As filed with the Securities and Exchange Commission
on December 31, 1998
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. ___ |_|
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1940 |_|
Amendment No. ___ |_|
(Check appropriate box or boxes)
------------------------
NATIONS INSTITUTIONAL RESERVES
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 626-2275
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With copies to:
W. Bruce McConnel, III, Esq.
Robert M. Kurucza, Esq. Michael P. Malloy, Esq.
Marco E. Adelfio, Esq. Drinker Biddle & Reath LLP
Morrison & Foerster LLP Philadelphia National Bank
2000 Pennsylvania Ave., N.W. Building
Suite 5500 1345 Chestnut Street
Washington, D.C. 20006 Philadelphia, PA 19107-2700
It is proposed that this filing will become effective on January 30, 1999
pursuant to Rule 488.
No filing fee is required under the Securities Act of 1933 because an indefinite
number of shares of beneficial interest in the Registrant, without par value,
has previously been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended. The Registrant filed on July 10, 1998, the
notice required by Rule 24f-2 for its fiscal year ended March 31, 1998 (File No.
33-33144; 811-6030).
<PAGE>
Nations Institutional Reserves
Cross-Reference Sheet
PART A
<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
- -------- ------------ ------------------
<S> <C> <C>
1 Beginning of Registration COVER PAGE OF REGISTRATION
Statement and Outside STATEMENT; CROSS-REFERENCE SHEET;
Front Cover Page of FRONT COVER PAGE OF PROXY
Prospectus STATEMENT/PROSPECTUS
2 Beginning and Outside TABLE OF CONTENTS
Back Cover Page of
Prospectus
3 Fee Table, Synopsis FEE TABLES; APPENDIX II
Information, and Risk -- EXPENSE SUMMARIES OF
Factors PACIFIC HORIZON FUNDS AND
THE CORRESPONDING NATIONS
FUNDS; SUMMARY --
PROPOSED REORGANIZATION;
SUMMARY-- OVERVIEW OF THE
FUNDS; SUMMARY -- FEDERAL
INCOME TAX CONSEQUENCES;
SUMMARY -- PACIFIC
HORIZON, MIT, NATIONS AND
NMIT BOARD CONSIDERATION;
SUMMARY--PRINCIPAL RISK FACTORS;
SUMMARY -- VOTING INFORMATION;
SUMMARY -- FEES AND EXPENSES.
4 Information About the THE REORGANIZATION -
Transaction DESCRIPTION OF THE
REORGANIZATION AGREEMENT;
THE REORGANIZATION -
DESCRIPTION OF THE MASTER
TRUST REORGANIZATION
AGREEMENT; THE
REORGANIZATION - PACIFIC
HORIZON AND MIT BOARD
CONSIDERATION; THE
REORGANIZATION - CAPITALIZATION;
THE REORGANIZATION - FEDERAL
INCOME TAX CONSIDERATIONS.
<PAGE>
5 Information About the COMPARISON OF PACIFIC HORIZON AND
Registrant NATIONS; ADDITIONAL INFORMATION
ABOUT NATIONS
6 Information About the COMPARISON OF PACIFIC HORIZON AND
Company Being Acquired NATIONS; ADDITIONAL INFORMATION
ABOUT PACIFIC HORIZON
7 Voting Information VOTING MATTERS
8 Interest of Certain NOT APPLICABLE
Persons and Experts
9 Additional Information NOT APPLICABLE
Required for Reoffering
by Persons Deemed to be
Underwriters
PART B
- ------
Statement of Additional
Item No. Item Caption Information Caption
- -------- ------------ -------------------
10 Cover Page COVER PAGE
11 Table of Contents TABLE OF CONTENTS
12 Additional Information INCORPORATION OF DOCUMENTS BY
About the Registrant REFERENCE IN STATEMENT OF
ADDITIONAL INFORMATION
13 Additional Information NOT APPLICABLE
About the Company Being
Acquired
14 Financial Statements EXHIBITS TO STATEMENT OF ADDITIONAL
INFORMATION
PART C
------
Item No.
--------
15-17 Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of this
Registration Statement.
</TABLE>
<PAGE>
The following items are hereby incorporated by reference into various parts of
this registration statement:
Nations Institutional Reserves ("Reserves")
From Post-Effective Amendment No. 22 of Reserves's Registration Statement, filed
August 27, 1998 (SEC File Nos. 33-33144; 811-6030):
Prospectuses for the Capital, Adviser, Market and Liquidity Class Shares
of Nations Cash Reserves, Nations Treasury Reserves, Nations Government
Reserves and Nations Municipal Reserves, dated September 1, 1998.
Statement of Additional Information for the Nations Cash Reserves, Nations
Treasury Reserves, Nations Government Reserves and Nations Municipal
Reserves, dated September 1, 1998.
From Post-Effective Amendment No. 23 of Reserves' Registration Statement, filed
November 25, 1998 (SEC File Nos. 33-33144; 811-6030):
Preliminary Prospectuses for the Daily, Investor, Service and Trust Class
Shares of Nations Cash Reserves, Nations Treasury Reserves, Nations
Government Reserves and Nations Municipal Reserves.
Final Prospectuses for the Daily, Investor, Service and Trust class Shares of
Nations Cash Reserves, Nations Treasury Reserves, Nations Government Reserves,
and Nations Municipal Reserves, dated January __, 1999.
The audited financial statements and related independent accountants' reports
for the Nations Cash Reserves, Nations Treasury Reserves, Nations Government
Reserves, and Nations Municipal Reserves, contained in the Annual Report for the
fiscal year ended April 30, 1998.
Pacific Horizon Funds, Inc. ("Pacific Horizon")
From Post-Effective Amendment No. 60 of Pacific Horizon's Registration
Statement, filed July 1, 1998 (SEC File Nos. 2-81110; 811-4293):
Prospectuses for the A Shares, B Shares, K Shares, and SRF Shares of the
Asset Allocation Fund and the Blue Chip Fund, dated July 1, 1998, as
supplemented.
Prospectus for the A Shares and B Shares of the California Municipal Bond
Fund, dated July 1, 1998, as supplemented.
<PAGE>
Prospectuses for the Horizon, Horizon Service, Pacific Horizon, S (Prime
Fund only), X, and Y Shares of the Prime Fund and the Treasury Fund, dated
July 1, 1998, as supplemented.
Prospectuses for the Horizon, Horizon Service, Pacific Horizon, S, and X
Shares of the California Tax-Exempt Money Market Fund, dated July 1, 1998,
as supplemented.
Prospectus for the A Shares, B Shares, and K Shares of the Capital Income
Fund, dated July 1, 1998, as supplemented.
Prospectuses for the Horizon, Horizon Service, and the Pacific Horizon
Shares of the Government Fund and the Treasury Only Fund, dated July 1,
1998, as supplemented.
Prospectuses for the A Shares, K Shares, and the SRF Shares of the
Intermediate Bond Fund, dated July 1, 1998, as supplemented.
Prospectuses for the Pacific Horizon, S, Horizon and Horizon Service
Shares of the Tax-Exempt Money Fund, dated July 1, 1998, as supplemented.
Statements of Additional Information for the Asset Allocation Fund, Blue
Chip Fund, California Municipal Bond Fund, California Tax-Exempt Money
Market Fund, Capital Income Fund, Government Fund, Intermediate Bond Fund,
Prime Fund, Tax-Exempt Money Fund, Treasury Fund, and Treasury Only Fund,
dated July 1, 1998, as supplemented.
The audited financial statements and related independent accountants' reports
for the Asset Allocation Fund, Blue Chip Fund, California Municipal Bond Fund,
California Tax-Exempt Money Market Fund, Capital Income Fund, Government Fund,
Intermediate Bond Fund, Prime Fund, Tax-Exempt Money Fund, Treasury Fund, and
Treasury Only Fund, contained in the Annual Report for the fiscal year ended
February 28, 1998.
The unaudited financial statements for the Asset Allocation Fund, Blue Chip
Fund, California Municipal Bond Fund, California Tax-Exempt Money Market Fund,
Capital Income Fund, Government Fund, Intermediate Bond Fund, Prime Fund,
Tax-Exempt Money Fund, Treasury Fund, and Treasury Only Fund, contained in the
Semi-Annual Report for the fiscal period ended August 31, 1998.
<PAGE>
PACIFIC HORIZON FUNDS, INC.
Asset Allocation Fund
Blue Chip Fund
California Municipal Bond Fund
California Tax-Exempt Money Market Fund
Capital Income Fund
Government Fund
Intermediate Bond Fund
Prime Fund
Tax-Exempt Money Fund
Treasury Fund
Treasury Only Fund
400 Bellevue Parkway
Wilmington, Delaware 19809
February 1, 1999
Dear Shareholder:
On behalf of the Board of Directors of Pacific Horizon Funds, Inc.
("Pacific Horizon"), we are pleased to invite you to a special meeting of
shareholders of the Pacific Horizon Funds named above to be held at 10:00 a.m.
(Eastern time) on April 12, 1999, at 400 Bellevue Parkway, Wilmington, Delaware
(the "Meeting"). At the Meeting, you will be asked to approve a proposed
Agreement and Plan of Reorganization, dated as of January __, 1999 (the
"Reorganization Agreement"), by and between Pacific Horizon and Nations
Institutional Reserves ("Nations"), which contemplates the reorganization of
your Pacific Horizon Fund into a corresponding fund of Nations, and the
reorganization of Pacific Horizon as a whole. Shareholders of the Blue Chip Fund
and the Intermediate Bond Fund, which are structured as master-feeder funds,
also will be asked to approve a proposed Agreement and Plan of Reorganization,
dated as of January __, 1999 (the "Master Trust Reorganization Agreement") by
and between Master Investment Trust - Series I ("MIT") and Nations Master
Investment Trust, which contemplates the reorganization of the Master Portfolios
in which these Funds invest.
Background. As you may recall, BankAmerica Corporation recently merged
with NationsBank Corporation to form the new BankAmerica Corporation
("BankAmerica"). As a result of the merger, both Bank of America National Trust
and Savings Association ("Bank of America"), the investment adviser to the
Pacific Horizon Funds, and NationsBanc Advisors, Inc. ("NBAI"), the investment
adviser to Nations, are indirect, wholly owned subsidiaries of BankAmerica. Bank
of America has decided to consolidate its mutual fund investment advisory
operations with those of NBAI.
<PAGE>
At the upcoming Meeting, you will be asked to approve the reorganization
of your Pacific Horizon Fund into a corresponding Nations Fund (the
"Reorganization"). If all approvals are obtained, the Pacific Horizon Funds will
be reorganized into corresponding Nations Funds in May 1999, when your Pacific
Horizon Fund shares will be exchanged for shares of the corresponding Nations
Funds of equal value. With respect to the Blue Chip Fund and Intermediate Bond
Fund, a corresponding reorganization would occur at the master portfolio level.
[PACIFIC HORIZON'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
TO APPROVE THE PROPOSED REORGANIZATION. MIT'S BOARD OF TRUSTEES UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS OF THE BLUE CHIP FUND AND INTERMEDIATE BOND FUND
VOTE TO APPROVE THE PROPOSED MASTER TRUST REORGANIZATION AGREEMENT.]
In considering these matters, you should note:
o Similar Objectives and Policies
The Pacific Horizon Funds are proposed to be reorganized into Nations Funds
with investment policies and objectives that are, in general, substantially
similar to those of the corresponding Pacific Horizon Funds.
o Enhanced Access and Service Arrangements
Following the Reorganization, you will enjoy access to Nations Funds through
enhanced distribution, transaction and shareholder servicing arrangements.
Among other things, the new BankAmerica has one of the most comprehensive
distribution network of any banking organization in the country.
o Same Value of Shares
The total dollar value of the Nations Fund shares you receive in the
Reorganization will be the same as the total dollar value of the Pacific
Horizon Fund shares that you held immediately before the Reorganization. The
exchange of Pacific Horizon Fund shares for Nations Fund shares will be
tax-free under federal law, and no front-end or contingent deferred sales
loads will be charged as a result of the exchange.
o The proposed Reorganization is expected to benefit Pacific Horizon Fund
shareholders by:
Offering actual or potential reductions in total operating expense ratios
in most cases;
Offering shareholders the opportunity to become part of a larger and more
diverse family of more than seventy mutual funds. Many of you will be able
to exchange your shares among most or all of those funds;
Offering access to a broader array of investment products, including a
line of fund-of-funds, and investment services, including a mutual fund
marketplace; and
Providing opportunities for enhanced returns through combined investment
portfolios.
2
<PAGE>
The formal Notice of Special Meeting, a Combined Proxy
Statement/Prospectus and a Proxy Ballot are enclosed. If you own shares in more
than one of the Pacific Horizon Funds named above, more than one Proxy Ballot
accompanies these materials. If you own shares in one or more of the Pacific
Horizon Funds not named above, you will be receiving separately a set of proxy
materials (including Proxy Ballot(s)) for the other funds(s).
Whether or not you plan to attend the Special Meeting, you may vote by
proxy in any of the following ways:
1. Mark, sign, date and return the enclosed Proxy Ballot(s) in the enclosed
postage-paid envelope;
2. Mark, sign, date and fax the enclosed Proxy Ballot(s) to ADP Proxy
Services at (704) 388-2641; or
3. Follow the instructions below to vote on-line or by telephone.
Please return your Proxy Ballot(s) fax it to us or follow the instructions
below to vote on-line or by telephone so that your vote will be counted.
YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN. PLEASE VOTE BY RETURNING YOUR PROXY BALLOT(S) TODAY, EITHER IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT (704) 388-2641. YOU MAY ALSO VOTE
YOUR PROXY INSTANTLY BY A TOLL-FREE PHONE CALL OR BY VOTING ON-LINE.
PLEASE SEE BELOW.
The proposed Reorganization and the reasons for the Pacific Horizon
Board's unanimous recommendation are discussed in detail in the enclosed
materials, which you should read carefully. If you have any questions about the
Reorganization, please do not hesitate to contact Pacific Horizon toll free at
1-800-___-___.
We look forward to seeing you at the Meeting or receiving your Proxy
Ballot(s) or your on-line or telephone instructions so that your shares may be
voted at the Meeting.
Sincerely,
------------------------------
Dr. Cornelius J. Pings
President
3
<PAGE>
PACIFIC
TWO QUICK AND EASY WAYS TO VOTE YOUR PROXY HORIZON
INSTANTLY FUNDS
As a valued Pacific Horizon Funds shareholder, your proxy vote is important to
us. That's why we've made it faster and easier to vote your proxy at your
convenience, 24 hours a day. After reviewing the enclosed Proxy Statement, which
outlines important issues affecting your funds, select one of the following
quick and easy methods to register your vote - accurately and immediately.
VOTE ON-LINE VOTE BY TOLL-FREE PHONE CALL
1. Read the enclosed Proxy Statement 1. Read the enclosed Proxy Statement
and have your Proxy Ballot(s)* at and have your Proxy Ballot(s)* at
hand. hand.
2. Go to Web site www.proxyvote.com 2. Call toll-free 1-800-690-6903.
3. Enter the 12-digit Control Number 3. Enter the 12-digit Control Number
found on your Proxy Ballot(s). found on your Proxy Ballot(s).
4. Cast your vote using the 4. Cast your vote using the
easy-to-follow instructions. easy-to-follow instructions.
* DO NOT MAIL THE PROXY BALLOT(S) IF VOTING BY INTERNET OR TELEPHONE.
4
<PAGE>
NATIONS INSTITUTIONAL RESERVES
February [1], 1999
Questions & Answers
-------------------
For Shareholders of Pacific Horizon Funds:
The following questions and answers provide an overview of the proposal to
reorganize your Fund into a corresponding portfolio of Nations Funds. We also
encourage you to read the full text of the combined proxy statement/prospectus
(the "Proxy/Prospectus") that follows.
- --------------------------------------------------------------------------------
Q: What are Pacific Horizon Fund shareholders being asked to vote upon?
A: Pacific Horizon Fund shareholders are being asked to consider and approve a
proposal to reorganize the Pacific Horizon Funds into corresponding portfolios
within the Nations Funds family of mutual funds.
Q: Why has the reorganization of the Pacific Horizon Funds into Nations Funds
been recommended?
A: The Board of Directors of the Pacific Horizon Funds and the Boards of
Trustees/Directors of Nations Funds have each determined that the consolidation
of the Pacific Horizon Funds into corresponding Nations Funds is in the best
interests of their respective shareholders. Among the benefits for Pacific
Horizon Fund shareholders considered by the Pacific Horizon Funds' Board were
access to a broader array of mutual funds and the possibility of improved
investment performance from the combining of investment portfolios. A more
detailed discussion of the factors considered by the respective Boards in
approving the reorganization is included in the Proxy/Prospectus.
Q: What is the anticipated timing of the reorganization?
A: The meeting of shareholders to consider the proposal is scheduled to occur on
April 12, 1999. If all necessary approvals are obtained, the proposed
reorganization will likely take place in May 1999.
Q: Who will receive the Proxy/Prospectus materials?
A: The Proxy/Prospectus has been mailed to all Pacific Horizon Fund shareholders
that held shares of record on January 14, 1999. Please note that in some cases
record ownership of and/or voting authority over Pacific Horizon Fund shares may
reside with a fiduciary or other agent. In these cases, the fiduciary or other
agent may receive the combined Proxy/Prospectus.
Q: How will the Pacific Horizon Funds be reorganized?
A: As you may know, the Pacific Horizon Funds consist of 17 separate mutual
funds, including 6 money market funds. The Proxy/Prospectus that accompanies
these materials, however, relates only to the 11 Pacific Horizon Funds listed
below. Shareholders of the other Pacific Horizon Funds are receiving similar but
separate documents. The proposed plan of reorganization for these 11 funds,
approved by the Pacific Horizon Funds' Board of Directors, contemplates the
reorganization of five of these Pacific Horizon Funds into four existing Nations
Funds portfolios having similar investment objectives and policies. The
remaining six Pacific Horizon Funds listed below will be reorganized into new
Nations Funds portfolios that are being created to continue the current
operations of these Pacific Horizon Funds. The investment objectives and
strategies of these new portfolios will be substantially the same as those of
the Pacific Horizon Funds. Under the proposed plan of reorganization, the
Pacific Horizon Funds covered by this Proxy/Prospectus would be reorganized into
the following Nations Funds portfolios:
1
<PAGE>
- --------------------------------------------------------------------------------
Pacific Horizon Funds Corresponding Nations Funds Portfolio
- --------------------------------------------------------------------------------
Asset Allocation Fund Nations Asset Allocation Fund (new
portfolio)
- --------------------------------------------------------------------------------
Blue Chip Fund Nations Blue Chip Fund (new portfolio)
- --------------------------------------------------------------------------------
Nations California Municipal Bond Fund (new
California Municipal Bond Fund portfolio)
- --------------------------------------------------------------------------------
California Tax-Exempt Money Market Nations California Tax-Exempt Reserves (new
Fund portfolio)
- --------------------------------------------------------------------------------
Capital Income Fund Nations Capital Income Fund (new portfolio)
- --------------------------------------------------------------------------------
Government Fund Nations Government Reserves
- --------------------------------------------------------------------------------
Nations Intermediate Bond Fund (new
Intermediate Bond Fund portfolio)
- --------------------------------------------------------------------------------
Prime Fund Nations Cash Reserves
- --------------------------------------------------------------------------------
Tax-Exempt Money Fund Nations Municipal Reserves
- --------------------------------------------------------------------------------
Treasury Fund Nations Treasury Reserves
- --------------------------------------------------------------------------------
Treasury Only Fund Nations Government Reserves
- --------------------------------------------------------------------------------
Please refer to Table I of the accompanying Proxy/Prospectus for information
regarding share class mapping.
Q: What are the costs and federal tax implications to shareholders in connection
with the proposed reorganization?
A: The customary costs of the reorganization will not be borne by Pacific
Horizon Fund shareholders. Also, no sales charge will be imposed on the shares
of the Nations Funds issued to you in the reorganization, which means that the
aggregate value of the Nations Fund shares issued to you will be equal to the
aggregate value of the Pacific Horizon Fund shares that you own immediately
prior to the reorganization. In addition, the exchange of Pacific Horizon Funds
shares for Nations Funds shares will be tax-free under federal law.
Q: What will happen to Pacific Horizon Fund account features such as Systematic
Investment Plans or Automatic Withdrawal Plans?
A: After the reorganization, Nations Funds will generally continue to honor
standing instructions regarding Pacific Horizon Fund accounts, such as
systematic investment plans, automatic withdrawal plans or dividend reinvestment
plans. However, those instructions will be subject to the requirements in place
for the Nations Funds and shareholders will accordingly be notified of any
differences that impact their accounts. Please refer to Appendix IV of the
Proxy/Prospectus for a detailed comparison of Pacific Horizon Funds/Nations
Funds shareholder services.
2
<PAGE>
PACIFIC HORIZON FUNDS, INC.
Asset Allocation Fund
Blue Chip Fund
California Municipal Bond Fund
California Tax-Exempt Money Market Fund
Capital Income Fund
Government Fund
Intermediate Bond Fund
Prime Fund
Tax-Exempt Money Fund
Treasury Fund
Treasury Only Fund
400 Bellevue Parkway
Wilmington, Delaware 19809
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On April 12, 1999
To Pacific Horizon Fund Shareholders:
NOTICE IS GIVEN THAT a special meeting of the shareholders (the "Meeting")
of the Pacific Horizon Funds named above (each a "Pacific Horizon Fund" and
together, the "Pacific Horizon Funds"), each of which is a series of Pacific
Horizon Funds, Inc. ("Pacific Horizon"), will be held at 10:00 a.m., Eastern
time, on April 12, 1999, at 400 Bellevue Parkway, Wilmington, Delaware, for
purpose of considering and voting upon:
ITEM 1. A proposal to approve an Agreement and Plan of Reorganization,
which provides for (a) the transfer of the assets and liabilities of each
Pacific Horizon Fund to a corresponding fund of Nations Institutional
Reserves in exchange for shares of designated classes of the corresponding
Nations Fund of equal value, (b) the distribution of the shares of
designated classes of the corresponding Nations fund to shareholders of
each Pacific Horizon Fund and (c) the dissolution under state law and the
deregistration under the Investment Company Act of 1940, as amended,
Pacific Horizon. In the case of Pacific Horizon Blue Chip Fund and Pacific
Horizon Intermediate Bond Fund shareholders, the proposal includes a
proposal to approve an additional proposed Agreement and Plan of
Reorganization for Master Investment Trust, Series I, which provides for
(a) the transfer of assets and liabilities of the Blue Chip and Investment
Grade Bond Portfolio of Master Investment Trust, Series I in exchange for
shares of corresponding portfolios of Nations Master Investment Trust of
equal value; (b) the distribution of shares of the corresponding portfolio
of Nations Master Investment Trust to shareholders of the portfolios of
Master Investment Trust, Series I and (c) the termination under state law
and deregistration under the 1940 Act of Master Investment Trust, Series
I.
<PAGE>
ITEM 2. Such other business as may properly come before the Meeting or any
adjournment(s).
Item 1 is described in the attached Combined Proxy Statement/Prospectus.
[YOUR DIRECTORS UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE PROPOSAL.]
Shareholders of record as of the close of business on January 14, 1999 are
entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE EACH ACCOMPANYING PROXY CARD, WHICH IS BEING SOLICITED BY THE
PACIFIC HORIZON BOARD OF DIRECTORS. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
MEETING. SHAREHOLDERS ALSO MAY RETURN PROXIES BY 1)FACSIMILE AT (704) 388-2641;
OR 2) TOUCHTONE VOTING BY DIALING (800) 690-6903; OR 3) VOTING ON-LINE AT WEB
SITE WWW.PROXYVOTE.COM. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE
EXERCISED BY SUBMITTING TO PACIFIC HORIZON A WRITTEN NOTICE OF REVOCATION OR A
SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
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 SPECIAL MEETING 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. YOUR VOTE COULD BE CRITICAL IN ALLOWING THE COMPANY TO HOLD
THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY BALLOT(S) IMMEDIATELY OR
VOTE ON-LINE OR BY TELEPHONE.
2
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
February 1, 1999
PACIFIC HORIZON FUNDS, INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
1-800-346-2087
NATIONS INSTITUTIONAL RESERVES
One NationsBank Plaza, 33rd Floor
Charlotte, North Carolina 28255
1-800-321-7854
This combined proxy statement/prospectus ("Proxy/Prospectus") is being
sent to shareholders of the Pacific Horizon Asset Allocation Fund, Pacific
Horizon Blue Chip Fund, Pacific Horizon California Municipal Bond Fund, Pacific
Horizon California Tax-Exempt Money Market Fund, Pacific Horizon Capital Income
Fund, Pacific Horizon Government Fund, Pacific Horizon Intermediate Bond Fund,
Pacific Horizon Prime Fund, Pacific Horizon Tax-Exempt Money Fund, Pacific
Horizon Treasury Fund and Pacific Horizon Treasury Only Fund (each a "Pacific
Horizon Fund" and collectively the "Pacific Horizon Funds"). The Board of
Directors of Pacific Horizon Funds, Inc. ("Pacific Horizon") has called a
Special Meeting of Shareholders (the "Meeting") at 10:00 a.m. (Eastern time) on
April 12, 1999 at 400 Bellevue Parkway, Wilmington, Delaware.
At the Meeting, shareholders will be asked:
o To approve a proposed Agreement and Plan of Reorganization dated as of
January ___, 1999 (the "Reorganization Agreement") by and between
Pacific Horizon and Nations Institutional Reserves ("Nations"), which
provides for (a) the transfer of the assets and liabilities of each
Pacific Horizon Fund to a corresponding fund of Nations in exchange for
the shares of designated classes of the corresponding Nations fund of
equal value; (b) the distribution of the shares of designated classes
of the corresponding Nations Fund to shareholders of each Pacific
Horizon Fund; and (c) the dissolution under state law and the
deregistration under the Investment Company Act of 1940, as amended
(the "1940 Act"), of Pacific Horizon. In the case of Pacific Horizon
Blue Chip Fund and Pacific Horizon Intermediate Bond Fund, shareholders
are also being asked, as part of a combined vote, to approve an
additional proposed Agreement and Plan of Reorganization dated as of
January ___, 1999 (the "Master Trust Reorganization Agreement") by and
between Master Investment Trust, Series I and Nations Master Investment
Trust which provides for (a) the transfer of the assets and liabilities
of the Blue Chip and Investment Grade Bond Portfolios of Master
Investment Trust, Series I in exchange for shares of corresponding
portfolios of Nations Master Investment Trust of equal value; (b) the
distribution of shares of the corresponding portfolio of Nations Master
Investment Trust to shareholders of the portfolios of Master Investment
Trust, Series I and (c) the termination under state law and
deregistration under the 1940 Act of Master Investment Trust, Series I.
1
<PAGE>
The Reorganization Agreement, a copy of which is attached as Appendix
I(A), provides, among other things discussed more fully below, for the transfer
of assets and liabilities of each Pacific Horizon Fund to a corresponding fund
of Nations (each a "Nations Fund" and collectively the "Nations Funds") in
exchange for shares ("Shares") of designated classes of the corresponding
Nations Fund of equal value. Pacific Horizon and Nations are both registered
open-end management investment companies (mutual funds).
The Master Trust Reorganization Agreement (which applies only to
shareholders of the Pacific Horizon Blue Chip Fund and Pacific Horizon
Intermediate Bond Fund), a copy of which is attached as Appendix I(B), among
other things discussed more fully below, provides for the transfer of assets and
liabilities of the Blue Chip Master Portfolio and the Intermediate Bond Master
Portfolio (each an "MIT Master Portfolio" and collectively, the "MIT Master
Portfolios") of Master Investment Trust, Series I ("MIT") to corresponding
master portfolios with substantially the same investment objective and policies
as the MIT Master Portfolios (each a "Nations Master Portfolio" and
collectively, the "Nations Master Portfolios") of a new registered investment
company--Nations Master Investment Trust ("NMIT"). The Master Trust
Reorganization Agreement further provides for NMIT to issue interests in each
Nations Master Portfolio to its investors equal in value to the assets and
liabilities transferred to it.
The transactions contemplated by both the Reorganization Agreement and
the Master Trust Reorganization Agreement are referred to collectively as the
"Reorganization."
As a result of the Reorganization, shareholders of the Pacific Horizon
Funds will become shareholders of the Nations Funds (the Pacific Horizon Funds
and Nations Funds are sometimes referred to as "Funds") and the MIT Master
Portfolios will transfer all of their assets and liabilities to corresponding
master portfolios of NMIT. Table I(A) shows each class of each Pacific Horizon
Fund and the designated class of each corresponding Nations Fund:
2
<PAGE>
<TABLE>
<CAPTION>
Table I(A)
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Pacific Horizon Fund/Share Class Corresponding Nations Fund/Share Class
Asset Allocation Fund Nations Asset Allocation Fund (shell)
A Shares Investor A Shares
B Shares Investor B Shares
K Shares Investor C Shares
SRF Shares Seafirst Shares
- ------------------------------------------------------------------------------------------------------------
Blue Chip Fund Nations Blue Chip Fund (shell)
A Shares Investor A Shares
B Shares Investor B Shares
K Shares Investor C Shares
SRF Shares Seafirst Shares
- ------------------------------------------------------------------------------------------------------------
California Municipal Bond Fund Nations California Municipal Bond Fund (shell)
A Shares Investor A Shares
B Shares Investor B Shares
- ------------------------------------------------------------------------------------------------------------
California Tax-Exempt Money Market Fund Nations California Tax-Exempt Reserves (shell)
Horizon Shares Capital Shares
Horizon Service Shares Advisor Shares
Pacific Horizon Shares Investor Shares
S Shares Daily Shares
X Shares Daily Shares
- ------------------------------------------------------------------------------------------------------------
Capital Income Fund Nations Capital Income Fund (shell)
A Shares Investor A Shares
B Shares Investor B Shares
K Shares Investor C Shares
- ------------------------------------------------------------------------------------------------------------
Government Fund Nations Government Reserves
Horizon Shares Capital Shares
Horizon Service Shares Advisor Shares
Pacific Horizon Shares Investor Shares
- ------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund Nations Intermediate Bond Fund (shell)
A Shares Investor A Shares
K Shares Investor C Shares
SRF Shares Seafirst Shares
- ------------------------------------------------------------------------------------------------------------
Prime Fund Nations Cash Reserves
Horizon Shares Capital Shares
Horizon Service Shares Advisor Shares
Pacific Horizon Shares Investor Shares
S Shares Daily Shares
X Shares Daily Shares
Y Shares Service Shares
- ------------------------------------------------------------------------------------------------------------
3
<PAGE>
Pacific Horizon Fund/Share Class Corresponding Nations Fund/Share Class
- ------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Fund Nations Municipal Reserves
Horizon Shares Capital Shares
Horizon Service Shares Advisor Shares
Pacific Horizon Shares Investor Shares
S Shares Daily Shares
- ------------------------------------------------------------------------------------------------------------
Treasury Fund Nations Treasury Reserves
Horizon Shares Capital Shares
Horizon Service Shares Advisor Shares
Pacific Horizon Shares Investor Shares
S Shares Daily Shares
X Shares Daily Shares
Y Shares Service Shares
- ------------------------------------------------------------------------------------------------------------
Treasury Only Nations Government Reserves
Horizon Shares Capital Shares
Horizon Service Shares Advisor Shares
Pacific Horizon Shares Investor Shares
- ------------------------------------------------------------------------------------------------------------
Table I(B) below shows each MIT Master Portfolio and the corresponding
Nations Master Portfolio:
Table I(B)
- ------------------------------------------------------------------------------------------------------------
MIT Master Portfolio Nations Master Portfolio
- ------------------------------------------------------------------------------------------------------------
Blue Chip Master Portfolio Nations Blue Chip Master Portfolio
- ------------------------------------------------------------------------------------------------------------
Investment Grade Bond Master Portfolio Nations Intermediate Bond Master Portfolio
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Pacific Horizon also offers shares in other funds that are not part of
this Proxy/Prospectus. Pacific Horizon shareholders of those funds are voting on
similar agreements and plans of reorganization that, in a like manner, would
provide for their reorganization into designated classes and corresponding
portfolios of two other registered investment companies - Nations Funds, Inc.
and Nations Fund Trust (together with Nations, the "Nations Funds Family"). If
the Reorganization Agreement and the agreements and plans of reorganization
affecting the other funds of Pacific Horizon are approved and consummated,
Pacific Horizon will transfer all of its assets and liabilities and deregister
as a registered investment company and dissolve under Maryland law.
This Proxy/Prospectus sets forth concisely the information that a
Pacific Horizon Fund shareholder should know before voting, and should be
retained for future reference. It is both Pacific Horizon's proxy statement for
the Meeting and a prospectus for Nations Cash Reserves, Nations Government
Reserves, Nations Municipal Reserves and Nations Treasury Reserves (the
"Operating Nations Funds"). It is not a prospectus for Nations Asset Allocation
Fund, Nations Blue Chip Fund, Nations California Municipal Bond Fund, Nations
California Tax-Exempt Reserves, Nations Capital Income Fund and Nations
Intermediate Bond Fund (the "Shell Nations Funds") or the Nations Master
Portfolios because they were created to continue the business of their
corresponding Pacific Horizon Funds and MIT Master Portfolios, respectively. The
Shell Nations Funds and Nations Master Portfolios will have substantially
identical investment objectives, policies and restrictions as the corresponding
Pacific Horizon Funds and MIT Master Portfolios, respectively.
4
<PAGE>
Additional information is set forth in the Statement of Additional
Information relating to this Proxy/Prospectus and in the prospectuses dated July
1, 1998, as supplemented, for the Pacific Horizon Funds, both of which are
incorporated herein by reference. Each of these documents is on file with the
Securities and Exchange Commission (the "SEC"), and is available without charge
by calling or writing Pacific Horizon at the telephone number or address stated
above. The information contained in the Operating Nations Funds' current
prospectuses for the designated share classes, dated various dates, also is
incorporated by reference into this Proxy/Prospectus. In addition, a current
prospectus for the designated share classes of the Operating Nations Funds
accompanies this Proxy/Prospectus. The Annual Report for the year ended April
30, 1998 and the Semi-Annual Report for the period ended October 31, 1998 for
the Operating Nations Funds are available without charge by calling or writing
Nations at the telephone number or address stated above. Each of these documents
is also available on the SEC's website at www.sec.gov.
This Proxy/Prospectus is expected to be first sent to shareholders on
or about February 1, 1999.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE PACIFIC HORIZON FUNDS AND NATIONS FUNDS ARE NOT DEPOSITS
OR OBLIGATIONS OF OR GUARANTEED OR ENDORSED BY BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, NATIONSBANK, N.A. OR ANY OF THEIR AFFILIATES OR ANY
OTHER BANK. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE DISTRIBUTOR OF THE PACIFIC HORIZON FUNDS IS
PROVIDENT DISTRIBUTORS, INC. THE DISTRIBUTOR OF THE NATIONS FUNDS IS STEPHENS
INC.
5
<PAGE>
MONEY MARKET FUNDS SEEK TO MAINTAIN A NET ASSET VALUE OF $1.00 PER
SHARE. AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THE NATIONS BLUE CHIP FUND AND THE NATIONS INTERMEDIATE BOND FUND
INVEST ALL OF THEIR ASSETS IN CORRESPONDING MASTER PORTFOLIOS, WHICH, IN TURN,
INVEST IN INDIVIDUAL SECURITIES.
6
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
FEE TABLES.............................................................................................x
Table II.................................................................................x
SUMMARY................................................................................................x
Proposed Reorganization.......................................................................x
Special Consideration for Shareholders of the Pacific Horizon
Blue Chip Fund and the Pacific Horizon Intermediate
Bond Fund................................................................................x
Overview of the Funds.........................................................................x
Federal Income Tax Consequences...............................................................x
Pacific Horizon, MIT, Nations and NMIT Board Consideration....................................x
Principal Risk Factors........................................................................x
Voting Information............................................................................x
Fees and Expenses.............................................................................x
THE REORGANIZATION.....................................................................................x
Reasons for the Reorganization................................................................x
Description of the Reorganization Agreement...................................................x
Description of the Master Trust Reorganization Agreement......................................x
Pacific Horizon and MIT Board Consideration...................................................x
Capitalization................................................................................x
Table III................................................................................x
Federal Income Tax Considerations.............................................................x
COMPARISON OF PACIFIC HORIZON AND NATIONS..............................................................x
Investment Objectives and Policies............................................................x
Investment Advisory Services and Service Providers............................................x
Other Service Providers for the Pacific Horizon Funds
and Nations Funds
Distribution, Shareholder Servicing
Arrangements, and Sales Loads for the Pacific Horizon Funds..............................x
Distribution and Shareholder Servicing Arrangements
for the Nations Funds....................................................................x
Shareholder Transactions and Services.........................................................x
Share Structure...............................................................................x
Comparison of Corporate/Trust Structure.......................................................x
VOTING MATTERS.........................................................................................x
General Information...........................................................................x
Special Consideration for Shareholders of the Pacific Horizon
Blue Chip Fund and the Pacific Horizon Intermediate
Bond Fund................................................................................x
Shareholder and Board Approvals...............................................................x
7
<PAGE>
Table IV(A)..............................................................................x
Table IV(B)..............................................................................x
Quorum........................................................................................x
Annual Meeting and Shareholder Meetings.......................................................x
ADDITIONAL INFORMATION ABOUT NATIONS...................................................................x
ADDITIONAL INFORMATION ABOUT PACIFIC HORIZON...........................................................x
FINANCIAL STATEMENTS...................................................................................x
OTHER BUSINESS.........................................................................................x
SHAREHOLDER INQUIRIES..................................................................................x
APPENDICES I(A) REORGANIZATION AGREEMENT
I(B) MASTER TRUST REORGANIZATION AGREEMENT
II EXPENSE SUMMARIES OF PACIFIC HORIZON FUNDS
AND THE CORRESPONDING NATIONS FUNDS
III INVESTMENT OBJECTIVES, LIMITATIONS AND
CERTAIN SIGNIFICANT INVESTMENT POLICIES
OF THE OPERATING NATIONS FUNDS AND THE
CORRESPONDING PACIFIC HORIZON FUNDS
IV SHAREHOLDER TRANSACTIONS AND SERVICES
OF THE NATIONS FUNDS AND THE CORRESPONDING
PACIFIC HORIZON FUNDS
</TABLE>
8
<PAGE>
FEE TABLES
The following table shows, as of September 30, 1998, (i) the current
annualized total expense ratio of the Pacific Horizon Funds and corresponding
Nations Funds before and after fee waivers and/or expense reimbursements and
(ii) the pro forma annualized total expense ratio of the corresponding Nations
Funds, before and after fee waivers and/or expense reimbursements, based upon
the fee arrangements that will be in place upon consummation of the
Reorganization. This table shows that the following funds and classes are
projected to experience lower annualized per share total operating expense
ratios, based upon the fee arrangements that will be in place, upon consummation
of the Reorganization.
California Municipal Bond Fund -- A&B Shares
California Tax Exempt Money Market Fund -- Horizon, Horizon Service and
Pacific Horizon Shares
Government Fund -- Horizon and Horizon Service Shares
Intermediate Bond Fund -- A Shares
Prime Fund -- Horizon, Horizon Service, Pacific Horizon and Y Shares
Tax-Exempt Money Fund -- Horizon, Horizon Service, and Pacific Horizon
Shares
Treasury Fund -- Horizon, Horizon Service, Pacific Horizon and Y Shares
Treasury Only Fund -- Horizon, Horizon Service and Pacific Horizon
Shares
The following funds and classes are projected to experience higher
annualized per share total operating expense ratios, based upon the fee
arrangements that will be in place, upon consummation of the Reorganization:
Asset Allocation Fund -- A, B and K Shares
Blue Chip Fund -- K Shares
California Tax Exempt Money Market Fund -- S and X Shares
Capital Income Fund -- A, B and K Shares
Intermediate Bond Fund -- K Shares
Prime Fund -- S and X Shares
Treasury Fund -- S and X Shares
9
<PAGE>
The following funds and classes are projected to experience no change
in annualized per share total operating expense ratios, based upon the
arrangements that will be in place, upon consummation of the Reorganization:
Asset Allocation Fund--SRF Shares
Blue Chip Fund--A, B& SRF Shares
Government Fund--Pacific Horizon Shares
Intermediate Bond Fund--SRF Shares
Tax Exempt Money Fund--S Shares
<TABLE>
<CAPTION>
TABLE II
Total Expense Information
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Horizon Fund/ Total Corresponding Total Pro Forma
- -------------------- -------------
Share Class Operating Nations Fund/Share Class Operating Combined Fund/Share Total
- ----------- ------------------------ -------------------
Expenses Expenses Class Post-Reorganization Operating
Before/After Before/After Expenses
Waivers and/or Waivers and/or
Reimbursements Reimbursements Before/After Waivers and/or
Reimbursements
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund Nations Asset Allocation Fund Nations Asset Allocation Fund
A Shares 0.97%/0.97% Investor A Shares n/a Investor A Shares 1.22%/1.20%
B Shares 1.72%/1.72% Investor B Shares n/a Investor B Shares 1.97%/1.95%
K Shares 1.72%/1.47% Investor C Shares n/a Investor C Shares 1.97%/1.95%
Seafirst Shares 0.97%/0.95% Seafirst Shares n/a Seafirst Shares 1.22%/0.95%
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Chip Fund Nations Blue Chip Fund Nations Blue Chip Fund
A Shares 1.23%/1.20% Investor A Shares n/a Investor A Shares 1.28%/1.20%
B Shares 1.98%/1.95% Investor B Shares n/a Investor B Shares 2.03%/1.95%
K Shares 1.98%/1.70% Investor C Shares n/a Investor C Shares 2.03%/1.95%
Seafirst Shares 1.23%/0.95% Seafirst Shares n/a Seafirst Shares 1.28%/0.95%
- ------------------------------------------------------------------------------------------------------------------------------------
10
<PAGE>
California Municipal Bond Fund Nations California Municipal Bond Fund Nations California Municipal Bond Fund
A Shares 0.94%/0.94% Investor A Shares n/a Investor A Shares 1.07%/0.85%
B Shares 1.69%/1.69% Investor B Shares n/a Investor B Shares 1.82%/1.45%
- ------------------------------------------------------------------------------------------------------------------------------------
California Tax-Exempt Money Market Fund Nations California Tax-Exempt Reserves Nations California Tax-Exempt Reserves
Horizon Shares 0.24%/0.24% Capital Shares n/a Capital Shares 0.29%/0.20%
Horizon Serv. Shares 0.49%/0.49% Advisor Shares n/a Advisor Shares 0.54%/0.45%
Pac. Horizon Shares 0.59%/0.56% Investor Shares n/a Investor Shares 0.64%/0.55%
S Shares 1.24%/0.79% Daily Shares n/a Daily Shares 0.89%/0.80%
X Shares 0.81%/0.79% Daily Shares n/a Daily Shares 0.89%/0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Income Fund Nations Capital Income Fund Nations Capital Income Fund
A Shares 1.21%/1.21% Investor A Shares n/a Investor A Shares 1.23%/1.23%
B Shares 1.96%/1.96% Investor B Shares n/a Investor B Shares 1.98%/1.98%
K Shares 1.96%/1.71% Investor C Shares n/a Investor C Shares 1.98%/1.98%
- ------------------------------------------------------------------------------------------------------------------------------------
11
<PAGE>
Government Fund Nations Government Reserves Nations Government Reserves
Horizon Shares 0.28%/0.23% Capital Shares 0.29%/0.20% Capital Shares 0.29%/0.20%
Horizon Serv. Shares 0.53%/0.48% Advisor Shares 0.54%/0.45% Advisor Shares 0.54%/0.45%
Pac. Horizon Shares 0.60%/0.55% Investor Shares n/a Investor Shares 0.64%/0.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund Nations Intermediate Bond Fund Nations Intermediate Bond Fund
A Shares 1.00%/0.96% Investor A Shares n/a Investor A Shares 1.06%/0.95%
K Shares 1.75%/1.46% Investor C Shares n/a Investor C Shares 1.81%/1.81%
Seafirst Shares 1.00%/.0.95% Seafirst Shares n/a Seafirst Shares 1.06%/0.95%
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Fund Nations Cash Reserves Nations Cash Reserves
Horizon Shares 0.24%/0.24% Capital Shares 0.28%/0.20% Capital Shares 0.28%/0.20%
Horizon Serv. Shares 0.49%/0.49% Advisor Shares 0.53%/0.45% Advisor Shares 0.53%/0.45%
Pac. Horizon Shares 0.56%/0.56% Investor Shares n/a Investor Shares 0.63%/0.55%
S Shares 1.24%/0.79% Daily Shares n/a Daily Shares 0.88%/0.80%
X Shares 0.79%/0.79% Daily Shares n/a Daily Shares 0.88%/0.80%
Y Shares 1.24%/1.24% Service Shares n/a Service Shares 1.28%/1.20%
- ------------------------------------------------------------------------------------------------------------------------------------
12
<PAGE>
Tax-Exempt Money Fund Nations Municipal Reserves Nations Municipal Reserves
Horizon Shares 0.27%/0.27% Capital Shares 0.35%/0.20% Capital Shares 0.30%/0.20%
Horizon Serv. Shares 0.52%/0.52% Advisor Shares 0.55%/0.45% Advisor Shares 0.55%/0.45%
Pac. Horizon Shares 0.59%/0.59% Investor Shares n/a Investor Shares 0.65%/0.55%
S Shares 1.25%/0.80% Daily Shares n/a Daily Shares 0.90%/0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury Fund Nations Treasury Reserves Nations Treasury Reserves
Horizon Shares 0.24%/0.24% Capital Shares 0.29%/0.20% Capital Shares 0.29%/0.20%
Horizon Serv. Shares 0.49%/0.49% Advisor Share 0.54%/0.45% Advisor Shares 0.54%/0.45%
Pac. Horizon Shares 0.56%/0.56% Investor Shares n/a Investor Shares 0.64%/0.55%
S Shares 1.24%/0.79% Daily Shares n/a Daily Shares 0.89%/0.80%
X Shares 0.79%/0.79% Daily Shares n/a Daily Shares 0.89%/0.80%
Y Shares 1.24%/1.24% Service Shares n/a Service Shares 1.29%/1.20%
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury Only Fund Nations Government Reserves Nations Government Reserves
Horizon Shares 0.27%/0.27% Capital Shares 0.29%/0.20% Capital Shares 0.29%/0.20%
Horizon Serv. Shares 0.52%/0.52% Advisor Shares 0.54%/0.45% Advisor Shares 0.54%/0.45%
Pac. Horizon Shares 0.59%/0.59% Investor Shares n/a Investor Shares 0.64%/0.55%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Detailed pro forma expense information for each proposed reorganization
is included in Appendix II.
SUMMARY
The following is a summary of certain information relating to the
proposed Reorganization. More complete information is contained elsewhere in
this Proxy/Prospectus, the Prospectuses and Statements of Additional Information
of Pacific Horizon and Nations, and the Appendices attached hereto.
Proposed Reorganization. The Reorganization Agreement provides for: (1)
the transfer of all of the assets and liabilities of each Pacific Horizon Fund
to a corresponding Nations Fund in exchange for Shares of the designated classes
of the corresponding Nations Fund of equal value; (2) the distribution of the
Nations Fund Shares to the shareholders of the Pacific Horizon Funds in
liquidation of the Pacific Horizon Funds; and (3) the dissolution under state
law and the deregistration under the 1940 Act, of Pacific Horizon. The
Reorganization is subject to a number of conditions, including Pacific Horizon
Fund shareholder approval.
The exchange of shares in the Reorganization will be tax-free under
federal law and shareholders will not pay any sales charge as a result of the
exchange of shares in the Reorganization. As a result of the proposed
Reorganization, a Pacific Horizon Fund shareholder will become a shareholder of
the corresponding Nations Fund and will hold, immediately after the
Reorganization, Nations Fund Shares having a total dollar value equal to the
total dollar value of the shares of the Pacific Horizon Fund that the
shareholder held immediately before the Reorganization. The Reorganization is
expected to occur in May 1999 or such later date as may be determined pursuant
to the Reorganization Agreement. For more information about the Reorganization
and the Reorganization Agreement, see "The Reorganization--Description of the
Reorganization Agreement."
14
<PAGE>
NationsBanc Advisors, Inc. ("NBAI") has advised Pacific Horizon and
Nations Funds that NationsBank and its affiliates intend, with respect to
certain of their fiduciary accounts that currently hold A Shares of a Pacific
Horizon Fund that is not a money market fund, to exchange the Investor A Shares
that such accounts would be entitled to receive as a result of the
Reorganization for Primary A Shares of the same Nations Fund of equal value at
or shortly after Closing. Similarly, NBAI has advised Pacific Horizon and
Nations Funds that NationsBank and its affiliates intend, with respect to
certain of their fiduciary accounts that currently hold Horizon or Horizon
Service shares of a Pacific Horizon money market fund, to exchange the Capital
or Advisor Shares that such accounts would be entitled to receive as a result of
the Reorganization for Trust Shares of the same Fund of equal value at or
shortly after Closing.
Special Consideration for Shareholders of the Pacific Horizon Blue Chip
Fund and Pacific Horizon Intermediate Bond Fund. The Blue Chip Fund and
Intermediate Bond Fund are feeder funds (each a "Feeder" and collectively, the
"Feeders") in a master/feeder structure whereby each Feeder invests all of its
assets in the securities of a corresponding MIT Master Portfolio, which has
substantially the same investment objective and policies as its corresponding
Feeder. It is proposed that the master/feeder structure continue within Nations
Funds. Therefore shareholders of each Feeder are being asked to approve not only
the Reorganization Agreement, which governs the reorganization of the Feeders,
but also the Master Trust Reorganization Agreement, which governs the
reorganization of the MIT Master Portfolios.
The Master Trust Reorganization Agreement contemplates the
reorganization of the MIT Master Portfolios into corresponding Nations Master
Portfolios of NMIT, which will have substantially the same investment objective
and policies as the MIT Master Portfolios. After the Reorganization, and the
transaction contemplated by the Master Trust Reorganization Agreement, the
Nations Feeders would invest all of their assets in the Nations Master
Portfolios.
For more information about this aspect of the Reorganization, see "The
Reorganization--Description of the Master Trust Reorganization Agreement" and
"Voting Matters--Special Voting Considerations for Shareholders of the Pacific
Horizon Blue Chip Fund and the Pacific Horizon Intermediate Bond Fund."
Overview of the Funds. The investment objective, policies and
restrictions of the Pacific Horizon Asset Allocation Fund, Pacific Horizon Blue
Chip Fund, Pacific Horizon California Municipal Bond Fund, Pacific Horizon
California Tax-Exempt Money Market Fund, Pacific Horizon Capital Income Fund and
Pacific Horizon Intermediate Bond Fund are substantially identical to those of
the corresponding Shell Nations Funds, because the Shell Nations Funds are being
created to continue the business of their corresponding Pacific Horizon Funds.
15
<PAGE>
The investment objectives, policies and restrictions of the other
Pacific Horizon Funds are, in general, substantially similar to those of their
corresponding Operating Nations Funds. While all of the Operating Nations Funds
are money market funds and therefore are subject to the general restrictions and
limitations of Rule 2a-7 under the 1940 Act, there are certain differences
between the investment policies and restrictions of the Operating Nations Funds
and their corresponding Pacific Horizon Funds. For example, while the Pacific
Horizon Prime Fund concentrates its investments (i.e., invests at least 25% of
its assets) in the banking and finance industries, the corresponding Nations
Cash Reserves merely reserves the right to concentrate its investments in
obligations of U.S. banks, foreign branches of U.S. banks and U.S. branches of
foreign banks. In addition, while the Pacific Horizon Treasury Only Fund invests
solely in obligations of the U.S. Treasury, the corresponding Nations Government
Reserves may invest not only in obligations of the U.S. Treasury, but also in
general U.S. Government obligations and repurchase agreements. However, in order
to more closely align the investment policies and restrictions of the two Funds,
NBAI has committed that Nations Government Reserves will not invest in
repurchase agreements after the Reorganization. For additional information, see
"Comparison of Pacific Horizon and Nations--Investment Objectives and Policies"
and Appendix III.
NBAI currently serves or will serve as the investment adviser to the
Nations Funds and Nations Master Portfolios. TradeStreet Investment Associates,
Inc.("TradeStreet") currently serves or will serve as investment sub-adviser to
the Nations Funds and Nations Master Portfolios, except Nations Blue Chip Master
Portfolio, for which Chicago Equity Partners ("Chicago Equity) will serve as
investment sub-adviser and Nation Asset Allocation Fund, for which TradeStreet
and Chicago Equity will serve as co-investment sub-advisers. Bank of America
National Trust and Savings Association ("Bank of America") currently serves as
the investment adviser to the Pacific Horizon Funds and MIT Master Portfolios.
NBAI, TradeStreet, Chicago Equity and Bank of America are indirect wholly owned
subsidiaries of BankAmerica Corporation.
Each Nations Fund's and Nations Master Portfolio's contractual advisory
fee is higher than the corresponding Pacific Horizon Fund's and MIT Master
Portfolio's contractual advisory fee, though advisory fees are only one type of
fees and expenses paid by mutual funds. Total operating expenses (after waivers
and reimbursements) are substantially the same as or lower for a substantial
majority of Nations Fund classes compared with corresponding Pacific Horizon
Fund classes. For a more detailed summary of fees and expenses, see Appendix II.
The Pacific Horizon Funds and Nations Funds have different administrators,
distributors, transfer agents and other service providers. For a detailed
description of the management of the Nations Funds, including NBAI, TradeStreet,
Chicago Equity and other service providers to the Nations Funds, see "Comparison
of Pacific Horizon and Nations - Investment Advisory Services" and the Nations
Fund prospectus which accompanies this Proxy/Prospectus..
16
<PAGE>
The purchase, redemption, dividend and other policies and procedures of
the Pacific Horizon Funds and the Nations Funds are generally similar. There
are, however, some differences, such as with respect to categories of
shareholders eligible for sales charge waivers. See "Comparison of Pacific
Horizon and Nations--Shareholder Transactions and Services," "Comparison of
Pacific Horizon and Nations--Share Structure" and Appendix IV to this
Proxy/Prospectus. Please note that no front-end or contingent deferred sales
loads will be imposed on any of the shareholders of the Pacific Horizon Funds as
a result of the exchange of shares in the Reorganization.
Federal Income Tax Consequences. The exchange of shares in the
Reorganization is not expected to result in the recognition, for federal income
tax purposes, of gain or loss by the Pacific Horizon Funds, the Nations Funds or
their respective shareholders. The sale of securities by the Pacific Horizon
Funds prior to the Reorganization, whether in the ordinary course of business or
in anticipation of the Reorganization, could result in a taxable capital gains
distribution prior to the Reorganization. See "The Reorganization
Agreement--Federal Income Tax Considerations" for additional information.
Pacific Horizon, MIT, Nations and NMIT Board Consideration. During its
deliberations, Pacific Horizon's Board of Directors (with the advice and
assistance of its counsel) reviewed, among other things: (1) the potential
effect of the Reorganization on the shareholders of the Pacific Horizon Funds;
(2) the capabilities, practices and resources of NBAI and the Nations Funds'
other service providers; (3) the investment advisory and other fees paid by the
Nations Funds, and the historical and projected expense ratios of the Nations
Funds as compared with those of the Pacific Horizon Funds and industry peer
groups; (4) the expected cost-savings for certain of the Pacific Horizon Funds,
including Pacific Horizon funds not part of this Proxy/Prospectus, as a result
of the reorganization of Pacific Horizon; (5) the investment objectives,
policies and limitations of the Nations Funds and their relative compatibility
with those of the Pacific Horizon Funds; (6) the historical investment
performance records of the Pacific Horizon Funds and the Nations Funds, relative
to each other and relative to peer groups; (7) the shareholder services offered
by Nations; (8) the terms and conditions of the Reorganization Agreement,
including those provisions that were intended to avoid dilution of the interests
of Pacific Horizon Fund shareholders; (9) the anticipated tax consequences of
the Reorganization for the respective Pacific Horizon Funds and their
shareholders; (10) the number of investment portfolio options that would be
available to shareholders after the Reorganization; (11) the viability of any
Pacific Horizon Fund on a stand-alone basis apart from the Nations Funds Family;
and (12) the potential benefits of the Reorganization to other persons,
especially NBAI and its affiliates. The Board also considered NBAI's belief that
the Reorganization would eliminate certain duplicative shareholder costs and
market overlap, facilitate consolidation of NBAI's managerial resources and
enhance generally operational efficiencies and focus with respect to the mutual
funds advised by NBAI. For additional information, see "The
Reorganization--Pacific Horizon and MIT Board Consideration."
17
<PAGE>
[Based upon their evaluation of the information presented to them, and
in light of their fiduciary duties under federal and state law, the Board of
Directors of Pacific Horizon, including all of the non-interested members of the
Board, determined that the proposed Reorganization is in the best interests of
the shareholders of each class of each Pacific Horizon Fund, and that the
interests of such shareholders will not be diluted as a result of the
Reorganization. PACIFIC HORIZON'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
PACIFIC HORIZON FUND SHAREHOLDERS APPROVE THE REORGANIZATION AGREEMENT. ]
During its deliberations, MIT's Board of Trustees (with the advice and
assistance of its counsel) reviewed, among other things, each of the matters
described above as they applied to MIT, the Master Trust Reorganization
Agreement and the Master Portfolio.
[Based upon their evaluation of the information presented to them, and
in light of their fiduciary duties under federal and state law, the Board of
Trustees of MIT, including all of the non-interested members of the Board,
determined that the proposed Reorganization is in the best interests of the
interest holders of the MIT Master Portfolios, and that the interests of such
interest holders will not be diluted as a result of the Reorganization. MIT'S
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE PACIFIC
HORIZON BLUE CHIP FUND AND THE PACIFIC HORIZON INTERMEDIATE BOND FUND APPROVE
THE MASTER TRUST REORGANIZATION AGREEMENT.]
After considering the relevant factors, the Nations Board and the NMIT
Board similarly found that participation in the Reorganization is in the best
interests of the Nations Funds and the Nations Master Portfolios, respectively,
and that the interests of the shareholders of the Nations Funds and the interest
holders of the Nations Master Portfolios will not be diluted as a result of the
Reorganization.
Principal Risk Factors. Because the Shell Nations Funds are being
created to continue the business of their corresponding Pacific Horizon Funds,
an investment in a Shell Nations Fund involves risks that are substantially the
same as those of the corresponding Pacific Horizon Fund.
With respect to the Operating Nations Funds, their investment
objectives, policies and restrictions are substantially similar to those of the
corresponding Pacific Horizon Funds. Accordingly, an investment in an Operating
Nations Fund involves risks that are similar to those of the corresponding
Pacific Horizon Fund. Because all of the Operating Nations Funds (and their
corresponding Pacific Horizon Funds) are money market funds, the risks are those
typically associated with investing in a portfolio of high quality, short-term
money market instruments. For example, while money market funds attempt to
maintain a stable net asset value of $1.00, there is no assurance that they will
be able to do so. Additionally, while the Funds all may invest in instruments
backed by the full faith and credit of the U.S. Government, neither shares of
the Operating Nations Funds nor the corresponding Pacific Horizon Funds are
themselves issued or guaranteed by the U.S. Government or any of its agencies.
18
<PAGE>
Voting Information. This Proxy/Prospectus is being furnished in
connection with the solicitation of proxies by Pacific Horizon's Board of
Directors. Only shareholders of record at the close of business on January 14,
1999 will be entitled to vote at the Meeting. Shares represented by a properly
executed proxy will be voted in accordance with the instructions thereon. If no
instruction is made, the named proxies will vote in favor of each proposal set
forth in the Notice of Meeting. Proxies may be revoked at any time before they
are exercised by submitting to Pacific Horizon a written notice of revocation or
a subsequently executed proxy or by attending the Meeting and voting in person.
For additional information, see "Voting Matters."
Special Voting Considerations for Shareholders of the Pacific Horizon
Blue Chip Fund and the Pacific Horizon Intermediate Bond Fund. Because the
Feeders invest all of their assets in shares of the corresponding MIT Master
Portfolios, shareholders of the Feeders are being asked to vote not only on the
Reorganization Agreement but also the Master Trust Reorganization Agreement.
Therefore, a vote for or against the Reorganization Agreement will include a
vote for or against the Master Trust Reorganization Agreement. The votes cast by
the Feeders' shareholders with respect to the Master Trust Reorganization
Agreement will, in turn, be cast by the Feeders, as the direct interest holders
in MIT, in the same proportion. The Master Trust Reorganization Agreement is
subject to approval by its interest holders, which includes two offshore funds
(the "World Horizon Funds") that also invest in each MIT Master Portfolio.
Shareholders of the World Horizon Funds also will be asked to cast votes on the
Master Trust Reorganization Agreement. The Reorganization, with respect to MIT
and the MIT Master Portfolios, will only be consummated if a majority of all
outstanding interests in the MIT Master Portfolios approve the Master Trust
Reorganization Agreement. For details concerning this aspect of the
Reorganization, see "Voting Matters--Special Consideration for Shareholders of
the Pacific Horizon Blue Chip Fund and the Pacific Horizon Intermediate Bond
Fund."
THE REORGANIZATION
Significant features of the Reorganization are summarized below. This
summary is qualified in its entirety by reference to the Reorganization
Agreement, a copy of which is attached as Appendix I.
The proposed Reorganization is expected to benefit Pacific Horizon Fund
shareholders by, among other things:
(i) Offering actual or potential reductions in total operating
expense ratios in most cases;
(ii) Offering access to a broader array of investment products,
including a line of fund-of-funds, and investment services
including a mutual fund marketplace;
(iii) Offering enhanced access and servicing arrangements; and
(iv) Providing opportunities for enhanced returns through combined
investment portfolios.
19
<PAGE>
Description of the Reorganization Agreement. The Reorganization
Agreement provides that, at the Closing, the assets and liabilities of the
Pacific Horizon Funds will be transferred to Nations in exchange for full and
fractional Shares of the designated classes of the corresponding Nations Funds,
as shown in Table I(A) (see page xx of this Proxy/Prospectus).
The Shares issued by each Nations Fund will have an aggregate dollar
value equal to the aggregate dollar value of the shares of the respective
Pacific Horizon Fund that are outstanding immediately before the Closing.
Immediately after the Closing, each Pacific Horizon Fund will distribute the
Shares of the Nations Fund received in the Reorganization to its shareholders in
liquidation of the Pacific Horizon Fund. Each shareholder owning shares of a
particular Pacific Horizon Fund at the Closing will receive Shares of the
designated class of the corresponding Nations Fund, and will receive any unpaid
dividends or distributions that were declared before the Closing on Pacific
Horizon Fund shares. Nations will establish an account for each former
shareholder of the Pacific Horizon Funds reflecting the number of Nations Fund
Shares distributed to that shareholder. The Shares issued in the Reorganization
will be in uncertificated form.
As indicated above, shareholders of other Pacific Horizon funds are
voting on similar agreements and plans of reorganization that, in a like manner,
would provide for the reorganization of those Pacific Horizon funds into
designated classes of corresponding portfolios of Nations Fund, Inc. and Nations
Funds Trust--other registered investment companies that, together with Nations,
comprise a significant part of the "Nations Funds Family." Please note that a
vote for or against the approval of the Reorganization Agreement includes a vote
for or against the reorganization of Pacific Horizon into the Nations Funds
Family. If the Reorganization Agreement and the agreements and plans of
reorganization affecting the other Pacific Horizon funds are approved and
consummated, Pacific Horizon will transfer all of its assets and liabilities, as
of the Closing, and all outstanding shares of the Pacific Horizon Funds will be
redeemed and canceled in exchange for shares of the Nations Funds Family, and
Pacific Horizon will wind up its affairs and apply to be deregistered as an
investment company under the 1940 Act and thereafter dissolve under Maryland
law.
The Reorganization is subject to a number of conditions, including
approval of the Reorganization Agreement and the related matters described in
this Proxy/Prospectus by Pacific Horizon Fund shareholders; approval of the
Reorganization of Pacific Horizon by a majority of all of the shares of the
funds of Pacific Horizon voting in the aggregate; the receipt of certain legal
opinions described in the Reorganization Agreement (which include an opinion of
Nations' counsel addressed to Pacific Horizon that the Nations Fund Shares
issued in the Reorganization will be validly issued, fully paid and
non-assessable); the receipt of certain certificates from the parties concerning
the continuing accuracy of the representations and warranties in the
Reorganization Agreement; the receipt of certain letters from independent
accountants regarding various financial matters; the receipt of any necessary
exemptive relief or no-action assurances requested from the SEC or its staff
with respect to Section 17(a) and 17(d) of the 1940 Act and Rule 17d-1
thereunder; the receipt of a certificate relating to the transition by Nations
of certain administrative servicing responsibilities to The Bank of New York;
the receipt of an exemptive order with respect to Section 9(a) of the 1940 Act
by Stephens Inc. and the parties' performance in all material respects of their
respective covenants and undertakings in the Reorganization Agreement. It is
possible that a majority of a Pacific Horizon Fund's shareholders may approve
the Reorganization Agreement while a sufficient majority of all shareholders of
all Pacific Horizon funds does not approve the reorganization of Pacific
Horizon. In such a case, the Board of Directors will contemplate what further
action is appropriate.
20
<PAGE>
The Reorganization Agreement also provides that NBAI or an affiliate
has agreed to assume all customary expenses associated with the Reorganization.
The Reorganization Agreement also provides, among other things, that the
Reorganization may be abandoned at any time prior to the Closing upon the mutual
consent of both Pacific Horizon and Nations, or by either Nations or Pacific
Horizon under certain conditions; and that officers of Nations and of Pacific
Horizon may amend, modify or supplement the Reorganization Agreement, provided
however, that following the Meeting, no such amendment may have the effect of
changing the provisions for determining the number of Shares of the
corresponding Nations Fund to be issued to the shareholders of any Pacific
Horizon Fund without obtaining the Pacific Horizon Fund shareholders' further
approval.
The Reorganization Agreement further provides that Reserves, on behalf
of each Nations Fund will use its best efforts to satisfy the conditions of
Section 15(f) of the 1940 Act. 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). 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 the investment adviser within
the meaning of the 1940 Act. Reserves' agreement in this regard is an assumption
of the stated expectation of Pacific Horizon as set forth in the Pacific Horizon
proxy statement dated May 15, 1998 relating to the change in control, if any, of
Bank of America Nations Trust and Savings Association--the Pacific Horizon
Funds' investment adviser--which occurred when NationsBank Corporation and
BankAmerica Corporation merged on September 30, 1998.
21
<PAGE>
Description of the Master Trust Reorganization Agreement (for
consideration by shareholders of the Pacific Horizon Blue Chip Fund and Pacific
Horizon Intermediate Bond Fund only). Like the Reorganization Agreement, the
Master Trust Reorganization Agreement provides that, at the Closing, the assets
and liabilities of the MIT Master Portfolios will be transferred to NMIT in
exchange for full and fractional shares of beneficial interest of the
corresponding Nations Master Portfolios, as shown in Table I(B) (see page xx of
this Proxy/Prospectus).
The interests issued by each Nations Master Portfolio will have an
aggregate dollar value equal to the aggregate dollar value of the interests of
the respective MIT Master Portfolio that are outstanding immediately before the
Closing. Immediately after the Closing, each MIT Master Portfolio will
distribute the interests of the Nations Master Portfolio received in the
Reorganization to MIT's interest holders, which, at such time, will be Nations
Blue Chip Fund and Nations Intermediate Bond Fund and the two corresponding
World Horizon Funds, in proportion to their interests, in liquidation of the MIT
Master Portfolios. Thus, following the Reorganization Feeder shareholders will
own shares of Nations Blue Chip Fund and Nations Intermediate Bond Fund equal in
value to their holdings in Pacific Horizon Blue Chip Fund and Pacific Horizon
Intermediate Bond Fund. Nations Blue Chip Fund and Nations Intermediate Bond
Fund in turn will own Master Portfolio interests that, correspond to the
holdings of Nations Horizon Blue Chips and Intermediate Bond Fund in the MIT
Master Portfolios immediately prior to the reorganization. Feeder shareholders
thus will own substantially the same portfolio securities and will be subject to
substantially the same investment objectives, policies and restrictions as
before. The value and composition of the portfolio securities held by the MIT
Master Portfolios and transferred to the Master Portfolios will not be affected
by the exchange of shares in the Reorganization. Please note that a vote for or
against the approval of the Reorganization Agreement, described above, includes
a vote for or against the Master Trust Reorganization Agreement.
The Master Trust Reorganization Agreement is subject to a number of
conditions, and contains a number of terms, that basically correspond to the
conditions and terms applicable to the Reorganization Agreement. It is possible
that shareholders of the Feeders will approve the Reorganization Agreement, but
interest holders of the Master Portfolios voting separately or in the aggregate
do not approve the Master Trust Reorganization Agreement. In such a case, the
Board of Trustees of MIT and the Board of Directors of Pacific Horizon will
contemplate what further action is appropriate.
Pacific Horizon and MIT Board Consideration. At meetings held on July
26 and 27, 1998, the Pacific Horizon Board of Directors and the MIT Board of
Trustees were advised that Bank of America and NBAI were considering
recommending a consolidation of Pacific Horizon with the Nations Fund Family
following the September 30, 1998 merger of NationsBank Corporation with
BankAmerica Corporation. The Pacific Horizon and the MIT Board of Trustees then
met again on October 27th-28th, November 23rd, December 7th, December 14th and
January 14th to consider the Reorganization proposal offered by management of
Nations, NBAI and its affiliates. In preparation for each meeting, the Directors
and Trustees were provided with detailed information about the Reorganization,
the Nations Funds and NBAI. These materials summarized the principal features of
the Reorganization, including the intention that the Reorganization be
consummated on a tax-free basis under federal law. In addition, the Pacific
Horizon Directors and Trustees received comparative information about the
Pacific Horizon Funds and the corresponding Nations Funds, including but not
limited to the following matters: (1) investment objectives and policies; (2)
advisory, distribution and other servicing arrangements; (3) expenses (with and
without giving effect to current expense limitations), including pro forma
expenses relative to peer groups and (4) performance relative to peer groups.
The Directors and Trustees were also provided with information about NationsBank
and its investment advisory organizations, including information regarding those
individuals or teams of individuals with responsibility for managing each
Nations Fund (or Nations Master Portfolio, as applicable).
22
<PAGE>
[The Reorganization was unanimously approved by the Pacific Horizon
Board of Directors and by the MIT Board of Trustees on January 14th, 1999.]
During its deliberations, Pacific Horizon's Board of Directors (with
the advice and assistance of its counsel) reviewed, among other things: (1) the
potential effect of the Reorganization on the shareholders of the Pacific
Horizon Funds; (2) the capabilities, practices and resources of NBAI and the
Nation Funds' other service providers; (3) the investment advisory and other
fees paid by the Nations Funds, and the historical and projected expense ratios
of the Nations Funds as compared with those of the Pacific Horizon Funds and
industry peer groups; (4) the expected cost-savings for certain of the Pacific
Horizon Funds, including Pacific Horizon funds not part of this
Proxy/Prospectus, as a result of the reorganization of Pacific Horizon; (5) the
investment objectives, policies and limitations of the Nations Funds and their
relative compatibility with those of the Pacific Horizon Funds; (6) the
historical investment performance records of the Pacific Horizon Funds and the
Nations Funds, relative to each other and relative to peer groups; (7) the
shareholder services offered by Nations; (8) the terms and conditions of the
Reorganization Agreement, including those provisions that were intended to avoid
dilution of the interests of Pacific Horizon Fund shareholders; (9) the
anticipated tax consequences of the Reorganization for the respective Pacific
Horizon Funds and their shareholders; (10) the number of investment portfolio
options that would be available to shareholders after the Reorganization; (11)
the viability of any Pacific Horizon Fund on a stand-alone basis apart from the
Nations Funds Family; and (12) the potential benefits of the Reorganization to
other persons, especially NBAI and its affiliates. The Board also considered
NBAI's belief that the Reorganization would eliminate certain duplicative
shareholder costs and market overlap, facilitate consolidation of NBAI's
managerial resources and enhance generally operational efficiencies and focus
with respect to the mutual funds advised by NBAI. The Board further notes that
NBAI or an affiliate would assume all customary expenses associated with the
Reorganization.
With respect to each Nations Fund, Pacific Horizon's Directors further
noted that, with request to a substantial majority of classes, the per share
annualized total operating expense ratios after the Reorganization, taking into
account voluntary fee waivers and expense reimbursements, would be substantially
the same as or lower than those of the corresponding Pacific Horizon Funds
before the Reorganization. It also noted that NBAI would assume all customary
expenses associated with the Reorganization and that it would commit to waive
fees and/or reimburse expenses as needed to ensure that, for one year from the
date of Closing, the Nations Funds total operating expense ratios will not
exceed the pro forma after waiver expense ratios shown in Table II, absent
extraordinary circumstances or a reduction in Fund assets that impacts expense
levels.
23
<PAGE>
[After consideration of the foregoing and other factors, the Pacific
Horizon Directors unanimously determined that the Reorganization is in the best
interest of the shareholders of each Pacific Horizon Fund, and that the interest
of the shareholders of each Pacific Horizon Fund will not be diluted as a result
of such Reorganization.]
[During its deliberations, MIT's Board of Trustees considered among
other things, the same factors as the Pacific Horizon Board of Directors in its
review of the merits of the Reorganization. After doing so, the MIT Trustees
unanimously determined that the Reorganization is in the best interest of the
interest holders of each MIT Master Portfolio, and that the interest of the
interest holders of each Master Portfolio will not be diluted as a result of
such Reorganization.]
Capitalization. The following table sets forth, as of September 30,
1998 (for the Shell Nations Funds and their corresponding Pacific Horizon Funds)
and as of October 31, 1998 (for the Operating Nations Funds and their
corresponding Pacific Horizon Funds): (1) the capitalization of each of the
Pacific Horizon Funds; (2) the capitalization of each of the corresponding
Nations Funds; and (3) the pro forma capitalization of each of the Nations Funds
as adjusted to give effect to the Reorganization. The capitalization of each
Pacific Horizon Fund and Nations Fund is likely to be different at the Closing
as a result of daily share purchase and redemption activity in the Pacific
Horizon Funds and Nations Funds as well as the effects of the other ongoing
operations of the respective Funds prior to Closing.
Nations Asset Allocation Fund, Blue Chip Fund, California Municipal
Bond Fund, California Tax-Exempt Reserves, Capital Income Fund and Intermediate
Bond Fund have not yet commenced operations, but will do so at the time the
Reorganization occurs.
Table III
Capitalization
1. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Asset Allocation Fund
with Nations Asset Allocation Fund.
24
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Pacific Horizon Asset Allocation Fund $67,056,441 3,163,843 $21.19
(A Shares) (A Shares) (A Shares)
$1,211,236 57,167 $21.19
(B Shares) (B Shares) (B Shares)
$1,359,810 64,236 $21.17
(K Shares) (K Shares) (K Shares)
$190,245,872 11,659,887 $16.32
(SRF Shares) (SRF Shares) (SRF Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations Asset Allocation Fund N/A N/A N/A
(Investor A) (Investor A) (Investor A)
N/A N/A N/A
(Investor B) (Investor B) (Investor B)
N/A N/A N/A
(Investor C) (Investor C) (N/A
N/A N/A (SRF Shares)
(SRF Shares) (SRF Shares)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $67,056,441 3,163,843 $21.19
(A Shares/ Investor A) (A Shares/ Investor (A Shares/ Investor A)
$1,211,236 A) $21.19
(B Shares/ Investor B) 57,167 (B Shares/Investor B)
$1,359,810 (B Shares/Investor B) $21.17
(K Shares/Investor C) 64,236 (K Shares/Investor C)
$190,245,872 (K Shares/Investor C) $16.32
(SRF/Seafirst Shares) 11,659,887 (SRF/Seafirst)
(SRF/Seafirst)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
2. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Blue Chip Fund with
Nations Blue Chip Fund.
25
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon Blue Chip Fund $340,350,591 12,180,427 $27.94
(A Shares) (A Shares) (A Shares)
$4,284,442 153,210 $27.96
(B Shares) (B Shares) (B Shares)
$8,500,765 305,456 $27.83
(K Shares) (K Shares) (K Shares)
$345,398,724 13,969,916 $24.72
(SRF Shares) (SRF Shares) (SRF Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations Blue Chip Fund N/A N/A N/A
(Investor A) (Investor A) (Investor A)
N/A N/A N/A
(Investor B) (Investor B) (Investor B)
N/A N/A N/A
(Investor C) (Investor C) (Investor C)
N/A N/A N/A
(Seafirst Shares) (Seafirst Shares) (Seafirst Shares)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $340,350,591 12,180,427 $27.94
(A Shares/ Investor A) (A Shares/ Investor A) (A Shares/ Investor A)
$4,284,442 153,210 $27.96
(B Shares/Investor B) (B Shares/Investor B) (B Shares/Investor B)
$8,500,765 305,456 $27.83
(K shares/Investor C) (K Shares/Investor C) (K shares/Investor C)
$345,398,724 $13,969,916 $24.72
(SRF/Seafirst) (SRF/ Shares) (SRF/Seafirst)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
3. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon California Municipal Bond
Fund with Nations California Municipal Bond Fund.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Shares Outstanding Net Asset Value
Total Net Assets Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon California Municipal $226,190,221 29,257,875 $7.73
Bond Fund (A Shares) (A Shares) (A Shares)
$1,155,896 149,417 $7.74
(B Shares) (B Shares) (B Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations California Municipal Bond Fund N/A N/A N/A
(Investor A) (Investor A) (Investor A
N/A N/A N/A
(Investor B) (Investor B) (Investor B)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $226,190,221 29,257,875 $7.73
(A Shares/ Investor A) (A Shares/ Investor A) (A Shares/ Investor A)
$1,155,896 149,417 $7.74
(B Shares/ Investor B) (B Shares/Investor B) (B Shares/ Investor B)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
4. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon California Tax-Exempt
Money Market Fund with Nations California Tax-Exempt Reserves.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon California Tax-Exempt N/A N/A N/A
Money Market Fund (Horizon Shares) (Horizon Shares) (Horizon Shares)
$746,840,011 746,903,947 $1.00
(Horizon Service (Horizon Service (Horizon Service
Shares) Shares) Shares)
$581,414,409 581,454,871 $1.00
(Pacific Horizon (Pacific Horizon (Pacific Horizon
Shares) Shares) Shares)
$294,292,298 294,301,253 $1.00
(S Shares) (S Shares) (S Shares)
$34,848,675 34,851,625 $1.00
(X Shares) (X Shares) (X Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations California Tax-Exempt Reserves N/A N/A N/A
(Capital Class) (Capital Class) (Capital Class)
N/A N/A N/A
(Advisor Class) (Advisor Class) (Advisor Class)
N/A N/A N/A
(Investor Class) (Investor Class) (Investor Class)
N/A N/A N/A
(Daily Shares) (Daily Shares) (Daily Shares)
N/A N/A N/A
(Daily Shares) (Daily Shares) (Daily Shares)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund N/A N/A N/A
(Horizon Shares/ (Horizon Shares/ Horizon Shares/
Capital Class) Capital Class) Capital Class)
$746,840,011 746,903,947 $1.00
(Horizon Service (Horizon Service (Horizon Service
Shares/ Shares/ Shares/
Advisor Class) Advisor Class) Advisor Class)
$581,414,409 581,454,871 $1.00
(Pacific Horizon (Pacific Horizon (Pacific Horizon
Shares/Investor Class) Shares/Investor Shares/Investor Class)
$294,292,298 Class) $1.00
(S Shares/Daily 294,301,253 (S Shares/Daily Shares)
Shares) (S Shares/Daily $1.00
$34,848,675 Shares) (X Shares/Daily Shares)
(X Shares/Daily 34,851,625
Shares) (X Shares/Daily
Shares)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
5. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Capital Income Fund with
Nations Capital Income Fund.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon Capital Income Fund $347,714,125 22,611,398 $15.38
(A Shares) (A Shares) (A Shares)
$1,755,221 114,197 $15.37
(B Shares) (B Shares) (B Shares)
$3,109,374 202,001 $15.39
(K Shares) (K Shares) (K Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations Capital Income Fund N/A N/A N/A
(Investor A) (Investor A) (Investor A)
N/A N/A N/A
(Investor B) (Investor B) (Investor B)
N/A N/A N/A
(Investor C) (Investor C) (Investor C)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $347,714,125 22,611,398 $15.38
(A Shares/Investor A) (A Shares/ Investor A) (A Shares/ Investor A
$1,755,221 114,197 $15.37
(B Shares/Investor B) (B Shares/Investor B) (B Shares/Investor B)
$3,109,374 202,001 $15.39
(K Shares/Investor C) (K Shares/Investor C) (K Shares/Investor C)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
6. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Intermediate Bond Fund
with Nations Intermediate Bond Fund.
28
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon Intermediate Bond Fund $67,798,192 6,838,079 $9.91
(A Shares) (A Shares) (A Shares)
$498,073 49,906 $9.98
(K Shares) (K Shares) (K Shares)
$34,842,467 3,119,515 $11.17
(SRF Shares) (SRF Shares) (SRF Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations Intermediate Bond Fund N/A N/A N/A
(Investor A) (Investor A) (Investor A)
N/A N/A N/A
(Investor C) (Investor C) (Investor C)
N/A N/A N/A
(Seafirst Shares) (Seafirst Shares) (Seafirst Shares)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $67,798,192 6,838,079 $9.91
(A Shares/Investor A) (A Shares/Investor (A Shares/Investor A)
$498,073 A) $9.98
(K Shares/Investor C) 49,906 (K Shares/Investor C)
$34,842,467 (K Shares/Investor C) $11.17
(SRF/Seafirst) 3,119,515 (SRF/Seafirst)
(SRF/Seafirst)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
7. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Prime Fund with Nations
Cash Reserves.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon Prime Fund $3,437,949,798 3,438,901,907 $1.00
(Horizon Shares) (Horizon Shares) (Horizon Shares)
$4,078,140,208 4,078,814,566 $1.00
(Horizon Service (Horizon Service (Horizon Service
Shares) Shares) Shares)
$2,883,219,107 2,883,995,489 $1.00
(Pacific Horizon (Pacific Horizon (Pacific Horizon
Shares) Shares) Shares)
$2,201,778,801 2,201,983,445 $1.00
(S Shares) (S Shares) (S Shares)
$1,489,825,987 $1,490,063,377 $1.00
(X Shares) (X Shares) (X Shares)
$184,076,527 $184,110,931 $1.00
(Y Shares) (Y Shares) (Y Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations Cash Reserves $3,808,855,000 3,808,850,249 $1.00
(Capital Class) (Capital Class) (Capital Class)
$810,617,000 810,616,096 $1.00
(Advisor Class) (Advisor Class) (Advisor Class)
N/A N/A N/A
(Investor Class) (Investor Class) (Investor Class)
N/A N/A N/A
(Daily Shares) (Daily Shares) (Daily Shares)
N/A N/A N/A
(Daily Shares) (Daily Shares) (Daily Shares)
N/A N/A N/A
(Service Class Shares) (Service Class (Service Class Shares)
Shares)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $7,246,804,789 7,247,752,156 $1.00
(Horizon Shares/ (Horizon Shares/ (Horizon Shares/
Capital Class) Capital Class) Capital Class)
$4,888,757,208 4,889,430,662 $1.00
(Horizon Service/ (Horizon Service/ (Horizon Service/
Advisor Class) Advisor Class) Advisor Class)
$2,883,219,107 2,883,995,489 $1.00
(Pacific Horizon/ (Pacific Horizon/ (Pacific Horizon/
Investor Class) Investor Class) Investor Class)
$1,201,778,801 1,201,983,445 $1.00
(S Shares/Daily (S Shares/Daily (S Shares/Daily Shares)
Shares) Shares) $1.00
$1,489,825,987 1,490,063,377 (X Shares/Daily Shares)
(X Shares/Daily (X Shares/Daily $1.00
Shares) Shares) (Y Shares/Service
$184,076,527 184,110,931 Class)
(Y Shares/Service (Y Shares/Service
Class) Class)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
8. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Tax-Exempt Money Fund
with Nations Municipal Reserves.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Shares Outstanding Net Asset Value
Total Net Assets Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon Tax-Exempt Money Fund $338,925,765 339,075,558 $1.00
(Horizon Shares) (Horizon Shares) (Horizon Shares)
$191,121,913 191,151,142 $1.00
(Horizon Service) (Horizon Service) (Horizon Service)
$144,280,499 144,306,769 $1.00
(Pacific Horizon) (Pacific Horizon) (Pacific Horizon)
$54,547,508 54,547,470 $1.00
(S Shares) (S Shares) (S Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations Municipal Reserves $117,664,000 117,664,588 $1.00
(Capital Class) (Capital Class) (Capital Class)
$49,969,000 49,969,376 $1.00
(Advisor Class) (Advisor Class) (Advisor Class)
N/A N/A N/A
(Investor Class) (Investor Class) (Investor Class)
N/A N/A N/A
(Daily Shares) (Daily Shares) (Daily Shares)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $456,589,765 456,740,146 $1.00
(Horizon Shares/ (Horizon Shares/ (Horizon Shares/
Capital Class) Capital Class) Capital Class)
$241,090,913 241,120,518 $1.00
(Horizon Service/ (Horizon Service/ (Horizon Service/
Advisor Class) Advisor Class) Advisor Class)
$144,280,499 144,306,769 $1.00
(Pacific Horizon/ (Pacific Horizon/ (Pacific Horizon/
Investor Class) Investor Class) Investor Class)
$54,547,508 54,547,470 $1.00
(S Shares/ (S Shares/ (S Shares/
Daily Shares) Daily Shares) Daily Shares)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
9. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Treasury Fund with
Nations Treasury Reserves.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Horizon Treasury Fund $704,991,899 705,088,100 $1.00
(Horizon Shares) (Horizon Shares) (Horizon Shares)
$1,777,221,778 1,777,331,147 $1.00
(Horizon Service (Horizon Service Shares) (Horizon Service
Shares) 432,816,395 Shares)
$432,672,305 (Pacific Horizon) $1.00
(Pacific Horizon) N/A (Pacific Horizon)
N/A (S Shares) N/A
(S Shares) 414,459,631 (S Shares)
$414,462,658 (X Shares) $1.00
(X Shares) 99,146,971 (X Shares)
$99,148,339 (Y Shares) $1.00
(Y Shares) (Y Shares)
- -------------------------------------------------------------------------------------------------------------------
Nations Treasury Reserves $466,959,000 466,882,129 $1.00
(Capital Class) (Capital Class) (Capital Class)
$345,679,000 345,699,380 $1.00
(Advisor Class) (Advisor Class) (Advisor Class)
N/A N/A N/A
(Investor Class) (Investor Class) (Investor Class)
N/A N/A N/A
(Daily Shares) (Daily Shares) (Daily Shares)
N/A N/A N/A
(Daily Shares) (Daily Shares) (Daily Shares)
N/A N/A N/A
(Service Class) (Service Class) (Service Class)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $1,171,950,899 1,171,970,229 $1.00
(Horizon Shares/ (Horizon Shares/ (Horizon Shares/
Capital Class) Capital Class) Capital Class)
$2,122,900,778 2,123,030,527 $1.00
(Horizon Service/ (Horizon Service/ (Horizon Service/
Advisor Class) Advisor Class) Advisor Class)
$432,672,305 432,816,395 $1.00
(Pacific Horizon/ (Pacific Horizon/ (Pacific Horizon/
Investor Class) Investor Class) Investor Class)
N/A N/A N/A
(S Shares/Daily (S Shares/Daily Shares) (S Shares/Daily
Shares) 414,459,631 Shares)
$414,462,658 (X Shares/Daily Shares) $1.00
(X Shares/Daily 99,146,971 (X Shares/Daily
Shares) (Y Shares/Service Shares)
$99,148,339 Class) $1.00
(Y Shares/Service (Y Shares/Service
Class) Class)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
10. The table below reflects current and pro forma capitalization
information for the combination of the Pacific Horizon Government Fund and the
Pacific Horizon Treasury Only Fund with Nations Government Reserves.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Shares Outstanding Net Asset Value
Total Net Assets Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$80,154,845 80,182,972 $1.00
Pacific Horizon Government Fund (Horizon Shares) (Horizon Shares) (Horizon Shares)
(Fund A) $233,934,621 234,029,786 $1.00
(Horizon Service) (Horizon Service) (Horizon Service)
$152,448,005 152,584,355 $1.00
(Pacific Horizon) (Pacific Horizon) (Pacific Horizon)
- -------------------------------------------------------------------------------------------------------------------
Pacific Horizon Treasury Only Fund $43,786,026 43,787,489, $1.00
(Fund B) (Horizon Shares) (Horizon Shares) (Horizon Shares)
$257,228,848 257,238,569 $1.00
(Horizon Service) (Horizon Service) (Horizon Service)
$227,237,891 227,268,646 $1.00
(Pacific Horizon) (Pacific Horizon) (Pacific Horizon)
- -------------------------------------------------------------------------------------------------------------------
Nations Government Reserves $160,300,000 160,300,511 $1.00
(Fund C) (Capital Class) (Capital Class) (Capital Class)
$115,769,000 115,769,079 $1.00
(Advisor Class) (Advisor Class) (Advisor Class)
N/A N/A N/A
(Investor Class) (Investor Class) (Investor Class)
- -------------------------------------------------------------------------------------------------------------------
$240,454,845 240,483,483 $1.00
Pro-Forma Combined Fund (Horizon Shares/ (Horizon Shares/ (Horizon Shares/
(Fund A + Fund C) Capital Class) Capital Class) Capital Class)
$349,703,621 349,798,865 $1.00
(Horizon Service/ (Horizon Service/ (Horizon Service/
Advisor Class) Advisor Class) Advisor Class)
$152,448,005 152,584,355 $1.00
(Pacific Horizon/ (Pacific Horizon/ (Pacific Horizon/
Investor Class) Investor Class) Investor Class)
- -------------------------------------------------------------------------------------------------------------------
Pro-Forma Combined Fund $204,086,026 204,088,000 $1.00
(Fund B + Fund C) (Horizon Shares/ (Horizon Shares/ (Horizon Shares/
Capital Class) Capital Class) Capital Class)
$372,992,848 373,007,648 $1.00
(Horizon Service/ (Horizon Service/ (Horizon Service/
Advisor Class) Advisor Class) Advisor Class)
$227,237,891 227,268,646 $1.00
(Pacific Horizon/ (Pacific Horizon/ (Pacific Horizon/
Investor Class) Investor Class) Investor Class)
- -------------------------------------------------------------------------------------------------------------------
Pro Forma Combined Fund $284,240,871 284,270,972 $1.00
(Fund A + Fund B + (Horizon (Horizon (Horizon
Fund C) Shares/Horizon Shares/Horizon Shares/Horizon
Shares/Capital Class) Shares/Capital Class) Shares/Capital Class)
$606,927,469 607,037,434 $1.00
(Horizon Service/ (Horizon Service/ (Horizon Service/
Horizon Service/ Horizon Service/ Horizon Service/
Advisor Class) Advisor Class) Advisor Class)
$379,685,895 379,853,002 $1.00
(Pacific (Pacific (Pacific
Horizon/Pacific Horizon/Pacific Horizon/Pacific
Horizon/Investor Horizon/Investor Horizon/Investor
Class) Class) Class)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
Federal Income Tax Considerations. Each Nations Fund and each Pacific
Horizon Fund intends to qualify as of the Closing, as a separate "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). Accordingly, each Pacific Horizon Fund and each corresponding Nations
Fund has been, and expects to continue to be, relieved of federal income tax
liability.
Consummation of the Reorganization with respect to each Pacific Horizon
Fund and the corresponding Nations Fund is subject to the condition that Pacific
Horizon and Nations receive an opinion from Morrison & Foerster LLP
substantially to the effect that, for federal income tax purposes: (i) the
transfer of all of the Fund Assets and Liabilities of a Pacific Horizon Fund to
the corresponding Nations Fund in exchange for the Nations Fund Shares, and the
distribution of those Nations Fund Shares to shareholders of the Pacific Horizon
Fund, will constitute a "reorganization" within the meaning of Section 368(a) of
the Code, and the Pacific Horizon Fund and the Nations Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of the Code in
respect of the Reorganization; (ii) no gain or loss will be recognized by the
Pacific Horizon Fund upon the transfer of its Fund Assets and Liabilities to the
Nations Fund solely in exchange for the Nations Fund Shares; (iii) no gain or
loss will be recognized by the Nations Fund upon the receipt of the Fund Assets
and assumption of Liabilities of the Pacific Horizon Fund solely in exchange for
the Nations Fund Shares; (iv) the basis of the Fund Assets received by the
Nations Fund pursuant to the Reorganization will be the same as the basis of
those assets in the hands of the Pacific Horizon Fund immediately prior to the
Reorganization; (v) the holding period of the Pacific Horizon Fund's assets in
the hands of the Nations Fund will include the period for which such assets have
been held by the Pacific Horizon Fund; (vi) no gain or loss will be recognized
by the Pacific Horizon Fund on the distribution to its shareholders of the
Nations Fund Shares; (vii) no gain or loss will be recognized by the
shareholders of the Pacific Horizon Fund upon their receipt of the Nations Fund
Shares in exchange for such shareholders' shares of the Pacific Horizon Fund;
(viii) the basis of the Nations Fund Shares received by the shareholders of the
Pacific Horizon Fund will be the same as the basis of the Pacific Horizon Fund
shares surrendered by such shareholders pursuant to the Reorganization; (ix) the
holding period for the Nations Fund Shares received by the Pacific Horizon Fund
shareholders will include the period during which such shareholders held the
Pacific Horizon Fund shares surrendered in exchange therefor, provided that such
Pacific Horizon Fund shares are held as a capital asset in the hands of the
Pacific Horizon Fund shareholders on the date of the exchange; and (x) each
Nations Fund will succeed to and take into account the tax attributes described
in Section 381(c) of the Code of the Pacific Horizon Fund as of the Closing
Date, subject to the conditions and limitations specified in the Code.
Shareholders of the Pacific Horizon Funds should note, however, that the sale of
securities by the Pacific Horizon Funds prior to the Closing whether in the
ordinary course of business or in anticipation of the Closing, could result in a
taxable capital gains distribution prior to the Closing.
The consolidation of MIT into NMIT will not result in the recognition
of gain or loss by MIT or NMIT. The basis of MIT assets received by NMIT will be
the same as the basis of those assets in the hands of MIT immediately prior to
the consolidation. The holding period of NMIT in the assets received from MIT
will be the same as the MIT's holding period immediately prior to the
consolidation.
33
<PAGE>
NMIT and MIT have not sought, and will not seek, a private ruling from
the Internal Revenue Service ("IRS") with respect to the federal income tax
consequences of the Reorganization. The opinion of Morrison & Foerster LLP with
respect to the federal income tax consequences of the Reorganization is not
binding on the IRS and does not preclude the IRS from adopting a contrary
position. Shareholders should consult their own advisers concerning the
potential tax consequences of the Reorganization to them, including any
applicable foreign, state or local income tax consequences.
Other Matters. Under a retirement plan approved by the Pacific Horizon
Board, each Pacific Horizon Director who has been in office for a specified
period of time is entitled to retirement benefits following death, resignation
or termination. The payment terms and the formula for calculating the amount of
the retirement benefits are set forth in Pacific Horizon's statement of
additional information. Because the Reorganization contemplates the dissolution
of Pacific Horizon, it is being considered a termination with respect to those
Directors who are not succeeding to the Nations Board. Such Directors will,
therefore, receive retirement benefits following the Reorganization.
COMPARISON OF PACIFIC HORIZON AND NATIONS
Investment Objectives and Policies. The investment objectives, policies
and restrictions of the Pacific Horizon Funds are, in general, substantially
similar to those of their corresponding Nations Fund. They are summarized in
Appendix III. There are, however, certain differences. A brief summary of the
more significant differences follows.
The investment objective, policies and restrictions of the Pacific
Horizon Asset Allocation Fund, Pacific Horizon Blue Chip Fund, Pacific Horizon
California Municipal Bond Fund, Pacific Horizon California Tax-Exempt Money
Market Fund, Pacific Horizon Capital Income Fund and Pacific Horizon
Intermediate Bond Fund are substantially identical to those of the corresponding
Shell Nations Funds, because the Shell Nations Funds are being created to
continue the business of their corresponding Pacific Horizon Funds.
The investment objectives, policies and restrictions of the other
Pacific Horizon Funds are, in general, substantially similar to those of their
corresponding Operating Nations Funds. While all of the Operating Nations Funds
are money market funds and therefore are subject to the general restrictions and
limitations of Rule 2a-7 under the 1940 Act, there are certain differences
between the investment policies and restrictions of the Operating Nations Funds
and their corresponding Pacific Horizon Funds. For example, while the Pacific
Horizon Prime Fund concentrates its investments (i.e., invests at least 25% of
its assets) in the banking and finance industries, the corresponding Nations
Cash Reserves merely reserves the right to so concentrate its investments. In
addition, while the Pacific Horizon Treasury Only Fund invests solely in
obligations of the U.S. Treasury, the corresponding Nations Government Reserves
may invest not only in obligations of the U.S. Treasury, but also in general
U.S. Government obligations and repurchase agreements. However, in order to more
closely align the investment policies and restrictions of the two Funds, NBAI
has committed that Nations Government Reserves will not invest in repurchase
agreements after the Reorganization.
34
<PAGE>
The investment objectives, strategies and policies of the Pacific
Horizon Funds and Nations Funds are more fully discussed in Appendix III.
Additional information about the investment policies and restrictions of the
Nations Funds and the Pacific Horizon Funds is included in their respective
prospectuses and statements of additional information, which have been
incorporated herein by reference.
Investment Advisory Services and Service Providers. NBAI will serve as
investment adviser to the Nations Funds and Nations Master Portfolios and
TradeStreet will serve as investment sub-adviser to the Nations Funds and
Nations Master Portfolios(except for Nations Blue Chip Master Portfolio).
Chicago Equity will serve as co-investment sub-adviser, along with TradeStreet,
to Nations Asset Allocation Fund and will serve as investment sub-adviser to
Nation Blue Chip Master Portfolio. NBAI, TradeStreet and Chicago Equity are
indirect wholly owned subsidiaries of NationsBank, which in turn is a wholly
owned subsidiary of BankAmerica Corporation.
NBAI is entitled to receive advisory fees, computed daily and paid
monthly, at the annual rate of: 0.15% of the average daily net assets of the
Operating Nations Funds; 0.15% of the average daily net assets of Nations
California Tax-Exempt Reserves; 0.65% of the average daily net assets of the
Nations Asset Allocation Fund, Nations Blue Chip Master Portfolio, Nations
Capital Income Fund; 0.50% of the average daily net assets of the Nations
California Municipal Bond Fund; and 0.40% of the average daily net assets of the
Nations Intermediate Bond Master Portfolio. After any waivers and/or
reimbursements, NBAI is receiving advisory fees at the annual rates of 0.10% for
the Operating Nations Funds and 0.28% for the Nations California Municipal Bond
Fund. NBAI will compensate TradeStreet and Chicago Equity for providing
sub-advisory services to Nations Blue Chip Master Portfolio and Nations Asset
Allocation Fund (equity portion only).
Bank of America serves as investment adviser to the Pacific Horizon
Funds and MIT Master Portfolios. Like NBAI, TradeStreet and Chicago Equity, Bank
of America is also a subsidiary of BankAmerica Corporation. With respect to the
Pacific Horizon Funds, Bank of America is entitled to receive a fee at the
annual rate of 0.20% of the average daily net assets of each of the Prime Fund,
Treasury Fund, Government Fund, Treasury Only Fund and Tax-Exempt Fund; 0.55% of
the average daily net assets of the Asset Allocation Fund; 0.65% of the average
daily net assets of the Capital Income Fund; and 0.70% of the average daily net
assets of the Blue Chip Fund respectively. With respect to the MIT Master
Portfolios, Bank of America is entitled to receive a fee at the annual rate of
0.45% and 0.50% of the Intermediate Bond Master Portfolio and the Blue Chip
Master Portfolio, respectively.
35
<PAGE>
Other Service Providers for the Pacific Horizon Funds and Nations Funds
Pacific Horizon Funds, MIT Master Portfolios, Nations Funds and Nations
Master Portfolios have different service providers. Upon completion of the
Reorganization, Nations Funds will continue to engage its existing service
providers. In all cases, the types of services provided to the Funds under these
service arrangements are substantially similar.
<TABLE>
<CAPTION>
Pacific Horizon Funds Nations Funds
--------------------- -------------
<S> <C> <C>
Distributor Provident Distributors, Inc. Stephens Inc.
(Pacific Horizon Funds Only)
Administrator Bank of Stephens Inc. and NationsBanc
America Advisors, Inc.
PFPC, Inc. (MIT Master Portfolios)
Sub-Administrator PFPC, Inc. The Bank of New York
Transfer Agent PFPC, Inc. First Data Investor Services Group,
Inc.
Sub-Transfer Agent N/A The Bank of New York
Custodian The Bank of New York (National The Bank of New York
Municipal Bond Fund Only)
PFPC Trust Company (All Others)
Independent Accountants PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
</TABLE>
[Stephens currently serves as the Nations Funds' distributor. Pursuant to
Section 9(a) of the 1940 Act, Stephens could be disqualified from serving as
such. The SEC has granted a temporary exemption from the provisions of Section
9(a). Stephens has applied for a permanent exemption and anticipates receiving
such an exemption shortly.]
Distribution and Shareholder Servicing Arrangements and Sales Loads for
the Pacific Horizon Funds
A Shares. Pacific Horizon has adopted a Shareholder Services Plan for A
Shares, under which the A Shares of each Pacific Horizon Fund reimburse Pacific
Horizon's distributor--Provident Distributors, Inc. ("Provident")--for
shareholder servicing fees that Provident pays to various service organizations
whose customers own A Shares. Payments made under the Shareholder Services Plan
for A Shares also cover shareholder services provided by Provident and for
support services provided to the beneficial owners of Pacific Horizon Fund
shares. Under the Plan, payments by a Pacific Horizon Fund may not exceed 0.25%
(annualized) of the average daily net assets of such Fund's A Shares. Excluded
from this calculation, however, are all shares acquired via a transfer of assets
from trust and agency accounts at Bank of America.
36
<PAGE>
Class A Shares charge a front-end sales load. The maximum front-end
sales load charged for each Pacific Horizon Fund's Class A Shares is set forth
in Appendix II. Sales load reduction and waiver categories, which differ from
those applicable to Investor A Shares of the corresponding Nations Funds, are
described in Appendix III. Certain purchases of A shares are subject to a
contingent deferred sales charge ("CDSC") if redeemed within a specific time
period after purchase; Investor A shares of the corresponding Nations Funds
received in exchange for such shares will be subject to the same CDSC if
redeemed within the specified time period. Certain purchases of A Shares of
$1,000,000 or more are subject to a CDSC of 1% on redemptions made within 18
months of purchases made before November 16, 1998 or 1% on redemptions made
within 1 year of purchases made on or after November 16, 1998, declining to .50%
in the second year and eliminated thereafter; Investor A shares of the
corresponding Nations Fund received in exchange for such shares will be subject
to the same CDSC if redeemed within two years. For all cases, former Class A
shareholders will be credited for the period of time from the original date of
purchase of their shares for purposes of determining the amount of their CDSC,
if any.
B Shares. Pacific Horizon has adopted a Distribution and Services Plan
for B Shares, under which the B Shares of each Pacific Horizon Fund reimburse
Bank of America for distribution related expenses and for shareholder servicing
expenses. Distribution expenses include expenses incurred in connection with
advertising and marketing the Funds' B Shares; payments to service organizations
for assistance in connection with the distribution of B Shares; and expenses
incurred in connection with preparing, printing and distributing prospectuses
for the Funds (except those used for regulatory purposes or distributed for
existing shareholders.) Under the Distribution Plan, payments by a Pacific
Horizon Fund for distribution expenses may not exceed 0.75% (annualized), of the
average daily net assets of such Fund's B Shares.
K Shares. Pacific Horizon also has adopted a Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act, under which K Shares of a Pacific Horizon Fund
reimburse Provident for services rendered and costs incurred in connection with
distribution of K Shares. Distribution expenses include expenses incurred in
connection with advertising and marketing the Funds' K Shares; payments to
service organizations for assistance in connection with the distribution of K
Shares; and expenses incurred in connection with preparing, printing and
distributing prospectuses for the Funds (except those used for regulatory
purposes or distributed for existing shareholders.) Under the Distribution Plan,
payments by a Pacific Horizon Fund for distribution expenses may not exceed
0.75% (annualized), of the average daily net assets of such Fund's K Shares.
Pacific Horizon also has adopted an Administrative and Shareholder
Services Plan for K Shares, under which K Shares of a Pacific Horizon Fund
reimburse Provident for administrative and shareholder servicing fees that
Provident pays to various services organizations whose customers own K Shares.
Administrative servicing expenses include expenses incurred in connection with
administrative services provided by Provident and payments to service
organizations for the provision of administrative services to beneficial owners
of K shares, such as establishing and maintaining accounts and records relating
to their clients who invest in K Shares, providing information to the Funds
necessary for accounting or sub-accounting and providing statements periodically
to clients showing their position in K Shares. Under the Administrative and
Shareholder Services Plan for K Shares and the Distribution and Services Plan
for B Shares, payments for shareholder servicing expenses may not exceed 0.25%
(annualized) of the average daily net assets of a Fund's B Shares or K Shares,
respectively and payments for administrative servicing expenses may not exceed
0.75% (annualized) of the average daily net assets of the Fund's K Shares.
The total of all fees, under the distribution plan and the
administrative and shareholder services plan may not exceed, in the aggregate,
1.00% (annualized) of the average daily net assets of a Fund's B Shares or K
Shares.
37
<PAGE>
Horizon Service Shares. Pacific Horizon has adopted a Shareholder
Services Plan for Horizon Service Shares, under which the Horizon Service Shares
of each Pacific Horizon Fund reimburse Bank of America and its affiliates for
shareholder servicing fees that sell Horizon Service Shares. Payments made under
the Shareholder Services Plan for Horizon Service Shares, also cover shareholder
services provided by Bank of America and for support services provided to the
beneficial owners of Pacific Horizon Fund shares. Under the Plan, payments by a
Pacific Horizon Fund may not exceed 0.25% (annualized) of the average daily net
assets of such Fund's Horizon Service Shares.
Pacific Horizon Shares. Pacific Horizon has adopted a Shareholder
Services Plan for Pacific Horizon Service Shares, under which the Pacific
Horizon Shares of each Pacific Horizon Fund reimburse Bank of America and its
affiliates for shareholder servicing fees that sell Pacific Horizon Service
Shares. Payments made under the Shareholder Services Plan for Pacific Horizon
Service Shares, also cover shareholder services provided by Bank of America and
for support services provided to the beneficial owners of Pacific Horizon Fund
shares. Under the Plan, payments by a Pacific Horizon Fund may not exceed 0.32%
(0.35% of the California Tax-Exempt Money Market Fund) (annualized) of the
average daily net assets of such Fund's Horizon Service Shares.
X Shares. Pacific Horizon has adopted a Distribution and Services Plan
for X Shares, under which the X Shares of each Pacific Horizon Fund reimburse
Provident for distribution related expenses and for shareholder servicing
expenses. Distribution expenses include expenses incurred in connection with
advertising and marketing the Funds' X Shares; payments to service organizations
for assistance in connection with the distribution of X Shares; and expenses
incurred in connection with preparing, printing and distributing prospectuses
for the Funds. Under the Distribution Plan, payments by a Pacific Horizon Fund
for distribution expenses and shareholder servicing may not exceed 0.30% and
0.25%, respectively, of the average daily net assets of such Fund's X Shares.
38
<PAGE>
Y Shares. Pacific Horizon has adopted a Distribution and Services Plan
for Y Shares, under which the Y Shares of each Pacific Horizon Fund reimburse
Provident for distribution related expenses and for shareholder servicing
expenses. Distribution expenses include expenses incurred in connection with
advertising and marketing the Funds' Y Shares; payments to service organizations
for assistance in connection with the distribution of Y Shares; and expenses
incurred in connection with preparing, printing and distributing prospectuses
for the Funds. Under the Distribution Plan, payments by a Pacific Horizon Fund
for distribution expenses and shareholder servicing expenses may not exceed
0.75% and 0.25%, respectively, of the average daily net assets of such Fund's Y
Shares.
S Shares. Pacific Horizon has adopted a Distribution and Services Plan
for S Shares, under which the S Shares of each Pacific Horizon Fund reimburse
Provident for distribution related expenses and for shareholder servicing
expenses. Distribution expenses include expenses incurred in connection with
advertising and marketing the Funds' S Shares; payments to service organizations
for assistance in connection with the distribution of S Shares; and expenses
incurred in connection with preparing, printing and distributing prospectuses
for the Funds. Under the Distribution Plan, payments by a Pacific Horizon Fund
for distribution expenses and shareholder servicing expenses may not exceed
0.75% and 0.25%, respectively, of the average daily net assets of such Fund's S
Shares.
Distribution and Shareholder Servicing Arrangements for the Nations
Funds.
Investor A Shares. Nations has adopted a Shareholder Servicing and
Distribution Plan (the "Investor A Plan") pursuant to Rule 12b-1 under the 1940
Act with respect to each Fund's Investor A Shares. The Investor A Plan provides
that each Fund may pay its distributor Stephens Inc. ("Stephens") banks,
broker/dealers or other financial institutions that offer Shares of the Fund and
that have entered into a Sales Support Agreement with Stephens ("Selling
Agents") or a Shareholder Servicing Agreement with Nations ("Servicing Agents"),
up to 0.25% (annualized) of the average daily net asset value of the Investor A
Shares.
Investor A Shares charge a front-end sales load. The maximum front-end
sales load charged for each Nations Fund's Investor A Shares is set forth in
Appendix II. Sales load reduction and waiver categories, which differ from those
applicable to Class A Shares of the corresponding Pacific Horizon Funds, are
described in Appendix III and the accompanying Prospectus(es).
Investor B Shares. Nations has adopted a Distribution Plan and a
Shareholder Servicing Plan with respect to Investor B Shares of the Nations
Funds. Pursuant to the Distribution Plan, the Funds may compensate or reimburse
Stephens for any activities or expenses primarily intended to result in the sale
of the Funds' Investor B Shares. Payments under the Distribution Plan will be
calculated daily and paid monthly at a rate or rates set from time to time by
the Trustees, provided that the annual rate may not exceed 0.75% of the average
daily net asset value of the Funds' Investor B Shares. The fees payable under
the Distribution Plan are used to, among other things, compensate Selling Agents
for providing sales support assistance relating to Investor B Shares. The
Trustees of Nations also have approved a Shareholder Servicing Plan for the
Nations Funds which permits the Fund to compensate Servicing Agents for services
provided to their customers that own Investor B Shares. Payments under the
Shareholder Servicing Plan are calculated daily and paid monthly at a rate or
rates set from time to time by the Funds, provided that the annual rate may not
exceed 0.25% of the average daily net asset value of the Funds' Investor B
Shares. Investor B shares charge a CDSC. The maximum CDSC for each Nations
Fund's Investor B shares is set forth in Appendix II. CDSC waiver categories
differ from those applicable to B shares of the corresponding Pacific Horizon
Funds.
39
<PAGE>
Investor C Shares. Nations has adopted a Distribution Plan with respect
to Investor C Shares of the Nations Funds. Pursuant to the Distribution Plan,
the Funds may compensate or reimburse Stephens for any activities or expenses
primarily intended to result in the sale of the Funds' Investor C Shares.
Payments under the Distribution Plan will be calculated daily and paid monthly
at a rate or rates set from time to time by the Trustees of Nations, provided
that the annual rate may not exceed 0.75% of the average daily net assets of the
Funds' Investor C Shares. The fees payable under the Distribution Plan are used
to, among other things, compensate Selling Agents for providing sales support
assistance relating to Investor C Shares. The Trustees of Nations also have
approved a shareholder servicing plan ("Servicing Plan") for the Funds which
permits the Fund to compensate Servicing Agents for services provided to their
customers that own Investor C Shares. Payments under the Servicing Plan are
calculated daily and paid monthly at a rate or rates set from time to time by
the Funds, provided that the annual rate may not exceed 0.25% of the average
daily net asset value of the Funds' Investor C Shares.
Investor C Shares purchased after January 19th, 1999 are subject to a
CDSC of 1% if redeemed within one year of purchase. However, no CDSC will apply
to Investor C Shares issued in the Reorganization.
Advisor Shares. Nations has adopted a Shareholder Servicing Plan with
respect to Adviser Shares of the Nations Funds. Pursuant to the Shareholder
Servicing Plan, the Funds may compensate Servicing Agents for any activities or
expenses for certain activities and or expenses of the Shareholder Servicing
Plan in connections with shareholder services that they provide. Payments under
the Shareholder Servicing Plan will be calculated daily and paid monthly at a
rate or rates set from time to time by the Trustees, provided that the annual
rate may not exceed 0.25% of the average daily net asset value of the Funds'
Adviser Shares.
Seafirst Shares. Nations has adopted a Shareholder Servicing Plan with
respect to Seafirst Shares of the Nations Funds. Pursuant to the Shareholder
Servicing Plan, the Funds may compensate or reimburse Servicing Agents for any
activities or expenses primarily intended to result in connections with
shareholder services that they provide. Payments under the Shareholder Servicing
Plan will be calculated daily and paid monthly at a rate or rates set from time
to time by the Trustees, provided that the annual rate may not exceed 0.25% of
the average daily net asset value of the Funds' Seafirst
40
<PAGE>
Investor Shares. Nations has adopted a Distribution Plan and a
Shareholder Servicing Plan with respect to Investor Shares of the Nations Funds.
Pursuant to the Distribution Plan, the Funds may compensate or reimburse
Stephens for any activities or expenses primarily intended to result in the sale
of the Funds' Investor Shares. Payments under the Distribution Plan will be
calculated daily and paid monthly at a rate or rates set from time to time by
the Directors, provided that the annual rate may not exceed 0.10% of the average
daily net asset value of the Funds' Investor Shares. The fees payable under the
Distribution Plan are used to, among other things, compensate Selling Agents for
providing sales support assistance relating to Investor Shares. The Trustees of
Nations also have approved a Shareholder Servicing Plan for the Nations Funds
which permits the Fund to compensate Servicing Agents for services provided to
their customers that own Investor Shares. Payments under the Shareholder
Servicing Plan are calculated daily and paid monthly at a rate or rates set from
time to time by the Funds, provided that the annual rate may not exceed 0.25% of
the average daily net asset value of the Funds' Investor Shares.
Daily Shares. Nations has adopted a Distribution Plan and a Shareholder
Servicing Plan with respect to Daily Shares of the Nations Funds. Pursuant to
the Distribution Plan, the Funds may compensate or reimburse Stephens for any
activities or expenses primarily intended to result in the sale of the Funds'
Daily Shares. Payments under the Distribution Plan will be calculated daily and
paid monthly at a rate or rates set from time to time by the Trustees, provided
that the annual rate may not exceed 0.35% of the average daily net asset value
of the Funds' Daily Shares. The fees payable under the Distribution Plan are
used to, among other things, compensate Selling Agents for providing sales
support assistance relating to Daily Shares. The Trustees of Nations also have
approved a Shareholder Servicing Plan for the Nations Funds which permits the
Fund to compensate Servicing Agents for services provided to their customers
that own Daily Shares. Payments under the Shareholder Servicing Plan are
calculated daily and paid monthly at a rate or rates set from time to time by
the Funds, provided that the annual rate may not exceed 0.25% of the average
daily net asset value of the Funds' Daily Shares.
Service Shares. Nations has adopted a Distribution Plan and a
Shareholder Servicing Plan with respect to Service Shares of the Nations Funds.
Pursuant to the Distribution Plan, the Funds may compensate or reimburse
Stephens for any activities or expenses primarily intended to result in the sale
of the Funds' Service Shares. Payments under the Distribution Plan will be
calculated daily and paid monthly at a rate or rates set from time to time by
the Trustees, provided that the annual rate may not exceed 0.75% of the average
daily net asset value of the Funds' Service Shares. The fees payable under the
Distribution Plan are used to, among other things, compensate Selling Agents for
providing sales support assistance relating to Service Shares. The Trustees of
Nations also have approved a Shareholder Servicing Plan for the Nations Funds
which permits the Fund to compensate Servicing Agents for services provided to
their customers that own Service Shares. Payments under the Shareholder
Servicing Plan are calculated daily and paid monthly at a rate or rates set from
time to time by the Trustees, provided that the annual rate may not exceed 0.25%
of the average daily net asset value of the Funds' Service Shares.
41
<PAGE>
Shareholder Transactions and Services. The Pacific Horizon Funds and
the corresponding Nations Funds offer generally similar shareholder services and
transactions. There are however, some differences. For example, the minimum
initial investment for A and K Shares of the Pacific Horizon Funds is generally
$500 while the minimum initial investment for the corresponding Investor A
Shares and Investor C Shares of the Nations Fund, respectively, is generally
$1,000. Also, redemptions from a Pacific Horizon Fund Account generally require
a $500 minimum balance, while Nations requires a $1,000 minimum balance. Another
difference is that Pacific Horizon provides check-writing privileges on all A
and K Shares of its fixed income funds, while Nations does not provide
check-writing privileges on Investor A and Investor C Shares of the Nations
Funds (although Nations does provide check-writing privileges on certain shares
of its money market funds). Additionally, Nations does not offer Teletrade--a
service currently offered Pacific Horizon Fund shareholders that allows
shareholders to authorize electronic transfers of money to purchase shares in or
redeem shares from an established Fund account. For a detailed comparison of
shareholder transactions and services, see Appendix IV.
Fees and Expenses. A substantial majority of Pacific Horizon Fund share
classes will experience substantially the same or lower total operating expense
ratios (after waivers and expense reimbursements) on a pro forma basis.
Moreover, NBAI has undertaken to waive fees and/or reimburse expenses as needed
to ensure that, for at least one year after the Reorganization, the Nations
Funds' total operating expense ratios, will not exceed the pro forma after
waiver ratios shown in Table II above, absent extraordinary circumstances or a
reduction in Fund assets that impacts expense levels. For detailed pro forma
expense information, see Appendix II.
Share Structure. Both Pacific Horizon and Nations are registered as
open-end management investment companies under the 1940 Act. Currently, Pacific
Horizon offers seventeen funds. The Nations Fund complex, which includes several
registered investment companies, will offer over seventy funds immediately after
the Reorganization.
Pacific Horizon was organized as a Maryland corporation on October 27,
1982. It is subject to the provisions of its Charter and By-Laws. Nations was
organized as a Massachusetts business trust on January 22, 1990 and is subject
to the provisions of its Declaration of Trust, as amended and supplemented, and
By-Laws. Pacific Horizon's Charter authorizes the Board of Directors to issue
full and fractional shares of capital stock ($0.001 par value per share) and to
classify and reclassify any authorized and unissued shares into one or more
classes of shares. Shares of Nations Funds are sold without par value, and each
share represents an equal proportionate interest in a portfolio of Nations with
other shares of the same class. Nations' Declaration of Trust authorizes the
Board of Trustees to classify shares into one or more series or classes. Shares
of both the Pacific Horizon Funds and Nations Funds are entitled to one vote for
each full share held and fractional votes for fractional shares held.
42
<PAGE>
Pacific Horizon Fund shareholders generally have cumulative voting
rights to the extent that may be required by applicable law. Additionally,
shareholders will vote in the aggregate and not by class or series, except as
required by law (or when permitted by the Board of Directors).
In accordance with Nations' Agreement and Declaration of Trust, all
shares of a series of Nations are entitled to vote by individual series, except
(1) when required by the 1940 Act, shares will be voted in the aggregate and not
by individual series, and (2) when the Trustees have determined that the matter
affects only the interests of one or more series, then only shareholders of such
series shall be entitled to vote thereon.
There is no cumulative voting in the election of Trustees for Nations.
Additional information concerning the attributes of the shares issued
by the Pacific Horizon Funds and Nations Funds is included in their respective
prospectuses, which are incorporated herein by reference. Information about the
dividend and distribution policies of both the Pacific Horizon Funds and Nations
Funds can be found in Appendix IV.
Comparison of Corporate/Trust Structure. Pacific Horizon is organized
as a Maryland corporation. Nations is organized as a Massachusetts business
trust. In general, the charter documents governing Pacific Horizon are similar
to those documents governing Nations. Although the rights of a shareholder of a
Maryland corporation vary in certain respects from the rights of an interest
holder of a Massachusetts business trust, the attributes of a share of common
stock are comparable to those of a share of beneficial interest, i.e., shares of
both are entitled to one vote per share held and fractional votes for fractional
shares held, and will vote in the aggregate and not by portfolio or class except
as otherwise required by law or when class voting is permitted by its Board.
It should be noted that under Maryland law, Pacific Horizon Fund
shareholders have no personal liability for Pacific Horizon's acts or
obligations. By contrast, under Massachusetts law, interest holders of a
Massachusetts business trust could, under certain circumstances, be held
personally liable for the obligations of the trust. However, Nations has
provisions in its Declarations of Trust that endeavor to protect shareholders
from such liability. Thus, the risk of an interest holder incurring a financial
loss on account of interest holder liability is limited to circumstances in
which the trust itself is unable to meet its obligations.
VOTING MATTERS
General Information. This Proxy/Prospectus is being furnished in connection
with the solicitation of proxies for the Meeting by the Board of Directors of
Pacific Horizon. It is expected that the solicitation of proxies will be
primarily by mail. [Officers and service contractors of Pacific Horizon and
Nations also may solicit proxies by telefacsimile, touchtone voting and on-line
voting]. In this connection, Pacific Horizon has retained ADP Proxy Services to
assist in the solicitation of proxies for the Reorganization. Shareholders may
vote (1) by mail, by marking, signing, dating and returning the enclosed Proxy
Ballot in the enclosed postage-paid envelope; (2) by telefacsimile, by marking,
signing, dating and faxing the enclosed Proxy Ballot to ADP Proxy Services at
(704) 388-2641; or (3) by touchtone voting at (800) 690-6903; or 4) on-line
voting at www.proxyvote.com. Any shareholder giving a proxy may revoke it at any
time before it is exercised by submitting to Pacific Horizon a written notice or
revocation of a subsequently executed proxy or by attending the Meeting and
voting in person.
43
<PAGE>
Any expenses incurred as a result of hiring ADP Proxy Services or any
other proxy solicitation agent will be borne by NBAI.
Only shareholders of record at the close of business on January 14,
1999 will be entitled to vote at the Meeting. On that date, the following
Pacific Horizon Shares were outstanding and entitled to be voted.
Name of Pacific Horizon Fund and Class Shares Entitled to Vote
- -------------------------------------- -----------------------
Asset Allocation Fund
A Shares
B Shares
K Shares
SRF Shares
Blue Chip Fund
A Shares
B Shares
K Shares
SRF Shares
California Municipal Bond Fund
A Shares
B Shares
California Tax-Exempt Money Market Fund
Horizon Shares
Horizon Service Shares
Pacific Horizon Shares
S Shares
X Shares
Capital Income Fund
A Shares
B Shares
K Shares
44
<PAGE>
Name of Pacific Horizon Fund and Class Shares Entitled to Vote
- -------------------------------------- -----------------------
Government Fund
Horizon Shares
Horizon Service Shares
Pacific Horizon Shares
Intermediate Bond Fund
A Shares
K Shares
SRF Shares
Prime Fund
Horizon Shares
Horizon Service Shares
Pacific Horizon Shares
S Shares
X Shares
Y Shares
Tax-Exempt Money Fund
Horizon Shares
Horizon Service Shares
Pacific Horizon Shares
S Shares
Treasury Fund
Horizon Shares
Horizon Service Shares
Pacific Horizon Shares
S Shares
X Shares
Y Shares
Treasury Only
Horizon Shares
Horizon Service Shares
Pacific Horizon Shares
Each whole and fractional share of a Pacific Horizon Fund is entitled
to a whole or fractional vote.
If the accompanying proxy is executed and returned in time for the
Meeting, the Shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting.
45
<PAGE>
Shareholder and Board Approvals. The Reorganization Agreement is being
submitted for approval at the Meeting by Pacific Horizon's shareholders pursuant
to Pacific Horizon's Charter and By-Laws, [and was unanimously approved by the
Pacific Horizon Board of Directors at a meeting held on January 14th, 1999.] The
Reorganization Agreement must be approved by a majority of the outstanding
shares of the Pacific Horizon Funds voting separately on a
portfolio-by-portfolio basis and the reorganization of Pacific Horizon
contemplated therein must be approved by a majority of the shares outstanding
and entitled to vote, voting in the aggregate, of all the series of Pacific
Horizon, including those funds that are not part of this Proxy/Prospectus. A
vote for the Reorganization Agreement includes a vote for the reorganization of
Pacific Horizon; correspondingly, a vote against the Reorganization Agreement is
a vote against the reorganization of Pacific Horizon. Separate proxy
solicitation materials are being mailed to the shareholders of all other series
of Pacific Horizon seeking the approval of similar agreements and plans of
reorganization and also Pacific Horizon's reorganization.
The Reorganization Agreement provides that in the event the
Reorganization Agreement is approved with respect to less than all of the
Pacific Horizon Funds, the failure of a Pacific Horizon Fund to consummate the
transactions contemplated by the Reorganization Agreement shall not affect the
consummation or validity of the Reorganization with respect to any other Pacific
Horizon Funds. It is possible that a majority of a Pacific Horizon Fund's
shareholders may approve the Reorganization Agreement while a sufficient
majority of all shareholders of all Pacific Horizon series voting in the
aggregate does not vote to approve the reorganization of Pacific Horizon. In
such a case, the Board of Directors will contemplate what further action is
appropriate.
Special Considerations for the Shareholders of the Pacific Horizon Blue
Chip Fund and the Pacific Horizon Intermediate Bond Fund. Because the Feeders
invest all of their assets in shares of the corresponding MIT Master Portfolios,
shareholders of the Feeders are being asked to vote not only on the
Reorganization Agreement but also the Master Trust Reorganization Agreement.
Therefore, a vote for or against the Reorganization Agreement will include a
vote for or against the Master Trust Reorganization Agreement. The votes cast by
the Feeders' shareholders with respect to the Master Trust Reorganization
Agreement will, in turn, be cast by the Feeders, as the direct interest holders
in MIT, in the same proportion. The Master Trust Reorganization Agreement is
subject to approval by its interest holders, which includes two World Horizon
Funds that also invest in each MIT Master Portfolio. Shareholders of the World
Horizon Funds also will be asked to cast votes on the Master Trust
Reorganization Agreement. The Reorganization, with respect to MIT and the MIT
Master Portfolios, will only be consummated if a majority of all outstanding
interests in the MIT Master Portfolios approve the Master Trust Reorganization
Agreement.
With respect to the approval of the Reorganization Agreement, the term
"majority of the outstanding shares" of Pacific Horizon or a Pacific Horizon
Fund means more than 50% of the outstanding shares of Pacific Horizon or the
particular Pacific Horizon Fund. The vote of the shareholders of the Nations
Funds is not being solicited, since their approval or consent is not necessary
for the Reorganization.
46
<PAGE>
As of January 14, 1999, neither the officers and Directors of Pacific
Horizon nor the Trustees of MIT as a group than 1% or more of any of the Pacific
Horizon Funds. As of January 14, 1999, the officers and Trustees of Nations as a
group owned less than 1% of any of the Nations Funds. Table IV(A) shows the
name, address and share ownership of each person known to Pacific Horizon to
have beneficial or record ownership with respect to 5% or more of a class of a
Pacific Horizon Fund as of January 14, 1999. Table IV(B) shows the name, address
and share ownership of each person known to Nations to have beneficial or record
ownership with respect to 5% or more of a class of a Nations Fund as of January
14, 1999.
<TABLE>
<CAPTION>
TABLE IV(A)
Class; Amount of
Pacific Horizon Shares Owned; Type Percentage Percentage of Percentage of
- ----------------
Fund Name and Address of Ownership of Class Fund Fund
---- ----------------- --------- ----- ----
Post-Closing
------------
<S> <C> <C> <C> <C> <C>
TABLE IV(B)
Class; Amount of
Shares Owned; Type Percentage Percentage of Percentage of
Nations Fund Name and Address of Ownership of Class Fund Fund
------------ ----------------- --------- ----- ----
Post-Closing
------------
</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. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class.
Nations and Pacific Horizon have been advised by Bank of America that
the shares of each Pacific Horizon Fund over which Bank of America and its
affiliates have voting power may be voted: by Bank of America itself in its
capacity as fiduciary; by Bank of America pursuant to instruction from
underlying beneficial holders; or by one or more independent fiduciaries.
Quorum. In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the Reorganization Agreement are not received by one or more of the
Pacific Horizon Funds, one or more adjournment(s) may be proposed to permit
further solicitation of proxies. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original Meeting without
notice except announcement at the meeting, but, under Maryland law, no more than
120 days after the record date. Any such adjournment(s) will require the
affirmative vote of a majority of those shares affected by the adjournment(s)
that are represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the particular proposal for which a quorum exists in favor
of such adjournment(s), and will vote those proxies required to be voted AGAINST
such proposal against any adjournment(s). A shareholder vote may be taken with
respect to one or more Pacific Horizon Funds (but not the other Pacific Horizon
Funds) on some or all matters before any such adjournment(s) if a quorum is
present and sufficient votes have been received for approval.
47
<PAGE>
A quorum is constituted with respect to Pacific Horizon or a Pacific
Horizon Fund by the presence in person or by proxy of the holders of more than
50% of the outstanding shares of Pacific Horizon or the Pacific Horizon Fund
entitled to vote at the Meeting. For purposes of determining the presence of a
quorum for transacting business at the Meeting, abstentions will be treated as
shares that are present at the Meeting but which have not been voted.
Abstentions will have the effect of a "no" vote for purposes of obtaining the
requisite approvals of the Reorganization Agreement and the Master Trust
Reorganization Agreement. 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 abstentions.
Annual Meetings and Shareholder Meetings. Neither Nations nor Pacific
Horizon presently intends to hold annual meetings of shareholders for the
election of directors/trustees and other business unless otherwise required by
the 1940 Act. Under certain circumstances, however, holders of at least 10% of
the outstanding shares of either Pacific Horizon or Nations have the right to
call a meeting of shareholders.
ADDITIONAL INFORMATION ABOUT NATIONS
Additional information about the Nations Funds is included in their
prospectuses and statements of additional information dated August 1, 1998, as
supplemented through the date hereof, copies of which, to the extent not
included herewith, may be obtained without charge by writing or calling Nations
at the address and telephone number set forth on the first page of this
Proxy/Prospectus. Nations is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act, and in accordance
therewith it files reports, proxy materials and other information with the SEC.
Reports and other information filed by Nations can be inspected and copied at
the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the offices of Nations listed above. In addition,
these materials can be inspected and copied at the SEC's Regional Offices at 7
World Trade Center, Suite 1300, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also can be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
48
<PAGE>
Officers of Nations are elected by, and serve at the pleasure of, the
Board of Trustees. Officers of Nations receive no remuneration from Nations for
their services in such capacities.
Information included in this Proxy/Prospectus concerning Nations was
provided by Nations.
ADDITIONAL INFORMATION ABOUT PACIFIC HORIZON
Additional information about the Pacific Horizon Funds is included in
their prospectuses and statements of additional information, dated July 1, 1998
as supplemented through the date hereof, which have been filed with the SEC.
Copies of these prospectuses and the related statements of additional
information may be obtained without charge by writing or calling Pacific Horizon
at the address and telephone number set forth on the first page of this
Proxy/Prospectus. Reports and other information filed by Pacific Horizon can be
inspected and copied at the Public Reference Facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the offices of Pacific
Horizon listed above. In addition, these materials can be inspected and copied
at the SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, New
York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials also can be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
Information included in this Proxy/Prospectus concerning Pacific
Horizon was provided by Pacific Horizon.
FINANCIAL STATEMENTS
The unaudited financial statements and financial highlights for shares
of the Operating Nations Funds for the semi-annual period ended October 31,
1998, are included or incorporated by reference in their prospectuses or
statements of additional information, or in the statement of additional
information related to this Proxy/Prospectus. The unaudited financial statements
and financial highlights for shares of the Pacific Horizon Fund for the
semi-annual period ended August 31, 1998 are included or incorporated by
reference in their prospectuses or statements of additional information or in
the statement of additional information related to this Proxy/Prospectus, or are
included herein.
The annual financial statements and financial highlights of the
Operating Nations Funds and MIT Master Portfolios for the year ended April 30,
1998 have been audited by PricewaterhouseCoopers LLP, independent accountants,
to the extent indicated in their reports thereon, have been incorporated by
reference in the Statement of Additional Information to this Proxy/Prospectus,
in reliance upon such reports given upon the authority of such firm as an expert
in accounting and auditing.
49
<PAGE>
The annual financial statements and financial highlights of the
Pacific Horizon Funds for the year ended February 28, 1998 have been audited by
PricewaterhouseCoopers LLP, independent accountants, to the extent indicated in
their reports thereon, have been incorporated by reference in the Statement of
Additional Information to this Proxy/Prospectus, in reliance upon such reports
given upon the authority of such firm as an expert in accounting and auditing.
OTHER BUSINESS
Pacific Horizon's Board of Directors knows of no other business to be
brought before the Meeting. However, if any other matters properly come before
the Meeting, it is the intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Pacific Horizon or to Nations
in writing at the address(es), or by phone at the phone number(s), on the cover
page of this Proxy/Prospectus.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SHAREHOLDERS ALSO MAY RETURN PROXIES BY TELEFACSIMILE OR VOTE ON-LINE OR BY
TELEPHONE.
PACIFIC HORIZON WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS FEBRUARY
28, 1998 ANNUAL REPORTS, OR AUGUST 31, 1998 SEMI-ANNUAL REPORTS, TO ANY
SHAREHOLDER UPON REQUEST ADDRESSED TO: PACIFIC HORIZON FUNDS AT P.O. BOX 8968,
WILMINGTON, DE 19899 OR BY TELEPHONE AT 1-800-346-2087
50
<PAGE>
APPENDIX I(a)
FORM OF AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of this _____ day of _______, 1998, by and between Nations Institutional
Reserves ("Nations Funds"), a Massachusetts business trust, for itself and on
behalf of Nations Cash Reserves, Nations Government Reserves, Nations Treasury
Reserves, Nations California Tax-Exempt Reserves (Shell), Nations Municipal
Reserves, Nations Asset Allocation Fund (Shell), Nations Capital Income Fund
(Shell), Nations California Municipal Bond Fund (Shell), Nations Intermediate
Bond Fund (Shell), and Nations Blue Chip Fund (Shell) (each an "Acquiring Fund"
and collectively the "Acquiring Funds"), each a portfolio of Nations Funds, and
Pacific Horizon Funds, Inc. ("Pacific Horizon Funds"), a Maryland corporation,
for itself and on behalf of the Pacific Horizon Prime Fund, Pacific Horizon
Government Fund, Pacific Horizon Treasury Fund, Pacific Horizon Treasury Only
Fund, Pacific Horizon California Tax-Exempt Money Market Fund, Pacific Horizon
Tax Exempt Money Fund, Pacific Horizon Asset Allocation Fund, Pacific Horizon
Capital Income Fund, Pacific Horizon California Municipal Bond Fund, Pacific
Horizon Intermediate Bond Fund and Pacific Horizon Blue Chip Fund (each an
"Acquired Fund" and collectively the "Acquired Funds"), each a portfolio of
Pacific Horizon Funds.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the Fund Assets (as defined in
paragraph 1.2.a.) of each Acquired Fund be transferred to each Acquiring Fund
corresponding thereto, as set forth in the table attached hereto as Schedule A,
in exchange for shares of specified classes of the corresponding Acquiring Fund
("Acquiring Fund Shares") and the assumption by each Acquiring Fund of the
Liabilities (as defined in paragraph 1.3) of each corresponding Acquired Fund,
and that such Acquiring Fund Shares be distributed immediately after the
Closing(s), as defined in this Agreement, by each Acquired Fund to its
shareholders in liquidation of each Acquired Fund. The parties intend that the
following Acquiring Funds -- Nations California Tax-Exempt Reserves, Nations
Asset Allocation Fund, Nations Capital Income Fund, Nations California Municipal
Bond Fund, Nations Intermediate Bond Fund and Nations Blue Chip Fund shall have
nominal assets and liabilities before the Reorganization(s), as defined in this
Agreement, and shall continue the investment operations of the following
corresponding Acquired Fund -- Pacific Horizon California Tax-Exempt Money
Market Fund -- Pacific Horizon Asset Allocation Fund Pacific Horizon Capital
Income Fund, Pacific Horizon California Municipal Bond Fund, Pacific Horizon
Intermediate Bond Fund and Pacific Horizon Blue Chip Fund thereafter, and that
in this regard certain actions should be taken as described in this Agreement.
This Agreement is intended to be and is adopted as a plan of reorganization for
each Acquired Fund each Reorganization (as defined herein) qualify as a
"reorganization", within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that each of the Acquiring Funds and
the Acquired Funds qualify as a "party to a reorganization," within the meaning
of Section 368(b) of the Code, with respect to such Reorganization.
1
<PAGE>
In consideration of the promises and of the covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUNDS
1.1. Subject to the terms and conditions herein set forth, and on the
basis of the representations and warranties contained herein, each
Acquired Fund shall assign, deliver and otherwise transfer its
assets as set forth in paragraph 1.2.a (the "Fund Assets") to its
corresponding Acquiring Fund identified in Schedule A, and such
corresponding Acquiring Fund shall, as consideration therefor, on
the Closing Date (as defined in paragraph 3.1), (i) deliver to each
corresponding Acquired Fund the full and fractional number of shares
of each of its share classes calculated by dividing the value of the
Fund Assets less the Liabilities of the corresponding Acquired Fund
that are so conveyed and are attributable to each of the Acquiring
Fund's respective share classes set forth in Schedule A, computed in
the manner and as of the time and date set forth in this Agreement,
by the net asset value of one Acquiring Fund share of the particular
share class that is to be delivered with respect thereto, computed
in the manner and as of the time and date set forth in this
Agreement; and (ii) assume all of such Acquired Fund's Liabilities
(as defined in paragraph 1.3). Such transfer, delivery and
assumption shall take place at the closing(s) provided for in
paragraph 3.1 (hereinafter sometimes referred to as the
"Closing(s)"). Promptly after the Closing(s), each Acquired Fund
shall distribute the Acquiring Fund Shares to the shareholders of
the respective share classes of the Acquired Fund in liquidation of
the Acquired Fund as provided in paragraph 1.4 hereof. Such
transaction(s) are hereinafter sometimes collectively referred to as
the "Reorganization(s)."
1.2.a. With respect to each Acquired Fund, the Fund Assets shall consist of
all property and assets of any nature whatsoever, including, without
limitation, all cash, cash equivalents, securities, claims (whether
absolute or contingent, known or unknown, accrued or unaccrued) and
receivables (including dividend and interest receivables) owned by
each Acquired Fund, and any prepaid expenses shown as an asset on
each Acquired Fund's books on the Closing Date.
1.2.b. At least fifteen (15) business days prior to the Closing Date, each
Acquired Fund will provide the corresponding Acquiring Fund with a
schedule of its securities and other assets and Liabilities of which
it is aware, and such Acquiring Fund will provide the Acquired Fund
with a copy of the current investment objective and policies
applicable to each Acquiring Fund. Each Acquired Fund reserves the
right to sell any of the securities or other assets shown on the
list of the Fund's Assets prior to the Closing Date but will not,
without the prior approval of the corresponding Acquiring Fund,
acquire any additional securities other than securities which the
Acquiring Fund is permitted to purchase in accordance with its
stated investment objective and policies. At least ten (10) business
days prior to the Closing Date, the Acquiring Fund will advise the
corresponding Acquired
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Fund of any investments of such Acquired Fund shown on such schedule
which the Acquiring Fund would not be permitted to hold, pursuant to
its stated investment objective and policies or otherwise. In the
event that the Acquired Fund holds any investments that its
corresponding Acquiring Fund would not be permitted to hold under
its stated investment objective or policies, the Acquired Fund, if
requested by the Acquiring Fund and, to the extent permissible and
consistent with the Acquired Fund's own investment objective and
policies, will dispose of such securities prior to the Closing Date.
In addition, if it is determined that the portfolios of the Acquired
Fund and the Acquiring Fund, when aggregated, would contain
investments exceeding certain percentage limitations to which the
Acquiring Fund is or will be subject with respect to such
investments, the Acquired Fund, if requested by the Acquiring Fund
and, to the extent permissible and consistent with the Acquired
Fund's own investment objective and policies, will dispose of and/or
reinvest a sufficient amount of such investments as may be necessary
to avoid violating such limitations as of the Closing Date.
1.3. Each Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. Each
Acquiring Fund will assume all liabilities and obligations of the
corresponding Acquired Fund, accrued, absolute, contingent or
otherwise existing, as of the Closing Date, which liabilities and
obligations shall include any obligation of the Pacific Horizon
Funds to indemnify Pacific Horizon Funds current and former
Directors and officers, acting in their capacities as such, to the
fullest extent permitted by law and the Pacific Horizon Funds'
Charter, as in effect as of the date of this Agreement and any
obligations of the Pacific Horizon Funds to pay any retirement
benefits to current and former Directors pursuant to Pacific Horizon
Fund's retirement plan ("Liabilities"). Without limiting the
foregoing, each Acquired Fund agrees that all rights to
indemnification and retirement benefits and all limitations of
liability existing in favor of the Pacific Horizon Funds' current
and former Directors and officers, acting in their capacities as
such, under Pacific Horizon Funds' Charter as in effect as of the
date of this Agreement shall survive the Reorganization and shall
continue in full force and effect, without any amendment thereto,
and shall constitute rights which may be asserted against Nations
Funds, its successors or assigns. The Liabilities assumed by Nations
Funds, its successors or assigns, on behalf of an Acquiring Fund
shall be separate Liabilities of such Acquiring Fund, and not joint
or joint and several liabilities of any other Acquiring Fund.
1.4. Prior to the Closing(s), Nations Funds and Pacific Horizon Funds
shall file appropriate Articles of Transfer pursuant to the laws of
the State of Maryland, effective as of the Closing(s).
1.5. Promptly after the Closing(s) with respect to each Acquired Fund,
the Acquired Fund will distribute the shares of the Acquiring Fund
class received by the Acquired Fund pursuant to paragraph 1.1 to its
shareholders of record determined as of the close of business on the
Closing Date ("Acquired Fund Investors") in
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complete liquidation of the Acquired Fund. Acquired Fund Investors
will be credited with full and fractional shares of the class that
is issued by the corresponding Acquiring Fund under this Agreement
with respect to the shares of the Acquired Fund that are held by the
Acquired Fund Investors. Such distribution will be accomplished by
an instruction, signed by an appropriate officer of Pacific Horizon
Funds, to transfer the Acquiring Fund Shares then credited to the
Acquired Fund's account on the books of the Acquiring Fund and to
open accounts on the books of the Acquiring Fund established and
maintained by the Acquiring Fund's transfer agent in the names of
record of the Acquired Fund Investors and representing the
respective number of shares of the Acquiring Fund due such Acquired
Fund Investors. In exchange for Acquiring Fund Shares distributed,
all issued and outstanding shares of common stock of the Acquired
Fund will be redeemed and canceled simultaneously therewith on the
Acquired Fund's books; any outstanding share certificates
representing interests in the Acquired Fund thereafter will
represent the right to receive such number of Acquiring Fund Shares
after the Closing(s) as determined in accordance with Section 1.1.
1.6. If a request shall be made for a change of the registration of
shares of an Acquiring Fund to another person from the account of
the shareholder in which name the shares are registered in the
records of the corresponding Acquired Fund, it shall be a condition
of such registration of shares that there be furnished to the
Acquiring Fund an instrument of transfer properly endorsed,
accompanied by appropriate signature guarantees and otherwise in
proper form for transfer and, if any of such shares are outstanding
in certificated form, the certificates representing such shares, and
that the person requesting such registration shall pay to such
Acquiring Fund any transfer or other taxes required by reason of
such registration or establish to the reasonable satisfaction of the
Acquiring Fund that such tax has been paid or is not applicable.
1.7. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund, the assumption of the Acquired Fund's
Liabilities by the Acquiring Fund, and the distribution by the
Acquired Fund of the Acquiring Fund Shares received by it pursuant
to paragraph 1.4, Pacific Horizon Funds shall terminate the
qualification, classification and registration of such Acquired Fund
at all appropriate federal and state agencies. All reporting and
other obligations of Pacific Horizon Funds shall remain the
exclusive responsibility of Pacific Horizon Funds up to and
including the date on which the particular Acquired Fund is
terminated and deregistered, subject to any reporting or other
obligations described in paragraph 4.9. Subject to the provisions of
Section 1.8 and comparable provisions of similar Agreements and
Plans of Reorganizations being entered into between Pacific Horizon
Funds and Nations Funds Trust and Nations Funds, Inc., at an
appropriate time as determined by Pacific Horizon Funds, upon the
advice of counsel, Pacific Horizon Funds will be dissolved under the
laws of the State of Maryland.
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1.8. Subject to the conditions set forth in this Agreement, the failure
of one Acquired Fund to consummate the transactions contemplated
hereby shall not affect the consummation or validity of a
Reorganization with respect to any other Acquired Fund, and the
provisions of this Agreement shall be construed to effect this
intent, including, without limitation, as the context requires,
construing the terms "Acquiring Fund" and "Acquired Fund" as meaning
only those series of Nations Funds and Pacific Horizon Funds,
respectively, which are involved in a Reorganization as of a Closing
Date.
2. VALUATION
2.1.a. With respect to each Acquired Fund, the value of the Fund Assets
shall be the value of such assets computed as of the time at which
its net asset value is calculated on the Closing Date (such time and
date being herein called the "Applicable Valuation Date"). The net
asset value of the Fund Assets to be transferred by the Acquired
Funds shall be computed by Pacific Horizon Funds and shall be
subject to adjustment by the amount, if any, agreed to by Nations
Funds and the respective Acquired Funds. In determining the value of
the securities transferred by the Acquired Funds to the Acquiring
Funds, except as provided in sub-paragraph 2.1.b., each security
shall be priced in accordance with the pricing policies and
procedures of the Acquiring Funds as described in its then current
prospectuses and statements of additional information. For such
purposes, price quotations and the security characteristics relating
to establishing such quotations shall be determined by Pacific
Horizon Funds, provided that such determination shall be subject to
the approval of Nations Funds. Pacific Horizon Funds and Nations
Funds agree to use all commercially reasonable efforts to resolve
any material pricing differences between the prices of portfolio
securities determined in accordance with the pricing policies and
procedures of Pacific Horizon Funds and those determined in
accordance with the pricing policies and procedures of the Acquiring
Funds prior to the Applicable Valuation Date.
2.1.b. It is understood and agreed that the net asset value of the Fund
Assets of those Pacific Horizon Funds that are money market funds
shall be based on the amortized cost valuation procedures that have
been adopted by the Board of Directors of Pacific Horizon Funds;
provided that if the difference between the per share net asset
values of such Acquired Funds, and the corresponding Acquiring Funds
equals or exceeds $.0025 on the Applicable Valuation Date, as
computed by using market values in accordance with the policies and
procedures established by Nations Funds (or as otherwise mutually
determined by the Board of Directors of Pacific Horizon Funds and
Board of Trustees of Nations Funds), either party shall have the
right to postpone the Applicable Valuation Date and Closing Date
with respect to the Pacific Horizon Funds until such time as the per
share difference is less than $.0025.
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2.2. The net asset value of the share of a class of shares of an
Acquiring Fund shall be the net asset value per share of such class
computed on the Applicable Valuation Date, using the valuation
procedures set forth in the Acquiring Fund's then current prospectus
and statement of additional information.
3. CLOSING(S) AND CLOSING DATE
3.1. Prior to the Closing(s), Nations Funds and Pacific Horizon funds
shall execute and file Articles of Transfer, effective as of the
Closing(s) with respect to the transactions contemplated hereby with
the Department of Assessments and Taxation of the State of Maryland
(the "Department of Assessments"). The Closing for the Acquiring
Funds and their corresponding Acquired Fund(s), shall occur on May
14, 1999, and/or on such other date(s) as may be mutually agreed
upon in writing by the officers of the parties hereto (a "Closing
Date"). With respect to Nations California Tax-Exempt Reserves
(Shell), Nations Asset Allocation Fund (Shell), Nations Capital
Income Fund (Shell), Nations California Municipal Bond Fund (Shell),
Nations Intermediate Bond Fund (Shell) and Nations Blue Chip Fund
(Shell), and the corresponding Acquired Fund, the Closing Date shall
occur on May 21, 1999, and/or on such other date(s) as may be
mutually agreed upon in writing by the officers of the parties
hereto. The Closing(s) shall be held at the offices of Stephens
Inc., 111 Center Street, Suite 300, Little Rock, Arkansas 72201 or
at such other location as is mutually agreeable to the parties. All
acts taking place at the Closing(s) shall be deemed to take place
simultaneously as of 4:00 p.m. Eastern time on the Closing Date
unless otherwise provided.
3.2. Each Acquiring Fund's custodian shall deliver at the Closing(s) a
certificate of an authorized officer stating that: (a) each Acquired
Fund's portfolio securities, cash and any other assets have been
delivered in proper form to the corresponding Acquiring Fund on the
Closing Date and (b) all necessary taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or
provision for payment shall have been made, by such Acquired Fund in
conjunction with the delivery of portfolio securities. Proper
delivery of cash shall be by wire to The Bank of New York, the
Acquiring Funds' Custodian, pursuant to instruction to be delivered
prior to the Closing(s).
3.3. Notwithstanding anything herein to the contrary, in the event that
on the Applicable Valuation Date (a) the New York Stock Exchange
shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such exchange or
elsewhere shall be disrupted so that, in the judgment of Nations
Funds and Pacific Horizon Funds, accurate appraisal of the value of
the net assets of an Acquiring Fund or an Acquired Fund is
impracticable, the Applicable Valuation Date and Closing Date shall
be postponed until the first business day after the day when trading
shall have been fully resumed without restriction or disruption and
reporting shall have been restored.
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3.4. With respect to each Acquired Fund, Pacific Horizon Funds shall
provide Nations Funds and its transfer agents with immediate access
from and after the Closing Date to (a) the computer, electronic or
such other forms of records containing the names, addresses and
taxpayer identification numbers of all of the Acquired Fund
Investors and the number and percentage ownership of outstanding
Acquired Fund shares owned by such Acquired Fund Investor, all as of
the Applicable Valuation Date, and (b) all original documentation
(including all applicable Internal Revenue Service forms,
certificates, certifications and correspondence) relating to the
Acquired Fund Investors' taxpayer identification numbers and their
liability for or exemption from back-up withholding. Each
corresponding Acquiring Fund shall issue and deliver to the
Secretary or Assistant Secretary of Pacific Horizon Funds, acting on
behalf of the Acquired Fund, a confirmation evidencing the Acquiring
Fund Shares credited on the Closing Date or shall provide evidence
satisfactory to each Acquired Fund that such Acquiring Fund Shares
have been credited to each Acquired Fund's account on the books of
each Acquiring Fund. At the Closing(s), each party shall deliver to
the other such bills of sale, checks, assignments, assumptions of
liability share certificates, if any, receipts or other documents of
transfer, assignment or conveyance as such other party or its
counsel may reasonably request.
3.5. Within twenty (20) days after the Closing Date, each Acquired Fund
shall deliver, in accordance with Article 1 hereof, to the
corresponding Acquiring Fund a statement of the Fund Assets and
Liabilities, together with a list of such Acquired Fund's portfolio
securities and other assets showing the respective adjusted bases
and holding periods thereof for income tax purposes, as of the
Closing Date, certified by an appropriate officer of Pacific Horizon
Funds.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
4.1. Pacific Horizon Funds has called or will call a meeting of the
Acquired Fund shareholders to consider and act upon this Agreement,
and to take such other actions reasonably necessary to obtain the
approval of the transactions contemplated herein, including approval
for each Acquired Fund's liquidating distribution of the Acquiring
Fund Shares contemplated hereby, and for Pacific Horizon Funds to
terminate each Acquired Fund's qualification, classification and
registration if requisite approvals are obtained with respect to
each Acquired Fund. Nations Funds and Pacific Horizon Funds will
jointly prepare the notice of meeting, form of proxy and proxy
statement (collectively, "Proxy Materials") to be used in connection
with such meeting; provided that Nations Funds has furnished or will
furnish Pacific Horizon Funds, except for those Acquired Funds which
are to be reorganized into a new shell Acquiring Fund, with a
current, effective prospectus, including any supplements, relating
to the class of shares of each Acquiring Fund corresponding to the
class of shares of each Acquired Fund then outstanding for
incorporation within and/or distribution with the Proxy
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<PAGE>
Materials, and with such other information relating to the Acquiring
Funds as is reasonably necessary for the preparation of the Proxy
Materials.
4.2. Pacific Horizon Funds, on behalf of each Acquired Fund, covenants
that each Acquired Fund shall not sell or otherwise dispose of any
Acquiring Fund Shares to be received in the transactions
contemplated herein, except in distribution to its shareholders in
accordance with the terms of this Agreement.
4.3. Pacific Horizon Funds, on behalf of each Acquired Fund, will assist
the corresponding Acquiring Fund in obtaining such information as
the Acquiring Fund reasonably requests concerning the record and
beneficial ownership of shares of each class of each Acquired Fund.
4.4. Subject to the provisions hereof, Nations Funds, on its own behalf
and on behalf of each Acquiring Fund, and Pacific Horizon Funds, on
its own behalf and on behalf of each Acquired Fund, will take, or
cause to be taken, all actions, and do, or cause to be done, all
things reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated herein.
4.5. Pacific Horizon Funds, on behalf of each Acquired Fund, shall
furnish to its corresponding Acquiring Fund on the Closing Date, a
statement of the total amount of each Acquired Fund's assets and
Liabilities as of the Closing Date, which statement shall be
certified by an appropriate officer of Pacific Horizon Funds as
being determined in accordance with generally accepted accounting
principles consistently applied and as being valued in accordance
with paragraph 2.1 hereof. As promptly as practicable, but in any
case within sixty (60) days after the Closing Date, Pacific Horizon
Funds, on behalf of each Acquired Fund, shall furnish its
corresponding Acquiring Fund, in such form as is reasonably
satisfactory to Nations Funds, on behalf of each Acquiring Fund, a
statement certified by an officer of Pacific Horizon Funds of such
Acquired Fund's federal income tax attributes and the tax bases in
its assets that will be carried over to the corresponding Acquiring
Fund in the Reorganization pursuant to Section 381 of the Code.
4.6. Nations Funds has prepared and filed, or will prepare and file, with
the Securities and Exchange Commission ("SEC") and the appropriate
state securities commissions a post-effective amendment (the "N-1A
Post-Effective Amendment") to its registration statement on Form
N-1A (File Nos. 33-33144; 811-6030), as promptly as practicable so
that all Acquiring Funds and their shares are registered under the
Securities Act of 1933, as amended (the "1933 Act"), the Investment
Company Act of 1940, as amended (the "1940 Act"), and applicable
state securities laws. In addition, Nations Funds, on behalf of each
Acquiring Fund, has prepared and filed, or will prepare and file
with the SEC a registration statement on Form N-14 under the 1933
Act, relating to the Acquiring Fund Shares, which, without
limitation, shall include a proxy statement of Pacific Horizon Funds
and the prospectuses of the Acquiring Funds of Nations Funds
8
<PAGE>
relating to the transactions contemplated by this Agreement (the
"Registration Statement"). Pacific Horizon Funds, on behalf of each
Acquired Fund, has provided or will provide each corresponding
Acquiring Fund with the materials and information necessary to
prepare the N-1A Post-Effective Amendment and the Proxy Materials
for inclusion in the Registration Statement, prepared in accordance
with paragraph 4.1, and with such other information and documents
relating to each Acquired Fund as are requested by the corresponding
Acquiring Fund and as are reasonably necessary for the preparation
of the N-1A Post-Effective Amendment and the Registration Statement.
4.7. As soon after the Closing Date as is reasonably practicable, Pacific
Horizon Funds, on behalf of each Acquired Fund shall prepare and
file all federal and other tax returns and reports of each Acquired
Fund required by law to be filed with respect to all periods ending
on or before the Closing Date but not theretofore filed.
4.8. With respect to each Acquiring Fund, Nations Funds agrees to use all
reasonable efforts to operate in accordance with its then current
prospectus and statement of additional information prepared in
accordance with Form N-1A, as may be modified from time to time,
including qualifying as a "regulated investment company" under the
Code, for at least one (1) year following the Closing Date.
4.9. With respect to each Acquired Fund, Pacific Horizon Funds agrees to
use all reasonable efforts to operate in accordance with its then
current prospectus and statement of additional information prepared
in accordance with Form N-1A, as may be modified from time to time,
including qualifying as a "regulated investment company" under the
Code, up to the Closing Date.
4.10. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund in exchange for Acquiring Fund Shares
and the assumption of all Liabilities of the Acquired Fund as
contemplated herein, Pacific Horizon Funds will file any final
regulatory reports, including but not limited to any Form N-SAR and
Rule 24f-2 filings with respect to such Acquired Fund(s), promptly
after the Closing Date. As soon as practicable after the Closing
Date and further subject to Section 1.8 hereof and comparable
provisions of similar Agreements and Plans of Reorganization between
Pacific Horizon Funds and Nations Fund Trust and Nations Funds,
Inc., Pacific Horizon Funds shall file an application pursuant to
Section 8(f) of the 1940 Act for an order declaring that it has
ceased to be an investment company; shall file Articles of
Dissolution for recordation with the Department of Assessments, and
shall take, in accordance with Maryland General Corporation Law, all
other steps necessary and proper to effect its complete dissolution.
4.11 Nations Fund, on behalf of each Acquiring Fund, shall use its best
efforts to satisfy the conditions of the statutory exemption set
forth in Section 15(f) of the 1940 Act, as an assumption of the
stated expectation of the Pacific Horizon Funds
9
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as set forth in the proxy statement of the Pacific Horizon Funds
dated May 15, 1998.
5. REPRESENTATIONS AND WARRANTIES
5.1. Nations Funds, on behalf of itself and each Acquiring Fund,
represents and warrants to the Pacific Horizon Funds as follows:
5.1.a. Nations Funds was duly created pursuant to its Agreement and
Declaration of Trust by the Trustees for the purpose of
acting as a management investment company under the 1940 Act
and is validly existing under the laws of the Commonwealth of
Massachusetts, and the Agreement and Declaration of Trust
directs the Trustees to manage the affairs of Nations Funds
and grants them all powers necessary or desirable to carry
out such responsibility, including administering Nations
Funds business as currently conducted by Nations Funds and as
described in the current prospectuses of Nations Funds;
Nations Funds is registered as an investment company
classified as an open-end management company under the 1940
Act, and its registration with the SEC as an investment
company is in full force and effect;
5.1.b. The Registration Statement, including the current
prospectuses and statement of additional information of each
Acquiring Fund, conform or will conform, at all times up to
and including the Closing Date, in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act
and the regulations thereunder and do not include or will not
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
5.1.c. Each Acquiring Fund is not in violation of, and the
execution, delivery and performance of this Agreement by
Nations Funds for itself and on behalf of each Acquiring Fund
does not and will not (i) violate Nations Funds' Agreement
and Declaration of Trust or By-Laws, or (ii) result in a
breach or violation of, or constitute a default under any
material agreement or material instrument, to which Nations
Funds is a party or by which its properties or assets are
bound;
5.1.d. Except as previously disclosed in writing to the Pacific
Horizon Funds, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or, to Nations Funds' knowledge, threatened
against Nations Funds or its business, the Acquiring Funds or
any of their properties or assets, which, if adversely
determined, would materially and adversely affect Nations
Funds or an Acquiring Fund's financial condition or the
conduct of their business, and
10
<PAGE>
Nations Funds knows of no facts that might form the basis for
the institution of any such proceeding or investigation, and
no Acquiring Fund is a party to or subject to the provisions
of any order, decree or judgment of any court or governmental
body which materially and adversely affects, or is reasonably
likely to materially and adversely affect, its business or
its ability to consummate the transactions contemplated
herein;
5.1.e. All issued and outstanding shares, including shares to be
issued in connection with the Reorganization, of each
Acquiring Fund class will, as of the Closing Date, be duly
authorized and validly issued and outstanding, fully paid and
non-assessable by Nations Funds and the Acquiring Fund does
not have outstanding any option, warrants or other rights to
subscribe for or purchase any of its shares;
5.1.f. The execution, delivery and performance of this Agreement on
behalf of each Acquiring Fund will have been duly authorized
prior to the Closing Date by all necessary action on the part
of Nations Funds and the Trustees, and this Agreement
constitutes a valid and binding obligation of Nations Funds
and each Acquiring Fund enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
5.1.g. The Acquiring Fund Shares to be issued and delivered to the
corresponding Acquired Fund for the account of the Acquired
Fund Investors, pursuant to the terms hereof, will have been
duly authorized as of the Closing Date and, when so issued
and delivered, will be duly and validly issued, fully paid
and non-assessable, and the shares of the class of the
Acquiring Fund issued and outstanding prior to the Closing
Date were offered and sold in compliance with the applicable
registration requirements, or exemptions therefrom, of the
1933 Act, and all applicable state securities laws, and the
regulations thereunder, and no shareholder of an Acquiring
Fund shall have any preemptive right of subscription or
purchase in respect thereto;
5.1.h. From the effective date of the Registration Statement,
through the time of the meeting of the Acquired Fund
shareholders and on the Closing Date, any written information
furnished by Nations Funds with respect to an Acquiring Fund
for use in the Proxy Materials, the Registration Statement or
any other materials provided in connection with the
Reorganization does not and will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the information provided not misleading;
5.1.i. No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the Securities
Exchange Act of 1934 (the
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<PAGE>
"1934 Act"), the 1940 Act or Massachusetts law for the
execution of this Agreement by Nations Funds, for itself and
on behalf of each Acquiring Fund, or the performance of the
Agreement by Nations Funds, for itself and on behalf of each
Acquiring Fund, except for the effectiveness of the
Registration Statement, any necessary exemptive relief or
no-action assurances requested from the SEC or its staff with
respect to Sections 17(a) and 17(d) of the 1940 Act and Rule
17d-1 thereunder, and such other consents, approvals,
authorizations and filings as have been made or received, and
except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date;
5.1.j. The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets of Nations
Cash Reserves, Nations Government Reserves, Nations Treasury
Reserves and Nations Municipal Reserves as of and for the
period ended March 31, 1998, audited by
PricewaterhouseCoopers LLP (copies of which have been or will
be furnished to the corresponding Acquired Fund), and the
unaudited Statement of Net Assets and Liabilities, Statement
of Operations and Statement of Changes in Net Assets of
Nations Cash Reserves, Nations Government Reserves, Nations
Treasury Reserves and Nations Municipal Reserves as of and
for the six-month period ended October 31, 1998 (copies of
which have been or will be furnished to the corresponding
Acquired Fund), present fairly, in all material respects, the
financial position of Nations Cash Reserves, Nations
Government Reserves, Nations Treasury Reserves and Nations
Municipal Reserves as of such date and the results of its
operations and the changes in its Net Assets for the period
then ended in accordance with generally accepted accounting
principles consistently applied and as of such date there
were no Liabilities of Nations Cash Reserves, Nations
Government Reserves, Nations Treasury Reserves and Nations
Municipal Reserves known to Nations Funds that were not
disclosed therein but that would be required to be disclosed
therein in accordance with generally accepted accounting
principles;
5.1.k. Since the date of the most recent audited financial
statements, there has not been any material adverse change in
any Acquiring Fund's financial position, assets, liabilities
or business, other than changes occurring in the ordinary
course of business, or any incurrence by an Acquiring Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed in
writing to and accepted by the corresponding Acquired Fund,
prior to the Closing Date (for the purposes of this
subparagraph (k), neither a decline in an Acquiring Fund's
net asset value per share nor a decrease in an Acquiring
Fund's size due to redemptions shall be deemed to constitute
a material adverse change);
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5.1.l. All federal and other tax returns and reports of Nations
Funds and each Acquiring Fund required by law to be filed on
or before the Closing Date have been or will be filed, and
all federal and other taxes owed by Nations Funds on behalf
of the Acquiring Funds have been or will be paid so far as
due, and to the best of Nations Funds' knowledge, no such
return is currently under audit and no assessment has been
asserted with respect to any such return;
5.1.m. At the Closing Date, the Acquiring Funds will have good and
marketable title to their assets and full right, power and
authority to assign, deliver and otherwise transfer such
assets; and
5.1.n. Each Acquiring Fund intends to qualify as a "regulated
investment company" under the Code, and each Acquiring Fund
that has conducted material investment operations prior to
the Closing Date has elected to qualify and has qualified as
a "regulated investment company" under the Code, as of and
since its first taxable year; has been a "regulated
investment company" under the Code at all times since the end
of its first taxable year when it so qualified; and qualifies
and shall continue to qualify as a "regulated investment
company" under the Code for its current taxable year.
5.2. Pacific Horizon Funds, on behalf of itself and each Acquired Fund,
represents and warrants to Nations Funds as follows:
5.2.a. Pacific Horizon Funds was duly incorporated under the laws of
the State of Maryland for the purpose of acting as a
management investment company under the 1940 Act and is
validly existing under the laws of the State of Maryland, and
its Charter and the laws of the State of Maryland provide
that the affairs of Pacific Horizon Funds shall be managed
under the direction of the Directors and grants them all
powers necessary or desirable to carry out such
responsibility, including administering Pacific Horizon Funds
business as currently conducted by Pacific Horizon Funds and
as described in the current prospectuses of Pacific Horizon
Funds; Pacific Horizon Funds is registered as an investment
company classified as an open-end management company under
the 1940 Act, and its registration with the SEC as an
investment company is in full force and effect;
5.2.b. All of the issued and outstanding shares of common stock of
each Acquired Fund have been offered and sold in compliance
in all material respects with applicable registration
requirements of the 1933 Act and state securities laws;
5.2.c. The Acquired Funds are not in violation of, and the
execution, delivery and performance of this Agreement by
Pacific Horizon Funds for itself and on behalf of each
Acquired Fund does not and will not (i) violate Pacific
13
<PAGE>
Horizon Funds' Charter or By-Laws, or (ii) result in a breach
or violation of, or constitute a default under any material
agreement or material instrument, to which Pacific Horizon
Funds is a party or by which its properties or assets are
bound, except as otherwise previously disclosed in writing to
the Acquiring Funds;
5.2.d. Except as previously disclosed in writing to Nations Funds,
no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently
pending or, to Pacific Horizon Funds' knowledge, threatened
against any Acquired Fund or any of its properties or assets
which, if adversely determined, would materially and
adversely affect such Acquired Fund's financial condition or
the conduct of its business, and Pacific Horizon Funds knows
of no facts that might form the basis for the institution of
any such proceeding or investigation, and no Acquired Fund is
a party to or subject to the provisions of any order, decree
or judgment of any court or governmental body that materially
and adversely affects, or is reasonably likely to materially
and adversely affect, its business or its ability to
consummate the transactions contemplated herein;
5.2.e. The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets of each
Acquired Fund as of and for the year ended February 28, 1998,
audited by PricewaterhouseCoopers LLP (copies of which have
been or will be furnished to the corresponding Acquiring
Fund) and the unaudited Statement of Assets and Liabilities,
Statement of Operations and Statement of Changes in Net
Assets of each Acquired Funds as of and for the six-month
period ended August 31, 1998 (copies of which have been or
will be furnished to the corresponding Acquiring Fund)
present fairly, in all material respects, the financial
position of each Acquired Fund as of such date and the
results of its operations and the changes in its Net Assets
for such period in accordance with generally accepted
accounting principles consistently applied, and as of such
date there were no Liabilities of any Acquired Fund known to
Pacific Horizon Funds that were not disclosed therein but
that would be required to be disclosed therein in accordance
with generally accepted accounting principles;
5.2.f. Since the date of the most recent audited financial
statements, there has not been any material adverse change in
any Acquired Fund's financial condition, assets, Liabilities
or business, other than changes occurring in the ordinary
course of business, or any incurrence by an Acquired Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed in
writing to and accepted by the corresponding Acquiring Fund,
prior to the Closing Date (for the purposes of this
subparagraph (f), neither a decline in an Acquired Fund's
14
<PAGE>
net asset value per share nor a decrease in an Acquired
Fund's size due to redemptions shall be deemed to constitute
a material adverse change);
5.2.g. All federal and other tax returns and reports of Pacific
Horizon Funds and each Acquired Fund required by law to be
filed on or before the Closing Date, have been or will be
filed, and all federal and other taxes owed by Pacific
Horizon Funds on behalf of the Acquired Funds, have been or
will be paid so far as due, and to the best of Pacific
Horizon Funds' knowledge, no such return is currently under
audit and no assessment has been asserted with respect to any
such return;
5.2.h. Each Acquired Fund has elected to qualify and has qualified
as a "regulated investment company" under the Code, as of and
since its first taxable year; has been a "regulated
investment company" under the Code at all times since the end
of its first taxable year when it so qualified; and qualifies
and shall continue to qualify as a "regulated investment
company" under the Code for its taxable year ending upon its
liquidation;
5.2.i. All issued and outstanding shares of each Acquired Fund are,
and on the Closing Date will be, duly authorized and validly
issued and outstanding, and fully paid and non-assessable by
Pacific Horizon Funds, and all such shares will, at the time
of the Closing(s), be held by the persons and in the amounts
set forth in the list of Acquired Fund Investors provided to
each corresponding Acquiring Fund, pursuant to paragraph 3.4,
and no Acquired Fund has outstanding any options, warrants or
other rights to subscribe for or purchase any of its shares,
nor is there outstanding any security convertible into any of
its shares;
5.2.j. At the Closing Date, each Acquired Fund will have good and
marketable title to its Fund Assets and full right, power and
authority to assign, deliver and otherwise transfer such Fund
Assets hereunder, and upon delivery and payment for such Fund
Assets as contemplated herein and the filing of Articles of
Transfer pursuant to the laws of the State of Maryland, the
corresponding Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the ownership or
transfer thereof other than such restrictions as might arise
under the 1933 Act or state securities laws, and except for
any liens or transfer tax liens arising in connection with
the transfer of Fund Assets pursuant to this Agreement;
5.2.k. The execution, delivery and performance of this Agreement on
behalf of the Acquired Funds will have been duly authorized
prior to the Closing Date by all necessary action on the part
of Pacific Horizon Funds and the Directors, and this
Agreement constitutes a valid and binding obligation of
Pacific Horizon Funds and each Acquired Fund enforceable in
accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general
15
<PAGE>
applicability relating to or affecting creditors' rights and
to general equity principles;
5.2.l. From the effective date of the Registration Statement,
through the time of the meeting of the Pacific Horizon Funds
shareholders, and on the Closing Date, the Registration
Statement insofar as it relates to materials provided by
Pacific Horizon Funds or the Acquired Funds, used in
connection with the preparation of the Registration
Statement: (i) will comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act and the
1940 Act and the regulations thereunder and (ii) will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
as of such dates and times, any written information furnished
by Pacific Horizon Funds, on behalf of the Acquired Funds,
for use in the Registration Statement or in any other manner
that may be necessary in connection with the transactions
contemplated hereby does not contain any untrue statement of
a material fact or omit to state a material fact necessary to
make the information provided not misleading; and
5.2.m. No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the 1934 Act, the
1940 Act or Maryland law for the execution of this Agreement
by Pacific Horizon Funds, for itself and on behalf of each
Acquired Fund, or the performance of the Agreement by Pacific
Horizon Funds for itself and on behalf of each Acquired Fund,
except for the effectiveness of the Registration Statement,
any necessary exemptive relief or no-action assurances
requested from the SEC or its staff with respect to Section
17(a) and 17(d) of the 1940 Act and Rule 17d-1 thereunder and
the filing of Articles of Transfer pursuant to Maryland law,
and except for such other consents, approvals, authorizations
and filings as have been made or received, and such consents,
approvals, authorizations and filings as may be required
subsequent to the Closing Date, it being understood, however,
that this Agreement and the transactions contemplated herein
must be approved by the shareholders of the Acquired Funds as
described in paragraph 8.1.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUNDS
The obligations of Pacific Horizon Funds to consummate the
Reorganization with respect to each Acquired Fund shall be subject to the
performance by Nations Funds, for itself and on behalf of each Acquiring Fund,
of all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions with respect to each
corresponding Acquiring Fund:
16
<PAGE>
6.1. All representations and warranties of Nations Funds with respect to
each Acquiring Fund contained herein shall be true and correct in
all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated herein, as of the
Closing Date with the same force and effect as if made on and as of
the Closing Date.
6.2. Nations Funds, on behalf of each Acquiring Fund, shall have
delivered to Pacific Horizon Funds at the Closing(s) a certificate
executed on behalf of each corresponding Acquiring Fund by Nations
Funds' President, Secretary, Assistant Secretary, or other
authorized officer, in a form and substance reasonably satisfactory
to Pacific Horizon Funds and dated as of the Closing Date, to the
effect that the representations and warranties of Nations Funds with
respect to each Acquiring Fund made herein are true and correct at
and as of the Closing Date, except as they may be affected by the
transactions contemplated herein, and as to such other matters as
such Acquired Fund shall reasonably request.
6.3. Each Acquired Fund shall have received at the Closing(s) a favorable
opinion of Morrison & Foerster LLP, counsel to Nations Funds (based
upon or subject to such representations, assumptions, limitations or
opinions of local counsel as such counsel may deem appropriate or
necessary), dated as of the Closing Date, in a form (including the
representations, assumptions, limitations or opinions of local
counsel upon which it is based or to which it is subject) reasonably
satisfactory to each Acquired Fund, substantially to the effect
that:
6.3.a. Nations Funds is a duly registered, open-end, management
investment company, and its registration with the SEC as an
investment company under the 1940 Act is in full force and
effect;
6.3.b. each Acquiring Fund is a portfolio of Nations Funds, which is
a company duly created pursuant to its Agreement and
Declaration of Trust, is validly existing and in good
standing under the laws of the Commonwealth of Massachusetts
and the Agreement and Declaration of Trust directs the
Trustees to manage the affairs of Nations Funds and grants
them all powers necessary or desirable to carry out such
responsibility, including administering Nations Funds'
business as described in the current prospectuses of Nations
Funds;
6.3.c. this Agreement has been duly authorized, executed and
delivered on behalf of Nations Funds and each Acquiring Fund
and, assuming due authorization, execution and delivery of
this Agreement on behalf of the Acquired Funds, is a valid
and binding obligation of Nations Funds enforceable against
Nations Funds in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles;
17
<PAGE>
6.3.d. the Acquiring Fund Shares to be issued to the Acquired Funds
Investors pursuant to this Agreement are duly registered
under the 1933 Act on the appropriate form, and are duly
authorized and upon such issuance will be validly issued and
outstanding and fully paid and non-assessable, and no
shareholder of an Acquiring Fund has any preemptive rights to
subscription or purchase in respect thereof;
6.3.e. the N-1A Post-Effective Amendment and the Registration
Statement have become effective with the SEC and, to the best
of such counsel's knowledge, no stop order suspending the
effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or
threatened;
6.3.f. except for the filing of Articles of Transfer pursuant to
Maryland law no consent, approval, authorization, filing or
order of any court or governmental authority of the United
States or any state is required for the consummation by
Nations Funds of the Reorganization with respect to each
Acquiring Fund;
6.3.g. to such counsel's knowledge, the execution and delivery of
the Agreement and the performance of its terms by Nations
Funds, and each Acquiring Fund, do not violate or result in a
violation of the Nations Funds Agreement and Declaration of
Trust or By-Laws, or any judgment, order or decree known to
such counsel, of any court or arbiter, to which Nations Funds
is a party, and, to such counsel's knowledge, will not
constitute a material breach of the terms, conditions or
provisions of, or constitute a default under, any contract,
undertaking, indenture or other agreement by which Nations
Funds is now bound or to which it is now a party;
6.3.h. to such counsel's knowledge, (a) no legal or governmental
proceedings existing on or before the date of mailing the
combined proxy statement/prospectus ("Combined
Proxy/Prospectus"), involving Nations Funds or the Acquiring
Funds, are required to be described in the Combined
Proxy/Prospectus which are not described as required and (b)
there are no contracts or documents relating to Nations Funds
or the Acquiring Funds, known to such counsel, of a character
required to be described in the Combined Proxy/Prospectus or
to be filed as an exhibit to the Registration Statement that
are not described or filed as required; and
6.3.i. to such counsel's knowledge, except as otherwise disclosed in
the Registration Statement, no litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or threatened against
Nations Funds or an Acquiring Fund or any of their properties
or assets and neither Nations Funds nor any Acquiring Fund is
a party to or subject to the provisions of any order, decree
or
18
<PAGE>
judgment of any court or governmental body that materially
and adversely affects, or would materially and adversely
affect, its business.
6.4. As of the Closing Date with respect to the Reorganization of each
Acquired Fund, there shall have been no material change in the
investment objective, policies and restrictions nor any material
change in the investment management fees, fee levels payable
pursuant to the 12b-1 plan of distribution, other fees payable for
services provided to the Acquiring Funds, fee waiver or expense
reimbursement undertakings, or sales loads of the Acquiring Funds
from those fee amounts, undertakings and sales load amounts
described in the prospectus of each Acquiring Fund delivered to the
corresponding Acquired Fund pursuant to paragraph 4.1 and in the
notice of meeting, form of proxy and Combined Proxy/Prospectus
(collectively, "Proxy Materials").
6.5. With respect to each Acquiring Fund, the Board of Trustees of
Nations Funds, including a majority of the "non-interested"
Trustees, has determined that the Reorganization is in the best
interests of each Acquiring Fund and that the interests of the
existing shareholders of each Acquiring Fund would not be diluted as
a result of the Reorganization.
6.6. For the period beginning at the Closing Date of the last
Reorganization to occur and ending not less than six years
thereafter, Nations Funds, its successor or assigns shall provide,
or cause to be provided, liability coverage at least as comparable
to the liability coverage currently applicable to both former and
current Directors and officers of Pacific Horizon Funds, covering
the actions of such Directors and officers of Pacific Horizon Funds
for the period they served as such.
6.7. NBAI shall have delivered to Pacific Horizons Fund, no later than
April 15, 1999, a certificate, in form and substance reasonably
satisfactory to Pacific Horizon Funds, to the effect that NBAI
believes that, as of such date, The Bank of New York ("BONY") is
capable of satisfactorily providing accounting services for the
Acquired Funds and Acquiring Funds, on a combined basis, following
the Reorganization ("Accounting Services"). Such certificate shall
be based on a certificate from BONY to NBAI to the effect that BONY
is capable of satisfactorily providing the Accounting Services.
6.8. Stephens Inc., the principal underwriter for the Nations Funds, no
later than the Closing Date, shall have received an exemptive order
under Section 9(c) of the 1940 Act, authorizing such company to
serve as the principal underwriter for the Nations Funds, or
otherwise shall be authorized to serve in such capacity.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUNDS
19
<PAGE>
The obligations of Nations Funds to consummate the Reorganization
with respect to each Acquiring Fund shall be subject to the performance by
Pacific Horizon Funds of all the obligations to be performed by it hereunder,
with respect to each corresponding Acquired Fund, on or before the Closing Date
and, in addition thereto, the following conditions:
7.1. All representations and warranties of Pacific Horizon Funds with
respect to the Acquired Funds contained herein shall be true and
correct in all material respects as of the date hereof and, except
as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date, with the same force and effect as
if made on and as of the Closing Date.
7.2. Pacific Horizon Funds, on behalf of each Acquired Fund, shall have
delivered to each corresponding Acquiring Fund at the Closing(s) a
certificate executed on behalf of each Acquired Fund, by Pacific
Horizon Funds' President, Secretary or Assistant Secretary, or other
authorized officer, in form and substance reasonably satisfactory to
the Acquiring Funds and dated as of the Closing Date, to the effect
that the representations and warranties of Pacific Horizon Funds
with respect to each Acquired Fund made herein are true and correct
at and as of the Closing Date, except as they may be affected by the
transactions contemplated herein and as to such other matters as
each Acquiring Fund shall reasonably request.
7.3. Each Acquiring Fund shall have received at the Closing(s) a
favorable opinion of Drinker Biddle & Reath LLP, counsel to Pacific
Horizon Funds (based upon or subject to such representations,
assumptions, limitations or opinions of local counsel as such
counsel may deem appropriate or necessary), dated as of the Closing
Date, in a form (including the representations, assumptions,
limitations or opinions of local counsel upon which it is based or
to which it is subject) reasonably satisfactory to such Acquiring
Fund, substantially to the effect that:
7.3.a. Pacific Horizon Funds is a duly registered, open-end
investment company, and its registration with the SEC as an
investment company under the 1940 Act is in full force and
effect;
7.3.b. each Acquired Fund is a portfolio of Pacific Horizon Funds,
Pacific Horizon Funds is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Maryland, and the Charter and the laws of the State
of Maryland provide that the affairs of Pacific Horizon Funds
shall be managed under the direction of the Directors and
grants them all powers necessary or desirable to carry out
such responsibility, including administering Pacific Horizon
Funds' business as described in the current prospectuses of
Pacific Horizon Funds;
7.3.c. this Agreement has been duly authorized, executed and
delivered by Pacific Horizon Funds, for itself and on behalf
of the Acquired Funds and, assuming due authorization,
execution and delivery of this Agreement on behalf of each
Acquiring Fund, is a valid and binding obligation of Pacific
20
<PAGE>
Horizon Funds, enforceable against Pacific Horizon Funds in
accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and court
decisions with respect thereto, and such counsel will express
no opinion with respect to the application of equitable
principles in any proceeding, whether at law or in equity;
7.3.d. no consent, approval, authorization, filing or order of any
governmental authority or to such counsel's knowledge, order
of any court of the United States or any state is required
for the consummation of the Reorganization by Pacific Horizon
Funds with respect to each Acquired Fund, except for such
consents, approvals, authorizations and filings as have been
made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to
the Closing Date;
7.3.e. to such counsel's knowledge, the execution and delivery of
the Agreement and the performance of its terms by Pacific
Horizon Funds, and each Acquired Fund, do not violate or
result in a violation of the Pacific Horizon Funds' Charter
or By-Laws, or any judgment, order or decree known to such
counsel, of any court or arbiter, to which Pacific Horizon
Funds is a party, and, to such counsel's knowledge, will not
constitute a material breach of the terms, conditions or
provisions of, or constitute a default under, any contract,
undertaking, indenture or other agreement by which Pacific
Horizon Funds is now bound or to which it is now a party;
7.3.f. to such counsel's knowledge, (a) no legal or governmental
proceedings existing on or before the date of mailing the
Combined Proxy/Prospectus involving Pacific Horizon Funds or
the Acquired Funds, are required to be described in the
Combined Proxy/Prospectus which are not described as required
and (b) there are no contracts or documents relating to
Pacific Horizon Funds or the Acquired Funds, known to such
counsel, of a character required to be described in the
Combined Proxy/Prospectus or to be filed as an exhibit to the
Registration Statement that are not described or filed as
required; and
7.3.g. to such counsel's knowledge, except as otherwise disclosed in
the Registration Statement, no litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or threatened against
Pacific Horizon Funds or an Acquired Fund or any of their
properties or assets and neither Pacific Horizon Funds nor an
Acquired Fund is a party to or subject to the provisions of
any order, decree or judgment of any court or governmental
body that materially and adversely affects, or would
materially and adversely affect, its business.
21
<PAGE>
7.4. Nations Funds, on behalf of each Acquiring Fund, shall have received
from PricewaterhouseCoopers LLP a letter addressed to Nations Funds,
on behalf of each Acquiring Fund, and dated as of the Closing Date
with respect to the Acquired Funds, in form and substance
satisfactory to Nations Funds, to the effect that:
7.4.a. they are independent accountants with respect to Pacific
Horizon Funds and each Acquired Fund within the meaning of
the 1933 Act and the applicable regulations thereunder;
7.4.b. in their opinion, the audited financial statements and the
per share data provided in accordance with Item 3 in Form
N-1A (the "Per Share Data") of the Acquired Fund included or
incorporated by reference in the Registration Statement
previously reported on by them comply as to form in all
material aspects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations
thereunder;
7.4.c. on the basis of limited procedures agreed upon by Nations
Funds, on behalf of the Acquiring Funds and Pacific Horizon
Funds, on behalf of the Acquired Funds, and described in such
letter (but not an examination in accordance with generally
accepted auditing standards), the data with respect to the
acquiring funds used in the calculation of any figure
expressed numerically or in dollars or percentages that
appear in the Registration Statement under: (a) "Table II --
Total Expense Information" in the Combined Proxy
Statement/Prospectus; (b) "Table III -- Capitalization (as of
September 30, 1998) in the Combined Proxy
Statement/Prospectus; (c) "Comparison of Pacific Horizon and
Nations--Investment Advisory Services" in the Combined Proxy
Statement/ Prospectus; (d) "Appendix II -- Expense Summaries
of Pacific Horizon Funds and the Corresponding Nations Funds"
in the Combined Proxy Statement/Prospectus; and (e) the pro
forma financial statements in the Statement of Additional
Information, agree with the underlying accounting records of
the Acquired Funds or with written estimates provided by
officers of Pacific Horizon Funds having responsibility for
financial and reporting matters, and were found to be
mathematically correct.
7.5. Pacific Horizon Funds shall have delivered to the Acquiring Funds,
pursuant to paragraph 5.2(e), copies of financial statements of each
Acquired Fund as of and for the year ended February 28, 1999,
audited by PricewaterhouseCoopers LLP.
7.6. With respect to each Acquired Fund, the Board of Directors of
Pacific Horizon Funds, including a majority of "non-interested"
Directors, has determined that the Reorganization is in the best
interests of each Acquired Fund and that the interests of the
existing investors in each Acquired Fund would not be diluted as a
result of the Reorganization.
22
<PAGE>
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS AND THE
ACQUIRED FUNDS
The obligations of each Acquiring Fund and of each corresponding
Acquired Fund herein are subject to the further conditions that on or before the
Closing Date with respect to each Acquiring Fund and each corresponding Acquired
Fund:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the
outstanding shares of common stock of Pacific Horizon Funds and of
each Acquired Fund, consistent with the provisions of the laws of
the State of Maryland, Pacific Horizon Funds' Charter and the 1940
Act, and certified copies of the resolutions evidencing such
approval shall have been delivered to each corresponding Acquiring
Fund. Approval of this Agreement by the requisite vote of the
holders of the outstanding shares of common stock in an Acquired
Fund shall constitute approval of all of the transactions
contemplated herein, including the reorganization of all investment
portfolios of Pacific Horizon Funds with the Nations Family of Funds
and the dissolution of Pacific Horizon Funds, subject to the
approval under Maryland law and the Charter of Pacific Horizon Funds
by the requisite vote of the holders of the outstanding shares of
common stock of Pacific Horizon Funds.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or any of the transactions
contemplated herein.
8.3. All consents of other parties and all other consents, orders,
approvals and permits of federal, state and local regulatory
authorities (including, without limitation, those of the SEC and of
state securities authorities) deemed necessary by Nations Funds, on
behalf of the Acquiring Funds or by Pacific Horizon Funds, on behalf
of the Acquired Funds, to permit consummation, in all material
respects, of the transactions contemplated herein shall have been
obtained, except where failure to obtain any such consent, order or
permit would not, in the opinion of the party asserting that the
condition to closing has not been satisfied, involve a risk of a
material adverse effect on the assets or properties of any of an
Acquiring Fund or its corresponding Acquired Fund.
8.4. The N-1A Post-Effective Amendment and the Registration Statement
shall have become effective under the 1933 Act, no stop orders
suspending the effectiveness thereof shall have been issued and, to
the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
8.5. Except to the extent prohibited by Rule 19b-1 promulgated under the
1940 Act, each Acquired Fund that has conducted material investment
operations prior to the Closing Date shall have declared a dividend
or dividends, with a record date
23
<PAGE>
and ex-dividend date prior to the Applicable Valuation Date, which,
together with all previous dividends, shall have the effect of
distributing to each Acquired Fund's shareholders substantially all
of its net investment company taxable income, if any, for all
taxable periods or years ending on or prior to the Closing Date
(computed without regard to any deduction for dividends paid) and
substantially all of its net capital gain, if any, realized for all
taxable periods or years ending on or prior to the Closing Date
(after reduction for any capital loss carry forward.)
8.6. Nations Funds, on behalf of each Acquiring Fund, and Pacific Horizon
Funds, on behalf of each Acquired Fund, shall have received from
PricewaterhouseCoopers LLP a letter dated as of the Closing Date, in
form and substance satisfactory to Nations Funds and to Pacific
Horizon Funds, to the effect that on the basis of limited procedures
agreed upon by Nations Funds, on behalf of the Acquiring Funds and
Pacific Horizon Funds, on behalf of the Acquired Funds (but not an
examination in accordance with generally accepted auditing
standards), the data with respect to the acquiring funds used in the
calculation of any figure expressed numerically or in dollars or
percentages that appear in the Registration Statement under: (a)
"Table II -- Total Expense Information" in the Combined Proxy
Statement/Prospectus; (b) "Table III -- Capitalization (as of
September 30, 1998) in the Combined Proxy Statement/Prospectus; (c)
"Comparison of Pacific Horizon and Nations --Investment Advisory
Services" in the Combined Proxy Statement/Prospectus; and (d)
"Appendix II -- Expense Summaries of Pacific Horizon Funds and the
Corresponding Nations Funds" in Combined Proxy Statement/Prospectus;
and (e) the pro forma financial statements in the Statement of
Additional Information, agree with the underlying accounting records
of the Acquiring Funds or with written estimates provided by
officers of Nations Funds having responsibility for financial and
reporting matters, and were found to be mathematically correct.
8.7. Nations Funds and Pacific Horizon Funds shall have received an
opinion of Morrison & Foerster LLP addressed to both Nations Funds
and Pacific Horizon Funds in a form reasonably satisfactory to them,
and dated as of the Closing Date, substantially to the effect that
on the basis of facts, representations, and assumptions set forth in
such opinion:
8.7.a. each Reorganization will constitute a "reorganization" within
the meaning of Section 368(a) of the Code, and each Acquiring
Fund and the corresponding Acquired Fund will each be a
"party to a reorganization" within the meaning of Section
368(b) of the Code with respect to such Reorganization.
8.7.b. no gain or loss will be recognized by an Acquired Fund upon
the transfer of its assets and Liabilities to the
corresponding Acquiring Fund solely in exchange for the
Acquiring Fund Shares;
24
<PAGE>
8.7.c. no gain or loss will be recognized by an Acquiring Fund upon
the receipt of the assets and assumption of Liabilities of
the corresponding Acquired Fund solely in exchange for the
Acquiring Fund Shares;
8.7.d. the basis of an Acquired Fund's assets received by the
corresponding Acquiring Fund pursuant to the Reorganization
will be the same as the basis of those assets in the hands of
the Acquired Fund immediately prior to the Reorganization;
8.7.e. the holding period of an Acquired Fund's assets in the hands
of the corresponding Acquiring Fund will include the period
for which such assets have been held by the Acquired Fund;
8.7.f. no gain or loss will be recognized by an Acquired Fund on the
distribution to its shareholders of the Acquiring Fund Shares
to be received by the Acquired Fund in the Reorganization;
8.7.g. no gain or loss will be recognized by the shareholders of an
Acquired Fund upon their receipt of the corresponding
Acquiring Fund Shares in exchange for such shareholders'
shares of the Acquired Fund;
8.7.h. the basis of the Acquiring Fund Shares received by the
shareholders of the corresponding Acquired Fund will be the
same as the basis of the Acquired Fund shares surrendered by
such shareholders pursuant to the Reorganization;
8.7.i. the holding period for the Acquiring Fund Shares received by
the Acquired Fund shareholders will include the period during
which such shareholders held the Acquired Fund shares
surrendered therefor, provided that such Acquired Fund shares
are held as a capital asset in the hands of the Acquired Fund
shareholders on the date of the exchange; and
8.7.j. each Acquiring Fund will succeed to and take into account the
tax attributes described in Section 381(c) of the Code of the
corresponding Acquired Fund as of the Closing Date, subject
to the conditions and limitations specified in the Code.
In rendering such opinion described in this paragraph 8.7, Morrison
& Foerster LLP may require and, to the extent they deem necessary and
appropriate, may rely upon representations made in certificates of Nations Funds
and Pacific Horizon Funds, their affiliates, and principal shareholders.
Notwithstanding anything herein to the contrary, neither an Acquiring Fund nor
its corresponding Acquired Fund may waive the condition set forth in this
paragraph 8.7.
8.8. Nations Funds and Pacific Horizon Funds shall have received (a) a
memorandum addressed to Nations Funds and the Pacific Horizon Funds,
in form reasonably satisfactory to them, prepared by Morrison &
Foerster LLP concerning the filing
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<PAGE>
of notices and/or other documents, and the payment of fees, in
connection with the shares to be issued by Nations Funds pursuant to
this Agreement under applicable state securities laws or the
exemption from such filing and payment requirements under such laws,
and (b) assurance reasonably satisfactory to each of them that all
permits and other authorizations necessary under state securities
laws to consummate the transactions contemplated by this Agreement
have been obtained.
8.9. The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this
Agreement under Section 25(c) of the 1940 Act.
8.10. Pacific Horizon Funds' agreements with each of its service
contractors have terminated before or at the Closing, and each party
has received reasonable assurance that no claim for damages
(liquidated or otherwise) will arise as a result of such
termination.
9. FINDER'S FEES AND EXPENSES
9.1. Nations Funds, for itself and on behalf of the Acquiring Funds and
Pacific Horizon Funds, on behalf of itself and on behalf of the
Acquired Funds, represent and warrant that there are no brokers or
finders entitled to receive any payments in connection with the
transactions provided for herein.
9.2. NationsBanc Advisors, Inc. shall bear, or shall cause one of its
affiliates to bear, the customary expenses associated with the
transactions contemplated by this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. This Agreement constitutes the entire agreement between the parties
and supersedes any prior or contemporaneous understanding or
arrangement with respect to the subject matter hereof.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the
transactions contemplated herein.
11. TERMINATION
11.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
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<PAGE>
11.1.a. by the mutual written consent of Nations Funds and Pacific
Horizon Funds;
11.1.b. by either Nations Funds or Pacific Horizon Funds by notice
to the other, without liability to the terminating party on
account of such termination (provided any such termination
shall not excuse the terminating party from any liability
arising out of a default or breach of this Agreement by such
terminating party) if such Closing(s) shall not have occurred
on or before December 31, 1999, or such other date as may be
agreed to by the parties; or
11.1.c. by either of Nations Funds or the Pacific Horizon Funds, in
writing without liability to the terminating party on account
of such termination (provided any such termination shall not
excuse the terminating party from any liability arising out
of a material default or breach of this Agreement by such
terminating party), if (i) the other party shall fail to
perform in any material respect its agreements contained
herein required to be performed prior to the Closing Date,
(ii) the other party materially breaches or shall have
materially breached any of its representations, warranties or
covenants contained herein, or (iii) any other express
condition precedent to the obligations of the terminating
party has not been met and it reasonably appears that it will
not or cannot be met.
11.2. Termination of this Agreement pursuant to paragraphs 11.1(a)
or (b) shall terminate all obligations of the parties
hereunder with respect to the Acquired Fund and Acquiring
Fund affected by such termination, or with respect to Nations
Funds and Pacific Horizon Funds, as the case may be, and
there shall be no liability for damages on the part of
Nations Funds or Pacific Horizon Funds or the Trustees or
officers of Nations Funds or Directors or officers of Pacific
Horizon Funds, on account of termination pursuant to
paragraphs 11.1(a) or (b), except as provided in paragraphs
11.1(a) or (b); provided, however, that notwithstanding any
termination of this Agreement pursuant to paragraph 11.1,
such termination shall not relieve NationsBanc Advisors, Inc.
of its obligations pursuant to Section 9.2 hereof.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
Nations Funds, acting on behalf of each Acquiring Fund and the authorized
officers of Pacific Horizon Funds, acting on behalf of each Acquired Fund;
provided, however, that following the meeting of the shareholders of the
Acquired Funds, no such amendment may have the effect of changing the provisions
for determining the number of shares of the corresponding Acquiring Funds to be
issued to the Acquired Fund Investors under this Agreement to the detriment of
such Acquired Fund Investors, or otherwise materially and adversely affecting
such Acquired Fund, without the Acquired Fund
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<PAGE>
obtaining the Pacific Horizon Fund(s)' shareholders further approval except that
nothing in this paragraph 12 shall be construed to prohibit any Acquiring Fund
and the corresponding Acquired Fund from amending this Agreement to change the
Closing Date or Applicable Valuation Date by mutual agreement.
At any time prior to or (to the fullest extent permitted by law)
after approval of this Agreement by the shareholders of Pacific Horizon Funds
either party may waive any breach by the other party or the failure to satisfy
any of the conditions to its obligations (such waiver to be in writing and
authorized by the Board of Trustees or Directors of the waiving party, or any
appropriate officer of either party, with or without the approval of such
party's shareholders).
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy, certified mail or overnight express courier addressed to:
For Nations Funds, on behalf of itself and each Acquiring Fund:
Richard H. Blank, Jr.
Secretary
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
With copies to:
Robert M. Kurucza and
Marco E. Adelfio
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W., Suite 5500
Washington, D.C. 20006
For Pacific Horizon Funds, on behalf of itself and each Acquired
Fund:
c/o W. Bruce McConnel, III
Secretary
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
28
<PAGE>
14.1. The article and paragraph headings contained herein are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. All references herein to
articles, paragraphs, subparagraphs or Schedules shall be construed
as referring to articles, paragraphs or subparagraphs hereof or
Schedules hereto, respectively. Whenever the terms hereto,
hereunder, herein or hereof are used in this Agreement, they shall
be construed as referring to this entire Agreement, rather than to
any individual article, paragraph, subparagraph or sentence.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland, without giving effect to the
conflicts of laws principles otherwise applicable therein.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of
the other parties. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
14.5. It is expressly agreed that the obligations of Nations Funds
hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of Nations
Funds personally, but shall bind only the assets and the property of
the respective Acquiring Fund of Nations Funds, as provided in its
Agreement and Declaration of Trust. The execution and delivery by
such officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally,
but shall bind only the assets and the property of the respective
Acquiring Fund of Nations Funds as provided in its Agreement and
Declaration of Trust.
14.6. No Acquired Fund shall have any liability for the obligations of any
other Acquired Fund hereunder and no Acquiring Fund shall have any
liability for the obligation of any other Acquiring Fund hereunder.
14.7. The names "Pacific Horizon Funds" and "Directors of Pacific Horizon
Funds" refer respectively to the corporation created and the
Directors, as directors but not individually or personally, acting
from time to time under Pacific Horizon Funds' Charter, which is
hereby referred to and a copy of which is on file at the Department
of Assessments and at the principal office of the Corporation. The
obligations of "Pacific Horizon Funds" entered into in the name or
on behalf thereof by any of the Directors, representatives or agents
are made not individually, but in such capacities, and are not
binding upon any of the Directors,
29
<PAGE>
shareholders, or representatives of the Corporation personally, but
bind only the corporate property, and all persons dealing with any
class of shares of the Corporation must look solely to the corporate
property belonging to such class for the enforcement of any claims
against the Corporation.
14.8. Any announcement or similar publicity with respect to this Agreement
or the transactions contemplated herein shall be made only at such
time and in such manner as the parties shall agree; provided that
nothing herein shall prevent either party upon notice to the other
party from making such public announcements as such party's counsel
may consider advisable in order to satisfy the party's legal and
contractual obligations in such regard.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized officers, and attested by their Secretaries
as of the day and year first written above.
NATIONS INSTITUTIONAL RESERVES, for
itself and on behalf of each
ATTEST: Acquiring Fund
By:
- --------------------------------- ---------------------------------
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the
Board of Trustees
PACIFIC HORIZON FUNDS, for itself and
ATTEST: on behalf of each Acquired Fund
By:
- --------------------------------- ---------------------------------
W. Bruce McConnel, III Dr. Cornelius J. Pings
Secretary President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC., hereby
joins in this Agreement with respect
to, and agrees to be bound by Section
ATTEST: 9.2 and 11.2 hereof
By:
- --------------------------------- ---------------------------------
30
<PAGE>
31
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SCHEDULE A
Acquired Fund Acquiring Fund
- ------------- --------------
Pacific Horizon Prime Fund Nations Cash Reserves
Class S Shares (Class B-Special Series 3) Daily Class Shares
Class X Shares (Class B-Special Series 4) Daily Class Shares
Class Y Shares (Class B-Special Series 5) Sweep Class Shares
Horizon Service Class Shares (Class B-Special Series 1) Advisor Class Shares
Horizon Class Shares (Class B-Special Series 2) Capital Class Shares
Pacific Horizon Class Shares (Class B) Investor Class Shares
Pacific Horizon Government Fund Nations Government Reserves
Horizon Service Class Shares (Class L-Special Advisor Class Shares
Series 1) Capital Class Shares
Horizon Class Shares (Class L-Special Series 2) Investor Class Shares
Pacific Horizon Class Shares (Class L)
Pacific Horizon Treasury Fund Nations Treasury Reserves
Class S Shares (Class A-Special Series 3) Daily Class Shares
Class X Shares (Class A-Special Series 4) Daily Class Shares
Class Y Shares (Class A-Special Series 5) Sweep Class Shares
Horizon Service Class Shares (Class A-Special Advisor Class Shares
Series 1) Capital Class Shares
Horizon Class Shares (Class A-Special Series 2) Investor Class Shares
Pacific Horizon Class Shares (Class A)
Pacific Horizon Treasury Only Fund Nations Government Reserves
Horizon Service Class Shares (Class K-Special Advisor Class Shares
Series 1) Capital Class Shares
Horizon Class Shares (Class K-Special Series 2) Investor Class Shares
Pacific Horizon Class Shares (Class K)
Pacific Horizon California Tax-Exempt Money Market Fund Nations California Tax-Exempt Reserves (Shell)
Class S Shares (Class J-Special Series 3) Daily Class Shares
Class X Shares (Class J-Special Series 4) Daily Class Shares
Horizon Service Class Shares (Class J-Special Advisor Class Shares
Series 1) Capital Class Shares
Horizon Class Shares (Class J-Special Series 1) Investor Class Shares
Pacific Horizon Class Shares (Class J)
Pacific Horizon Tax Exempt Money Fund Nations Municipal Reserves
Class S Shares (Class I-Special Series 3) Daily Class Shares
Horizon Service Class Shares (Class I-Special Advisor Class Shares
Series 1) Capital Class Shares
Horizon Class Shares (Class I-Special Series 2) Investor Class Shares
Pacific Horizon Class Shares (Class I)
Asset Allocation Fund ($256 million) Nations Asset Allocation Fund (Shell)
Share Class A (Class O) Investor A
Share Class B (Class O-Special Series 3) Investor B
Share Class K ($1 mm) (Class O-Special Series 5) Investor C
Share Class Seafirst ($187 mm) (Class O-Special Seafirst Class**
Series 7)
Capital Income Fund ($349 mm) Nations Capital Income Fund (Shell)
Share Class A (Class F) Investor A
Share Class B (Class F-Special Series 3) Share Class K ($3 mm) (Class Investor B
F-Special Series 5) Investor C
California Municipal Bond Fund ($235 mm) Nations California Municipal Bond Fund (Shell)
Share Class A (Class G) Investor A
Share Class B (Class G-Special Series 3) Investor B
Intermediate Bond Fund (feeder) ($82 mm) Nations Intermediate Bond Fund (Feeder Shell)
Share Class A (Class M) Investor A
Share Class K ($462 k) (Class M-Special Series 5) Investor C
Share Class Seafirst ($35 mm) (Class M-Special Seafirst Class**
Series 7)
Blue Chip Fund (feeder) ($680 mm) Nations Blue Chip Fund (Feeder Shell)
Share Class A (Class N) Investor A
Share Class B (Class N-Special Series 3) Investor B
Share Class K ($7.6 mm) (Class N-Special Series 5) Investor C
Share Class Seafirst ($337 mm) (Class N-Special Seafirst Class**
Series 7)
</TABLE>
A-2
<PAGE>
APPENDIX I(B)
FORM OF AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of this _____ day of _______, 1999, by and between Nations Master Investment
Trust ("NMIT"), a Delaware business trust, for itself and on behalf of Nations
Blue Chip Master Portfolio and Nations Intermediate Bond Master Portfolio (each
an "Acquiring Fund" and collectively the "Acquiring Funds"), each a master
portfolio of NMIT, and Master Investment Trust, Series I ("MIT"), a Delaware
business trust, for itself and on behalf of the Blue Chip Master Portfolio and
Intermediate Bond Master Portfolio (each an "Acquired Fund" and collectively the
"Acquired Funds"), each a portfolio of MIT.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the Fund Assets (as defined in
paragraph 1.2.a.) of each Acquired Fund be transferred to each Acquiring Fund
corresponding thereto, as set forth in the table attached hereto as Schedule A,
in exchange for shares of beneficial interest of the corresponding Acquiring
Fund ("Acquiring Fund Shares") and the assumption by each Acquiring Fund of the
Liabilities (as defined in paragraph 1.3) of each corresponding Acquired Fund,
and that such Acquiring Fund Shares be distributed immediately after the
Closing(s), as defined in this Agreement, by each Acquired Fund to its interest
holders in liquidation of each Acquired Fund. The parties intend that each
Reorganization (as defined herein) qualify as a partnership within the meaning
of Section [ ] of the Internal Revenue Code of 1986, as amended (the "Code").
In consideration of the promises and of the covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUNDS
1.1. Subject to the terms and conditions herein set forth, and on
the basis of the representations and warranties contained
herein, each Acquired Fund shall assign, deliver and otherwise
transfer its assets as set forth in paragraph 1.2.a (the "Fund
Assets") to its corresponding Acquiring Fund identified in
Schedule A, and such corresponding Acquiring Fund shall, as
consideration therefor, on the Closing Date (as defined in
paragraph 3.1), (i) deliver to each corresponding Acquired
Fund the full and fractional number of shares of beneficial
interest calculated by dividing the value of the Fund Assets
less the Liabilities of the corresponding Acquired Fund that
are so conveyed and are attributable to each of the Acquiring
Fund's respective share classes set forth in Schedule A,
computed in the manner and as of the time and date set forth
in this Agreement, by the net asset value of one Acquiring
Fund share of the particular share class that is to be
delivered with respect thereto, computed in the manner and as
of the time and date set forth in this Agreement; and (ii)
assume all of such Acquired Fund's Liabilities (as defined in
paragraph 1.3). Such transfer, delivery and assumption shall
take place at the closing(s) provided for in paragraph 3.1
(hereinafter sometimes referred to as the "Closing(s)").
Promptly after the Closing(s), each Acquired Fund shall
distribute the Acquiring Fund Shares to the interest holders
of the respective share classes of the Acquired Fund in
liquidation of the Acquired Fund as provided in paragraph 1.4
hereof. Such transaction(s) are hereinafter sometimes
collectively referred to as the "Reorganization(s)."
1
<PAGE>
1.2. With respect to each Acquired Fund, the Fund Assets shall
consist of all property and assets of any nature whatsoever,
including, without limitation, all cash, cash equivalents,
securities, claims (whether absolute or contingent, known or
unknown, accrued or unaccrued) and receivables (including
dividend and interest receivables) owned by each Acquired
Fund, and any prepaid expenses shown as an asset on each
Acquired Fund's books on the Closing Date.
1.3. Each Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. Each
Acquiring Fund will assume all liabilities and obligations of
the corresponding Acquired Fund, accrued, absolute, contingent
or otherwise existing, as of the Closing Date, which
liabilities and obligations shall include any obligation of
MIT to indemnify MIT's current and former Trustees and
officers, acting in their capacities as such, to the fullest
extent permitted by law and MIT's Charter, as in effect as of
the date of this Agreement and any obligations of MIT to pay
any retirement benefits to current and former Trustees
pursuant to MIT's retirement plan ("Liabilities"). Without
limiting the foregoing, each Acquired Fund agrees that all
rights to indemnification and retirement benefits and all
limitations of liability existing in favor of MIT's current
and former Directors and officers, acting in their capacities
as such, under MIT's Charter as in effect as of the date of
this Agreement shall survive the Reorganization and shall
continue in full force and effect, without any amendment
thereto, and shall constitute rights which may be asserted
against NMIT, its successors or assigns. The Liabilities
assumed by NMIT, its successors or assigns, on behalf of an
Acquiring Fund shall be separate Liabilities of such Acquiring
Fund, and not joint or joint and several liabilities of any
other Acquiring Fund.
1.4. Promptly after the Closing(s) with respect to each Acquired
Fund, the Acquired Fund will distribute the shares of
beneficial interest of the Acquiring Fund class received by
the Acquired Fund pursuant to paragraph 1.1 to its interest
holders of record determined as of the close of business on
the Closing Date ("Acquired Fund Investors") in complete
liquidation of the Acquired Fund. Acquired Fund Investors will
be credited with full and fractional shares issued by the
corresponding Acquiring Fund under this Agreement with respect
to the shares of the Acquired Fund that are held by the
Acquired Fund Investors. Such distribution will be
accomplished by an instruction, signed by an appropriate
officer of MIT, to transfer the Acquiring Fund Shares then
credited to the Acquired Fund's account on the books of the
Acquiring Fund and to open accounts on the books of the
Acquiring Fund established and maintained by the Acquiring
Fund's transfer agent in the names of record of the Acquired
Fund Investors and representing the respective number of
shares of the Acquiring Fund due such Acquired Fund Investors.
In exchange for Acquiring Fund Shares distributed, all issued
and outstanding shares of beneficial interest of the Acquired
Fund will be redeemed and canceled simultaneously therewith on
the Acquired Fund's books; any outstanding share certificates
representing interests in the Acquired Fund thereafter will
represent the right to receive such number of Acquiring Fund
Shares after the Closing(s) as determined in accordance with
Section 1.1.
2
<PAGE>
1.5. If a request shall be made for a change of the registration of
shares of an Acquiring Fund to another person from the account
of the interest holder in which name the shares are registered
in the records of the corresponding Acquired Fund, it shall be
a condition of such registration of shares that there be
furnished to the Acquiring Fund an instrument of transfer
properly endorsed, accompanied by appropriate signature
guarantees and otherwise in proper form for transfer and, if
any of such shares are outstanding in certificated form, the
certificates representing such shares, and that the person
requesting such registration shall pay to such Acquiring Fund
any transfer or other taxes required by reason of such
registration or establish to the reasonable satisfaction of
the Acquiring Fund that such tax has been paid or is not
applicable.
1.6. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund, the assumption of the Acquired
Fund's Liabilities by the Acquiring Fund, and the distribution
by the Acquired Fund of the Acquiring Fund Shares received by
it pursuant to paragraph 1.4, MIT shall terminate the
qualification, classification and registration of such
Acquired Fund at all appropriate federal and state agencies.
All reporting and other obligations of MIT shall remain the
exclusive responsibility of MIT up to and including the date
on which the particular Acquired Fund is terminated and
deregistered, subject to any reporting or other obligations
described in paragraph 4.9. Subject to the provisions of
Section 1.8, at an appropriate time as determined by MIT, upon
the advice of counsel, MIT will be dissolved under the laws of
the State of Delaware.
1.7. Subject to the conditions set forth in this Agreement, the
failure of one Acquired Fund to consummate the transactions
contemplated hereby shall not affect the consummation or
validity of a Reorganization with respect to any other
Acquired Fund, and the provisions of this Agreement shall be
construed to effect this intent, including, without
limitation, as the context requires, construing the terms
"Acquiring Fund" and "Acquired Fund" as meaning only those
series of NMIT and MIT, respectively, which are involved in a
Reorganization as of a Closing Date.
3
<PAGE>
2. VALUATION
2.1.a. With respect to each Acquired Fund, the value of the Fund
Assets shall be the value of such assets computed as of the
time at which its net asset value is calculated on the Closing
Date (such time and date being herein called the "Applicable
Valuation Date"). The net asset value of the Fund Assets to be
transferred by the Acquired Funds shall be computed by MIT and
shall be subject to adjustment by the amount, if any, agreed
to by NMIT and the respective Acquired Funds. In determining
the value of the securities transferred by the Acquired Funds
to the Acquiring Funds, except as provided in sub-paragraph
2.1.b., each security shall be priced in accordance with the
pricing policies and procedures of the Acquiring Funds as
described in its then current prospectuses and statements of
additional information. For such purposes, price quotations
and the security characteristics relating to establishing such
quotations shall be determined by MIT, provided that such
determination shall be subject to the approval of NMIT. MIT
and NMIT agree to use all commercially reasonable efforts to
resolve any material pricing differences between the prices of
portfolio securities determined in accordance with the pricing
policies and procedures of MIT and those determined in
accordance with the pricing policies and procedures of the
Acquiring Funds prior to the Applicable Valuation Date.
2.2. The net asset value of a share of an Acquiring Fund shall be
the net asset value per share of such class computed on the
Applicable Valuation Date, using the valuation procedures set
forth in the Acquiring Fund's then current registration
statement.
3. CLOSING(S) AND CLOSING DATE
3.1. The Closing for the Acquiring Funds and their corresponding
Acquired Fund(s), shall occur on May 14, 1999, and/or on such
other date(s) as may be mutually agreed upon in writing by the
officers of the parties hereto (a "Closing Date"), but in any
case, after the closing of the reorganization of the Pacific
Horizon Intermediate Bond Fund and the Nations Intermediate
Bond Fund and the closing of the reorganization of the Pacific
Horizon Blue Chip Fund and the Nations Blue Chip Fund. The
Closing(s) shall be held at the offices of Stephens Inc., 111
Center Street, Suite 300, Little Rock, Arkansas 72201 or at
such other location as is mutually agreeable to the parties.
All acts taking place at the Closing(s) shall be deemed to
take place simultaneously as of 4:01 p.m. Eastern time on the
Closing Date unless otherwise provided.
3.2. Each Acquiring Fund's custodian shall deliver at the
Closing(s) a certificate of an authorized officer stating
that: (a) each Acquired Fund's portfolio securities, cash and
any other assets have been delivered in proper form to the
corresponding Acquiring Fund on the Closing Date and (b) all
necessary taxes including all applicable federal and state
stock transfer stamps, if any, have been paid, or provision
for payment shall have been made, by such Acquired Fund in
conjunction with the delivery of portfolio securities. Proper
delivery of cash shall be by wire to The Bank of New York, the
Acquiring Funds' Custodian, pursuant to instruction to be
delivered prior to the Closing(s).
4
<PAGE>
3.3. Notwithstanding anything herein to the contrary, in the event
that on the Applicable Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall
be restricted or (b) trading or the reporting of trading on
such exchange or elsewhere shall be disrupted so that, in the
judgment of NMIT and MIT, accurate appraisal of the value of
the net assets of an Acquiring Fund or an Acquired Fund is
impracticable, the Applicable Valuation Date and Closing Date
shall be postponed until the first business day after the day
when trading shall have been fully resumed without restriction
or disruption and reporting shall have been restored.
3.4. With respect to each Acquired Fund, MIT shall provide NMIT and
its transfer agents with immediate access from and after the
Closing Date to (a) the computer, electronic or such other
forms of records containing the names, addresses and taxpayer
identification numbers of all of the Acquired Fund Investors
and the number and percentage ownership of outstanding
Acquired Fund shares owned by such Acquired Fund Investor, all
as of the Applicable Valuation Date, and (b) all original
documentation (including all applicable Internal Revenue
Service forms, certificates, certifications and
correspondence) relating to the Acquired Fund Investors'
taxpayer identification numbers and their liability for or
exemption from back-up withholding. Each corresponding
Acquiring Fund shall issue and deliver to the Secretary or
Assistant Secretary of MIT, acting on behalf of the Acquired
Fund, a confirmation evidencing the Acquiring Fund Shares
credited on the Closing Date or shall provide evidence
satisfactory to each Acquired Fund that such Acquiring Fund
Shares have been credited to each Acquired Fund's account on
the books of each Acquiring Fund. At the Closing(s), each
party shall deliver to the other such bills of sale, checks,
assignments, assumptions of liability share certificates, if
any, receipts or other documents of transfer, assignment or
conveyance as such other party or its counsel may reasonably
request.
3.5. Within twenty (20) days after the Closing Date, each Acquired
Fund shall deliver, in accordance with Article 1 hereof, to
the corresponding Acquiring Fund a statement of the Fund
Assets and Liabilities, together with a list of such Acquired
Fund's portfolio securities and other assets showing the
respective adjusted bases and holding periods thereof for
income tax purposes, as of the Closing Date, certified by an
appropriate officer of MIT.
5
<PAGE>
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
4.1. MIT has called or will call a meeting of the Acquired Fund
interest holders to consider and act upon this Agreement, and
to take such other actions reasonably necessary to obtain the
approval of the transactions contemplated herein, including
approval for each Acquired Fund's liquidating distribution of
the Acquiring Fund Shares contemplated hereby, and for MIT to
terminate each Acquired Fund's qualification, classification
and registration if requisite approvals are obtained with
respect to each Acquired Fund. NMIT and MIT will jointly
prepare the notice of meeting, form of proxy and proxy
statement (collectively, "Proxy Materials") to be used in
connection with such meeting; provided that NMIT has furnished
or will furnish MIT, with a current, effective prospectus,
including any supplements, relating to the class of shares of
each Acquiring Fund corresponding to the class of shares of
each Acquired Fund then outstanding for incorporation within
and/or distribution with the Proxy Materials, and with such
other information relating to the Acquiring Funds as is
reasonably necessary for the preparation of the Proxy
Materials.
4.2. MIT, on behalf of each Acquired Fund, covenants that each
Acquired Fund shall not sell or otherwise dispose of any
Acquiring Fund Shares to be received in the transactions
contemplated herein, except in distribution to its interest
holders in accordance with the terms of this Agreement.
4.3. MIT, on behalf of each Acquired Fund, will assist the
corresponding Acquiring Fund in obtaining such information as
the Acquiring Fund reasonably requests concerning the record
and beneficial ownership of shares of each class of each
Acquired Fund.
4.4. Subject to the provisions hereof, NMIT, on its own behalf and
on behalf of each Acquiring Fund, and MIT, on its own behalf
and on behalf of each Acquired Fund, will take, or cause to be
taken, all actions, and do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated herein.
4.5. MIT, on behalf of each Acquired Fund, shall furnish to its
corresponding Acquiring Fund on the Closing Date, a statement
of the total amount of each Acquired Fund's assets and
Liabilities as of the Closing Date, which statement shall be
certified by an appropriate officer of MIT as being determined
in accordance with generally accepted accounting principles
consistently applied and as being valued in accordance with
paragraph 2.1 hereof. As promptly as practicable, but in any
case within sixty (60) days after the Closing Date, MIT, on
behalf of each Acquired Fund, shall furnish its corresponding
Acquiring Fund, in such form as is reasonably satisfactory to
NMIT, on behalf of each Acquiring Fund, a statement certified
by an officer of MIT of such Acquired Fund's federal income
tax attributes and the tax bases in its assets that will be
carried over to the corresponding Acquiring Fund in the
Reorganization pursuant to [ ] of the Code.
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4.6. NMIT has prepared and filed, or will prepare and file, with
the Securities and Exchange Commission ("SEC") and the
appropriate state securities commissions a post-effective
amendment (the "N-1A Post-Effective Amendment") to its
registration statement on Form N-1A (File Nos. [ ]), as
promptly as practicable so that all Acquiring Funds and their
shares are registered under the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940,
as amended (the "1940 Act"), and applicable state securities
laws. In addition, NMIT, on behalf of each Acquiring Fund, has
prepared and filed, or will prepare and file with the SEC a
registration statement on Form N-14 under the 1933 Act,
relating to the Acquiring Fund Shares, which, without
limitation, shall include a proxy statement of MIT and the
prospectuses of the Acquiring Funds of NMIT relating to the
transactions contemplated by this Agreement (the "Registration
Statement"). MIT, on behalf of each Acquired Fund, has
provided or will provide each corresponding Acquiring Fund
with the materials and information necessary to prepare the
N-1A Post-Effective Amendment and the Proxy Materials for
inclusion in the Registration Statement, prepared in
accordance with paragraph 4.1, and with such other information
and documents relating to each Acquired Fund as are requested
by the corresponding Acquiring Fund and as are reasonably
necessary for the preparation of the N-1A Post-Effective
Amendment and the Registration Statement.
4.7. As soon after the Closing Date as is reasonably practicable,
MIT, on behalf of each Acquired Fund shall prepare and file
all federal and other tax returns and reports of each Acquired
Fund required by law to be filed with respect to all periods
ending on or before the Closing Date but not theretofore
filed.
4.8. With respect to each Acquiring Fund, NMIT agrees to use all
reasonable efforts to operate in accordance with its then
current prospectus and statement of additional information
prepared in accordance with Form N-1A, as may be modified from
time to time, including qualifying as a partnership under the
Code, for at least one (1) year following the Closing Date.
4.9. With respect to each Acquired Fund, MIT agrees to use all
reasonable efforts to operate in accordance with its then
current prospectus and statement of additional information
prepared in accordance with Form N-1A, as may be modified from
time to time, including qualifying as a partnership under the
Code, up to the Closing Date.
4.10. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption of all Liabilities of the Acquired
Fund as contemplated herein, MIT will file any final
regulatory reports, including but not limited to any Form
N-SAR and Rule 24f-2 filings with respect to such Acquired
Fund(s), promptly after the Closing Date. As soon as
practicable after the Closing Date and further subject to
Section 1.8 hereof and comparable provisions of similar
Agreements and Plans of Reorganization between MIT and Nations
Institutional Reserves and NMIT, Inc., MIT shall file an
application pursuant to Section 8(f) of the 1940 Act for an
order declaring that it has ceased to be an investment
company; shall file Articles of Dissolution for recordation
with the Department of Assessments, and shall take, in
accordance with Delaware General Corporation Law, all other
steps necessary and proper to effect its complete dissolution.
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5. REPRESENTATIONS AND WARRANTIES
5.1. NMIT, on behalf of itself and each Acquiring Fund, represents
and warrants to the MIT as follows:
5.1.a. NMIT was duly created pursuant to its Agreement and
Declaration of Trust by the Trustees for the purpose of acting
as a management investment company under the 1940 Act and is
validly existing under the laws of the State of Delaware, and
the Agreement and Declaration of Trust directs the Trustees to
manage the affairs of NMIT and grants them all powers
necessary or desirable to carry out such responsibility,
including administering NMIT business as currently conducted
by NMIT and as described in the current prospectuses of NMIT;
NMIT is registered as an investment company classified as an
open-end management company under the 1940 Act, and its
registration with the SEC as an investment company is in full
force and effect;
5.1.b. The Registration Statement, including the current prospectuses
and statement of additional information of each Acquiring
Fund, conform or will conform, at all times up to and
including the Closing Date, in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the regulations thereunder and do not include or will not
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
5.1.c. Each Acquiring Fund is not in violation of, and the execution,
delivery and performance of this Agreement by NMIT for itself
and on behalf of each Acquiring Fund does not and will not (i)
violate NMIT's Agreement and Declaration of Trust or By-Laws,
or (ii) result in a breach or violation of, or constitute a
default under any material agreement or material instrument,
to which NMIT is a party or by which its properties or assets
are bound;
8
<PAGE>
5.1.d. Except as previously disclosed in writing to the MIT, no
litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or,
to NMIT's knowledge, threatened against NMIT or its business,
the Acquiring Funds or any of their properties or assets,
which, if adversely determined, would materially and adversely
affect NMIT or an Acquiring Fund's financial condition or the
conduct of their business, and NMIT knows of no facts that
might form the basis for the institution of any such
proceeding or investigation, and no Acquiring Fund is a party
to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially
and adversely affects, or is reasonably likely to materially
and adversely affect, its business or its ability to
consummate the transactions contemplated herein;
5.1.e. All issued and outstanding shares, including shares to be
issued in connection with the Reorganization, of each
Acquiring Fund class will, as of the Closing Date, be duly
authorized and validly issued and outstanding, fully paid and
non-assessable by NMIT and the Acquiring Fund does not have
outstanding any option, warrants or other rights to subscribe
for or purchase any of its shares;
5.1.f. The execution, delivery and performance of this Agreement on
behalf of each Acquiring Fund will have been duly authorized
prior to the Closing Date by all necessary action on the part
of NMIT and the Trustees, and this Agreement constitutes a
valid and binding obligation of NMIT and each Acquiring Fund
enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles;
5.1.g. The Acquiring Fund Shares to be issued and delivered to the
corresponding Acquired Fund for the account of the Acquired
Fund Investors, pursuant to the terms hereof, will have been
duly authorized as of the Closing Date and, when so issued and
delivered, will be duly and validly issued, fully paid and
non-assessable, and the shares of the class of the Acquiring
Fund issued and outstanding prior to the Closing Date were
offered and sold in compliance with the applicable
registration requirements, or exemptions therefrom, of the
1933 Act, and all applicable state securities laws, and the
regulations thereunder, and no interest holder of an Acquiring
Fund shall have any preemptive right of subscription or
purchase in respect thereto;
5.1.h. From the effective date of the Registration Statement, through
the time of the meeting of the Acquired Fund interest holders
and on the Closing Date, any written information furnished by
NMIT with respect to an Acquiring Fund for use in the Proxy
Materials, the Registration Statement or any other materials
provided in connection with the Reorganization does not and
will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the
information provided not misleading;
9
<PAGE>
5.1.i. No governmental consents, approvals, authorizations or filings
are required under the 1933 Act, the Securities Exchange Act
of 1934 (the "1934 Act"), the 1940 Act or Delaware law for the
execution of this Agreement by NMIT, for itself and on behalf
of each Acquiring Fund, or the performance of the Agreement by
NMIT, for itself and on behalf of each Acquiring Fund, except
for the effectiveness of the Registration Statement, any
necessary exemptive relief or no-action assurances requested
from the SEC or its staff with respect to Sections 17(a) and
17(d) of the 1940 Act and Rule 17d-1 thereunder, and such
other consents, approvals, authorizations and filings as have
been made or received, and except for such consents,
approvals, authorizations and filings as may be required
subsequent to the Closing Date;
5.1.j. All federal and other tax returns and reports of NMIT and each
Acquiring Fund required by law to be filed on or before the
Closing Date have been or will be filed, and all federal and
other taxes owed by NMIT on behalf of the Acquiring Funds have
been or will be paid so far as due, and to the best of NMIT's
knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return;
5.1.k. At the Closing Date, the Acquiring Funds will have good and
marketable title to their assets and full right, power and
authority to assign, deliver and otherwise transfer such
assets; and
5.1.l. Each Acquiring Fund intends to qualify as a partnership
investment company" under the Code, and each Acquiring Fund
that has conducted material investment operations prior to the
Closing Date has elected to qualify and has qualified as a
partnership under the Code, as of and since its first taxable
year; has been a partnership under the Code at all times since
the end of its first taxable year when it so qualified; and
qualifies and shall continue to qualify as a partnership under
the Code for its current taxable year.
5.2. MIT, on behalf of itself and each Acquired Fund, represents and warrants to
NMIT as follows:
5.2.a. MIT was duly incorporated under the laws of the State of
Delaware for the purpose of acting as a management investment
company under the 1940 Act and is validly existing under the
laws of the State of Delaware, and its Charter and the laws of
the State of Delaware provide that the affairs of MIT shall be
managed under the direction of the Trustees and grants them
all powers necessary or desirable to carry out such
responsibility, including administering MIT business as
currently conducted by MIT and as described in the current
prospectuses of MIT; MIT is registered as an investment
company classified as an open-end management company under the
1940 Act, and its registration with the SEC as an investment
company is in full force and effect;
10
<PAGE>
5.2.b. All of the issued and outstanding shares of common stock of
each Acquired Fund have been offered and sold in compliance in
all material respects with applicable registration
requirements of the 1933 Act and state securities laws;
5.2.c. The Acquired Funds are not in violation of, and the execution,
delivery and performance of this Agreement by MIT for itself
and on behalf of each Acquired Fund does not and will not (i)
violate MIT's Charter or By-Laws, or (ii) result in a breach
or violation of, or constitute a default under any material
agreement or material instrument, to which MIT is a party or
by which its properties or assets are bound, except as
otherwise previously disclosed in writing to the Acquiring
Funds;
5.2.d. Except as previously disclosed in writing to NMIT, no
litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or,
to MIT's knowledge, threatened against any Acquired Fund or
any of its properties or assets which, if adversely
determined, would materially and adversely affect such
Acquired Fund's financial condition or the conduct of its
business, and MIT knows of no facts that might form the basis
for the institution of any such proceeding or investigation,
and no Acquired Fund is a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects, or is
reasonably likely to materially and adversely affect, its
business or its ability to consummate the transactions
contemplated herein;
5.2.e. The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets of each
Acquired Fund as of and for the year ended [ ], 1998, audited
by PricewaterhouseCoopers LLP (copies of which have been or
will be furnished to the corresponding Acquiring Fund) and the
unaudited Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets of each
Acquired Funds as of and for the six-month period ended [ ],
1998 (copies of which have been or will be furnished to the
corresponding Acquiring Fund) present fairly, in all material
respects, the financial position of each Acquired Fund as of
such date and the results of its operations and the changes in
its Net Assets for such period in accordance with generally
accepted accounting principles consistently applied, and as of
such date there were no Liabilities of any Acquired Fund known
to MIT that were not disclosed therein but that would be
required to be disclosed therein in accordance with generally
accepted accounting principles;
11
<PAGE>
5.2.f. Since the date of the most recent audited financial
statements, there has not been any material adverse change in
any Acquired Fund's financial condition, assets, Liabilities
or business, other than changes occurring in the ordinary
course of business, or any incurrence by an Acquired Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed in
writing to and accepted by the corresponding Acquiring Fund,
prior to the Closing Date (for the purposes of this
subparagraph (f), neither a decline in an Acquired Fund's net
asset value per share nor a decrease in an Acquired Fund's
size due to redemptions shall be deemed to constitute a
material adverse change);
5.2.g. All federal and other tax returns and reports of MIT and each
Acquired Fund required by law to be filed on or before the
Closing Date, have been or will be filed, and all federal and
other taxes owed by MIT on behalf of the Acquired Funds, have
been or will be paid so far as due, and to the best of MIT's
knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return;
5.2.h. [Each Acquired Fund has elected to qualify and has qualified
as a "regulated investment company" under the Code, as of and
since its first taxable year; has been a "regulated investment
company" under the Code at all times since the end of its
first taxable year when it so qualified; and qualifies and
shall continue to qualify as a "regulated investment company"
under the Code for its taxable year ending upon its
liquidation;]
5.2.i. All issued and outstanding shares of each Acquired Fund are,
and on the Closing Date will be, duly authorized and validly
issued and outstanding, and fully paid and non-assessable by
MIT, and all such shares will, at the time of the Closing(s),
be held by the persons and in the amounts set forth in the
list of Acquired Fund Investors provided to each corresponding
Acquiring Fund, pursuant to paragraph 3.4, and no Acquired
Fund has outstanding any options, warrants or other rights to
subscribe for or purchase any of its shares, nor is there
outstanding any security convertible into any of its shares;
5.2.j. At the Closing Date, each Acquired Fund will have good and
marketable title to its Fund Assets and full right, power and
authority to assign, deliver and otherwise transfer such Fund
Assets hereunder, and upon delivery and payment for such Fund
Assets as contemplated herein and the filing of Articles of
Transfer pursuant to the laws of the State of Delaware, the
corresponding Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the ownership or
transfer thereof other than such restrictions as might arise
under the 1933 Act or state securities laws, and except for
any liens or transfer tax liens arising in connection with the
transfer of Fund Assets pursuant to this Agreement;
12
<PAGE>
5.2.k. The execution, delivery and performance of this Agreement on
behalf of the Acquired Funds will have been duly authorized
prior to the Closing Date by all necessary action on the part
of MIT and the Directors, and this Agreement constitutes a
valid and binding obligation of MIT and each Acquired Fund
enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles;
5.2.l. From the effective date of the Registration Statement, through
the time of the meeting of the MIT interest holders, and on
the Closing Date, the Registration Statement insofar as it
relates to materials provided by MIT or the Acquired Funds,
used in connection with the preparation of the Registration
Statement: (i) will comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act and the
1940 Act and the regulations thereunder and (ii) will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
as of such dates and times, any written information furnished
by MIT, on behalf of the Acquired Funds, for use in the
Registration Statement or in any other manner that may be
necessary in connection with the transactions contemplated
hereby does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
information provided not misleading; and
5.2.m. No governmental consents, approvals, authorizations or filings
are required under the 1933 Act, the 1934 Act, the 1940 Act or
Delaware law for the execution of this Agreement by MIT, for
itself and on behalf of each Acquired Fund, or the performance
of the Agreement by MIT for itself and on behalf of each
Acquired Fund, except for the effectiveness of the
Registration Statement, any necessary exemptive relief or
no-action assurances requested from the SEC or its staff with
respect to Section 17(a) and 17(d) of the 1940 Act and Rule
17d-1 thereunder and the filing of Articles of Transfer
pursuant to Delaware law, and except for such other consents,
approvals, authorizations and filings as have been made or
received, and such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date, it
being understood, however, that this Agreement and the
transactions contemplated herein must be approved by the
interest holders of the Acquired Funds as described in
paragraph 8.1.
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<PAGE>
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUNDS
The obligations of MIT to consummate the Reorganization with respect
to each Acquired Fund shall be subject to the performance by NMIT, for itself
and on behalf of each Acquiring Fund, of all the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following conditions with respect to each corresponding Acquiring Fund:
6.1. All representations and warranties of NMIT with respect to each
Acquiring Fund contained herein shall be true and correct in all
material respects as of the date hereof and, except as they may be
affected by the transactions contemplated herein, as of the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
6.2. NMIT, on behalf of each Acquiring Fund, shall have delivered to MIT at
the Closing(s) a certificate executed on behalf of each corresponding
Acquiring Fund by NMIT's President, Secretary, Assistant Secretary, or
other authorized officer, in a form and substance reasonably
satisfactory to MIT and dated as of the Closing Date, to the effect
that the representations and warranties of NMIT with respect to each
Acquiring Fund made herein are true and correct at and as of the
Closing Date, except as they may be affected by the transactions
contemplated herein, and as to such other matters as such Acquired Fund
shall reasonably request.
6.3. Each Acquired Fund shall have received at the Closing(s) a favorable
opinion of Morrison & Foerster LLP, counsel to NMIT (based upon or
subject to such representations, assumptions, limitations or opinions
of local counsel as such counsel may deem appropriate or necessary),
dated as of the Closing Date, in a form (including the representations,
assumptions, limitations or opinions of local counsel upon which it is
based or to which it is subject) reasonably satisfactory to each
Acquired Fund, substantially to the effect that:
6.3.a. NMIT is a duly registered, open-end, management investment
company, and its registration with the SEC as an investment
company under the 1940 Act is in full force and effect;
6.3.b. each Acquiring Fund is a portfolio of NMIT, which is a company
duly created pursuant to its Agreement and Declaration of
Trust, is validly existing and in good standing under the laws
of the State of Delaware and the Agreement and Declaration of
Trust directs the Trustees to manage the affairs of NMIT and
grants them all powers necessary or desirable to carry out
such responsibility, including administering NMIT's business
as described in the current prospectuses of NMIT;
6.3.c. this Agreement has been duly authorized, executed and
delivered on behalf of NMIT and each Acquiring Fund and,
assuming due authorization, execution and delivery of this
Agreement on behalf of the Acquired Funds, is a valid and
binding obligation of NMIT enforceable against NMIT in
accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and to general
equity principles;
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<PAGE>
6.3.d. the Acquiring Fund Shares to be issued to the Acquired Funds
Investors pursuant to this Agreement are duly registered under
the 1933 Act on the appropriate form, and are duly authorized
and upon such issuance will be validly issued and outstanding
and fully paid and non-assessable, and no interest holder of
an Acquiring Fund has any preemptive rights to subscription or
purchase in respect thereof;
6.3.e. the N-1A Post-Effective Amendment and the Registration
Statement have become effective with the SEC and, to the best
of such counsel's knowledge, no stop order suspending the
effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or
threatened;
6.3.f. except for the filing of Articles of Transfer pursuant to
Delaware law no consent, approval, authorization, filing or
order of any court or governmental authority of the United
States or any state is required for the consummation by NMIT
of the Reorganization with respect to each Acquiring Fund;
6.3.g. to such counsel's knowledge, the execution and delivery of the
Agreement and the performance of its terms by NMIT, and each
Acquiring Fund, do not violate or result in a violation of the
NMIT Agreement and Declaration of Trust or By-Laws, or any
judgment, order or decree known to such counsel, of any court
or arbiter, to which NMIT is a party, and, to such counsel's
knowledge, will not constitute a material breach of the terms,
conditions or provisions of, or constitute a default under,
any contract, undertaking, indenture or other agreement by
which NMIT is now bound or to which it is now a party;
6.3.h. to such counsel's knowledge, (a) no legal or governmental
proceedings existing on or before the date of mailing the
combined proxy statement/prospectus ("Combined
Proxy/Prospectus"), involving NMIT or the Acquiring Funds, are
required to be described in the Combined Proxy/Prospectus
which are not described as required and (b) there are no
contracts or documents relating to NMIT or the Acquiring
Funds, known to such counsel, of a character required to be
described in the Combined Proxy/Prospectus or to be filed as
an exhibit to the Registration Statement that are not
described or filed as required; and
15
<PAGE>
6.3.i. to such counsel's knowledge, except as otherwise disclosed in
the Registration Statement, no litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or threatened against
NMIT or an Acquiring Fund or any of their properties or assets
and neither NMIT nor any Acquiring Fund is a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely
affects, or would materially and adversely affect, its
business.
6.4. As of the Closing Date with respect to the Reorganization of each
Acquired Fund, there shall have been no material change in the
investment objective, policies and restrictions nor any material change
in the investment management fees, fee levels payable pursuant to the
12b-1 plan of distribution, other fees payable for services provided to
the Acquiring Funds, fee waiver or expense reimbursement undertakings,
or sales loads of the Acquiring Funds from those fee amounts,
undertakings and sales load amounts described in the prospectus of each
Acquiring Fund delivered to the corresponding Acquired Fund pursuant to
paragraph 4.1 and in the notice of meeting, form of proxy and Combined
Proxy/Prospectus (collectively, "Proxy Materials").
6.5. With respect to each Acquiring Fund, the Board of Trustees of NMIT,
including a majority of the "non-interested" Trustees, has determined
that the Reorganization is in the best interests of each Acquiring Fund
and that the interests of the existing interest holders of each
Acquiring Fund would not be diluted as a result of the Reorganization.
6.6. For the period beginning at the Closing Date of the last Reorganization
to occur and ending not less than six years thereafter, NMIT, its
successor or assigns shall provide, or cause to be provided, liability
coverage at least as comparable to the liability coverage currently
applicable to both former and current Directors and officers of MIT,
covering the actions of such Directors and officers of MIT for the
period they served as such.
6.7. NBAI shall have delivered to Pacific Horizons Fund, no later than April
15, 1999, a certificate, in form and substance reasonably satisfactory
to MIT, to the effect that NBAI believes that, as of such date, The
Bank of New York ("BONY") is capable of satisfactorily providing
accounting services for the Acquired Funds and Acquiring Funds, on a
combined basis, following the Reorganization ("Accounting Services").
Such certificate shall be based on a certificate from BONY to NBAI to
the effect that BONY is capable of satisfactorily providing the
Accounting Services.
6.8. Stephens Inc., the principal underwriter for the NMIT, no later than
the Closing Date, shall have received an exemptive order under Section
9(c) of the 1940 Act, authorizing such company to serve as the
principal underwriter for the NMIT, or otherwise shall be authorized to
serve in such capacity.
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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUNDS
The obligations of NMIT to consummate the Reorganization with
respect to each Acquiring Fund shall be subject to the performance by MIT of all
the obligations to be performed by it hereunder, with respect to each
corresponding Acquired Fund, on or before the Closing Date and, in addition
thereto, the following conditions:
7.1. All representations and warranties of MIT with respect to the Acquired
Funds contained herein shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing
Date, with the same force and effect as if made on and as of the
Closing Date.
7.2. MIT, on behalf of each Acquired Fund, shall have delivered to each
corresponding Acquiring Fund at the Closing(s) a certificate executed
on behalf of each Acquired Fund, by MIT's President, Secretary or
Assistant Secretary, or other authorized officer, in form and substance
reasonably satisfactory to the Acquiring Funds and dated as of the
Closing Date, to the effect that the representations and warranties of
MIT with respect to each Acquired Fund made herein are true and correct
at and as of the Closing Date, except as they may be affected by the
transactions contemplated herein and as to such other matters as each
Acquiring Fund shall reasonably request.
7.3. Each Acquiring Fund shall have received at the Closing(s) a favorable
opinion of Drinker Biddle & Reath LLP, counsel to MIT (based upon or
subject to such representations, assumptions, limitations or opinions
of local counsel as such counsel may deem appropriate or necessary),
dated as of the Closing Date, in a form (including the representations,
assumptions, limitations or opinions of local counsel upon which it is
based or to which it is subject) reasonably satisfactory to such
Acquiring Fund, substantially to the effect that:
7.3.a. MIT is a duly registered, open-end investment company, and its
registration with the SEC as an investment company under the
1940 Act is in full force and effect;
7.3.b. each Acquired Fund is a portfolio of MIT, MIT is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and the Charter and the
laws of the State of Delaware provide that the affairs of MIT
shall be managed under the direction of the Directors and
grants them all powers necessary or desirable to carry out
such responsibility, including administering MIT's business as
described in the current prospectuses of MIT;
7.3.c. this Agreement has been duly authorized, executed and
delivered by MIT, for itself and on behalf of the Acquired
Funds and, assuming due authorization, execution and delivery
of this Agreement on behalf of each Acquiring Fund, is a valid
and binding obligation of MIT, enforceable against MIT in
accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and court decisions
with respect thereto, and such counsel will express no opinion
with respect to the application of equitable principles in any
proceeding, whether at law or in equity;
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7.3.d. no consent, approval, authorization, filing or order of any
governmental authority or to such counsel's knowledge, order
of any court of the United States or any state is required for
the consummation of the Reorganization by MIT with respect to
each Acquired Fund, except for such consents, approvals,
authorizations and filings as have been made or received, and
except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date;
7.3.e. to such counsel's knowledge, the execution and delivery of the
Agreement and the performance of its terms by MIT, and each
Acquired Fund, do not violate or result in a violation of the
MIT's Charter or By-Laws, or any judgment, order or decree
known to such counsel, of any court or arbiter, to which MIT
is a party, and, to such counsel's knowledge, will not
constitute a material breach of the terms, conditions or
provisions of, or constitute a default under, any contract,
undertaking, indenture or other agreement by which MIT is now
bound or to which it is now a party;
7.3.f. to such counsel's knowledge, (a) no legal or governmental
proceedings existing on or before the date of mailing the
Combined Proxy/Prospectus involving MIT or the Acquired Funds,
are required to be described in the Combined Proxy/Prospectus
which are not described as required and (b) there are no
contracts or documents relating to MIT or the Acquired Funds,
known to such counsel, of a character required to be described
in the Combined Proxy/Prospectus or to be filed as an exhibit
to the Registration Statement that are not described or filed
as required; and
7.3.g. to such counsel's knowledge, except as otherwise disclosed in
the Registration Statement, no litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or threatened against
MIT or an Acquired Fund or any of their properties or assets
and neither MIT nor an Acquired Fund is a party to or subject
to the provisions of any order, decree or judgment of any
court or governmental body that materially and adversely
affects, or would materially and adversely affect, its
business.
7.4. MIT shall have delivered to the Acquiring Funds, pursuant to paragraph
5.2(e), copies of financial statements of each Acquired Fund as of and
for the year ended February 28, 1999, audited by PricewaterhouseCoopers
LLP.
18
<PAGE>
7.5. With respect to each Acquired Fund, the Board of Directors of MIT,
including a majority of "non-interested" Directors, has determined that
the Reorganization is in the best interests of each Acquired Fund and
that the interests of the existing investors in each Acquired Fund
would not be diluted as a result of the Reorganization.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS AND THE
ACQUIRED FUNDS
The obligations of each Acquiring Fund and of each corresponding
Acquired Fund herein are subject to the further conditions that on or before the
Closing Date with respect to each Acquiring Fund and each corresponding Acquired
Fund:
8.1. This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares
of common stock of MIT and of each Acquired Fund, consistent with the
provisions of the laws of the State of Delaware, MIT's Charter and the
1940 Act, and certified copies of the resolutions evidencing such
approval shall have been delivered to each corresponding Acquiring
Fund. Approval of this Agreement by the requisite vote of the holders
of the outstanding shares of common stock in an Acquired Fund shall
constitute approval of all of the transactions contemplated herein,
including the reorganization of all investment portfolios of MIT with
the Nations Family of Funds and the dissolution of MIT, subject to the
approval under Delaware law and the Charter of MIT by the requisite
vote of the holders of the outstanding shares of common stock of MIT.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought
to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or any of the transactions contemplated
herein.
8.3. All consents of other parties and all other consents, orders, approvals
and permits of federal, state and local regulatory authorities
(including, without limitation, those of the SEC and of state
securities authorities) deemed necessary by NMIT, on behalf of the
Acquiring Funds or by MIT, on behalf of the Acquired Funds, to permit
consummation, in all material respects, of the transactions
contemplated herein shall have been obtained, except where failure to
obtain any such consent, order or permit would not, in the opinion of
the party asserting that the condition to closing has not been
satisfied, involve a risk of a material adverse effect on the assets or
properties of any of an Acquiring Fund or its corresponding Acquired
Fund.
8.4. The N-1A Post-Effective Amendment and the Registration Statement shall
have become effective under the 1933 Act, no stop orders suspending the
effectiveness thereof shall have been issued and, to the best knowledge
of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated
under the 1933 Act.
19
<PAGE>
8.5. Except to the extent prohibited by Rule 19b-1 promulgated under the
1940 Act, each Acquired Fund that has conducted material investment
operations prior to the Closing Date shall have declared a dividend or
dividends, with a record date and ex-dividend date prior to the
Applicable Valuation Date, which, together with all previous dividends,
shall have the effect of distributing to each Acquired Fund's interest
holders substantially all of its net investment company taxable income,
if any, for all taxable periods or years ending on or prior to the
Closing Date (computed without regard to any deduction for dividends
paid) and substantially all of its net capital gain, if any, realized
for all taxable periods or years ending on or prior to the Closing Date
(after reduction for any capital loss carry forward.)
8.6. NMIT and MIT shall have received an opinion of Morrison & Foerster LLP
addressed to both NMIT and MIT in a form reasonably satisfactory to
them, and dated as of the Closing Date, substantially to the effect
that on the basis of facts, representations, and assumptions set forth
in such opinion:
8.6.a. [ ] each Reorganization will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and each
Acquiring Fund and the corresponding Acquired Fund will each
be a "party to a reorganization" within the meaning of Section
368(b) of the Code with respect to such Reorganization;
8.6.b. no gain or loss will be recognized by an Acquired Fund upon
the transfer of its assets and Liabilities to the
corresponding Acquiring Fund solely in exchange for the
Acquiring Fund Shares;
8.6.c. no gain or loss will be recognized by an Acquiring Fund upon
the receipt of the assets and assumption of Liabilities of the
corresponding Acquired Fund solely in exchange for the
Acquiring Fund Shares;
8.6.d. the basis of an Acquired Fund's assets received by the
corresponding Acquiring Fund pursuant to the Reorganization
will be the same as the basis of those assets in the hands of
the Acquired Fund immediately prior to the Reorganization;
8.6.e. the holding period of an Acquired Fund's assets in the hands
of the corresponding Acquiring Fund will include the period
for which such assets have been held by the Acquired Fund;
8.6.f. no gain or loss will be recognized by an Acquired Fund on the
distribution to its interest holders of the Acquiring Fund
Shares to be received by the Acquired Fund in the
Reorganization;
20
<PAGE>
8.6.g. no gain or loss will be recognized by the interest holders of
an Acquired Fund upon their receipt of the corresponding
Acquiring Fund Shares in exchange for such interest holders'
shares of the Acquired Fund;
8.6.h. the basis of the Acquiring Fund Shares received by the
interest holders of the corresponding Acquired Fund will be
the same as the basis of the Acquired Fund shares surrendered
by such interest holders pursuant to the Reorganization;
8.6.i. the holding period for the Acquiring Fund Shares received by
the Acquired Fund interest holders will include the period
during which such interest holders held the Acquired Fund
shares surrendered therefor, provided that such Acquired Fund
shares are held as a capital asset in the hands of the
Acquired Fund interest holders on the date of the exchange;
and
8.6.j. [ ] each Acquiring Fund will succeed to and take into account
the tax attributes described in Section 381(c) of the Code of
the corresponding Acquired Fund as of the Closing Date,
subject to the conditions and limitations specified in the
Code.
In rendering such opinion described in this paragraph 8.7, Morrison
& Foerster LLP may require and, to the extent they deem necessary and
appropriate, may rely upon representations made in certificates of NMIT and MIT,
their affiliates, and principal interest holders. Notwithstanding anything
herein to the contrary, neither an Acquiring Fund nor its corresponding Acquired
Fund may waive the condition set forth in this paragraph 8.7.
8.7. NMIT and MIT shall have received (a) a memorandum addressed to NMIT and
the MIT, in form reasonably satisfactory to them, prepared by Morrison
& Foerster LLP concerning the filing of notices and/or other documents,
and the payment of fees, in connection with the shares to be issued by
NMIT pursuant to this Agreement under applicable state securities laws
or the exemption from such filing and payment requirements under such
laws, and (b) assurance reasonably satisfactory to each of them that
all permits and other authorizations necessary under state securities
laws to consummate the transactions contemplated by this Agreement have
been obtained.
8.8. The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
enjoin consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act.
8.9. MIT's agreements with each of its service contractors have terminated
before or at the Closing, and each party has received reasonable
assurance that no claim for damages (liquidated or otherwise) will
arise as a result of such termination.
21
<PAGE>
9. FINDER'S FEES AND EXPENSES
9.1. NMIT, for itself and on behalf of the Acquiring Funds and MIT, on
behalf of itself and on behalf of the Acquired Funds, represent and
warrant that there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for herein.
9.2. NationsBanc Advisors, Inc. shall bear, or shall cause one of its
affiliates to bear, the customary expenses associated with the
transactions contemplated by this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. This Agreement constitutes the entire agreement between the parties
and supersedes any prior or contemporaneous understanding or
arrangement with respect to the subject matter hereof.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the
transactions contemplated herein.
11. TERMINATION
11.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
11.1.a. by the mutual written consent of NMIT and MIT;
11.1.b. by either NMIT or MIT by notice to the other, without
liability to the terminating party on account of such
termination (provided any such termination shall not excuse
the terminating party from any liability arising out of a
default or breach of this Agreement by such terminating
party) if such Closing(s) shall not have occurred on or
before December 31, 1999, or such other date as may be
agreed to by the parties; or
11.1.c. by either of NMIT or the MIT, in writing without liability
to the terminating party on account of such termination
(provided any such termination shall not excuse the
terminating party from any liability arising out of a
material default or breach of this Agreement by such
terminating party), if (i) the other party shall fail to
perform in any material respect its agreements contained
herein required to be performed prior to the Closing Date,
(ii) the other party materially breaches or shall have
materially breached any of its representations, warranties
or covenants contained herein, or (iii) any other express
condition precedent to the obligations of the terminating
party has not been met and it reasonably appears that it
will not or cannot be met.
22
<PAGE>
11.2. Termination of this Agreement pursuant to paragraphs 11.1(a) or (b)
shall terminate all obligations of the parties hereunder with
respect to the Acquired Fund and Acquiring Fund affected by such
termination, or with respect to NMIT and MIT, as the case may be,
and there shall be no liability for damages on the part of NMIT or
MIT or the Trustees or officers of NMIT or Directors or officers of
MIT, on account of termination pursuant to paragraphs 11.1(a) or
(b), except as provided in paragraphs 11.1(a) or (b); provided,
however, that notwithstanding any termination of this Agreement
pursuant to paragraph 11.1, such termination shall not relieve
NationsBanc Advisors, Inc. of its obligations pursuant to Section
9.2 hereof.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
NMIT, acting on behalf of each Acquiring Fund and the authorized officers of
MIT, acting on behalf of each Acquired Fund; provided, however, that following
the meeting of the interest holders of the Acquired Funds, no such amendment may
have the effect of changing the provisions for determining the number of shares
of the corresponding Acquiring Funds to be issued to the Acquired Fund Investors
under this Agreement to the detriment of such Acquired Fund Investors, or
otherwise materially and adversely affecting such Acquired Fund, without the
Acquired Fund obtaining the Pacific Horizon Fund(s)' interest holders further
approval except that nothing in this paragraph 12 shall be construed to prohibit
any Acquiring Fund and the corresponding Acquired Fund from amending this
Agreement to change the Closing Date or Applicable Valuation Date by mutual
agreement.
At any time prior to or (to the fullest extent permitted by law)
after approval of this Agreement by the interest holders of MIT either party may
waive any breach by the other party or the failure to satisfy any of the
conditions to its obligations (such waiver to be in writing and authorized by
the Board of Trustees or Directors of the waiving party, or any appropriate
officer of either party, with or without the approval of such party's interest
holders).
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy, certified mail or overnight express courier addressed to:
For NMIT, on behalf of itself and each Acquiring Fund:
Richard H. Blank, Jr.
Secretary
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
23
<PAGE>
With copies to:
Robert M. Kurucza and
Marco E. Adelfio
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W., Suite 5500
Washington, D.C. 20006
For MIT, on behalf of itself and each Acquired Fund:
c/o W. Bruce McConnel, III
Secretary
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained herein are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. All references herein to
articles, paragraphs, subparagraphs or Schedules shall be construed
as referring to articles, paragraphs or subparagraphs hereof or
Schedules hereto, respectively. Whenever the terms hereto,
hereunder, herein or hereof are used in this Agreement, they shall
be construed as referring to this entire Agreement, rather than to
any individual article, paragraph, subparagraph or sentence.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the
conflicts of laws principles otherwise applicable therein.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of
the other parties. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
24
<PAGE>
14.5. It is expressly agreed that the obligations of NMIT hereunder shall
not be binding upon any of the Trustees, interest holders, nominees,
officers, agents, or employees of NMIT personally, but shall bind
only the assets and the property of the respective Acquiring Fund of
NMIT, as provided in its Agreement and Declaration of Trust. The
execution and delivery by such officers shall not be deemed to have
been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the assets and the
property of the respective Acquiring Fund of NMIT as provided in its
Agreement and Declaration of Trust.
14.6. No Acquired Fund shall have any liability for the obligations of any
other Acquired Fund hereunder and no Acquiring Fund shall have any
liability for the obligation of any other Acquiring Fund hereunder.
14.7. The names "MIT" and "Directors of MIT" refer respectively to the
corporation created and the Directors, as directors but not
individually or personally, acting from time to time under MIT's
Charter, which is hereby referred to and a copy of which is on file
at the Department of Assessments and at the principal office of the
Corporation. The obligations of "MIT" entered into in the name or on
behalf thereof by any of the Directors, representatives or agents
are made not individually, but in such capacities, and are not
binding upon any of the Directors, interest holders, or
representatives of the Corporation personally, but bind only the
corporate property, and all persons dealing with any class of shares
of the Corporation must look solely to the corporate property
belonging to such class for the enforcement of any claims against
the Corporation.
14.8. Any announcement or similar publicity with respect to this Agreement
or the transactions contemplated herein shall be made only at such
time and in such manner as the parties shall agree; provided that
nothing herein shall prevent either party upon notice to the other
party from making such public announcements as such party's counsel
may consider advisable in order to satisfy the party's legal and
contractual obligations in such regard.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized officers, and attested by their Secretaries
as of the day and year first written above.
25
<PAGE>
NATIONS MASTER INVESTMENT TRUST, for
ATTEST: itself and on behalf of each
Acquiring Fund
______________________________ By: _____________________________
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the
Board of Trustees
MASTER INVESTMENT TRUST, SERIES I.,
ATTEST: for itself and on behalf of each
Acquired Fund
_____________________________ By: _____________________________
W. Bruce McConnel, III Dr. Cornelius J. Pings
Secretary President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC., hereby
ATTEST: joins in this Agreement with respect
to, and agrees to be bound by Section
9.2 and 11.2 hereof
_____________________________ By: _____________________________
26
<PAGE>
SCHEDULE A
Acquired Fund Acquiring Fund
- -------------------------------- -----------------------------------------------
Investment Grade Bond Portfolio Nations Intermediate Bond Portfolio
- -------------------------------- -----------------------------------------------
Blue Chip Master Portfolio Nations Blue Chip Master Portfolio
- -------------------------------- -----------------------------------------------
A-1
<PAGE>
APPENDIX II
Expense Summaries of the Pacific Horizon Funds
and Corresponding Nations Funds
-----------------------------------------------
The following tables (a) compare the fees and expenses as of September 30,
1998, for the respective Pacific Horizon Funds and their corresponding Nations
Funds and (b) show the estimated fees and expenses for the corresponding Nations
Funds on a pro forma basis after giving effect to the reorganization. The
Nations Funds' management fees as of September 30, 1998, have been adjusted to
reflect a Board-approved reduction in the contractual fee rates under the
management contracts. The contractual management fees shown become effective
upon consummation of the Reorganization. The purpose of these tables is to
assist shareholders in understanding the various costs and expenses that
investors in these portfolios will bear as shareholders. The tables do not
reflect any charges that may be imposed by institutions directly on their
customer accounts in connection with investments in the portfolios. The fund
operating expense levels shown in this Proxy/Prospectus assume current net asset
levels; pro forma expense levels shown should not be considered an actual
representation of future expenses or performance. Such pro forma expense levels
project anticipated levels but may be greater or less than those shown.
Nations Asset Allocation Fund, Nations Blue Chip Fund, Nations California
Municipal Bond Fund, Nations California Tax-Exempt Reserves, Nations Capital
Income Fund and Nations Intermediate Bond Fund are new investment portfolios
with nominal assets and liabilities that will commence investment operations
upon the completion of the Reorganization.
II-1
<PAGE>
PACIFIC HORIZON ASSET ALLOCATION FUND-A SHARES
NATIONS ASSET ALLOCATION FUND-INVESTOR A SHARES
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
---- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases .... 5.75% 5.75%
Maximum Sales Load Imposed on
Reinvested Dividends .................... None None
Maximum Deferred Sales Load (as a percentage
of redemption proceeds)1 ................ 1.00% 1.00%
Redemption Fees ............................ None None
Exchange Fee ............................... None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees ............................ 0.40% 0.65%
12b-1/Shareholder Servicing Fees ........... 0.25% 0.25
Other Expenses (after waivers)2 ............ 0.32% 0.30%
---- ----
Total Fund Operating Expenses (after waivers):3 0.97% 1.20%
==== ====
- --------------------
1 Certain A Shares and Investor A Shares that are purchased at net asset
value are subject to a Deferred Sales Charge if redeemed within two years
of purchase.
2 Other Expenses (absent waivers) would be 0.32% for the Nations Asset
Allocation Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.22% for the
Nations Asset Allocation Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
---- ---------
1 year ............................ $ 67 $69
3 years ........................... 87 93
5 years ........................... 108 120
10 years .......................... 170 195
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-2
<PAGE>
PACIFIC HORIZON ASSET ALLOCATION FUND-B SHARES
NATIONS ASSET ALLOCATION FUND-INVESTOR B SHARES
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases ... None None
Maximum Sales Load Imposed on
Reinvested Dividends .................. None None
Maximum Deferred Sales Load(as a percentage
of redemption proceeds)1 .............. 5.00% 5.00%
Redemption Fees ........................... None None
Exchange Fee .............................. None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees ........................... 0.40% 0.65%
12b-1/Shareholder Servicing Fees .......... 1.00% 1.00%
Other Expenses (after waivers)2 ........... 0.32% 0.30%
---- ----
Total Fund Operating Expenses (after waivers):8 1.72% 1.95%
==== ====
- --------------------
1 Investor B Shares purchased prior to January 1, 1996 or after July 31,
1997 are subject to the Deferred Sales Charge as set forth in the
applicable schedule in the prospectus. The Maximum Deferred Sales Charge
is 5.00% in the first year after purchase, declining to 1.00% in the sixth
year after purchase and eliminated thereafter.
2 Other Expenses (absent waivers) would be 0.32% for the Nations Asset
Allocation Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.97% for the
Nations Asset Allocation Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
gross annual return and (2) redemption at the end of each time period:
Pacific Nations Asset
Horizon Allocation
Asset Allocation Fund
Fund Pro Forma
---- ---------
1 year ............................ $67 $70
3 years ........................... 84 91
5 years ........................... 113 125
10 years .......................... 203 208
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
gross annual return and (2) no redemption at the end of each time period:
Pacific Horizon Nations Asset
Asset Allocation Allocation Fund
Fund Pro Forma
1 year ............................ $17 $20
3 years ........................... 54 61
5 years ........................... 93 105
10 years .......................... 203 208
- --------------------
4 These examples should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual return; actual return
II-3
<PAGE>
may be greater or less than the assumed amount. These examples assume that
all dividends and other distributions are reinvested and that the percentage
amounts listed under Total Fund Operating Expenses above remain the same in
the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-4
<PAGE>
PACIFIC HORIZON ASSET ALLOCATION FUND-K SHARES
NATIONS ASSET ALLOCATION FUND-INVESTOR C SHARES
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
---- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases ........... None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None
Maximum Deferred Sales Load (as a percentage
of redemption proceeds) ....................... None 1.00%
Redemption Fees ................................... None None
Exchange Fee ...................................... None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees ................................... 0.40% 0.65%
12b-1/Shareholder Servicing Fees
(after waivers)1................................ 0.75% 1.00%
Other Expenses (after waivers)2.................... 0.32% 0.30%
---- ----
Total Fund Operating Expenses (after waivers):3....... 1.47% 1.95%
==== ====
- --------------------
1 Distribution and Shareholder Servicing Fees (absent waivers) would be
1.00% for the Pacific Horizon Asset Allocation Fund.
2 Other Expenses (absent waivers) would be 0.32% for the Nations Asset
Allocation Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.72% for the
Pacific Horizon Asset Allocation Fund an 1.97% for the Nations Asset
Allocation Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
1 year ............................ $ 15 $ 30
3 years ........................... 46 61
5 years ........................... 80 105
10 years .......................... 176 228
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2 no redemption at the end of each time period:
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
1 year ............................ $ 15 $ 20
3 years ........................... 46 61
5 years ........................... 80 105
10 years .......................... 176 228
II-5
<PAGE>
- --------------------
4 These examples should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual return; actual return may be greater or less than the assumed amount.
These examples assume that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund Operating
Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-6
<PAGE>
PACIFIC HORIZON ASSET ALLOCATION FUND-SRF SHARES
NATIONS ASSET ALLOCATION FUND-SEAFIRST SHARES
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
---- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases ......... None None
Maximum Sales Load Imposed on
Reinvested Dividends.......................... None None
Maximum Deferred Sales Load (as a percentage
of redemption proceeds) ...................... None None
Redemption Fees ................................. None None
Exchange Fee .................................... None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees ................................. 0.40% 0.65%
12b-1/Shareholder Servicing Fees
(after waivers)1.............................. 0.23% 0.00%
Other Expenses (after waivers)2.................. 0.32% 0.30%
---- ----
Total Fund Operating Expenses (after waivers):3..... 0.95% 0.95%
==== ====
- --------------------
1 Distribution and Shareholder Servicing Fees (absent waivers) would be
0.25% for the Pacific Horizon Asset Allocation Fund and the Nations Asset
Allocation Fund.
2 Other Expenses (absent waivers) would be 0.32% for the Nations Asset
Allocation Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.97% for the
Pacific Horizon Asset Allocation Fund and 1.22% for the Nations Asset
Allocation Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Asset
Asset Allocation
Allocation Fund
Fund Pro Forma
---- ---------
1 year ............................ $ 10 $ 10
3 years ........................... 30 30
5 years ........................... 53 53
10 years .......................... 117 117
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-7
<PAGE>
PACIFIC HORIZON BLUE CHIP FUND-A SHARES
NATIONS BLUE CHIP FUND-INVESTOR A SHARES
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 5.75% 5.75%
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None
Maximum Deferred Sales Load1 ...................... 1.00% 1.00%
Redemption Fees ................................... None None
Exchange Fee ...................................... None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees ................................... 0.50% 0.65%
12b-1/Shareholder Servicing Fees................... 0.25% 0.25%
Other Expenses (after waivers)2.................... 0.45% 0.30%
---- ----
Total Fund Operating Expenses (after waivers)3:....... 1.20% 1.20%
==== ====
- --------------------
1 Certain A Shares and Investor A Shares that are purchased at net asset
value are subject to a Deferred Sales Charge if redeemed within two years
of purchase.
2 Other Expenses (absent waivers) would be 0.48% for the Pacific Horizon
Blue Chip Fund and 0.38% for the Nations Blue Chip Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.23% for the Blue
Chip Fund and 1.28% for the Nations Blue Chip Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
1 year ............................ $ 69 $ 69
3 years ........................... 93 93
5 years ........................... 120 120
10 years .......................... 195 195
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-8
<PAGE>
PACIFIC HORIZON BLUE CHIP FUND-B SHARES
NATIONS BLUE CHIP FUND-INVESTOR B SHARES
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............. None None
Maximum Sales Load Imposed on
Reinvested Dividends............................. None None
Maximum Deferred Sales Load1 ....................... 5.00% 5.00%
Redemption Fees .................................... None None
Exchange Fee ....................................... None None
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees .................................... 0.50% 0.65%
12b-1/Shareholder Servicing Fees.................... 1.00% 1.00%
Other Expenses (after waivers)2..................... 0.45% 0.30%
---- ----
Total Fund Operating Expenses (after waivers)3:........ 1.95% 1.95%
==== ====
- --------------------
1 Investor B Shares purchased prior to January 1, 1996 or after July 31,
1997 are subject to the Deferred Sales Charge as set forth in the
applicable schedule in the prospectus. The Maximum Deferred Sales Charge
is 5.00% in the first year after purchase, declining to 1.00% in the sixth
year after purchase and eliminated thereafter.
2 Other Expenses (absent waivers) would be 0.48% for the Pacific Horizon
Blue Chip Fund and 0.38% for Nations Blue Chip Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.98% for the
Pacific Horizon Blue Chip Fund and 2.03% for Nations Blue Chip Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
1 year ............................ $ 70 $ 70
3 years ........................... 91 91
5 years ........................... 125 125
10 years .......................... 227 208
II-9
<PAGE>
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) no redemption at the end of each time period:
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
1 year ............................ $ 20 $ 20
3 years ........................... 61 61
5 years ........................... 105 105
10 years .......................... 227 208
- --------------------
4 These examples should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5% annual
return is hypothetical and should not be considered a representation of
past or future annual return; actual return may be greater or less than
the assumed amount. These examples assume that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-10
<PAGE>
PACIFIC HORIZON BLUE CHIP FUND-K SHARES
NATIONS BLUE CHIP FUND-INVESTOR C SHARES
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases None None
(as a percentage of offering
price) ..........................
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load ........ None 1.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees .................... 0.50% 0.65%
12b-1/Shareholder Servicing Fees
(after waivers)1................. 0.75% 1.00%
Other Expenses (after waivers)2..... 0.45% 0.30%
---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 1.70% 1.95%
==== ====
- --------------------
1 Distribution and Servicing Fees (absent waivers) would be 1.00% for the
Pacific Horizon Blue Chip Fund.
2 Other Expenses (absent waivers) would be 0.48% for the Pacific Horizon
Blue Chip Fund and 0.38% for Nations Blue Chip Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.98% for the
Pacific Horizon Blue Chip Fund and 2.03% for Nations Blue Chip Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations
Blue Chip Blue Chip
Fund Pro Forma
---- ---------
1 year ............................ $ 17 $ 30
3 years ........................... 54 61
5 years ........................... 92 105
10 years .......................... 202 228
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) no redemption at the end of each time period:
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
1 year ............................ $ 17 $ 20
3 years ........................... 54 61
5 years ........................... 92 105
10 years .......................... 202 228
II-11
<PAGE>
- --------------------
4 These examples should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5% annual
return is hypothetical and should not be considered a representation of
past or future annual return; actual return may be greater or less than
the assumed amount. These examples assume that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-12
<PAGE>
PACIFIC HORIZON BLUE CHIP FUND-SRF SHARES
NATIONS BLUE CHIP FUND-SEAFIRST SHARES
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load ........ None None
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees .................... 0.50% 0.65%
12b-1/Shareholder Servicing Fees
(after waivers)1................. 0.00% 0.00%
Other Expenses (after waivers)2..... 0.45% 0.30%
---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 0.95% 0.95%
==== ====
- --------------------
1 Distribution and Servicing Fees (absent waivers) would be 0.25% for the
Pacific Horizon Blue Chip Fund and Nations Blue Chip Fund.
2 Other Expenses (absent waivers) would be 0.48% for the Blue Chip Fund and
0.38% for Nations Blue Chip Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.23% for the Blue
Chip Fund and 1.28% for Nations Blue Chip Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Blue Chip
Blue Chip Fund
Fund Pro Forma
---- ---------
1 year ............................ $ 10 $ 10
3 years ........................... 30 30
5 years ........................... 53 53
10 years .......................... 117 117
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-13
<PAGE>
PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND-A SHARES
NATIONS CALIFORNIA MUNICIPAL BOND FUND-INVESTOR A SHARES
Pacific Nations
Horizon California
California Municipal
Municipal Bond Fund
Bond Fund Pro Forma
--------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... 4.75% 4.75%
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load1 ....... 1.00% 1.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)2.... 0.30% 0.28%
12b-1/Shareholder Servicing Fees.... 0.25% 0.25%
Other Expenses...................... 0.39% 0.32%
---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 0.94% 0.85%
==== =====
- --------------------
1 Certain A Shares and Investor A Shares that are purchased at net asset
value are subject to a Deferred Sales Charge if redeemed within two years
of purchase.
2 Management Fees (absent waivers) would be 0.50% for the Nations California
Municipal Bond Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.07% for the
Nations California Municipal Bond Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Nations
Pacific California
Horizon Municipal
California Bond
Municipal Fund
Bond Fund Pro Forma
--------- ---------
1 year ............................ $ 57 $ 56
3 years ........................... 76 73
5 years ........................... 97 92
10 years .......................... 158 148
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual return; actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund Operating
Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-14
<PAGE>
PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND-B SHARES
NATIONS CALIFORNIA MUNICIPAL BOND FUND-INVESTOR B SHARES
Pacific Nations
Horizon California
California Municipal
Municipal Bond Fund
Bond Fund Pro Forma
--------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load1........ 5.00% 5.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)2.... 0.30% 0.28%
12b-1/Shareholder Servicing Fees
(after waivers)3................. 1.00% 0.85%
Other Expenses (after waivers)...... 0.39% 0.32%
---- ----
Total Fund Operating Expenses (after
waivers)4.............................. 1.69% 1.45%
==== =====
- ----------------------------------------
1 Investor B Shares purchased prior to January 1, 1996 or after July 31,
1997 are subject to the Deferred Sales Charge as set forth in the
applicable schedule. The Maximum Deferred Sales Charge is 5.00% in the
first year after purchase, declining to 1.00% in the sixth year after
purchase and eliminated thereafter.
2 Management Fees (absent waivers) would be 0.50% for the Nations California
Municipal Bond Fund.
3 Distribution and Servicing Fees (absent waivers) would be 1.00% for the
Nations California Municipal Bond Fund.
4 Total Fund Operating Expenses (absent waivers) would be 1.82% for the
Nations California Municipal Bond Fund.
Example:5
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon California
California Municipal
Municipal Bond Fund
Bond Fund Pro Forma
--------- ---------
1 year ............................ $ 67 $ 65
3 years ........................... 83 76
5 years ........................... 112 99
10 years .......................... 200 157
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) no redemption at the end of each time period:
II-15
<PAGE>
Pacific Nations
Horizon California
California Municipal
Municipal Bond Fund
Bond Fund Pro Forma
--------- ---------
1 year ............................ $ 17 $ 15
3 years ........................... 53 46
5 years ........................... 92 79
10 years .......................... 200 157
- --------------------
5 These examples should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5% annual
return is hypothetical and should not be considered a representation of
past or future annual return; actual return may be greater or less than
the assumed amount. These examples assume that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-16
<PAGE>
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND-
HORIZON SHARES
NATIONS CALIFORNIA TAX-EXEMPT RESERVES-CAPITAL SHARES
Pacific
Horizon Nations
California California
Tax-Exempt Tax-Exempt
Money Reserves
Market Fund Pro Forma
----------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load (as a
percentage of
redemption proceeds) ............ None None
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.00% 0.00%
Other Expenses (after waivers)2..... 0.14% 0.10%
---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.24% 0.20%
==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations California
Tax-Exempt Reserves.
2 Other Expenses (absent waivers) would be 0.14% for Nations California
Tax-Exempt Reserves.
3 Total Fund Operating Expenses (absent waivers) would be 0.29% for Nations
California Tax-Exempt Reserves.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations
California California
Tax-Exempt Tax-Exempt
Money Market Reserves
Fund Pro Forma
---- ---------
1 year ............................ $ 2 $ 2
3 years ........................... 8 6
5 years ........................... 14 11
10 years .......................... 31 26
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-17
<PAGE>
II-18
<PAGE>
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND-
HORIZON SERVICE SHARES
NATIONS CALIFORNIA TAX-EXEMPT RESERVES-ADVISOR SHARES
Pacific
Horizon Nations
California California
Tax-Exempt Tax-Exempt
Money Reserves
Market Fund Pro Forma
----------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load (as a
percentage
of redemption proceeds) ......... None None
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.25% 0.25%
Other Expenses (after waivers)2..... 0.14% 0.10%
---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.49% 0.45%
==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for the Nations California
Tax-Exempt Reserves.
2 Other Expenses (absent waivers) would be 0.14% for the Nations California
Tax-Exempt Reserves.
3 Total Fund Operating Expenses (absent waivers) would be 0.54% for the
Nations California Tax-Exempt Reserves.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations
California California
Tax Exempt Tax-Exempt
Money Market Reserves
Fund Pro Forma
---- ---------
1 year ............................ $ 5 $ 5
3 years ........................... 16 14
5 years ........................... 27 25
10 years .......................... 62 57
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
II-19
<PAGE>
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-20
<PAGE>
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND-
PACIFIC HORIZON SHARES
NATIONS CALIFORNIA TAX-EXEMPT RESERVES-INVESTOR SHARES
Pacific
Horizon Nations
California California
Tax-Exempt Tax-Exempt
Money Reserves
Market Fund Pro Forma
----------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load (as a
percentage
of redemption proceeds) ......... None None
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.35% 0.35%
Other Expenses (after waivers)**.... 0.11% 0.10%
---- ----
Total Fund Operating Expenses (after 0.56% 0.55%
waivers):3 ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for the Nations California
Tax-Exempt Reserves.
2 Other Expenses (absent waivers) would be 0.14% for the Pacific Horizon
California Tax-Exempt Money Market Fund and the Nations California
Tax-Exempt Reserves.
3 Total Fund Operating Expenses (absent waivers) would be 0.59% for the
Pacific Horizon California Tax-Exempt Money Market Fund and 0.64% for the
Nations California Tax-Exempt Reserves.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations
California California
Tax Exempt Tax-Exempt
Money Market Reserves
Fund Pro Forma
---- ---------
1 year ............................ $ 6 $ 6
3 years ........................... 18 18
5 years ........................... 31 31
10 years .......................... 70 69
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
II-21
<PAGE>
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-22
<PAGE>
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND-
S AND X SHARES
NATIONS CALIFORNIA TAX-EXEMPT RESERVES-DAILY SHARES
Pacific Pacific
Horizon Horizon
California California Nations
Tax-Exempt Tax-Exempt California
Money Money Tax-Exempt
Market Fund Market Fund Reserves
S Shares X Shares Pro Forma
-------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees2... 0.55% 0.55% 0.60%
Other Expenses (after waivers)3..... 0.14% 0.14% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):4 0.79% 0.79% 0.80%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for the Nations California
Tax-Exempt Reserves.
2 Distribution and Shareholder Servicing Fees (absent waivers) would be
1.00% for S Shares of the Pacific Horizon California Tax-Exempt Money
Market Fund.
3 Other Expenses (absent waivers) would be 0.14% for Nations California
Tax-Exempt Reserves.
4 Total Fund Operating Expenses (absent waivers) would be 1.24% for S Shares
of the Pacific Horizon California Tax-Exempt Money Market Fund, and 0.89%
for Nations California Tax-Exempt Reserves.
Example:5
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Pacific
Horizon Horizon
California California Nations
Tax-Exempt Tax-Exempt California
Money Market Money Tax-Exempt
Fund Market Fund Reserves
S Shares X Shares Pro Forma
-------- -------- ---------
1 year ............................ $ 8 $ 8 $ 8
3 years ........................... 25 25 26
5 years ........................... 44 44 44
10 years .......................... 98 98 99
II-23
<PAGE>
- --------------------
5 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly
II-24
<PAGE>
PACIFIC HORIZON CAPITAL INCOME FUND-A SHARES
NATIONS CAPITAL INCOME FUND-INVESTOR A SHARES
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... 5.75% 5.75%
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load(as a
percentage of redemption proceeds)1 1.00% 1.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees .................... 0.45% 0.65%
12b-1/Shareholder Servicing Fees.... 0.25% 0.25%
Other Expenses...................... 0.51% 0.33%
---- ----
Total Fund Operating Expenses: 1.21% 1.23%
==== ====
- --------------------
1 Certain A Shares and Investor A Shares that are purchased at net asset
value are subject to a Deferred Sales Charge if redeemed within two years of
purchase.
Example:2
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
1 year ............................ $ 69 $ 69
3 years ........................... 94 94
5 years ........................... 120 121
10 years .......................... 196 198
- --------------------
2 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-25
<PAGE>
PACIFIC HORIZON CAPITAL INCOME FUND-B SHARES
NATIONS CAPITAL INCOME FUND-INVESTOR B SHARES
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load (as a
percentage of
redemption proceeds)1 ........... 5.00% 5.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees .................... 0.45% 0.65%
12b-1/Shareholder Servicing Fees.... 1.00% 1.00%
Other Expenses ..................... 0.51% 0.33%
---- ----
Total Fund Operating Expenses:......... 1.96% 1.98%
==== ====
- --------------------
1 Investor B Shares purchased prior to January 1, 1996 or after July 31,
1997 are subject to the Deferred Sales Charge as set forth in the
applicable schedule. The Maximum Deferred Sales Charge is 5.00% in the
first year after purchase, declining to 1.00% in the sixth year after
purchase and eliminated thereafter.
Example:2
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
1 year ............................ $ 70 $ 70
3 years ........................... 92 92
5 years ........................... 126 127
10 years .......................... 229 211
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) no redemption at the end of each time period:
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
1 year ............................ $ 20 $ 20
3 years ........................... 62 62
5 years ........................... 106 107
10 years .......................... 229 211
II-26
<PAGE>
- -------------------
2 These examples should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5% annual
return is hypothetical and should not be considered a representation of
past or future annual return; actual return may be greater or less than
the assumed amount. These examples assume that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-27
<PAGE>
PACIFIC HORIZON CAPITAL INCOME FUND-K SHARES
NATIONS CAPITAL INCOME FUND-INVESTOR C SHARES
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None 1.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees .................... 0.45% 0.65%
12b-1/Shareholder Servicing
Fees(after waivers)1............. 0.75% 1.00%
Other Expenses...................... 0.51% 0.33%
---- ----
Total Fund Operating Expenses (after
waivers):2 1.71% 1.98%
==== ====
- --------------------
1 Distribution and Shareholder Servicing Fees (absent waivers) would be
1.00% for Pacific Horizon Capital Income Fund.
2 Total Fund Operating Expenses (absent waivers) would be 1.96% for the
Pacific Horizon Capital Income Fund.
Example:3
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
1 year ............................ $ 70 $ 70
3 years ........................... 92 92
5 years ........................... 126 127
10 years .......................... 229 211
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) no redemption at the end of each time period:
Pacific Nations
Horizon Capital
Capital Income Fund
Income Fund Pro Forma
----------- ---------
1 year ............................ $ 17 $ 20
3 years ........................... 54 62
5 years ........................... 93 107
10 years .......................... 203 232
- --------------------
II-28
<PAGE>
3 These examples should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5% annual
return is hypothetical and should not be considered a representation of
past or future annual return; actual return may be greater or less than
the assumed amount. These examples assume that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-29
<PAGE>
PACIFIC HORIZON GOVERNMENT FUND-HORIZON SHARES
NATIONS GOVERNMENT RESERVES-CAPITAL SHARES
Pacific
Horizon Nations Combined
Government Government Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None
Maximum Deferred Sales Load ...... None None None
Redemption Fees .................. None None None
Exchange Fee ..................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1.. 0.05% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.00% 0.00% 0.00%
Other Expenses (after waivers)2... 0.18% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers)3:........................... 0.23% 0.20% 0.20%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.10% for the Government Fund
and 0.15% for Nations Government Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.28% for the
Government Fund and 0.29% for Nations Government Reserves and the Combined
Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations Combined
Government Government Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ............................ $ 2 $ 2 $ 2
3 years ........................... 7 6 6
5 years ........................... 13 11 11
10 years .......................... 29 26 26
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-30
<PAGE>
PACIFIC HORIZON GOVERNMENT FUND-HORIZON SERVICE SHARES
NATIONS GOVERNMENT RESERVES-ADVISOR SHARES
Pacific
Horizon Nations Combined
Government Government Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None
Maximum Deferred Sales Load ...... None None None
Redemption Fees .................. None None None
Exchange Fee ..................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.05% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.25% 0.25% 0.25%
Other Expenses (after waivers)2... 0.18% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers)3:........................... 0.48% 0.45% 0.45%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.10% for the Pacific Horizon
Government Fund and 0.15% for Nations Government Reserves and the Combined
Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.53% for the
Pacific Horizon Government Fund and 0.54% for Nations Government Reserves
and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations Combined
Government Government Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ............................ $ 5 $ 5 $ 5
3 years ........................... 15 14 14
5 years ........................... 27 25 25
10 years .......................... 60 57 57
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-31
<PAGE>
PACIFIC HORIZON GOVERNMENT FUND-PACIFIC HORIZON SHARES
NATIONS GOVERNMENT RESERVES-INVESTOR SHARES
Pacific
Horizon Nations Combined
Government Government Fund
Fund Reserves Pro Forma
---- -------- -----
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None
Maximum Deferred Sales Load ...... None None None
Redemption Fees .................. None None None
Exchange Fee ..................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.05% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.32% 0.35% 0.35%
Other Expenses (after waivers)2... 0.18% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers)3:........................... 0.55% 0.55% 0.55%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.10% for the Government Fund
and 0.15% for Nations Government Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and Nations Government Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.60% for the
Government Fund and 0.64% for Nations Government Reserves and the Combined
Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Government Combined
Government Reserves Fund
Fund ---------- Pro Forma
---- ---------
1 year ............................ $ 6 $ 6 $ 6
3 years ........................... 18 18 18
5 years ........................... 31 31 31
10 years .......................... 69 69 69
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-32
<PAGE>
PACIFIC HORIZON INTERMEDIATE BOND FUND-A SHARES
NATIONS INTERMEDIATE BOND FUND-INVESTOR A SHARES
Pacific Nations
Horizon Intermediate
Intermediate Bond Fund
Bond Fund Pro Forma
--------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... 3.25% 3.25%
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load1 ....... 1.00% 1.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)2.... 0.26% 0.40%
12b-1/Shareholder Servicing Fees.... 0.25% 0.25%
Other Expenses...................... 0.45% 0.41%
---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 0.96% 1.06%
==== ----
- --------------------
1 Certain A Shares and Investor A Shares that are purchased at net asset
value are subject to a Deferred Sales Charge if redeemed within two years
of purchase.
2 Management Fees (absent waivers) would be 0.30% for the Pacific Horizon
Intermediate Bond Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.00% for the
Pacific Horizon Intermediate Bond Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Intermediate
Intermediate Bond Fund
Bond Fund Pro Forma
--------- ---------
1 year ............................ $ 42 $ 43
3 years ........................... 62 65
5 years ........................... 84 89
10 years .......................... 147 58
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-33
<PAGE>
PACIFIC HORIZON INTERMEDIATE BOND FUND-K SHARES
NATIONS INTERMEDIATE BOND FUND-INVESTOR C SHARES
Pacific Nations
Horizon Intermediate
Intermediate Bond Fund
Bond Fund Pro Forma
--------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Maximum Deferred Sales Load ........ None 1.00%
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1.... 0.26% 0.40%
12b-1/Shareholder Servicing Fees2... 0.75% 1.00%
Other Expenses ..................... 0.45% 0.41%
---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 1.46% 1.81%
==== ----
- --------------------
1 Management Fees (absent waivers) would be 0.30% for the Pacific Horizon
Intermediate Bond Fund.
2 Distribution and Servicing Fees (absent waivers) would be 1.00% for the
Pacific Horizon Intermediate Bond Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.75% for the
Pacific Horizon Intermediate Bond Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Intermediate
Intermediate Bond Fund
Bond Fund Pro Forma
--------- ------------
1 year ............................ $ 15 $ 18
3 years ........................... 46 57
5 years ........................... 80 98
10 years .......................... 175 214
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) no redemption at the end of each time period:
Pacific Nations
Horizon Intermediate
Intermediate Bond Fund
Bond Fund Pro Forma
--------- ---------
1 year ............................ $ 15 $ 18
3 years ........................... 46 57
5 years ........................... 80 98
10 years .......................... 175 214
II-34
<PAGE>
- --------------------
4 These examples should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5% annual
return is hypothetical and should not be considered a representation of
past or future annual return; actual return may be greater or less than
the assumed amount. These examples assume that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-35
<PAGE>
PACIFIC HORIZON INTERMEDIATE BOND FUND-SRF SHARES
NATIONS INTERMEDIATE BOND FUND-SEAFIRST SHARES
Pacific Nations
Horizon Intermediate
Intermediate Bond Fund
Bond Fund Pro Forma
--------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None
Deferred Sales Load ................ None None
Redemption Fees .................... None None
Exchange Fee ....................... None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1.... 0.26% 0.40%
12b-1/Shareholder Servicing Fees
(after waivers)2................. 0.24% 0.14%
Other Expenses...................... 0.45% 0.41%
---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 0.95% 0.95%
==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.30% for the Pacific Horizon
Intermediate Bond Fund.
2 Distribution and Servicing Fees (absent waivers) would be 0.25% for the
Pacific Horizon Intermediate Bond Fund and Nations Intermediate Bond Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.00% for the
Pacific Horizon Intermediate Bond Fund and 1.00% for Nations Intermediate
Bond Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations
Horizon Intermediate
Intermediate Bond Fund
Bond Fund Pro Forma
--------- ---------
1 year ............................ $ 10 $ 10
3 years ........................... 30 30
5 years ........................... 53 53
10 years .......................... 117 117
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-36
<PAGE>
PACIFIC HORIZON PRIME FUND-HORIZON SHARES
NATIONS CASH RESERVES-CAPITAL SHARES
Pacific Nations Combined
Horizon Cash Fund
Prime Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Deferred Sales Load ................ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1.... 0.09% 0.10% 0.10%
Other Expenses (after waivers)2..... 0.15% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 0.24% 0.20% 0.20%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Cash Reserves
and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.13% for Nations Cash Reserves
and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.28% for Nations
Cash Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations Combined
Horizon Cash Fund
Prime Fund Reserves Pro Forma
---------- -------- ---------
1 year ............................ $ 2 $2 $ 2
3 years ........................... 8 6 6
5 years ........................... 14 11 11
10 years .......................... 31 26 20
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-37
<PAGE>
PACIFIC HORIZON PRIME FUND-HORIZON SERVICE SHARES
NATIONS CASH RESERVES-ADVISOR SHARES
Pacific Nations Combined
Horizon Cash Fund
Prime Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Deferred Sales Load(as a percentage
of redemption proceeds) ......... None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.09% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.25% 0.25% 0.25%
Other Expenses (after waivers)2..... 0.15% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.49% 0.45% 0.45%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Cash Reserves
and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.13% for Nations Cash Reserves
and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.53% for Nations
Cash Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations Combined
Horizon Cash Fund
Prime Fund Reserves Pro Forma
---------- -------- ---------
1 year ............................ $ 5 $ 5 $ 5
3 years ........................... 16 14 14
5 years ........................... 27 25 25
10 years .......................... 62 57 57
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-38
<PAGE>
PACIFIC HORIZON PRIME FUND-PACIFIC HORIZON SHARES
NATIONS CASH RESERVES-INVESTOR SHARES
Pacific Nations Combined
Horizon Cash Fund
Prime Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) .......................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Deferred Sales Load ................ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1.... 0.09% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.32% 0.35% 0.35%
Other Expenses (after waivers)2..... 0.15% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers)3:............................. 0.56% 0.55% 0.55%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Cash Reserves
and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.13% for Nations Cash Reserves
and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.63% for Nations
Cash Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations Combined
Prime Cash Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ............................ $ 6 $ 6 $ 6
3 years ........................... 18 18 18
5 years ........................... 31 31 31
10 years .......................... 70 69 69
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-39
<PAGE>
PACIFIC HORIZON PRIME FUND-S AND X SHARES
NATIONS CASH RESERVES-DAILY SHARES
<TABLE>
<CAPTION>
Pacific Pacific
Horizon Horizon Nations Combined
Prime Fund- Prime Fund- Cash Fund
S Shares X Shares Reserves Pro Forma
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None None
Redemption Fees .................... None None None None
Exchange Fee ....................... None None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees1 ................... 0.09% 0.09% 0.10% 0.10%
12b-1/Shareholder Servicing Fees2... 0.55% 0.55% 0.60% 0.60%
Other Expenses (after waivers)3..... 0.15% 0.15% 0.10% 0.10%
---- ---- ---- ----
Total Fund Operating Expenses (after
waivers):4............................. 0.79% 0.79% 0.80% 0.80%
==== ==== ==== ====
</TABLE>
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Cash Reserves
and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.13% for Nations Cash Reserves
and the Combined Fund
3 Distribution and Shareholder Servicing Fees (absent waivers) would be
1.00% for S Shares of the Pacific Horizon Prime Fund.
4 Total Fund Operating Expenses (absent waivers) would be 1.24% for S Shares
of the Pacific Horizon Prime Fund, and 0.88% for Nations Cash Reserves and
the Combined Fund.
Example:5
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Pacific
Horizon Horizon Nations Combined
Prime Fund- Prime Fund- Cash Fund
S Shares X Shares Reserves Pro Forma
-------- -------- -------- ---------
1 year .................... $ 8 $ 8 $ 8 $ 8
3 years ................... 25 25 26 26
5 years ................... 44 44 44 44
10 years .................. 98 98 99 99
- --------------------
5 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-40
<PAGE>
PACIFIC HORIZON PRIME FUND-Y SHARES
NATIONS CASH RESERVES-SERVICE SHARES
Pacific Nations Combined
Horizon Cash Fund
Prime Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1.... 0.09% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 1.00% 1.00% 1.00%
Other Expenses (after waivers)2..... 0.15% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3............................. 1.24% 1.20% 1.20%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Cash Reserves
and the Combined Fund
2 Other Expenses (absent waivers) would be 0.13% for Nations Cash Reserves
and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.28% for Nations
Cash Reserves and the Combined Fund
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations Combined
Prime Cash Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ............................ $ 13 $ 12 $ 12
3 years ........................... 39 38 38
5 years ........................... 68 66 66
10 years .......................... 150 145 145
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-41
<PAGE>
PACIFIC HORIZON TAX-EXEMPT MONEY FUND-HORIZON SHARES
NATIONS MUNICIPAL RESERVES-CAPITAL SHARES
Pacific
Horizon Nations Combined
Tax-Exempt Municipal Fund
Money Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
Other Expenses (after waivers)2..... 0.17% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.27% 0.20% 0.20%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.30% for Nations
Municipal Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon
Tax-Exempt Nations Combined
Money Municipal Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ............................ $ 3 $ 2 $ 2
3 years ........................... 9 6 6
5 years ........................... 15 11 11
10 years .......................... 34 26 26
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-42
<PAGE>
PACIFIC HORIZON TAX-EXEMPT MONEY FUND-HORIZON SERVICE SHARES
NATIONS MUNICIPAL RESERVES-ADVISOR SHARES
Pacific
Horizon Nations Combined
Tax-Exempt Municipal Fund
Money Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.25% 0.25% 0.25%
Other Expenses (after waivers)2..... 0.17% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.52% 0.45% 0.45%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.55% for Nations
Municipal Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations Combined
Tax-Exempt Municipal Fund
Money Fund Reserves Pro Forma
---------- -------- ---------
1 year ............................ $ 5 $ 5 $ 5
3 years ........................... 17 14 14
5 years ........................... 29 25 25
10 years .......................... 65 57 57
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-43
<PAGE>
PACIFIC HORIZON TAX-EXEMPT MONEY FUND-PACIFIC HORIZON SHARES
NATIONS MUNICIPAL RESERVES-INVESTOR SHARES
Pacific
Horizon Nations Combined
Tax-Exempt Municipal Fund
Money Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.32% 0.35% 0.35%
Other Expenses (after waivers)2..... 0.17% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.59% 0.55% 0.55%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.65% for Nations
Municipal Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon Nations Combined
Tax-Exempt Municipal Fund
Money Fund Reserves Pro Forma
---------- -------- ---------
1 year ............................ $ 6 $ 6 $6
3 years ........................... 19 18 18
5 years ........................... 33 31 31
10 years .......................... 74 69 69
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-44
<PAGE>
PACIFIC HORIZON TAX-EXEMPT MONEY FUND-S SHARES
NATIONS MUNICIPAL RESERVES-DAILY SHARES
Pacific
Horizon Nations Combined
Tax-Exempt Municipal Fund
Money Fund Reserves Pro Forma
---------- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees
(after waivers)2................. 0.55% 0.60% 0.60%
Other Expenses (after waivers)3..... 0.17% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):4............................. 0.82% 0.80% 0.80%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
2 Distribution and Shareholder Servicing Fees (absent waivers) would be
1.00% for Pacific Horizon Tax-Exempt Money Fund.
2 Other Expenses (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund
3 Total Fund Operating Expenses (absent waivers) would be 1.27% for the
Pacific Horizon Tax-Exempt Money Fund and 0.90% for Nations Municipal
Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon
Tax-Exempt Nations Combined
Money Municipal Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ..................... $ 8 $ 8 $ 8
3 years .................... 26 26 26
5 years .................... 46 44 44
10 years ................... 101 99 99
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-45
<PAGE>
PACIFIC HORIZON TREASURY FUND-HORIZON SHARES
NATIONS TREASURY RESERVES-CAPITAL SHARES
Pacific
Horizon Nations Combined
Treasury Treasury Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
Other Expenses (after waivers)2..... 0.14% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.24% 0.20% 0.20%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Treasury
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Treasury
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.29% for Nations
Treasury Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations Combined
Horizon Treasury Fund
Treasury Fund Reserves Pro Forma
------------- -------- ---------
1 year ............................ $ 2 $ 2 $ 2
3 years ........................... 8 6 6
5 years ........................... 14 11 11
10 years .......................... 31 26 26
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-46
<PAGE>
PACIFIC HORIZON TREASURY FUND-HORIZON SERVICE SHARES
NATIONS TREASURY RESERVES-ADVISOR SHARES
Pacific
Horizon Nations Combined
Treasury Treasury Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Deferred Sales Load(as a percentage
of redemption proceeds) ......... None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
12b-1 Shareholder Servicing Fees.... 0.25% 0.25% 0.25%
Other Expenses (after waivers)2..... 0.14% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3 0.49% 0.45% 0.45%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Treasury
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Treasury
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.54% for Nations
Treasury Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations Combined
Horizon Treasury Fund
Treasury Fund Reserves Pro Forma
------------- -------- ---------
1 year ............................ $ 5 $ 5 $ 5
3 years ........................... 16 14 14
5 years ........................... 27 25 25
10 years .......................... 62 57 57
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-47
<PAGE>
PACIFIC HORIZON TREASURY FUND-PACIFIC HORIZON SHARES
NATIONS TREASURY RESERVES-INVESTOR SHARES
Pacific
Horizon Nations Combined
Treasury Treasury Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 0.32% 0.35% 0.35%
Other Expenses (after waivers)2..... 0.14% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3............................. 0.56% 0.55% 0.55%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Treasury
Reserves and the Combined Fund
2 Other Expenses (absent waivers) would be 0.14% for Nations Treasury
Reserves and the Combined Fund
3 Total Fund Operating Expenses (absent waivers) would be 0.64% for Nations
Treasury Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations Combined
Horizon Treasury Fund
Treasury Fund Reserves Pro Forma
------------- -------- ---------
1 year ............................ $ 6 $6 $ 6
3 years ........................... 18 18 18
5 years ........................... 31 31 31
10 years .......................... 70 69 69
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-48
<PAGE>
PACIFIC HORIZON TREASURY FUND-S & X SHARES
NATIONS TREASURY RESERVES-DAILY SHARES
<TABLE>
<CAPTION>
Pacific Pacific
Horizon Horizon
Treasury Treasury Nations Combined
Fund Fund Treasury Fund
S Shares X Shares Reserves Pro Forma
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None None
Redemption Fees .................... None None None None
Exchange Fee ....................... None None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees
(after waivers)2................. 0.55% 0.55% 0.60% 0.60%
Other Expenses (after reimbursements)3 0.14% 0.14% 0.10% 0.10%
---- ---- ---- ----
Total Fund Operating Expenses (after
waivers):4 0.79% 0.79% 0.80% 0.80%
==== ==== ==== ====
</TABLE>
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Treasury
Reserves and the Combined Fund.
2 Distribution and Shareholder Servicing Fees (absent waivers) would be
1.00% for S Shares of the Pacific Horizon Treasury Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Treasury
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.24% for S Shares
of the Pacific Horizon Treasury Fund and 0.89% for Nations Treasury
Reserves and the Combined Fund.
Example:5
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Pacific Horizon
Horizon Treasury Nations Combined
Treasury Fund Fund Treasury Fund
S Shares X Shares Reserves Pro Forma
-------- -------- -------- ---------
1 year .................... $ 8 $ 8 $ 8 $ 8
3 years ................... 25 25 26 26
5 years ................... 44 44 44 44
10 years .................. 98 98 99 99
- --------------------
5 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-49
<PAGE>
PACIFIC HORIZON TREASURY FUND-Y SHARES
NATIONS TREASURY RESERVES-SERVICE SHARES
Pacific
Horizon Nations Combined
Treasury Treasury Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases ....................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Maximum Deferred Sales Load(as a
percentage of
redemption proceeds) ............ None None None
Redemption Fees .................... None None None
Exchange Fee ....................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 ... 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.... 1.00% 1.00% 1.00%
Other Expenses (after waivers)2..... 0.14% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3 1.24% 1.20% 1.20%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Treasury
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Treasury
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.29% for Nations
Treasury Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific Nations Combined
Horizon Treasury Fund
Treasury Fund Reserves Pro Forma
1 year ............................ $ 13 $ 12 $ 12
3 years ........................... 39 38 38
5 years ........................... 68 66 66
10 years .......................... 10 145 145
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-50
<PAGE>
PACIFIC HORIZON TREASURY ONLY FUND-HORIZON SHARES
NATIONS GOVERNMENT RESERVES-CAPITAL SHARES
Pacific
Horizon
Treasury Nations Combined
Only Government Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None
Maximum Deferred Sales Load ...... None None None
Redemption Fees .................. None None None
Exchange Fee ..................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.10% 0.10% 0.10%
Other Expenses (after waivers)2... 0.17% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers)3:........................... 0.27% 0.20% 0.20%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Government
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.29% for Nations
Government Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon
Treasury Nations Combined
Only Government Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ............................ $ 3 $ 2 $ 2
3 years ........................... 9 6 6
5 years ........................... 15 11 11
10 years .......................... 34 26 26
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-51
<PAGE>
PACIFIC HORIZON TREASURY ONLY FUND-HORIZON SERVICE SHARES
NATIONS GOVERNMENT RESERVES-ADVISOR SHARES
Pacific
Horizon
Treasury Nations Combined
Only Government Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None
Maximum Deferred Sales Load ...... None None None
Redemption Fees .................. None None None
Exchange Fee ..................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.25% 0.25% 0.25%
Other Expenses (after waivers)2... 0.17% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers):3........................... 0.52% 0.45% 0.45%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Government
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.54% for Nations
Government Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon
Treasury Nations Combined
Only Government Fund
Fund Reserves Pro Forma
---- -------- ---------
1 year ............................ $ 5 $ 5 $ 5
3 years ........................... 17 14 14
5 years ........................... 29 25 25
10 years .......................... 65 57 57
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-52
<PAGE>
PACIFIC HORIZON TREASURY ONLY FUND-PACIFIC HORIZON SHARES
NATIONS GOVERNMENT RESERVES-INVESTOR SHARES
Pacific
Horizon
Treasury Nations Combined
Only Government Fund
Fund Reserves Pro Forma
---- -------- ---------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None
Maximum Deferred Sales Load ...... None None None
Redemption Fees .................. None None None
Exchange Fee ..................... None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.32% 0.35% 0.35%
Other Expenses (after waivers)2... 0.17% 0.10% 0.10%
---- ---- ----
Total Fund Operating Expenses (after
waivers)3............................ 0.59% 0.55% 0.55%
==== ==== ====
- --------------------
1 Management Fees (absent waivers) would be 0.15% for Nations Government
Reserves and the Combined Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.64% for Nations
Government Reserves and the Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Horizon
Treasury Nations Combined
Only Government Fund Pro
Fund Reserves Forma
---- -------- -----
1 year ............................ $ 6 $ 6 $ 6
3 years ........................... 19 18 18
5 years ........................... 33 31 31
10 years .......................... 74 69 69
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-53
<PAGE>
PACIFIC HORIZON GOVERNMENT & TREASURY ONLY-HORIZON SHARES
NATIONS GOVERNMENT RESERVES-CAPITAL SHARES
<TABLE>
<CAPTION>
Pacific
Pacific Horizon
Horizon Treasury Nations Combined
Government Only Government Funds
Fund Fund Reserves Pro Forma
---- ---- -------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None None
Maximum Deferred Sales Load ...... None None None None
Redemption Fees .................. None None None None
Exchange Fee ..................... None None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.05% 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.00% 0.00% 0.00% 0.00%
Other Expenses (after waivers)2... 0.18% 0.17% 0.10% 0.10%
---- ---- ---- ----
Total Fund Operating Expenses (after
waivers)3:........................... 0.23% 0.27% 0.20% 0.20%
==== ==== ==== ====
</TABLE>
- --------------------
1 Management Fees (absent waivers) would be 0.10% for Pacific Horizon
Government Fund and 0.15% for Nations Government Reserves and the Combined
Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.28% for Pacific
Horizon Government Fund and 0.29% for Nations Government Reserves and the
Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Pacific Horizon
Horizon Treasury Nations Combined
Government Only Government Funds
Fund Fund Reserves Pro Forma
---------- -------- ---------- ----------
1 year ...................... $ 2 $ 3 $ 2 $ 2
3 years ..................... 7 9 6 6
5 years ..................... 13 15 11 11
10 years .................... 29 34 26 26
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-54
<PAGE>
PACIFIC HORIZON GOVERNMENT & TREASURY ONLY-HORIZON SERVICE SHARES
NATIONS GOVERNMENT RESERVES-ADVISOR SHARES
<TABLE>
<CAPTION>
Pacific
Pacific Horizon
Horizon Treasury Nations Combined
Government Only Government Funds
Fund Fund Reserves Pro Forma
---------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None None
Maximum Deferred Sales Load ...... None None None None
Redemption Fees .................. None None None None
Exchange Fee ..................... None None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.05% 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.25% 0.25% 0.25% 0.25%
Other Expenses (after waivers)2... 0.18% 0.17% 0.10% 0.10%
---- ---- ---- ----
Total Fund Operating Expenses (after
waivers)3:........................... 0.48% 0.52% 0.45% 0.45%
==== ==== ==== ====
</TABLE>
- --------------------
1 Management Fees (absent waivers) would be 0.10% for Pacific Horizon
Government Fund and 0.15% for Nations Government Reserves and the Combined
Fund.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves and the Combined Fund.
3 Total Fund Operating Expenses (absent waivers) would be 0.53% for Pacific
Horizon Government Fund and 0.54% for Nations Government Reserves and the
Combined Fund.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Pacific
Pacific Horizon
Horizon Treasury Nations Combined
Government Only Government Funds
Fund Fund Reserves Pro Forma
---- ---- -------- ---------
1 year ....................... $ 5 $ 5 $ 5 $ 5
3 years ...................... 15 17 14 14
5 years ...................... 27 29 25 25
10 years ..................... 60 65 57 57
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-55
<PAGE>
PACIFIC HORIZON GOVERNMENT & TREASURY ONLY-PACIFIC HORIZON SHARES
NATIONS GOVERNMENT RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
Nations Pacific
Pacific Horizon
Horizon Treasury Government Combined
Government Only Reserves Funds
Fund Fund Pro Forma Pro Forma
---- ---- --------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering
price) ........................ None None None None
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None None
Maximum Deferred Sales Load ...... None None None None
Redemption Fees .................. None None None None
Exchange Fee ..................... None None None None
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (after waivers)1 . 0.05% 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees.. 0.00% 0.00% 0.35% 0.35%
Special Management Service........ 0.32% 0.32% 0.00% 0.00%
Other Expenses (after waivers)2... 0.18% 0.17% 0.10% 0.10%
---- ---- ---- ----
Total Fund Operating Expenses (after
waivers)3:........................... 0.55% 0.59% 0.55% 0.55%
==== ==== ==== ====
</TABLE>
- --------------------
1 Management Fees (absent waivers) would be 0.10% for Pacific Horizon
Government Fund and 0.15% for the Nations Government Reserves.
2 Other Expenses (absent waivers) would be 0.14% for Nations Government
Reserves.
3 Total Fund Operating Expenses (absent waivers) would be 0.60% for Pacific
Horizon Government Fund and 0.64% for Nations Government Reserves.
Example:4
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:
Nations Pacific
Pacific Horizon
Horizon Treasury Government Combined
Government Only Reserves Funds
Fund Fund Pro Forma Pro Forma
---- ---- --------- -----
1 year .................... $ 6 $ 6 $ 6 $ 6
3 years ................... 18 19 18 18
5 years ................... 31 33 31 31
10 years .................. 69 74 69 69
- --------------------
4 This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return; actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-56
<PAGE>
APPENDIX III
Investment Objectives, Limitations and Certain Significant Investment
Policies of the Pacific Horizon Funds and Corresponding Nations Funds
This Appendix highlights the investment objectives and certain significant
similarities and differences among the investment limitations and investment
policies of the five Pacific Horizon Funds and their four corresponding
Operating Nations Funds into which they will be reorganized. The Pacific Horizon
Asset Allocation, Blue Chip, California Municipal Bond Fund, California
Tax-Exempt Money Market Fund, Capital Income Fund and Intermediate Bond Fund are
being reorganized into Shell Nations Funds that have substantially the same
investment objectives, restrictions and policies as their corresponding Pacific
Horizon Funds. The following is qualified in its entirety by the more detailed
information included in the prospectuses and statements of additional
information for the Pacific Horizon Funds and the corresponding Nations Funds
which are incorporated by reference in this Proxy/Prospectus.
I. PACIFIC HORIZON GOVERNMENT FUND/
NATIONS GOVERNMENT RESERVES
Investment Objectives:
1. Pacific Horizon Government Fund: to seek current income, a stable share
price and daily liquidity.
2. Nations Government Reserves: to preserve principal value and maintain a
high degree of liquidity while providing current income.
Comment: The Pacific Horizon Fund pursues its investment objective by
investing in short-term debt obligations issued or guaranteed (as to principal
and interest) by the U.S. Government, its agencies, instrumentalities, or
sponsored entities (and in repurchase agreements relating to such obligations
including those issues backed by the full faith and credit of the United States;
right of the issuer to borrow from the U.S. Treasury; discretionary authority of
the U.S. Government to purchase the agency's obligations; and credit of the
agency or instrumentality issuing the obligations). All of the Fund's investment
will be in the highest short term rating category or will be issued by issuers
with such rating (or, if, unrated, will be of comparable quality).
Like the Pacific Horizon Fund, the Nations Fund also typically invests in
direct obligations issued by the U.S. Treasury, STRIPS and repurchase agreements
and reverse agreements involving such obligations. The Nations Funds also may
invest in obligations the principal and interest of which are backed by the full
faith and credit of the United States Government, provided that the Fund shall
under normal market conditions invest at least 65% of its total assets in U.S.
Treasury bills, notes and bonds and other instruments issued directly by the
U.S. Government and repurchase agreements relating thereto. However, it is
expected that after
III-1
<PAGE>
the Reorganizations, the Nations Government Reserves Fund will not invest in
repurchase agreements. Each Fund is a money market fund and in accordance with
Rule 2a-7 under the 1940 Act, will invest in instruments with remaining maturity
not exceeding 397 days and each Fund's dollar-weighted average portfolio
maturity may not exceed 90 days. Both Funds limit their investment to "First
Tier Securities" as defined by Rule 2a-7.
II. PACIFIC HORIZON PRIME FUND/
NATIONS CASH RESERVES
Investment Objectives:
1. Pacific Horizon Prime Fund: to seek current income, a stable share
price and daily liquidity.
2. Nations Cash Reserves: to preserve principal value and maintain a high
degree of liquidity while providing current income.
Comment: The Pacific Horizon Fund pursues its invest objective by
investing in U.S. dollar denominated money market securities (such as bank
certificates of deposit, bankers' acceptances and commercial paper), including
those issued by U.S. and foreign banks, U.S. and foreign corporate issuers, the
U.S. government, its agencies and instrumentalities and municipalities. At least
95% of the Fund's investments will be in highest short-term rating category or
will issued by issuers with such ratings (or, if unrated, will be of comparable
quality). The Pacific Horizon Fund will concentrate its investments in the
securities of the banking and financing sector. Under normal market conditions,
the Pacific Horizon Fund will invest at least 25% of its net assets in such
investments. The Pacific Horizon Fund invests in both First Tier and Second Tier
Securities as defined by Rule 2a-7 under the 1940 Act.
The Nations Fund invests in obligations denominated in U.S. dollars and
consisting of: (i) commercial paper; (ii) obligations (including certificates of
deposit, time deposits and banker's' acceptances) of thrift institutions, U.S.
commercial banks (including foreign branches of such banks) and U.S. and London
branches of foreign banks, provided that such institutions have total assets of
$1 billion or more (iii) short-term corporate obligations of issuers of
commercial paper whose commercial paper is eligible for purchase by the Fund;
(iv) high quality short-term taxable obligations issued by state and local
governments; (v) instruments eligible for purchase by Nations Government
Reserves; and (vi) repurchase agreements and reverse purchase agreements
involving any of the foregoing obligations. Similar, although not identical to,
the Pacific Horizon Fund, the Nations Fund reserves the right to concentrate
(i.e., invest more than 25% of its assets) investments in U.S. dollar
denominated obligations of U.S. banks, foreign branches of U.S. banks and U.S.
branches of foreign banks. The Fund may also invest in guaranteed investment
contracts and in securities issued by other investment companies. The short term
obligations that may be purchased include instruments issued by trusts,
partnerships or other special purpose issuers, including pass-through
certificates representing participations in or debt instruments backed by the
securities and other assets owned by such issuers. For temporary defensive
purposes, the investment advisers may invest up to 100% of its assets in
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, repurchase
III-2
<PAGE>
agreements and cash. Each Fund is a money market fund and in accordance with
Rule 2a-7 under the 1940 Act, will invest in instruments with remaining maturity
not exceeding 397 days and each Fund's dollar-weighted average portfolio
maturity may not exceed 90 days. The Fund is listed on the National Association
of Insurance Commissioners' Approved List of Class 1 Money Market Mutual Funds.
The Nations Fund, unlike the Pacific Horizon Fund limits its investment to
"First-Tier Securities" as defined by Rule 2a-7 under the 1940 Act.
III. PACIFIC HORIZON TAX-EXEMPT MONEY FUND/
NATIONS MUNICIPAL RESERVES
Investment Objectives:
1. Pacific Horizon Tax Exempt Money Fund: to seek current income exempt
from Federal taxes, a stable share price and daily liquidity.
2. Nations Municipal Reserves: to preserve principal value and maintain
a high degree of liquidity while providing current income exempt from Federal
income taxes.
Comment: The Pacific Horizon Fund pursues its objective by investing at
least 80% of its assets in a diversified portfolio of federally tax-exempt short
term debt oblations issued by, or on behalf of, states, territories and
possessions of the United States, including those issued by the U.S. government,
its agencies, and instrumentalities, municipalities, local governments, other
political subdivisions ("Municipal Securities"). Under normal circumstances, all
investments of the Pacific Horizon Fund will be in the highest short-term rating
category or will be issued by issuers with such ratings (or, if unrated will be
of comparable quality). For temporary defensive purposes, or if the investment
adviser does not feel that suitable securities in the highest short-term rating
category are available, the Fund may invest in investments in the second-highest
short-term rating category. The Fund also may invest up to 20% of its assets in
taxable obligations.
Similar to the Pacific Horizon Fund, under normal market conditions, the
Nations Fund will also invest at least 80% of its total assets in Municipal
Securities. Unlike the Pacific Horizon Fund, the Nations Fund may also invest in
instruments issued by certain trusts, partnerships or other special purpose
issuers, including pass through certificates. Like the Pacific Horizon Fund, the
Nations Fund also may invest up to 20% of the total value of its assets in
taxable instruments. The Nations Fund, however, intends to limit any such
investment in money market instruments (consisting of U.S. Government
Obligations and repurchase agreements) and private activity bonds, the interest
on which may be treated as a specific tax preference item under the Federal
alternative minimum tax. Like the Pacific Horizon Fund, the Nations Fund may
hold cash reserves pending investment during temporary defensive periods or if
the investment adviser believes that desirable tax-exempt obligations are
unavailable.
Each Fund is a money market fund and in accordance with Rule 2a-7 under
the 1940 Act, will invest in instruments with remaining maturity not exceeding
397 days and each Fund's dollar-weighted average portfolio maturity may not
exceed 90 days. The Pacific Horizon Fund and the Nations Fund are permitted to
invest their assets in both First Tier Securities and Second
III-3
<PAGE>
Tier Securities, as those terms are defined by the SEC, in accordance with Rule
2a-7 under the 1940 Act. The Pacific Horizon Fund will invest in both First Tier
and Second Tier Securities but the Nations Fund will invest only in First Tier
Securities.
IV. PACIFIC HORIZON TREASURY FUND/
NATIONS TREASURY RESERVES
Investment Objectives:
1. Pacific Horizon Treasury Fund: to seek current income, a stable share
price and daily liquidity.
2. Nations Treasury Reserves: to preserve principal value and maintain a
high degree of liquidity while providing current income.
Comment: Each Fund is a money market fund and in accordance with Rule 2a-7
under the 1940 Act, will invest in instruments with remaining maturity not
exceeding 397 days and each Fund's dollar-weighted average portfolio maturity
may not exceed 90 days. The Pacific Horizon Fund pursues its investment
objective by investing solely in direct obligations of the U.S. Treasury,
including U.S. Treasury bills, notes and bonds, repurchase agreements backed by
U.S. Treasury bills, notes and bonds. All of the Fund's investments will be in
the highest short-term rating category or will issued by issuers with such
ratings. The Pacific Horizon Fund will invest only in First Tier Securities as
defined by Rule 2a-7 under the 1940 Act.
Like the Pacific Horizon Fund, the Nations Fund also typically invests in
direct obligations issued by the U.S. Treasury, STRIPS and repurchase agreements
and reverse agreements involving such obligations. Under normal market
conditions, the Nations Fund will invest 65% of its total assets in U.S.
Treasury bills, notes and bonds and other instruments issued directly by the
U.S. Government and repurchase agreements secured by such obligations. The
Nations Fund may also invest in obligations the principal and interest of which
are backed by the full faith and credit of the United States Government. The
Fund is listed on the National Association of Insurance Commissioners' Approved
List of Class 1 Money Market Mutual Funds. Like the Pacific Horizon Fund, the
Nations Fund will invest only in First Tier Securities.
V. PACIFIC HORIZON TREASURY ONLY FUND/
NATIONS GOVERNMENT RESERVES
Investment Objectives:
1. Pacific Horizon Treasury Only Fund: to seek current income, a stable
share price and daily liquidity.
2. Nations Government Reserves: to preserve principal value and maintain a
high degree of liquidity while providing current income.
III-4
<PAGE>
Comment: Each Fund is a money market fund and in accordance with Rule 2a-7
under the 1940 Act, will invest in instruments with remaining maturity not
exceeding 397 days and each Fund's dollar-weighted average portfolio maturity
may not exceed 90 days. The Pacific Horizon Fund will pursue its investment
objective by investing solely in the obligations of the U.S. Treasury. U.S.
Treasury securities are backed by the full faith and credit of the U.S.
Government and include U.S. Treasury bills, notes and bonds. All of the Fund's
investments will be in the highest short-term rating category or will be issued
by issuers with such ratings. The Pacific Horizon Fund will invest in "First
Tier Securities" as defined by Rule 2a-7 under the 1940 Act.
Like the Pacific Horizon Fund, the Nations Fund also typically invests in
direct obligations issued by the U.S. Treasury and STRIPS. Unlike the Pacific
Horizon Fund, the Nations Fund may also purchase obligations, the principal and
interest of which are backed by the full faith and credit of the U.S.
Government. The Nations Fund, unlike the Pacific Horizon Fund, may enter into
repurchase agreements involving such obligations. Like the Pacific Horizon Fund,
the Nations Fund will invest only in First Tier Securities.
III-5
<PAGE>
APPENDIX IV
Shareholder Transactions and Services of the Nations Funds and the
Corresponding Pacific Horizon Funds
-----------------------------------------------
This Appendix compares the shareholder transactions and services of the
Pacific Horizon Funds and the corresponding Nations Funds. The following is
qualified in its entirety by the more detailed information included in the
prospectuses for the Pacific Horizon Funds and Nations Funds which are
incorporated by reference in this Proxy/Prospectus. Unless otherwise indicated,
terms used herein and not otherwise defined have the same meanings as are given
to them in such prospectuses. Please note that after the Reorganization, Nations
will generally continue to honor any standing instructions regarding the
corresponding Pacific Horizon Fund classes, under arrangements such as automatic
withdrawal plans, systematic investment plans or dividend reinvestment plans. In
such cases, standing instructions will be subject to the same or similar terms
(e.g., minimum investments, account balances and minimum transaction amounts)
currently in effect, except that there may be exceptions with respect to the
timing of transactions which may need to be altered to comport with Nations
procedures. Shareholders will be notified of any such exceptions. After the
Reorganization, any instructions given with respect to any new account will be
subject to the terms of the applicable Nations Fund class.
IV-1
<PAGE>
I. Pacific Horizon Funds - A Shares
Corresponding Nations Funds - Investor A Shares
A. Sales Charges and Exemptions
There is a maximum sales charge of 5.75% on A Shares of the Pacific
Horizon Asset Allocation, Blue Chip and Capital Income Funds, 3.25% on the
Intermediate Bond Fund and 4.75% on the California Municipal Bond Fund. The
sales charge on the A Shares of the Pacific Horizon Funds may decrease as the
amount a shareholder invests increases. Also there is no sales charge on
purchases of A shares of $1 million or more. However, unless a Pacific Horizon
Fund shareholder participates in the Bank of America Daily Advantage(R) or
Advantage Plus3 programs, a contingent deferred sales charge will be imposed as
follows: 1% redemptions made within 1 year of purchases made on or after
November 16, 1998, declining to 0.50% in the second year, and eliminated
thereafter, or 1% on redemptions made within 18 months of purchases made before
November 16, 1998. An investor also may be entitled to reduced sales charges on
A Shares through rights of accumulation, letter of intent, quality discounts or
through certain affiliations with BankAmerica Corporation.
There is a maximum sales charge of 5.75% on Investor A Shares of the
Nations Capital Income, Asset Allocation and Blue Chip Funds, 3.25% on the
Intermediate Bond Fund and 4.25% on the California Municipal Bond Fund. Sales
charges are reduced as the amount invested increases. An investor also may be
entitled to reduced sales charges on Investor A Shares through Rights of
Accumulation, a Letter of Intent, Quantity Discounts or through certain
affiliations with BankAmerica Corporation. Investor A Shares of each of the
Nations Funds have in addition a 1.00% maximum deferred sales charge which is
imposed only if shares are redeemed within two years of purchase.
B. Purchase Policies
Pacific Horizon Funds Nations Funds
Minimum initial investment $500 for a regular $1,000 for a regular
account; $100 for account; $500 for IRA
investors purchasing investors; $250 for
through BofA or its non-working spousal
affiliate*; $500 for IRA IRAs; $100 for investors
or SEP IRA investors; participating in the
$250 for non-working Systematic Investment
spousal IRAs; $2500 Plan; no minimum
- ------------------
* The minimum investment is $100 for purchases made through BofA or its
affiliates' trust and agency accounts or a Service Organization whose clients
have made aggregate minimum purchases of $1 million. The minimum investment is
$200 for BankAmerica cardholders with an appropriate award certificate.
IV-2
<PAGE>
for SEP-IRAs. investment for 401(k)
plans, simplified
employee pension plans
("SEPs"), Savings
Incentives Method Plans
for Employees ("SIMPLE
IRAs") and salary
reduction-IRAs
("SAR-IRAs").**
Minimum subsequent $50 for regular accounts $100; $50 for subsequent
investments and $0 for investors investments made through
purchasing through BofA the Systematic Investment
or its affiliates; for Plan.
IRA or SEP IRA investors;
for non-working spousal
IRAs; or for SEP-IRAs with
more than one participant.
Purchase methods Through Bank of America; Through Selling Agents,
Service Organizations; by Servicing Agents, a
mail; by wire; by Nations Fund Personal
telephone; or Teletrade. Investment Planner
account; by mail; by
wire; by telephone# and
a Systematic Investment
Plan.
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Yes Yes
By telephone Yes Yes#
By wire Yes Yes
- --------------------------------------------------------------------------------
** The assets of such plans must reach an asset value of $1,000 ($500 for
SEPs, SAR-SEPs and SAR-IRAs) within one year of the account open date. If
the assets of such plans do not reach the minimum asset size within one
year, Nations reserves the right to redeem the Shares held by such plans on
60 days' written notice.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
IV-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Check writing feature Yes ($500 transaction None
(fixed income funds, only) minimum)
By automatic withdrawal plan Yes (net asset value of account Yes (net asset value of account
must be $5,000) must be $10,000)@
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Investor A Shares and Pacific Horizon may redeem A
Shares, if the balance in a shareholder's account with the Fund drops below $500
as a result of redemptions, and the shareholder does not increase the balance to
at least $500 on 60 days' written notice. Share balances also may be redeemed at
the direction of an agent pursuant to arrangements between the agent and its
customer. Nations and Pacific Horizon also may redeem shares of the Nations
Funds and Pacific Horizon Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.
D. Additional Shareholder Services
<TABLE>
<CAPTION>
<S> <C>
Pacific Horizon Funds Nations Funds
Systematic/automatic Yes ($50 minimum initial and Yes (in any amount from $50
investment plan subsequent investment) to $100,000).
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Yes Yes
By telephone Yes Yes
Minimum The A Shares exchanged The Investor A Shares
must have a current value exchanged must have a
of at least $500. current value of at
least $1,000
Automatic exchange feature No Yes. A shareholder may
automatically exchange
at least $25 on a
monthly or quarterly
basis.
</TABLE>
- -----------------------
@ Shares of Nations Funds redeemed under the automatic withdrawal plan will
not be subject to a contingent deferred sales charge, provided that the
shares so redeemed do not exceed, on an annual basis, 12% of the net asset
value of the respective shares in the account.
IV-4
<PAGE>
Investor A Shares of a Nations Fund may be exchanged for Investor A Shares
of most other Nations Funds. Exchanges are subject to the minimum investment and
other requirements imposed.
A Shares of a Pacific Horizon Fund may be exchanged for A Shares of any
other Pacific Horizon Fund or Time Horizon Fund, a separate investment company
advised by Bank of America. Exchanges are subject to the minimum investment
requirements imposed.
II. Pacific Horizon Funds - B Shares
Corresponding Nations Funds - Investor B Shares
A. Sales Charges and Exemptions
There is a maximum deferred sales charge of 5.00% on B Shares and Investor
B Shares of each of the Pacific Horizon Funds and the Nations Funds,
respectively if such shares are redeemed within a specified number of years of
the initial purchase. The deferred sales charge is reduced as the number of
years the shares are held increases, and there is no deferred sales charge on
shares held for six years or longer.
B. Purchase Policies
Pacific Horizon Funds Nations Funds
Minimum initial investment $500 for a regular $1,000 for a regular
account; $100 for account; $500 for IRA
investors purchasing investors; $250 for
through BofA or its non-working spousal
affiliate*; $500 for IRA IRAs; $100 for investors
or SEP IRA investors; participating in the
$250 for non-working Systematic Investment
spousal IRAs; $2500 for Plan; no minimum
SEP-IRAs with more than investment for 401(k)
one participant. plans, simplified
employee pension plans
("SEPs"), Savings
Incentives Method Plans
for Employees ("SIMPLE
IRAs") and salary
reduction-IRAs
("SAR-IRAs").**
- ---------------------
* The minimum investment is $100 for purchases made through BofA or its
affiliates' trust and agency accounts or a Service Organization whose
clients have made aggregate minimum purchases of $1 million. The minimum
investment is $200 for BankAmerica cardholders with an appropriate award
certificate.
** The assets of such plans must reach an asset value of $1,000 ($500 for
SEPs, SAR-SEPs and SAR-IRAs) within one year of the account open date. If
the assets of such plans do not reach the minimum asset size within one
year, Nations reserves the right to redeem the Shares held by such plans on
60 days' written notice.
IV-5
<PAGE>
Minimum subsequent $50 for regular accounts $100; $50 for subsequent
investments and $0 for investors investments made through
purchasing through BofA the Systematic
or its affiliate; for IRA Investment Plan.
or SEP IRA investors; for
non-working spousal IRAs;
or for SEP-IRAs.
Purchase methods Through Bank of America; Through Selling Agents,
Service Organizations; by Servicing Agents, a
mail; by wire; by Nations Fund Personal
telephone; or Teletrade. Investment Planner
account; by mail; by
wire; by telephone# and
a Systematic Investment
Plan.
C. Redemption Procedures
<TABLE>
<CAPTION>
<S> <C>
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Yes Yes
By telephone Yes Yes#
By wire Yes Yes
Check writing feature Yes ($500 transaction None
(fixed income funds, only) minimum)
By automatic withdrawal plan Yes (net asset value of account Yes (net asset value of plan of account
must be $5,000) must be $10,000)@
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Investor B Shares and Pacific Horizon may redeem B
Shares, if the balance in a shareholder's account with the Fund drops below $500
as a result of
- ------------------------
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
@ Shares of Nations Funds redeemed under the automatic withdrawal plan will
not be subject to a contingent deferred sales charge, provided that the
shares so redeemed do not exceed, on an annual basis, 12% of the net asset
value of the respective shares in the account.
IV-6
<PAGE>
redemptions, and the shareholder does not increase the balance to at least $500
on 60 days' written notice. Share balances also may be redeemed at the direction
of an agent pursuant to arrangements between the agent and its customer. Nations
and Pacific Horizon also may redeem shares of the Nations Funds and Pacific
Horizon Funds involuntarily or make payment for redemption in readily marketable
securities or other property under certain circumstances in accordance with the
1940 Act.
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Yes ($50 minimum initial Yes (in any amount from
investment plan and subsequent investment) $50 to $100,000).
Conversion feature Yes (to A Shares in 8 Yes (to Investor A
years) shares in 8 years)
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Yes Yes
By telephone Yes Yes
Minimum The B Shares exchanged The Investor B Shares
must have a current value exchanged must have a
of at least $500. current value of at
least $1,000
Automatic exchange feature None None
Investor B Shares of a Nations Fund may be exchanged for Investor B Shares
of most other Nations Funds or Investor C Shares of Nations Fund money market
funds. Exchanges are subject to the minimum investment requirements imposed.
B Shares of a Pacific Horizon Fund may be exchanged for B Shares of any
other Pacific Horizon Fund or Time Horizon Fund or the Y Shares of Pacific
Horizon's Prime Fund. Exchanges are subject to the minimum investment
requirements imposed.
IV-7
<PAGE>
III. Pacific Horizon Fund - K Shares
Corresponding Nations Fund - Investor C Shares
A. Sales Charges and Exemptions
Pacific Horizon's K Shares are offered at net asset value with no
front-end or contingent deferred sales charges.
Nations Funds Investor C Shares are subject to a maximum deferred sales
charge of 1.00% of the lower of the original purchase price or redemption
proceeds.
B. Purchase Policies
Pacific Horizon Funds Nations Funds
Minimum initial investment $500 for a regular $1,000 for a regular
account; $100 for account; $500 for IRA
investors purchasing investors; $250 for
through BofA or its non-working spousal
affiliate*; $500 for IRA IRAs; $100 for investors
or SEP IRA investors; participating in the
$250 for non-working Systematic Investment
spousal IRAs; $2500 for Plan; no minimum
SEP-IRAs with more than investment for 401(k)
one participant. plans, simplified
employee pension plans
("SEPs"), Savings
Incentives Method Plans
for Employees ("SIMPLE
IRAs") and salary
reduction-IRAs
("SAR-IRAs").**
Minimum subsequent $50 for regular accounts $100; $50 for subsequent
investments and $0 for investors investments made through
purchasing through BofA the Systematic
or its affiliate; for IRA Investment Plan.
or SEP IRA investors; for
non-working spousal IRAs;
or for SEP-IRAs.
- --------------------
* The minimum investment is $100 for purchases made through BofA or its
affiliates' trust and agency accounts or a Service Organization whose
clients have made aggregate minimum purchases of $1 million. The minimum
investment is $200 for BankAmerica cardholders with an appropriate award
certificate.
** The assets of such plans must reach an asset value of $1,000 ($500 for
SEPs, SAR-SEPs and SAR-IRAs) within one year of the account open date. If
the assets of such plans do not reach the minimum asset size within one
year, Nations reserves the right to redeem the Shares held by such plans on
60 days' written notice.
IV-8
<PAGE>
Purchase methods Through Bank of America; Through Selling Agents,
Service Organizations; by Servicing Agents, a
mail; by wire; by Nations Fund Personal
telephone; or Teletrade. Investment Planner
account; by mail; by
wire; by telephone# and
a Systematic Investment
Plan.
C. Redemption Procedures
<TABLE>
<CAPTION>
<S> <C>
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Yes Yes
By telephone Yes Yes#
By wire Yes Yes
Check writing feature Yes ($500 transaction None
(fixed income funds, only) minimum)
By automatic withdrawal plan Yes (net asset value of account Yes (net asset value of account
(fixed income fund only) must be $5,000) must be $10,000)@
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Investor C Shares and Pacific Horizon may redeem K
Shares, if the balance in a shareholder's account with the Fund drops below $500
as a result of redemptions, and the shareholder does not increase the balance to
at least $500 on 60 days' written notice. Share balances also may be redeemed at
the direction of an agent pursuant to arrangements between the agent and its
customer. Nations and Pacific Horizon also may redeem shares of the Nations
Funds and Pacific Horizon Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.
- -----------------------
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
@ Shares of Nations Funds redeemed under the automatic withdrawal plan will
not be subject to a contingent deferred sales charge, provided that the
shares so redeemed do not exceed, on an annual basis, 12% of the net asset
value of the respective shares in the account.
IV-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Yes ($50 minimum initial and Yes (in any amount from $50
investment plan subsequent investment) to $100,000).
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Yes Yes
By telephone Yes Yes
Minimum The K Shares exchanged The Investor C Shares
must have a current value exchanged must have a
of at least $500. current value of at
least $1,000
Automatic exchange feature No Yes. A shareholder may
automatically exchange
at least $25 on a
monthly or quarterly
basis.
</TABLE>
Investor C Shares of a Nations Fund may be exchanged for Investor C Shares
of most other non-money market Nations Fund or Daily shares of any non-money
market Nations Fund. Exchanges are subject to the minimum investment and other
requirements imposed.
K Shares of a Pacific Horizon Fund may be exchanged for K Shares of any
other Pacific Horizon Fund or Time Horizon Fund. Exchanges are subject to the
minimum investment requirements imposed.
IV. Pacific Horizon Funds - SRF Shares
Corresponding Nations Funds - Seafirst Shares
A. Sales Charges and Exemptions
Pacific Horizon's SRF Shares and Nations Funds Seafirst Shares are offered
at net asset value with no front-end or contingent deferred sales charges.
B. Purchase Policies
IV-10
<PAGE>
Pacific Horizon Funds Nations Funds*
Minimum initial investment None None
Minimum subsequent None None
investments
Purchase methods Through Bank of America; None
Service Organizations; by
mail; by wire; by telephone; or
Teletrade.
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature None None
By automatic withdrawal None None
plan
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Seafirst Shares and Pacific Horizon may redeem SRF
Shares, if the balance in a shareholder's account with the Fund drops below $500
as a result of redemptions, and the shareholder does not increase the balance to
at least $500 on 60 days' written notice. Share balances also may be redeemed at
the direction of an agent pursuant to arrangements between the agent and its
customer. Nations and Pacific Horizon also may redeem shares of the Nations
Funds and Pacific Horizon Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.
D. Additional Shareholder Services
- -----------------------
* Seafirst Shares of Nations Funds will not be offered to new investors.
IV-11
<PAGE>
Pacific Horizon Funds Nations Funds
Systematic/automatic None None
investment plan
E. Share Exchanges
Pacific Horizon Funds Nations Funds**
By mail Yes [n/a]
By telephone Yes [n/a]
Minimum None [n/a]
Automatic Conversion Plan On June 23, 2000 to A [n/a]
Shares
SRF Shares of a Pacific Horizon Fund may be exchanged for SRF Shares or A
Shares of any other Pacific Horizon Fund or Time Horizon Fund or Pacific Horizon
Shares of the Pacific Horizon Prime Fund. Exchanges are subject to the minimum
investment requirements imposed.
V. Pacific Horizon Funds - S Shares
Corresponding Nations Funds - Daily Shares
A. Sales Charges and Exemptions
Pacific Horizon's S Shares and Nations Funds' Daily Shares are both
offered at net asset value with no front-end or contingent deferred sales
charges.
B. Purchase Policies
Pacific Horizon Funds*** Nations Funds
Minimum initial investment None $1,000 for a regular
account; $500 for IRA
investors; $250 for
non-working spousal
IRAs; $100 for investors
participating in the
Systematic
* Seafirst Shares of Nations Funds will not be offered to new investors.
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance
requirements.
IV-12
<PAGE>
Investment Plan; no
minimum investment for
401(k) plans, simplified
employee pension plans
("SEPs"), Savings
Incentives Method Plans
for Employees ("SIMPLE
IRAs") and salary
reduction-IRAs
("SAR-IRAs").**
Minimum subsequent None $100; $50 for subsequent
investments investments made through
the Systematic
Investment Plan.
Purchase methods Through departments of Through Selling Agents,
Bank of America or Servicing Agents, a
Service Organizations Nations Fund Personal
Investment Planner
account; by mail; by
wire; by telephone# and a
Systematic Investment
Plan.
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Terms set by Service Yes
Organization
By telephone Terms set by Service Yes#
Organization
By wire Terms set by Service Yes
- --------------------------------------------------------------------------------
** The assets of such plans must reach an asset value of $1,000 ($500 for
SEPs, SAR-SEPs and SAR-IRAs) within one year of the account open date. If
the assets of such plans do not reach the minimum asset size within one
year, Nations reserves the right to redeem the Shares held by such plans on
60 days' written notice.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
IV-13
<PAGE>
Organization
Check writing feature None Yes ($250 transaction
minimum)
By automatic withdrawal Terms set by Service Yes (net asset value of
plan Organization account must be $10,000)@
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Daily Shares and Pacific Horizon may redeem S Shares,
if the balance in a shareholder's account with the Fund drops below $500 as a
result of redemptions, and the shareholder does not increase the balance to at
least $500 on 60 days' written notice. Share balances also may be redeemed at
the direction of an agent pursuant to arrangements between the agent and its
customer. Nations and Pacific Horizon also may redeem shares of the Nations
Funds and Pacific Horizon Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Terms set by Service Yes (in any amount from
investment plan Organization $50 to $100,000).
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Terms set by Service Yes
Organization
By telephone Terms set by Service Yes
Organization
Minimum Terms set by Service The Daily Shares
Organization exchanged must have a
current value of at
least $1,000
Automatic exchange feature Terms set by Service Yes. A shareholder may
Organization automatically exchange at
least $25 on a monthly or
- ----------
@ Shares of Nations Funds redeemed under the automatic withdrawal plan will
not be subject to a contingent deferred sales charge, provided that the
shares so redeemed do not exceed, on an annual basis, 12% of the net asset
value of the respective shares in the account.
IV-14
<PAGE>
quarterly basis.
[Daily Shares of a Nations Fund may be exchanged for Daily Shares or
Investor C shares of any other Nations Fund.] Exchanges are subject to the
minimum investment requirements imposed.
The exchange features of Pacific Horizon's S Shares are determined by the
investor's Service Organization.
VI. Pacific Horizon Funds - X Shares
Corresponding Nations Funds - Daily Shares
A. Sales Charges and Exemptions
Pacific Horizon's X Shares and Nations Funds' Daily Shares are both
offered at net asset value with no front-end or contingent deferred sales
charges.
B. Purchase Policies
Pacific Horizon Funds*** Nations Funds
Minimum initial investment None $1,000 for a regular
account; $500 for IRA
investors; $250 for
non-working spousal
IRAs; $100 for investors
participating in the
Systematic Investment
Plan; no minimum
investment for 401(k)
plans, simplified
employee pension plans
("SEPs"), Savings
Incentives Method Plans
for Employees ("SIMPLE
IRAs") and salary
reduction-IRAs
("SAR-IRAs").**
Minimum subsequent None $100; $50 for subsequent
investments investments made through
the Systematic
Investment Plan.
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance
requirements.
** The assets of such plans must reach an asset value of $1,000 ($500 for
SEPs, SAR-SEPs and SAR-IRAs) within one year of the account open date. If
the assets of such plans do not reach the minimum asset size within one
year, Nations reserves the right to redeem the Shares held by such plans on
60 days' written notice.
IV-15
<PAGE>
Purchase methods Through departments of Through Selling Agents,
Bank of America or Servicing Agents, a
Service Organizations Nations Fund Personal
Investment Planner
account; by mail; by
wire; by telephone# and a
Systematic Investment
Plan.
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Terms set by Service Yes
Organization
By telephone Terms set by Service Yes#
Organization
By wire Terms set by Service Yes
Organization
Check writing feature None Yes ($250 transaction
minimum)
By automatic withdrawal Terms set by Service Yes (net asset value of
plan Organization account must be $10,000)@
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Daily Shares and Pacific Horizon may redeem X Shares,
if the balance in a shareholder's account with the Fund drops below $500 as a
result of redemptions, and the shareholder does not increase the balance to at
least $500 on 60 days' written notice. Share balances also may be redeemed at
the direction of an agent pursuant to arrangements between the agent and its
customer. Nations and Pacific Horizon also may redeem shares of the Nations
Funds and Pacific Horizon Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.
- -----------------------------
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
@ Shares of Nations Funds redeemed under the automatic withdrawal plan will
not be subject to a contingent deferred sales charge, provided that the
shares so redeemed do not exceed, on an annual basis, 12% of the net asset
value of the respective shares in the account.
IV-16
<PAGE>
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Terms set by Service Yes (in any amount from
investment plan Organization $50 to $100,000).
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Terms set by Service Yes
Organization
By telephone Terms set by Service Yes
Organization
Minimum Terms set by Service The Daily Shares
Organization exchanged must have a
current value of at
least $1,000
Automatic exchange feature Terms set by Service Yes. A shareholder may
Organization automatically exchange at
least $25 on a monthly or
quarterly basis.
[Daily Shares of a Nations Fund may be exchanged for Daily Shares or
Investor C shares of any other Nations Fund.] Exchanges are subject to the
minimum investment requirements imposed.
The exchange features of Pacific Horizon's X Shares are determined by the
investor's Service Organization.
VII. Pacific Horizon Funds - Y Shares
Corresponding Nations Funds - Service Shares
A. Sales Charges and Exemptions
Pacific Horizon's Y Shares and Nations Funds' Service Shares are both
offered at net asset value with no front-end or contingent deferred sales
charges.
B. Purchase Policies
IV-17
<PAGE>
Pacific Horizon Funds*** Nations Funds
Minimum initial investment None None
Minimum subsequent None None
investments
Purchase methods Through departments of Through Selling Agents,
Bank of America or Servicing Agents, a
Service Organizations Nations Fund Personal
Investment Planner
account; by mail; by
wire; by telephone# and a
Systematic Investment
Plan.
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Terms set by Service Yes
Organization
By telephone Terms set by Service Yes#
Organization
By wire Terms set by Service Yes
Organization
Check writing feature None Yes ($250 transaction
minimum)
By automatic withdrawal Terms set by Service Yes (net asset value of
plan Organization account must be $10,000)@
- ----------------------
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance
requirements.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
IV-18
<PAGE>
Reinstatement Privileges Within 120 days only for None
exchanges of B Shares into
Y Shares of Pacific
Horizon's Prime Fund.
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Service Shares and Pacific Horizon may redeem Y Shares,
if the balance in a shareholder's account with the Fund drops below $500 as a
result of redemptions, and the shareholder does not increase the balance to at
least $500 on 60 days' written notice. Share balances also may be redeemed at
the direction of an agent pursuant to arrangements between the agent and its
customer. Nations and Pacific Horizon also may redeem shares of the Nations
Funds and Pacific Horizon Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Terms set by Service Yes (in any amount from
investment plan Organization $50 to $100,000).+
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Terms set by Service Yes
Organization
By telephone Terms set by Service Yes
Organization
Minimum Terms set by Service None
Organization
Automatic exchange feature Terms set by Service Yes. A shareholder may
Organization automatically exchange at
least $25 on a monthly or
quarterly basis.
- -----------------------
@ Shares of Nations Funds redeemed under the automatic withdrawal plan will
not be subject to a contingent deferred sales charge, provided that the
shares so redeemed do not exceed, on an annual basis, 12% of the net asset
value of the respective shares in the account.
+ Minimum initial investment: $1,000.
IV-19
<PAGE>
[Service Shares of a Nations Fund may be exchanged for Service Shares of
any other Nations Fund.] Exchanges are subject to the minimum investment
requirements imposed.
Pacific Horizon's Y Shares of the Prime Fund may be exchanged for B Shares
of any other Pacific Horizon Fund or Y Shares of the Treasury Fund. Shares of
the Treasury Fund may be exchanged only for Y Shares of the Prime Fund.
Exchanges are subject to the minimum investment requirements imposed. check
VIII. Pacific Horizon Funds - Horizon Service Shares
Corresponding Nations Funds - Adviser Shares
A. Sales Charges and Exemptions
Pacific Horizon's Horizon Service Shares and Nations Funds' Adviser Shares
are both offered at net asset value with no front-end or contingent deferred
sales charges.
B. Purchase Policies
Pacific Horizon Funds*** Nations Funds
Minimum initial investment $500,000 $100,000
Minimum subsequent None None
investments
Purchase methods Directly by institutional Through Stephens, the
clients or through Transfer Agent, or their
selected Service respective agents
Organizations upon
execution of the
appropriate account
documentation
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By telephone Yes Yes
By wire Yes Yes
- --------------------------
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance
requirements.
IV-20
<PAGE>
Check writing feature None None
By automatic withdrawal [to be inserted] None
plan
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Adviser Shares and Pacific Horizon may redeem Horizon
Service Shares, if the balance in a shareholder's account with the Fund drops
below $500 as a result of redemptions, and the shareholder does not increase the
balance to at least $500 on 60 days' written notice. Share balances also may be
redeemed at the direction of an agent pursuant to arrangements between the agent
and its customer. Nations and Pacific Horizon also may redeem shares of the
Nations Funds and Pacific Horizon Funds involuntarily or make payment for
redemption in readily marketable securities or other property under certain
circumstances in accordance with the 1940 Act.
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Terms set by Service None
investment plan Organization
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Terms set by Service [to be inserted]
Organization
By telephone Terms set by Service Yes
Organization
Minimum Terms set by Service $100,000
Organization
Automatic exchange feature Terms set by Service None
Organization
[Adviser Shares of a Nations Fund may be exchanged for Adviser Shares of
any other Nations Fund.] Exchanges are subject to the minimum investment
requirements imposed.
Horizon Service Shares of a Pacific Horizon Fund may be exchanged for
Horizon Service Shares of any other Pacific Horizon Fund. Exchanges are subject
to the minimum investment requirements imposed.
IV-21
<PAGE>
IX. Pacific Horizon Funds - Horizon Shares
Corresponding Nations Funds - Capital Shares
A. Sales Charges and Exemptions
Pacific Horizon's Horizon Shares and Nations Funds' Capital Shares are
both offered at net asset value with no front-end or contingent deferred sales
charges.
B. Purchase Policies
Pacific Horizon Funds*** Nations Funds
Minimum initial investment $500,000* $1,000,000
Minimum subsequent None None
investments
Purchase methods Directly by institutional Through Stephens, the
clients or through Transfer Agent, or their
selected Service respective agents
Organizations upon
execution of the
appropriate account
documentation
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By telephone Yes Yes
By wire Yes Yes
Check writing feature None None
By automatic withdrawal [to be inserted] None
plan
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Capital Shares and Pacific Horizon may redeem Horizon
Shares, if the
- ----------------------
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance
requirements.
* Purchases by checks are not permitted.
IV-22
<PAGE>
balance in a shareholder's account with the Fund drops below $500 as a result of
redemptions, and the shareholder does not increase the balance to at least $500
on 60 days' written notice. Share balances also may be redeemed at the direction
of an agent pursuant to arrangements between the agent and its customer. Nations
and Pacific Horizon also may redeem shares of the Nations Funds and Pacific
Horizon Funds involuntarily or make payment for redemption in readily marketable
securities or other property under certain circumstances in accordance with the
1940 Act.
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Terms set by Service None
investment plan Organization
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail Terms set by Service [to be inserted]
Organization
By telephone Terms set by Service Yes
Organization
Minimum Terms set by Service None
Organization
Automatic exchange feature Terms set by Service None
Organization
[Capital Shares of a Nations Fund may be exchanged for Capital Shares of
any other Nations Fund.] Exchanges are subject to the minimum investment
requirements imposed.
Horizon Shares of a Pacific Horizon Fund may be exchanged for Horizon
Shares of any other Pacific Horizon Fund. Exchanges are subject to the minimum
investment requirements imposed.
X. Pacific Horizon Funds - Pacific Horizon Shares
Corresponding Nations Funds - Investor Shares
A. Sales Charges and Exemptions
IV-23
<PAGE>
Pacific Horizon's Pacific Horizon Shares and Nations Funds' Investor
Shares are both offered at net asset value with no front-end or contingent
deferred sales charges.
B. Purchase Policies
Pacific Horizon Funds Nations Funds
Minimum initial investment $500 for a regular $25,000
account; $500 for IRA or
Roth IRA and SEP IRAs;
$250 for non-working
spousal IRAs; $2500 for
SEP-IRAs with more than
one participant; $50
through Direct Deposit
Program.
Minimum subsequent $50, $500 for Teletrade, None
investments $0 for investors
purchasing through BofA
or its affiliations; for
IRA or Roth IRA
investors; for
non-working spousal
IRAs; or for SEP-IRAs.
Purchase methods Through Bank of America [to be inserted]
or Service Organizations.
C. Redemption Procedures
Pacific Horizon Funds Nations Funds
Through an authorized Yes Yes
selling or servicing agent
By mail Yes [to be inserted]
By telephone [to be inserted] [to be inserted]
By wire Yes [to be inserted]
Check writing feature Yes (transaction minimum: Yes (transaction
$500) minimum: $500)
By automatic withdrawal Yes (net asset value of None
account must be $5,000)
IV-24
<PAGE>
Reinstatement privileges Yes (within 90 days) Yes (within 90 days)
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Investor Shares and Pacific Horizon may redeem Pacific
Horizon Shares, if the balance in a shareholder's account with the Fund drops
below $500 as a result of redemptions, and the shareholder does not increase the
balance to at least $500 on 60 days' written notice. Share balances also may be
redeemed at the direction of an agent pursuant to arrangements between the agent
and its customer. Nations and Pacific Horizon also may redeem shares of the
Nations Funds and Pacific Horizon Funds involuntarily or make payment for
redemption in readily marketable securities or other property under certain
circumstances in accordance with the 1940 Act.
D. Additional Shareholder Services
Pacific Horizon Funds Nations Funds
Systematic/automatic Yes ($50 minimum initial None
investment plan and subsequent
investment).
E. Share Exchanges
Pacific Horizon Funds Nations Funds
By mail [to be inserted] Yes
By telephone Yes Yes
Minimum The Pacific Horizon None
Shares exchanged must
have a current value of
a least $500.
Automatic exchange feature None [to be inserted]
[Investor Shares of a Nations Fund may be exchanged for Investor Shares or
Investor B shares of any other Nations Fund.] Exchanges are subject to the
minimum investment requirements imposed.
Pacific Horizon Shares of a Pacific Horizon Fund may be exchanged for
Pacific Horizon Shares of any other Pacific Horizon Fund or Time Horizon Fund,
except Pacific Horizon Shares of the Pacific Horizon's Prime Fund acquired
through an exchange of B Shares of a Time Horizon Fund may only be exchanged
back to B shares of a Time Horizon Fund. Exchanges are subject to the minimum
investment requirements imposed.
XI. Dividends for each of the Pacific Horizon Funds and Nations Funds are
declared and paid as follows:
IV-25
<PAGE>
Pacific Horizon Funds Nations Funds
Declared daily and paid Tax-Exempt Money Fund Municipal Reserves
monthly
Prime Fund Cash Reserves
Treasury Fund Treasury Reserves
Treasury Only Fund Government Reserves
California Tax-Exempt
Money Market Fund
Declared and paid Blue Chip Fund N/A
quarterly
Asset Allocation Fund
Capital Income Fund
IV-26
<PAGE>
Statement of Additional Information
Dated February 1, 1999
PACIFIC HORIZON FUNDS, INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
1-800-346-2087
NATIONS INSTITUTIONAL RESERVES
One NationsBank Plaza, 33rd Floor
Charlotte, North Carolina 28255
1-800-321-7854
(April 12, 1999 Special Meeting of Shareholders of Pacific Horizon Funds)
This Statement of Additional Information is not a prospectus but
should be read in conjunction with the Proxy/Prospectus dated the date hereof,
for the Special Meeting of Shareholders of Pacific Horizon to be held on April
12, 1999. Copies of the Proxy/Prospectus may be obtained at no charge by writing
or calling Pacific Horizon or Nations at the addresses or telephone numbers set
forth above. Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the
Proxy/Prospectus.
Incorporation of Documents by Reference in Statement of Additional Information
Further information about Nations Municipal Reserves, Nations Government
Reserves, Nations Cash Reserves and Nations Treasury Reserves, is contained in
and incorporated by reference to their statements of additional information
dated September 1, 1998 and January ___, 1999.
Further information about the Pacific Horizon Asset Allocation Fund, Blue
Chip Fund, California Municipal Bond Fund, California Tax-Exempt Money Market
Fund, Capital Income Fund, Government Fund, Intermediate Bond Fund, Prime Fund,
Tax-Exempt Fund, Treasury Fund and Treasury Only Fund, is contained in and
incorporated herein by reference to their statements of additional information,
dated July 1, 1998, as supplemented.
The audited financial statements and related Report of Independent
Accountants for the year ended March 31, 1998 and the unaudited financial
statements for the semi-annual period ended September 30, 1998 for Nations
Government Reserves, Nations Cash Reserves, Nations Municipal Reserves and
Nations Treasury Reserves, are incorporated herein by reference. No other part
of the annual or semi-annual reports are incorporated herein by reference.
The audited financial statements and related Report of Independent
Accountants for the year ended February 28, 1998 and the unaudited financial
statements for the semi-annual period ended August 31, 1998 for the Pacific
Horizon Asset Allocation, Blue Chip, California Municipal Bond, California
Municipal Tax-Free Money Market, Capital Income, Government Intermediate Bond,
Prime, Tax-Exempt Money, Treasury and Treasury Only Funds and the Blue Chip
Portfolio and Investment Grade Bond Portfolio of Master Investment Trust, Series
I are incorporated herein by reference. No other part of the annual or
semi-annual reports are incorporated herein by reference.
1
<PAGE>
Table of Contents
General Information............................................................4
Introductory Note to Pro Forma Financial Information...........................5
2
<PAGE>
General Information
The Reorganization contemplates the transfer of all of the assets
and liabilities of each Pacific Horizon Fund to a corresponding Nations Fund in
exchange for Shares of designated classes of the corresponding Nations Fund of
equal value.
The Shares issued by Nations will have an aggregate value equal to the
aggregate value of the shares of the respective Pacific Horizon Funds that were
outstanding immediately before the Closing.
After the transfer of their assets and liabilities in exchange for Shares
of the Nations Funds, the Pacific Horizon Funds will distribute the Shares of
the Nations Funds to their shareholders in liquidation of the Pacific Horizon
Funds. Each shareholder owning shares of a particular Pacific Horizon Fund at
the Closing will receive Shares of the corresponding Nations Fund of equal
value, and will receive any unpaid dividends or distributions that were declared
before the Closing on shares of the Pacific Horizon Funds. Nations will
establish an account for each former shareholder of the Pacific Horizon Funds
reflecting the appropriate number of Nations Fund Shares distributed to the
shareholder. These accounts will be substantially identical to the accounts
maintained by Pacific Horizon for each shareholder. Upon completion of the
reorganization with respect to all funds of Pacific Horizon, all outstanding
shares of the Pacific Horizon Funds will have been redeemed and cancelled in
exchange for Shares of the Nations Funds distributed, and Pacific Horizon will
wind up its affairs and be deregistered as an investment company under the 1940
Act and dissolved under Maryland law.
For further information about the transaction, see the Proxy/Prospectus.
3
<PAGE>
Introductory Note to Pro Forma Financial Information
The following unaudited pro forma information gives effect to the proposed
transfer of the assets and liabilities of the Pacific Horizon Funds to the
Nations Funds, accounted for as if each transfer had occurred as of September
30, 1998 (for the Shell Nations Funds and corresponding Pacific Horizon Funds)
and October 31, 1998 (for the Operating Nations Funds and corresponding Pacific
Horizon Funds). In addition, each pro forma combining statement has been
prepared based upon the structure of the proposed fee and expense structure of
the applicable surviving Nations Fund.
The pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto of the Pacific Horizon Funds
and Nations Funds included or incorporated herein by reference in this Statement
of Additional Information. Each combination of the above Pacific Horizon Funds
and Nations Funds will be accounted for as a tax-free reorganization.
4
<PAGE>
[ pro forma financials to be distributed separately by NBAI ]
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONS ASSET ALLOCATION FUND / PACIFIC HORIZON ASSET ALLOCATION FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Combining Schedule of Investments (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
September 30,1998
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific
Pacific Pro Forma Nations Horizon Pro Forma
Nations Asset Horizon Asset Asset Asset Asset Asset
Allocation Allocation Allocation Allocation Allocation Allocation
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C> <C>
(in 000's) (in 000's) (in 000's)
COLLATERALIZED MORTGAGE OBLIGATIONS -
12.38%
1,000,000 1,000,000 AESOP Funding II, Series 1997-1, Class 1,021 1,021
A1
1,750,000 1,750,000 Asset Securitization Corp., Series 1997-D5, 1,868 1,868
Class A1C
1,222,000 1,222,000 Chevy Chase Auto Receivables Trust, Series 1,245 1,245
1998-2, Class A
1,300,000 1,300,000 Circuit City Credit Card Master Trust, 1,334 1,334
Series 1995-1, Class A
1,715,000 1,715,000 Commercial Mortgage Acceptance Corp., Series 1,795 1,795
1998-C1, Class A2
1,800,000 1,800,000 Credit Suisse First Boston Mortgage 1,886 1,886
Securities Corp., Series 1998-C1, Class A1B
1,966,000 1,966,000 Criimi Mae CMBS Corp., Series 1998-1, Class 1,975 1,975
A1+
1,900,000 1,900,000 Donaldson, Lufkin, Jenrette, Commercial 1,980 1,980
Mortgage Corp., Series 1998-CG1, Class A1B
1,300,000 1,300,000 Fingerhut Master Trust, Series 1998-1, Class 1,335 1,335
A
2,000,000 2,000,000 First Union-Lehman Brothers-Bank of America 2,080 2,080
Trust, Series 1998-C2, Class A2
1,600,000 1,600,000 General Growth Properties, Series 1, Class 1,684 1,684
A2, 144A+
2,075,000 2,075,000 GMAC Commercial Mortgage Securities, Inc., 2,183 2,183
Series 1997-C2, Class A3
2,350,000 2,350,000 Lehman Brothers Commercial Conduit Mortgage 2,457 2,457
Trust, Series 1998-C1, Class A3
2,750,000 2,750,000 Mortgage Capital Funding, Inc., Series 2,911 2,911
1998-MC1, Class A2
1,850,000 1,850,000 Mortgage Capital Funding, Inc., Series 1,927 1,927
1998-MC2, Class A2
2,050,000 2,050,000 Nomura Asset Securities Corp., Series 2,149 2,149
1998-D6, Class A1B
995 995 UAF Auto Grantor Trust, Series 1998-A, Class 1,009 1,009
A+
53,506,000 53,506,000 Vendee Mortgage Trust, Series 1998-1, Class 736 736
2, Interest Only Obligation
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pacific
Pacific Pro Forma Nations Horizon Pro Forma
Nations Asset Horizon Asset Asset Asset Asset Asset
Allocation Allocation Allocation Allocation Allocation Allocation
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C> <C>
53,124,000 53,124,000 Vendee Mortgage Trust, Series 1998-3, Class 598 598
10, Interest Only Obligation ---------------------------------------
0 32,173 32,173
---------------------------------------
COMMON STOCK - 52.86%
<S> <C> <C> <C> <C>
18,600 18,600 United Technologies Corp. 1,422 1,422
10,000 10,000 AMR Corp.** 554 554
3,900 3,900 UAL Corp. ** 253 253
8,000 8,000 Tommy Hilfiger Corp. ** 328 328
16,400 16,400 Chrysler Corp. 785 785
10,800 10,800 Dana Corp. 403 403
34,000 34,000 Ford Motor Co. 1,596 1,596
21,000 21,000 BankBoston Corp. 693 693
36,500 36,500 Chase Manhattan Corp. 995 995
15,700 15,700 Citicorp 1,459 1,459
17,000 17,000 First Chicago NBD Corp. 1,164 1,164
42,000 42,000 First Union Corp. 2,150 2,150
29,700 29,700 Fleet Financial Group, Inc. 2,181 2,181
24,900 24,900 Mellon Bank Corp. 1,371 1,371
16,800 16,800 National City Corp. 1,108 1,108
12,800 12,800 PNC Bank Corp. 576 576
22,800 22,800 Anheuser-Busch Cos., Inc. 1,231 1,231
35,500 35,500 Coca-Cola Co. 2,046 2,046
19,600 19,600 PepsiCo, Inc. 577 577
28,800 28,800 Masco Corp. 709 709
12,700 12,700 Dow Chemical Co. 1,085 1,085
11,000 11,000 Du Pont (E. I.) De Nemours & Co. 617 617
8,200 8,200 PPG Industries, Inc. 448 448
14,900 14,900 Praxair, Inc. 487 487
18,000 18,000 Solutia, Inc. 406 406
1 1 ACNielson Corp. 0 0
42,900 42,900 Cisco Systems, Inc.** 2,652 2,652
35,800 35,800 Lucent Technologies, Inc. 2,472 2,472
9,300 9,300 Compaq Computer Corp. 294 294
50,800 50,800 Dell Computer Corp.** 3,340 3,340
8,400 8,400 Eastman Kodak Co. 649 649
35,000 35,000 EMC Corp.** 2,002 2,002
19,300 19,300 Sun Microsystems, Inc.** 961 961
11,500 11,500 Xerox Corp. 975 975
41,400 41,400 HBO & Co. 1,195 1,195
46,200 46,200 Microsoft Corp.** 5,085 5,085
21,400 21,400 Oracle Corp. 623 623
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pacific
Pacific Pro Forma Nations Horizon Pro Forma
Nations Asset Horizon Asset Asset Asset Asset Asset
Allocation Allocation Allocation Allocation Allocation Allocation
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C> <C>
33,200 33,200 Avon Products, Inc. 932 932
8,600 8,600 Clorox Co. 709 709
10,600 10,600 Newell Co. 488 488
16,600 16,600 Procter & Gamble Co. 1,178 1,178
10,200 10,200 Unilever NV, New York 625 625
58,500 58,500 Edison International 1,503 1,503
27,300 27,300 FPL Group, Inc. 1,902 1,902
57,800 57,800 General Electric Co. 4,599 4,599
14,500 14,500 Transocean Offshore, Inc. 503 503
10,400 10,400 Halliburton Co. 297 297
15,000 15,000 Brunswick Corp. 194 194
21,100 21,100 Carnival Corp. 671 671
19,800 19,800 Time Warner, Inc. 1,734 1,734
22,500 22,500 Viacom, Inc., Class B** 1,305 1,305
16,200 16,200 American Express Co. 1,258 1,258
19,600 19,600 Morgan Stanley Dean Witter Discover & Co. 844 844
31,700 31,700 Providian Financial Corp. 2,688 2,688
18,700 18,700 Conagra, Inc. 504 504
9,600 9,600 Heintz (H.J.) Co. 491 491
10,300 10,300 Pioneer Hi-Bred International, Inc. 270 270
20,700 20,700 Quaker Oats Co. 1,221 1,221
9,600 9,600 Sara Lee Corp. 518 518
4,100 4,100 United Healthcare Corp. 144 144
44,900 44,900 Abbott Laboratories 1,950 1,950
24,800 24,800 Biomet, Inc. 860 860
11,200 11,200 Guidant Corp. 832 832
13,100 13,100 Johnson & Johnson Co. 1,025 1,025
38,600 38,600 Allstate Corp. 1,609 1,609
16,500 16,500 American General Corp. 1,054 1,054
32,400 32,400 Conseco, Inc. 990 990
1,800 1,800 Equitable Cos., Inc. 75 75
23,400 23,400 SunAmerica, Inc. 1,427 1,427
13,600 13,600 Deere & Co. 411 411
15,300 15,300 Ingersoll-Rand Co. 581 581
1,600 1,600 Aluminum Company of America 114 114
31,300 31,300 USX-U.S. Steel Group, Inc. 747 747
19,400 19,400 AlliedSignal, Inc. 686 686
16,000 16,000 Honeywell, Inc. 1,025 1,025
41,600 41,600 Tyco International Ltd. 2,299 2,299
13,000 13,000 Phillips Petroleum Co. 587 587
12,400 12,400 Sun Co., Inc. 397 397
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pacific
Pacific Pro Forma Nations Horizon Pro Forma
Nations Asset Horizon Asset Asset Asset Asset Asset
Allocation Allocation Allocation Allocation Allocation Allocation
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C> <C>
23,800 23,800 USX - Marathon Group 843 843
7,700 7,700 Amoco Corp. 415 415
9,600 9,600 Chevron Corp. 807 807
54,600 54,600 Exxon Corp. 3,832 3,832
26,200 26,200 Mobil Corp. 1,990 1,990
14,100 14,100 Texaco, Inc. 884 884
15,700 15,700 Kimberly-Clark Corp. 636 636
23,400 23,400 Owens-Illinois, Inc. 585 585
8,700 8,700 Temple Inland, Inc. 416 416
12,800 12,800 Biogen, Inc. 843 843
30,700 30,700 Bristol-Meyers Squibb Co. 3,189 3,189
8,500 8,500 Merck & Co., Inc. 1,101 1,101
30,000 30,000 Pfizer, Inc. 3,178 3,178
16,400 16,400 Schering-Plough Corp. 1,698 1,698
48,000 48,000 Warner-Lambert Co. 3,624 3,624
8,700 8,700 McGraw-Hill Cos., Inc. 689 689
18,200 18,200 New York Times Co., Class A 501 501
14,300 14,300 Marriott International, Inc., Class A 341 341
11,000 11,000 McDonald's Corp. 657 657
22,000 22,000 Gap, Inc. 1,161 1,161
41,200 41,200 Home Depot, Inc. 1,627 1,627
51,600 51,600 TJX Cos., Inc. 919 919
43,600 43,600 Wal-Mart Stores, Inc. 2,382 2,382
11,700 11,700 Albertson's, Inc. 633 633
23,200 23,200 Safeway, Inc.** 1,076 1,076
19,000 19,000 Harris Corp. 608 608
13,400 13,400 Intel Corp. 1,149 1,149
23,800 23,800 Maxim Integrated Products, Inc. ** 664 664
49,700 49,700 Philip Morris Cos., Inc. 2,289 2,289
17,100 17,100 Burlington Northern Santa Fe Corp. 547 547
31,400 31,400 Coastal Corp. 1,060 1,060
32,600 32,600 AT&T Corp. 1,905 1,905
35,300 35,300 BellSouth Corp. 2,656 2,656
27,100 27,100 GTE Corp. 1,491 1,491
61,324 61,324 MCI Communications Corp. 2,997 2,997
8,100 8,100 Sprint Corp. 583 583
23,900 23,900 U.S. West, Inc. 1,253 1,253
--------------------------------------
0 137,368 137,368
---------------------------------------
CONVERTIBLE PREFERRED STOCK - .06%
<PAGE>
Pacific
Pacific Pro Forma Nations Horizon Pro Forma
Nations Asset Horizon Asset Asset Asset Asset Asset
Allocation Allocation Allocation Allocation Allocation Allocation
Shares Shares Shares Asset Description Value Value Value
(in 000's) (in 000's) (in 000's)
---------------------------------------
Sealed Air Corp. 0 175 175
---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CORPORATE OBLIGATIONS - - 15.63%
CORPORATE BONDS - 13.54%
1,000,000 1,000,000 AON Corp. 1,080 1,080
1,600,000 1,600,000 BHP Finance USA Ltd. 1,604 1,604
1,400,000 1,400,000 Capital One Bank 1,447 1,447
1,400,000 1,400,000 Case Credit Corp. 1,451 1,451
1,605,000 1,605,000 Coastal Corp. 1,776 1,776
1,300,000 1,300,000 Consumers Energy Co.144A+ 1,352 1,352
1,200,000 1,200,000 Cox Radio, Inc. 144A+ 1,238 1,238
1,000,000 1,000,000 Federated Department Stores 1,092 1,092
2,200,000 2,200,000 Finova Capital Corp. 2,285 2,285
2,000,000 2,000,000 General Motors Acceptance Corp. 2,095 2,095
1,200,000 1,200,000 GTE Corp. 1,390 1,390
1,350,000 1,350,000 Hanson Overseas B.V. 1,448 1,448
1,250,000 1,250,000 James River Corp. 1,366 1,366
1,000,000 1,000,000 KN Energy, Inc. 1,024 1,024
1,500,000 1,500,000 Nabisco, Inc. 1,523 1,523
1,250,000 1,250,000 News America Holdings, Inc. 1,398 1,398
1,500,000 1,500,000 Praxair, Inc. 1,579 1,579
1,300,000 1,300,000 Salomon Smith Barney Holdings, Inc. 1,350 1,350
1,200,000 1,200,000 Sears Roebuck Acceptance Corp. 1,236 1,236
1,100,000 1,100,000 Service Corp. International 1,145 1,145
1,300,000 1,300,000 TCI Communications, Inc. 1,358 1,358
1,250,000 1,250,000 Time Warner Inc., Pass-Through, 144A+ 1,278 1,278
1,100,000 1,100,000 USG Corp. 1,176 1,176
1,000,000 1,000,000 Williams Cos., Inc. 1,020 1,020
1,400,000 1,400,000 Worldcom, Inc. 1,477 1,477
---------------------------------------
0 35,188 35,188
---------------------------------------
<CAPTION>
MEDIUM TERM NOTES - 2.09%
1,400,000 1,400,000 Banco Latinoamericano, 144A+ 1,386 1,386
1,500,000 1,500,000 MCN Investment Corp. 1,566 1,566
1,250,000 1,250,000 Paine Webber Group, Inc. 1,344 1,344
1,100,000 1,100,000 PSE&G Capital Corp.+ 1,143 1,143
---------------------------------------
0 5,439 5,439
---------------------------------------
---------------------------------------
TOTAL CORPORATE OBLIGATIONS 0 40,627 40,627
---------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pacific
Pacific Pro Forma Nations Horizon Pro Forma
Nations Asset Horizon Asset Asset Asset Asset Asset
Allocation Allocation Allocation Allocation Allocation Allocation
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPANIES - 1.43%
1,860,583 1,860,583 Temporary Investment Cash Fund 1,861 1,861
1,860,583 1,860,583 Temporary Investment Fund 1,861 1,861
---------------------------------------
0 3,722 3,722
---------------------------------------
US GOVERNMENT AGENCY OBLIGATIONS -
14.03%
19,000 19,000 FHLMC Pool #533301 20 20
2,402,000 2,402,000 FHLMC Pool #E60891 2,454 2,454
632,000 632,000 FHLMC Pool #G10304 646 646
2,811,000 2,811,000 FNCI Pool #400028 2,868 2,868
837,000 837,000 FNCL Pool #313349 906 906
4,541,000 4,541,000 FNCL Pool #313644 4,664 4,664
345,000 345,000 FNCL Pool #325602 351 351
1,156,000 1,156,000 FNCX Pool #323191 1,173 1,173
2,000,000 2,000,000 FNMA Pool #1997-M5 Class C 2,201 2,201
1,166,000 1,166,000 FNMA Pool #345858 1,200 1,200
3,604,000 3,604,000 FNMA Pool #405210 3,701 3,701
3,632,000 3,632,000 FNMA Pool #437420 3,730 3,730
52,000 52,000 GNMA Pool #146301 57 57
3,325,000 3,325,000 GNMA Pool #436800 3,463 3,463
2,611,000 2,611,000 GNMA Pool #448913 2,719 2,719
2,813,000 2,813,000 GNMA Pool #448958 2,930 2,930
970,000 970,000 GNMA Pool #449104 1,010 1,010
156,000 156,000 GNMA Pool #467788 163 163
443,000 443,000 GNMA Pool #469406 461 461
204,000 204,000 GNSF Pool #231236 218 218
167,000 167,000 GNSF Pool #258039 178 178
197,000 197,000 GNSF Pool #276635 210 210
233,000 233,000 GNSF Pool #278853 248 248
833,000 833,000 GNSF Pool #780330 898 898
---------------------------------------
0 36,469 36,469
---------------------------------------
US GOVERNMENT OBLIGATIONS - 3.91%
3,000,000 3,000,000 U.S. Treasury Strips* 2,027 2,027
750,000 750,000 U.S. Treasury Strips* 453 453
14,500,000 14,500,000 U.S. Treasury Strips* 5,057 5,057
2,900,000 2,900,000 U.S. Treasury Strips* 817 817
7,900,000 7,900,000 U.S. Treasury Strips* 1,811 1,811
---------------------------------------
0 10,165 10,165
---------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pacific
Pacific Pro Forma Nations Horizon Pro Forma
Nations Asset Horizon Asset Asset Asset Asset Asset
Allocation Allocation Allocation Allocation Allocation Allocation
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------
TOTAL INVESTMENTS -100.3% (COST $0,
$236,835, $236,835 RESPECTIVELY) 0 260,699 260,669
---------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONS ASSET ALLOCATION FUND / PACIFIC HORIZON ASSET ALLOCATION FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Combining Statement of Net Assets (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
September 30,1998
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Pacific Horizon
Nations Asset Asset Adjustments to Pro Pro Forma
Allocation Fund Allocation Fund Forma Combined
- -----------------------------------------------------------------------------------------------------------------
(in 000's) (in 000's) (in 000's) (in 000's)
- --------------------------------------======================================================= =================
TOTAL INVESTMENTS $ - $ 260,699 $ - $ 260,699
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES:
- -----------------------------------------------------------------------------------------------------------------
Other assets and liabilities, net - (826) - (826)
- -----------------------------------------------------------------------------------------------------------------
Total Other Assets and Liabilities - (826) - (826)
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS $ - $ 259,873 $ - $ 259,873
- ---------------------------------------===================================================== ==================
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS BY CLASS:
- -----------------------------------------------------------------------------------------------------------------
Investor A / Class A $ - $ 67,056 $ - $ 67,056
- -----------------------------------------------------------------------------------------------------------------
Investor B / Class B - 1,211 - 1,211
- -----------------------------------------------------------------------------------------------------------------
Investor C / Class K - 1,360 - 1,360
- -----------------------------------------------------------------------------------------------------------------
Seafirst Class / Seafirst Class - 190,246 - 190,246
- ---------------------------------------===================================================== =================
$ - $ 259,873 $ - $ 259,873
- ---------------------------------------===================================================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING BY CLASS:
- -----------------------------------------------------------------------------------------------------------------
Investor A / Class A - 3,164 - 3,164
- -----------------------------------------------------------------------------------------------------------------
Investor B / Class B - 57 - 57
- -----------------------------------------------------------------------------------------------------------------
Investor C / Class K - 64 - 64
- -----------------------------------------------------------------------------------------------------------------
Seafirst Class / Seafirst Class - 11,660 - 11,660
- ---------------------------------------===================================================== =================
- 14,945 - 14,945
- ---------------------------------------===================================================== =================
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE BY CLASS:
- -----------------------------------------------------------------------------------------------------------------
Investor A / Class A $ - $ 21.19 $ - 21.19
- -----------------------------------------------------------------------------------------------------------------
Investor B / Class B $ - $ 21.19 $ - 21.19
- -----------------------------------------------------------------------------------------------------------------
Investor C / Class K $ - $ 21.17 $ - 21.17
- -----------------------------------------------------------------------------------------------------------------
Seafirst Class / Seafirst Class $ - $ 16.32 $ - 16.32
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
NATIONS ASSET ALLOCATION FUND / PACIFIC HORIZON ASSET ALLOCATION FUND
- -----------------------------------------------------------------------------------------------------------
Pro Forma Combining Statement of Operations (unaudited)
- -----------------------------------------------------------------------------------------------------------
Twelve Month Period Ending September 30,1998
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Pacific Horizon
Nations Asset Asset Adjustments to Pro Pro Forma
Allocation Fund Allocation Fund Forma Combined
- -----------------------------------------------------------------------------------------------------------
(in 000's) (in 000's) (in 000's) (in 000's)
- ----------------------------------======================================================= ===============
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------------
Interest $0 $7,430 $0 $7,430
- -----------------------------------------------------------------------------------------------------------
Dividends - 1,770 - 1,770
- -----------------------------------====================================================== ===============
Total Investment Income - 9,200 - 9,200
- -----------------------------------====================================================== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------------------------
Investment Advisory - 1,024 640(a) 1,664
- -----------------------------------------------------------------------------------------------------------
Administration - 382 207(a) 589
- -----------------------------------------------------------------------------------------------------------
Transfer Agent - 68 60(b) 128
- ----------------------------------------------------------------------------------------------------------
Custodian (d) - 54 (14)(b) 40
- -----------------------------------------------------------------------------------------------------------
Legal and Audit Fees - 18 (5)(b) 13
- -----------------------------------------------------------------------------------------------------------
Registration & Filing - 22 - 22
- -----------------------------------------------------------------------------------------------------------
Trustees' Fees - 12 (7)(b) 5
- -----------------------------------------------------------------------------------------------------------
Interest Expense - - - -
- -----------------------------------------------------------------------------------------------------------
Other expenses - 149 (136)(b) 13
- -----------------------------------====================================================== ===============
Subtotal - 1,729 745 2,474
- -----------------------------------====================================================== ===============
- -----------------------------------------------------------------------------------------------------------
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
- -----------------------------------------------------------------------------------------------------------
Investor A / Class A - 200 - 200
- -----------------------------------------------------------------------------------------------------------
Investor B / Class B - 1 - 1
- -----------------------------------------------------------------------------------------------------------
Investor C / Class K - 11 - 11
- -----------------------------------------------------------------------------------------------------------
Seafirst Class - 427 - 427
- -----------------------------------------------------------------------------------------------------------
- 639 - 639
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Fees waived and/or reimbursed by
investment -
- -----------------------------------------------------------------------------------------------------------
advisor, administrator and/or
distributor - (8) (469) (c) (477)
- -----------------------------------------------------------------------------------------------------------
TOTAL EXPENSES - 2,360 276 2,636
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME - 6,840 (276) 6,564
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------
Net realized gain/(loss) on investments - 23,040 - 23,040
- -----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/
- -----------------------------------------------------------------------------------------------------------
(depreciation) of investments - (41,261) - (41,261)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain/(loss)
- -----------------------------------------------------------------------------------------------------------
on investments - (18,221) - (18,221)
- -----------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------
RESULTING FROM OPERATIONS $0 ($11,381) ($276) ($11,657)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
LEGEND:
- --------------------------------------------------------------------------------
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
- --------------------------------------------------------------------------------
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
- --------------------------------------------------------------------------------
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
- --------------------------------------------------------------------------------
(D) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Nations Asset Allocation Fund
Pacific Horizon Asset Allocation Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at
September 30, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Asset Allocation Fund in exchange for
shares of Nations Asset Allocation Fund. Under generally accepted accounting
principles, the historical cost of investment securities will be carried forward
under the new name of Nations Asset Allocation Fund. The pro forma statements do
not reflect the expenses of either fund in carrying out its obligations under
the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees and
Investor C shareholders servicing and distribution fees have been calculated for
the combined fund based on the contractual rates expected to be in effect for
the Nations Asset Allocation Fund at the time of the Reorganization at the
combined level of average net assets for the twelve month period ended
September 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NATIONS BLUE CHIP FUND / PACIFIC HORIZONS BLUE CHIP FUND
- ----------------------------------------------------------------------------------------------------------------------------------
Pro Forma Combining Schedule of Investments (unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
September 30,1998
- ----------------------------------------------------------------------------------------------------------------------------------
Pacific Pacific
Horizon Blue Nations Horizon Pro Forma
Nations Blue Chip Pro Forma Blue Chip Blue Chip Blue Chip
Chip Portfolio Portfolio Blue Chip Portfolio Portfolio Portfolio
Shares Shares Shares Asset Description Value Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK - 96.78%
253,700 253,700 Abbott Laboratories 11,020 11,020
59,600 59,600 Albertson's, Inc. 3,226 3,226
103,900 103,900 AlliedSignal, Inc. 3,676 3,676
208,594 208,594 Allstate Corp. 8,695 8,695
27,600 27,600 Aluminum Company of America 1,959 1,959
96,800 96,800 American Express Co. 7,514 7,514
103,700 103,700 American General Corp. 6,624 6,624
183,700 183,700 Ameritech Corp. 8,703 8,703
53,700 53,700 AMR Corp. 2,977 2,977
120,500 120,500 Anheuser-Busch Cos., Inc. 6,507 6,507
226,300 226,300 AT&T Corp. 13,225 13,225
178,000 178,000 Avon Products, Inc. 4,995 4,995
130,000 130,000 Banc One Corp. 5,541 5,541
109,600 109,600 BankBoston Corp. 3,617 3,617
167,442 167,442 Bell Atlantic Corp. 8,110 8,110
188,800 188,800 BellSouth Corp. 14,207 14,207
69,000 69,000 Biogen, Inc. 4,541 4,541
138,200 138,200 Biomet, Inc. 4,794 4,794
146,700 146,700 Bristol-Meyers Squibb Co. 15,238 15,238
82,400 82,400 Brunswick Corp. 1,066 1,066
91,500 91,500 Burlington Northern Santa Fe Corp. 2,928 2,928
103,900 103,900 Centex Corp. 3,585 3,585
123,100 123,100 Chase Manhattan Corp. 5,324 5,324
119,300 119,300 Chevron Corp. 10,029 10,029
57,600 57,600 Chrysler Corp. 2,758 2,758
165,975 165,975 Cisco Systems, Inc. 10,259 10,259
50,900 50,900 Citicorp 4,730 4,730
46,300 46,300 Clorox Co. 3,820 3,820
142,400 142,400 Coastal Corp. 4,806 4,806
193,100 193,100 Coca-Cola Co. 11,128 11,128
61,900 61,900 Compaq Computer Corp. 1,957 1,957
100,100 100,100 Conagra, Inc. 2,696 2,696
177,800 177,800 Conseco, Inc. 5,434 5,434
62,700 62,700 Dana Corp. 2,339 2,339
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
73,800 73,800 Deere & Co. 2,232 2,232
270,000 270,000 Dell Computer Corp. 17,752 17,752
70,000 70,000 Dow Chemical Co. 5,981 5,981
59,000 59,000 Du Pont, (E.I.) de Nemours & Co. 3,312 3,312
45,000 45,000 Eastman Kodak Co. 3,479 3,479
308,900 308,900 Edison International 7,935 7,935
187,400 187,400 EMC Corp. 10,717 10,717
4,200 4,200 Equitable Cos., Inc. 174 174
287,600 287,600 Exxon Corp. 20,186 20,186
224,900 224,900 First Union Corp. 11,512 11,512
144,500 144,500 Fleet Financial Group, Inc. 10,612 10,612
104,100 104,100 Fluor Corp. 4,275 4,275
209,500 209,500 Ford Motor Co. 9,834 9,834
162,800 162,800 FPL Group, Inc. 11,345 11,345
121,700 121,700 Gap, Inc. 6,420 6,420
278,500 278,500 General Electric Co. 22,158 22,158
50,100 50,100 Goodrich (B.F.) Co. 1,638 1,638
63,500 63,500 Guidant Corp. 4,715 4,715
107,500 107,500 Harris Corp. 3,440 3,440
229,800 229,800 HBO & Co. 6,635 6,635
51,800 51,800 Heinz (H.J.) Co. 2,648 2,648
208,200 208,200 Home Depot, Inc. 8,224 8,224
86,000 86,000 Honeywell, Inc. 5,509 5,509
46,200 46,200 Ingersoll-Rand Co. 1,753 1,753
114,100 114,100 Intel, Inc. 9,784 9,784
62,500 62,500 Johnson & Johnson Co. 4,890 4,890
84,500 84,500 Kimberly-Clark Corp. 3,422 3,422
60,900 60,900 King World Productions, Inc. 1,591 1,591
124,400 124,400 Kroger Co. 6,220 6,220
101,300 101,300 Lehman Brothers Holdings, Inc. 2,862 2,862
226,800 226,800 Lowe's Cos., Inc. 7,215 7,215
135,700 135,700 Lucent Technologies, Inc. 9,372 9,372
118,500 118,500 Marriott International Inc., Class A 2,829 2,829
122,600 122,600 Maxim Integrated Products, Inc. 3,418 3,418
44,100 44,100 McDonald's Corp. 2,632 2,632
47,300 47,300 McGraw-Hill Cos., Inc. 3,749 3,749
158,400 158,400 MCI Worldcom, Inc. 7,742 7,742
132,100 132,100 Mellon Bank Corp. 7,274 7,274
45,600 45,600 Merck & Co., Inc. 5,908 5,908
244,100 244,100 Microsoft Corp. 26,867 26,867
144,900 144,900 Mobil Corp. 11,003 11,003
109,700 109,700 Morgan Stanley Dean Witter Discover & Co. 4,724 4,724
88,800 88,800 National City Corp. 5,855 5,855
138,406 138,406 NationsBank Corp. 7,405 7,405
114,800 114,800 New York Times Co., Class A 3,157 3,157
56,000 56,000 Newell Co. 2,579 2,579
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
106,000 106,000 Oracle Corp. 3,087 3,087
125,400 125,400 Owens-Illinois, Inc. 3,135 3,135
48,300 48,300 P.P.G. Industries, Inc. 2,635 2,635
102,900 102,900 PepsiCo, Inc. 3,029 3,029
153,300 153,300 Pfizer, Inc. 16,240 16,240
265,200 265,200 Philip Morris Cos., Inc. 12,216 12,216
88,100 88,100 Phillips Petroleum Co. 3,975 3,975
89,200 89,200 Pioneer Hi-Bred International, Inc. 2,341 2,341
83,400 83,400 Praxair, Inc. 2,726 2,726
88,600 88,600 Procter & Gamble Co. 6,285 6,285
114,500 114,500 Quaker Oats Co. 6,756 6,756
181,500 181,500 Schering-Plough Corp. 18,797 18,797
67,400 67,400 Solutia, Inc. 2,177 2,177
62,000 62,000 Sun Co., Inc. 1,984 1,984
114,500 114,500 Sun Microsystems, Inc. 5,704 5,704
120,800 120,800 SunAmerica, Inc. 7,369 7,369
68,200 68,200 SYSCO Corp. 1,607 1,607
88,600 88,600 Tellabs, Inc. 3,527 3,527
46,500 46,500 Temple Inland, Inc. 2,226 2,226
114,500 114,500 Time Warner, Inc. 10,026 10,026
419,800 419,800 TJX Cos., Inc. 7,478 7,478
42,200 42,200 Tommy Hilfiger 1,730 1,730
138,500 138,500 Transocean Offshore, Inc. 4,804 4,804
112,300 112,300 Travelers Group, Inc. 4,211 4,211
158,500 158,500 Tyco International Ltd. 8,757 8,757
131,200 131,200 U.S. West, Inc. 6,880 6,880
21,100 21,100 UAL Corp. 1,368 1,368
55,900 55,900 Unilever NV 3,424 3,424
113,500 113,500 United Healthcare Corp. 3,973 3,973
117,600 117,600 United Technologies Corp. 8,989 8,989
143,200 143,200 USX - Marathon Group 5,075 5,075
119,900 119,900 USX-U.S. Steel Group, Inc. 2,863 2,863
117,000 117,000 Viacom, Inc., Class B 6,786 6,786
50,200 50,200 Wal-Mart Stores, Inc. 2,742 2,742
0 0 Walt Disney Co. 0 0
98,200 98,200 Warner-Lambert Co. 7,414 7,414
62,000 62,000 Xerox Corp. 5,255 5,255
---------------------------------------
0 728,603 728,603
---------------------------------------
INVESTMENT COMPANIES - 2.68%
20,219,278 20,219,278 Temporary Investment Fund 20,219 20,219
---------------------------------------
0 20,219 20,219
---------------------------------------
U.S. TREASURY OBLIGATIONS - .4%
3,040,000 3,040,000 U.S. Treasury Bill 3,034 3,034
---------------------------------------
0 3,034 3,034
---------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------
Total Investment--99.86% (Cost $0, $653,495,
$653,495, respectively) 0 751,856 751,856
---------------------------------------
- ---------------------------------------------------------------------------------------------------------
NATIONS BLUE CHIP FUND / PACIFIC HORIZONS BLUE CHIP FUND
- ---------------------------------------------------------------------------------------------------------
Pro Forma Combining Statement of Net Assets (unaudited)
- ---------------------------------------------------------------------------------------------------------
September 30,1998
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Nations Blue Pacific Horizons Adjustments to Pro Pro Forma
Chip Fund Blue Chip Fund Forma Combined
- ---------------------------------------------------------------------------------------------------------
(in 000's) (in 000's) (in 000's) (in 000's)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS $ - $ 699,807 $ - $ 699,807
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES:
Other assets and liabilities, net - (1,272) - (1,272)
- ---------------------------------------------------------------------------------------------------------
Total Other Assets and Liabilities - (1,272) - (1,272)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET ASSETS - 698,535 - 698,535
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET ASSETS BY CLASS:
- ---------------------------------------------------------------------------------------------------------
Investor A / Class A $ - $ 340,351 $ - $ 340,351
- ---------------------------------------------------------------------------------------------------------
Investor B / Class B $ - $ 4,284 $ - $ 4,284
- ---------------------------------------------------------------------------------------------------------
Investor C / Class K $ - $ 8,501 $ - $ 8,501
- ---------------------------------------------------------------------------------------------------------
Seafirst Class $ - $ 345,399 $ - $ 345,399
- ---------------------------------------------------------------------------------------------------------
$ - $ 698,535 $ - $ 698,535
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING BY CLASS:
- ---------------------------------------------------------------------------------------------------------
Investor A / Class A - 12,180 - 12,180
- ---------------------------------------------------------------------------------------------------------
Investor B / Class B - 153 - 153
- ---------------------------------------------------------------------------------------------------------
Investor C / Class K - 305 - 305
- ---------------------------------------------------------------------------------------------------------
Seafirst Class - - 13,970
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
13,970
- ---------------------------------------------------------------------------------------------------------
- 26,608 - 26,608
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE BY CLASS:
- ---------------------------------------------------------------------------------------------------------
Investor A / Class A $ - $ 27.94 $ - 27.94
- ---------------------------------------------------------------------------------------------------------
Investor B / Class B $ - $ 27.96 $ - 27.96
- ---------------------------------------------------------------------------------------------------------
Investor C / Class K $ - $ 27.83 $ - 27.83
- ---------------------------------------------------------------------------------------------------------
Seafirst Class $ - $ 24.72 $ - 24.72
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NATIONS BLUE CHIP FUND / PACIFIC HORIZONS BLUE CHIP FUND
- ---------------------------------------------------------------------------------------------------------
Pro Forma Combining Statement of Operations (unaudited)
- ---------------------------------------------------------------------------------------------------------
September 30,1998
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Nations Blue Pacific Horizons Adjustments to Pro Pro Forma
Chip Fund Blue Chip Fund Forma Combined
- ---------------------------------------------------------------------------------------------------------
(in 000's) (in 000's) (in 000's) (in 000's)
- ---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------------
Investment Income from Master Investment Trust, Series 1 - Blue Chip Portfolio
- ---------------------------------------------------------------------------------------------------------
Interest $0 $1,282 $0 $1,282
- ---------------------------------------------------------------------------------------------------------
Dividends - 9,883 - 9,883
- ---------------------------------------------------------------------------------------------------------
- 11,165 - 11,165
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Expenses - 4,272 882 5,154
- ---------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense
reimbursements - (33) 33 -
- ---------------------------------------------------------------------------------------------------------
- 4,239 915 5,154
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Net Investment Income from - 6,926 6,011
Master Investment Trust (915)
Series I - Blue Chip Portfolio
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------------
Investment Advisory - - -
- ---------------------------------------------------------------------------------------------------------
Administration - 1,032 206 1,238
- ---------------------------------------------------------------------------------------------------------
Transfer Agent - 474 474
- ---------------------------------------------------------------------------------------------------------
Custodian - 1 1
- ---------------------------------------------------------------------------------------------------------
Legal and Audit Fees - 20 20
- ---------------------------------------------------------------------------------------------------------
Registration & Filing - 59 59
- ---------------------------------------------------------------------------------------------------------
Trustees' Fees - 5 5
- ---------------------------------------------------------------------------------------------------------
Interest Expense - - -
- ---------------------------------------------------------------------------------------------------------
Other expenses - 150 150
- ---------------------------------------------------------------------------------------------------------
Subtotal - 1,741 206 1,947
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
SHAREHOLDER SERVICING AND
DISTRIBUTION FEES
- ---------------------------------------------------------------------------------------------------------
Investor A / Class A - 768 - 768
- ---------------------------------------------------------------------------------------------------------
Investor B / Class B - 1 - 1
- ---------------------------------------------------------------------------------------------------------
Investor C / Class K - 64 - 64
- ---------------------------------------------------------------------------------------------------------
Seafirst Class - 939 - 939
- ---------------------------------------------------------------------------------------------------------
Subtotal - 1,772 - 1,772
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Fees waived and/or reimbursed by
investment
- ---------------------------------------------------------------------------------------------------------
advisor, administrator and/or
distributor - (636) (839) (1,475)
- ---------------------------------------------------------------------------------------------------------
TOTAL EXPENSES - 2,877 (633) 2,244
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME - 4,049 (282) 3,767
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------------
Net realized gain/(loss) on
investments - -
46,637 46,637
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation/depreciation of
investments - (133,152) - (133,152)
- ---------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain/(loss) on investments - (86,515) - (86,515)
- ---------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------
RESULTING FROM OPERATIONS $0 ($82,466) ($282) ($82,748)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
LEGEND:
- ---------------------------------------------------------------------------------------------------------
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(B) CONTRACTUAL FEE OBLIGATION. ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE
TWO FUNDS BECOME ONE.
- --------------------------------------------------------------------------------
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
- --------------------------------------------------------------------------------
(D) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Nations Blue Chip Fund
Pacific Horizon Blue Chip Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at September
30, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Blue Chip Fund in exchange for shares
of Nations Blue Chip Fund. Under generally accepted accounting principles, the
historical cost of investment securities will be carried forward under the new
name of Nations Blue Chip Fund. The pro forma statements do not reflect the
expenses of either fund in carrying out its obligations under the proposed
Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Portfolio Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees and
Investor C shareholders servicing and distribution fees have been calculated for
the combined fund based on the contractual rates expected to be in effect for
the Nations Blue Chip Fund at the time of the Reorganization at the combined
level of average net assets for the twelve month period ended September 30,
1998.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONS MASTER INVESTMENT TRUST, SERIES I - BLUE CHIP PORTFOLIO / MASTER INVESTMENT TRUST, SERIES I - BLUE CHIP PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Combining Schedule of Investments (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
September 30,1998
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Pacific
Horizon Blue Nations Horizon Pro Forma
Nations Blue Chip Pro Forma Blue Chip Blue Chip Blue Chip
Chip Portfolio Portfolio Blue Chip Portfolio Portfolio Portfolio
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C>
(in 000's) (in 000's) (in 000's)
COMMON STOCK - 96.78%
253,700 253,700 Abbott Laboratories 11,020 11,020
59,600 59,600 Albertson's, Inc. 3,226 3,226
103,900 103,900 AlliedSignal, Inc. 3,676 3,676
208,594 208,594 Allstate Corp. 8,695 8,695
27,600 27,600 Aluminum Company of America 1,959 1,959
96,800 96,800 American Express Co. 7,514 7,514
103,700 103,700 American General Corp. 6,624 6,624
183,700 183,700 Ameritech Corp. 8,703 8,703
53,700 53,700 AMR Corp. 2,977 2,977
120,500 120,500 Anheuser-Busch Cos., Inc. 6,507 6,507
226,300 226,300 AT&T Corp. 13,225 13,225
178,000 178,000 Avon Products, Inc. 4,995 4,995
130,000 130,000 Banc One Corp. 5,541 5,541
109,600 109,600 BankBoston Corp. 3,617 3,617
167,442 167,442 Bell Atlantic Corp. 8,110 8,110
188,800 188,800 BellSouth Corp. 14,207 14,207
69,000 69,000 Biogen, Inc. 4,541 4,541
138,200 138,200 Biomet, Inc. 4,794 4,794
146,700 146,700 Bristol-Meyers Squibb Co. 15,238 15,238
82,400 82,400 Brunswick Corp. 1,066 1,066
91,500 91,500 Burlington Northern Santa Fe Corp. 2,928 2,928
103,900 103,900 Centex Corp. 3,585 3,585
123,100 123,100 Chase Manhattan Corp. 5,324 5,324
119,300 119,300 Chevron Corp. 10,029 10,029
57,600 57,600 Chrysler Corp. 2,758 2,758
165,975 165,975 Cisco Systems, Inc. 10,259 10,259
50,900 50,900 Citicorp 4,730 4,730
46,300 46,300 Clorox Co. 3,820 3,820
142,400 142,400 Coastal Corp. 4,806 4,806
193,100 193,100 Coca-Cola Co. 11,128 11,128
61,900 61,900 Compaq Computer Corp. 1,957 1,957
100,100 100,100 Conagra, Inc. 2,696 2,696
177,800 177,800 Conseco, Inc. 5,434 5,434
<PAGE>
<CAPTION>
Pacific Pacific
Horizon Blue Nations Horizon Pro Forma
Nations Blue Chip Pro Forma Blue Chip Blue Chip Blue Chip
Chip Portfolio Portfolio Blue Chip Portfolio Portfolio Portfolio
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C>
(in 000's) (in 000's) (in 000's)
62,700 62,700 Dana Corp. 2,339 2,339
73,800 73,800 Deere & Co. 2,232 2,232
270,000 270,000 Dell Computer Corp. 17,752 17,752
70,000 70,000 Dow Chemical Co. 5,981 5,981
59,000 59,000 Du Pont, (E.I.) de Nemours & Co. 3,312 3,312
45,000 45,000 Eastman Kodak Co. 3,479 3,479
308,900 308,900 Edison International 7,935 7,935
187,400 187,400 EMC Corp. 10,717 10,717
4,200 4,200 Equitable Cos., Inc. 174 174
287,600 287,600 Exxon Corp. 20,186 20,186
224,900 224,900 First Union Corp. 11,512 11,512
144,500 144,500 Fleet Financial Group, Inc. 10,612 10,612
104,100 104,100 Fluor Corp. 4,275 4,275
209,500 209,500 Ford Motor Co. 9,834 9,834
162,800 162,800 FPL Group, Inc. 11,345 11,345
121,700 121,700 Gap, Inc. 6,420 6,420
278,500 278,500 General Electric Co. 22,158 22,158
50,100 50,100 Goodrich (B.F.) Co. 1,638 1,638
63,500 63,500 Guidant Corp. 4,715 4,715
107,500 107,500 Harris Corp. 3,440 3,440
229,800 229,800 HBO & Co. 6,635 6,635
51,800 51,800 Heinz (H.J.) Co. 2,648 2,648
208,200 208,200 Home Depot, Inc. 8,224 8,224
86,000 86,000 Honeywell, Inc. 5,509 5,509
46,200 46,200 Ingersoll-Rand Co. 1,753 1,753
114,100 114,100 Intel, Inc. 9,784 9,784
62,500 62,500 Johnson & Johnson Co. 4,890 4,890
84,500 84,500 Kimberly-Clark Corp. 3,422 3,422
60,900 60,900 King World Productions, Inc. 1,591 1,591
124,400 124,400 Kroger Co. 6,220 6,220
101,300 101,300 Lehman Brothers Holdings, Inc. 2,862 2,862
226,800 226,800 Lowe's Cos., Inc. 7,215 7,215
135,700 135,700 Lucent Technologies, Inc. 9,372 9,372
118,500 118,500 Marriott International Inc., Class A 2,829 2,829
122,600 122,600 Maxim Integrated Products, Inc. 3,418 3,418
44,100 44,100 McDonald's Corp. 2,632 2,632
47,300 47,300 McGraw-Hill Cos., Inc. 3,749 3,749
158,400 158,400 MCI Worldcom, Inc. 7,742 7,742
132,100 132,100 Mellon Bank Corp. 7,274 7,274
45,600 45,600 Merck & Co., Inc. 5,908 5,908
244,100 244,100 Microsoft Corp. 26,867 26,867
144,900 144,900 Mobil Corp. 11,003 11,003
109,700 109,700 Morgan Stanley Dean Witter Discover & Co. 4,724 4,724
88,800 88,800 National City Corp. 5,855 5,855
138,406 138,406 NationsBank Corp. 7,405 7,405
114,800 114,800 New York Times Co., Class A 3,157 3,157
<PAGE>
<CAPTION>
Pacific Pacific
Horizon Blue Nations Horizon Pro Forma
Nations Blue Chip Pro Forma Blue Chip Blue Chip Blue Chip
Chip Portfolio Portfolio Blue Chip Portfolio Portfolio Portfolio
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C>
(in 000's) (in 000's) (in 000's)
56,000 56,000 Newell Co. 2,579 2,579
106,000 106,000 Oracle Corp. 3,087 3,087
125,400 125,400 Owens-Illinois, Inc. 3,135 3,135
48,300 48,300 P.P.G. Industries, Inc. 2,635 2,635
102,900 102,900 PepsiCo, Inc. 3,029 3,029
153,300 153,300 Pfizer, Inc. 16,240 16,240
265,200 265,200 Philip Morris Cos., Inc. 12,216 12,216
88,100 88,100 Phillips Petroleum Co. 3,975 3,975
89,200 89,200 Pioneer Hi-Bred International, Inc. 2,341 2,341
83,400 83,400 Praxair, Inc. 2,726 2,726
88,600 88,600 Procter & Gamble Co. 6,285 6,285
114,500 114,500 Quaker Oats Co. 6,756 6,756
181,500 181,500 Schering-Plough Corp. 18,797 18,797
67,400 67,400 Solutia, Inc. 2,177 2,177
62,000 62,000 Sun Co., Inc. 1,984 1,984
114,500 114,500 Sun Microsystems, Inc. 5,704 5,704
120,800 120,800 SunAmerica, Inc. 7,369 7,369
68,200 68,200 SYSCO Corp. 1,607 1,607
88,600 88,600 Tellabs, Inc. 3,527 3,527
46,500 46,500 Temple Inland, Inc. 2,226 2,226
114,500 114,500 Time Warner, Inc. 10,026 10,026
419,800 419,800 TJX Cos., Inc. 7,478 7,478
42,200 42,200 Tommy Hilfiger 1,730 1,730
138,500 138,500 Transocean Offshore, Inc. 4,804 4,804
112,300 112,300 Travelers Group, Inc. 4,211 4,211
158,500 158,500 Tyco International Ltd. 8,757 8,757
131,200 131,200 U.S. West, Inc. 6,880 6,880
21,100 21,100 UAL Corp. 1,368 1,368
55,900 55,900 Unilever NV 3,424 3,424
113,500 113,500 United Healthcare Corp. 3,973 3,973
117,600 117,600 United Technologies Corp. 8,989 8,989
143,200 143,200 USX - Marathon Group 5,075 5,075
119,900 119,900 USX-U.S. Steel Group, Inc. 2,863 2,863
117,000 117,000 Viacom, Inc., Class B 6,786 6,786
50,200 50,200 Wal-Mart Stores, Inc. 2,742 2,742
0 0 Walt Disney Co. 0 0
98,200 98,200 Warner-Lambert Co. 7,414 7,414
62,000 62,000 Xerox Corp. 5,255 5,255
---------------------------------------
0 728,603 728,603
---------------------------------------
INVESTMENT COMPANIES - 2.68%
20,219,278 20,219,278Temporary Investment Fund 20,219 20,219
---------------------------------------
0 20,219 20,219
---------------------------------------
U.S. TREASURY OBLIGATIONS - .4%
3,040,000 3,040,000U.S. Treasury Bill 3,034 3,034
<PAGE>
Pacific Pacific
Horizon Blue Nations Horizon Pro Forma
Nations Blue Chip Pro Forma Blue Chip Blue Chip Blue Chip
Chip Portfolio Portfolio Blue Chip Portfolio Portfolio Portfolio
Shares Shares Shares Asset Description Value Value Value
<S> <C> <C> <C> <C> <C>
(in 000's) (in 000's) (in 000's)
---------------------------------------
0 3,034 3,034
---------------------------------------
---------------------------------------
Total Investment--99.86% (Cost $0, $653,495,
$653,495, respectively) 0 751,856 751,856
---------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NATIONS MASTER INVESTMENT TRUST, SERIES I - BLUE CHIP PORTFOLIO / MASTER INVESTMENT TRUST, SERIES I - BLUE CHIP PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------------
Pro Forma Combining Statement of Net Assets (unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
September 30,1998
- ------------------------------------------------------------------------------------------------------------------------------------
Nations Blue Pacific Horizons Adjustments to Pro Pro Forma
Chip Portfolio Blue Chip Portfolio Forma Combined
- ------------------------------------------------------------------------------------------------------------------------------------
(in 000's) (in 000's) (in 000's) (in 000's)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS $ - $ 751,856 $ - $751,856
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES:
- ------------------------------------------------------------------------------------------------------------------------------------
Other assets and liabilities, net - 1,031 - 1,031
- ------------------------------------------------------------------------------------------------------------------------------------
Total Other Assets and Liabilities - 1,031 - 1,031
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - 752,887 - 752,887
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS BY CLASS:
- ------------------------------------------------------------------------------------------------------------------------------------
World Horizon Class $ - $ 53,095 $ - $ 53,095
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Horizon Class $ - $ 699,792 $ - $ 699,792
- ------------------------------------------------------------------------------------------------------------------------------------
$ - $ 752,887 $ - $ 752,887
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING BY CLASS:
- ------------------------------------------------------------------------------------------------------------------------------------
World Horizon Class - 2,207 - 2,207
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Horizon Class - 28,736 - 28,736
- ------------------------------------------------------------------------------------------------------------------------------------
- 30,943 - 30,943
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE BY CLASS:
- ------------------------------------------------------------------------------------------------------------------------------------
World Horizon Class $ - $ 24.06 $ - $ 24.06
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Horizon Class $ - $ 24.35 $ - $ 24.35
- ------------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONS MASTER INVESTMENT TRUST, SERIES I - BLUE CHIP PORTFOLIO / MASTER INVESTMENT TRUST, SERIES I - BLUE CHIP PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Combining Statement of Operations (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
September 30,1998
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Nations Blue Pacific Horizons Adjustments to Pro Pro Forma
Chip Portfolio Blue Chip Portfolio Forma Combined
- ------------------------------------------------------------------------------------------------------------------------------------
(in 000's) (in 000's) (in 000's) (in 000's)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------------------------------------
Interest $0 $1,396 $0 $1,396
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends - 10,560 - 10,560
- ------------------------------------------------------------------------------------------------------------------------------------
- 11,956 - 11,956
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Advisory - 3,726 1,118 4,844
- ------------------------------------------------------------------------------------------------------------------------------------
Administration - 373 373
- ------------------------------------------------------------------------------------------------------------------------------------
Transfer Agent - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian - 114 (40) 74
- ------------------------------------------------------------------------------------------------------------------------------------
Legal and Audit Fees - 71 71
- ------------------------------------------------------------------------------------------------------------------------------------
Registration & Filing - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' Fees - 46 46
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Expense - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Other expenses - 293 (100) 193
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal - 4,623 978 5,601
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES - 4,623 978 5,601
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME - 7,333 (978) 6,355
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain/(loss) on investments - 62,453 - 62,453
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/
(depreciation) of investments - (112,610) - (112,610)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain/(loss)
on investments - (50,157) - (50,157)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
RESULTING FROM OPERATIONS $0 ($42,824) ($978) ($43,802)
- ------------------------------------------------------------------------------------------------------------------------------------
LEGEND:
- ---------------------------------------------------------------------------------------------------------------------------------
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
- ---------------------------------------------------------------------------------------------------------------------------------
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
- ---------------------------------------------------------------------------------------------------------------------------------
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
- ---------------------------------------------------------------------------------------------------------------------------------
(D) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Nations Blue Chip Master Portfolio
Pacific Horizon Blue Chip Master Portfolio
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at September
30, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Blue Chip Master Portfolio in exchange
for shares of Nations Blue Chip Master Portfolio. Under generally accepted
accounting principles, the historical cost of investment securities will be
carried forward under the new name of Nations Blue Chip Master Portfolio. The
pro forma statements do not reflect the expenses of either fund in carrying out
its obligations under the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Blue Chip Master Portfolio at the time of the
Reorganization at the combined level of average net assets for the twelve month
period ended September 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
NATIONS CALIFORNIA MUNICIPAL BOND FUND / PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND
Pro Forma Combining Schedule of Investments (unaudited)
Twelve Month Period Ending September 30,1998
Pacific
Nations Horizon
California California Pacific
Municipal Municipal Nations Horizon
Bond Bond Pro Forma California California
Principal Principal Principal Municipal Municipal Pro Forma
Amount Amount Amount Description Bond Value Bond Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - PUERTO RICO - 2.39%
5,000,000 5,000,000 PUERTO RICO ELECTRIC POWER AUTH REV 6% 5,431 5,431
07/01/2014
---------------------------------------
0 5,431 5,431
---------------------------------------
MUNICIPAL BONDS - CALIFORNIA - 98.12%
2,500,000 2,500,000 ORANGE CNTY CALIF ARPT REV 5.50% 07/01/10 2,781 2,781
4,000,000 4,000,000 ORANGE COUNTY CALIFORNIA ARPT REV 5.5% 4,420 4,420
7/01/2011
5,000,000 5,000,000 PORT OAKLAND CLAIF PORT REV 5.50% 11/1/15 5,363 5,363
1,730,000 1,730,000 SAN FRANCISCO CALIFORNIA CITY & CNTY AIRPORTS 1,968 1,968
1,465,000 1,465,000 ABAG FIN AUTH FOR NONVIOLENT CORPS 4.625% 1,502 1,502
7/1/04
4,780,000 4,780,000 ALAMEDA CNTY CALIF CTFS PARTN 4,798 4,798
3,000,000 3,000,000 CALIFORNIA STATEWIDE CMNTYS DEV 5.125% 3,067 3,067
08/15/17
1,280,000 1,280,000 CHINO CALIFORNIA UNIFIED SCHOOL DISTRICT 1,310 1,310
2,000,000 2,000,000 MANHATTAN BEACH CALIFORNIA UNIFIED SCHOOL 1,957 1,957
DISTRICT
1,000,000 1,000,000 SOUTHERN CALIFORNIA RAPID TRAN DISTRICT 1,071 1,071
1,000,000 1,000,000 NATOMAS UNIFIED SCHOOL DISTRICT, SERIES A 1,080 1,080
3,500,000 3,500,000 UNIVERSITY CALIF REVS 6.00% 7/1/26 3,885 3,885
2,000,000 2,000,000 LOS ANGELES CALIFORNIA SERIES A 6.00% 9/1/11 2,240 2,240
1,295,000 1,295,000 SCOTTS VALLEY CALIF UN SCH DIST 1,353 1,353
1,025,000 1,025,000 WESTWOOD CALIF UNI SCH DIST 6.50% 8/1/21 1,158 1,158
1,000,000 1,000,000 CALIFORNIA HEALTH FACILITY FINANCING AUTH REV 1,085 1,085
<PAGE>
1,000,000 1,000,000 CALIFORNIA HEALTH FACS FING AUTH REVENUE 1,091 1,091
5,000,000 5,000,000 DUARTE CALIFORNIA CTFS PARTN CITY OF HOPE 5,319 5,319
3,000,000 3,000,000 CALIFORNIA HLTH FACS FIN AUTH REV 5.125% 3,041 3,041
08/15/22
5,000,000 5,000,000 UNIVERSITY OF CALIF REVS 5.75% 07/01/24 5,419 5,419
2,750,000 2,750,000 CALIFORNIA HFA 5.65% 08/01/17 2,874 2,874
2,000,000 2,000,000 CALIFORNIA HSG FIN AGY REV 6.10% 08/01/15 2,145 2,145
2,050,000 2,050,000 CALIFORNIA HSG FIN AGY SINGLE 5.40% 08/01/28 2,091 2,091
3,000,000 3,000,000 CALIFORNIA HSG FIN REV 5.75% 02/01/29 3,154 3,154
2,500,000 2,500,000 PASADENA CALIFORNIA COMMUNITY DEVLP 2,667 2,667
1,000,000 1,000,000 INDUSTRY CAL URBAN DEV TAX 6.90% 11/01/2016 1,101 1,101
1,500,000 1,500,000 SAN DIEGO CALIF INDL DEV REV 6.40% 9/1/18 1,618 1,618
1,370,000 1,370,000 THOUSAND OAKS CALIF REDEV AGENCY 1,493 1,493
1,000,000 1,000,000 DEL MAR CALIF RACE TRACK AUTH REV 6.00% 1,101 1,101
8/15/06
1,200,000 1,200,000 DEL MAR CALIF RACE TRACK AUTH REV 6.00% 1,332 1,332
8/15/08
1,000,000 1,000,000 OAKLAND CALIF ST BLDG AUTH LEASE 5.00% 1,017 1,017
04/01/17
2,000,000 2,000,000 SAN MATEO CNTY CALIF JT PWRS 5.125% 07/15/32 2,030 2,030
1,130,000 1,130,000 SANTA ANA FINANCING AUTHORITY LEASING REVENUE 1,242 1,242
1,185,000 1,185,000 BODEGA BAY FIRE PROTECTION DIST COP 6.45% 1,355 1,355
10/1/31
2,500,000 2,500,000 POWAY CERTIFICATES OF PARTICIPATION, 2,725 2,725
2,500,000 2,500,000 CALIFORNIA HLTH FACS FIN AUTH 5% 6/01/2007 2,687 2,687
1,000,000 1,000,000 CALIFORNIA PCR FINANCIAL AUTH 1,047 1,047
1,000,000 1,000,000 CALIFORNIA POLLUTION CONTROL FINANCING AUTH 1,095 1,095
5,000,000 5,000,000 FRESNO CALIFORNIA SEWER REV 5,981 5,981
3,670,000 3,670,000 SAN JOSE CALIFORNIA REDEVELOPMENT AGENCY TAX 4,280 4,280
2,900,000 2,900,000 SACRAMENTO CALIFORNIA POWER AUTH COGENRATION 3,121 3,121
1,000,000 1,000,000 SOUTHERN CALIFORNIA PUBLIC POWER AUTH 1,239 1,239
3,000,000 3,000,000 WEST COVINA CAL REDEV AGY CMNTY 6.00% 9/1/17 3,424 3,424
3,000,000 3,000,000 ALAMEDA CNTY CALIF CTFS PARTN 5.7% 12/01/2014 3,236 3,236
<PAGE>
7,970,000 7,970,000 CALIFORNIA ST PUB WKS BRD LEASE REV 5.50% 8,319 8,319
6/1/19
1,250,000 1,250,000 UNION CITY COMMUNITY REDEVELOPMENT AGENCY 1,344 1,344
CALIF.
1,000,000 1,000,000 ABAG FIN CORPORATION CAL SER A 6.25% 6/1/11 1,046 1,046
1,000,000 1,000,000 CADA SAC LEASE REV 6.50% 04/01/12 1,107 1,107
2,600,000 2,600,000 CALIFORNIA GO GFIC 5.25% 10/01/2017 2,701 2,701
1,000,000 1,000,000 CALIFORNIA HEALTH FAC FIN AUTH 6.50% 12/1/20 1,065 1,065
1,600,000 1,600,000 CALIFORNIA HLTH FACS FIN VRN 7/1/12 1,600 1,600
1,000,000 1,000,000 CALIFORNIA POLLUTION CONTROL 6.40% 12/01/2024 1,084 1,084
2,000,000 2,000,000 CALIFORNIA ST PUB WKS BRD 5.50% 1/1/10 2,205 2,205
210,000 210,000 CALIFORNIA ST UNREFUNDED BAL-AMBAC TCRS 6% 235 235
5/1/12
4,500,000 4,500,000 CALIFORNIA STATE DEPT. OF WATER 5.70% 4,776 4,776
12/01/16
3,000,000 3,000,000 CENTRAL VALLEY FING AUTHORITY CALIFORNIA 3,232 3,232
4,000,000 4,000,000 CONTRA COSTA CALIF WTR DIST WTR REV 5.00% 4,010 4,010
10/01/22
1,000,000 1,000,000 DEL MAR CALIF RACE TRACK AUTH REV 6.20% 1,116 1,116
8/15/11
575,000 575,000 EMERYVILLE CALIF PUB FING AUTH REV 6.50% 639 639
05/01/21
925,000 925,000 EMERYVILLE CALIF PUB FING AUTH REV 6.50% 1,005 1,005
05/01/21
1,965,000 1,965,000 FREMONT CALIF PUB FING AUTH 6.00% 09/01/11 2,013 2,013
4,000,000 4,000,000 LONG BEACH CALIFORNIA 5.375% 5/15/20 4,115 4,115
3,000,000 3,000,000 LOS ANGELES CALIF CONVETNION 6.00% 8/15/10 3,502 3,502
2,000,000 2,000,000 LOS ANGELES HARBOR REVENUE AMT 2,200 2,200
4,500,000 4,500,000 METROLPOLITAN WATER DISTRICT, SOUTHERN 5,158 5,158
CALIFORNIA
2,000,000 2,000,000 NORTHERN CALIFORNIA TRANSMISSION REVENUE 2,195 2,195
2,500,000 2,500,000 NORTHRIDGE WTR DIST CALIF REV 5.25% 2/1/18 2,584 2,584
1,500,000 1,500,000 ORANGE CO RANCHO SANTA MARG CORP 7.125% 1,575 1,575
8/15/17
2,000,000 2,000,000 RANCHO CALIFORNIA WTR DIST FING AUTH 5.9% 2,230 2,230
11/1/15
2,000,000 2,000,000 SAN DIEGO CFD 7.00% 9/1/15 2,412 2,412
3,000,000 3,000,000 SAN FRANCISCO CALIF CITY 5.70% 5/1/26 3,202 3,202
1,000,000 1,000,000 SAN FRANCISCO CALIF ST BLDG 5.00% 10/1/08 1,079 1,079
<PAGE>
1,750,000 1,750,000 SAN JOAQUIN COUNTY CAL PUBLIC FAC 5.50% 1,958 1,958
11/15/13
3,000,000 3,000,000 SAN JOAQUIN HILLS CALIF TRANSN STEP UP 2,021 2,021
01/15/16
3,000,000 3,000,000 SAN JOSE CAL FIN AUTH REV 6.40% 9/1/17 3,240 3,240
2,000,000 2,000,000 LOS ANGELES COUNTY CALIF TRANS COMMUNITY 2,101 2,101
SALES
2,500,000 2,500,000 LOS ANGELES COUNTY CALIF TRANSPORTATION COMMN 2,716 2,716
5,000,000 5,000,000 SAN JOSE CALIF REDEVL AGCY 5.25% 08/01/29 5,131 5,131
1,290,000 1,290,000 THOUSAND OAKS REDEVELOPMENT AGENCY 5.40% 1,409 1,409
12/1/09
3,000,000 3,000,000 FOOTHILL EASTERN CORRIDOR AGCY CALIF 6.00% 3,341 3,341
1/1/16
485,000 485,000 SAN FRANCISCO CALIF BAY AREA 5.50% 07/01/20 538 538
610,000 610,000 SAN FRANCISCO CALIF BAY AREA 5.50% 07/01/2020 641 641
3,000,000 3,000,000 SAN FRANCISCO CALIF BAY AREA RAPID 4.75% 2,957 2,957
7/1/23
1,500,000 1,500,000 ESCONDIDO POWER 6.00% 09/01/18 1,669 1,669
1,500,000 1,500,000 LOS ANGELES COUNTY CALIFORNIA SANTN DIST FING 1,579 1,579
2,000,000 2,000,000 TURLOCK CALIFORNIA IRR DIST REVENUE- REF-1996 2,307 2,307
2,515,000 2,515,000 ALAMEDA COUNTY CALIFORNIA WATER DIST REV 2,767 2,767
CTFS PART
2,000,000 2,000,000 CALIFORNIA ST DEP WTR RES CENT VY PROJ REV 2,033 2,033
3,000,000 3,000,000 EAST BAY CALIF MUN UTIL DIST 5% 6/1/2016 3,056 3,056
1,000,000 1,000,000 EASTERN MUNI WATER DISTRICT CALIFORNIA 1,249 1,249
1,500,000 1,500,000 ELSINORE VALLEY CALIFORNIA 1,757 1,757
2,000,000 2,000,000 LOS ANGELES DEPT WTR & PWR WATER REV 5.75% 2,163 2,163
4/15/12
1,000,000 1,000,000 RANCH CALIFORNIA WATER DIST FINANCIAL AUTH 1,098 1,098
REV
1,500,000 1,500,000 RIVERSIDE CALIF WTR REV 5.375% 10/01/11 1,628 1,628
---------------------------------------
0 223,079 223,079
---------------------------------------
TOTAL INVESTMENTS--100.51% (COST $0, $209,
600, $209,600, RESPECTIVELY) 0 228,502 228,502
<PAGE>
NATIONS CALIFORNIA MUNICIPAL BOND FUND / PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND
Pro Forma Combining Statement of Net Assets (unaudited)
September 30,1998
Pacific
Nations CA Horizon CA
Municipal Municipal Bond Adjustments to Pro Pro Forma
Bond Fund Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
----------------------------------------------- ----------------
TOTAL INVESTMENTS $ - $228,502 $ - $ 228,502
OTHER ASSETS AND LIABILITIES:
Other assets and liabilities, net - (1,156) - (1,156)
----------------------------------------------- ----------------
Total Other Assets and Liabilities - (1,156) - (1,156)
----------------------------------------------- ----------------
NET ASSETS $ - $227,346 $ - $227,346
=============================================== ================
NET ASSETS BY CLASS:
Investor A / Class A $ - $226,190 $- $226,190
Investor B / Class B - 1,156 - 1,156
----------------------------------------------- ----------------
$- $227,346 %- $227,346
----------------------------------------------- ----------------
SHARES OUTSTANDING BY CLASS:
Investor A / Class A - 29,258 - 29,258
Investor B / Class B - 149 - 149
----------------------------------------------- ----------------
- 29,407 - 29,407
----------------------------------------------- ----------------
NET ASSET VALUE PER SHARE BY CLASS:
Investor A / Class A $ - $ 7.73 $ - $7.73
Investor B / Class B $ - $ 7.74 $ - $7.74
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
<PAGE>
NATIONS CALIFORNIA MUNICIPAL BOND FUND / PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND
Pro Forma Combining Statement of Operations (unaudited)
Twelve Month Period Ending September 30,1998
Pacific
Nations CA Horizon CA
Municipal Municipal Bond Adjustments to Pro Pro Forma
Bond Fund Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
----------------------------------------------- ----------------
INVESTMENT INCOME:
Interest $0 $12,368 $0 $12,368
Dividends - - - -
----------------------------------------------- ----------------
Total Investment Income - 12,368 - 12,368
----------------------------------------------- ----------------
EXPENSES:
Investment Advisory - 529 353(a) 882
Administration - 349 39 (a) 388
Transfer Agent - 137 (57) (b) 80
Custodian - 18 22 (b) 40
Legal and Audit Fees - 42 (35) (b) 7
Registration & Filing - 29 - 29
Trustees' Fees - 4 (b) 4
Interest Expense - - - -
Other expenses - 130 (110) (b) 20
----------------------------------------------- ----------------
Subtotal - 1,238 212 1,450
----------------------------------------------- ----------------
SHAREHOLDER SERVICING AND DISTRIBUTION
FEES
Investor A - 567 - 567
<PAGE>
Investor B - 2 - 2
----------------------------------------------- ----------------
- 569 - 569
----------------------------------------------- ----------------
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor - 257 (645) (c) (388)
----------------------------------------------- ----------------
TOTAL EXPENSES - 2,064 (433) 1,631
----------------------------------------------- ----------------
----------------------------------------------- ----------------
NET INVESTMENT INCOME - 10,304 433 10,737
----------------------------------------------- ----------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investments - 4,192 - 4,192
Net change in unrealized appreciation/
(depreciation) of investments - 20,809 - 20,809
Net realized and unrealized gain/(loss)
----------------------------------------------- ----------------
on investments - 25,001 - 25,001
----------------------------------------------- ----------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $0 $35,305 $433 $35,738
=============================================== ================
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
(D) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
<PAGE>
Nations California Municipal Bond Fund
Pacific Horizon California Municipal Bond Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at September
30, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon California Municipal Bond Fund in
exchange for shares of Nations California Municipal Bond Fund. Under generally
accepted accounting principles, the historical cost of investment securities
will be carried forward under the new name of Nations California Municipal Bond
Fund. The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
1. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations California Municipal Bond Fund at the time of the
Reorganization at the combined level of average net assets for the twelve month
period ended September 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
Nations Capital Income Fund / Pacific Horizon Capital Income Fund
Pro Forma Combining Schedule of Investments (unaudited)
September 30,1998
Pacific
Nations Horizon
Capital Capital Pacific
Income Income Pro Forma Nations Horizon
Principal Principal Principal Capital Capital Pro Forma
Amount Amount Amount Description Income Value Income Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C>
Common Stock - 16.81%
90,000 90,000 AMERICAN HOME PRODUCTS CORP. 4,714 4,714
80,000 80,000 AMOCO CORP 4,310 4,310
50,000 50,000 BANKBOSTON CORPORATION 1,650 1,650
73,500 73,500 CISCO SYSTEMS, INCORPORATED 4,543 4,543
54,000 54,000 ELI LILLY & COMPANY 4,229 4,229
40,000 40,000 FLEET FINANCIAL GROUP INC. 2,938 2,938
85,342 85,342 GOLDEN STATE BANCORP INC. 1,702 1,702
66,800 66,800 INTEL CORPORATION 5,728 5,728
85,104 85,104 MCDERMOTT INTL INC 2,292 2,292
85,000 85,000 MCDONALD'S CORPORATION 5,072 5,072
120,000 120,000 MICRON TECHNOLOGY INC 3,653 3,653
166,600 166,600 NORDSTROM INCORPORATED 4,123 4,123
31,000 31,000 PFIZER INC 3,284 3,284
45,000 45,000 PNC BANK CORP 2,025 2,025
40,000 40,000 PROCTER & GAMBLE COMPANY 2,838 2,838
200,000 200,000 SOVREIGN BANCORP, INC. 2,663 2,663
100,000 100,000 XILINX INCORPORATED 3,500 3,500
---------------------------------------
0 59,264 59,264
---------------------------------------
Convertible Bond - 42.27%
7,350,000 7,350,000 AGNICO EAGLE MINES 3.50% 1/27/04 4,309 4,309
4,400,000 4,400,000 ALZA CORPORATION 5.0% 5/1/06 5,544 5,544
<PAGE>
4,200,000 4,200,000 AMERICAN RETIREMENT CORPORATION 5.75% 3,675 3,675
10/01/02
4,765,000 4,765,000 ARV ASSISTED LIVING 6.75% 04/01/06 2,793 2,793
5,660,000 5,660,000 ATMEL SA 3.25% 6/1/02 *STEP UP* SERIES 144A 4,026 4,026
4,300,000 4,300,000 BANKATLANTIC BNC 5.625% 12/01/07 3,913 3,913
5,000,000 5,000,000 BELL ATLANTIC FINL SERV 144A 4.25% 9/15/05 4,863 4,863
4,500,000 4,500,000 BELL ATLANTIC FINL SERV 5.75% 04/01/03 144A 4,601 4,601
1,125,000 1,125,000 BERKSHIRE HATHAWAY 1.00% 12/2/01 1,367 1,367
4,840,000 4,840,000 CLEAR CHANNEL 2.625% 04/01/03 4,882 4,882
0 0 CUSTODY SWEEP INTEREST - -
0 0 EMCOR GROUP INC 5.75% 04/01/05 - -
4,900,000 4,900,000 HEALTHSOUTH CORP 3.25% 04/01/03 SERIES: 144A 3,700 3,700
4,580,000 4,580,000 HILTON HOTELS CORPORATION 5.00% 5/15/06 4,053 4,053
2,800,000 2,800,000 HOME DEPOT INC 3.25% 10/1/01 4,886 4,886
2,250,000 2,250,000 ITRON INC 144A 6.75% 03/31/04 1,496 1,496
900,000 900,000 ITRON INC. 6.75% 03/31/04 599 599
2,850,000 2,850,000 KELLSTROM INDUSTRIES INC 5.5% 6/15/03 2,212 2,212
3,000,000 3,000,000 LOEWS CORP 3.125% 9/15/07 2,385 2,385
4,100,000 4,100,000 MAGNA INTERNATIONAL INC 4.875% 02/15/05 4,121 4,121
3,000,000 3,000,000 MARK IV INDUSTRIES 4.75% 11/01/04 2,505 2,505
2,135,000 2,135,000 MARK IV INDUSTRIES 4.75% 11/01/04 1,783 1,783
3,350,000 3,350,000 MOTOROLA INC. ZERO CPN. 9/27/13 2,291 2,291
1,310,000 1,310,000 NCS HEALTHCARE INC 5.75% 08/15/04 1,118 1,118
4,300,000 4,300,000 OMNICARE 5% 12/01/07 144A 4,504 4,504
4,400,000 4,400,000 OMNICOM 2.25% 1/6/13 144A 5,038 5,038
1,065,000 1,065,000 PARKER DRILLING CORP 5.50% 8/1/04 799 799
3,780,000 3,780,000 PENN TREATY AMERICA CORP 6.25% 12/01/03 4,002 4,002
890,000 890,000 PENN TREATY AMERICA CORP EURO 12/01/03 6.25% 942 942
8,800,000 8,800,000 PEP BOYS 0% 9/20/11 4,862 4,862
<PAGE>
4,550,000 4,550,000 PHOTRONICS INC. 6.0% 6/1/2004 3,788 3,788
4,215,000 4,215,000 PROTECTION ONE ALRM 6.75% 9/15/03 4,742 4,742
4,350,000 4,350,000 RITE AID CORP 5.25% 09/15/02 5,160 5,160
9,000,000 9,000,000 ROCHE HOLDINGS INC ZERO CPN 05/06/12 4,669 4,669
5,000,000 5,000,000 ROCHE HOLDINGS ZERO COUPON BOND 144A 4/20/10 3,025 3,025
1,700,000 1,700,000 SEACOR 5.375 11/15/06 144 1,552 1,552
1,300,000 1,300,000 SEACOR HOLDINGS INC 5.375 11/15/2006 CNV 1,188 1,188
2,000,000 2,000,000 SOLECTRON CORP. 6% 3/1/06 144A 3,073 3,073
4,920,000 4,920,000 THERMO ELECTRON CORP. 144A 4,225 4,225
10,525,000 10,525,000 TIMES MIRROR CO 0.00% 04/15/17 4,684 4,684
2,680,000 2,680,000 TOWER AUTOMOTIVE INC. 5.0% 8/1/04 2,582 2,582
12,000,000 12,000,000 US CELLULAR CORP 0.00% 6/15/15 CONV 4,545 4,545
3,500,000 3,500,000 US FILTER 4.50% 12/15/01 3,176 3,176
2,500,000 2,500,000 WASTE MANAGEMENT INC 4.00% 02/01/02 3,041 3,041
4,500,000 4,500,000 WMX TECHNOLOGIES 2.00% 01/24/05 4,500 4,500
4,000,000 4,000,000 XILINX INC 5.25% 11/01/02 3,820 3,820
---------------------------------------
0 149,039 149,039
---------------------------------------
Preferred Stock-Convertible - 36.90%
120,000 120,000 AMERUS LIFE HOLDINGS INC 2,910 2,910
70,000 70,000 CALENERGY CAPITAL TRUST II PFD 144A 2,923 2,923
85,000 85,000 CITIZENS UTILITIES CO. 5.0000% 1/31/36 SERIES 3,655 3,655
168,300 168,300 CNB CAPITAL TRUST I PFD 4,502 4,502
71,600 71,600 CONSECO FINANCE TRUST IV PFD 2,824 2,824
94,000 94,000 EL PASO ENERGY CPTL TRUST I PFD 4,312 4,312
108,000 108,000 ELSAG BAILEY PFD 5.50% 12/31/35 SERIES 4,266 4,266
89,600 89,600 FLEETWOOD CAPITAL TRUST SERIES: 144A 3,965 3,965
112,400 112,400 FREEPORT MCMORAN COV GOLD PFD 5.000% SERIES 1,812 1,812
19,000 19,000 FRONTIER FINANCING TRUST PFD 829 829
50,000 50,000 FRONTIER INSURANCE GROUP INC 144A PFD STK 2,181 2,181
<PAGE>
0 0 GOLDEN STATE BANCORP 8.75% SERIES A - -
66,100 66,100 HOUSTON INDUSTRIES INC PFD 5,044 5,044
93,000 93,000 INTERNATIONAL PAPER 144A CONV PFRD 4,569 4,569
45,600 45,600 LIFE RE CAPITAL TRUST II 6.00% PFD 3,386 3,386
142,500 142,500 MCN CORP. 2,654 2,654
86,500 86,500 MEDIAONE GROUP "ATI" PIES 4,833 4,833
60,000 60,000 MEDIAONE GROUP INC SERIES "D" PREFERRED STOCK 5,633 5,633
50,000 50,000 MICROSOFT CORP 2.196% PFD 4,819 4,819
81,300 81,300 NEWELL FINANCIAL TRUST 5.25% PREFERRED 4,583 4,583
CONVERTIBLE
40,000 40,000 OCCIDENTAL PETE CONV PFD $3.00 2,445 2,445
85,000 85,000 OWENS CORNING LLC 144A 4,154 4,154
95,350 95,350 OWENS-ILL INC 3,409 3,409
391,000 391,000 PHILADELPHIA CONS HLDG CORP 3,812 3,812
73,300 73,300 PLC CAP TRUST II (PL) 6.5% 2/16/01 SERIES 4,462 4,462
81,000 81,000 RALSTON PURINA CO. 7% 8/1/00 4,941 4,941
200,000 200,000 READERS DIGEST (RDA) $1.9300 2/15/01 4,163 4,163
77,200 77,200 SEALED AIR CORP (NEW) WI 2,788 2,788
91,000 91,000 SPRINT CORP CONV PFD 8.25% 6,143 6,143
50,000 50,000 ST. PAUL CAPITAL LLC 6.00% 12/31/49 3,088 3,088
75,000 75,000 TCI COMMUNICATIONS PRFD 6,318 6,318
96,500 96,500 TEXAS UTILITIES CO 5,428 5,428
18,000 18,000 UNION PACIFIC CAP TRUST 801 801
90,000 90,000 UNION PACIFIC CAP TRUST 144A 4,005 4,005
85,000 85,000 UNOCAL CORP. 4,452 4,452
---------------------------------------
0 130,009 130,009
---------------------------------------
Warrants - 0.10%
85,342 85,342 GOLDEN STATE BANCRP-LITIG ST 360 360
---------------------------------------
0 360 360
---------------------------------------
<PAGE>
Total Investments- 96.08% (Cost $0,
$346,163 respectively) 0 338,772 338,772
Nations Capital Income Fund / Pacific Horizon Capital Income Fund
Pro Forma Combining Statement of Net Assets (unaudited)
September 30,1998
Pacific
Horizon
Nations Capital Capital Income Adjustments to Pro Forma
Income Fund Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
-------------------------------------------------- ----------------
Total Investments $ - $338,772 $ - $338,772
Other Assets and Liabilities:
Other assets and liabilities, net - 13,807 - 13,807
-------------------------------------------------- ----------------
Total Other Assets and Liabilities - 13,807 - 13,807
-------------------------------------------------- ----------------
Net Assets $ - $ 352,579 $ - $352,579
================================================== ================
Net Assets by Class:
Investor A / Class A $ - $347,714 $- $347,714
Investor B / Class B $ - $ 1,755 $- $ 1,755
Investor C / Class K $ - $ 3,110 $- $ 3,110
-------------------------------------------------- ----------------
$ - $352,579 $- $352,579
-------------------------------------------------- ----------------
Shares Outstanding by Class:
Investor A / Class A - 22,612 - 22,612
Investor B / Class B - 114 - 114
Investor C / Class K - 202 - 202
-------------------------------------------------- ----------------
- 22,928 - 22,928
-------------------------------------------------- ----------------
<PAGE>
Net Asset Value per Share by Class:
Investor A / Class A $ - $ 15.38 $ - $ 15.38
Investor B / Class B $ - $ 15.37 $ - $ 15.37
Investor C / Class K $ - $ 15.39 $ - $ 15.39
See Notes to Pro Forma Financial Statements
Nations Capital Income Fund / Pacific Horizon Capital Income Fund
Pro Forma Combining Statement of Operations (unaudited)
Twelve Month Period Ending September 30,1998
Pacific
Horizon
Nations Capital Capital Income Adjustments to Pro Pro Forma
Income Fund Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
-------------------------------------------------- ----------------
INVESTMENT INCOME:
Interest $0 $10,299 $0 $10,299
Dividends - 6,720 - 6,720
-------------------------------------------------- ----------------
Total Investment Income - 17,019 - 17,019
-------------------------------------------------- ----------------
EXPENSES:
Investment Advisory - 1,785 796(a) 2,581
Administration - 794 119(a) 913
Transfer Agent - 568 (388) (b) 180
Custodian - 3 42 (b) 45
Legal and Audit Fees - 32 (23) (b) 9
Registration & Filing - 37 - 37
Trustees' Fees - 6 2 (b) 8
Other expenses - 151 (50) (b) 101
-------------------------------------------------- ----------------
<PAGE>
Subtotal - 3,376 498 3,874
-------------------------------------------------- ----------------
Shareholder Servicing and Distribution Fees
Investor A - 984 - 984
Investor B - 2 - 2
Investor C - 27 - 27
-------------------------------------------------- ----------------
- 1,013 - 1,013
-------------------------------------------------- ----------------
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor - (7) 7 -
-------------------------------------------------- ----------------
Total Expenses - 4,382 505 4,887
-------------------------------------------------- ----------------
-------------------------------------------------- ----------------
NET INVESTMENT INCOME - 12,637 (505) 12,132
-------------------------------------------------- ----------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investments - 18,900 - 18,900
Net change in unrealized appreciation/
(depreciation) of investments - (30,917) - (30,917)
Net realized and unrealized gain/(loss)
-------------------------------------------------- ----------------
on investments - (12,017) - (12,017)
-------------------------------------------------- ----------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $0 $620 ($505) $115
================================================== ================
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
<PAGE>
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
Nations Capital Income Fund
Pacific Horizon Capital Income Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at September
30, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Capital Income Fund in exchange for
shares of Nations Capital Income Fund. Under generally accepted accounting
principles, the historical cost of investment securities will be carried forward
under the new name of Nations Capital Income Fund. The pro forma statements do
not reflect the expenses of either fund in carrying out its obligations under
the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees and
Investor C shareholders servicing and distribution fees have been calculated for
the combined fund based on the contractual rates expected to be in effect for
the Nations Capital Income at the time of the Reorganization at the combined
level of average net assets for the twelve month period ended September 30,
1998.
<PAGE>
<TABLE>
<CAPTION>
NATIONS CASH RESERVES / PACIFIC HORIZON PRIME FUND
Pro Forma Combining Schedule of Investments (unaudited)
October 31,1998
Pacific Horizon Pacific
Nations Cash Prime Fund Nations Cash Horizon Pro Forma
Reserves Principal Pro Forma Principal Reserves Prime Fund Combined
Principal Amount Amount Amount Description Value Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C> <C> <C>
BANK NOTES - 2.08%
0 25,000,000 25,000,000 BANK ONE WISCONSIN N.A. 5.55% 2/26/99 0 24,989 24,989
0 50,000,000 50,000,000 KEY BANK N.A. VR 10/29/99 0 50,000 50,000
0 100,000,000 100,000,000 KEY BANK N.A. VR 9/16/99 0 99,966 99,966
0 50,000,000 50,000,000 MORGAN GUARANTY TRUST COMP OF N.Y. VR 0 49,986 49,986
10/15/99
0 100,000,000 100,000,000 MORGAN GUARANTY TRUST COMP. OF N.Y. VR 0 99,956 99,956
9/27/99
0 50,000,000 50,000,000 PNC BANK N.A. VR 10/13/99 0 49,991 49,991
0 50,000,000 50,000,000 US BANK N.A. VR 9/15/99 0 49,996 49,996
------------------------------------
0 424,884 424,884
------------------------------------
CERTIFICATES OF DEPOSIT - EURO - 0.85%
0 50,000,000 50,000,000 COMMERZBANK AG LONDON BRANCH 5.19% 1/7/99 0 49,987 49,987
0 100,000,000 100,000,000 ING BANK NV LDN BRNCH 5.53% 1/08/99 0 100,002 100,002
0 25,000,000 25,000,000 SVENSKA HANDELSBANKEN LDN BRNCH 5.655% 0 25,000 25,000
12/7/98 ------------------------------------
0 174,989 174,989
------------------------------------
CERTIFICATES OF DEPOSIT- DOMESTIC - 1.22%
40,000,000 0 40,000,000 BANKERS TRUST NEW YORK 5.33% 11/2/98 39,988 0 39,988
45,000,000 0 45,000,000 BANKERS TRUST NEW YORK 5.78% 4/28/99 44,989 0 44,989
23,500,000 0 23,500,000 BANKERS TRUST NEW YORK 5.77% 4/28/99 23,486 0 23,486
35,000,000 0 35,000,000 BANKERS TRUST NEW YORK 5.67% 2/26/99 34,995 0 34,995
50,000,000 0 50,000,000 CHASE MANHATTAN BANK 5% 2/16/99 50,000 0 50,000
20,000,000 0 20,000,000 CHASE MANHATTAN BANK U.S.A. 5.685% 8/03/99 19,991 0 19,991
36,000,000 0 36,000,000 MORGAN GUARANTY TRUST, 5.55% 2/02/99 35,976 0 35,976
<PAGE>
-------------------------------------
249,425 0 249,425
-------------------------------------
CERTIFICATES OF DEPOSIT- YANKEE - 9.6%
25,000,000 0 25,000,000 ABN-AMRO BANK 5.75% 3/31/99 24,994 0 24,994
30,000,000 0 30,000,000 BANK NATIONALE DE PARIS 5.71% 2/25/99 30,000 0 30,000
0 50,000,000 50,000,000 BANQUE NATL DE PARIS,NY BRANCH 5.73% 3/31/99 0 49,990 49,990
0 90,000,000 90,000,000 BANQUE PARIBAS NY BRANCH 5.66% 3/1/99 0 89,986 89,986
0 50,000,000 50,000,000 BANQUE PARIBAS NY BRANCH 5.73% 3/29/99 0 49,990 49,990
0 75,000,000 75,000,000 BAYERISCHE LANDESBANK GIROZENTRALE, NY BRANCH 0 74,975 74,975
0 50,000,000 50,000,000 CANADIAN IMPERIAL BANK OF COMMERCE, NY BRANCH 0 49,985 49,985
0 22,000,000 22,000,000 COMMERZBANK AG NY BRANCH 5.08% 9/28/99 0 22,061 22,061
0 27,000,000 27,000,000 COMMERZBANK AG NY BRANCH 5.14% 9/15/99 0 27,084 27,084
0 200,000,000 200,000,000 COMMERZBANK AG NY BRANCH 5.19% 9/21/99 0 200,590 200,590
27,500,000 0 27,500,000 COMMERZBANK 5.64% 3/02/99 27,485 0 27,485
40,000,000 0 40,000,000 CREDIT AGRICOLE 5.75% 4/01/99 39,992 0 39,992
0 100,000,000 100,000,000 CREDIT SUISSE FIRST BOSTON VR 8/11/99 0 100,000 100,000
0 80,000,000 80,000,000 DRESDNER BANK A.G. NY BRANCH 5.73% 4/19/99 0 80,178 80,178
0 50,000,000 50,000,000 ISTITUTO BANCAIRIO SAN PAOLO D.T. NY VR 0 49,993 49,993
3/19/99
0 50,000,000 50,000,000 ISTITUTO BANCARIO SAN PAOLO DI TORINO, NY 0 49,988 49,988
BRANCH
0 50,000,000 50,000,000 ISTITUTO BANCARIO SAN PAOLO DI TORINO, NY 0 49,979 49,979
BRANCH
20,000,000 0 20,000,000 NATIONAL BANK OF CANADA 5.94% 12/03/98 20,000 0 20,000
30,000,000 0 30,000,000 NATIONAL BANK OF CANADA 5.64% 1/04/99 30,000 0 30,000
0 25,000,000 25,000,000 NATIONAL WESTMINSTER BANK PLC NY BRANCH 0 24,986 24,986
0 50,000,000 50,000,000 ROYAL BANK OF CANADA NY BRANCH 5.63% 2/26/99 0 49,989 49,989
0 25,000,000 25,000,000 SOCIETE GENERALE BANK NY BRANCH VR 1/22/99 0 24,997 24,997
0 25,000,000 25,000,000 SOCIETE GENERALE BANK NY BRANCH VR 5/7/99 0 24,992 24,992
0 50,000,000 50,000,000 SOCIETE GENERALE BANK NY BRANCH VR 6/1/99 0 49,977 49,977
0 50,000,000 50,000,000 SOCIETE GENERALE BANK NY BRANCH 5.66% 2/26/99 0 49,995 49,995
<PAGE>
0 50,000,000 50,000,000 SOCIETE GENERALE BANK NY BRANCH 5.69% 3/2/99 0 49,992 49,992
0 25,000,000 25,000,000 SOCIETE GENERALE BANK NY BRANCH 5.75% 4/15/99 0 24,995 24,995
0 25,000,000 25,000,000 SOCIETE GENERALE BANK NY BRANCH 5.76% 4/16/99 0 24,995 24,995
125,000,000 0 125,000,000 SOCIETE GENERALE NY 5.323% 8/11/99 124,903 0 124,903
16,250,000 0 16,250,000 SOCIETE GENERALE NY 5.7% 3/23/99 16,247 0 16,247
29,000,000 0 29,000,000 SOCIETE GENERALE NY 5.8% 3/31/99 28,995 0 28,995
30,000,000 0 30,000,000 SOCIETE GENERALE NY 5.75% 4/16/99 29,986 0 29,986
30,000,000 0 30,000,000 SOCIETE GENERALE NY 5.8% 4/28/99 29,986 0 29,986
25,000,000 50,000,000 75,000,000 SOCIETE GENERALE 5.7% 2/26/99 24,997 49,994 74,991
0 50,000,000 50,000,000 SVENSKA HANDELSBANKEN NY BRANCH 0 50,315 50,315
0 100,000,000 100,000,000 SVENSKA HANDELSBANKEN NY BRANCH 5.75% 4/26/99 0 99,977 99,977
0 100,000,000 100,000,000 WESTDEUTSCHE LANDES BANK GIROZENTRALE, NY 0 100,000 100,000
BRANCH
-----------------------------------------
427,585 1,520,003 1,947,588
-----------------------------------------
COMMERCIAL PAPER - 42.72%
0 50,000,000 50,000,000 ABBEY NATIONAL NORTH AMERICA CORP. 0 49,529 49,529
0 95,000,000 95,000,000 AETNA SERVICES INC 5.40% 11/20/98 0 94,729 94,729
0 40,000,000 40,000,000 AETNA SERVICES INC 5.45% 1/22/99 0 39,503 39,503
0 20,000,000 20,000,000 AKZO NOBEL INC 5.30% 2/19/99 0 19,676 19,676
0 43,500,000 43,500,000 ALCATEL ALSTHOM INC 5.30% 12/18/98 0 43,199 43,199
25,066,000 0 25,066,000 AON CORP 12/01/98 24,955 0 24,955
34,296,000 0 34,296,000 AON CORP 12/07/98 34,118 0 34,118
50,000,000 0 50,000,000 AON CORP 12/08/98 49,724 0 49,724
21,000,000 0 21,000,000 AON CORP 12/22/98 20,844 0 20,844
15,581,000 0 15,581,000 AON CORP 11/12/98 15,555 0 15,555
0 100,000,000 100,000,000 ASSET SECURITIZATION COOPERATIVE CORP 0 99,941 99,941
0 35,000,000 35,000,000 ASSET SECURITIZATION COOPERATIVE CORP 0 34,906 34,906
0 100,000,000 100,000,000 ASSET SECURITIZATION COOPERATIVE CORP 0 99,426 99,426
0 100,000,000 100,000,000 ASSET SECURITIZATION COOPERATIVE CORP 0 99,411 99,411
0 50,000,000 50,000,000 BANC ONE FUNDING CORP 5.30% 01/13/99 0 49,463 49,463
53,564,000 0 53,564,000 BANKER TRUST CORPORATION 1/15/99 52,922 0 52,922
12,500,000 0 12,500,000 BANKERS TRUST CORPORATION 2/19/99 12,288 0 12,288
20,000,000 0 20,000,000 BANKERS TRUST NY CORP 11/24/98 19,930 0 19,930
0 50,000,000 50,000,000 BAT CAPITAL CORP 5.27% 12/11/98 0 49,707 49,707
0 150,000,000 150,000,000 BAT CAPITAL CORP 5.46% 12/30/98 0 148,658 148,658
<PAGE>
0 100,000,000 100,000,000 BAT CAPITAL CORP 5.54% 11/18/98 0 99,738 99,738
0 50,000,000 50,000,000 BETA FINANCE INCORPORATED 4.97% 4/6/99 0 48,923 48,923
0 50,000,000 50,000,000 BHF FINANCE DELAWARE INC. 5.53% 11/25/98 0 49,816 49,816
30,000,000 0 30,000,000 BT ALEX BROWN 1/21/99 29,624 0 29,624
16,000,000 0 16,000,000 BURMAH CASTROL FINANCE 11/16/98 15,963 0 15,963
0 85,000,000 85,000,000 CC USA INC 5.26% 1/25/99 0 83,944 83,944
0 30,000,000 30,000,000 CC USA INC 5.53% 11/19/98 0 29,917 29,917
0 30,000,000 30,000,000 CC USA INC 5.53% 11/20/98 0 29,912 29,912
125,000,000 0 125,000,000 CHASE MANHATTAN CORP 1/29/99 123,399 0 123,399
0 75,000,000 75,000,000 CITIBANK CAP MKTS ASSETS LLC 5.40% 11/10/98 0 74,899 74,899
0 25,000,000 25,000,000 CITIBANK CAP MKTS ASSETS LLC 5.485% 12/21/98 0 24,810 24,810
0 50,000,000 50,000,000 CITIBANK CAP MKTS ASSETS LLC 5.53% 11/4/98 0 49,977 49,977
0 50,000,000 50,000,000 CITIBANK CAP MKTS ASSETS LLC 5.54% 11/02/98 0 49,992 49,992
0 100,000,000 100,000,000 CORPORATE ASSET FUNDING CORP. INC 0 98,569 98,569
0 50,000,000 50,000,000 CORPORATE ASSET FUNDING CORP. INC 0 49,279 49,279
58,000,000 0 58,000,000 COUNTRYWIDE HOME LOANS INC 11/02/98 57,991 0 57,991
50,000,000 0 50,000,000 COUNTRYWIDE HOME LOANS, INC 11/18/98 49,872 0 49,872
35,500,000 0 35,500,000 COUNTRYWIDE HOME LOANS, INC 11/24/98 35,380 0 35,380
50,000,000 50,000,000 100,000,000 COUNTRYWIDE HOME LOANS, INC 11/25/98 49,824 49,816 99,641
20,000,000 0 20,000,000 COUNTRYWIDE HOME LOANS, INC 11/30/98 19,912 0 19,912
0 25,000,000 25,000,000 CREGEM NORTH AMERICA INC 5.05% 1/14/99 0 24,740 24,740
0 50,000,000 50,000,000 CREGEM NORTH AMERICA INC 5.19% 1/14/99 0 49,467 49,467
0 100,000,000 100,000,000 DAIMLER-BENZ NORTH AMERICA CORP 0 99,522 99,522
0 25,000,000 25,000,000 DUKE CAPITAL CORP 5.53% 11/24/98 0 24,912 24,912
0 30,000,000 30,000,000 DUKE CAPITAL CORP 5.54% 11/13/98 0 29,945 29,945
45,000,000 0 45,000,000 EDISON SECURITIZATION 4/23/99 43,919 0 43,919
0 40,435,000 40,435,000 FALCON ASSET SECURITIZATION CORP 0 40,380 40,380
0 73,800,000 73,800,000 FALCON ASSET SECURITIZATION CORP 0 73,598 73,598
0 26,545,000 26,545,000 FALCON ASSET SECURITIZATION CORP 0 26,468 26,468
0 38,895,000 38,895,000 FALCON ASSET SECURITIZATION CORP 0 38,436 38,436
6,034,000 0 6,034,000 FINOVA CAPITAL CORP 11/20/98 6,016 0 6,016
27,500,000 0 27,500,000 FINOVA CAPITAL CORP 1/05/99 27,232 0 27,232
28,000,000 0 28,000,000 FINOVA CAPITAL CORP 1/29/99 27,624 0 27,624
300,000,000 0 300,000,000 GEN MOTORS ACCEP CORP 11/02/98 299,952 0 299,952
<PAGE>
200,000,000 300,000,000 500,000,000 GENERAL ELECTRIC CAPITAL CORP 11/02/98 199,968 299,952 499,920
0 50,000,000 50,000,000 GENERAL ELECTRIC CAPITAL CORP 5.48% 12/29/98 0 49,559 49,559
0 50,000,000 50,000,000 GENERAL ELECTRIC CAPITAL SERV 5.48% 12/29/98 0 49,559 49,559
92,000,000 0 92,000,000 GENERAL ELECTRIC COMPANY 12/31/98 91,213 0 91,213
200,000,000 0 200,000,000 GOLMAN SACHS GROUP 5.646% 11/09/98 200,000 0 200,000
0 43,164,000 43,164,000 GOVERNMENT DEVELOPMENT BANK OF PUERTO RICO 0 43,104 43,104
0 50,000,000 50,000,000 GREYHAWK FUNDING LLC 5.35% 1/28/99 0 49,346 49,346
0 75,000,000 75,000,000 GREYHAWK FUNDING LLC 5.40% 1/29/99 0 74,010 74,010
0 50,000,000 50,000,000 HERTZ CORPORATION 5.20% 11/20/98 0 49,863 49,863
0 50,000,000 50,000,000 HERTZ CORPORATION 5.52% 12/11/98 0 49,693 49,693
30,000,000 0 30,000,000 HITACHI AMERICA 12/02/98 29,868 0 29,868
15,000,000 20,000,000 35,000,000 HITACHI AMERICA 12/16/98 14,897 19,863 34,760
16,000,000 0 16,000,000 HITACHI AMERICA LTD 5/14/99 15,533 0 15,533
0 23,985,000 23,985,000 HITACHI AMERICA LTD 5.315% 5/6/99 0 23,326 23,326
0 17,000,000 17,000,000 HITACHI AMERICA LTD 5.51% 11/10/98 0 16,977 16,977
0 20,000,000 20,000,000 HITACHI AMERICA LTD 5.52% 11/30/98 0 19,911 19,911
21,000,000 0 21,000,000 HITACHI AMERICA, LTD. 2/24/99 20,661 0 20,661
9,000,000 0 9,000,000 HITACHI AMERICA, LTD. 4/13/99 8,776 0 8,776
12,000,000 0 12,000,000 HITACHI AMERICA,LTD 5/11/99 11,653 0 11,653
60,500,000 0 60,500,000 INTERNATIONAL DUE 11/12/98 60,399 0 60,399
76,146,000 0 76,146,000 INTERNATIONAL SECURITIZ 12/10/98 75,715 0 75,715
35,250,000 0 35,250,000 INTERNATIONAL SECURITIZ 4/22/99 34,408 0 34,408
55,050,000 0 55,050,000 INTERNATIONAL SECURITIZ 4/29/99 53,704 0 53,704
0 97,000,000 97,000,000 JOHNSON CONTROLS INC 5.45% 12/4/98 0 96,515 96,515
0 50,000,000 50,000,000 JOHNSON CONTROLS INC 5.48% 2/26/99 0 49,277 49,277
0 50,000,000 50,000,000 JOHNSON CONTROLS INC 5.60% 11/18/98 0 49,868 49,868
0 45,000,000 45,000,000 JP MORGAN & CO INC 4.82% 4/13/99 0 44,018 44,018
50,000,000 0 50,000,000 LEHMAN BROS DUE11/16/98 49,884 0 49,884
60,000,000 0 60,000,000 LEHMAN BROS DUE12/21/98 59,538 0 59,538
0 100,000,000 100,000,000 LEHMAN BROTHERS HOLDINGS INC VR 05/07/99 0 100,000 100,000
0 50,000,000 50,000,000 LEHMAN BROTHERS HOLDINGS INC VR 1/19/99 0 50,000 50,000
0 50,000,000 50,000,000 LEHMAN BROTHERS HOLDINGS INC. 5.55% 11/18/98 0 49,869 49,869
75,000,000 0 75,000,000 LEXINGTON PARKER CAPITAL CP IL 4/27/99 75,000 0 75,000
60,000,000 0 60,000,000 MITSUBISHI INTERNATIONAL 11/03/98 59,981 0 59,981
17,000,000 0 17,000,000 MITSUBISHI INTERNATIONAL 11/23/98 16,941 0 16,941
65,000,000 0 65,000,000 MITSUBISHI INTERNATIONAL 1/26/99 64,107 0 64,107
45,000,000 0 45,000,000 MITSUBISHI INTERNATIONAL CORP 11/12/98 44,920 0 44,920
10,000,000 0 10,000,000 MITSUBISHI INTERNATIONAL CORP 11/16/98 9,976 0 9,976
<PAGE>
50,000,000 0 50,000,000 MITSUBISHI MOTORS, 1/27/99 49,305 0 49,305
0 38,000,000 38,000,000 MOAT FUNDING LLC 5.33% 1/8/99 0 37,617 37,617
0 50,000,000 50,000,000 MOAT FUNDING LLC AB 5.38% 1/28/99 0 49,342 49,342
0 22,695,000 22,695,000 MOAT FUNDING LLC 5.40% 1/22/99 0 22,416 22,416
0 58,273,000 58,273,000 MOAT FUNDING LLC 5.53% 12/11/98 0 57,915 57,915
0 22,941,000 22,941,000 MOAT FUNDING LLC 5.54% 11/23/98 0 22,863 22,863
0 142,480,000 142,480,000 MOAT FUNDING LLC 5.54% 11/24/98 0 141,976 141,976
0 71,004,000 71,004,000 MOAT FUNDING LLC 5.54% 11/25/98 0 70,742 70,742
0 50,000,000 50,000,000 NATIONAL AUST FUND (DELAWARE) 5.475% 12/29/98 0 49,559 49,559
0 50,000,000 50,000,000 NATIONAL BANK OF CANADA 5.485% 12/28/98 0 49,566 49,566
20,000,000 0 20,000,000 NATIONAL BANK OF CANADA. 12/31/98 19,820 0 19,820
72,000,000 0 72,000,000 NATIONAL BANK OF CANADA DCP. 2/24/99 70,818 0 70,818
90,000,000 0 90,000,000 PHH CORP 1/20/99 88,888 0 88,888
40,208,000 0 40,208,000 PHH CORP 1/21/99 39,703 0 39,703
50,000,000 0 50,000,000 PHH CORP 11/18/98 49,866 0 49,866
33,500,000 0 33,500,000 PHH CORP 12/09/98 33,302 0 33,302
0 75,000,000 75,000,000 PHH CORPORATION 5.50% 11/13/98 0 74,863 74,863
0 50,000,000 50,000,000 PHH CORPORATION 5.63% 12/16/98 0 49,648 49,648
0 181,342,000 181,342,000 REPUBLIC INDUSTRIES FUNDING 5.25% 11/30/98 0 180,575 180,575
0 25,000,000 25,000,000 RIVERWOODS FUNDING CORP 5.20% 1/21/99 0 24,708 24,708
0 250,000,000 250,000,000 RIVERWOODS FUNDING CORP 5.2675% 1/22/99 0 246,997 246,997
20,000,000 0 20,000,000 SAFECO CORP 11/12/98 19,966 0 19,966
20,000,000 0 20,000,000 SAFECO CORP 11/17/98 19,951 0 19,951
12,000,000 0 12,000,000 SAFECO CORP 12/02/98 11,943 0 11,943
90,000,000 0 90,000,000 SAFECO CORP 12/08/98 89,514 0 89,514
30,000,000 0 30,000,000 SAFECO CORP 12/10/98 29,830 0 29,830
58,000,000 0 58,000,000 SAFECO CORP 12/14/98 57,631 0 57,631
30,000,000 0 30,000,000 SAFECO CREDIT 11/19/98 29,917 0 29,917
10,000,000 0 10,000,000 SAFECO CREDIT 12/09/98 9,944 0 9,944
10,000,000 0 10,000,000 SAFECO CREDIT 12/10/98 9,944 0 9,944
7,500,000 0 7,500,000 SAFECO CREDIT 12/18/98 7,448 0 7,448
25,000,000 0 25,000,000 SAFECO CREDIT CO 11/12/98 24,958 0 24,958
38,100,000 0 38,100,000 SAFECO CREDIT CO 12/04/98 37,908 0 37,908
0 50,000,000 50,000,000 SAFECO CREDIT COMPANY 5.41% 1/22/99 0 49,384 49,384
0 50,000,000 50,000,000 SAFECO CREDIT COMPANY 5.52% 12/03/98 0 49,755 49,755
0 35,000,000 35,000,000 SAFECO CREDIT COMPANY 5.535% 11/25/98 0 34,871 34,871
0 49,320,000 49,320,000 SAFECO CREDIT COMPANY 5.54% 11/17/98 0 49,199 49,199
0 100,000,000 100,000,000 SALOMON SMITH BARNEY HOLDINGS INC 0 99,954 99,954
<PAGE>
0 50,000,000 50,000,000 SALOMON SMITH BARNEY HOLDINGS INC. 0 49,870 49,870
0 50,000,000 50,000,000 SALOMON SMITH BARNEY HOLDINGS INC. 0 49,748 49,748
0 100,000,000 100,000,000 SALOMON SMITH BARNEY HOLDINGS INC. 0 98,824 98,824
0 50,000,000 50,000,000 SALOMON SMITH BARNEY HOLDINGS INC. 0 49,410 49,410
0 50,000,000 50,000,000 SIGMA FINANCE INC 5.31% 2/5/99 0 49,292 49,292
0 50,000,000 50,000,000 SIGMA FINANCE INC 5.32% 1/19/99 0 49,416 49,416
0 50,000,000 50,000,000 SIGMA FINANCE INC 5.53% 11/30/98 0 49,777 49,777
0 50,000,000 50,000,000 SIGMA FINANCE INC 5.56% 11/9/98 0 49,938 49,938
5,000,000 0 5,000,000 SUMITOMO CORP 12/11/98 4,969 0 4,969
10,000,000 0 10,000,000 SUMITOMO CORP OF AMERICA 11/19/98 9,972 0 9,972
0 19,541,000 19,541,000 THAMES ASSET GLOBAL SECURITIZATION NO.1 INC 0 19,303 19,303
0 17,767,000 17,767,000 THAMES ASSET GLOBAL SECURITIZATION NO.1 INC 0 17,545 17,545
0 50,000,000 50,000,000 THAMES ASSET GLOBAL SECURITIZATION NO.1 INC 0 49,355 49,355
0 50,000,000 50,000,000 THAMES ASSET GLOBAL SECURITIZATION NO.1 INC 0 49,353 49,353
0 100,000,000 100,000,000 THE BEAR STEARNS COMPANIES INC. 5.49% 0 99,283 99,283
12/18/98
18,000,000 0 18,000,000 TULIP FUNDING 11/10/98 17,976 0 17,976
32,263,000 0 32,263,000 TULIP FUNDING 11/16/98 32,189 0 32,189
25,000,000 0 25,000,000 TULIP FUNDING 1/04/99 24,760 0 24,760
18,627,000 0 18,627,000 TULIP FUNDING CORP 11/17/98 18,581 0 18,581
45,000,000 0 45,000,000 TULIP FUNDING CORP 1/26/99 44,425 0 44,425
100,000,000 0 100,000,000 TULIP FUNDING CORP 1/28/99 98,680 0 98,680
187,000,000 0 187,000,000 VARIABLE FUNDING CAPITAL CORP 11/02/98 186,970 0 186,970
0 38,460,000 38,460,000 WORLD 0MNI VEHICLE LEASING INC 5.42% 12/8/98 0 38,246 38,246
0 42,180,000 42,180,000 WORLD OMNI VEHICLE LEASING INC 0 41,935 41,935
0 37,000,000 37,000,000 WORLD OMNI VEHICLE LEASING INC 5.42% 11/4/98 0 36,983 36,983
0 25,000,000 25,000,000 WORLD OMNI VEHICLE LEASING INC 5.45% 0 24,985 24,985
-----------------------------------------
3,353,364 5,345,131 8,698,495
-----------------------------------------
COMMERCIAL PAPER - FOREIGN - 3.5%
0 41,627,000 41,627,000 BAA PLC 5.12% 3/19/99 0 40,810 40,810
0 75,000,000 75,000,000 BRADFORD & BINGLEY BUILDING SOCIETY 0 74,315 74,315
0 150,000,000 150,000,000 BRITISH GAS CAPITAL INC. 5.00% 04/16/99 0 146,542 146,542
0 100,000,000 100,000,000 BRITISH GAS CAPITAL INC. 5.01% 04/15/99 0 97,704 97,704
<PAGE>
0 48,000,000 48,000,000 DIAGEO CAPITAL PLC 5.13% 2/18/99 0 47,254 47,254
0 50,000,000 50,000,000 DIAGEO CAPITAL PLC 5.49% 12/1/98 0 49,771 49,771
0 50,000,000 50,000,000 FCE BANK PLC 5.31% 1/15/99 0 49,447 49,447
0 200,000,000 200,000,000 WESTDEUTSCHE LANDESBANK GIROZENTRALE 0 199,968 199,968
-----------------------------------------
0 705,811 705,811
-----------------------------------------
CORPORATE NOTE - 13.78%
0 50,000,000 50,000,000 AMERICAN HONDA FINANCE CORP VRMTN 06/16/99 0 50,000 50,000
0 25,000,000 25,000,000 AMERICAN HONDA FINANCE CORP VRMTN 06/25/99 0 25,000 25,000
0 25,000,000 25,000,000 AMERICAN HONDA FINANCE CORP VRMTN 1/20/99 0 25,000 25,000
0 50,000,000 50,000,000 AMERICAN HONDA FINANCE CORP VRMTN 1/21/99 0 49,999 49,999
0 65,000,000 65,000,000 AMERICAN HONDA FINANCE CORP VRMTN 4/20/99 0 65,000 65,000
0 25,000,000 25,000,000 AMERICAN HONDA FINANCE CORP VRMTN 4/26/99 0 24,999 24,999
0 25,000,000 25,000,000 BANCO POPULAR DE PUERTO RICO VRMTN 1/15/99 0 25,008 25,008
0 105,000,000 105,000,000 BANKERS TRUST CORPORATION VRMTN 2/10/99 0 104,989 104,989
0 100,000,000 100,000,000 BANKERS TRUST CORPORATION VRMTN 8/9/99 0 99,958 99,958
0 100,000,000 100,000,000 BEAR STEARNS COMPANIES INC VRMTN 3/17/99 0 100,000 100,000
0 50,000,000 50,000,000 BETA FINANCE INC VRMTN AB 10/26/99 0 50,000 50,000
0 50,000,000 50,000,000 BETA FINANCE INC VRMTN AB 10/27/99 0 50,000 50,000
0 50,000,000 50,000,000 CC USA INC VRMTN AB 11/02/99 0 49,958 49,958
0 50,000,000 50,000,000 CHRYSLER FINANCIAL CORP VRMTN 6/23/99 0 50,000 50,000
0 50,000,000 50,000,000 COMPAGNIE BANCAIRE USA FUNDING VRMTN 11/25/98 0 50,000 50,000
0 100,000,000 100,000,000 COUNTRYWIDE HOME LOANS INC SERIES G VRMTN 0 100,000 100,000
08/30/99
0 100,000,000 100,000,000 COUNTRYWIDE HOME LOANS INC SERIES G VRMTN 0 100,000 100,000
7/26/99
0 50,000,000 50,000,000 COUNTRYWIDE HOME LOANS INC VRMTN 7/26/99 0 50,000 50,000
0 100,000,000 100,000,000 CREDIT SUISSE FIRST BOSTON INC VRMTN 7/30/99 0 100,000 100,000
0 150,000,000 150,000,000 CREDIT SUISSE FIRST BOSTON INC VRMTN 9/13/99 0 149,937 149,937
110,000,000 0 110,000,000 FIRST UNION NATL BANK 5.48% 10/27/99 110,000 0 110,000
0 35,000,000 35,000,000 GENERAL MOTOR ACCEPTANCE CORP VRMTN 10/08/99 0 34,959 34,959
<PAGE>
0 25,000,000 25,000,000 HOUSEHOLD FINANCE CORPORATION VRMTN 1/19/99 0 25,000 25,000
0 25,000,000 25,000,000 HOUSEHOLD FINANCE CORPORATION VRMTN 1/21/99 0 25,000 25,000
0 75,000,000 75,000,000 HOUSEHOLD FINANCE CORPORATION VRMTN 10/14/99 0 75,000 75,000
0 25,000,000 25,000,000 HOUSEHOLD FINANCE CORPORATION VRMTN 3/29/99 0 24,993 24,993
0 50,000,000 50,000,000 HOUSEHOLD FINANCE CORPORATION VRMTN 3/9/99 0 50,000 50,000
0 20,000,000 20,000,000 HOUSEHOLD FINANCE CORPORATION VRMTN 4/08/99 0 20,015 20,015
0 100,000,000 100,000,000 JP MORGAN & CO INC VRMTN 10/4/99 0 100,000 100,000
50,000,000 0 50,000,000 LEHMAN BROTHERS HOLDINGS INC 5.46% 11/3/99 50,000 0 50,000
0 25,000,000 25,000,000 LEHMAN BROTHERS HOLDINGS INC. VRMTN 2/12/99 0 25,000 25,000
13,500,000 0 13,500,000 LEHMAN BROTHERS, INC. 10% 5/15/99 13,780 0 13,780
0 100,000,000 100,000,000 MERRILL LYNCH & CO., INC. VRMTN 10/01/99 0 100,000 100,000
0 100,000,000 100,000,000 MERRILL LYNCH & CO., INC. VRMTN 10/04/99 0 100,000 100,000
0 25,000,000 25,000,000 MERRILL LYNCH & CO., INC. VRMTN 11/23/98 0 25,000 25,000
0 25,000,000 25,000,000 MERRILL LYNCH & CO., INC. VRMTN 12/9/98 0 25,000 25,000
0 100,000,000 100,000,000 MERRILL LYNCH & CO., INC. VRMTN 9/23/99 0 100,000 100,000
0 100,000,000 100,000,000 PHH CORPORATION VRMTN 2/24/99 0 100,000 100,000
0 90,000,000 90,000,000 PHH CORPORATION VRMTN 3/16/99 0 90,000 90,000
0 43,280,000 43,280,000 RACERS SERIES 1998-MM-3-5 VRMTN AB 3/31/99 0 43,278 43,278
0 50,000,000 50,000,000 SIGMA FINANCE INC VRMTN 07/19/99 0 50,000 50,000
0 50,000,000 50,000,000 SIGMA FINANCE INC VRMTN 08/26/99 0 50,000 50,000
0 50,000,000 50,000,000 SIGMA FINANCE INC VRMTN 9/15/99 0 50,000 50,000
0 100,000,000 100,000,000 THE CIT GROUP INC VRMTN 10/20/99 0 100,000 100,000
0 100,000,000 100,000,000 TOYOTA MOTOR CREDIT VRMTN 10/18/99 0 100,000 100,000
-----------------------------------------
173,780 2,633,093 2,806,873
-----------------------------------------
GUARANTEED INVESTMENT CONTRACTS - 2.45%
75,000,000 0 75,000,000 COMMONWEALTH LIFE INS CO 5.53% 11/2/98 75,000 0 75,000
50,000,000 0 50,000,000 FIRST ALLMERICA FIN LIFE INSUR 5.78% 5/15/03 50,000 0 50,000
50,000,000 0 50,000,000 FIRST ALLMERICA FIN LIFE INSUR 5.62% 9/22/03 50,000 0 50,000
50,000,000 0 50,000,000 GIC JACKSON NATL LIFE INS 5.65% 1/01/50 50,000 0 50,000
<PAGE>
50,000,000 0 50,000,000 JACKSON NATL LIFE INS 5.41% 1/01/99 50,000 0 50,000
100,000,000 0 100,000,000 NY LIFE 5.292% 11/17/98 100,000 0 100,000
25,000,000 0 25,000,000 PEOPLES LIFE INS COMP FRN 5.45% 1/01/50 25,000 0 25,000
50,000,000 0 50,000,000 TRAVELERS INSURANCE CO FRN 5.368% 11/12/98 50,000 0 50,000
50,000,000 0 50,000,000 TRAVELERS INSURANCE GROUP 5.645% 1/4/99 50,000 0 50,000
-----------------------------------------
500,000 0 500,000
-----------------------------------------
INVESTMENT COMPANIES - 0.51%
56,347,559 0 56,347,559 AIM LIQUID ASSET PORTFOLIO 56,348 0 56,348
18,474,000 0 18,474,000 AIM PRIME 18,474 0 18,474
30,376,000 0 30,376,000 DREYFUS CASH MANAGEMENT PLUS 30,376 0 30,376
-----------------------------------------
105,198 0 105,198
-----------------------------------------
MASTER NOTES - 4.42%
0 400,000,000 400,000,000 GOLDMAN SACHS GROUP L.P. MASTER NOTE 07/09/99 0 400,000 400,000
0 500,000,000 500,000,000 MORGAN STANLEY, DEAN WITTER, DISCOVER MDN 0 500,000 500,000
12/18/98
-----------------------------------------
0 900,000 900,000
-----------------------------------------
MEDIUM TERM NOTES - 6.73%
40,000,000 100,000,000 140,000,000 BANKERS TRUST CORP 5.39% 8/06/99 39,997 99,992 139,989
45,000,000 0 45,000,000 BANKERS TRUST CORP FRN 5.386% 9/14/99 45,000 0 45,000
10,000,000 0 10,000,000 BEAR STEARNS CO INC 5.69% 2/25/99 9,998 0 9,998
48,000,000 0 48,000,000 BEAR STEARNS CO INC 5.8% 6/14/99 48,069 0 48,069
50,000,000 0 50,000,000 BEAR STEARNS CO INC 5.19% 7/28/99 50,000 0 50,000
0 50,000,000 50,000,000 CC USA INC ABMTN 5.80% 4/9/99 0 50,000 50,000
70,000,000 0 70,000,000 CREDIT SUISSE FIRST BOSTON 5.409% 11/09/99 69,930 0 69,930
50,000,000 0 50,000,000 GOLDMAN SACHS GROUP FRN 5.438% 3/26/99 50,000 0 50,000
20,000,000 0 20,000,000 JP MORGAN AND CO INC ICP 5.75% 3/10/99 20,000 0 20,000
70,000,000 0 70,000,000 LEHMAN BROS HOLDINGS DCP 5.466% 2/12/99 70,000 0 70,000
40,000,000 0 40,000,000 LEHMAN BROTHERS 5.53% 3/23/99 40,000 0 40,000
20,000,000 0 20,000,000 LEHMAN BROTHERS HOLDINGS INC 4.87% 1/13/99 20,000 0 20,000
25,000,000 0 25,000,000 LIBERTY LIGHT US 5.76% 7/23/99 24,998 0 24,998
125,000,000 0 25,000,000 LIBERTY LIGHT US CAPITAL FRN 5.389% 9/15/99 125,000 0 125,000
25,000,000 0 25,000,000 LIBERTY LIGHT US CAPITAL FRN 5.43% 11/05/99 25,000 0 25,000
50,000,000 0 50,000,000 LIBERTY LIGHT US FRN 5.39% 8/06/99 50,000 0 50,000
<PAGE>
50,000,000 0 50,000,000 LIBERTY LIGHT US FRN 5.39% 8/27/99 50,000 0 50,000
50,000,000 0 50,000,000 MERRILL LYNCH & CO 4.754% 5/11/99 50,000 0 50,000
30,000,000 0 30,000,000 MERRILL LYNCH & CO 4.77% 11/25/99 30,000 0 30,000
70,000,000 0 70,000,000 MERRILL LYNCH & CO MTNB 5.37% 6/11/99 70,000 0 70,000
67,000,000 0 67,000,000 MERRILL LYNCH CO FRN 5.44% 10/08/99 67,000 0 67,000
25,000,000 0 25,000,000 MORGAN STANLEY DEAN WITT FRN 5.298% 1/15/99 24,999 0 24,999
25,000,000 0 25,000,000 PHH CORP FRN 5.346% 2/10/99 24,990 0 24,990
50,000,000 0 50,000,000 PHH CORP FRN 5.476% 6/14/99 50,000 0 50,000
40,000,000 0 40,000,000 PHH CORP FRN 5.465% 7/06/99 39,997 0 39,997
35,176,000 0 35,176,000 PHILIP MORRIS 8.625% 3/01/99 35,489 0 35,489
20,000,000 0 20,000,000 PHILIP MORRIS 7.375% 2/15/99 20,084 0 20,084
0 25,000,000 25,000,000 SIGMA FINANCE INC MTN 5.76% 3/31/99 0 25,000 25,000
0 25,000,000 25,000,000 SIGMA FINANCE INC MTN 5.775% 3/31/99 0 25,000 25,000
0 20,000,000 20,000,000 THE CIT GROUP INC MTN 6.625% 9/13/99 0 20,309 20,309
-----------------------------------------
1,150,535 220,301 1,370,836
-----------------------------------------
MUNICIPAL BOND - 0.19%
40,000,000 0 40,000,000 VIRGINIA HSG DEV AUTH FRN 5.1% 1/01/46 40,000 0 40,000
-----------------------------------------
40,000 0 40,000
-----------------------------------------
REPURCHASE AGREEMENTS - 7.74%
0 150,000,000 150,000,000 HSBC SECURITIES INC 5.58% 11/02/98 0 150,000 150,000
0 129,570,000 129,570,000 JP MORGAN 5.00% 11/02/98 0 129,570 129,570
0 600,000,000 600,000,000 LEHMAN 5.60% 11/02/98 0 600,000 600,000
100,000,000 0 100,000,000 MERRILL LYNCH 5.72% 11/02/98 100,000 0 100,000
0 555,000,000 555,000,000 PRUDENTIAL 5.60% 11/02/98 0 555,000 555,000
0 17,429,000 17,429,000 THE BANK OF NEW YORK 5.20% 11/02/98 0 17,429 17,429
0 25,000,000 25,000,000 THE BANK OF NEW YORK 5.55% 11/02/98 0 25,000 25,000
-----------------------------------------
100,000 1,476,999 1,576,999
-----------------------------------------
TIME DEPOSITS- EURO - 4.82%
150,000,000 0 150,000,000 CHASE MANHATTAN 5.563% 11/02/98 150,000 0 150,000
350,000,000 0 350,000,000 DEUTSCHE BANK 5.688% 11/02/98 350,000 0 350,000
82,000,000 0 82,000,000 FIRST UNION 5.25% 11/02/98 82,000 0 82,000
50,000,000 0 50,000,000 SOCIETE GENERALE 5.563% 11/02/98 50,000 0 50,000
350,000,000 0 350,000,000 WESTDEUTSCHE 5.688% 11/02/98 350,000 0 350,000
-----------------------------------------
982,000 0 982,000
-----------------------------------------
Total Investments--100.61% (Cost $7,081,887,
$13,401,211, $20,483,098, respectively) 7,081,887 13,401,211 20,483,098
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONS CASH RESERVES / PACIFIC HORIZON PRIME FUND
Pro Forma Combining Statement of Net Assets (unaudited)
October 31,1998
Pacific
Nations Cash Horizon Adjustments to Pro Forma
Reserves Prime Fund Pro Forma Combined
( in 000's) ( in 000's) ( in 000's) ( in 000's)
-------------------------------------------- --------------
<S> <C> <C> <C>
TOTAL INVESTMENTS $ 7,081,887 $ 13,401,211 $-- $ 20,483,098
OTHER ASSETS AND LIABILITIES:
Receivable for investment securities sold -- 2,008,830 -- 2,008,830
Payable for investment securities purchased -- (2,100,728) -- (2,100,728)
Other assets and liabilities, net 908 (34,322) -- (33,414)
------------ ------------
Total Other Assets and Liabilities 908 (126,220) -- (125,312)
------------ ------------
NET ASSETS $ 7,082,795 $ 13,2$4,991 $ -- $ 20,357,786
============ ============
NET ASSETS BY CLASS:
Capital Class / Horizon (Primary) $ 3,808,855 $ 3,437,950 $- $ 7,246,805
Liquidity Class 1,300,321 -- -- 1,300,321
Adviser Class / Horizon Service 810,617 4,078,140 -- 4,888,757
Market Class 1,163,002 -- -- 1,163,002
Investor Class / Pacific Horizon -- 2,883,219 -- 2,883,219
<PAGE>
Service Class / Class Y -- 184,077 -- 184,077
Daily / Class S & Class X -- 2,691,605 -- 2,691,605
------------ ------------
$ 7,082,795 $ 13,274,991 $- $ 20,357,786
------------ ------------
SHARES OUTSTANDING BY CLASS:
Capital Class / Horizon (Primary) 3,808,850 3,438,902 -- 7,247,752
Liquidity Class 1,300,319 -- -- 1,300,319
Adviser Class / Horizon Service 810,617 4,078,815 -- 4,889,432
Market Class 1,163,000 -- -- 1,163,000
Investor Class / Pacific Horizon -- 2,883,995 -- 2,883,995
Service Class / Class Y -- 184,111 -- 184,111
Daily / Class S & Class X -- 2,692,046 -- 2,692,046
------------ ------------
7,082,786 13,277,869 -- 20,360,655
------------ ------------
NET ASSET VALUE PER SHARE BY CLASS:
Capital Class / Horizon (Primary) $ 1.00 $ 1.00 $ -- $ 1.00
Liquidity Class $ 1.00 $ -- $ -- $ 1.00
Adviser Class / Horizon Service $ 1.00 $ 1.00 -- $ 1.00
Market Class $ 1.00 $ -- -- $ 1.00
Investor Class / Pacific Horizon $ -- $ 1.00 -- $ 1.00
<PAGE>
Service Class / Class Y -- $ 1.00 -- $ 1.00
Daily / Class S & Class X -- $ 1.00 -- $ 1.00
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
NATIONS CASH RESERVES / PACIFIC HORIZON PRIME FUND
Pro Forma Combining Statement of Operations (unaudited)
For the Twelve Month Period Ending October 31,1998
Pacific
Nations Cash Horizon Adjustments to Pro Forma
Reserves Prime Fund Pro Forma Combined
( in 000's) ( in 000's) ( in 000's) ( in 000's)
----------------------------------------- --------------
INVESTMENT INCOME:
Interest $299,325 $610,079 $0 $909,404
Dividends 7,169 - - 7,169
----------------------------------------- --------------
Total Investment Income 306,494 610,079 - 916,573
----------------------------------------- --------------
EXPENSES:
Investment Advisory 16,144 9,387 (2,072) (a) 23,459
Administration 5,381 10,258 - (a) 15,639
Transfer Agent 93 390 (97) (b) 386
Custodian 295 698 (131) (b) 862
Legal and Audit Fees 71 332 (44) (b) 359
Registration & Filing 1,014 1,211 2,225
<PAGE>
Trustees' Fees 110 175 (50) (b) 235
Interest Expense 11 - 11
Other expenses 271 1,168 (700) (b) 739
----------------------------------------- --------------
Subtotal 23,390 23,619 (3,094) 43,915
----------------------------------------- --------------
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Liquidity Class 9,755 - - 9,755
Adviser Class / Horizon Service 1,699 9,268 - 10,967
Market Class 3,687 - - 3,687
Investor Class / Pacific Horizon - 8,150 764(a) 8,914
Service Class / Class Y - 1,316 1,316
Daily / Class S & Class X - 12,858 (2,376) (a) 10,482
----------------------------------------- --------------
Subtotal 15,141 31,592 (1,612) 45,121
----------------------------------------- --------------
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor (21,732) (3,251) 12,350(c) (12,633)
----------------------------------------- --------------
TOTAL EXPENSES 16,799 51,960 7,644 76,403
----------------------------------------- --------------
----------------------------------------- --------------
NET INVESTMENT INCOME 289,695 558,119 (7,644) 840,170
----------------------------------------- --------------
NET REALIZED GAIN/(LOSS)
ON INVESTMENTS 2 (1,032) - (1,034)
----------------------------------------- --------------
<PAGE>
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $289,697 $557,087 ($7,644) $839,136
========================================= ==============
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
(D) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
Nations Cash Reserves
Pacific Horizon Prime Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of October 31, 1998 the Trust offered five separate portfolios. The
unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of October 31, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of November 1,1998. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
October 31, 1997 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Prime Fund in exchange for shares of
Nations Cash Reserves. Under generally accepted accounting principles, the
historical cost of investment securities will be carried forward to the
surviving entity and the results of operations of the Pacific Horizon Prime Fund
for pre-combination periods will not be restated. The pro forma statements do
not reflect the expenses of either fund in carrying out its obligations under
the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Cash Reserves at the time of the Reorganization at
the combined level of average net assets for the twelve month period ended
October 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
NATIONS CALIFORNIA TAX EXEMPT FUND / PACIFIC HORIZON CALIFORNIA TAX EXEMPT FUND
Pro Forma Combining Schedule of Investments (unaudited)
September 30,1998
Nations Pacific Horizon Pacific
California California Nations Horizon
Tax-Exempt Tax-Exempt California California
Principal Principal Pro Forma Principal Tax-Exempt Tax-Exempt Pro Forma
Amount Amount Amount Description Value Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS - PUERTO
RICO - 2.76%
2,000,000 2,000,000 PUERTO RICO COMWLTH HWY & TRANSN REV 07/01/28 2,000 2,000
10,995,000 10,995,000 PUERTO RICO COMMONWEALTH INFRA VRN 7/01/12 10,995 10,995
*144A*
27,900,000 27,900,000 PUERTO RICO ELEC POWER AUTH VRN 07/01/22 27,900 27,900
*144A*
4,900,000 4,900,000 PUERTO RICO ELEC PWR AUTH PWR REV 07/01/23 4,900 4,900
---------------------------------------
0 45,795 45,795
---------------------------------------
SHORT-TERM TAX-EXEMPT
INVESTMENTS - CALIFORNIA -
97.80% ABAG FIN AUTH FOR
NONPROFIT CORPS CALIF
3,000,000 3,000,000 10/01/27 3,000 3,000
5,000,000 5,000,000 ALAMEDA CONTRA COSTA CALIF VRN 08/01/23 5,000 5,000
1,800,000 1,800,000 ANAHEIM CALIF HSG AUTH MULTIFAMILY 08/01/20 1,800 1,800
CALIFORNIA HSG FIN AGY MULTI UNIT RENT HSG
2,000,000 2,000,000 REV 2,000 2,000
CALIFORNIA HSG FIN AGY MULTI UNIT RENT HSG
2,775,000 2,775,000 REV 2,775 2,775
2,000,000 2,000,000 CA HSG FIN AGY MULTI-UNIT 3.7% 08/01/23 2,000 2,000
10,995,000 10,995,000 CALIFORNIA HLTH FACS FINC AUTH REV 06/01/12 10,995 10,995
14,100,000 14,100,000 CALIFORNIA HLTH FACS FIN AUTH REV 09/01/28 14,100 14,100
1,660,000 1,660,000 CALIFORNIA HLTH FACS FIN AUTH REV 10/01/24 1,660 1,660
1,800,000 1,800,000 CALIF HEALTH FACS FIN AUTH REV VRN 7/1/22 1,800 1,800
15,700,000 15,700,000 CALIFORNIA HLTH FACS FIN AUTH VRN 10/01/22 15,700 15,700
<PAGE>
5,615,000 5,615,000 CALIFORNIA HSG FIN AGY REV P-FLTS SER PA 58 5,615 5,615
2/1/24
1,000,000 1,000,000 CALIFORNIA HSG FIN AGY REV 07/15/13 1,000 1,000
1,200,000 1,200,000 CALIFORNIA HSG FIN AGY REV VRN 07/15/13 1,200 1,200
14,360,000 14,360,000 CALIFORNIA HSG FIN AGY REV 3.55% 02/01/33 14,360 14,360
4,700,000 4,700,000 CALIFORNIA HEALTH FACS VRN 07/01/13 4,700 4,700
2,500,000 2,500,000 CALIFORNIA HEALTH FACS FING AUTH REV 10/01/21 2,500 2,500
2,405,000 2,405,000 CA PCR FIN AUTH (CHEVRON) 4.00% 11/15/01 2,408 2,408
14,000,000 14,000,000 CA PCR FIN AUTH ( SO CAL ) SER 1985B 14,000 14,000
700,000 700,000 CALIFORNIA PCR FIN AUTH VRN 10/01/06 700 700
16,000,000 16,000,000 CALIFORNIA POLLUTN CTL VRN 12/1/16 AMT PCR 16,000 16,000
1,000,000 1,000,000 CALIF POLLUN CTL FING VRN 12/1/16 AMT 1,000 1,000
2,500,000 2,500,000 CALIFORNIA POLLUTN CTL FING VRN 11/1/26 2,500 2,500
7,800,000 7,800,000 CALIF POLLUTN CTL FING VRN 2/1/16 7,800 7,800
2,000,000 2,000,000 CALIFORNIA PCR AUTH VRN 12/01/18 2,000 2,000
7,500,000 7,500,000 CALIFORNIA PCR FIN AUTH VRN 11/01/26 7,500 7,500
45,000,000 45,000,000 CALIFORNIA PCR FINCL AUTH VRN 11/01/26 45,000 45,000
4,900,000 4,900,000 CA PCR DELANO PWR PROJ "AMT" 8/1/19 (PCR) 4,900 4,900
10,700,000 10,700,000 CA POLLTN CNTRL REVENUE FIN AUTH "AMT" 10,700 10,700
5,125,000 5,125,000 CA POLLUTION CNTRL TAORIMINA SOLID WSTE DISP 5,125 5,125
PCR
10,000,000 10,000,000 CA PCR FIN AUTH (SHELL) SER A "AMT" VRN 10,000 10,000
10/01/24
2,240,000 2,240,000 CA PCR FIN AUTH (TAORMINA IND) SER B "AMT" 2,240 2,240
PCR
17,900,000 17,900,000 CALIFORNIA PCR FIN AUTH VRN 10/01/31 AMT 17,900 17,900
2,500,000 2,500,000 CALIFORNIA PCR FIN AUTH VRN 10/01/31 2,500 2,500
1,700,000 1,700,000 CALIFORNIA PCR FINCL AUTH VRN 12/01/11 "AMT" 1,700 1,700
2,000,000 2,000,000 CALIFORNIA POLLUTN CTL FING AUTH SOLID WASTE 2,000 2,000
DISP
42,050,000 42,050,000 CALIFORNIA SCH CASH RESERVE PROG 4.50% 42,324 42,324
07/02/99
3,975,000 3,975,000 CALIFORNIA ST MUNI TR RCPTS 4.20% 09/01/21 3,975 3,975
*144A*
8,385,000 8,385,000 CALIFORNIA ST FLTG RATE RCPTS-SG 95 9/01/2016 8,385 8,385
8,340,000 8,340,000 CALIFORNIA ST SGA 40 VRN 06/01/13 8,340 8,340
<PAGE>
15,950,000 15,950,000 CALIFORNIA ST G.O. VRN 06/01/21 *144A* 15,950 15,950
2,000,000 2,000,000 CALIFORNIA STATE GO SOC GEN $ VRN 06/01/17 2,000 2,000
*144A*
35,000,000 35,000,000 CALIFORNIA ST P-FLOATS-PT 1072 02/01/21 35,000 35,000
20,000,000 20,000,000 CALIFORNIA ST REV ANTIC NTS 4.00% 06/30/99 20,123 20,123
1,400,000 1,400,000 CALIF STATEWIDE CMNTYS DEV VRN 12/15/24 "AMT" 1,400 1,400
100,000 100,000 CALIFORNIA STATEWIDE CMNTY DEV AUTH VRN 100 100
6/1/26
3,000,000 3,000,000 CALIFONIA STATEWIDE CMNTY VRN 02/01/28 3,000 3,000
0 0 CALIFORNIA STWD COMM DEVL VRN 07/01/27 "AMT" 0 0
13,100,000 13,100,000 CALIFORNIA TRAN FIN AUTH 10/01/27 13,100 13,100
CALIFORNIA STATEWIDE CMNTYS DEV CORP REV
1,605,000 1,605,000 12/01/18 1,605 1,605
1,000,000 1,000,000 CALIFORNIA STATEWIDE DEV AUTH REV VRN 12/1/18 1,000 1,000
39,200,000 39,200,000 CA ST-WIDE COM DEV AUTH REV SUTTER HEALTH 39,200 39,200
7/1/15
1,300,000 1,300,000 CA STATEWIDE COMM DEV AUTH REV 08/15/27 1,300 1,300
5,000,000 5,000,000 CAMARILLO CALIF MULTIFAMILY HSG REV 07/15/19 5,000 5,000
2,000,000 2,000,000 CAMPBELL CALIF UN ELEM SCH 4.00% 08/02/99 2,007 2,007
2,250,000 2,250,000 CENTRAL COAST WTR AUTH CALIF REV 10/01/16 2,250 2,250
*144A*
2,365,000 2,365,000 CHAFFEY CALIIF UN HIGH SCH 4.00% 08/01/99 2,373 2,373
2,000,000 2,000,000 CHULA VISTA CA (TERRA NOVA PROJ) 92A 3/1/05 2,000 2,000
11,000,000 11,000,000 CHULA VISTA CA IDR (SAN DIEGO) "AMT" 12/1/27 11,000 11,000
7,400,000 7,400,000 CHULA VISTA CALIF IDR VRN 03/01/23 "AMT" 7,400 7,400
2,900,000 2,900,000 CONTRA COSTA CNTY CALIF VAR-REF-B-RMK 9/28/94 2,900 2,900
11,950,000 11,950,000 CA HFA FIN AGCY 3.50% 08/01/16 *144A* 11,950 11,950
10,000,000 10,000,000 CALIFORNIA GEN OBLIG CLASS A EAGEL 2/1/06 10,000 10,000
17,270,000 17,270,000 CALIF ST DEPT OF WATER RES VRN 12/01/29 17,270 17,270
15,100,000 15,100,000 CALIFORNIA G.O. VRN 04/01/04 15,100 15,100
13,000,000 13,000,000 CITY OF LONG BEACH 05/15/15 VRN 13,000 13,000
17,600,000 17,600,000 FOOTHILL EASTERN TRANSPORTATION VRN 1/2/35 17,600 17,600
<PAGE>
15,000,000 15,000,000 FOOTHILL EASTERN TRANS CORRIDOR REVENUE 15,000 15,000
1/2/35
2,000,000 2,000,000 FREMONT CALIF CTFS PARTN 08/01/28 2,000 2,000
9,790,000 9,790,000 FREMONT CALIF MULTIFMLY HSG VRN 09/01/14 9,790 9,790
17,800,000 17,800,000 HAYWARD CALIF MULTIFAMILY HSG REV 08/01/14 17,800 17,800
3,800,000 3,800,000 HAYWARD CALIF MULTIFAM HSG REV VRN 03/01/33 3,800 3,800
11,600,000 11,600,000 HUNTINGTON BEACH CALIF MUTIFAMILY VRN 7/1/14 11,600 11,600
5,060,000 5,060,000 INDIO CA MULTIFAMILY REV (WESTERN FEDERAL 5,060 5,060
SAVINGS)
15,500,000 15,500,000 IRVNE CALIF IMPT BD VRN 09/02/22 15,500 15,500
9,000,000 9,000,000 IRVINE CALIF IMPT BD ACT 1915 VRN 09/02/23 9,000 9,000
1,100,000 1,100,000 IRVINE RANCH CALIF WTR DIST 10/1/00 1,100 1,100
1,200,000 1,200,000 KERN CNTY CALIF CTFS VRN 8/1/06 1,200 1,200
8,500,000 8,500,000 KERN CNTY CALIF CTFS PARTN VRN8/1/06 8,500 8,500
4,500,000 4,500,000 LIVERMORE CALIF MULTIFAMILY REV 07/15/18 4,500 4,500
9,995,000 9,995,000 LONG BEACH CA AMT 05/15/07 9,995 9,995
*144A*
8,950,000 8,950,000 LONG BEACH CALIFORNIA HEALTH SRVCS VRN 8,950 8,950
10/01/16
20,000,000 20,000,000 LOS ANGELES CALIF CMNTY REDEV VRN 10/01/19 20,000 20,000
AMT
7,880,000 7,880,000 LOS ANGELES CALIF CONVENTION 7.375% 08/15/18 8,277 8,277
2,000,000 2,000,000 LOS ANGELES CALIF INDL DEV AUTH INDL 08/01/23 2,000 2,000
7,000,000 7,000,000 LOS ANGELES CNTY CALIF 4.50% 10/01/98 7,000 7,000
43,780,000 43,780,000 LOS ANGELES CA USD 44,055 44,055
1,000,000 1,000,000 LOS ANGELES CALIF(BELMONT LEARNING) VRN 1,000 1,000
12/01/17
2,100,000 2,100,000 LOS ANGELES CNTY CALIF MTA VRN 07/01/17 2,100 2,100
*144A*
13,355,000 13,355,000 LOS ANGELES CNTY CAL.MET TRANSN AUTH 13,355 13,355
7/1/11*144A*
5,000,000 5,000,000 LOS ANGELES METROPOLITAN TRANS AUTH CP 3.45% 5,000 5,000
6,000,000 6,000,000 LOS ANGELES CO TRANSP COMM SALES TAX REV 6,000 6,000
2,600,000 2,600,000 LOS ANGELES CO CA PENSION OBLIGATION VRN 2,600 2,600
6/30/07
5,200,000 5,200,000 LOS ANGELES CO, CALIF PENSION OBLIG VRN 5,200 5,200
6/30/07
5,200,000 5,200,000 MSR PUB PWR AGY CALIF VRN 07/01/22 5,200 5,200
9,000,000 9,000,000 M-S-R PUBLIC POWER AGCY CALIF SER D VRN 9,000 9,000
07/01/18
<PAGE>
2,545,000 2,545,000 MODESTO CALIF HIGH SCH DIST & MODESTO CITY 2,545 2,545
08/1/11
4,975,000 4,975,000 MODESTO CALIF MLTIFMLY HSG VRN 09/01/24 4,975 4,975
9,000,000 9,000,000 MONTERAY COUNTY CA RECLAMATION AND DIST PROJ 9,000 9,000
21,600,000 21,600,000 MONTEREY PENINSULA CA WTR MGMT DIST 7/1/22 21,600 21,600
16,500,000 16,500,000 MOUNTAIN VIEW CALIF VRN 03/01/17 16,500 16,500
1,525,000 1,525,000 NORTH CITY WEST CALIF SCH FACS 7.85% 09/01/19 1,616 1,616
8,000,000 8,000,000 NORTHERN CALIF PWR AGY PUB P 5% 7/01/1999 8,081 8,081
12,000,000 12,000,000 OAKLAND CALIF JT PWRS FINCG AUTH VRN 08/01/21 12,000 12,000
1,800,000 1,800,000 ONTARIO CALIF INDL DEV AUTH 4/1/15 1,800 1,800
3,800,000 3,800,000 ORANGE CNTY CALIF APT DEV REV 11/01/08 3,800 3,800
19,500,000 19,500,000 ORANGE CNTY VRN 11/1/07 19,500 19,500
24,600,000 24,600,000 ORANGE COUNTY CALIF APT DEV REV VRN 11/1/2005 24,600 24,600
2,670,000 2,670,000 ORANGE CNTY CALIF APT DEV REV 04/01/23 2,670 2,670
6,500,000 6,500,000 ORANGE CNTY CALIF APT DEV REV 08/15/28 6,500 6,500
12,000,000 12,000,000 ORANGE CNTY CALIF HSG AUTH VRN 06/15/28 12,000 12,000
21,700,000 21,700,000 ORANGE COUNTY IRVINE COAST ASSESMENT VRN 21,700 21,700
9/2/18
3,700,000 3,700,000 ORANGE CO CA SANITATION DIST VRN 08/01/15 3,700 3,700
9,600,000 9,600,000 ORANGE COUNTY, CA SANITATION 8/1/17 9,600 9,600
8,800,000 8,800,000 ORANGE CNTY CA SANTN DISTS VRN 8/1/16 8,800 8,800
2,100,000 2,100,000 OTAY CALIF WATER DIST CTFS VRN 09/01/26 2,100 2,100
1,275,000 1,275,000 PARAMOUNT CALIF UNI SCH DIST CTFS PARTN 1,275 1,275
09/01/08
1,925,000 1,925,000 PARAMOUNT CALIF UNI SCH DIST CTFS PARTN 1,925 1,925
09/01/15
1,940,000 1,940,000 PARAMOUNT CALIF UNI SCH DIST CTFS 09/01/27 1,940 1,940
1,000,000 1,000,000 PASADENA CALIF ROSE BOWL IMPRVMNT VRN 1,000 1,000
12/01/16
3,400,000 3,400,000 RIVERSIDE CALIF ELECTRIC REV VRN 10/01/11 3,400 3,400
*144A*
20,925,000 20,925,000 RIVERSIDE CO CALIF VRN 12/1/15 20,925 20,925
4,500,000 4,500,000 RIVERSIDE COUNTY CALIFORNIA ASSET LEASING 4,582 4,582
CORP
3,000,000 3,000,000 RIVERSIDE CNTY CALIF 4.50% 09/30/99 3,037 3,037
<PAGE>
9,400,000 9,400,000 RIVERSIDE CNTY CALIF CMNTY FACS DIST 09/01/14 9,400 9,400
8,000,000 8,000,000 RIVERSIDE CNTY CALIF SCHL 4.50% 10/01/98 8,000 8,000
8,000,000 8,000,000 RIVERSIDE CNTY CALIF SPL TAX 3.50% 09/01/28 8,000 8,000
11,000,000 11,000,000 ROSEVILLE CALIF FIN AUTH VRN 10/01/14 11,000 11,000
5,000,000 5,000,000 SACRAMENTO CNTY CALIF HSG AUTH 11/15/27 5,000 5,000
18,010,000 18,010,000 SACRAMENTO CNTY CALIF HSG REV VRN 09/15/07 18,010 18,010
12,000,000 12,000,000 SAN BERNARDINO CNTY CALIF 4.50% 09/30/99 12,129 12,129
22,000,000 22,000,000 SAN BERNARDINO CNTY CALIF HSG AUTH VRN 22,000 22,000
08/01/05
1,500,000 1,500,000 SAN DIEGO CALIF AREA LOCAL GOVT 1,500 1,500
7,740,000 7,740,000 SAN DIEGO CALIF HSG MULTIFAMILY VRN 12/01/08 7,740 7,740
19,165,000 19,165,000 SAN DIEGO HOUSING AUTH MULTI-FAMILY SERIES 19,165 19,165
1985
11,910,000 11,910,000 SAN DIEGO CALIF HSG AUTH VRN 12/01/08 11,910 11,910
14,250,000 14,250,000 SAN DIEGO CALIF HSG AUTH 14,250 14,250
2,500,000 2,500,000 SAN DIEGO CITY,CA IDA (SDG&E) SER A 2,500 2,500
15,830,000 15,830,000 SAN DIEGO VALIF PUB FACS FING AUTH SWR 15,830 15,830
05/15/25
4,490,000 4,490,000 SANDIEGO CNTY HSG REV VRN 8/15/13 4,490 4,490
7,000,000 7,000,000 SAN DIEGO CO, CA AUTH CP 3.45% 3/8/99 7,000 7,000
26,290,000 26,290,000 SAN FRANCISCO CALIF CITY & CNTY ARPT 05/01/29 26,290 26,290
9,775,000 9,775,000 SAN FRANCISCO CALIF CITY & CNTY ARPT COMMN 9,775 9,775
5/1/20
11,500,000 11,500,000 SAN FRANCISCO CAL.CITY & CNTY ARPT COMM 11,500 11,500
INTL*144A*
3,905,000 3,905,000 SAN FRANCISCO CAL.ARPT REV VRN 05/1/26 3,905 3,905
"AMT"*144A*
5,345,000 5,345,000 SAN FRAN CITY CALIF & CNTY ARPT VRN 5,345 5,345
05/01/21*144A*
1,500,000 1,500,000 SAN FRANCISCO CITY & CO (WINTERLAND MFH) 1,500 1,500
6/1/06
10,000,000 10,000,000 SAN FRANCISCO CALIF CITY & CNTY 4.5% 10,104 10,104
9/22/1999
7,900,000 7,900,000 SAN JOSE CALIF MULTIFAMILY HSG REV 11/01/07 7,900 7,900
3,100,000 3,100,000 SANTA ANNITA CALIF VRN 07/01/15 3,100 3,100
9,800,000 9,800,000 SANTA CLARA, CA ELECTRIC REV 7/1/10 9,800 9,800
1,600,000 1,600,000 SANTA CLARA CALIF ELEC REV 1,600 1,600
1,835,000 1,835,000 SANTA CLARA CALIF LOC GOVT FIN 7.25% 02/01/13 1,893 1,893
10,300,000 10,300,000 SOUTHERN CALIF PUB PWR AUTH VRN 7/1/19 10,300 10,300
<PAGE>
4,030,000 4,030,000 SOUTHERN KERN CALIF USD VRN 09/01/26 4,030 4,030
1,700,000 1,700,000 TUSTIN CA IMPROVEMENT BOND VRN 09/02/13 1,700 1,700
1,000,000 1,000,000 UNIVERSITY CALIF REVS SER B - 1989 7.1% 1,032 1,032
9/01/99
11,300,000 11,300,000 UNIVERSITY OF CALIFORNIA REV VRN 09/01/19 11,300 11,300
3,300,000 3,300,000 VALLEJO CA IDB (MEYER CODEWARE IND) SERIES A 3,300 3,300
5,000,000 5,000,000 VICTOR VALLEY CALIF COMNTY COLLEGE DIST CTFS 5,000 5,000
PARTN
20,000,000 20,000,000 WATERUSE FINC AUTH, CALIF VRN 05/01/28 20,000 20,000
2,330,000 2,330,000 CA DEPT OF WATER RESOURCES WTR REV SER 1 2,330 2,330
10,000,000 10,000,000 CA GO CP 3.00% 10/21/98 10,000 10,000
15,000,000 15,000,000 CA PCR FIN AUTH (PACIFIC GAS & ELEC) SER D 15,000 15,000
2,200,000 2,200,000 CA PCR FIN AUTH (SO CA EDISON) SER 1985B 2,200 2,200
9,800,000 9,800,000 CA PCR FIN AUTH (SO CA EDISON) SER 85-D 9,800 9,800
5,300,000 5,300,000 CA PCR FIN AUTH (SO CA EDISON) SER 85-C 5,300 5,300
3,000,000 3,000,000 CHULA VISTA IDR, CA (SDG & E) SERIES 1992C 3,000 3,000
"AMT"
0 0 CONVERSION INTEREST 0 0
2,500,000 2,500,000 CA PCR FIN AUTH (SO CAL EDISON) SER 1985 2,500 2,500
35,000,000 35,000,000 LOS ANGELES DEPT WTR & PWR ELECTRIC PLANT 35,000 35,000
TECP
15,000,000 15,000,000 LOS ANGELES DEPT WTR & PWR ELECTRIC PLANT 15,000 15,000
TECP
10,000,000 10,000,000 LONG BEACH, CA HARBOR AMT 3.10% 12/09/98 10,000 10,000
3,500,000 3,500,000 LOS ANGELES DEPT WTR & PWR ELECTRIC PLANT 3,500 3,500
TECP
16,000,000 16,000,000 LOS ANGELES CO, CA CAPITAL ASSET LEASE CORP 16,000 16,000
10,000,000 10,000,000 LOS ANGELES DEPT WTR & PWR ELECTRIC PLANT 10,000 10,000
TECP
10,000,000 10,000,000 LOS ANGELES DEPT WTR & PWR ELECTRIC PLANT 10,000 10,000
TECP
1,500,000 1,500,000 LOS ANGELES, CA WASTEWATER SYS REV 3.0% 1,500 1,500
11/24/98
19,000,000 19,000,000 LOS ANGELES DEPT WTR & PWR ELECTRIC PLANT 19,000 19,000
TECP
21,000,000 21,000,000 MODESTO IRRIGATION DIST, CA COP 2.70% 21,000 21,000
10/09/98
<PAGE>
20,000,000 20,000,000 PUERTO RICO GDB CP 3.00% 10/8/98 20,000 20,000
SOUTHERN CA METROPOLITAN WTR DIST 2.85%
4,000,000 4,000,000 11/10/98 4,000 4,000
10,000,000 10,000,000 SACRAMENTO MUNICIPAL UTILITY DIST, CA SER 1 10,000 10,000
9,000,000 9,000,000 SAN DIEGO COUNTY, CA TEETER OBLIGATION 9,000 9,000
SAN DIEGO CITY, CA IDA (SDG & E) 2.95%
5,200,000 5,200,000 12/07/98 5,200 5,200
5,700,000 5,700,000 SOUTHERN CA METROPOLITAN WTR DIST 5,700 5,700
---------------------------------------
0 1,620,910 1,620,910
---------------------------------------
TOTAL INVESTMENTS - 100.56% (COST $0,
$1,666,706 RESPECTIVELY) 0 1,666,706 1,666,706
</TABLE>
<TABLE>
<CAPTION>
NATIONS CALIFORNIA TAX EXEMPT FUND / PACIFIC HORIZON CALIFORNIA TAX EXEMPT FUND
Pro Forma Combining Statement of Net Assets (unaudited)
September 30,1998
Pacific
Nations Horizon
California California
Tax Exempt Tax Exempt Adjustments to Pro Forma
Fund Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
--------------------------------------------- --------------
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS $ -- $ 1,666,706 $ -- $ 1,666,706
OTHER ASSETS AND LIABILITIES:
Other assets and liabilities, net -- (9,311) -- (9,311)
--------- ------------ ----------- -----------
Total Other Assets and Liabilities -- (9,311) -- (9,311)
--------- ------------ ----------- -----------
NET ASSETS $ -- $ 1,657,395 $ -- $ 1,657,395
=========== ===========
NET ASSETS BY CLASS:
Advisor Class / Horizon Service $ -- $ 746,840 $ -- $ 746,840
<PAGE>
Investor Class / Pacific Horizon -- 581,414 -- 581,414
Daily / Class S & Class X -- 329,141 -- 329,141
--------- ------------ ----------- -----------
$ -- $ 1,657,395 $ -- $ 1,657,395
--------- ------------ ----------- -----------
SHARES OUTSTANDING BY CLASS:
Adviser Class / Horizon Service -- 746,904 -- 746,904
Investor Class / Pacific Horizon -- 581,455 -- 581,455
Daily / Class S & Class X -- 329,153 -- 329,153
--------- ------------ ----------- -----------
-- 1,657,512 -- 1,657,512
--------- ------------ ----------- -----------
NET ASSET VALUE PER SHARE BY CLASS:
Adviser Class / Horizon Service $ -- $ 1.00 $ -- $ 1.00
Investor Class / Pacific Horizon $ -- $ 1.00 $ -- $ 1.00
Daily / Class S & Class X $ -- $ 1.00 $ -- $ 1.00
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
NATIONS CALIFORNIA TAX EXEMPT FUND / PACIFIC HORIZON CALIFORNIA TAX EXEMPT FUND
Pro Forma Combining Statement of Operations (unaudited)
Twelve Month Period Ending September 30,1998
Pacific
Nations Horizon
California California
Tax Exempt Tax Exempt Adjustments to Pro Pro Forma
Fund Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
--------------------------------------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $0 $47,807 $0 $47,807
Dividends - - - -
--------------------------------------------- ---------------
<PAGE>
Total Investment Income - 47,807 - 47,807
--------------------------------------------- ---------------
EXPENSES:
Investment Advisory - 1,405 703(a) 2,108
Administration - 1,405 - (a) 1,405
Transfer Agent - 57 165(b) 222
Custodian - 113 52 (b) 165
Legal and Audit Fees - 89 (36) (b) 53
Registration & Filing - 64 - 64
Trustees' Fees - 23 - 23
Interest Expense - - - -
Other expenses - 183 (108) (b) 75
--------------------------------------------- ---------------
Subtotal - 3,339 776 4,115
--------------------------------------------- ---------------
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Adviser Class / Horizon Service - 1,567 1,567
Investor Class / Pacific Horizon - 1,939 1,939
Daily / Class S & Class X - 1,896 (677) (a) 1,219
--------------------------------------------- ---------------
- 5,402 (677) 4,725
--------------------------------------------- ---------------
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor - (875) (430) (c) (1,305)
--------------------------------------------- ---------------
<PAGE>
TOTAL EXPENSES - 7,866 (331) 7,535
--------------------------------------------- ---------------
--------------------------------------------- ---------------
NET INVESTMENT INCOME - 39,941 331 40,272
--------------------------------------------- ---------------
NET REALIZED GAIN/(LOSS)
--------------------------------------------- ---------------
ON INVESTMENTS - (59) - (59)
--------------------------------------------- ---------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $0 $39,882 $331 $40,213
============================================= ===============
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
(D) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
Nations California Tax-Exempt Fund
Pacific Horizon California Tax-Exempt Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at September
30, 1998 and for the twelve month period then ended.
<PAGE>
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon California Tax-Exempt Fund in exchange
for shares of Nations California Tax-Exempt Fund. Under generally accepted
accounting principles, the historical cost of investment securities will be
carried forward under the new name of Nations California Tax-Exempt Fund. The
pro forma statements do not reflect the expenses of either fund in carrying out
its obligations under the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
1. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations California Tax-Exempt Fund at the time of the
Reorganization at the combined level of average net assets for the twelve month
period ended September 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Government Fund
Pro Forma Combining Schedule of Investments (Unaudited)
October 31,1998
Nations Pacific
Government Horizon Pacific
Reserve Government Pro Forma Nations Horizon
Principal Principal Principal Government Government Pro Forma
Amount Amount Amount Asset Description Reserve Value Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C> <C>
Investment Companies - 0.8%
9,105,000 0 9,105,000 DREYFUS TREASURY CASH MANAGEMENT 9,105 0 9,105
------------------------------------------
9,105 0 9,105
------------------------------------------
Repurchase Agreements - 45.45%
157,000,000 0 157,000,000 ABN-AMRO CHIC 5.625% 11/02/98 157,000 0 157,000
140,000,000 0 140,000,000 FIRST UNION CAPITAL 5.62% 11/02/98 140,000 0 140,000
20,000,000 0 20,000,000 GOLD SACHS TERM 5.21% 11/02/98 20,000 0 20,000
0 50,000,000 50,000,000 HSBC 5.6% 11/2/98 0 50,000 50,000
0 23,515,000 23,515,000 J.P. MORGAN 5% 11/2/98 0 23,515 23,515
0 60,000,000 60,000,000 LEHMAN 5.6% 11/2/98 0 60,000 60,000
0 55,000,000 55,000,000 PRUDENTIAL 5.6% 11/2/98 0 55,000 55,000
------------------------------------------
317,000 188,515 505,515
------------------------------------------
Time Deposits- Euro - 1.6%
17,847 0 17,847 BANK OF NEW YORK CAYMAN ISLAND 4.75% 17,847 0 17,847
11/02/98 ------------------------------------------
17,847 0 17,847
------------------------------------------
U.S. Government Agency Obligations -
52.25%
0 11,245,000 11,245,000 FANNIE MAE 5.05% 11/10/98 0 11,243 11,243
0 15,000,000 15,000,000 FANNIE MAE 5.38% 02/09/99 0 15,015 15,015
0 5,000,000 5,000,000 FANNIE MAE 5.49% 08/03/99 0 4,995 4,995
0 5,000,000 5,000,000 FANNIE MAE 5.57% 05/07/99 0 4,996 4,996
0 3,000,000 3,000,000 FANNIE MAE 9.55 3/10/99 0 3,041 3,041
0 20,000,000 20,000,000 FANNIE MAE DISC NOTE 01/04/99 0 19,821 19,821
0 10,000,000 10,000,000 FANNIE MAE DISC NOTE 01/27/99 0 9,884 9,884
0 10,000,000 10,000,000 FANNIE MAE DISC NOTE 02/01/99 0 9,877 9,877
0 10,000,000 10,000,000 FANNIE MAE DISC NOTE 04/01/99 0 9,807 9,807
0 25,000,000 25,000,000 FANNIE MAE DISC NOTE 11/20/98 0 24,928 24,928
8,000,000 0 8,000,000 FANNIEMAE SERIES MTN 4.441% 4/28/99 7,998 0 7,998
6,000,000 5,000,000 11,000,000 FEDERAL FARM CREDIT BANK 5.70% 11/03/98 6,000 5,000 11,000
11,000,000 0 11,000,000 FEDERAL FARM CREDIT BANK, DN 5.65% 11,000 0 11,000
01/04/99
6,901,000 0 6,901,000 FEDERAL HOME LOAN BANK 4/14/99 6,756 0 6,756
<PAGE>
12,000,000 0 12,000,000 FEDERAL HOME LOAN BANK 5.24% 10/21/99 12,000 0 12,000
0 15,000,000 15,000,000 FEDERAL HOME LOAN BANK 08/12/99 0 14,994 14,994
0 8,400,000 8,400,000 FEDERAL HOME LOAN BANK 5.335% 01/11/99 0 8,395 8,395
0 5,000,000 5,000,000 FEDERAL HOME LOAN BANK 5.718% 05/06/99 0 4,999 4,999
0 5,000,000 5,000,000 FEDERAL HOME LOAN BANK 5.723% 05/05/99 0 4,999 4,999
8,000,000 9,760,000 17,760,000 FEDERAL HOME LOAN BANK DISC NOTE 01/04/99 7,928 9,673 17,601
9,000,000 0 9,000,000 FEDERAL HOME LOAN BANK, NOTE 5.65% 8,999 0 8,999
4/09/99
8,000,000 0 8,000,000 FEDERAL HOME LOAN BK DN 11/13/98 7,987 0 7,987
0 5,000,000 5,000,000 FEDERAL HOME LOAN MORTGAGE CORP 5.60% 0 4,998 4,998
04/21/99
0 3,237,000 3,237,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 3,208 3,208
NOTE 01/04/99
8,905,000 10,000,000 18,905,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 8,809 9,901 18,710
NOTE 01/15/99
0 10,000,000 10,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 9,885 9,885
NOTE 01/19/99
5,000,000 20,000,000 25,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 4,929 19,703 24,632
NOTE 02/17/98
0 20,000,000 20,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 19,662 19,662
NOTE 03/05/99
0 15,000,000 15,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 14,947 14,947
NOTE 11/25/98
0 25,000,000 25,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 24,879 24,879
NOTE 12/04/98
0 8,760,000 8,760,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 8,706 8,706
NOTE 12/18/98
0 1,148,000 1,148,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 1,140 1,140
NOTE 12/22/98
6,000,000 0 6,000,000 FEDL HOME LN BK, DISC NOTE 2/12/99 5,915 0 5,915
7,151,000 0 7,151,000 FEDL HOME LN BK,DUE 02/11/99 7,044 0 7,044
15,000,000 0 15,000,000 FHLB 5.57% 3/09/99 14,999 0 14,999
4,000,000 0 4,000,000 FHLB 5.705% 5/05/99 4,013 0 4,013
13,000,000 0 13,000,000 FHLB 4.574% 6/17/99 12,998 0 12,998
12,000,000 0 12,000,000 FHLB 5.51% 7/06/99 11,992 0 11,992
7,000,000 0 7,000,000 FHLB DISC NOTE 12/11/98 6,959 0 6,959
20,000,000 0 20,000,000 FHLB FRN 4.62% 12/24/98 19,999 0 19,999
6,000,000 0 6,000,000 FHLB GOV AGENCIES 5.415% 2/10/99 5,999 0 5,999
8,000,000 0 8,000,000 FHLMC 1/07/99 7,923 0 7,923
8,000,000 0 8,000,000 FHLMC 1/08/99 7,921 0 7,921
8,000,000 0 8,000,000 FHLMC 1/22/99 7,905 0 7,905
7,000,000 0 7,000,000 FHLMC 2/16/99 6,903 0 6,903
3,293,000 0 3,293,000 FHLMC 3/12/99 3,232 0 3,232
3,108,000 0 3,108,000 FHLMC 3/29/99 3,048 0 3,048
8,000,000 0 8,000,000 FHLMC DISC NOTE 1/26/99 7,904 0 7,904
<PAGE>
5,034,000 0 5,034,000 FHLMC DISC NOTE 1/12/98 5,026 0 5,026
8,000,000 0 8,000,000 FMC DISC NOTE 2/19/99 7,885 0 7,885
6,703,000 0 6,703,000 FMLMC DISC NOTE 2/05/99 6,610 0 6,610
5,000,000 0 5,000,000 FNMA 5.66% 11/20/98 5,000 0 5,000
8,000,000 0 8,000,000 FNMA 5.63% 5/05/99 7,998 0 7,998
8,000,000 0 8,000,000 FNMA DISC NOTE 4.75 2/18/99 7,885 0 7,885
4,000,000 0 4,000,000 FREDDIE MAC DN 11/06/98 3,997 0 3,997
6,000,000 0 6,000,000 FREDDIE MAC DN 12/10/98 5,967 0 5,967
6,000,000 0 6,000,000 SLMA DUE 5.51% 9/16/99 6,000 0 6,000
12,000,000 0 12,000,000 SLMA FRN 5.19% 9/15/99 11,992 0 11,992
17,000,000 0 17,000,000 SLMA MED TERM NOTE 5.40% 2/10/99 16,993 0 16,993
------------------------------------------
302,513 278,695 581,208
------------------------------------------
Total Investments 100.1% (Cost
$646,465, $467,210, $1,113,675
respectively) 646,465 467,210 1,113,675
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Government Fund
Pro Forma Combining Statement of Net Assets (Unaudited)
October 31,1998
Nations Pacific
Government Horizons Adjustments to Pro Forma
Reserves Government Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
--------------------------------------------- -------------
<S> <C> <C> <C> <C>
Total Investments $ 646,465 $ 467,210 $- $ 1,113,675
Other Assets and Liabilities:
Receivable for investments sold -- 188,067 -- 317,867
Payable for investments purchased -- (188,515) -- (264,167)
Other assets and liabilities, net (678) (225) -- 20,458
-------- -----------
Total Other Assets and Liabilities (678) (673) -- 74,158
-------- -----------
Net Assets 645,787 466,537 -- 1,187,833
======== ===========
Net Assets by Class:
Capital Class / Horizon (Primary) $ 160,300 $ 80,155 $- $ 240,455
Liquidity Class $ 42,718 $- $- $ 42,718
Adviser Class / Horizon Service $ 115,769 $ 233,934 $- $ 349,703
Market Class $ 327,000 $- $- $ 327,000
Investor Class / Pacific Horizon $ -- $ 152,448 $ 152,448
-------- -----------
$ 645,787 $ 466,537 $- $ 1,112,324
-------- -----------
Shares Outstanding by Class:
Capital Class / Horizon (Primary) 160,301 80,183 -- 240,484
<PAGE>
Liquidity Class 42,719 -- -- 42,719
Adviser Class / Horizon Service 115,769 234,030 -- 349,799
Market Class 327,000 -- -- 327,000
Investor Class / Pacific Horizon -- 152,584 -- 152,584
-------- -----------
645,789 466,797 -- 1,112,586
-------- -----------
Net Asset Value per Share by Class:
Capital Class / Horizon (Primary) $ 1.00 $ 1.00 $ -- $ 1.00
Liquidity Class $ 1.00 $ -- $ -- $ 1.00
Adviser Class / Horizon Service $ 1.00 $ 1.00 $ -- $ 1.00
Market Class $ 1.00 $ -- $ -- $ 1.00
Investor Class / Pacific Horizon $- $ 1.00 $ -- $ 1.00
</TABLE>
See Notes to Pro Forma
Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Government Fund
Pro Forma Combining Statement of Operations (unaudited)
October 31,1998
Nations Pacific
Government Horizons Adjustments to Pro Pro Forma
Reserves Government Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
---------------------------------------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $30,349 $25,066 $ - $55,415
Dividends 509 - - 509
---------------------------------------------- ---------------
Total Investment Income 30,858 25,066 - 55,924
---------------------------------------------- ---------------
EXPENSES:
Investment Advisory 1,657 477 (602) (a) 1,502
Administration 553 448 - 1,001
Transfer Agent 42 17 - 59
Custodian 48 85 (23) (b) 110
Legal and Audit Fees 10 33 (26) (b) 17
Registration & Filing 101 159 - 260
Trustees' Fees 11 10 (12) (b) 9
Interest Expense - - - -
Other expenses 24 92 (65) (b) 51
---------------------------------------------- ---------------
Subtotal 2,446 1,291 (728) 3,009
---------------------------------------------- ---------------
Shareholder Servicing and Distribution Fees
Liquidity Class 407 - - 407
Adviser Class / Horizon Service 190 613 - 803
<PAGE>
Market Class 1,321 - - 1,321
Investor Class / Pacific Horizon - 454 42 (a) 496
---------------------------------------------- ---------------
1,918 1,067 42 3,027
---------------------------------------------- ---------------
Fees waived and/or reimbursed by investment -
advisor, administrator and/or
distributor (2,047) (204) 1,130 (1,121)
---------------------------------------------- ---------------
Total Expenses 2,317 2,154 444 4,915
---------------------------------------------- ---------------
---------------------------------------------- ---------------
NET INVESTMENT INCOME 28,541 22,912 (444) 51,009
---------------------------------------------- ---------------
NET REALIZED GAIN/(LOSS) ON
---------------------------------------------- ---------------
INVESTMENTS: - 3 - 3
---------------------------------------------- ---------------
NET INCREASE/(DECREASE) IN NET ASSETS
============================================== ===============
RESULTING FROM OPERATIONS: $28,541 $22,915 $ (444) $51,012
============================================== ===============
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Government Reserves
Pacific Horizon Government Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of October 31, 1998 the Trust offered five separate portfolios. The
unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of October 31, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of November 1, 1998. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
October 31, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Government Fund in exchange for shares
of Nations Government Reserves. Under generally accepted accounting principles,
the historical cost of investment securities will be carried forward to the
surviving entity and the results of operations of the Pacific Horizon Government
Fund for pre-combination periods will not be restated. The pro forma statements
do not reflect the expenses of either fund in carrying out its obligations under
the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Government Reserves at the time of the
Reorganization at the combined level of average net assets for the twelve month
period ended October 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Government Fund
Pro Forma Combining Schedule of Investments (Unaudited)
October 31,1998
Nations Pacific
Government Horizon Pacific
Reserve Government Pro Forma Nations Horizon
Principal Principal Principal Government Government Pro Forma
Amount Amount Amount Asset Description Reserve Value Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C> <C>
Investment Companies - 0.8%
9,105,000 0 9,105,000 DREYFUS TREASURY CASH MANAGEMENT 9,105 0 9,105
------------------------------------------
9,105 0 9,105
------------------------------------------
Repurchase Agreements--45.45%
157,000,000 0 157,000,000 ABN-AMRO CHIC 5.625% 11/02/98 157,000 0 157,000
140,000,000 0 140,000,000 FIRST UNION CAPITAL 5.62% 11/02/98 140,000 0 140,000
20,000,000 0 20,000,000 GOLD SACHS TERM 5.21% 11/02/98 20,000 0 20,000
0 50,000,000 50,000,000 HSBC 5.6% 11/2/98 0 50,000 50,000
0 23,515,000 23,515,000 J.P. MORGAN 5% 11/2/98 0 23,515 23,515
0 60,000,000 60,000,000 LEHMAN 5.6% 11/2/98 0 60,000 60,000
0 55,000,000 55,000,000 PRUDENTIAL 5.6% 11/2/98 0 55,000 55,000
------------------------------------------
317,000 188,515 505,515
------------------------------------------
Time Deposits- Euro - 1.6%
17,847 0 17,847 BANK OF NEW YORK CAYMAN ISLAND 4.75% 17,847 0 17,847
11/02/98 ------------------------------------------
17,847 0 17,847
------------------------------------------
U.S. Government Agency Obligations--
52.25%
0 11,245,000 11,245,000 FANNIE MAE 5.05% 11/10/98 0 11,243 11,243
0 15,000,000 15,000,000 FANNIE MAE 5.38% 02/09/99 0 15,015 15,015
0 5,000,000 5,000,000 FANNIE MAE 5.49% 08/03/99 0 4,995 4,995
0 5,000,000 5,000,000 FANNIE MAE 5.57% 05/07/99 0 4,996 4,996
0 3,000,000 3,000,000 FANNIE MAE 9.55 3/10/99 0 3,041 3,041
0 20,000,000 20,000,000 FANNIE MAE DISC NOTE 01/04/99 0 19,821 19,821
0 10,000,000 10,000,000 FANNIE MAE DISC NOTE 01/27/99 0 9,884 9,884
0 10,000,000 10,000,000 FANNIE MAE DISC NOTE 02/01/99 0 9,877 9,877
0 10,000,000 10,000,000 FANNIE MAE DISC NOTE 04/01/99 0 9,807 9,807
0 25,000,000 25,000,000 FANNIE MAE DISC NOTE 11/20/98 0 24,928 24,928
8,000,000 0 8,000,000 FANNIEMAE SERIES MTN 4.441% 4/28/99 7,998 0 7,998
6,000,000 5,000,000 11,000,000 FEDERAL FARM CREDIT BANK 5.70% 11/03/98 6,000 5,000 11,000
11,000,000 0 11,000,000 FEDERAL FARM CREDIT BANK, DN 5.65% 11,000 0 11,000
01/04/99
6,901,000 0 6,901,000 FEDERAL HOME LOAN BANK 4/14/99 6,756 0 6,756
<PAGE>
12,000,000 0 12,000,000 FEDERAL HOME LOAN BANK 5.24% 10/21/99 12,000 0 12,000
0 15,000,000 15,000,000 FEDERAL HOME LOAN BANK 08/12/99 0 14,994 14,994
0 8,400,000 8,400,000 FEDERAL HOME LOAN BANK 5.335% 01/11/99 0 8,395 8,395
0 5,000,000 5,000,000 FEDERAL HOME LOAN BANK 5.718% 05/06/99 0 4,999 4,999
0 5,000,000 5,000,000 FEDERAL HOME LOAN BANK 5.723% 05/05/99 0 4,999 4,999
8,000,000 9,760,000 17,760,000 FEDERAL HOME LOAN BANK DISC NOTE 01/04/99 7,928 9,673 17,601
9,000,000 0 9,000,000 FEDERAL HOME LOAN BANK, NOTE 5.65% 8,999 0 8,999
4/09/99
8,000,000 0 8,000,000 FEDERAL HOME LOAN BK DN 11/13/98 7,987 0 7,987
0 5,000,000 5,000,000 FEDERAL HOME LOAN MORTGAGE CORP 5.60% 0 4,998 4,998
04/21/99
0 3,237,000 3,237,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 3,208 3,208
NOTE 01/04/99
8,905,000 10,000,000 18,905,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 8,809 9,901 18,710
NOTE 01/15/99
0 10,000,000 10,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 9,885 9,885
NOTE 01/19/99
5,000,000 20,000,000 25,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 4,929 19,703 24,632
NOTE 02/17/98
0 20,000,000 20,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 19,662 19,662
NOTE 03/05/99
0 15,000,000 15,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 14,947 14,947
NOTE 11/25/98
0 25,000,000 25,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 24,879 24,879
NOTE 12/04/98
0 8,760,000 8,760,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 8,706 8,706
NOTE 12/18/98
0 1,148,000 1,148,000 FEDERAL HOME LOAN MORTGAGE CORP DISC 0 1,140 1,140
NOTE 12/22/98
6,000,000 0 6,000,000 FEDL HOME LN BK, DISC NOTE 2/12/99 5,915 0 5,915
7,151,000 0 7,151,000 FEDL HOME LN BK,DUE 02/11/99 7,044 0 7,044
15,000,000 0 15,000,000 FHLB 5.57% 3/09/99 14,999 0 14,999
4,000,000 0 4,000,000 FHLB 5.705% 5/05/99 4,013 0 4,013
13,000,000 0 13,000,000 FHLB 4.574% 6/17/99 12,998 0 12,998
12,000,000 0 12,000,000 FHLB 5.51% 7/06/99 11,992 0 11,992
7,000,000 0 7,000,000 FHLB DISC NOTE 12/11/98 6,959 0 6,959
20,000,000 0 20,000,000 FHLB FRN 4.62% 12/24/98 19,999 0 19,999
6,000,000 0 6,000,000 FHLB GOV AGENCIES 5.415% 2/10/99 5,999 0 5,999
8,000,000 0 8,000,000 FHLMC 1/07/99 7,923 0 7,923
8,000,000 0 8,000,000 FHLMC 1/08/99 7,921 0 7,921
8,000,000 0 8,000,000 FHLMC 1/22/99 7,905 0 7,905
7,000,000 0 7,000,000 FHLMC 2/16/99 6,903 0 6,903
3,293,000 0 3,293,000 FHLMC 3/12/99 3,232 0 3,232
3,108,000 0 3,108,000 FHLMC 3/29/99 3,048 0 3,048
8,000,000 0 8,000,000 FHLMC DISC NOTE 1/26/99 7,904 0 7,904
<PAGE>
5,034,000 0 5,034,000 FHLMC DISC NOTE 1/12/98 5,026 0 5,026
8,000,000 0 8,000,000 FMC DISC NOTE 2/19/99 7,885 0 7,885
6,703,000 0 6,703,000 FMLMC DISC NOTE 2/05/99 6,610 0 6,610
5,000,000 0 5,000,000 FNMA 5.66% 11/20/98 5,000 0 5,000
8,000,000 0 8,000,000 FNMA 5.63% 5/05/99 7,998 0 7,998
8,000,000 0 8,000,000 FNMA DISC NOTE 4.75 2/18/99 7,885 0 7,885
4,000,000 0 4,000,000 FREDDIE MAC DN 11/06/98 3,997 0 3,997
6,000,000 0 6,000,000 FREDDIE MAC DN 12/10/98 5,967 0 5,967
6,000,000 0 6,000,000 SLMA DUE 5.51% 9/16/99 6,000 0 6,000
12,000,000 0 12,000,000 SLMA FRN 5.19% 9/15/99 11,992 0 11,992
17,000,000 0 17,000,000 SLMA MED TERM NOTE 5.40% 2/10/99 16,993 0 16,993
------------------------------------------
302,513 278,695 581,208
------------------------------------------
Total Investments 100.1% (Cost
$646,465, $467,210, $1,113,675
respectively) 646,465 467,210 1,113,675
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Government Fund
Pro Forma Combining Statement of Net Assets (Unaudited)
October 31,1998
Nations Pacific
Government Horizons Adjustments to Pro Forma
Reserves Government Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
--------------------------------------------- ---------------
<S> <C> <C> <C> <C>
Total Investments $ 646,465 $ 467,210 $-- $ 1,113,675
Other Assets and Liabilities:
Receivable for investments sold -- 188,067 -- 317,867
Payable for investments purchased -- (188,515) -- (264,167)
Other assets and liabilities, net (678) (225) -- 20,458
--------------------------------------------- ---------------
Total Other Assets and Liabilities (678) (673) -- 74,158
--------------------------------------------- ---------------
Net Assets 645,787 466,537 -- 1,187,833
============================================= ===============
Net Assets by Class:
<PAGE>
Capital Class / Horizon (Primary) $ 160,300 $ 80,155 -- $ 240,455
Liquidity Class $ 42,718 $ -- -- $ 42,718
Adviser Class / Horizon Service $ 115,769 $ 233,934 -- $ 349,703
Market Class $ 327,000 $ -- -- $ 327,000
Investor Class / Pacific Horizon $ -- $ 152,448 $ 152,448
--------------------------------------------- ---------------
$ 645,787 $ 466,537 $- $ 1,112,324
--------------------------------------------- ---------------
Shares Outstanding by Class:
Capital Class / Horizon (Primary) 160,301 80,183 -- 240,484
Liquidity Class 42,719 -- -- 42,719
Adviser Class / Horizon Service 115,769 234,030 -- 349,799
Market Class 327,000 -- -- 327,000
Investor Class / Pacific Horizon -- 152,584 -- 152,584
--------------------------------------------- ---------------
645,789 466,797 -- 1,112,586
--------------------------------------------- ---------------
Net Asset Value per Share by Class:
Capital Class / Horizon (Primary) $ 1.00 $ 1.00 $ -- $ 1.00
Liquidity Class $ 1.00 $ -- $ -- $ 1.00
Adviser Class / Horizon Service $ 1.00 $ 1.00 $ -- $ 1.00
Market Class $ 1.00 $ -- $ -- $ 1.00
Investor Class / Pacific Horizon $- $ 1.00 $ -- $ 1.00
</TABLE>
See Notes to Pro Forma
Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Government Fund
Pro Forma Combining Statement of Operations (unaudited)
October 31,1998
Nations Pacific
Government Horizons Adjustments to Pro Pro Forma
Reserves Government Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
---------------------------------------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $30,349 $42,247 $ - $72,596
Dividends 509 - - 509
---------------------------------------------- ---------------
Total Investment Income 30,858 42,247 - 73,105
---------------------------------------------- ---------------
EXPENSES:
Investment Advisory 1,657 756 (448) (a) 1,965
Administration 553 757 - (a) 1,310
Transfer Agent 42 62 (9) (b) 95
Custodian 48 141 (83) (b) 106
Legal and Audit Fees 10 73 (26) (b) 57
Registration & Filing 101 300 - 401
Trustees' Fees 11 16 (12) (b) 15
Interest Expense - - - -
Other expenses 24 204 (179) (b) 49
---------------------------------------------- ---------------
Subtotal 2,446 2,309 (757) 3,998
---------------------------------------------- ---------------
Shareholder Servicing and Distribution Fees
Liquidity Class 407 - - 407
<PAGE>
Adviser Class / Horizon Service 190 613 - 803
Market Class 1,321 - - 1,321
Investor Class / Pacific Horizon - 454 42 (a) 496
---------------------------------------------- ---------------
1,918 1,067 42 3,027
---------------------------------------------- ---------------
Fees waived and/or reimbursed by investment -
advisor, administrator and/or
distributor (2,047) (204) 1,090(c) (1,161)
---------------------------------------------- ---------------
Total Expenses 2,317 3,172 375 5,864
---------------------------------------------- ---------------
---------------------------------------------- ---------------
NET INVESTMENT INCOME 28,541 39,075 (375) 67,241
---------------------------------------------- ---------------
NET REALIZED GAIN/(LOSS) ON
---------------------------------------------- ---------------
INVESTMENTS: - 3 - 3
---------------------------------------------- ---------------
NET INCREASE/(DECREASE) IN NET ASSETS
---------------------------------------------- ---------------
RESULTING FROM OPERATIONS: $28,541 $39,078 $ (375) $67,244
============================================== ===============
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
See Notes to Pro Forma Financial
Statements
<PAGE>
Nations Government Reserves
Pacific Horizon Government Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of October 31, 1998 the Trust offered five separate portfolios. The
unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of October 31, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of November 1, 1998. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
October 31, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Government Fund in exchange for shares
of Nations Government Reserves. Under generally accepted accounting principles,
the historical cost of investment securities will be carried forward to the
surviving entity and the results of operations of the Pacific Horizon Government
Fund for pre-combination periods will not be restated. The pro forma statements
do not reflect the expenses of either fund in carrying out its obligations under
the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Government Reserves at the time of the
Reorganization at the combined level of average net assets for the twelve month
period ended October 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Treasury Only Fund
Pro Forma Combining Schedule of Investments (unaudited)
October 31,1998
Pacific
Nations Pacific Horizon
Government Horizon Pro Forma Nations Treasury
Reserve Treasury Only Principal Government Only Pro Forma
Principal Amount Principal Amount Amount Asset Description Reserve Value Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C> <C>
Investment Companies - 0.75%
9,105,000 0 9,105,000 DREYFUS TREASURY CASH MANAGEMENT 9,105 0 9,105
----------------------------------------
9,105 0 9,105
----------------------------------------
Repurchase Agreements--27.00%
157,000,000 0 157,000,000 ABN-AMRO CHIC 5.625% 11/02/98 157,000 0 157,000
140,000,000 0 140,000,000 FIRST UNION CAPITAL 5.62% 11/02/98 140,000 0 140,000
20,000,000 0 20,000,000 GOLD SACHS TERM 5.21% 11/02/98 20,000 0 20,000
----------------------------------------
317,000 0 317,000
----------------------------------------
Time Deposits- Euro - 1.52%
17,847,000 0 17,847,000 BANK OF NEW YORK CAYMAN ISLAND 4.75% 11/02/98 17,847 0 17,847
----------------------------------------
17,847 0 17,847
----------------------------------------
U.S. Government Agency Obligations--25.77%
8,000,000 0 8,000,000 FANNIEMAE SERIES MTN 4.441% 4/28/99 7,998 0 7,998
<PAGE>
6,000,000 0 6,000,000 FEDERAL FARM CREDIT BANK 5.70% 11/03/98 6,000 0 6,000
11,000,000 0 11,000,000 FEDERAL FARM CREDIT BANK, DN 5.65% 01/04/99 11,000 0 11,000
6,901,000 0 6,901,000 FEDERAL HOME LOAN BANK 4/14/99 6,756 0 6,756
12,000,000 0 12,000,000 FEDERAL HOME LOAN BANK 5.24% 10/21/99 12,000 0 12,000
8,000,000 0 8,000,000 FEDERAL HOME LOAN BANK DISC NOTE 01/04/99 7,928 0 7,928
9,000,000 0 9,000,000 FEDERAL HOME LOAN BANK, NOTE 5.65% 4/09/99 8,999 0 8,999
8,000,000 0 8,000,000 FEDERAL HOME LOAN BK DN 11/13/98 7,987 0 7,987
8,905,000 0 8,905,000 FEDERAL HOME LOAN MORTGAGE CORP DISC NOTE 8,809 0 8,809
01/15/99
5,000,000 0 5,000,000 FEDERAL HOME LOAN MORTGAGE CORP DISC NOTE 4,929 0 4,929
02/17/98
6,000,000 0 6,000,000 FEDL HOME LN BK, DISC NOTE 2/12/99 5,915 0 5,915
7,151,000 0 7,151,000 FEDL HOME LN BK,DUE 02/11/99 7,044 0 7,044
15,000,000 0 15,000,000 FHLB 5.57% 3/09/99 14,999 0 14,999
4,000,000 0 4,000,000 FHLB 5.705% 5/05/99 4,013 0 4,013
13,000,000 0 13,000,000 FHLB 4.574% 6/17/99 12,998 0 12,998
12,000,000 0 12,000,000 FHLB 5.51% 7/06/99 11,992 0 11,992
7,000,000 0 7,000,000 FHLB DISC NOTE 12/11/98 6,959 0 6,959
20,000,000 0 20,000,000 FHLB FRN 4.62% 12/24/98 19,999 0 19,999
6,000,000 0 6,000,000 FHLB GOV AGENCIES 5.415% 2/10/99 5,999 0 5,999
8,000,000 0 8,000,000 FHLMC 1/07/99 7,923 0 7,923
8,000,000 0 8,000,000 FHLMC 1/08/99 7,921 0 7,921
8,000,000 0 8,000,000 FHLMC 1/22/99 7,905 0 7,905
7,000,000 0 7,000,000 FHLMC 2/16/99 6,903 0 6,903
3,293,000 0 3,293,000 FHLMC 3/12/99 3,232 0 3,232
3,108,000 0 3,108,000 FHLMC 3/29/99 3,048 0 3,048
8,000,000 0 8,000,000 FHLMC DISC NOTE 1/26/99 7,904 0 7,904
5,034,000 0 5,034,000 FHLMC DISC NOTE 1/12/98 5,026 0 5,026
<PAGE>
8,000,000 0 8,000,000 FMC DISC NOTE 2/19/99 7,884 0 7,884
6,703,000 0 6,703,000 FMLMC DISC NOTE 2/05/99 6,610 0 6,610
5,000,000 0 5,000,000 FNMA 5.66% 11/20/98 5,000 0 5,000
8,000,000 0 8,000,000 FNMA 5.63% 5/05/99 7,998 0 7,998
8,000,000 0 8,000,000 FNMA DISC NOTE 4.75 2/18/99 7,885 0 7,885
4,000,000 0 4,000,000 FREDDIE MAC DN 11/06/98 3,997 0 3,997
6,000,000 0 6,000,000 FREDDIE MAC DN 12/10/98 5,968 0 5,968
6,000,000 0 6,000,000 SLMA DUE 5.51% 9/16/99 6,000 0 6,000
12,000,000 0 12,000,000 SLMA FRN 5.19% 9/15/99 11,992 0 11,992
17,000,000 0 17,000,000 SLMA MED TERM NOTE 5.40% 2/10/99 16,993 0 16,993
----------------------------------------
302,513 0 302,513
----------------------------------------
U.S. Treasury Notes--38.56%
0 93,770,000 93,770,000 US TREASURY NOTE 5.00% 1/31/99 0 93,840 93,840
0 49,150,000 49,150,000 US TREASURY NOTE 5.00% 2/15/99 0 49,152 49,152
0 49,575,000 49,575,000 US TREASURY NOTE 5.125% 11/30/98 0 49,577 49,577
0 53,340,000 53,340,000 US TREASURY NOTE 5.125% 12/31/98 0 53,404 53,404
0 97,850,000 97,850,000 US TREASURY NOTE 5.50% 11/15/98 0 97,864 97,864
0 25,000,000 25,000,000 US TREASURY NOTE 5.75% 12/31/98 0 25,058 25,058
0 4,300,000 4,300,000 US TREASURY NOTE 5.875% 1/31/99 0 4,308 4,308
0 8,955,000 8,955,000 US TREASURY NOTE 6.25% 3/31/99 0 9,021 9,021
0 30,000,000 30,000,000 US TREASURY NOTE 8.875% 11/15/98 0 30,039 30,039
0 40,000,000 40,000,000 US TREASURY NOTE 8.875% 2/15/99 0 40,476 40,476
----------------------------------------
0 452,739 452,739
----------------------------------------
Total Investments--93.6% (Cost $646,465,
$452,739 respectively) 646,465 452,739 1,099,204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Treasury Only Fund
Pro Forma Combining Statement of Net Assets (unaudited)
October 31,1998
Pacific
Nations Horizons
Government Treasury Only Adjustments to Pro Pro Forma
Reserves Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
--------------------------------------------- ---------------
<S> <C> <C> <C>
Total Investments $646,465 $452,739 $- $1,099,204
Other Assets and Liabilities:
Receivable for investments sold - 129,800 - 129,800
Payable for investments purchased - (75,652) - (75,652)
Other assets and liabilities, net (678) 21,361 - 20,683
--------------------------------------------- ---------------
Total Other Assets and Liabilities (678) 75,509 - 74,831
--------------------------------------------- ---------------
Net Assets 645,787 528,248 - 1,174,035
============================================= ===============
Net Assets by Class:
Capital Class / Horizon (Primary) $160,300 $43,786 $- $204,086
Liquidity Class $42,718 $ - $- $42,718
Adviser Class / Horizon Service $115,769 $257,224 $- $372,993
<PAGE>
Market Class $327,000 $- $- $327,000
Investor Class / Pacific Horizon $- 4227,238 $- $227,238
--------------------------------------------- ---------------
$645,787 $528,248 $- $1,174,035
--------------------------------------------- ---------------
Shares Outstanding by Class:
Capital Class / Horizon (Primary) 160,301 43,788 - 204,089
Liquidity Class 42,719 - - 42,719
Adviser Class / Horizon Service 115,769 257,239 - 373,008
Market Class 327,000 - - 327,000
Investor Class / Pacific Horizon - 227,268 - 227,268
--------------------------------------------- ---------------
645,789 528,295 - 1,174,084
--------------------------------------------- ---------------
Net Asset Value per Share by Class
Capital Class / Horizon (Primary) $1.00 $ 1.00 $ - $1.00
Liquidity Class $1.00 $ - $ - $1.00
Adviser Class / Horizon Service $1.00 $ 1.00 $ - $1.00
Market Class $1.00 $ - $ - $1.00
Investor Class / Pacific Horizon $- $ 1.00 $ - $1.00
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizons Treasury Only Fund
Pro Forma Combining Statement of Operations (unaudited)
October 31,1998
Pacific
Nations Horizons
Government Treasury Only Adjustments to Pro Pro Forma
Reserves Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
--------------------------------------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $30,349 $23,607 $ - $53,956
Dividends 509 - - 509
--------------------------------------------- ---------------
Total Investment Income 30,858 23,607 - 54,465
--------------------------------------------- ---------------
EXPENSES:
Investment Advisory 1,657 451 (602) (a) 1,506
Administration 553 451 - (a) 1,004
Transfer Agent 42 52 (21) (b) 73
Custodian 48 56 6 (b) 110
<PAGE>
Legal and Audit Fees 10 38 (26) (b) 22
Registration & Filing 101 38 - 139
Trustees' Fees 11 7 (4) (b) 14
Interest Expense - - - -
Other expenses 24 99 (85) (b) 38
--------------------------------------------- ---------------
Subtotal 2,446 1,192 (732) 2,906
--------------------------------------------- ---------------
Shareholder Servicing and Distribution Fees
Liquidity Class 407 - 407
Adviser Class / Horizon Service 190 535 725
Market Class 1,321 - 1,321
Investor Class / Pacific Horizon - 652 61 (a) 713
------------------------------------------------- ---------------
Subtotal 1,918 1,187 61 3,166
------------------------------------------------- ---------------
Fees waived and/or reimbursed by investment - - -
advisor, administrator and/or distributor (2,047) - 1,000(c) (1,047)
--------------------------------------------- ---------------
Total Expenses 2,317 2,379 329 5,025
--------------------------------------------- ---------------
<PAGE>
--------------------------------------------- ---------------
NET INVESTMENT INCOME 28,541 21,228 (329) 49,440
--------------------------------------------- ---------------
NET REALIZED GAIN/(LOSS) ON
--------------------------------------------- ---------------
INVESTMENTS: - (23) - (23)
--------------------------------------------- ---------------
NET INCREASE/(DECREASE) IN NET ASSETS
============================================= ===============
RESULTING FROM OPERATIONS: $28,541 $21,205 $ (329) $49,417
============================================= ===============
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Government Reserves
Pacific Horizon Treasury Only Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of October 31, 1998 the Trust offered five separate portfolios. The
unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of October 31, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of November 1, 1998. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
October 31, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Treasury Only Fund in exchange for
shares of Nations Government Reserves. Under generally accepted accounting
principles, the historical cost of investment securities will be carried forward
to the surviving entity and the results of operations of the Pacific Horizon
Treasury Only Fund for pre-combination periods will not be restated. The pro
forma statements do not reflect the expenses of either fund in carrying out its
obligations under the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Government Reserves at the time of the
Reorganization at the combined level of average net assets for the twelve month
period ended October 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Nations Intermediate Bond Fund / Pacific Horizons Intermediate Bond Fund
Pro Forma Combining Schedule of Investments (unaudited)
September 30,1998
Pacific
Horizon
Nations Intermediate Pro Forma Pro Forma
Intermediate Bond Intermediate Nations Pacific Intermediate
Bond Portfolio Portfolio Bond Portfolio Intermediate Horizon Bond
Principal Principal Principal Bond Portfolio Portfolio Portfolio
Amount Amount Amount Asset Description Value Value Value
(in 000's) (in 000's) (in 000's)
ASSET BACKED SECURITIES---19.0%
AESOP Funding II, Series 1997-1,
2,000,000 2,000,000 Class A1, 6.22, 10/20/01 2,041 2,041
Asset Securitization Corp., Series
1,900,000 1,900,000 1997-D5, Class A1C, 6.75, 02/14/41 2,041 2,041
Chevy Chase Auto Receivables Trust,
1,222,000 1,222,000 Series 1998, Class A , 5.91, 12/15/04 1,245 1,245
Circuit City Credit Card Master
Trust, Series 1995-1, Class A, 6.375,
1,000,000 1,000,000 08/15/05 1,027 1,027
Citibank Credit Card Master Trust I,
Series 1997-6, Class A ZCB, 5.04,
2,000,000 2,000,000 08/15/06 1,481 1,481
Commercial Mortgage Acceptance Corp.,
Series 1998-C1, Class A2 , 6.49,
1,850,000 1,850,000 05/15/08 1,937 1,937
Contimortgage Home Equity Loan Trust,
2,000,000 2,000,000 Series 1996-4, Class A5, 6.6, 10/15/11 2,059 2,059
Contimortgage Home Equity Loan Trust,
Series 1997-3, Class A5, 7.01,
2,000,000 2,000,000 08/15/13 2,122 2,122
First Chicago Master Trust II ,
1,340,000 1,340,000 5.8706, 02/15/04 1,346 1,346
General Growth Properties, Series 1,
1,900,000 1,900,000 Class A2, 6.602, 11/15/07 2,000 2,000
GMAC Commercial Mortgage Securities,
Inc., Series 1997-C2, Class A3 ,
2,300,000 2,300,000 6.566, 11/15/07 2,420 2,420
Lehman Brothers Commercial Conduit
Mortgage Trust, Series 1998-C1, Class
2,100,000 2,100,000 A3, 6.48, 01/18/08 2,196 2,196
Nomura Asset Securities Corp., Series
2,180,000 2,180,000 1998-D6, Class A1B, 6.59, 03/17/28 2,286 2,286
<PAGE>
Standard Credit Card Master Trust,
Series 1995-3, Class A , 7.85,
2,500,000 2,500,000 02/07/02 2,586 2,586
The Money Store Home Equity Trust,
Series 1996-B, Class A6, 7.38,
1,000,000 1,000,000 05/15/17 1,035 1,035
World Omni Automobile Lease
Securitization Trust, Series 1997-A,
2,245,000 2,245,000 Class A4, 6.9, 06/25/03 2,358 2,358
------------------------------------------
0 30,180 30,180
------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS---8.3%
Credit Suisse First Boston Mortgage
Securities Corp., Series 1998-C1,
1,250,000 1,250,000 Class A1B, 6.48, 05/17/08 1,309 1,309
Criimi Mae Corp., Series 1998-1,
2,212,000 2,212,000 Class A1, 5.697, 10/20/01 2,222 2,222
Donaldson Lufkin Jenrette Commercial
Mortgage Corp., Series 1998-CG1,
1,300,000 1,300,000 Class A1B, 6.41, 06/10/31 1,354 1,354
First Union-Lehman Brothers-Bank of
America Commercial Mortgage, Series
2,250,000 2,250,000 1998-C2, Class A2, 6.56, 11/18/08 2,341 2,341
Mortgage Capital Funding, Inc.,
Series 1998-MC1, Class A2, 6.663,
2,950,000 2,950,000 01/18/08 3,123 3,123
Mortgage Capital Funding, Inc.,
Series 1998-MC2, Class A2, 6.423,
1,300,000 1,300,000 05/18/08 1,354 1,354
Vendee Mortgage Trust, Series 1998-1,
Class 2, Interest Only Obligation,
63,491,000 63,491,000 0.455, 02/15/28 873 873
Vendee Mortgage Trust, Series 1998-3,
Class 10, Interest Only Obligation,
59,000,000 59,000,000 0.316, 09/01/28 664 664
------------------------------------------
0 13,240 13,240
------------------------------------------
CORPORATE BONDS---30.07%
Banks--1.75%
Banco Latinoamericano, Series 144A,
1,500,000 1,500,000 6.59, 10/16/01 1,485 1,485
1,250,000 1,250,000 Capital One Bank, 7, 04/30/01 1,292 1,292
------------------------------------------
0 2,777 2,777
------------------------------------------
<PAGE>
Brokerage--1.93%
Bear Stearns Companies, Inc., 6.125,
1,500,000 1,500,000 02/01/03 1,532 1,532
Salomon Smith Barney Holdings, Inc.,
1,500,000 1,500,000 6.25, 05/15/03 1,533 1,533
------------------------------------------
0 3,065 3,065
------------------------------------------
Cable & Media--2.7%
Cox Radio, Inc., Series 144A, 6.25,
1,300,000 1,300,000 05/15/03 1,341 1,341
TCI Communications, Inc., 6.375,
1,500,000 1,500,000 05/01/03 1,568 1,568
Time Warner Inc., Pass-Through
1,350,000 1,350,000 Certificates, 6.1, 12/30/01 1,380 1,380
------------------------------------------
0 4,289 4,289
------------------------------------------
Chemicals--0.79%
1,200,000 1,200,000 Praxair, Inc., 6.75, 03/01/03 1,263 1,263
------------------------------------------
0 1,263 1,263
------------------------------------------
Commercial Services--1.91%
News America Holdings, Inc., 8.625,
1,500,000 1,500,000 02/01/03 1,678 1,678
Service Corp. International, 6.3,
1,300,000 1,300,000 03/15/03 1,354 1,354
------------------------------------------
0 3,032 3,032
------------------------------------------
Diversified Manufacturing--0.86%
1,300,000 1,300,000 Belo (A.H.) Corp., 6.875, 06/15/02 1,359 1,359
------------------------------------------
0 1,359 1,359
------------------------------------------
Energy--1.62%
1,300,000 1,300,000 PSE&G Capital Corp. , 6.74, 10/23/01 1,350 1,350
Williams Companies, Inc. , 6.125,
1,200,000 1,200,000 02/01/01 1,224 1,224
------------------------------------------
0 2,574 2,574
------------------------------------------
Financial Services---10.49%
1,200,000 1,200,000 AON Corp., 7.4, 10/01/02 1,296 1,296
<PAGE>
Associates Corp. of North America,
1,675,000 1,675,000 7.5, 04/15/02 1,740 1,740
1,300,000 1,300,000 Case Credit Corp., 6.125, 02/15/03 1,347 1,347
1,500,000 1,500,000 Finova Capital Corp., 6.625, 09/15/01 1,558 1,558
Ford Motor Credit Corp., 6.55,
1,800,000 1,800,000 09/10/02 1,897 1,897
General Motors Acceptance Corp. ,
2,000,000 2,000,000 6.875, 07/15/01 2,095 2,095
1,500,000 1,500,000 Hanson Overseas B.V., 7.375, 01/15/03 1,609 1,609
Household Finance Corp. , 6.125,
1,300,000 1,300,000 07/15/12 1,344 1,344
Prudential Security Financial Corp. ,
2,200,000 2,200,000 6.506, 07/15/08 2,287 2,287
1,400,000 1,400,000 USG Corp., 9.25, 09/15/01 1,496 1,496
------------------------------------------
0 16,669 16,669
------------------------------------------
Food & Kindred Products--2.18%
1,550,000 1,550,000 James River Corp., 8.375, 11/15/01 1,693 1,693
1,750,000 1,750,000 Nabisco, Inc., 6.125, 09/01/98 1,776 1,776
------------------------------------------
0 3,469 3,469
------------------------------------------
Insurance--2.46%
2,700,000 2,700,000 Aetna Services, Inc. , 6.75, 08/15/01 2,828 2,828
1,000,000 1,000,000 Hartford Life, Inc., 6.9, 06/15/04 1,084 1,084
------------------------------------------
0 3,912 3,912
------------------------------------------
Retail Stores--1.68%
Federated Department Stores , 8.125,
1,220,000 1,220,000 10/15/02 1,333 1,333
Sears Roebuck Acceptance Corp., 6,
1,300,000 1,300,000 03/20/03 1,339 1,339
------------------------------------------
2,672 2,672
------------------------------------------
Utilities--1.69%
Consumers Energy Co., Series 144A,
1,400,000 1,400,000 6.2, 05/01/03 1,456 1,456
1,200,000 1,200,000 KN Energy, Inc., 6.45, 03/01/03 1,228 1,228
------------------------------------------
2,684 2,684
------------------------------------------
<PAGE>
Total Corporate Bonds (Cost $47,722) 0 47,765 47,765
MEDIUM TERM NOTES--2.2%
Lehman Brothers Holdings, 6.9,
2,000,000 2,000,000 01/29/01 2,037 2,037
1,400,000 1,400,000 Worldcom Inc. , 6.4, 08/15/05 1,477 1,477
------------------------------------------
0 3,514 3,514
------------------------------------------
U.S. TREASURY OBLIGATIONS---28.97%
U.S. Treasury Strips--2.37%
2,250,000 2,250,000 U.S. Treasury Strips, 05/15/09 1,359 1,359
2,000,000 2,000,000 U.S. Treasury Strips, 08/15/23 541 541
2,750,000 2,750,000 U.S. Treasury Strips, 05/15/07 1,858 1,858
------------------------------------------
0 3,758 3,758
------------------------------------------
U.S. Treasury Notes---26.6%
5,700,000 5,700,000 U.S. Treasury Note, 7.75, 01/31/00 5,935 5,935
1,000,000 1,000,000 U.S. Treasury Note, 6.625, 06/30/01 1,057 1,057
6,000,000 6,000,000 U.S. Treasury Note, 6.25, 10/31/01 6,315 6,315
15,150,000 15,150,000 U.S. Treasury Note, 5.75, 08/15/03 16,070 16,070
9,000,000 9,000,000 U.S. Treasury Note, 5.5, 12/31/00 9,209 9,209
3,150,000 3,150,000 U.S. Treasury Note, 7, 07/15/06 3,667 3,667
------------------------------------------
0 42,253 42,253
------------------------------------------
Total U.S. Treasury Obligations (Cost
$44,904) 0 46,011 46,011
U.S. GOVERNMENT AGENCY
OBLIGATIONS---9.6%
FannieMae 30 Year Fixed Obligation
13,200,000 13,200,000 (TBA), 7, 04/01/00 13,569 13,569
FannieMae, Pool Association, Pool
1,261,000 1,261,000 #345858, 6.259, 08/01/36 1,298 1,298
Government National Mortgage
11,000 11,000 Association Pool #136688, 10, 09/15/15 12 12
<PAGE>
Government National Mortgage
196,000 196,000 Association Pool #166744, 10, 07/15/16 214 214
Government National Mortgage
62,000 62,000 Association Pool #209480, 10, 07/15/17 68 68
Government National Mortgage
85,000 85,000 Association Pool #227082, 10, 08/15/17 93 93
------------------------------------------
0 15,254 15,254
------------------------------------------
SHORT TERM INVESTMENTS---9.5% -
7,524,000 7,524,000 Temporary Investment Cash Fund 7,524 7,524
7,524,000 7,524,000 Temporary Investment Fund 7,524 7,524
------------------------------------------
0 15,048 15,048
------------------------------------------
Total Investments---107.6% (Cost
$0,$167,432, $167,432 respectively) 0 171,012 171,012
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Nations Intermediate Bond Fund / Pacific Horizons Intermediate Bond Fund
Pro Forma Combining Statement of Net Assets (unaudited)
September 30,1998
Nations Pacific Horizons
Intermediate Intermediate Adjustments to Pro Pro Forma
Bond Fund Bond Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
---------------------------------------------------------------------
Total Investments $ - $ 103,614 $ - $ 103,614
Other Assets and Liabilities:
Other assets and liabilities, net - (475) - (475)
Total Other Assets and Liabilities - (475) - (475)
<PAGE>
Net Assets - 103,139 - 103,139
=====================================================================
Net Assets by Class:
Investor A / Class A $ - $ 67,798 $ - $ 67,798
$ $ $ $
Investor C / Class K - 498 - 498
$ $ $ $
Seafirst Class - 34,843 - 34,843
$ $ $ $
- 103,139 - 103,139
Shares Outstanding by Class:
Investor A / Class A - 6,838 - 6,838
Investor C / Class K - 50 - 50
Seafirst Class - 3,120 - 3,120
---------------------------------------------------------------------
- 10,008 - 10,008
---------------------------------------------------------------------
Net Asset Value per Share by Class:
Investor A / Class A $ - $ 9.91 $ - $ 9.91
Investor C / Class K $ - $ 9.98 $ - $ 9.98
Seafirst Class $ - $ 11.17 $ - $ 11.17
See Notes to Pro Forma Financial Statements
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Nations Intermediate Bond Fund / Pacific Horizons Intermediate Bond Fund
Pro Forma Combining Statement of Operations (unaudited)
September 30,1998
Nations Pacific Horizons
Intermediate Intermediate Adjustments to Pro Pro Forma
Bond Fund Bond Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
INVESTMENT INCOME:
Investment Income from Master Investment Trust,
Series 1 - Investment Grade Bond
Portfolio
Interest $0 $4,855 $0 $4,855
Dividends - - - -
- 4,855 - 4,855
<PAGE>
Expenses - 233 202 435
Less: Fee waivers and expense reimbursements - (21) 21 -
- 212 223 435
Net Investment Income from Master Investment Trust,
Series I - Investment Grade Bond Portfolio - 4,643 (223) 4,420
EXPENSES:
Investment Advisory - 35 (35) -
Administration - 123 16 139
Transfer Agent - 19 19
Custodian - - -
Legal and Audit Fees - 19 19
Registration & Filing - 6 6
Trustees' Fees - 2 2
Interest Expense - - -
Other expenses - 57 (10) 47
Subtotal - 261 (29) 232
Shareholder Servicing and Distribution Fees
Investor A / Class A - 152 - 152
Investor B / Class B - - - -
Investor C / Class K - 4 - 4
Seafirst Class - 43 - 43
Subtotal - 199 - 199
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor - 40 (40) -
Total Expenses - 500 (69) 431
NET INVESTMENT INCOME - 4,143 (154) 3,989
<PAGE>
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investments - 1,014 - 1,014
Net change in unrealized appreciation/
(depreciation) of investments - 1,420 - 1,420
Net realized and unrealized gain/(loss)
---------------------------------------------------------------------
on investments - 2,434 - 2,434
---------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $0 $6,577 ($154) $6,423
=====================================================================
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
See Notes to Pro Forma Financial Statements
Nations Intermediate Bond Fund
Pacific Horizon Intermediate Bond Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at September
30, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Intermediate Bond Fund in exchange for
shares of Nations Intermediate Bond Fund. Under generally accepted accounting
principles, the historical cost of investment securities will be carried forward
under the new name of Nations Intermediate Bond Fund. The pro forma statements
do not reflect the expenses of either fund in carrying out its obligations under
the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees and
Investor C shareholders servicing and distribution fees have been calculated for
the combined fund based on the contractual rates expected to be in effect for
the Nations Intermediate Bond Fund at the time of the Reorganization at the
combined level of average net assets for the twelve month period ended September
30, 1998.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Nations Master Investment Trust, Series I - Investment Grade Bond Portfolio / Master Investment Trust,
Series I - Investment Grade Bond Portfolio
Pro Forma Combining Schedule of Investments (unaudited)
September 30,1998
Pacific
Horizon
Nations Intermediate Pro Forma Pro Forma
Intermediate Bond Intermediate Nations Pacific Intermediate
Bond Portfolio Portfolio Bond Portfolio Intermediate Horizon Bond
Principal Principal Principal Bond Portfolio Portfolio Portfolio
Amount Amount Amount Asset Description Value Value Value
(in 000's) (in 000's) (in 000's)
ASSET BACKED SECURITIES---19.0%
AESOP Funding II, Series 1997-1,
2,000,000 2,000,000 Class A1, 6.22, 10/20/01 2,041 2,041
Asset Securitization Corp., Series
1,900,000 1,900,000 1997-D5, Class A1C, 6.75, 02/14/41 2,041 2,041
Chevy Chase Auto Receivables Trust,
1,222,000 1,222,000 Series 1998, Class A , 5.91, 12/15/04 1,245 1,245
Circuit City Credit Card Master
Trust, Series 1995-1, Class A, 6.375,
1,000,000 1,000,000 08/15/05 1,027 1,027
Citibank Credit Card Master Trust I,
Series 1997-6, Class A ZCB, 5.04,
2,000,000 2,000,000 08/15/06 1,481 1,481
Commercial Mortgage Acceptance Corp.,
Series 1998-C1, Class A2 , 6.49,
1,850,000 1,850,000 05/15/08 1,937 1,937
Contimortgage Home Equity Loan Trust,
2,000,000 2,000,000 Series 1996-4, Class A5, 6.6, 10/15/11 2,059 2,059
Contimortgage Home Equity Loan Trust,
Series 1997-3, Class A5, 7.01,
2,000,000 2,000,000 08/15/13 2,122 2,122
First Chicago Master Trust II ,
1,340,000 1,340,000 5.8706, 02/15/04 1,346 1,346
General Growth Properties, Series 1,
1,900,000 1,900,000 Class A2, 6.602, 11/15/07 2,000 2,000
GMAC Commercial Mortgage Securities,
Inc., Series 1997-C2, Class A3 ,
2,300,000 2,300,000 6.566, 11/15/07 2,420 2,420
Lehman Brothers Commercial Conduit
Mortgage Trust, Series 1998-C1, Class
2,100,000 2,100,000 A3, 6.48, 01/18/08 2,196 2,196
Nomura Asset Securities Corp., Series
2,180,000 2,180,000 1998-D6, Class A1B, 6.59, 03/17/28 2,286 2,286
<PAGE>
Standard Credit Card Master Trust,
Series 1995-3, Class A , 7.85,
2,500,000 2,500,000 02/07/02 2,586 2,586
The Money Store Home Equity Trust,
Series 1996-B, Class A6, 7.38,
1,000,000 1,000,000 05/15/17 1,035 1,035
World Omni Automobile Lease
Securitization Trust, Series 1997-A,
2,245,000 2,245,000 Class A4, 6.9, 06/25/03 2,358 2,358
------------------------------------------
0 30,180 30,180
------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS---8.3%
Credit Suisse First Boston Mortgage
Securities Corp., Series 1998-C1,
1,250,000 1,250,000 Class A1B, 6.48, 05/17/08 1,309 1,309
Criimi Mae Corp., Series 1998-1,
2,212,000 2,212,000 Class A1, 5.697, 10/20/01 2,222 2,222
Donaldson Lufkin Jenrette Commercial
Mortgage Corp., Series 1998-CG1,
1,300,000 1,300,000 Class A1B, 6.41, 06/10/31 1,354 1,354
First Union-Lehman Brothers-Bank of
America Commercial Mortgage, Series
2,250,000 2,250,000 1998-C2, Class A2, 6.56, 11/18/08 2,341 2,341
Mortgage Capital Funding, Inc.,
Series 1998-MC1, Class A2, 6.663,
2,950,000 2,950,000 01/18/08 3,123 3,123
Mortgage Capital Funding, Inc.,
Series 1998-MC2, Class A2, 6.423,
1,300,000 1,300,000 05/18/08 1,354 1,354
Vendee Mortgage Trust, Series 1998-1,
Class 2, Interest Only Obligation,
63,491,000 63,491,000 0.455, 02/15/28 873 873
Vendee Mortgage Trust, Series 1998-3,
Class 10, Interest Only Obligation,
59,000,000 59,000,000 0.316, 09/01/28 664 664
------------------------------------------
0 13,240 13,240
------------------------------------------
CORPORATE BONDS---30.07%
Banks--1.75%
1,500,000 1,500,000 Banco Latinoamericano, Series 144A, 1,485 1,485
6.59, 10/16/01
1,250,000 1,250,000 Capital One Bank, 7, 04/30/01 1,292 1,292
------------------------------------------
0 2,777 2,777
------------------------------------------
<PAGE>
Brokerage--1.93%
1,500,000 1,500,000 Bear Stearns Companies, Inc., 6.125, 1,532 1,532
02/01/03
1,500,000 1,500,000 Salomon Smith Barney Holdings, Inc., 1,533 1,533
6.25, 05/15/03 ------------------------------------------
0 3,065 3,065
------------------------------------------
Cable & Media--2.7%
1,300,000 1,300,000 Cox Radio, Inc., Series 144A, 6.25, 1,341 1,341
05/15/03
1,500,000 1,500,000 TCI Communications, Inc., 6.375, 1,568 1,568
05/01/03
1,350,000 1,350,000 Time Warner Inc., Pass-Through 1,380 1,380
Certificates, 6.1, 12/30/01 ------------------------------------------
0 4,289 4,289
------------------------------------------
Chemicals--0.79%
1,200,000 1,200,000 Praxair, Inc., 6.75, 03/01/03 1,263 1,263
------------------------------------------
0 1,263 1,263
------------------------------------------
Commercial Services--1.91%
1,500,000 1,500,000 News America Holdings, Inc., 8.625, 1,678 1,678
02/01/03
1,300,000 1,300,000 Service Corp. International, 6.3, 1,354 1,354
03/15/03 ------------------------------------------
0 3,032 3,032
------------------------------------------
Diversified Manufacturing--0.86%
1,300,000 1,300,000 Belo (A.H.) Corp., 6.875, 06/15/02 1,359 1,359
------------------------------------------
0 1,359 1,359
------------------------------------------
Energy--1.62%
1,300,000 1,300,000 PSE&G Capital Corp. , 6.74, 10/23/01 1,350 1,350
1,200,000 1,200,000 Williams Companies, Inc. , 6.125, 1,224 1,224
02/01/01 ------------------------------------------
0 2,574 2,574
------------------------------------------
Financial Services---10.49%
1,200,000 1,200,000 AON Corp., 7.4, 10/01/02 1,296 1,296
<PAGE>
1,675,000 1,675,000 Associates Corp. of North America, 1,740 1,740
7.5, 04/15/02
1,300,000 1,300,000 Case Credit Corp., 6.125, 02/15/03 1,347 1,347
1,500,000 1,500,000 Finova Capital Corp., 6.625, 09/15/01 1,558 1,558
1,800,000 1,800,000 Ford Motor Credit Corp., 6.55, 1,897 1,897
09/10/02
2,000,000 2,000,000 General Motors Acceptance Corp. , 2,095 2,095
6.875, 07/15/01
1,500,000 1,500,000 Hanson Overseas B.V., 7.375, 01/15/03 1,609 1,609
1,300,000 1,300,000 Household Finance Corp. , 6.125, 1,344 1,344
07/15/12
2,200,000 2,200,000 Prudential Security Financial Corp. , 2,287 2,287
6.506, 07/15/08
1,400,000 1,400,000 USG Corp., 9.25, 09/15/01 1,496 1,496
------------------------------------------
0 16,669 16,669
------------------------------------------
Food & Kindred Products--2.18%
1,550,000 1,550,000 James River Corp., 8.375, 11/15/01 1,693 1,693
1,750,000 1,750,000 Nabisco, Inc., 6.125, 09/01/98 1,776 1,776
------------------------------------------
0 3,469 3,469
------------------------------------------
Insurance--2.46%
2,700,000 2,700,000 Aetna Services, Inc. , 6.75, 08/15/01 2,828 2,828
1,000,000 1,000,000 Hartford Life, Inc., 6.9, 06/15/04 1,084 1,084
------------------------------------------
0 3,912 3,912
------------------------------------------
Retail Stores--1.68%
1,220,000 1,220,000 Federated Department Stores , 8.125, 1,333 1,333
10/15/02
1,300,000 1,300,000 Sears Roebuck Acceptance Corp., 6, 1,339 1,339
03/20/03 ------------------------------------------
0 2,672 2,672
------------------------------------------
Utilities--1.69%
1,400,000 1,400,000 Consumers Energy Co., Series 144A, 1,456 1,456
6.2, 05/01/03
1,200,000 1,200,000 KN Energy, Inc., 6.45, 03/01/03 1,228 1,228
------------------------------------------
0 2,684 2,684
------------------------------------------
<PAGE>
Total Corporate Bonds (Cost $47,722) 0 47,765 47,765
MEDIUM TERM NOTES--2.2%
2,000,000 2,000,000 Lehman Brothers Holdings, 6.9, 2,037 2,037
01/29/01
1,400,000 1,400,000 Worldcom Inc. , 6.4, 08/15/05 1,477 1,477
------------------------------------------
0 3,514 3,514
------------------------------------------
U.S. TREASURY OBLIGATIONS---28.97%
U.S. Treasury Strips--2.37%
2,250,000 2,250,000 U.S. Treasury Strips, 05/15/09 1,359 1,359
2,000,000 2,000,000 U.S. Treasury Strips, 08/15/23 541 541
2,750,000 2,750,000 U.S. Treasury Strips, 05/15/07 1,858 1,858
------------------------------------------
0 3,758 3,758
------------------------------------------
U.S. Treasury Notes---26.6%
5,700,000 5,700,000 U.S. Treasury Note, 7.75, 01/31/00 5,935 5,935
1,000,000 1,000,000 U.S. Treasury Note, 6.625, 06/30/01 1,057 1,057
6,000,000 6,000,000 U.S. Treasury Note, 6.25, 10/31/01 6,315 6,315
15,150,000 15,150,000 U.S. Treasury Note, 5.75, 08/15/03 16,070 16,070
9,000,000 9,000,000 U.S. Treasury Note, 5.5, 12/31/00 9,209 9,209
3,150,000 3,150,000 U.S. Treasury Note, 7, 07/15/06 3,667 3,667
------------------------------------------
0 42,253 42,253
------------------------------------------
Total U.S. Treasury Obligations (Cost
$44,904) 0 46,011 46,011
U.S. GOVERNMENT AGENCY
OBLIGATIONS---9.6%
FannieMae 30 Year Fixed Obligation
13,200,000 13,200,000 (TBA), 7, 04/01/00 13,569 13,569
FannieMae, Pool Association, Pool
1,261,000 1,261,000 #345858, 6.259, 08/01/36 1,298 1,298
Government National Mortgage
11,000 11,000 Association Pool #136688, 10, 09/15/15 12 12
<PAGE>
Government National Mortgage
196,000 196,000 Association Pool #166744, 10, 07/15/16 214 214
Government National Mortgage
62,000 62,000 Association Pool #209480, 10, 07/15/17 68 68
Government National Mortgage
85,000 85,000 Association Pool #227082, 10, 08/15/17 93 93
------------------------------------------
0 15,254 15,254
------------------------------------------
SHORT TERM INVESTMENTS---9.5% -
7,524,000 7,524,000 Temporary Investment Cash Fund 7,524 7,524
7,524,000 7,524,000 Temporary Investment Fund 7,524 7,524
------------------------------------------
0 15,048 15,048
------------------------------------------
Total Investments---107.6% (Cost
$0,$167,432, $167,432 respectively) 0 171,012 171,012
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Nations Master Investment Trust, Series I - Investment Grade Bond Portfolio / Master Investment Trust,
Series I - Investment Grade Bond Portfolio
Pro Forma Combining Statement of Net Assets (unaudited)
September 30,1998
Nations Pacific Horizons
Investment Grade Investment Grade Adjustments to Pro Pro Forma
Bond Portfolio Bond Portfolio Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
$ $ $ $
Total Investments - 171,012 - 171,012
Other Assets and Liabilities:
Other assets and liabilities, net - (12,140) - (12,140)
<PAGE>
Total Other Assets and Liabilities - (12,140) - (12,140)
Net Assets - 158,872 - 158,872
=========================================================================
Net Assets by Class:
$ $ $ $
World Horizon Class - 55,258 - 55,258
$ $ $ $
Pacific Horizon Class - 103,614 - 103,614
$ $ $ $
- 158,872 - 158,872
Shares Outstanding by Class:
World Horizon Class - 4,097 - 4,097
Pacific Horizon Class - 7,686 - 7,686
- 11,783 - 11,783
Net Asset Value per Share by Class:
$ $
World Horizon Class - $ 13.49 $ - 13.49
$ $
Pacific Horizon Class - $ 13.48 $ - 13.48
</TABLE>
See Notes to Pro Forma Financial Statements
<TABLE>
<CAPTION>
<S> <C>
Nations Master Investment Trust, Series I - Investment Grade Bond Portfolio / Master Investment
Trust, Series I - Investment Grade Bond Portfolio
Pro Forma Combining Statement of Operations (unaudited)
September 30,1998
Nations Pacific Horizons
Investment Grade Investment Grade Adjustments to Pro Pro Forma
Bond Portfolio Bond Portfolio Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
INVESTMENT INCOME:
<PAGE>
Investment Income:
Interest $0 $8,017 $0 $8,017
Dividends - - - -
- 8,017 - 8,017
EXPENSES:
Investment Advisory - 388 156(a) 544
Administration - 68 68
Transfer Agent - - -
Custodian - 18 (8) 10
Legal and Audit Fees - 25 (5) 20
Registration & Filing - - -
Trustees' Fees - 16 (5) 11
Interest Expense - - -
Other expenses - 122 (60) 62
Subtotal - 637 78 715
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor - (196) 196 -
Total Expenses - 441 274 715
NET INVESTMENT INCOME - 7,576 (274) 7,302
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investments - 1,634 - 1,634
Net change in unrealized appreciation/
(depreciation) of investments - 2,790 - 2,790
Net realized and unrealized gain/(loss) on investments - 4,424 - 4,424
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $0 $12,000 ($274) $11,726
<PAGE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
</TABLE>
See Notes to Pro Forma Financial Statements
Nations Investment Grade Bond Master Portfolio
Pacific Horizon Investment Grade Bond Master Portfolio
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of September 30, 1998 the Trust offered five separate portfolios.
The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of September 30, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of October 1,1997. These statements have been derived from books and
records utilized in calculating daily net asset value of each fund at September
30, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Investment Grade Bond Master Portfolio
in exchange for shares of Nations Investment Grade Bond Master Portfolio. Under
generally accepted accounting principles, the historical cost of investment
securities will be carried forward under the new name of Nations Intermediate
Bond Master Portfolio. The pro forma statements do not reflect the expenses of
either fund in carrying out its obligations under the proposed Agreement and
Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Intermediate Bond Master Portfolio at the time of
the Reorganization at the combined level of average net assets for the twelve
month period ended September 30, 1998.
<PAGE>
Nations Municipal Reserves / Pacific Horizons Tax Exempt Fund
Pro Forma Combining Schedule of Investments (unaudited)
October 31,1998
<TABLE>
<CAPTION>
<S> <C>
Nations Nations Pacifc
Municipal Pacific Horizon Municipal Horizon Tax Pro Forma
Reserves Tax Exempt Reserves Exempt Market Portfolio
Par Par Pro Forma Par Security Description Market Value Value Value
(in 000's) (in 000's) (in 000's)
Investment Companies - 0.2%
1,650,000 0 1,650,000 AIM TAX EXEMPT 1,650 0 1,650
575,000 0 575,000 FEDERATED TAX EXEMPT MONEY MAR 575 0 575
------------------------------------------
2,225 0 2,225
------------------------------------------
Municipal Bonds And Notes - Alabama -
1.19%
6,100,000 0 6,100,000 AL HFA SER A FRN 3.1% 03/01/201 5 6,100 0 6,100
ARAB ALA INDL DEV BRD FRN 3.35%
680,000 0 680,000 6/01/02 680 0 680
1,600,000 0 1,600,000 FOLEY AL IDB FRN 3.25% 12/01/00 1,600 0 1,600
NORTH ALA ENVI IMPT AUTH FRN 3.65%
1,000,000 0 1,000,000 12/01/00 1,000 0 1,000
PHENIX CITY ALA IND DEV FRN 3.75%
2,470,000 0 2,470,000 6/01/28 2,470 0 2,470
PHENIX CNTY AL INDL DEV BOARD 3.70%
1,350,000 0 1,350,000 12/01/15 1,350 0 1,350
------------------------------------------
13,200 0 13,200
------------------------------------------
Municipal Bonds and Notes -
Alaska - 0.9% ALASKA ST HSG
FIN CORP 12/01/19
0 9,995,000 9,995,000 *144A* 0 9,995 9,995
------------------------------------------
0 9,995 9,995
------------------------------------------
Municipal Bonds and Notes -
Arizona - 1.49%
0 2,200,000 2,200,000 APACHE CNTY ARIZ INDL DEV AUTH INDL 0 2,200 2,200
DEV REV
7,700,000 1,000,000 8,700,000 APACHE CNTY AZ IDA INDL DEV RE 3.15% 7,700 1,000 8,700
12/15/18
3,250,000 0 3,250,000 ARIZONA EDL LN MARKETING CORP 6.55% 3,279 0 3,279
3/01/99
1,300,000 0 1,300,000 MARICOPA CNTY ARIZ PLLTN CTL 3.7% 1,300 0 1,300
5/01/29
1,000,000 0 1,000,000 PINAL CNTY AZ IDA PCR FRN 3.1% 1,000 0 1,000
12/01/11 ------------------------------------------
13,279 3,200 16,479
------------------------------------------
<PAGE>
Municipal Bonds and Notes -
Arkansas - 0.31%
0 3,400,000 3,400,000 ARKANSAS ST DEVL FIN AUTH 3.70% 0 3,400 3,400
07/01/30 ------------------------------------------
0 3,400 3,400
------------------------------------------
Municipal Bonds And Notes -
California - 1.98%
2,500,000 0 2,500,000 CA HIGH ED LOAN 3.65% 4/01/00 2,500 0 2,500
400,000 0 400,000 LOS ANGELES CA AIRPORT 3.65% 12/01/25 400 0 400
0 1,700,000 1,700,000 ONTARIO CALIF INDL DEV AUTH 4/1/15 0 1,700 1,700
0 14,700,000 14,700,000 ORANGE COUNTY IRVINE COAST ASSESMENT 0 14,700 14,700
VRN 9/2/18
1,500,000 0 1,500,000 REGIONALS ARPTS IMPT CA FRN 3.75% 1,500 0 1,500
12/01/25
1,200,000 0 1,200,000 SAN DIEGO CA IDB FRN 2.9% 10/01/07 1,200 0 1,200
------------------------------------------
5,600 16,400 22,000
------------------------------------------
Municipal Bonds And Notes -
Colorado - 2.04%
1,485,000 0 1,485,000 CO HLTH FACS AUTH REV FRN 3.15% 1,485 0 1,485
12/01/04
3,070,000 0 3,070,000 COLORADO POST2ND EDL FACS AUTH 3.15% 3,070 0 3,070
6/01/11
3,600,000 0 3,600,000 COLORADO STDT OBLG AUTH VRN 3.05% 3,600 0 3,600
8/01/00
2,000,000 0 2,000,000 COLORADO STUDENT OBLIG BD FRN 3.15% 2,000 0 2,000
7/01/20
4,985,000 0 4,985,000 DENVER COLO CITY CNYT MULTI 3.35% 4,985 0 4,985
10/15/08
1,035,000 0 1,035,000 LARIMAR CNTY CO INDL DEV REV F 3.15% 1,035 0 1,035
6/01/10
3,000,000 0 3,000,000 MOFFAT CNTY CO POLLUTN CTL FRN 3.2% 3,000 0 3,000
7/01/10
3,500,000 0 3,500,000 PITKIN CNTY CO IDR SER A 3.7% 4/01/16 3,500 0 3,500
------------------------------------------
22,675 0 22,675
------------------------------------------
Municipal Bonds and Notes - Dc - 3.89%
0 4,700,000 4,700,000 DISTRICT COLUMBIA 0 4,700 4,700
0 13,300,000 13,300,000 DISTRICT COLUMBIA VRN 10/1/07 0 13,300 13,300
0 18,800,000 18,800,000 DISTRICT COLUMBIA VRN 10/1/07 0 18,800 18,800
0 4,100,000 4,100,000 DISTRICT COLUMBIA VRN 10/1/07 0 4,100 4,100
0 2,200,000 2,200,000 DISTRICT OF COLUMBIA VAR-REF-A-4 0 2,200 2,200
------------------------------------------
0 43,100 43,100
------------------------------------------
<PAGE>
Municipal Bonds And Notes -
Florida - 7.40%
2,775,000 0 2,775,000 BREVARD CNTY FLA HSG FIN AUTH 3.2% 2,775 0 2,775
12/01/10
0 10,395,000 10,395,000 FLORIDA BRD OF EDUCATION 3.65% 0 10,395 10,395
06/01/23 *144A*
1,700,000 0 1,700,000 FLORIDA HSG FIN AGY MULTI FAM 3.25% 1,700 0 1,700
6/01/07
1,845,000 0 1,845,000 FORT WALTON BEACH FLA INDL DEV 3.4% 1,845 0 1,845
10/01/11
7,000,000 0 7,000,000 INDIAN RIVER CNTY FL HOSP FRN 3.2% 7,000 0 7,000
10/01/15
0 5,000,000 5,000,000 JACKSONVILLE, FL PCR (FL PWR & LGHT) 0 5,000 5,000
3.30% 11/9/98
800,000 0 800,000 ORANGE COUNTY FL HFA FRN 3.1% 3/01/18 800 0 800
5,500,000 0 5,500,000 PALM BEACH CO FL 3.05% 5/01/25 5,500 0 5,500
0 5,300,000 5,300,000 PINELLAS COUNTY, FL HOUSING VRN 0 5,300 5,300
06/15/25
0 2,500,000 2,500,000 SARASOTA CO PUBLIC HOSP 93A 3.65% 0 2,500 2,500
12/10/98
SARASOTA CO, FL PUB HSP DIST
0 4,000,000 4,000,000 (SARASOTA HSP PRJ) 0 4,000 4,000
SARASOTA CO, FL PUBLIC HOSP DIST
0 10,000,000 10,000,000 SERIES 91 0 10,000 10,000
SARASOTA CO,FL PUB HSP DIST(SARASOTA
0 5,000,000 5,000,000 HSP PRJ) 0 5,000 5,000
SUNSHINE ST GON'T FIN COMMISSION REV
0 10,000,000 10,000,000 BNDS SER86 0 10,000 10,000
SUNSHINE ST GOV'T FIN COMMISSION REV
0 10,000,000 10,000,000 BNDS SER 1986 0 10,000 10,000
------------------------------------------
19,620 62,195 81,815
------------------------------------------
Municipal Bonds And Notes -
Georgia - 4.86%
3,000,000 0 3,000,000 BURKE CNTY GA DEV AUTH POLLUTN 3.7% 3,000 0 3,000
4/01/25
2,200,000 0 2,200,000 BURKE CNTY GA DEV AUTH POLLUTN 3.7% 2,200 0 2,200
9/01/25
1,140,000 0 1,140,000 CLAYTON CNTY GA HSG AUTH FRN 3.15% 1,140 0 1,140
1/01/21
3,945,000 0 3,945,000 CLAYTON CNTY GA MULTIFAMILY FR 3.15% 3,945 0 3,945
1/01/21
2,000,000 0 2,000,000 COBB CNTY GA DEV AUTH REV FRN 3.15% 2,000 0 2,000
8/01/08
1,900,000 0 1,900,000 COBB CNTY GA RES CARE FACS 3.15% 1,900 0 1,900
8/01/15
3,585,000 0 3,585,000 COLUMBIA CNTY GA RES ELDERLY A 3.15% 3,585 0 3,585
1/01/21
1,400,000 0 1,400,000 DE KALB CNTY GA HSG AUTH MULTI 3.30% 1,400 0 1,400
12/01/20
3,500,000 0 3,500,000 FULTON CNTY GA 3.15% 12/01/10 3,500 0 3,500
<PAGE>
3,500,000 0 3,500,000 FULTON CNTY GA 3.15% 7/01/14 3,500 0 3,500
FULTON CNTY GA DEV AUTH REV 3.15%
3,000,000 0 3,000,000 4/01/17 3,000 0 3,000
0 15,000,000 15,000,000 GAINESVILLE GA REDEVL VRN 01/01/23 0 15,000 15,000
1,150,000 0 1,150,000 MEAG S'94D # 1 FRN 3.25% 1/01/22 1,150 0 1,150
0 1,500,000 1,500,000 MUNICIPAL ELEC AUTH GA VRN 06/01/20 0 1,500 1,500
7,000,000 0 7,000,000 SMYRNA GA SG AUTH FRN 3.15% 6/01/25 7,000 0 7,000
------------------------------------------
37,320 16,500 53,820
------------------------------------------
Municipal Bonds and Notes - Hawaii -
1.35%
0 14,990,000 14,990,000 HAWAII ST 04/01/09 0 14,990 14,990
------------------------------------------
0 14,990 14,990
------------------------------------------
Municipal Bonds and Notes - Idaho -
1.78%
0 2,500,000 2,500,000 IDAHO HEALTH FACILITY 5/1/22 0 2,500 2,500
IDAHO ST TAX ANTIC NOTES 4.50%
0 15,000,000 15,000,000 06/30/99 0 15,086 15,086
POWER CNTY IDAHO POLLUTN CTL R 3.75%
2,200,000 0 2,200,000 12/01/10 2,200 0 2,200
------------------------------------------
2,200 17,586 19,786
------------------------------------------
Municipal Bonds And Notes -
Illinois - 9.44%
2,000,000 0 2,000,000 CHICAGO IL O'HARE INTL ARPT FR 3.70% 2,000 0 2,000
12/01/17
0 1,135,000 1,135,000 CHICAGO ILL INDL DEV REV 12/01/16 0 1,135 1,135
0 8,000,000 8,000,000 CHICAGO ILL PK DIST 4.30% 09/17/99 0 8,050.60 8,050.60
0 12,500,000 12,500,000 CHICAGO ILL TENDER NTS- SER C 10/31/99 0 12,500 12,500
0 6,800,000 6,800,000 CHICAGO ILL VAR-EQUIP NTS 3.8% 0 6,800 6,800
01/01/06
1,050,000 0 1,050,000 CHICAGO O'HARE AIRPORT FRN 3.7% 1,050 0 1,050
12/01/17
0 4,450,000 4,450,000 ELMHURST ILLINOIS FRN HOSP REV: JOINT 0 4,450 4,450
COMM HLTH
1,700,000 0 1,700,000 IL DEV FIN AUTH INDL FRN 3.35% 5/01/15 1,700 0 1,700
2,000,000 0 2,000,000 IL DEV FIN AUTH POLLUTN CTL 3.05% 2,000 0 2,000
12/01/28
2,000,000 0 2,000,000 IL DEV FIN AUTH REV 3.25% 9/01/18 2,000 0 2,000
870,000 0 870,000 IL DFA IDR FRN 3.35% 6/01/12 870 0 870
1,400,000 0 1,400,000 IL EFA REVS FRN 3.15% 12/01/25 1,400 0 1,400
3,600,000 0 3,600,000 ILL HLTH FACS FRN 3.7% 8/15/25 3,600 0 3,600
<PAGE>
2,000,000 0 2,000,000 ILLINOIS DEV FIN AUTH FRN 3.05% 2,000 0 2,000
10/15/14
2,300,000 0 2,300,000 ILLINOIS DEV FIN AUTH INDL FRN 3.35% 2,300 0 2,300
5/01/09
0 6,400,000 6,400,000 ILLINOIS EDL FACS AUTH REVS 3.60% 0 6,400 6,400
12/01/25
0 1,755,000 1,755,000 ILLINOIS HEALTH FACILITIES AUTHORITY 0 1,755 1,755
11/1/20
0 5,800,000 5,800,000 ILLINOIS HEALTH FACILITY AUTH 0 5,800 5,800
RESURRECTION 5/1/11
0 26,200,000 26,200,000 ILLINOIS HEALTH FACS AUTH REV 01/01/28 0 26,200 26,200
0 9,000,000 9,000,000 ILLINOIS HEALTH FACS AUTH REV ADJ SER 0 9,000 9,000
A V/R
1,975,000 0 1,975,000 LOMBARD IL (CLOVER CREEKAPTS) 4% 1,975 0 1,975
12/15/06
LOMBARD VILLAGE IL IPR FRN 3.45%
1,500,000 0 1,500,000 10/01/13 1,500 0 1,500
------------------------------------------
22,395 82,090 104,485
------------------------------------------
Municipal Bonds And Notes -
Indiana - 1.69%
760,000 0 760,000 AUBURN IND ECON DEV REV FRN DU 3.3% 760 0 760
9/01/00
0 2,895,000 2,895,000 INDIANA HEALTH FAC FING AUTH 4.25% 0 2,896 2,896
12/01/98
2,085,000 0 2,085,000 INDIANA HLTH FINANCE AUTH 3.25% 2,085 0 2,085
12/01/16
2,700,000 0 2,700,000 INDIANAPOLIS IN ECON DEV (EDGC 3.1% 2,700 0 2,700
12/01/08
0 8,000,000 8,000,000 JASPER CO, IN PCR (NORTHERN IN PUB 0 8,000 8,000
SVC) SER A
770,000 0 770,000 KENDALLVILLE IN MC CRAY FRN 3.25% 770 0 770
1/01/04
1,200,000 0 1,200,000 PRINCETON IND POLLTN CTL REV 3.75% 1,200 0 1,200
3/01/19
265,000 0 265,000 ROCKPORT IND POLLUTION CTL REV 3.75% 265 0 265
7/01/25
------------------------------------------
7,780 10,896 18,676
------------------------------------------
Municipal Bonds and Notes - Iowa -
0.42%
0 4,700,000 4,700,000 IOWA HIGHER ED LN AUTH REV 12/1/15 FRN 0 4,700 4,700
------------------------------------------
0 4,700 4,700
------------------------------------------
Municipal Bonds And Notes -
Kentucky - 2.30%
1,440,000 0 1,440,000 JEFFERSON CNTY KY BLDGS REV NO 3.15% 1,440 0 1,440
6/01/11
1,160,000 0 1,160,000 JEFFERSON CNTY KY HOSP FRN 3.55% 1,160 0 1,160
12/01/14
1,700,000 0 1,700,000 JEFFERSONTOWN KY INDL BLDG REV 3.3% 1,700 0 1,700
4/01/20
0 6,000,000 6,000,000 KENTUCKY ASSET/LIABILITY COMMN GEN 4% 0 6,025 6,025
06/25/99
<PAGE>
0 15,000,000 15,000,000 KENTUCKY ASSET/LIABILTY COMM TRANS 0 15,087 15,087
4.50% 06/25/99 ------------------------------------------
4,300 21,112 25,412
------------------------------------------
Municipal Bonds And Notes -
Louisiana - 7.33%
8,000,000 5,500,000 13,500,000 ASCENSION PARISH LA PCR FRN DU 3.15% 8,000 5,500 13,500
12/01/09
7,400,000 0 7,400,000 ASCENSION PARISH LA PLLTN REV 3.7% 7,400 0 7,400
9/01/23
1,300,000 0 1,300,000 LA ST OFFSHORE TERM AUTH DEEPW 3.7% 1,300 0 1,300
9/01/08
2,300,000 0 2,300,000 LAKE CHARLES LA HBR & TERM FRN 3.25% 2,300 0 2,300
8/01/07
0 11,600,000 11,600,000 LOUISIANA GENERAL OBLIGATION T/E 0 11,600 11,600
94-13-02 *144A*
0 9,900,000 9,900,000 LOUISIANA PUB FACS AUTH HOSP VRN 0 9,900 9,900
09/01/27
0 5,400,000 5,400,000 LOUISIANA PUBLIC FACS AUTH VRN 0 5,400 5,400
09/01/25
0 10,500,000 10,500,000 PLAQUEMINES LA PORT HBR & TERM DIST 0 10,500 10,500
PORT FACS REV
0 9,500,000 9,500,000 PLAQUEMINES LA PORT HBR & TERM DIST 0 9,504 9,504
VRN 9/1/08
4,500,000 0 4,500,000 SOUTH LA PORT COMM MARINE FRN 3.0% 4,500 0 4,500
7/01/21
0 5,050,000 5,050,000 WEST BATON ROUGE, LA IDA (DOW 0 5,050 5,050
CHEMICAL) ------------------------------------------
23,500 57,454 80,954
------------------------------------------
Municipal Bonds and Notes -
Maine - 0.18%
0 1,985,000 1,985,000 MAINE HEALTH & HIGHER EDL FACS AUTH 0 1,985 1,985
REV 12/01/25 ------------------------------------------
0 1,985 1,985
------------------------------------------
Municipal Bonds And Notes -
Maryland - 1.37%
15,000,000 0 15,000,000 BALTIMORE MD INDL DEV AUTH 3.10% 15,000 0 15,000
8/01/16
170,000 0 170,000 MONTGOMERY CNTY MD IDR FRN 3.65% 170 0 170
4/01/14 ------------------------------------------
15,170 0 15,170
------------------------------------------
Municipal Bonds and Notes -
Massachusetts - 3.17%
0 35,000,000 35,000,000 MASSACHUETTS ST VAR-REF-SER B 9/01/16 0 35,000 35,000
------------------------------------------
0 35,000 35,000
------------------------------------------
Municipal Bonds And Notes -
Michigan - 0.84%
<PAGE>
1,000,000 0 1,000,000 DELTA CO MI 1,000 0 1,000
EDL MUNI BOND 3.7%
12/01/13
0 6,500,000 6,500,000 MICHIGAN MUN BD AUTH REV 4.25% 0 6,534 6,534
08/27/99
1,800,000 0 1,800,000 UNIVERSITY OF MICH MED SVC PLA 3.75% 1,800 0 1,800
12/01/27 ------------------------------------------
2,800 6,534 9,334
------------------------------------------
Municipal Bonds And Notes -
Minnesota - 0.22%
2,410,000 0 2,410,000 MINNEAPOLIS MINN AMT REV FRN 2,410 0 2,410
3.15% 11/01/16 ------------------------------------------
2,410 0 2,410
------------------------------------------
Municipal Bonds And Notes -
Mississippi - 0.23%
2,500,000 0 2,500,000 FLOWOOD MISS INDL DEV REV FRN 3.3% 2,500 0 2,500
11/01/01 ------------------------------------------
2,500 0 2,500
------------------------------------------
Municipal Bonds and Notes -
Missouri - 1.43%
0 5,500,000 5,500,000 MISSOURI HIGHER ED LN AUTH STUDENT 0 5,500 5,500
VAR 06/01/20
1,800,000 0 1,800,000 MISSOURI HLTH & ED WA U SER FR 3.15% 1,800 0 1,800
9/01/10
0 1,800,000 1,800,000 MISSOURI ST HEALTH & EDL FACS AUTH 0 1,800 1,800
REV 05/15/38
6,700,000 0 6,700,000 MO ST HLTH & EDL FACS FRN 3.1% 6/01/14 6,700 0 6,700
------------------------------------------
8,500 7,300 15,800
------------------------------------------
Municipal Bonds And Notes -
Nebraska - 0.2%
2,250,000 0 2,250,000 DOUGLAS CNTY NEB SCH DIST 4.25% 2,251 0 2,251
1/15/99 ------------------------------------------
2,251 0 2,251
------------------------------------------
Municipal Bonds And Notes -
Nevada - 0.32%
300,000 0 300,000 GRAND FORKS ND HLTH CARE FACS 3.65% 300 0 300
12/01/25
3,250,000 0 3,250,000 GRAND FORKS ND HOSP FACS REV 3.65% 3,250 0 3,250
12/01/16 ------------------------------------------
3,550 0 3,550
------------------------------------------
Municipal Bonds And Notes -
New Jersey - 0.45%
5,000,000 0 5,000,000 NEW JERSEY ST HWY AUTH GARDEN 5,000 0 5,000
3.36% ------------------------------------------
6/01/17 5,000 0 5,000
------------------------------------------
<PAGE>
Municipal Bonds And Notes -
New Mexico - 0.53%
5,900,000 0 5,900,000 DONA ANA CNTY NM FRN 3.1% 11/01/13 5,900 0 5,900
------------------------------------------
5,900 0 5,900
------------------------------------------
Municipal Bonds and Notes -
New York - 1.58%
0 11,500,000 11,500,000 NEW YORK LOCAL GOVERNMENT EAGLES 0 11,500 11,500
04/01/17 *144A*
0 6,000,000 6,000,000 NEW YORK MTA 1993C VRDCS 0 6,000 6,000
10/31/07 *144A* ------------------------------------------
0 17,500 17,500
------------------------------------------
Municipal Bonds and Notes -
North Carolina - 3.64%
0 1,300,000 1,300,000 NORTH CAROLINA MED CARE 0 1,300 1,300
COMM HOSP REV
VRN 09/01/02
0 10,000,000 10,000,000 NORTH CAROLINA MEDICAL CARE VRN 0 10,000 10,000
11/15/09
0 6,500,000 6,500,000 NORTH CAROLINA MUNI POWER AGENCY 0 6,500 6,500
(CATAWBA PROJ)
0 6,200,000 6,200,000 NORTH CAROLINA MUNI POWER AGENCY 0 6,200 6,200
(CATAWBA PROJ)#1
0 10,000,000 10,000,000 NORTH CAROLINA MUNICIPAL POWER AGENCY 0 10,000 10,000
CATAWABA
0 6,200,000 6,200,000 WAKE COUNTY N C INDL FACS & PCR VRN 0 6,200 6,200
09/01/15 ------------------------------------------
0 40,200 40,200
------------------------------------------
Municipal Bonds And Notes -
Ohio - 3.30%
960,000 0 960,000 CENTERVILLE OH HLTH FRN 3.15% 11/01/13 960 0 960
5,000,000 0 5,000,000 CLINTON CNTY OH ARPT 3.15% 6/01/11 5,000 0 5,000
895,000 0 895,000 CUYHOGA CNTY OH IDR FRN 3.25% 5/04/11 895 0 895
1,000,000 0 1,000,000 GREENE CNTY OH IDR FRN 3.4% 9/01/16 1,000 0 1,000
2,060,000 0 2,060,000 LUCAS CNTY OHIO INDL DEV REV F 3.3% 2,060 0 2,060
7/01/09
10,000,000 0 10,000,000 LUCAS CO OH TOLEDO ZOO 3.25% 10/01/05 10,000 0 10,000
2,279,000 0 2,279,000 OHIO FINANCING AGY HSG FRN 3.5% 2,279 0 2,279
12/01/15
1,300,000 0 1,300,000 OHIO ST AIR QUALITY DEV AUTH F 3.7% 1,300 0 1,300
12/01/15
2,300,000 0 2,300,000 OHIO ST AIR QUALITY DEV FRN AU 3.7% 2,300 0 2,300
12/01/15
1,210,000 0 1,210,000 OHIO ST POLLUTION CTL REV 3.7% 5/01/22 1,210 0 1,210
<PAGE>
0 2,000,000 2,000,000 OHIO STATE WTR DEV AUTH SOLID WASTE 0 2,000 2,000
DISP REV
5,000,000 0 5,000,000 OTTAWA CO OHIO BANS 4% 8/06/99 5,011 0 5,011
1,350,000 0 1,350,000 SUMMIT CO OH IDR FRN 3.25% 2/01/07 1,350 0 1,350
1,065,000 0 1,065,000 TOLEDO-LUCAS CNTY OHIO PORT FR 3.35% 1,065 0 1,065
12/01/21 ------------------------------------------
34,430 2,000 36,430
------------------------------------------
Municipal Bonds and Notes -
Oklahoma - 1.71%
0 18,925,000 18,925,000 OKLAHOMA ST 0 18,925 18,925
WTR RES BRD ST LN 3.50% ------------------------------------------
09/01/24 0 18,925 18,925
------------------------------------------
Municipal Bonds and Notes -
Oregon - 1.87%
0 10,000,000 10,000,000 MEDFORD OREGON HOSP FACS AUTH VRN 0 10,000 10,000
05/15/27
4,595,000 0 4,595,000 OREGON ST HSG & CMNTY SVCS DEP 3.85% 4,595 0 4,595
12/03/98
4,100,000 0 4,100,000 PORT OF PORTLAND OR HORIZON 3.75% 4,100 0 4,100
6/15/27
2,000,000 0 2,000,000 PORT PORTLAND (SCHNITZER STEEL 3.2% 2,000 0 2,000
11/01/07 ------------------------------------------
10,695 10,000 20,695
------------------------------------------
Municipal Bonds and Notes -
Pennsylvania - 10.63%
0 8,225,000 8,225,000 ALLEGHANY CO. PA INDUSTRIAL REVENUE 0 8,225 8,225
9/1/11
0 3,700,000 3,700,000 ALLEGHENY CNTY PA INDL DEV 09/01/11 0 3,700 3,700
3,900,000 0 3,900,000 DELAWARE CNTY INDL DEV POLLUTN 3.7% 3,900 0 3,900
12/01/09
1,000,000 0 1,000,000 DELAWARE CNTY INDL DEV POLLUTN 3.7% 1,000 0 1,000
10/01/19
3,100,000 0 3,100,000 ELK CNTY PA INDL DEV AUTH REV 3.3% 3,100 0 3,100
0 4,600,000 4,600,000 3/01/09 0 4,600 4,600
EMMAUS PA GEN AUTH REV 03/01/24
2,100,000 0 2,100,000 PHILADELPHIA PA AUTH DEV FRN 3.7% 2,100 0 2,100
7/01/25
0 13,250,000 13,250,000 PHILADELPHIA PA TRANS 4.25% 06/30/99 0 13,302 13,302
0 20,600,000 20,600,000 QUAKERTOWN PA GEN AUTH REV 7/1/26 0 20,600 20,600
0 46,600,000 46,600,000 QUAKERTOWN PA HOSP AUTH VRN 07/01/05 0 46,600 46,600
0 7,300,000 7,300,000 SCHUYLKILL CNTY PA IDA VRN 12/01/22 0 7,300 7,300
1,240,000 0 1,240,000 SCHUYLKILL CNTY PA INDL DEV FR 3.15% 1,240 0 1,240
2/01/12
1,760,000 0 1,760,000 SCHUYLKILL CNTY PA INDL DEV FR 3.3% 1,760 0 1,760
<PAGE>
2/01/12 ------------------------------------------
13,100 104,327 117,427
------------------------------------------
Municipal Bonds And Notes -
South Carolina - 1.07%
4,000,000 0 4,000,000 ANDERSON CNTY SC INDL REV 4,000 0 4,000
3.25% 11/01/12
1,000,000 0 1,000,000 CHEROKEE CNTY SC FRN 3.5% 11/01/04 1,000 0 1,000
3,100,000 0 3,100,000 SC JOBS EDA HFA FRN 3.15% 10/01/19 3,100 0 3,100
1,300,000 0 1,300,000 SOUTH CAROLINA JOB DEV AUTH FR 3.25% 1,300 0 1,300
12/01/01
1,800,000 0 1,800,000 SOUTH CAROLINA JOBS FRN 3.15% 6/01/18 1,800 0 1,800
700,000 0 700,000 YORK CNTY SC POLLTN CTL REV 3.2% 700 0 700
9/15/14 ------------------------------------------
11,900 0 11,900
------------------------------------------
730,000 0 730,000 Municipal Bonds And Notes - 730 0 730
South Dakota - 0.07% ------------------------------------------
SOUTH DAKOTA ECON DEV FIN AUTH 730 0 730
3.5% 8/01/08 ------------------------------------------
Municipal Bonds and Notes -
Tennessee - 3.18%
0 8,500,000 8,500,000 BRISTOL,TN HEALTH & EDUCATION FAC 95A 0 8,500 8,500
3/1/14*144A*
2,000,000 0 2,000,000 DICKSON COUNTY TN 3.15% 11/01/12 2,000 0 2,000
6,685,000 0 6,685,000 FRANKLIN CNTY TN HLTH & EDL 3.1% 6,685 0 6,685
9/01/18
1,265,000 0 1,265,000 JEFFERSON CTY TN IDB FRN 3.2% 11/01/24 1,265 0 1,265
0 9,350,000 9,350,000 MET GOVT NASHVILLE VRN 11/15/26 0 9,350 9,350
5,600,000 0 5,600,000 METRO NASHVILLE ARPT AUTH FACS 3.65% 5,600 0 5,600
10/01/12
1,700,000 0 1,700,000 SPRINGFIELD TN INDL DEV BRD FR 3.35% 1,700 0 1,700
11/15/09 ------------------------------------------
17,250 17,850 35,100
------------------------------------------
Municipal Bonds and Notes -
Texas - 8.80%
0 1,500,000 1,500,000 ANGELINA NECHES RIVER AUTH TX 5/1/14 0 1,500 1,500
0 9,250,000 9,250,000 BRAZOS RIVER HARBOR NAVIGATION DIST, 0 9,250 9,250
TX
0 6,700,000 6,700,000 GRAND PRAIRIE TEX HSG VRN 6/1/10 0 6,700 6,700
0 2,300,000 2,300,000 GRAPEVINE TEX INDL DEV CORP ARPT REV 0 2,300 2,300
<PAGE>
100,000 0 100,000 GRAPEVINE TEX INDL DEV CORP FR 3.65% 100 0 100
12/01/24
400,000 0 400,000 GRAPEVINE TEX INDL FRN 3.65% 12/01/24 400 0 400
1,100,000 0 1,100,000 GRAPEVINE TEX INDL FRN 3.65% 12/01/24 1,100 0 1,100
3,200,000 200,000 3,400,000 GUADALUPE BLANCO RIV AUTH TX F 3.75% 3,200 200 3,400
11/01/15
0 900,000 900,000 GULF COAST WASTE DISP AUTH TEX POLLU. 0 900 900
VRN 10/1/17
0 4,000,000 4,000,000 HARRIS CNTY TEXAS PCR VRN 04/01/27 0 4,000 4,000
4,000,000 0 4,000,000 HARRIS CNTY TX FRN 3.7% 12/01/26 4,000 0 4,000
2,900,000 0 2,900,000 HARRIS CNTY TX HEALTH FACS FRN 3.7% 2,900 0 2,900
12/01/25
900,000 0 900,000 LONE STAR TEX ARPT IMPT AUTH 3.65% 900 0 900
12/01/14
300,000 0 300,000 LONE STAR TEX ARPT IMPT AUTH 3.65% 300 0 300
12/01/14
1,100,000 0 1,100,000 LONE STAR TEX ARPT IMPT AUTH 3.65% 1,100 0 1,100
12/01/14
600,000 0 600,000 LONE STAR TX ARPT IMPT AUTH FR 3.65% 600 0 600
12/01/14
700,000 0 700,000 LONE STAR TX ARPT IMPT AUTH FR 3.65% 700 0 700
12/01/14
930,000 0 930,000 LONE STAR TX ARPT IMPT AUTH FR 3.65% 930 0 930
12/01/14
4,300,000 0 4,300,000 MC ALLEN TX HEALTH FRN 3.3% 12/01/24 4,303 0 4,303
0 5,000,000 5,000,000 N CENTRAL TX HLTH FAC (METH HOSP) SER 0 5,000 5,000
91-A
1,200,000 0 1,200,000 NUECES CNTY TX HLTH FACS DEV C 3.2% 1,200 0 1,200
7/01/15
0 16,600,000 16,600,000 NUECES RIVER AUTH TEXAS VRN 03/01/27 0 16,600 16,600
*144A*
4,000,000 0 4,000,000 SABINE RIVER AUTH TX POLLUTN F 3.75% 4,000 0 4,000
3/01/26
5,000,000 0 5,000,000 TEXAS MUN GAS CORP FRN 3.05% 1/15/23 5,000 0 5,000
0 15,000,000 15,000,000 TEXAS ST 4.50% 08/31/99 0 15,146 15,146
1,000,000 0 1,000,000 TRINITY RIVER TX IDA FRN 3.225% 1,000 0 1,000
11/01/14
3,900,000 0 3,900,000 WEST SIDE CALHOUN CNTY FRN 3.7% 3,900 0 3,900
12/01/15 ------------------------------------------
35,633 61,596 97,229
------------------------------------------
Municipal Bonds and Notes -
Utah - 1.82%
0 6,000,000 6,000,000 EMERY CNTY UTAH PCR DAILY VRN 11/1/24 0 6,000 6,000
0 9,900,000 9,900,000 INTERMOUNTAIN PWR AGY UT VRN 0 9,900 9,900
07/01/03 *144A*
0 4,200,000 4,200,000 SALT LAKE CNTY UTAH POLLUTN CTL VRN 0 4,200 4,200
<PAGE>
2/1/08 ------------------------------------------
0 20,100 20,100
------------------------------------------
Municipal Bonds and Notes -
Vermont - 0.98%
0 5,500,000 5,500,000 VERMONT ED & HLTH BLDG-MIDDLEBURY COL 0 5,500 5,500
3.75 5/1/28
0 3,575,000 3,575,000 VERMONT EDL & HLTH BLDGS FING AGY REV 0 3,575 3,575
11/01/27
0 1,800,000 1,800,000 VERMONT EDL & HLTH BLDGS FING AGY REV 0 1,800 1,800
12/01/25 ------------------------------------------
0 10,875 10,875
------------------------------------------
Municipal Bonds And Notes -
Virginia - 1.64%
5,800,000 0 5,800,000 ALBEMARLE CNTY VA INDL DEV AUT 3.1% 5,800 0 5,800
2/01/26
7,125,000 0 7,125,000 MADISON CNTY VA INDL DEV 3.2% 6/01/13 7,125 0 7,125
3,595,000 0 3,595,000 RICHMOND VA EQUIP NOTES 4.25% 5/15/99 3,603 0 3,603
1,575,000 0 1,575,000 WINCHESTER VA INDL DEV AUTH FR 3.45% 1,575 0 1,575
8/01/07 ------------------------------------------
18,103 0 18,103
------------------------------------------
Municipal Bonds And Notes -
Washington - 1.17%
800,000 0 800,000 PORT SKAGIT CNTY WA IND DEV VA 800 0 800
3.4% 12/01/20
0 1,000,000 1,000,000 WASHINGTON ST HSG FIN COMMN 01/01/10 0 1,000 1,000
WASHINGTON ST PUB PWR SUPPLY SYS
0 9,195,000 9,195,000 NUCLEAR *144A* 0 9,195 9,195
0 2,000,000 2,000,000 WASHINGTON STATE HEALTH CARE FACS VRN 0 2,000 2,000
1/1/23 ------------------------------------------
800 12,195 12,995
------------------------------------------
Municipal Bonds And Notes -
West Virginia - 0.14%
1,600,000 0 1,600,000 OHIO CNTY WVA IDR FRN 3.85% 12/01/01 1,600 0 1,600
------------------------------------------
1,600 0 1,600
------------------------------------------
Municipal Bonds And Notes -
Wisconsin - 0.86%
3,000,000 0 3,000,000 MENASHA WIS JT SCH DIST 3.15% 9/30/99 3,001 0 3,001
940,000 0 940,000 MILWAUKEE WI IDR (MANDEL CO) F 3.5% 940 0 940
4/01/07
3,000,000 0 3,000,000 WATERTOWN WI UNIF SCH DIST 3.1% 3,001 0 3,001
10/28/99
0 2,500,000 2,500,000 WISCONSIN ST OPERATING NTS 4.50% 0 2,515 2,515
06/15/99 ------------------------------------------
6,942 2,515 9,457
------------------------------------------
<PAGE>
Municipal Bonds And Notes -
Wyoming - 0.28%
1,500,000 0 1,500,000 SUBLETTE CNTY WYO PLLTN CTL 3.8% 1,500 0 1,500
7/01/17
0 1,650,000 1,650,000 SUBLETTE CNTY WYO POLLUTION CTL REV 0 1,650 1,650
VRN 11/01/2014 ------------------------------------------
1,500 1,650 3,150
------------------------------------------
Total Investments- 100.43% (Cost 374,858 734,170 1,109,028
$374,858, $734,170, $1,109,028
respectively)
</TABLE>
Nations Municipal Reserves / Pacific Horizons Tax Exempt Fund
Pro Forma Combining Statement of Net Assets (unaudited)
October 31,1998
<TABLE>
<CAPTION>
<S> <C>
Nations Pacific
Municipal Horizon Tax Adjustments to Pro Pro Forma
Reserves Exempt Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
$ $ $ $
Total Investments 374,858 734,170 - 1,109,028
Other Assets and Liabilities:
Other assets and liabilities, net 512 (5,294) - (4,782)
Total Other Assets and Liabilities 512 (5,294) - (4,782)
Net Assets 375,370 728,876 - 1,104,246
Net Assets by Class:
$ $ $ $
Capital Class / Horizon (Primary) 117,664 338,926 - 456,590
Liquidity Class 66,738 - - 66,738
Adviser Class / Horizon Service 49,969 191,122 - 241,091
<PAGE>
Market Class 140,999 - - 140,999
Investor Class / Pacific Horizon - 144,281 - 144,281
Daily / Class S & Class X - 54,547 - 54,547
$ $ $ $
375,370 728,876 - 1,104,246
Shares Outstanding by Class:
Capital Class / Horizon (Primary) 117,665 339,076 - 456,741
Liquidity Class 66,738 - - 66,738
Adviser Class / Horizon Service 49,969 191,151 - 241,120
Market Class 141,000 - - 141,000
Investor Class / Pacific Horizon - 144,307 - 144,307
Daily / Class S & Class X - 54,547 - 54,547
375,372 729,081 - 1,104,453
Net Asset Value per Share by Class:
$ $
Capital Class / Horizon (Primary) 1.00 $ 1.00 $ - 1.00
$ $
Liquidity Class 1.00 $ - $ - 1.00
$ $
Adviser Class / Horizon Service 1.00 $ 1.00 $ - 1.00
$ $
Market Class 1.00 $ - $ - 1.00
$ $
Investor Class / Pacific Horizon - $ 1.00 $ - 1.00
$ $
Daily / Class S & Class X - $ 1.00 $ - 1.00
See Notes to Pro Forma Financial Statements
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Nations Municipal Reserves / Pacific Horizons Tax Exempt Fund
<PAGE>
Pro Forma Combining Statement of Operations (unaudited)
For the Twelve Month Period Ending October 31,1998
Nations Pacific
Municipal Horizon Tax Adjustments to Pro Pro Forma
Reserves Exempt Fund Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
INVESTMENT INCOME:
Interest $10,108 $25,946 $0 $36,054
Dividends 141 - - 141
Total Investment Income 10,249 25,946 - 36,195
EXPENSES:
Investment Advisory 855 724 (65)(a) 1,514
Administration 285 724 - (a) 1,009
Transfer Agent 40 23 51 (b) 114
Custodian 26 88 (34) (b) 80
Legal and Audit Fees 11 64 (43) (b) 32
Registration & Filing 116 64 - 180
Trustees' Fees 6 29 (20) (b) 15
Interest Expense 44 - - 44
Other expenses (12) 172 (73) (b) 87
Subtotal 1,371 1,888 (184) 3,075
Shareholder Servicing and Distribution Fees
Liquidity Class 625 - 625
<PAGE>
Adviser Class / Horizon Service 100 482 582
Market Class 542 - 542
Investor Class / Pacific Horizon - 448 42 (a) 480
Daily / Class S & Class X - 328 (131) (a) 197
Subtotal 1,267 1,258 89 2,436
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor (1,445) (147) 535(c) (1,057)
Total Expenses 1,193 2,999 262 4,454
NET INVESTMENT INCOME 9,056 22,947 (262) 31,741
NET REALIZED GAIN/(LOSS)
ON INVESTMENTS (1) (18) - (19)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $9,055 $22,929 ($262) $31,722
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Municipal Reserves
Pacific Horizon Tax-Exempt Money Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of October 31, 1998 the Trust offered five separate portfolios. The
unaudited Pro Forma Combining Statement of Net Assets assumes the exchange
described in the next paragraph occurred as of October 31, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of November 1,1998. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
October 31, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizon Tax-Exempt Money Fund and the in
exchange for shares of Nations Municipal Reserves Fund. Under generally accepted
accounting principles, the historical cost of investment securities will be
carried forward to the surviving entity and the results of operations of the
Pacific Horizon Tax-Exempt Money Fund for pre-combination periods will not be
restated. The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Municipal Reserves at the time of the
Reorganization at the combined level of average net assets for the twelve month
period ended October 31, 1998.
<PAGE>
Nations Treasury Reserves / Pacific Horizon Treasury Fund
Pro Forma Combining Schedule of Investments (unaudited)
October 31,1998
<TABLE>
<CAPTION>
<S> <C>
Nations Pacific
Treasury Horizon
Nations Treasury Pacific Horizon Reserves Treasury Pro Forma
Reserves Par Treasury Par Pro Forma Par Security Description Market Market Market
Value Value Value
(in 000's) (in 000's) (in 000's)
INVESTMENT COMPANIES - 1.26%
49,531,000 0 49,531,000 AIM TREASURY 49,531 49,531
22,050,000 0 22,050,000 DREYFUS TREASURY CASH MANAGEME 22,050 22,050
-------------------------------------
71,581 0 71,581
-------------------------------------
REPURCHASE AGREEMENTS - 80.39%
547,000,000 0 547,000,000 ABN-AMRO 5.4% 11/02/98 547,000 547,000
0 275,000,000 275,000,000 BARCLAYS CAPITAL INC.,5.38%,11/2/98 275,000 275,000
105,000,000 0 105,000,000 BEAR STEARNS CO 5.6% 11/02/98 105,000 105,000
0 400,000,000 400,000,000 CIBC OPPENHEIMER CORP., 5.38%,11/2/98 400,000 400,000
0 400,000,000 400,000,000 CREDIT SUISSE FIRST BOSTON CORP. 400,000 400,000
5.45%,11/2/98
277,113,000 0 277,113,000 CS FIRST BOSTON REVERSE REPO 11/02/98 277,113 277,113
90,000,000 0 90,000,000 DEUTSCHE BANK REPO 5.4% 11/02/98 90,000 90,000
50,000,000 0 50,000,000 DRESDNER KLEINWORT 4.9% 11/02/98 50,000 50,000
45,000,000 0 45,000,000 DRESDNER KLEINWORT 5.58% 11/02/98 45,000 45,000
105,000,000 0 105,000,000 FIRST UNION CAPITAL 5.42% 11/02/98 105,000 105,000
100,000,000 0 100,000,000 GOLD SACHS TERM REPO 5.21% 11/02/98 100,000 100,000
0 400,000,000 400,000,000 GOLDMAN SACHS & CO.,5.38%,11/2/98 400,000 400,000
105,000,000 0 105,000,000 HSBC SECURITIES, INC. 5.42%, 11/02/98 105,000 105,000
0 400,000,000 400,000,000 HSBC SECURITIES INC.,5.42%,11/2/98 400,000 400,000
0 126,439,000 126,439,000 J.P. MORGAN SECURITIES, INC., 5.00%, 11/2/98 126,439 126,439
<PAGE>
110,000,000 0 110,000,000 JP MORGAN SEC 4.83% 11/03/98 110,000 110,000
170,000,000 0 170,000,000 LEHMAN BROTHERS INC 5.5% 11/02/98 170,000 170,000
0 300,000,000 300,000,000 LEHMAN BROTHERS INC., 5.38%,11/2/98 300,000 300,000
0 300,000,000 300,000,000 MORGAN STANLEY & CO.INC., 5.38%, 11/2/98 300,000 300,000
105,000,000 0 105,000,000 MORGAN STANLEY DEAN 5.56% 11/02/98 105,000 105,000
0 14,052,000 14,052,000 THE BANK OF NEW YORK, 5.20%, 11/2/98 14,052 14,052
0 10,000,000 10,000,000 THE BANK OF NEW YORK, 5.40%, 11/2/98 10,000 10,000
105,000,000 0 105,000,000 WESTDEUTLANDESBANK 5.6% 11/02/98 105,000 105,000
-------------------------------------
1,914,113 2,625,491 4,539,604
-------------------------------------
TIME DEPOSITS- EURO - .55%
30,152,000 0 30,152,000 BANK OF NEW YORK CAYMAN ISLAND 4.75% 11/02/98 30,152 30,152
-------------------------------------
30,152 30,152
-------------------------------------
U.S. TREASURY NOTES--22.77%
100,000,000 75,000,000 175,000,000 U.S. TREASURY NOTE 6.25% 5/31/99 100,926 75,717 176,643
30,000,000 0 30,000,000 U.S. TREASURY NOTE 6% 6/30/99 30,089 30,089
75,000,000 25,000,000 100,000,000 US TREASURY NOTE 6.375% 4/30/99 75,443 25,099 100,542
45,000,000 150,000,000 195,000,000 US TREASURY NOTE 5.875% 1/31/99 45,043 150,103 195,146
65,000,000 0 65,000,000 US TREASURY NOTE 5.875% 7/31/99 65,382 65,382
50,000,000 0 50,000,000 US TREASURY NOTE 5.875% 8/31/99 50,151 50,151
15,000,000 25,000,000 40,000,000 US TREASURY NOTE 5.5% 2/28/99 14,999 24,996 39,995
50,000,000 50,000,000 100,000,000 US TREASURY NOTE 5.0% 2/15/99 50,039 50,047 100,086
0 250,000,000 250,000,000 US TREASURY NOTE 5.875% 02/28/99 250,241 250,241
0 25,000,000 25,000,000 US TREASURY NOTE 6.375% 1/15/99 25,040 25,040
0 50,000,000 50,000,000 US TREASURY NOTE 6.375% 5/15/99 50496 50,496
0 25,000,000 25,000,000 US TREASURY NOTE 6.50% 04/30/99 25,113 25,113
0 100,000,000 100,000,000 US TREASURY NOTE 6.75% 05/31/99 101,219 101,219
0 75,000,000 75,000,000 US TREASURY NOTE 8.875% 2/15/99 75,757 75,757
-------------------------------------
432,072 853,828 1,285,900
-------------------------------------
-------------------------------------
Total Investments--104.97% (Cost $2,447,919,
$3,479,320, $5.927,239, respectively) 2,447,919 3,479,320 5,927,239
-------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations Treasury Reserves / Pacific Horizon Treasury Fund
Pro Forma Combining Statement of Net Assets (unaudited)
October 31,1998
Nations Pacific
Treasury Horizon Adjustments to Pro Forma
Reserves Treasury Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
----------------------------------------- --------------
<S> <C> <C> <C> <C>
Total Investments $ 2,447,919 $ 3,479,320 $- $ 5,927,239
Other Assets and Liabilities:
Receivable for securities sold -- 2,578,844 -- 2,578,844
Payable for securities purchased -- (2,675,987) -- (2,675,987)
Payable for reverse repurchase agreement (277,113) -- (277,113)
Other assets and liabilities, net 47,057 46,320 -- 93,377
----------- -----------
Total Other Assets and Liabilities (230,056) (50,823) -- (280,879)
----------- -----------
Net Assets $ 2,217,863 $ 3,428,497 $ -- $ 5,646,360
=========== ===========
Net Assets by Class:
Capital Class / Horizon (Primary) $ 466,959 $ 704,992 $-- $ 1,171,951
Liquidity Class 294,293 -- -- 294,293
Adviser Class / Horizon Service 345,679 1,777,222 -- 2,122,901
<PAGE>
Market Class 1,110,932 -- -- 1,110,932
Investor Class / Pacific Horizon -- 432,672 432,672
Service Class / Class Y -- 99,148 99,148
Daily / Class S & Class X -- 414,463 414,463
----------- -----------
$ 2,217,863 $ 3,428,497 $-- $ 5,646,360
----------- -----------
Shares Outstanding by Class:
Capital Class / Horizon (Primary) 466,882 705,088 -- 1,171,970
Liquidity Class 294,311 -- -- 294,311
Adviser Class / Horizon Service 345,699 1,777,331 -- 2,123,030
Market Class 1,111,000 -- -- 1,111,000
Investor Class / Pacific Horizon -- 432,816 -- 432,816
Service Class / Class Y -- 99,147 -- 99,147
Daily / Class S & Class X -- 414,460 -- 414,460
----------- -----------
2,217,892 3,428,842 -- 5,646,734
----------- -----------
Net Asset Value per Share by Class:
Capital Class / Horizon (Primary) $ 1.00 $ 1.00 $ -- $ 1.00
Liquidity Class $ 1.00 $ -- $ -- $ 1.00
Adviser Class / Horizon Service $ 1.00 $ 1.00 $ -- $ 1.00
<PAGE>
Market Class $ 1.00 $ -- $ -- $ 1.00
Investor Class / Pacific Horizon $ -- $ 1.00 $ -- $ 1.00
Service Class / Class Y $ -- $ 1.00 $ -- $ 1.00
Daily / Class S & Class X $ -- $ 1.00 $ -- $ 1.00
</TABLE>
See Notes to Pro Forma Financial Statements
<TABLE>
<CAPTION>
Nations Treasury Reserves / Pacific Horizon Treasury Fund
Pro Forma Combining Statement of Operations (unaudited)
For the Twelve Month Period Ending October 31,1998
Nations Pacific
Treasury Horizon Adjustments to Pro Forma
Reserves Treasury Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
----------------------------------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $79,852 $173,632 $0 $253,484
Dividends 2,891 - - 2,891
----------------------------------------- --------------
Total Investment Income 82,743 173,632 - 256,375
----------------------------------------- --------------
EXPENSES:
Investment Advisory 4,503 3,143 (657) (a) 6,989
Administration 1,500 3,159 - (a) 4,659
Transfer Agent 101 60 (30) (b) 131
Custodian 91 289 (42) (b) 338
<PAGE>
Legal and Audit Fees 29 174 (42) (b) 161
Registration & Filing 127 204 - 331
Trustees' Fees 21 57 (44) (b) 34
Interest Expense - - - -
Other expenses 63 319 (50) (b) 332
----------------------------------------- --------------
Subtotal 6,435 7,405 (865) 12,975
----------------------------------------- --------------
Shareholder Servicing and Distribution
Fees
Liquidity Class 4,114 - - 4,114
Adviser Class / Horizon Service 723 4,463 - 5,186
Market Class 1,987 - - 1,987
Investor Class / Pacific Horizon - 1,103 103(a) 1,206
Service Class / Class Y - 773 - 773
Daily / Class S & Class X - 1,312 119(a) 1,431
----------------------------------------- --------------
Subtotal 6,824 7,651 222 14,697
----------------------------------------- --------------
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor (7,415) - 3,750(c) (3,665)
----------------------------------------- --------------
Total Expenses 5,844 15,056 3,107 24,007
----------------------------------------- --------------
<PAGE>
----------------------------------------- --------------
NET INVESTMENT INCOME 76,899 158,576 (3,107) 232,368
----------------------------------------- --------------
NET REALIZED GAIN/(LOSS)
----------------------------------------- --------------
ON INVESTMENTS (2) 19 - 17
----------------------------------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS
========================================= ==============
RESULTING FROM OPERATIONS $76,897 $158,595 ($3,107) $232,385
========================================= ==============
</TABLE>
Legend:
(a) Reflects adjustment to the acquiring fund contractual fee obligation.
(b) Adjustment reflects expected savings when the two funds become one.
(c) Reflects adjustment to the level of the acquiring fund's voluntary expense
reimbursement.
(d) Net of expense offset arrangements amounts to less than .01% of average net
assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Treasury Reserves
Pacific Horizon Treasury Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Institutional Reserves (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. As of October 31, 1998 the Trust offered five separate portfolios. The
unaudited Pro Forma Combining Portfolio of Investments and the unaudited Pro
Forma Combining Statement of Assets and Liabilities assumes the exchange
described in the next paragraph occurred as of October 31, 1997 and the
unaudited pro Forma Combining Statement of Operations assumes the exchange
occurred as of November 1,1998. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
October 31, 1998 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pacific Horizons Treasury Fund in exchange for shares
of Nations Treasury Reserves. Under generally accepted accounting principles,
the historical cost of investment securities will be carried forward to the
surviving entity and the results of operations of the Pacific Horizon Treasury
Fund for pre-combination periods will not be restated. The pro forma statements
do not reflect the expenses of either fund in carrying out its obligations under
the proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity. The investment advisory and administration fees have
been calculated for the combined fund based on the contractual rates expected to
be in effect for the Nations Treasury Reserves at the time of the Reorganization
at the combined level of average net assets for the twelve month period ended
October 31, 1998.
<PAGE>
NATIONS INSTITUTIONAL RESERVES
ONE NATIONSBANK PLAZA
33rd Floor
Charlotte, NC 28255
1-800-626-2275
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification.
Article VIII of the Agreement and Declaration of Trust filed as Exhibit
1 to the Registration Statement is incorporated by reference. Indemnification of
Registrant's administrators, principal underwriter, custodian and transfer agent
is provided for, respectively, in the:
1. Co-Administration Agreement with Stephens Inc. and NationsBank
Advisors, Inc.;
2. Distribution Agreement with Stephens Inc.;
3. Custody Agreement with The Bank of New York; and
4. Transfer Agency Agreement with First Data Investor Services Group,
Inc.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant by the Registrant pursuant to the Agreement and Declaration of
Trust or otherwise, the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by trustees, directors,
officers or controlling persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such trustees,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 16. Exhibits.
All references to the "Registration Statement" in the following list of
Exhibits refer to the Registrant's Registration Statement on Form N-1A (File
Nos. 33-33144;811-6030). All references to the "Pacific Horizon Registration
Statement" in the following list of Exhibits refer to the Pacific Horizon Funds'
Registration Statement on Form N-1A (File Nos. ).
C-1
<PAGE>
Exhibit Number Description
(1) Declaration of Trust date January 22, 1990, is
incorporated by reference to Post-Effective Amendment
No. 22, filed on August 27, 1998.
(2) By-Laws dated January 22, 1990, are incorporated by
reference to Post-Effective Amendment No. 22, filed
on August 27, 1998.
(3) Not Applicable.
(4) Form of Agreement and Plan of Reorganization, filed
herewith as Appendix II to the Combined
Prospectus/Proxy Statement.
(5) Not Applicable.
(6)(a) Investment Advisory Agreement with NationsBanc
Advisors, Inc. incorporated by reference to
Post-Effective Amendment No. 17.
(6)(b) Sub-Advisory Agreement with TradeStreet Investment
Associates, Inc. incorporated by reference to
Post-Effective Amendment No. 17.
(7) Distribution Agreement with Stephens, Inc.
incorporated by reference to Post-Effective Amendment
No. 22, filed on August 27, 1998.
(8) Not Applicable.
(9) Custody Agreement with The Bank of New York
incorporated by reference to Post-Effective Amendment
No. 20.
(10)(a) Shareholder Servicing Plan for Adviser Class Shares
incorporated by reference to Post-Effective Amendment
No. 22, filed on August 27, 1998.
(10)(b) Form of Shareholder Servicing Agreement for Adviser Class
Shares incorporated by reference to Post-Effective Amendment
No. 22, filed on August 27, 1998.
(10)(c) Form of Shareholder Servicing Plan for Market Class
Shares incorporated by reference to Post-Effective
Amendment No. 22, filed on August 27, 1998.
C-2
<PAGE>
(10)(d) Shareholder Servicing Agreement for Market Class
Shares incorporated by reference to Post-Effective
Amendment No. 22, filed on August 27, 1998.
(10)(e) Shareholder Servicing Plan for Liquidity Class Shares
incorporated by reference to Post-Effective Amendment
No. 22, filed on August 27, 1998.
(10)(f) Distribution Plan for Liquidity Class Shares
incorporated by reference to Post-Effective Amendment
No. 22, filed on August 27, 1998.
(10)(g) Distribution Plan for Market Class Shares
incorporated by reference to Post-Effective Amendment
No. 22, filed on August 27, 1998.
(10)(h) Form of Brokerage Agreement, dated November 18, 1994,
is incorporated by reference to Post-Effective
Amendment No. 22, filed on August 27, 1998.
(10)(i) Transfer Agency and Registrar Agreement with First
Data Investor Services Group, Inc., is incorporated
by reference to Post-Effective Amendment No. 22,
filed on August 27, 1998.
(11) Opinion and Consent of Morrison & Foerster LLP, filed
herewith.
(12) See Item 17(3) of this Part C.
(13)(a) Administration Agreement with Stephens Inc., dated May 1,
1994, is incorporated by reference to Post-Effective
Amendment No. 22, filed on August 27, 1998.
(13)(b) Co-Administration Agreement with The Boston Company
Advisors, Inc., dated May 1, 1994, is incorporated by
reference to Post-Effective Amendment No. 22, filed
on August 27, 1998.
(14)(a) Consent of Independent Accountants- PricewaterhouseCoopers
LLP, filed herewith.
(14)(b) Consent of Independent Accountants - PricewaterhouseCoopers
LLP, filed herewith.
(15) Not Applicable.
(16) Powers of Attorney, filed herewith.
C-3
<PAGE>
(17)(a) Plan entered into by Registrant pursuant to Rule 18f-3 under
the Investment Company Act of 1940, dated April 12, 1995, is
incorporated by reference to Post-Effective Amendment No.
22, filed on August 27,
1998.
(17)(b) Form of Proxy Ballot, filed herewith.
(17)(c)(i) Prospectuses and Statement of Additional Information for
Capital Class, Adviser Class, Liquidity Class, and Market
Class Shares of Nations Cash Reserve, Nations Treasury
Reserves, Nations Government Reserves and Nations Municipal
Reserves, dated September 1, 1998, are incorporated by
reference to Post-Effective Amendment No. 22 to the
Registration Statement, as filed on August 27, 1998.
(17)(c)(ii) Prospectuses and Statement of Additional Information for
Daily Class, Investor Class, Service Class and Trust Class
Shares of Nations Cash Reserves, Nations Treasury Reserves,
nations Government Reserves and Nations Municipal reserves
dated January __, 1999, are incorporated by reference to
Post-Effective Amendment No. 23 to the Registration
Statement, as filed on November 25, 1998.
(17)(c)(iii) Prospectuses and Statements of Additional Information for
Horizon, Horizon Service, Pacific Horizon, Class Y, and
Class S & X Shares of Pacific Horizon Prime Fund and Pacific
Horizon Treasury Fund, and Horizon, Horizon Service, Pacific
Horizon, and Class S & X Shares of Pacific Horizon
California Tax-Exempt Money Market Fund, and Horizon,
Horizon Service, Pacific Horizon, and Class S Shares of the
Pacific Horizon Tax-Exempt Money Fund, and Horizon, Horizon
Service, and Pacific Horizon Shares of the Pacific Horizon
Government Fund, incorporated by reference to Post-Effective
Amendment No. 60 to the Pacific Horizon Registration
Statement as filed on July 1, 1998.
(17)(c)(iv) Prospectuses and Statements of Additional Information for
Class A, B, K, and SRF Shares of the Pacific Horizon Asset
Allocation Fund, and Class A, B, and K Shares of the Pacific
Horizon Capital Income Fund, and Class A and B Shares of the
Pacific Horizon California Municipal Income Fund, and Class
A, K, and SRF Shares of the Pacific Horizon Intermediate
Bond Fund, incorporated by reference to Post-Effective
Amendment No. 60 to the Pacific Horizon Registration
Statement as filed on July 1, 1998.
C-4
<PAGE>
(17)(c)(v) Annual Reports for Nations Cash Reserves, Nations
Treasury Reserves, Nations Government Reserves and
Nations Municipal Reserves for the year ended April
30, 1998, filed on June 30, 1998.
(17)(c)(vi) Annual Reports for Asset Allocation Fund, Blue Chip Fund,
California Municipal Bond Fund, California Tax-Exempt Money
Market Fund, Capital Income Fund, Government Fund,
Intermediate Bond Fund, Prime Fund, Tax-Exempt Money Fund,
Treasury Fund, and Treasury Only Fund for the year ended
February 28, 1998, filed on _________________.
(17)(c)(vii) Semi-Annual Reports for Asset Allocation Fund, Blue Chip
Fund, California Municipal Bond Fund, California Tax-Exempt
Money Market Fund, Capital Income Fund, Government Fund,
Intermediate Bond Fund, Prime Fund, Tax-Exempt Money Fund,
Treasury Fund, and Treasury Only Fund for the period ended
August 31, 1998, filed
on ___________________.
Item 17. Undertakings.
(1) Registrant agrees that, prior to any public reoffering of the
securities registered through the use of a prospectus which is
a part of this registration statement by any person or party
who is deemed to be an underwriter within the meaning of Rule
145(c) of the Securities Act of 1933, the reoffering prospectus
will contain the information called for by the applicable
registration form for the reofferings by persons who may be
deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona
fide offering of them.
(3) The undersigned Registrant agrees to file, by post-effective
amendment, an opinion of counsel or a copy of an IRS ruling
supporting the tax consequences of the Reorganization within a
reasonable time after receipt of such opinion or ruling.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form N-14 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Little
Rock, State of Arkansas on the 23rd day of December, 1998.
NATIONS INSTITUTIONAL RESERVES
By: *
----------------------------------------
A. Max Walker
President and Chairman
of the Board of Trustees
By: /s/ Richard H. Blank, Jr.
----------------------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
<S> <C>
SIGNATURES TITLE DATE
* President and Chairman December 23, 1998
- ------------------------------- of the Board of Trustees
(A. Max Walker) (Principal Executive Officer)
/s/ Richard H. Blank, Jr. Treasurer December 23, 1998
- ------------------------------- (Principal Financial and
(Richard H. Blank, Jr.) Accounting Officer)
* Trustee December 23, 1998
- -------------------------------
(Edmund L. Benson, III)
* Trustee December 23, 1998
- -------------------------------
(James Ermer)
* Trustee December 23, 1998
- -------------------------------
(William H. Grigg)
* Trustee December 23, 1998
- -------------------------------
(Thomas F. Keller)
* Trustee December 23, 1998
- -------------------------------
(Carl E. Mundy, Jr.)
* Trustee December 23, 1998
- -------------------------------
(Charles B. Walker)
* Trustee December 23, 1998
- -------------------------------
(Thomas S. Word)
* Trustee December 23, 1998
- -------------------------------
(James B. Sommers)
/s/ Richard H. Blank, Jr.
- -------------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
</TABLE>
<PAGE>
Nations Institutional Reserves
File Nos. 33-33144; 811-6030
Exhibit Number Description
- -------------- -----------
Ex-99.11 Opinion and Consent of Morrison &
Foerster LLP
Ex-99.14(a) Consent of Accountants --
PricewaterhouseCoopers LLP
Ex-99.14(b) Consent of Accountants -
PricewaterhouseCoopers LLP
Ex-99.16 Powers of Attorney
Ex-99.17 Form of Proxy Ballot
EXH. 99.11
----------
[MORRISON & FOERSTER LLP LETTERHEAD]
December 30, 1998
Nations Institutional Reserves
One NationsBank Plaza
Charlotte, NC 28255
Re: Units of Beneficial Interest of Nations Institutional Reserves
Ladies/Gentlemen:
We refer to the Registration Statement on Form N-14 (the "Registration
Statement") of Nations Institutional Reserves ("Reserves") relating to the
registration of an indefinite number of units of beneficial interest (the
"Shares"), of certain Funds of Reserves (the "Funds").
We have been requested by Reserves to furnish this opinion as Exhibit
11 to the Registration Statement.
We have examined documents relating to the organization of Reserves and
the authorization and issuance of the Shares. We have also made such inquiries
of Reserves and examined such questions of law as we have deemed necessary for
the purpose of rendering the opinion set forth herein. We have assumed the
genuineness of all signatures and the authenticity of all items submitted to us
as originals and the conformity with originals of all items submitted to us as
copies.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance of the Shares by Reserves has been duly and validly
authorized by all appropriate action and, assuming delivery in accordance with
the description set forth in the Combined Proxy Statement/Prospectus included in
the Registration Statement, the Shares will be legally issued, fully paid and
nonassessable by Reserves.
<PAGE>
Nations Institutional Reserves
December 30, 1998
Page Two
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
description of advice rendered by our firm under the headings "The
Reorganization--Federal Income Tax Considerations" in the Combined Proxy
Statement/Prospectus, under the heading "How The Funds Are Managed" in the
Prospectuses, and under the heading "Counsel" in the Statement of Additional
Information, which are incorporated by reference into the Registration
Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
EXH.99.14(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Combined Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
N-14 (the "Registration Statement") of our report dated April 21, 1998, relating
to the financial statements and financial highlights appearing in the February
28, 1998 Annual Report of the Pacific Horizon Prime Fund, Pacific Horizon
Government Fund, Pacific Horizon Treasury Fund, Pacific Horizon Treasury Only
Fund, Pacific Horizon Tax-Exempt Fund, Pacific Horizon California Municipal Bond
Fund, Pacific Horizon California Tax-Exempt Fund, Pacific Horizon Asset
Allocation Fund, Pacific Horizon Capital Income, Pacific Horizon Intermediate
Bond Fund and Pacific Horizon Blue Chip Fund (eleven of the seventeen portfolios
constituting Pacific Horizon Funds, Inc., hereafter referred to as the "Funds")
which financial statements and financial highlights are also incorporated by
reference into the Combined Proxy Statement/Prospectus and included in the
Registration Statement. We also consent to the incorporation by reference in the
Prospectuses and Statement of Additional Information of the Funds dated July 1,
1998, of our report dated April 21, 1998, relating to the financial statements
and financial highlights appearing in the February 28, 1998 Annual Report of the
Funds, which Prospectuses and Statement of Information are also incorporated by
reference in the Registration Statement. We further consent to the references to
us under the headings "Financial Statements", "Other Service Providers for the
Pacific Horizon Funds and Nations Funds" and in paragraphs 5.2.e. and 7.4 of the
Agreement and Plan of Reorganization in such Combined Proxy Statement/Prospectus
and to the references to us under the headings "Financial Highlights" in the
Prospectuses dated July 1, 1998 for the Funds and under the headings
"Independent Accountants" and "Financial Statements" in the Statements of
Additional Information dated July 1, 1998 for the Funds.
PricewaterhouseCoopers LLP
New York, New York
December 30, 1998
EXH. 99.14(b)
-------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Combined Proxy
Statement/Prospectus and Statement of Additional Information constituting parts
of this Registration Statement on Form N-14 (the "Registration Statement") of
our report dated June 23, 1998, relating to the financial statements and
financial highlights of Nations Cash Reserves, Nations Treasury Reserves,
Nations Government Reserves and Nations Municipal Reserves (the "Funds")
appearing in the April 30, 1998 Annual Report to Shareholders, which financial
statements and financial highlights are also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
headings "Financial Statements" and "Other Service Providers for the Pacific
Horizon Funds and Nations Funds" in such Combined Proxy Statement/Prospectus. We
further consent to the references to us under the headings "Financial
Highlights" and "How The Funds Are Managed - Other Service Providers" in the
Prospectuses of the Funds dated September 1, 1998, as supplemented, and under
the heading "Experts and Financial Information" in the Statement of Additional
Information of the Funds dated September 1, 1998 which are incorporated by
reference into the Registration Statement.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 30, 1998
EXH. 99.16
POWER OF ATTORNEY
Edmund L. Benson, III, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ Edmund L. Benson, III
------------------------------
Edmund L. Benson, III
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
James Ermer, whose signature appears below, does hereby constitute and
appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco E.
Adelfio and Steven G. Cravath, each individually, his true and lawful attorneys
and agents, with power of substitution or resubstitution, to do any and all acts
and things and to execute any and all instruments which said attorneys and
agents, each individually, may deem necessary or advisable or which may be
required to enable Nations Institutional Reserves (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as a trustee of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: December 23, 1998
/s/ James Ermer
-----------------------
James Ermer
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
William H. Grigg, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ William H. Grigg
---------------------------
William H. Grigg
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
Thomas F. Keller, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ Thomas F. Keller
----------------------------
Thomas F. Keller
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
A. Max Walker, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as an officer of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ A. Max Walker
-----------------------
A. Max Walker
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
Charles B. Walker, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ Charles B. Walker
------------------------------
Charles B. Walker
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
Thomas S. Word, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as a trustee of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ Thomas S. Word, Jr.
------------------------------
Thomas S. Word, Jr.
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
Carl E. Mundy, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as an officer of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ Carl E. Mundy, Jr.
-----------------------------
Carl E. Mundy, Jr.
<PAGE>
EXH. 99.16
POWER OF ATTORNEY
James B. Sommers, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Institutional Reserves (the "Trust") to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended (the "1933 Act"), and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Trust's Registration
Statement(s) on Form N-14 pursuant to the 1933 Act, and to qualify or register
for sale any securities in any state including specifically, but without
limiting the generality of the foregoing, the power and authority to sign, in
the name and on behalf of the undersigned as an officer of the Trust, such
Registration Statement(s), and any and all amendments thereto, filed with the
Securities and Exchange Commission under the 1933 Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, individually or collectively, shall do or
cause to be done by virtue thereof.
Dated: December 23, 1998
/s/ James B. Sommers
---------------------------
James B. Sommers
EXH. 99.17
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
ASSET ALLOCATION FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware at 10:00 a.m.
(Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Asset Allocation Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
BLUE CHIP FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Blue Chip Fund (the "Fund") which the undersigned
may be entitled to vote with respect to the proposals set forth below, in
accordance with the specification indicated, if any, and with all the powers
which the undersigned would possess if personally present. The undersigned
hereby revokes any prior proxy to vote at such meeting, and hereby ratifies and
confirms all that said attorneys and Proxies, or either of them, may lawfully do
by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
<PAGE>
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, (the
"1940 Act") of Pacific Horizon; and also to approve an additional
proposed Agreement and Plan of Reorganization dated as of January __,
1999 (the "Master Trust Reorganization Agreement") by and between
Master Investment Trust, Series I and Nations Master Investment Trust
which provides for (a) the transfer of assets and liabilities of the
Blue Chip Portfolio Master Investment Trust, Series I in exchange for
shares of corresponding portfolios of Nations Master Investment Trust
of equal value; (b) the distribution of shares of the corresponding
portfolio of Nations Master Investment Trust to shareholders of the
portfolios of Master Investment Trust, Series I and (c) the termination
under state law and deregistration under the 1940 Act of Master
Investment Trust, Series I.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
CALIFORNIA MUNICIPAL BOND FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon California Municipal Bond Fund (the "Fund") which
the undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon California Tax-Exempt Money Market Fund (the
"Fund") which the undersigned may be entitled to vote with respect to the
proposals set forth below, in accordance with the specification indicated, if
any, and with all the powers which the undersigned would possess if personally
present. The undersigned hereby revokes any prior proxy to vote at such meeting,
and hereby ratifies and confirms all that said attorneys and Proxies, or either
of them, may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the (the
"1940 Act") of Pacific Horizon.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
CAPITAL INCOME FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held 400 Bellevue Parkway, Wilmington, Delaware, at 10:00 a.m.
(Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Capital Income Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
GOVERNMENT FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Government Fund (the "Fund") which the undersigned
may be entitled to vote with respect to the proposals set forth below, in
accordance with the specification indicated, if any, and with all the powers
which the undersigned would possess if personally present. The undersigned
hereby revokes any prior proxy to vote at such meeting, and hereby ratifies and
confirms all that said attorneys and Proxies, or either of them, may lawfully do
by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
INTERMEDIATE BOND FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Intermediate Bond Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon; and also to approve an additional
proposed Agreement and Plan of Reorganization dated as of January __,
1999 (the "Master Trust Reorganization Agreement") by and between
Master Investment Trust, Series I and Nations Master Investment Trust
which provides for (a) the transfer of assets and liabilities of the
Investment Grade Bond Portfolio of Master Investment Trust, Series I in
exchange for shares of corresponding portfolios of Nations Master
Investment Trust of equal value; (b) the distribution of shares of the
corresponding portfolio of Nations Master Investment Trust to
shareholders of the portfolios of Master Investment Trust, Series I and
(c) the termination under state law and deregistration under the 1940
Act of Master Investment Trust, Series I.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
PRIME FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Prime Fund (the "Fund") which the undersigned may
be entitled to vote with respect to the proposals set forth below, in accordance
with the specification indicated, if any, and with all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at such meeting, and hereby ratifies and confirms all
that said attorneys and Proxies, or either of them, may lawfully do by virtue
thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
TAX-EXEMPT MONEY FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Tax-Exempt Money Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon and in the case of the Pacific Horizon
Blue Chip Fund, an additional Agreement and Plan of Reorganization.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
TREASURY FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Treasury Fund (the "Fund") which the undersigned
may be entitled to vote with respect to the proposals set forth below, in
accordance with the specification indicated, if any, and with all the powers
which the undersigned would possess if personally present. The undersigned
hereby revokes any prior proxy to vote at such meeting, and hereby ratifies and
confirms all that said attorneys and Proxies, or either of them, may lawfully do
by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE
ACTION TO BE TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED
WITHOUT ANY SPECIFICATION WILL BE VOTED IN FAVOR OF THE
PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon and in the case of the Pacific Horizon
Blue Chip Fund, an additional Agreement and Plan of Reorganization.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
PACIFIC HORIZON FUNDS, INC.
TREASURY ONLY FUND
Special Meeting of Shareholders-April 12, 1999
The undersigned hereby appoints ________ and ________ (the "Proxies") and
each of them, attorneys and proxies of the undersigned, each with power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of Pacific Horizon Funds, Inc. ("Pacific
Horizon") to be held at 400 Bellevue Parkway, Wilmington, Delaware, at 10:00
a.m. (Eastern time), on Monday, April 12, 1999, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Pacific Horizon Treasury Only Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 1,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PACIFIC HORIZON, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
(1) FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641; OR (2)
TOUCHTONE VOTING AT (800) 690-6903; OR (3) ON-LINE VOTING AT WWW.PROXYVOTE.COM;
OR (4) BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU
MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Reorganization, attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
(a) the transfer of all of the assets and liabilities of the Fund to a
corresponding fund of Nations Institutional Reserves in exchange for
shares of a designated class of such Nations fund, (b) the distribution
of shares of designated classes of the corresponding Nations Fund to
shareholders of each Pacific Horizon Fund and (c) the dissolution under
state law and the Investment Company Act of 1940, as amended, the
("1940 Act") of Pacific Horizon and in the case of the Pacific Horizon
Blue Chip Fund, an additional Agreement and Plan of Reorganization.
|_|YES |_|NO |_|ABSTAIN
THIS PROPOSAL HAS BEEN PROPOSED BY PACIFIC HORIZON.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
-----------------------------
_____________________________, 1999
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)