Law Offices
Drinker Biddle & Reath, LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
Telex: 834684
Fax: (215) 988-2757
June 9, 1998
VIA EDGAR TRANSMISSION
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
Re: Pacific Horizon Funds, Inc.
Registration Nos. 2-81110 and 811-4293
Ladies and Gentlemen:
In connection with the solicitation of shareholder approval of certain matters
in connection with the Annual Meeting of Shareholders to be held on June 19,
1998, on behalf of Pacific Horizon Funds, Inc. (the "Company") and pursuant to
Rule 14a-6(b) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), enclosed herewith for filing is a letter sent to shareholders of the
Company regarding the proxy.
Questions and comments concerning the enclosed materials may be directed
to the undersigned at (215) 988-1152.
Very truly yours,
/s/ Kenneth L. Greenberg, Esq.
June 9, 1998
Dear Shareholder:
By now you should have received a package from Pacific Horizon Funds, Inc.,
regarding the upcoming Annual Meeting of Shareholders, which included a
request for your vote on a number of proposals. Although the meeting date
is scheduled for June 19th, it may be necessary to adjourn the meeting and
hold it at a later date. I am writing to remind you that your vote is
important. Below you will find a recap of each proposal.
As a bit of background, the first Pacific Horizon Funds prospectus was
first written in 1983. Since that time, new types of investment securities
have been introduced into the financial markets and most recently, there
has been a move by the Securities and Exchange Commission (the "SEC") to
simplify the language contained in fund prospectuses. Like some mutual
fund companies, we're asking shareholders to approve proposals that will
allow us to update our prospectus to reflect these changes. Bank of
America believes that there will be no significant change made in the way
it manages the Funds.
Proposal 1: The intent is to restructure the Board of Directors in order
to have essentially the same directors across all the registered investment
companies advised by Bank of America and its affiliates. This would
centralize board decision-making.
Proposal 2: The merger of BankAmerica with NationsBank, scheduled to be
completed in the fourth quarter of this year, represents a change in
ownership of the advisor's parent corporation and may result in a
termination of the existing Investment Advisory Agreement. To avoid the
costs of issuing a second proxy after the merger is completed, you are
being asked at this time to approve a new agreement.
Proposal 3: The change in ownership discussed under proposal 2 above may
also terminate the sub-advisory agreement for the Pacific Horizon
International Equity Fund. Again, to avoid issuing a second proxy
following the merger, you are being asked at this time to approve a new
sub-advisory agreement between Bank of America and Wellington Management
Company, LLP.
Proposal 4: Amends the charter to define a quorum as "the presence in
person or by proxy of shareholders of 30% of all votes entitled to be
cast". Pacific Horizon Fund's current quorum requirement is 50%. The state
law under which Pacific Horizon Funds is organized allows a lower quorum
threshold to be established. The proposal recognizes the difficulty of
getting shareholders to complete and return proxies, which could impact
the abilities of the Board to conduct the Fund's business.
Proposal 5: Certain investment policies and limitations are matters of
"fundamental policy" and may not be changed without the approval of
shareholders. We are rewording certain of the Fund's fundamental
limitations to create a uniform set of fundamental limitations.
Proposals 6 and 7: Seek to change certain "fundamental" policies and
investment objectives to "non-fundamental" policies and objectives so that
any modification, including those caused by changes to regulations, don't
have to be ratified by shareholders through a vote. SEC regulations do not
require these policies to be "fundamental". Again, these changes will not
significantly effect the way Bank of America manages the Funds.
Proposal 8: The industry concentration limitation in the Prime money
market fund will allow us to invest more than 25% (the current limit) in
the Banking and Finance industry sector. The reason for this change is
that in today's market this sector issues as much as 90% of all paper
eligible for purchase by the Prime money market fund. The Fund's adviser
believes raising this sector's concentration limit will potentially allow
them to lower the Fund's issuer concentrations in other sectors and our
default risk.
Proposal 9: We are simply asking you to ratify Price Waterhouse as the
Funds' accountant.
Thank you in advance for your attention to this matter.
If you do not plan to attend the Special Meeting of Shareholders in person,
we urge you to use one of the following methods by which your vote can be
submitted in order that the meeting can be held and a maximum number of
shares voted. You can fill in, sign and promptly return the proxy-voting
card by mail or fax or you can phone in your vote. To vote by fax, sign the
proxy card and fax both sides to (212) 269-2796. To vote by phone, simply
call 800-848-3374. If less than a majority of the shares eligible to vote
are represented, the annual meeting of shareholders will have to be
adjourned without conducting any business. In that event, the Company will
have to continue to solicit votes at an additional expense to the Funds in
an attempt to achieve a quorum.
Dr. Cornelius Pings
Chairman of the Board
