted by the
objectives, policies and restrictions 1940 Act.
without regard to the limitations set
forth in this paragraph.
</TABLE>
C-11
<PAGE> 65
INTERMEDIATE BOND, BLUE CHIP AND ASSET ALLOCATION FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
8. The Funds may not purchase on margin or 8. Designate as non-fundamental and restate
sell short. as follows:
A Fund may not sell securities short,
maintain a short position or purchase
securities on margin, except for such
short-term credits as may necessary for
the clearance of transactions. For this
purpose, the deposit or payment by a
Fund for initial or maintenance margin
in connection with futures contracts is
not considered to be the purchase or
sale of a security on margin.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
9. The Funds may not purchase securities of 9. Designate as non-fundamental and restate
any other investment company (except in as follows:
connection with a merger, consolidation, A Fund may not purchase securities of
acquisition or reorganization) if, other investment companies except as
immediately after such purchase, Pacific permitted by the 1940 Act.
Horizon (and any companies controlled by
it) would own in the aggregate (i) more
than 3% of the total outstanding voting
stock of such investment company, (ii)
securities issued by such investment
company would have an aggregate value in
excess of 5% of the value of the total
assets of Pacific Horizon, or (iii)
securities issued by such investment
company and all other investment
companies would have an aggregate value
in excess of 10% of the value of the
total assets of Pacific Horizon
provided, however, that a Fund may
invest all its assets in a diversified,
open-end management investment company,
or a series thereof, having
substantially the same investment
objectives, policies and restrictions as
such Fund, without regard to the
limitations set forth in this paragraph.
</TABLE>
C-12
<PAGE> 66
INTERMEDIATE BOND, BLUE CHIP AND ASSET ALLOCATION FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON PUT, CALL, STRADDLE AND SPREAD
TRANSACTIONS
10. The Funds may not invest in or sell put, 10. Designate as non-fundamental and restate
call, straddle or spread options or as follows:
interests in oil, gas or other mineral A Fund may not write or sell puts,
exploration or development programs. calls, straddles, spreads or
combinations thereof except that a Fund
may acquire standby commitments and may
enter into futures contracts and options
in accordance with its investment
objective.
LIMITATION ON INVESTMENT IN ILLIQUID
SECURITIES
11. The Funds may not invest the assets of 11. Designate as non-fundamental and restate
any Fund in nonmarketable securities as follows:
that are not readily marketable
(including repurchase agreements A Fund may not invest more than 15% of
maturing in more than seven days, its net assets in illiquid securities.
securities described in limitation
number 5 above, restricted securities,
certain OTC options and securities used
as cover for such options and stripped
mortgage-backed securities) to any
extent greater than 10% of the value of
the total assets of that Fund; pro-
vided, however, that a Fund may invest
all its assets in a diversified,
open-end management investment company,
or a series thereof with substantially
the same investment objectives, policies
and restrictions as the Fund, without
regard to the limitations set forth in
this paragraph.
LIMITATION ON PURCHASE OF CERTAIN SECURITIES
BY BOARD MEMBERS
12. The Funds may not purchase or retain 12. This investment limitation will be
securities of an issuer if those members eliminated.
of the Board of Pacific Horizon or the
Master Portfolio, each of whom own more
than 1/2 of 1% of such securities,
together own more than 5% of the
securities of such issuer, provided,
however, that a Fund may invest all its
assets in a diversified, open-end
management investment company, or a
series thereof, having substantially the
same investment objectives, policies and
restrictions as such Fund, without
regard to the limitations set forth in
this paragraph.
</TABLE>
C-13
<PAGE> 67
INTERMEDIATE BOND, BLUE CHIP AND ASSET ALLOCATION FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
INVESTMENT OBJECTIVE
INTERMEDIATE BOND FUND
13. The Fund seeks to obtain interest income 13. Designate as non-fundamental and leave
and capital appreciation. unchanged.
BLUE CHIP FUND
14. The Fund seeks long-term capital 14. Designate as non-fundamental and leave
appreciation through investment in blue unchanged.
chip stocks.
ASSET ALLOCATION FUND
15. The Fund seeks long-term growth from 15. Designate as non-fundamental and leave
capital appreciation and dividend and unchanged.
interest income.
</TABLE>
C-14
<PAGE> 68
AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Fund may not underwrite the 1. A Fund may not underwrite any issue of
securities of other issuers. securities within the meaning of the
1933 Act except when it might be
technically deemed to be an underwriter
either (a) in connection with the
disposition of a portfolio security or
(b) in connection with the purchase of
securities directly from the issuer
thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Fund may not purchase or sell real 2. A Fund may not purchase or sell real
estate (however, the Fund may, to the estate, except a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, purchase securities issued by invest in real estate and may purchase
companies investing in real estate or securities which are secured by real
interests therein). estate or interests in real estate.
LIMITATION ON COMMODITY TRANSACTIONS
3. The Fund may not purchase or sell 3. A Fund may not purchase or sell
commodity contracts, or invest in oil, commodities, except that a Fund may, to the
gas or mineral exploration or extent consistent with its investment
development programs, except that the objective, invest in securities of
Fund may, to the extent appropriate to companies that purchase or sell
its investment objective, purchase commodities or which invest in such
publicly traded securities of companies programs, and purchase and sell options,
engaging in whole or in part in such forward contracts, futures contracts,
activities, and may enter into futures and options on futures contracts. This
contract and related options. limitation does not apply to foreign
currency transactions including without
limitation forward currency contracts.
LIMITATION ON INDUSTRY CONCENTRATION
4. The Fund may not purchase any securities 4. A Fund may not purchase any securities
which would cause 25% or more of the which would cause 25% or more of the value
Fund's total assets at the time of of its total assets at the time of
purchase to be invested in the purchase to be invested in the
securities of one or more issuers securities of one or more issuers
conducting their principal business ac- conducting their principal business ac-
tivities in the same industry, provided tivities in the same industry, provided
that (a) there is no limitation with that (a) there is no limitation with
respect to obligations issued or respect to obligations issued or
guaranteed by the U.S. Government, its guaranteed by the U.S. government, any
agencies or instrumentalities; (b) state or territory of the United States,
wholly-owned finance companies will be or any of their agencies, instru-
considered to be in the industries of mentalities or political subdivisions,
their parents if their activities are and (b) notwithstanding this limitation
primarily related to financing the or any other fundamental investment
activities of the parents; and (c) the limitation, assets may be invested in
industry classification of utilities the securities of one or more
will be determined according to their diversified management investment com-
service. For example, gas, gas panies to the extent permitted by the
transmission, electric and gas, electric 1940 Act.
and telephone will be considered a
separate industry.
</TABLE>
C-15
<PAGE> 69
AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON LENDING
5. The Fund may not make loans except that 5. A Fund may not make loans, except to the
the Fund may purchase or hold debt extent permitted by the 1940 Act.
instruments or enter into repurchase
agreements pursuant to its investment
objective and policies and may lend
portfolio securities in an amount not
exceeding 30% of its total assets.
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Fund may not borrow money or issue 6. A Fund may not borrow money, issue
senior securities, except that the Fund senior securities or mortgage, pledge or
may borrow from banks or enter into hypothecate its assets except to the
reverse repurchase agreements to meet extent permitted under the 1940 Act.
redemptions or for other temporary
purposes in amounts up to 10% of its
total assets at the time of such
borrowing; or mortgage, pledge or
hypothecate any assets except in
connection with any such borrowing and
in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of
its total assets at the time of such
borrowing; or purchase securities at any
time after such borrowings (including
reverse repurchase agreements) have been
entered into and before they are repaid.
The Fund's transactions in futures and
related options (including the margin
posted by the Fund in connection with
such transactions) are not subject to
this investment limitation.
LIMITATION ON ISSUER CONCENTRATION
7. The Fund may not purchase securities of 7. A Fund may not purchase securities
any one issuer (other than obligations (except securities issued or guaranteed by
issued or guaranteed by U.S. Government, the U.S. Government, its agencies or
its agencies or instrumentalities) if instrumentalities) of any one issuer if
immediately thereafter more than 15% of as a result, more than 5% of its total
its total assets would be invested in assets would be invested in the
certificates of deposit or bankers' securities of such issuer or it would
acceptances of any one bank, or more own more than 10% of the voting
than 5% of its total assets would be securities of such issuer, except that
invested in other securities of any one (a) up to 25% of the Fund's total assets
bank or the securities of any other may be invested without regard to these
issuer (except that up to 25% of the limitations; and (b) a Fund's assets may
Fund's total assets may be invested be invested in the securities of one or
without regard to this limitation). more diversified management investment
companies to the extent permitted by the
1940 Act.
</TABLE>
C-16
<PAGE> 70
AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
8. The Fund may not purchase securities on 8. Designate as non-fundamental and restate
margin, make short sales of securities as follows:
or maintain a short position, except
that this limitation shall not apply to A Fund may not sell securities short,
transactions in futures contracts and maintain a short position or purchase
related options. securities on margin, except for such
short-term credits as may be necessary
for the clearance of transactions. For
this purpose, a deposit or payment by a
Fund for initial or maintenance margin
in connection with futures contracts is
not considered to be the purchase or
sale of a security on margin.
LIMITATION ON PURCHASING SECURITIES OF
COMPANIES FOR THE PURPOSE OF EXERCISING
CONTROL
9. The Fund may not purchase securities of 9. Designate as non-fundamental and leave
companies for the purpose of exercising unchanged.
control.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
10. The Fund may not acquire any other 10. Designate as non-fundamental and restate
investment company or investment company as follows:
security except in connection with a
merger, consolidation, reorganization or A Fund may not purchase securities of
acquisition of assets or as may other investment companies except as
otherwise be permitted by the Invest- permitted by the 1940 Act.
ment Company Act of 1940.
</TABLE>
C-17
<PAGE> 71
AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON ILLIQUID SECURITIES
11. The Fund may not purchase securities 11. Designate as non-fundamental and restate
without available market quotations as follows:
which cannot be sold without
registration or the filing of a A Fund may not invest more than 15% of
notification under Federal or state its net assets in illiquid securities.
securities laws, enter into repurchase
agreements providing for settlement more
than seven days after notice, or
purchase any other securities deemed
illiquid by the Directors if, as a
result, such securities and repurchase
agreements would exceed 10% of the
Fund's total value.
The Fund intends that variable amount
master demand notes with maturities of
nine months or less, as well as any
investments in securities that are not
registered under the 1933 Act but that
may be purchased by institutional buyers
under Rule 144A and for which a liquid
trading market exists as determined by
the Board of Directors or Bank of
America (pursuant to guidelines adopted
by the Board), will not be subject to
this 10% limitation on illiquid
securities.
LIMITATION ON INVESTMENT IN EQUITY
SECURITIES
12. Except for temporary defensive periods, 12. Designate as non-fundamental and leave
the Aggressive Growth Fund will invest unchanged.
at least 65% of its total assets in
equity securities.
INVESTMENT OBJECTIVE
13. The Fund seeks to achieve maximum 13. Designate as non-fundamental and leave
capital appreciation. unchanged.
</TABLE>
C-18
<PAGE> 72
U.S. GOVERNMENT SECURITIES AND CAPITAL INCOME FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Funds may not underwrite any issue 1. A Fund may not underwrite any issue of
of securities, except to the extent that securities within the meaning of the
the purchase of securities directly from 1933 Act except when it might be
the issuer thereof in accordance with technically deemed to be an underwriter
the Fund's investment objective, either (a) in connection with the
policies and limitations may be deemed disposition of a portfolio security or
to be underwriting. (b) in connection with the purchase of
securities directly from the issuer
thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Funds may not purchase or sell real 2. A Fund may not purchase or sell real
estate, except that a Fund may, to the estate, except a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, invest in GNMA Certificates invest in real estate and may purchase
and securities issued by companies which securities which are secured by real
invest in real estate or interests estate or interests in real estate.
therein.
LIMITATION ON COMMODITY TRANSACTIONS
3. The Funds may not purchase or sell 3. A Fund may not purchase or sell
commodities or commodity contracts, or commodities, except that a Fund may to the
invest in oil, gas or mineral extent consistent with its investment
exploration or development programs, objective, invest in securities of
except that: (a) a Fund may, to the companies that purchase or sell
extent appropriate to its investment commodities or which invest in such
objective, invest in securities issued programs, and purchase and sell options,
by companies which purchase or sell forward contracts, futures contracts,
commodities or commodity contracts or and options on futures contracts. This
which invest in such programs; and (b) a limitation does not apply to foreign
Fund may purchase and sell futures currency transactions including without
contracts and options on futures limitation forward currency contracts.
contracts.
LIMITATION ON INDUSTRY CONCENTRATION
4. The Funds may not purchase any 4. A Fund may not purchase any securities
securities which would cause 25% or more which would cause 25% or more of the value
of the value of its total assets at the of its total assets at the time of
time of such purchase to be invested in purchase to be invested in the
the securities of one or more issuers securities of one or more issuers
conducting their principal business conducting their principal business
activities in the same industry; activities in the same industry,
provided, however, that (a) there is no provided that (a) there is no limitation
limitation with respect to investments with respect to obligations issued or
in obligations issued or guaranteed by guaranteed by the U.S. government, any
the federal government and its agencies state or territory of the United States,
and instrumentalities; (b) each utility or any of their agencies,
(such as gas, gas transmission, electric instrumentalities or political
and telephone service) will be subdivisions, and (b) notwithstanding
considered a single industry for this limitation or any other fundamental
purposes of this policy; and (c) investment limitation, assets may be
wholly-owned finance companies will be invested in the securities of one or
considered to be in the industries of more diversified management investment
their parents if their activities are companies to the extent permitted by the
primarily related to financing the 1940 Act.
activities of their parents.
</TABLE>
C-19
<PAGE> 73
U.S. GOVERNMENT SECURITIES AND CAPITAL INCOME FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON LENDING
5. The Funds may not make loans, except 5. A Fund may not make loans, except to the
that the Funds may purchase or hold debt extent permitted by the 1940 Act.
obligations in accordance with its
investment objective, policies and
limitations; may enter into repurchase
agreements with respect to securities;
and may lend portfolio securities
against collateral consisting of cash or
securities of the U.S. Government and
its agencies and its agencies and
instrumentalities which are consistent
with its permitted investments.
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Funds may not borrow money except 6. A Fund may not borrow money, issue
from banks for temporary purposes and in senior securities or mortgage, pledge or
an amount not exceeding 10% of the value hypothecate its assets except to the
of the Fund's total assets, issue senior extent permitted under the 1940 Act.
securities (as defined in the 1940 Act)
or mortgage, pledge or hypothecate any
assets except in connection with any
such borrowing and in amounts not in
excess of the lesser of the dollar
amounts borrowed or 10% of the value of
the Fund's total assets at the time of
such borrowing. Borrowing may take the
form of sale of portfolio securities
accompanied by a simultaneous agreement
as to their repurchase. (This borrowing
provision is not for investment
leverage, but solely to facilitate
management of the Fund's portfolio by
enabling the Fund to meet redemption
requests when the liquidation of
portfolio securities is deemed to be
disadvantageous or inconvenient. The
Fund will not purchase any securities
while borrowings are outstanding.
Interest paid on borrowed funds will
reduce the net investment income of the
Fund.) For the purpose of this
restriction, collateral or escrow
arrangements with respect to margin for
futures contracts are not deemed to be a
pledge of assets, and neither such
arrangements nor the purchase of futures
contracts are deemed to be the issuance
of a senior security.
</TABLE>
C-20
<PAGE> 74
U.S. GOVERNMENT SECURITIES AND CAPITAL INCOME FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON ISSUER CONCENTRATION
7. The Funds may not purchase the 7. A Fund may not purchase the securities
securities of any issuer if as a result (except securities issued or guaranteed
more than 5% of the value of the Fund's by the U.S. Government, its agencies or
total assets would be invested in the instrumentalities) of any one issuer if
securities of such issuer, except that as a result, more than 5% of its total
up to 25% of the value of the Fund's assets would be invested in the
total assets may be invested without securities of such issuer, or it would
regard to this 5% limitation. Securities own more than 10% of the voting
issued or guaranteed by the United securities of such issuer, except that
States Government or its agencies or up to 25% of the (a) Fund's total assets
instrumentalities are not subject to may be invested without regard to these
this investment limitation. limitations; and (b) a Fund's assets may
be invested in the securities of one or
The Funds may not purchase securities of more diversified management investment
any issuer if as a result the Fund will companies to the extent permitted by the
own more than 10% of the voting 1940 Act.
securities of such issuer.
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES OR MARGIN
8. The Funds may not purchase securities on 8. Designate as non-fundamental and restate
margin (except for such short-term as follows:
credits as may be necessary for the
clearance of transactions), make short A Fund may not sell securities short,
sales of securities or maintain a short maintain a short position, or purchase
position. securities on margin, except for such
short-term credits as may be necessary
for the clearance of transactions. For
this purpose, a deposit or payment by a
Fund for initial or maintenance margin
in connection with futures contracts is
not considered to be the purchase or
sale of a security on margin.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
9. The Funds may not purchase securities of 9. Designate non-fundamental and restate as
other investment companies, except (a) follows:
securities of money-market funds, to the
extent permitted by the Investment A Fund may not purchase securities of
Company Act of 1940, or (b) in other investment companies, except as
connection with a merger, consolidation, permitted by the 1940 Act.
acquisition or reorganization.
</TABLE>
C-21
<PAGE> 75
U.S. GOVERNMENT SECURITIES AND CAPITAL INCOME FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON PUT, CALL, STRADDLE AND SPREAD
TRANSACTIONS
10. The Funds may not write or sell puts, 10. Designate as non-fundamental and restate
calls, straddles, spreads or as follows:
combinations thereof, except that the
Funds may write covered call options. A Fund may not write or sell puts,
calls, straddles, spreads or
combinations thereof except that a Fund
may acquire standby commitments and may
enter into futures contracts and options
in accordance with its investment
objectives.
LIMITATION ON ILLIQUID SECURITIES
11. The Funds may not invest more than 10% 11. Designate as non-fundamental and restate
of the value of its total assets in as follows:
securities with legal or contractual
restrictions on resale (including A Fund may not invest more than 15% of
repurchase agreements with terms greater its net assets in illiquid securities.
than seven days, over the-counter
options and the securities covering such
options).
LIMITATION ON UNSEASONED ISSUERS
12. The Funds may not purchase securities of 12. This investment limitation will be
any issuer which has been in continuous eliminated.
operation for less than three years
(including operations of its
predecessors), except obligations issued
or guaranteed by the U.S. government or
its agencies.
LIMITATION ON INVESTMENT IN GNMA CERTIFICATES
(U.S. GOVERNMENT SECURITIES FUND ONLY)
13. Under normal market conditions, the U.S. 13. Designate as non-fundamental and restate
Government Securities Fund may not as follows:
invest less than 65% of its total assets
in GNMA Certificates. Under normal market conditions, the U.S.
Government Securities Fund may not
invest less than 65% of its total assets
in securities issued by the U.S.
Government, its agencies,
instrumentalities or sponsored
enterprises.
LIMITATION ON INVESTMENT IN CONVERTIBLE
SECURITIES (CAPITAL INCOME FUND ONLY)
14. Under normal market conditions, the 14. Designate as non-fundamental and leave
Capital Income Fund may not invest less unchanged.
than 65% of its total assets in
Convertible Securities. For purposes of
this limitation, securities acquired
upon the conversion of Convertible
Securities are deemed to be Convertible
Securities for a period of two months
after the effective date of their
conversion.
</TABLE>
C-22
<PAGE> 76
U.S. GOVERNMENT SECURITIES AND CAPITAL INCOME FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
INVESTMENT OBJECTIVE
U.S. GOVERNMENT SECURITIES FUND
15. The Fund strives to provide investors 15. Designate as non-fundamental and leave
with a high level of current income, unchanged.
consistent with preservation of capital.
CAPITAL INCOME FUND
16. The Fund seeks to provide investors with 16. Designate as non-fundamental and leave
a total investment return, comprised of unchanged.
current income and capital appreciation,
consistent with prudent investment risk.
</TABLE>
C-23
<PAGE> 77
CALIFORNIA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Fund may not underwrite the 1. A Fund may not underwrite any issue of
securities of other issuers. securities within the meaning of the
1933 Act except when it might be
technically deemed to be an underwriter
either (a) in connection with the
disposition of a portfolio security or
(b) in connection with the purchase of
securities directly from the issuer
thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Fund may not purchase or sell real 2. A Fund may not purchase or sell real
estate (however, the Fund may, to the estate, except a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, purchase Municipal Securities invest in real estate and may purchase
secured by real estate or interests securities which are secured by real
therein or securities issued by compa- estate or interests in real estate.
nies investing in real estate or
interests therein).
LIMITATION ON COMMODITY TRANSACTIONS
3. The Fund may not purchase or sell 3. A Fund may not purchase or sell
commodity contracts, or invest in oil, commodities, except that a Fund may, to the
gas or mineral exploration or extent consistent with its investment
development programs (however, the Fund objective, invest in securities of
may, to the extent appropriate to its companies that purchase or sell
investment objective, purchase publicly commodities or which invest in such
traded securities of companies engaging programs, and purchase and sell options,
in whole or in part in such activities). forward contracts, futures contracts,
and options on futures contracts or
indices. This limitation does not apply
to foreign currency transactions includ-
ing without limitation forward currency
contracts.
</TABLE>
C-24
<PAGE> 78
CALIFORNIA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
4. The Fund may not purchase any securities 4. A Fund may not purchase any securities
which would cause 25% or more of the which would cause 25% or more of the value
Fund's total assets at the time of of its total assets at the time of
purchase to be invested in the purchase to be invested in the
securities of one or more issuers securities of one or more issuers
conducting their principal business ac- conducting their principal business ac-
tivities in the same industry, provided tivities in the same industry, provided
that this limitation shall not apply to that (a) there is no limitation with
Municipal Securities or governmental respect to obligations issued or
guarantees of Municipal Securities; and guaranteed by the U.S. government, any
provided, further, that for the purpose state or territory of the United States,
of this limitation only, industrial de- or any of their agencies, instru-
velopment bonds that are backed only by mentalities or political subdivisions,
the assets and revenues of a and (b) notwithstanding this limitation
nongovernmental user shall not be deemed or any other fundamental investment
to be Municipal Securities. limitation, assets may be invested in
the securities of one or more
diversified management investment com-
panies to the extent permitted by the
1940 Act.
LIMITATION ON LENDING
5. The Fund may not make loans except that 5. A Fund may not make loans, except to the
the Fund may purchase or hold debt extent permitted by the 1940 Act.
instruments and enter into repurchase
agreements pursuant to its investment
objective and policies.
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Funds may not borrow money or issue 6. A Fund may not borrow money, issue
senior securities, except that the Fund senior securities or mortgage, pledge or
may borrow from banks or enter into hypothecate its assets except to the
reverse repurchase agreements to meet extent permitted under the 1940 Act.
redemptions or for other temporary
purposes in amounts up to 10% of its
total assets at the time of such
borrowing; or mortgage, pledge or
hypothecate any assets except in
connection with any such borrowing and
in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of
its total assets at the time of such
borrowing.
The Fund may not purchase securities
while its borrowings (including reverse
repurchase agreements) are outstanding.
</TABLE>
C-25
<PAGE> 79
CALIFORNIA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON ISSUER CONCENTRATION
7. The Fund may not purchase securities of 7. A Fund may not purchase securities
any one issuer (other than obligations (except securities issued or guaranteed by
issued or guaranteed by the U.S. the U.S. Government, its agencies or
Government, its agencies or instrumentalities) of any one issuer if
instrumentalities) if immediately there- as a result more than 5% of its total
after more than 15% of its total assets assets would be invested in the
would be invested in certificates of securities of such issuer or it would
deposit or bankers' acceptances of any own more than 10% of the voting
one bank, or more than 5% of its total securities of such issuer, except that
assets would be invested in other (a) up to 25% of the Fund's total assets
securities of any one bank or the may be invested without regard to these
securities of any other issuer (except limitations; and (b) a Fund's assets may
that up to 25% of the Fund's total be invested in the securities of one or
assets may be invested without regard to more diversified management investment
this limitation). companies to the extent permitted by the
1940 Act.
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
8. The Fund may not purchase securities on 8. Designate as non-fundamental and restate
margin, make short sales of securities as follows:
or maintain a short position.
A Fund may not sell securities short,
maintain a short position, or purchase
securities on margin, except for such
short-term credits as may be necessary for
the clearance of transactions. For this
purpose, a deposit or payment by a Fund
for initial or maintenance margin in
connection with futures contracts is not
considered to be the purchase or sale of a
security on margin.
LIMITATION ON PURCHASING SECURITIES OF
COMPANIES FOR THE PURPOSE OF EXERCISING
CONTROL
9. The Fund may not purchase securities of 9. Designate as non-fundamental and leave
companies for the purpose of exercising unchanged.
control.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
10. The Fund may not acquire any other 10. Designate as non-fundamental and
investment company or investment company restate as follows:
security except in connection with a A Fund may not purchase securities of
merger, consolidation, reorganization other investment companies except as
or acquisition of assets. permitted by the 1940 Act.
</TABLE>
C-26
<PAGE> 80
CALIFORNIA TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON PUT, CALL, STRADDLE AND SPREAD
TRANSACTIONS
11. The Fund may not write or sell puts, 11. Designate as non-fundamental restate as
calls, straddles, spreads, or follows:
combinations thereof except that the A Fund may not write or sell puts,
Fund may acquire stand-by commitments calls, straddles, spreads or
with respect to its Municipal combinations thereof except that a Fund
Securities. may acquire standby commitments and may
enter into futures contracts and
options in accordance with its
investment objective.
LIMITATION ON ILLIQUID SECURITIES
12. The Fund may not invest more than 10% of 12. Designate as non-fundamental and
its total assets in securities with restate as follows:
legal or contractual restrictions on A Fund may not invest more than 15% of
resale or for which no readily its net assets in illiquid securities.
available market exists, including re-
purchase agreements providing for
settlement more than seven days after
notice.
LIMITATION ON UNSEASONED ISSUERS
13. The Fund may not invest in industrial 13. This fundamental investment limitation
revenue bonds where the payment of will be eliminated.
principal and interest are the
responsibility of a company (including
its predecessors) with less than three
years of continuous operation.
INVESTMENT OBJECTIVE
14. The Fund seeks as high a level of 14. Designate as non-fundamental and leave
current interest income free of Federal unchanged.
Income Tax and California state personal
income tax as is consistent with prudent
investment management and preservation
of capital.
LIMITATION ON INVESTMENT IN CALIFORNIA
MUNICIPAL SECURITIES
15. The Fund, under normal circumstances, 15. Designate as non-fundamental and restate
will invest at least 80% of its assets as follows:
in California municipal securities.
The Fund, under normal circumstances, will
invest at least 65% of its assets in
California municipal securities.
</TABLE>
C-27
<PAGE> 81
SHORT-TERM GOVERNMENT FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Fund may not underwrite the 1. A Fund may not underwrite any issue of
securities of other issuers, provided securities within the meaning of the
that all of the assets of the Fund may 1933 Act except when it might be
be invested in another investment technically deemed to be an underwriter
company. either (a) in connection with the
disposition of a portfolio security or
(b) in connection with the purchase of
securities directly from the issuer
thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Fund may not purchase or sell real 2. A Fund may not purchase or sell real
estate, except that the Fund may, to the estate, except a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, invest in securities and invest in real estate and may purchase
instruments guaranteed by agencies or securities which are secured by real
instrumentalities of the U.S. estate or interests in real estate.
Government, and securities issued by
companies which invest in real estate or
interests therein.
LIMITATION ON COMMODITY TRANSACTIONS
3. The Fund may not purchase or sell 3. A Fund may not purchase or sell
commodities or commodity contracts, or commodities, except that a Fund may, to the
invest in oil, gas or mineral extent consistent with its investment
exploration or development programs. objective, invest in securities of
This restriction shall not apply to companies that purchase or sell
securities issued by companies which commodities or which invest in such
purchase or sell commodities or programs, and purchase and sell options,
commodity contracts or which invest in forward contracts, futures contracts,
such programs, or to futures contracts and options on futures contracts. This
or options on futures contracts. limitation does not apply to foreign
currency transactions including without
limitation forward currency contracts.
</TABLE>
C-28
<PAGE> 82
SHORT-TERM GOVERNMENT FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
4. The Fund may not purchase any securities 4. A Fund may not purchase any securities
which would cause 25% or more of the which would cause 25% or more of the value
value of its total assets at the time of of its total assets at the time of
such purchase to be invested in the purchase to be invested in the
securities of one or more issuers securities of one or more issuers
conducting their principal business ac- conducting their principal business ac-
tivities in the same industry; provided, tivities in the same industry, provided
however, that (a) there is no limitation that (a) there is no limitation with
with respect to investments in respect to obligations issued or
obligations issued or guaranteed by the guaranteed by the U.S. government, any
federal government and its agencies or state or territory of the United States,
instrumentalities; (b) each utility or any of their agencies, instru-
(such as gas, gas transmission, electric mentalities or political subdivisions,
and telephone service) will be and (b) notwithstanding this limitation
considered a single industry for or any other fundamental investment
purposes of this policy; and (c) limitation, assets may be invested in
wholly-owned finance companies will be the securities of one or more
considered to be in the industries of diversified management investment com-
their parents if their activities are panies to the extent permitted by the
primarily related to financing the 1940 Act.
activities of their parents.
LIMITATION ON LENDING
5. The Fund may not make loans, except 5. A Fund may not make loans, except to the
investments in debt securities and extent permitted by the 1940 Act.
repurchase agreements.
</TABLE>
C-29
<PAGE> 83
SHORT-TERM GOVERNMENT FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Fund may not borrow money for the 6. A Fund may not borrow money, issue
purpose of obtaining investment leverage senior securities or mortgage, pledge or
or issue senior securities (as defined hypothecate its assets except to the
in the 1940 Act), provided that the Fund extent permitted under the 1940 Act.
may borrow from banks for temporary
purposes in an amount not exceeding 10%
of the value of the total assets of the
Fund; or mortgage, pledge or hypothecate
any assets, except in connection with
any such borrowing and in amounts not in
excess of the lesser of the dollar
amounts borrowed or 10% of the value of
its total assets at the time of such
borrowing. This restriction shall not
apply to (a) the sale of portfolio
securities accompanied by a simulta-
neous agreement as to their repurchase,
or (b) transactions in currency,
options, futures contracts and options
on futures contracts, or forward
commitment transactions.
LIMITATION ON ISSUER CONCENTRATION
7. The Fund may not purchase securities 7. A Fund may not purchase securities
(except securities issued by the U.S. (except securities issued or guaranteed by
Government, its agencies or the U.S. Government, its agencies or
instrumentalities) if, as a result more instrumentalities) of any one issuer if,
than 5% of its total assets will be as a result, more than 5% of its total
invested in the securities of any one assets would be invested in the
issuer, except that up to 25% of its securities of such issuer or it would
total assets may be invested without own more than 10% of the voting
regard to this 5% limitation; provided securities of such issuer, except that
that all of the assets of the Fund may (a) up to 25% of its total assets may be
be invested in another investment invested without regard to these
company. The Fund may not purchase limitations; and (b) a Fund's assets may
securities of any issuer if as a result be invested in the securities of one or
it would own more than 10% of the voting more diversified management investment
securities of such issuer; provided that companies to the extent permitted by the
all of the assets of the Fund may be 1940 Act.
invested in another investment company.
</TABLE>
C-30
<PAGE> 84
SHORT-TERM GOVERNMENT FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
8. The Fund may not purchase securities on 8. Designate as non-fundamental and restate
margin (except for such short-term as follows:
credits as may be necessary for the
clearance of transactions), make short A Fund may not sell securities short,
sales of securities or maintain a short maintain a short position, or purchase
position. For this purpose, the deposit securities on margin, except for such
or payment by the Fund for initial or short-term credits as may be necessary
maintenance margin in connection with for the clearance of transactions. For
futures contracts is not considered to this purpose, the deposit or payment by
be the purchase or sale of a security on the Fund for initial or maintenance
margin. margin in connection with futures
contracts is not considered to be the
purchase or sale of a security on
margin.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
9. The Fund may not purchase securities of 9. Designate as non-fundamental and restate
other investment companies to the extent as follows:
prohibited by the 1940 Act.
A Fund may not purchase securities of
other investment companies except as
permitted by the 1940 Act.
INVESTMENT OBJECTIVE
10. The Fund seeks high current income 10. Designate as non-fundamental and leave
consistent with relative stability of unchanged.
principal.
</TABLE>
C-31
<PAGE> 85
PRIME AND TREASURY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Funds may not underwrite the 1. A Fund may not underwrite any issue of
securities of other issuers. securities within the meaning of the
1933 Act except when it might be
technically deemed to be an underwriter
either (a) in connection with the
disposition of a portfolio security or
(b) in connection with the purchase of
securities directly from the issuer
thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Funds may not purchase or sell real 2. A Fund may not purchase or sell real
estate (however, a Fund may, to the estate, except a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, purchase securities issued by invest in real estate and may purchase
companies investing in real estate or securities which are secured by real
interests therein). estate or interests in real estate.
LIMITATION ON COMMODITY TRANSACTIONS
3. None 3. A Fund may not purchase or sell
commodities, except that a Fund may, to the
extent consistent with its investment
objective, invest in securities of
companies that purchase or sell
commodities or which invest in such
programs, and purchase and sell options,
forward contracts, futures contracts and
options on futures contracts. This
limitation does not apply to foreign
currency transactions including without
limitation forward currency contracts.
</TABLE>
C-32
<PAGE> 86
PRIME AND TREASURY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
PRIME FUND ONLY
4. The Fund may not purchase any securities 4. A Fund may not purchase any securities
which would cause 25% or more of the which would cause 25% or more of the value
Fund's total assets at the time of of its total assets at the time of
purchase to be invested in the purchase to be invested in the
securities of one or more issuers securities of one or more issuers
conducting their principal business ac- conducting their principal business ac-
tivities in the same industry, provided tivities in the same industry, provided
that (a) there is no limitation with that (a) there is no limitation with
respect to obligations issued or respect to obligations issued or
guaranteed by the U.S. Government, its guaranteed by the U.S. government, any
agencies or instrumentalities or state or territory of the United States,
domestic bank certificates of deposit, or any of their agencies, instru-
bankers' acceptances and repurchase mentalities or political subdivisions,
agreements secured by instruments of and (b) notwithstanding this limitation
domestic branches of U.S. banks or or any other fundamental investment
obligations of the U.S. Government, its limitation, assets may be invested in
agencies or instrumentalities; (b) the securities of one or more
wholly-owned finance companies will be diversified management investment com-
considered to be in the industries of panies to the extent permitted by the
their parents if their activities are 1940 Act.
primarily related to financing the
activities of the parents; and (c) the Notwithstanding the above limitation,
industry classification of utilities there is no limitation with respect to
will be determined according to their investments by any Money Market Fund in
service. For example, gas, gas repurchase agreements, domestic bank
transmission, electric and gas, electric obligations and certain bank obligations
and telephone will each be considered a considered to be issued by domestic
separate industry. banks pursuant to regulations or
pronouncements of the Securities and Ex-
change Commission ("SEC") or its staff.
Notwithstanding the above limitation,
the Prime Fund will invest more than 25%
of its assets in the banking and finance
industry.
TREASURY FUND ONLY TREASURY FUND ONLY
5. The Fund may not concentrate its 5. See limitation listed in Number 4.
investments in any particular industry
(excluding obligations of the U.S.
Government, obligations of domestic
banks, and repurchase agreements), but
if it is deemed appropriate for the
achievement of its investment objective,
up to 25% of the assets of the Fund
(taken at market value at the time of
each investment) may be invested in any
one industry; provided, that nothing in
this investment restriction shall affect
the Fund's ability to invest a portion
or all of its assets in a corresponding
investment company with the same
investment objective and policies.
</TABLE>
C-33
<PAGE> 87
PRIME AND TREASURY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON LENDING
6. The Funds may not make loans except that 6. A Fund may not make loans, except to the
(i) a Fund may purchase or hold debt extent permitted by the 1940 Act.
instruments and enter into repurchase
agreements pursuant to its investment
objective and policies, and (ii) the
Prime Fund may lend portfolio
securities.
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
7. The Funds may not borrow money or issue 7. A Fund may not borrow money, issue
senior securities, except that each Fund senior securities or mortgage, pledge or
may borrow from banks or enter into hypothecate its assets except to the
reverse repurchase agreements to meet extent permitted under the 1940 Act.
redemptions or for other temporary
purposes in amounts up to 10% of its
total assets at the time of such
borrowing; or mortgage, pledge or
hypothecate any assets except in
connection with any such borrowing and
in amounts not in excess of the lesser
of the dollar amount borrowed or 10% of
its total assets at the time of such
borrowing; or purchase securities at any
time after such borrowings (including
reverse repurchase agreements) have been
entered into and before they are repaid.
LIMITATION ON ISSUER CONCENTRATION
8. The Funds may not purchase securities of 8. A Fund may not purchase securities
any one issuer (other than obligations (except securities issued or guaranteed by
issued or guaranteed by the U.S. the U.S. Government, its agencies or
Government, its agencies or instrumentalities) of any one issuer if
instrumentalities) if immediately there- as a result more than 5% of its total
after more than 15% of its total assets assets would be invested in securities
would be invested in certificates of of such issuer or it would own more than
deposit or bankers' acceptances of any 10% of the voting securities of such
one bank, or more than 5% of its total issuer except that (a) up to 25% of the
assets would be invested in other Fund's total assets may be invested
securities of any one bank or the without regard to this limitation; and
securities of any other issuer (except (b) a Fund's assets may be invested in
that up to 25% of the Fund's total the securities of one or more
assets may be invested without regard to diversified management investment
this limitation). companies to the extent permitted by the
1940 Act.
Notwithstanding the foregoing
restriction, each of the Money Market
Funds, as a non-fundamental policy, may
invest without regard to the 5%
limitation in securities subject to
certain guarantees and certain money
market fund securities in accordance
with Rule 2a-7 under the 1940 Act or any
successor rule, and as otherwise
permitted in accordance with Rule 2a-7
or any successor rule.
</TABLE>
C-34
<PAGE> 88
PRIME AND TREASURY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
9. The Funds may not purchase securities on 9. Designate as non-fundamental and restate
margin, make short sales of securities as follows:
or maintain a short position.
A Fund may not sell securities short,
maintain a short position, or purchase
securities on margin, except for such
short-term credits as are necessary for
the clearance of transactions. For this
purpose, a deposit or payment by a Fund
for initial or maintenance margin in
connection with futures contracts is not
considered to be the purchase or sale of
a security on margin.
LIMITATION ON PURCHASING SECURITIES OF
COMPANIES FOR THE PURPOSE OF EXERCISING
CONTROL
10. The Funds may not purchase securities of 10. Designate as non-fundamental and leave
companies for the purpose of exercising unchanged.
control.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
11. The Funds may not acquire any other 11. Designate as non-fundamental and restate
investment company or investment company as follows:
security except in connection with a
merger, consolidation, reorganization or A Fund may purchase securities of other
acquisition of assets. investment companies except as permitted
by the 1940 Act.
LIMITATION ON ILLIQUID SECURITIES
12. The Funds may not purchase securities 12. Designate as non-fundamental and restate
without available market quotations as follows:
which cannot be sold without
registration or the filing of a A Fund may not invest more than 10% of
notification under federal or state its net assets in illiquid securities.
securities laws, enter into repurchase
agreements providing for settlement more
than seven days after notice, or
purchase any other securities deemed
illiquid by the Directors if, as a
result, such securities and repurchase
agreements would exceed 10% of the
Fund's total assets.
CONCENTRATION POLICY
PRIME FUND ONLY PRIME FUND ONLY
13. None 13. Add the following fundamental Investment
policy:
The Fund will concentrate its
investments in obligations of the
banking and finance industry.
</TABLE>
C-35
<PAGE> 89
PRIME AND TREASURY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
INVESTMENT OBJECTIVE -- PRIME AND TREASURY
FUND
14. The Funds seek high current income and 14. Designate as non-fundamental and restate
stability of principal. as follows:
The Funds seek current income, a stable
share price and daily liquidity.
</TABLE>
C-36
<PAGE> 90
GOVERNMENT AND TREASURY ONLY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Funds may not underwrite securities 1. A Fund may not underwrite any issue of
issued by other persons, except that all securities within the meaning of the
of the assets of a Fund may be invested 1933 Act except when it might be
in a corresponding investment company technically deemed to be an underwriter
with the same investment objective and either (a) in connection with the
policies and except insofar as a Fund disposition of a portfolio security or
may technically be deemed an underwriter (b) in connection with the purchase of
under the 1933 Act in selling a securities directly from the issuer
security. thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Funds may not purchase or sell real 2. A Fund may not purchase or sell real
estate (including limited partnership estate, except that a Fund may purchase
interests but excluding securities securities of issuers which deal or
secured by real estate or interests invest in real estate and may purchase
therein), interests in oil, gas or securities which are secured by real
mineral leases, commodities or commodity estate or interests in real estate.
contracts in the ordinary course of
business (each Fund reserves the freedom
of action to hold and to sell real
estate acquired as a result of the
ownership of securities by such Fund).
LIMITATION ON COMMODITY TRANSACTIONS
3. None. 3. A Fund may not purchase or sell
commodities, except that a Fund may to the
extent consistent with its investment
objective, invest in securities of
companies that purchase or sell
commodities or which invest in such
programs, purchase and sell options,
forward contracts, futures contracts,
and options on futures contracts. This
limitation does not apply to foreign
currency transactions including without
limitation forward currency contracts.
</TABLE>
C-37
<PAGE> 91
GOVERNMENT AND TREASURY ONLY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
4. The Funds may not concentrate its 4. A Fund may not purchase any securities
investments in any particular industry which would cause 25% or more of the value
(excluding obligations of the U.S. of its total assets at the time of
Government, obligations of domestic purchase to be invested in the
banks, and repurchase agreements), but securities of one or more issuers
if it is deemed appropriate for the conducting their principal business ac-
achievement of its investment objective, tivities in the same industry, provided
up to 25% of the assets of the Fund that (a) there is no limitation with
(taken at market value at the time of respect to obligations issued or
each investment) may be invested in any guaranteed by the U.S. government, any
one industry; provided, that nothing in state or territory of the United States,
this investment restriction shall affect or any of their agencies, instru-
the Fund's ability to invest a portion mentalities or political subdivisions,
or all of its assets in a corresponding and (b) notwithstanding this limitation
investment company with the same or any other fundamental investment
investment objective and policies. limitation, assets may be invested in
the securities of one or more
diversified management investment com-
panies to the extent permitted by the
1940 Act.
Notwithstanding the above limitation,
there is no limitation with respect to
investments by any Money Market Fund in
repurchase agreements, domestic bank
obligations and certain bank obligations
considered to be issued by domestic
banks pursuant to regulations or
pronouncements of the SEC or its staff.
LIMITATION ON LENDING
5. The Funds may not make loans to other 5. A Fund may not make loans, except to the
persons except (a) through the lending extent permitted by the 1940 Act.
of securities held by a Fund, (b)
through the use of fixed time deposits
or repurchase agreements or the purchase
of short term obligations, or (c) by
purchasing all or a portion of an issue
of debt securities of types commonly
distributed privately to financial
institutions; for purposes of this
investment restriction the purchase of
short-term commercial paper or a portion
of an issue of debt securities which are
part of an issue to the public shall not
be considered the making of a loan.
</TABLE>
C-38
<PAGE> 92
GOVERNMENT AND TREASURY ONLY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Funds may not borrow money, except 6. A Fund may not borrow money, issue
that as a temporary measure for senior securities or mortgage, pledge or
extraordinary or emergency purposes, hypothecate its assets except to the
each Fund may borrow from banks in an extent permitted under the 1940 Act.
amount not to exceed 1/3 of the value
of its net assets, including the amount
borrowed; moreover, neither Fund may
purchase any securities at any time at
which borrowings exceed 5% of the total
assets of the Fund (taken at market
value) (it is intended that each Fund
would borrow money only from banks and
only to accommodate requests for
withdrawals while effecting an orderly
liquidation of securities).
The Funds may not issue any senior
security (as that term is defined in the
1940 Act) if such issuance is
specifically prohibited by the 1940 Act
or the rules and regulations promul-
gated thereunder, except as appropriate
to evidence a debt incurred without
violating the above restriction
regarding borrowing.
LIMITATION ON ISSUER CONCENTRATION
7. The Funds may not purchase securities of 7. A Fund may not purchase securities
any one issuer (other than obligations (except securities issued or guaranteed by
issued or guaranteed by the U.S. the U.S. Government, its agencies or
Government, its agencies or instrumentalities) of any one issuer if
instrumentalities) if immediately there- as a result more than 5% of its total
after more than 15% of its total assets assets would be invested in securities
would be invested in certificates of of such issuer or it would own more than
deposit or bankers' acceptances of any 10% of the voting securities of such
one bank, or more than 5% of its total issuer except that (a) up to 25% of the
assets would be invested in other Fund's total assets may be invested
securities of any one bank or the without regard to this limitation; and
securities of any other issuer (except (b) a Fund's assets may be invested in
that up to 25% of the Fund's total the securities of one or more
assets may be invested without regard to diversified management investment
this limitation). companies to the extent permitted by the
1940 Act.
Notwithstanding the foregoing
restriction, each of the Money Market
Funds, as a non-fundamental policy, may
invest without regard to the 5%
limitation in securities subject to
certain guarantees and certain money
market fund securities in accordance
with Rule 2a-7 under the 1940 Act or any
successor rule, and as otherwise
permitted in accordance with Rule 2a-7
or any successor rule.
</TABLE>
C-39
<PAGE> 93
GOVERNMENT AND TREASURY ONLY FUNDS
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
8. The Funds may not purchase any 8. A Fund may not sell securities short,
securities or evidence of interest maintain a short position or purchase
therein on margin, except that a Fund securities on margin, except for such
may obtain such short term credit as may short term credits as are necessary for
be necessary for the clearance of the clearance of transactions. For this
purchases and sales of securities. purpose, a deposit or payment by a Fund
for initial or maintenance margin in
connection with futures contracts is not
considered to be the purchase or sale of
a security on margin.
LIMITATION ON ILLIQUID SECURITIES
9. The Funds may not invest more than 10% 9. A Fund may not invest more than 10% of
of the Fund's net assets in securities its net assets in illiquid securities.
that are not readily marketable (such as
repurchase agreements maturing in more
than seven days). If changes in the
markets of certain securities cause a
Fund to exceed such 10% limit, the Fund
will take steps to bring the aggregate
amount of its illiquid securities back
below 10% of its net assets.
</TABLE>
C-40
<PAGE> 94
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Fund may not underwrite any issue of 1. A Fund may not underwrite any issue of
securities, except to the extent that securities within the meaning of the
the purchase of securities directly from 1933 Act except when it might be
the issuer thereof in accordance with technically deemed to be an underwriter
the Fund's investment objective, either (a) in connection with the
policies and limitations may be deemed disposition of a portfolio security or
to be underwriting. (b) in connection with the purchase of
securities directly from the issuer
thereof in accordance with its
investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Fund may not purchase or sell real 2. A Fund may not purchase or sell real
estate, except that the Fund may, to the estate, except that a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, invest in securities issued invest in real estate and may purchase
by companies which invest in real estate securities which are secured by real
or interests therein. estate or interests in real estate.
LIMITATION ON COMMODITY TRANSACTIONS
3. The Fund may not purchase or sell 3. A Fund may not purchase or sell
commodities or commodity contracts, or commodities, except that a Fund may, to the
invest in oil, gas or mineral extent consistent with its investment
exploration or development programs, objective, invest in securities of
except that the Fund may, to the extent companies that purchase or sell
appropriate to its investment objective, commodities or which invest in such
invest in securities issued by companies programs and purchase and sell options,
which purchase or sell commodities or forward contracts, futures contracts,
commodity contracts or which invest in and options on futures contracts. This
such programs. limitation does not apply to foreign
currency transactions including without
limitation forward currency contracts.
</TABLE>
C-41
<PAGE> 95
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
4. The Fund may not purchase any securities 4. A Fund may not purchase any securities
which would cause 25% or more of the which would cause 25% or more of the value
value of its total assets at the time of of its total assets at the time of
such purchase to be invested in the purchase to be invested in the
securities of one or more issuers securities of one or more issuers
conducting their principal business conducting their principal business
activities in the same industry; activities in the same industry,
provided, however, that (a) there is no provided that (a) there is no limitation
limitation with respect to investments with respect to obligations issued or
in Municipal Securities or obligations guaranteed by the U.S. government, any
issued or guaranteed by the Federal state or territory of the United States,
Government and its agencies and or any of their agencies,
instrumentalities; (b) although there is instrumentalities or political
no limitation with respect to subdivisions, and (b) notwithstanding
investments in certificates of deposit this limitation or any other fundamental
and bankers' acceptances issued by investment limitation, assets may be
domestic branches of United States invested in the securities of one or
banks, no more than 10% of the total more diversified management investment
value of the Fund's assets at the time companies to the extent permitted by the
of purchase may be invested in 1940 Act.
certificates of deposit and bankers'
acceptances issued by domestic branches Notwithstanding the above limitation,
of foreign banks and no more than 25% of there is no limitation with respect to
the total value of the Fund's assets at investments by any Money Market Fund in
the time of purchase may be invested in repurchase agreements, domestic bank
certificates of deposit and bankers' obligations and certain bank obligations
acceptances issued by domestic branches considered to be issued by domestic
of foreign banks and foreign branches of banks pursuant to regulations or
domestic banks; (c) each utility service pronouncements of the SEC or its staff.
(such as gas, gas transmission, electric
and telephone service) will be
considered a single industry for
purposes of this policy; and (d)
wholly-owned finance companies will be
considered to be in the industries of
their parents if their activities are
primarily related to financing the
activities of their parents.
LIMITATION ON LENDING
5. The Fund may not make loans, except that 5. A Fund may not make loans, except to the
the Fund may purchase or hold debt extent permitted by the 1940 Act.
obligations in accordance with its
investment objective, policies and
limitations, and may enter into
repurchase agreements with respect to
securities.
</TABLE>
C-42
<PAGE> 96
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Fund may not borrow money except 6. A Fund may not borrow money, issue
from banks for temporary purposes and in senior securities or mortgage, pledge or
amounts not in excess of 10% of the hypothecate its assets except to the
value of the Fund's total assets at the extent permitted under the 1940 Act.
time of such borrowing, or mortgage,
pledge or hypothecate any assets except
in connection with any such borrowing
and in amounts not in excess of the
lesser of the dollar amounts borrowed or
10% of the value of the Fund's total
assets at the time of such borrowing.
(This borrowing provision is not for
investment leverage, but solely to
facilitate management of the Fund's
portfolio by enabling the Fund to meet
redemption requests when the liquidation
of portfolio securities is deemed to be
disadvantageous or inconvenient. The
Fund will not purchase any securities
while borrowings are outstanding.
Interest paid on borrowed funds will
reduce the net investment income of the
Fund.)
LIMITATION ON ISSUER CONCENTRATION
7. The Fund may not purchase the securities 7. A Fund may not purchase the securities
of any issuer if as a result more than (except securities issued by the U.S.
5% of the value of the Fund's total Government, its agencies or
assets would be invested in the instrumentalities) if as a result more
securities of such issuer, except that than 5% of the value of its total assets
up to 25% of the value of the Fund's would be invested in the securities of
total assets may be invested without one issuer or it would own more than 10%
regard to this 5% limitation. Securities of the voting securities of such issuer,
issued or guaranteed by the United except that (a) up to 25% of the value
States Government or its agencies or of the Fund's total assets may be
instrumentalities are not subject to invested without regard to these
this investment limitation. For purposes limitations; and (b) a Fund's assets may
of this limitation and the Fund's policy be invested in the securities of one or
on concentration of investments set more diversified management investment
forth in the Prospectus, a governmental companies to the extent permitted by the
agency, authority, instrumentality or 1940 Act.
other political subdivision is deemed to
be an issuer, separate from the Notwithstanding the foregoing
government creating such subdivision, if restriction, each of the Money Market
the security issued by such subdivision Funds may, as a non-fundamental policy,
is backed only by the assets and invest without regard to the 5%
revenues of the subdivision, and a limitation in securities subject to
guarantee of a security is not deemed to certain guarantees and certain money
be a security issued by the guarantor, market fund securities in accordance
provided that no more than 10% of the with Rule 2a-7 under the 1940 Act or any
value of the Fund's total assets is successor rule, and as otherwise
invested in securities issued or permitted in accordance with Rule 2a-7
guaranteed by such guarantor. or any successor rule.
</TABLE>
C-43
<PAGE> 97
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES ON MARGIN
8. The Fund may not purchase securities on 8. Designate as non-fundamental and restate
margin, make short sales of securities as follows:
or maintain a short position.
A Fund may not sell securities short,
maintain a short position, or purchase
securities on margin, except for such
short-term credits as are necessary for
the clearance of transactions. For this
purpose, a deposit or payment by a Fund
for initial or maintenance margin in
connection with futures contracts is not
considered to be the purchase or sale of
a security on margin.
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
9. The Fund may not purchase securities of 9. Designate as non-fundamental and restate
other investment companies, except in as follows:
connection with a merger, consolidation,
acquisition or reorganization. A Fund may not purchase securities of
other investment companies, except as
permitted by the 1940 Act.
LIMITATION ON ILLIQUID SECURITIES
10. The Fund may not invest more than 10% of 10. Designate as non-fundamental and restate
the value of its total assets in as follows:
securities with legal or contractual
restrictions on resale (including A Fund may not invest more than 10% of
repurchase agreements with terms greater its net assets in illiquid securities.
than seven days).
LIMITATION ON PUT, CALL, STRADDLE AND SPREAD
TRANSACTIONS
11. The Fund may not write or sell puts, 11. Designate as non-fundamental and restate
calls, straddles, spreads or as follows:
combinations thereof.
A Fund may not write or sell puts,
calls, straddles, spreads or
combinations thereof except that a Fund
may acquire standby commitments and may
enter into futures contracts and options
in accordance with its investment
objectives.
LIMITATION ON INVESTMENT IN MUNICIPAL
SECURITIES
12. Under normal circumstances, the Fund may 12. Designate as non-fundamental and leave
not invest less than 80% of its total unchanged.
assets in Municipal Securities (other
than private activity bonds the interest
on which may be subject to the federal
alternative minimum tax).
</TABLE>
C-44
<PAGE> 98
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
INVESTMENT OBJECTIVE -- TAX-EXEMPT MONEY
FUND
13. The Fund seeks as high a level of 13. Designate as non-fundamental and restate
current interest income free of federal as follows:
income tax as is consistent with the
relative stability of principal. The Fund seeks current income exempt
from federal income taxes, a stable
share price and daily liquidity.
</TABLE>
C-45
<PAGE> 99
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON UNDERWRITING OF SECURITIES
1. The Fund may not underwrite the 1. A Fund may not underwrite securities
securities of other issuers. within the meaning of the 1933 Act except
when it might be technically deemed to
be an underwriter either (a) in
connection with the disposition of a
portfolio security or (b) in connection
with the purchase of securities directly
from the issuer thereof in accordance
with its investment objective.
LIMITATION ON REAL ESTATE TRANSACTIONS
2. The Fund may not purchase or sell real 2. A Fund may not purchase or sell real
estate (however, a Fund may, to the estate, except that a Fund may purchase
extent appropriate to its investment securities of issuers which deal or
objective, purchase securities issued by invest in real estate and may purchase
companies investing in real estate or securities which are secured by real
interests therein and the Fund may estate or interests in real estate.
purchase Municipal Securities secured by
real estate or interests therein).
LIMITATION ON COMMODITY TRANSACTIONS
3. The Fund may not purchase or sell 3. A Fund may not purchase or sell
commodity contracts, or invest in oil, commodities, except that a Fund may to the
gas or mineral exploration or extent consistent with its investment
development programs (however, the Fund objective, invest in securities of
may, to the extent appropriate to its companies that purchase or sell
investment objective, purchase publicly commodities or which invest in such
traded securities of companies engaging programs and purchase and sell options,
in whole or in part in such activities). forward contracts, futures contracts,
and options on futures contracts. This
limitation does not apply to foreign
currency transactions including without
limitation forward currency contracts.
</TABLE>
C-46
<PAGE> 100
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON INDUSTRY CONCENTRATION
4. The Fund may not purchase any securities 4. A Fund may not purchase any securities
which would cause 25% or more of the which would cause 25% or more of the Fund's
Fund's total assets at the time of total assets at the time of purchase to
purchase to be invested in the be invested in the securities of one or
securities of one or more issuers more issuers conducting their principal
conducting their principal business ac- business activities in the same
tivities in the same industry, provided industry, provided that (a) there is no
that this limitation shall not apply to limitation with respect to obligations
Municipal Securities or governmental issued or guaranteed by the U.S.
guarantees of Municipal Securities; and government, any state or territory of
provided, further, that for the purpose the United States, or any of their
of this limitation only, industrial de- agencies, instrumentalities or political
velopment bonds that are backed only by subdivisions, and (b) notwithstanding
the assets and revenues of a this limitation or any other fundamental
nongovernmental user shall not be deemed investment limitation, assets may be
to be Municipal Securities. invested in the securities of one or
more diversified management investment
companies to the extent permitted by the
1940 Act.
Notwithstanding the above limitation,
there is no limitation with respect to
investments by any Money Market Fund in
repurchase agreements, domestic bank
obligations and certain bank obligations
considered to be issued by domestic
banks pursuant to regulations or
pronouncements of the SEC or its staff.
LIMITATION ON LENDING
5. The Fund may not make loans except that 5. A Fund may not make loans, except to the
the Fund may purchase or hold debt extent permitted by the 1940 Act.
instruments and enter into repurchase
agreements pursuant to its investment
objective and policies.
LIMITATION ON BORROWING AND ISSUANCE OF
SENIOR SECURITIES
6. The Fund may not borrow money or issue 6. A Fund may not borrow money, issue
senior securities, except that the Fund senior securities or mortgage, pledge or
may borrow from banks or enter into hypothecate its assets except to the
reverse repurchase agreements to meet extent permitted under the 1940 Act.
redemptions or for other temporary
purposes in amounts up to 10% of its
total assets at the time of such
borrowing; or mortgage, pledge or
hypothecate any assets except in
connection with any such borrowing and
in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of
its total assets at the time of such
borrowing.
The Fund may not purchase securities
while its borrowings (including reverse
repurchase agreements) are outstanding.
</TABLE>
C-47
<PAGE> 101
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON ISSUER CONCENTRATION
7. The Fund may not purchase the securities 7. Designate as non-fundamental and restate
of any issuer if as a result more than as follows:
5% of the value of the Fund's total
assets would be invested in the The Fund may not purchase the securities
securities of such issuer, except that of any issuer (except securities issued
(a) up to 50% of the value of the Fund's by the U.S. Government, its agencies or
total assets may be invested without instrumentalities) if as a result more
regard to this 5% limitation provided than 5% of the value of the Fund's total
that no more than 25% of the value of assets would be invested in the
the Fund's total assets are invested in securities of such issuer, except that
the securities of any one issuer and (b) (a) up to 50% of the value of the Fund's
this 5% limitation does not apply to total assets may be invested without
securities issued or guaranteed by the regard to this 5% limitation provided
U.S. Government, its agencies or that no more than 25% of the value of
instrumentalities. the Fund's total assets are invested in
the securities of any one issuer and (b)
a Fund's assets may be invested in the
securities of one or more diversified
management investment companies to the
extent permitted by the 1940 Act.
Notwithstanding the foregoing
restriction, the California Tax Exempt
Money Market Fund may invest without
regard to the 5% limitation in
securities subject to certain guarantees
and certain money market fund securities
in accordance with Rule 2a-7 under the
1940 Act or any successor rule, and as
otherwise permitted in accordance with
Rule 2a-7 or any successor rule.
LIMITATION ON SHORT SALES AND PURCHASING
SECURITIES OR MARGIN
8. The Fund may not purchase securities on 8. Designate as non-fundamental and restate
margin, make short sales of securities as follows:
or maintain a short position.
A Fund may not sell securities short,
maintain a short position, or purchase
securities on margin, except for such
short-term credits as are necessary for
the clearance of transactions. For this
purpose, a deposit or payment by a Fund
for initial or maintenance margin in
connection with futures contracts is not
considered to be the purchase or sale of
a security on margin.
LIMITATION ON PURCHASING SECURITIES OF
COMPANIES FOR THE PURPOSE OF EXERCISING
CONTROL
9. The Fund may not purchase securities of 9. Designate as non-fundamental and leave
companies for the purpose of exercising unchanged.
control.
</TABLE>
C-48
<PAGE> 102
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL INVESTMENT LIMITATION PROPOSED FUNDAMENTAL INVESTMENT LIMITATION
----------------------------------------- ------------------------------------------
<S> <C>
LIMITATION ON PURCHASING SECURITIES OF OTHER
INVESTMENT COMPANIES
10. The Fund may not acquire any other 10. Designate as non-fundamental and restate
investment company or investment company as follows:
security except in connection with a
merger, consolidation, reorganization or A Fund may not purchase securities of
acquisition of assets. other investment companies except as
permitted by the 1940 Act.
LIMITATION ON INVESTMENTS IN PUT, CALL,
STRADDLE AND SPREAD TRANSACTIONS
11. The Fund may not write or sell puts, 11. Designate as non-fundamental and restate
calls, straddles, spreads, or as follows:
combinations thereof except that the
Fund may acquire stand-by commitments A Fund may not write or sell puts,
with respect to its Municipal calls, straddles, spreads or
Securities. combinations thereof except that a Fund
may acquire standby commitments and may
enter into futures contracts and options
in accordance with its investment
objective.
LIMITATION ON INVESTMENT IN UNSEASONED
ISSUERS
12. The Fund may not invest in industrial 12. This fundamental investment limitation
revenue bonds where the payment of will be eliminated.
principal and interest are the
responsibility of a company (including
its predecessors) with less than three
years of continuous operation.
INVESTMENT IN CALIFORNIA MUNICIPAL
SECURITIES
13. The Fund may not under normal market 13. Designate as non-fundamental and leave
conditions invest less than 80% of its unchanged.
net assets in California Municipal
Securities.
INVESTMENT OBJECTIVE -- CALIFORNIA
TAX-EXEMPT
MONEY MARKET FUND
14. The Fund seeks as high a level of 14. Designate as non-fundamental and restate
current interest income free of federal as follows:
income tax and California state personal
income tax as is consistent with the The Fund seeks current income free of
preservation of capital and relative federal income tax and California state
stability of principal. personal tax, a stable share price, and
daily liquidity.
</TABLE>
C-49
<PAGE> 103
PACIFIC HORIZON FUNDS, INC.
PRIME FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S PRIME FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON MARCH 24,
1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY
OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 104
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on purchasing securities of companies for the purpose of
exercising control.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(8) Proposal to approve or disapprove a new fundamental investment limitation
of the Prime Fund regarding investment concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ------------------------
SIGNATURE DATE
- -------------------------------- ------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 105
PACIFIC HORIZON FUNDS, INC.
TREASURY FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY E. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S TREASURY FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON MARCH
24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND UPON
ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 106
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on purchasing securities of companies for the purpose of
exercising control.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) Limitation on Purchasing Securities of Other Investment Companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 107
PACIFIC HORIZON FUNDS, INC.
GOVERNMENT FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S GOVERNMENT FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON
MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND
UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 108
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- -------------------------
SIGNATURE DATE
- -------------------------------- -------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 109
PACIFIC HORIZON FUNDS, INC.
TAX-EXEMPT MONEY FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S TAX-EXEMPT MONEY FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED
ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS
AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 110
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(l) policy on investment in municipal securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
<PAGE> 111
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 112
PACIFIC HORIZON FUNDS, INC.
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S CALIFORNIA TAX-EXEMPT MONEY MARKET FUND (THE "FUND") HELD OF RECORD BY
THE UNDERSIGNED ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE
FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 113
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on purchasing securities of companies for the purpose of
exercising control.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on unseasoned issuers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(m) policy on investment in California municipal securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
<PAGE> 114
PACIFIC HORIZON FUNDS, INC.
INTERMEDIATE BOND FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S INTERMEDIATE BOND FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED
ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS
AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 115
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on transactions in certain securities by Board members.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
<PAGE> 116
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 117
PACIFIC HORIZON FUNDS, INC.
CORPORATE BOND FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S CORPORATE BOND FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON
MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND
UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America, NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 118
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 119
PACIFIC HORIZON FUNDS, INC.
U.S. GOVERNMENT SECURITIES FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S U.S. GOVERNMENT SECURITIES FUND (THE "FUND") HELD OF RECORD BY THE
UNDERSIGNED ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE
FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 120
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on unseasoned issuers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(i) policy on investment in GNMA certificates.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
<PAGE> 121
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 122
PACIFIC HORIZON FUNDS, INC.
CAPITAL INCOME FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S CAPITAL INCOME FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED
ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS
AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 123
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on unseasoned issuers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(j) policy on investment in convertible securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
<PAGE> 124
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 125
PACIFIC HORIZON FUNDS, INC.
NATIONAL MUNICIPAL BOND FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S NATIONAL MUNICIPAL BOND FUND (THE "FUND") HELD OF RECORD BY THE
UNDERSIGNED ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE
FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America, NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 126
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on purchasing securities of companies for the purpose of
exercising control.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
<PAGE> 127
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 128
PACIFIC HORIZON FUNDS, INC.
CALIFORNIA TAX-EXEMPT BOND FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S CALIFORNIA TAX-EXEMPT BOND FUND (THE "FUND") HELD OF RECORD BY THE
UNDERSIGNED ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE
FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America, NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 129
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on purchasing securities of companies for the purpose of
exercising control.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on unseasoned issuers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(k) policy on investment in California municipal securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 130
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 131
PACIFIC HORIZON FUNDS, INC.
SHORT TERM GOVERNMENT FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT A ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S SHORT-TERM GOVERNMENT FUND (THE "FUND") HELD OF RECORD BY THE
UNDERSIGNED ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE
FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 132
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 133
PACIFIC HORIZON FUNDS, INC.
ASSET ALLOCATION FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S ASSET ALLOCATION FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED
ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS
AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 134
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on transactions in certain securities by Board members.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
<PAGE> 135
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 136
PACIFIC HORIZON FUNDS, INC.
BLUE CHIP FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S BLUE CHIP FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON MARCH
24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND UPON
ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 137
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on transactions in certain securities by Board members.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE
<PAGE> 138
PACIFIC HORIZON FUNDS, INC.
INTERNATIONAL EQUITY FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S INTERNATIONAL EQUITY FUND (THE "FUND") HELD OF RECORD BY THE
UNDERSIGNED ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE
FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN
THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Proposal to approve or disapprove a new Sub-Advisory Agreement between
the Bank of America NT & SA and Wellington Management Company LLP.
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 139
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on purchasing securities of other investment companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on put, call, straddle and spread transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 140
PACIFIC HORIZON FUNDS, INC.
AGGRESSIVE GROWTH FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S AGGRESSIVE GROWTH FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED
ON MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS
AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 141
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on purchasing securities of companies for the purpose of
exercising control.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) Limitation on Purchasing Securities of Other Investment Companies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) Proposal to approve or disapprove a change in the fundamental investment
objective to a non-fundamental investment objective.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- ---------------------------
SIGNATURE DATE
- -------------------------------- ---------------------------
SIGNATURE (JOINT OWNER) DATE
<PAGE> 142
PACIFIC HORIZON FUNDS, INC.
TREASURY ONLY FUND
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON
FUNDS, INC. (THE "COMPANY") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON FRIDAY, JUNE 19, 1998, AT 9:00 A.M. EASTERN TIME, AT THE OFFICES OF THE
COMPANY AT 400 BELLEVUE PARKWAY, WILMINGTON, DELAWARE.
THE UNDERSIGNED HEREBY APPOINTS GARY M. GARDNER, JAY F. NUSBLATT AND J.
ROBERT DUGAN, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES OF
THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED ANNUAL MEETING, AND AT ALL
ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES EVIDENCING INTERESTS IN THE
COMPANY'S TREASURY ONLY FUND (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON
MARCH 24, 1998, THE RECORD DATE FOR THE MEETING, UPON THE FOLLOWING MATTERS AND
UPON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[ ] For all nominees listed below (except as marked to the contrary
below)
[ ] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
(b) limitation on purchasing securities of companies for the purpose of
exercising control.
E.S. Bottum W.P. Carmichael T.M. Collins
D.B. Fletcher R.E. Greeley C.J Pings
(2) Proposal to approve or disapprove a new Investment Advisory Agreement
between the Company and Bank of America NT & SA.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to approve or disapprove an amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to approve or disapprove changes to the following fundamental
investment limitations of the Fund:
(a) limitation on underwriting of securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) limitation on real estate transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) limitation on commodity transactions;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) limitation on industry concentration;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on lending;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) limitation on borrowing and issuance of senior securities;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 143
(g) limitation on issuer concentration.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Proposal to approve or disapprove certain changes to the following
fundamental investment policies and limitations, including a change to
make all of such policies and limitations non-fundamental:
(a) limitation on short sales and purchasing securities on margin.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) limitation on illiquid securities.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(9) Proposal to ratify or reject the selection of Price Waterhouse LLP as the
Company's independent accountant for the fiscal year ending February 28,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(10) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- -------------------------------- -------------------------
SIGNATURE DATE
- -------------------------------- -------------------------
SIGNATURE (JOINT OWNER) DATE
