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 8, 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 Pacific Horizon, including the Pacific Horizon funds named above
(each a "Pacific Horizon Fund") 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 February 8, 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 (each a "Nations Fund"), 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
February 8, 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 THE SAME OR SIMILAR OBJECTIVES AND POLICIES
Five of the Pacific Horizon Funds are proposed to be reorganized into
existing Nations Funds with investment policies and objectives that are, in
general, similar to those of the corresponding Pacific Horizon Funds. Six
of the Pacific Horizon Funds are proposed to be reorganized into shell
Nations Funds that have been created for the purpose of the Reorganization
and that will continue the investment policies and objectives of the
corresponding Pacific Horizon Funds.
o SIMILAR ACCESS AND SERVICE ARRANGEMENTS
Following the Reorganization, you will enjoy access to Nations Funds
through similar distribution, transaction and shareholder servicing
arrangements. The new BankAmerica has one of the most comprehensive
distribution networks 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:
o Offering actual or potential reductions in total operating expense
ratios for most shareholders;
o 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;
o Offering access to a broader array of investment products,
including a line of fund-of-funds; and
o 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 fund(s). Please be sure to
vote and return each Proxy Ballot.
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 BY A TOLL-FREE PHONE CALL OR BY VOTING ON-LINE, AS
INDICATED ON THE ATTACHED INSERT.
The proposed Reorganization and the reasons for the Pacific Horizon
Board's and MIT Board's unanimous recommendations 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 1-800-653-9427.
We look forward to your attendance 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>
TWO QUICK AND EASY WAYS TO VOTE YOUR PROXY PACIFIC
HORIZON
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/PROSPECTUS ("PROXY STATEMENT"), which outlines important issues
affecting your funds, select one of the following quick and easy methods to
register your vote - ACCURATELY and QUICKLY.
<TABLE>
<CAPTION>
<S> <C>
VOTE ON-LINE VOTE BY TOLL-FREE PHONE CALL
1. Read the enclosed PROXY STATEMENT and have 1. Read the enclosed PROXY STATEMENT and have
your PROXY BALLOT(S)* at hand. your PROXY BALLOT(S)* at hand.
2. Go to Web site WWW.PROXYVOTE.COM. 2. Call toll-free 1-800-690-6903.
3. Enter the 12-digit Control Number found on your 3. Enter the 12-digit Control Number found on your
PROXY BALLOT(S). PROXY BALLOT(S).
4. Cast your vote using the easy-to-follow 4. Cast your vote using the easy-to-follow
instructions. instructions
</TABLE>
* DO NOT MAIL THE PROXY BALLOT(S) IF VOTING BY INTERNET OR TELEPHONE.
4
<PAGE>
NATIONS INSTITUTIONAL RESERVES
February 8, 1999
QUESTIONS & ANSWERS
FOR SHAREHOLDERS OF PACIFIC HORIZON FUNDS:
The following questions and answers provide an overview of the proposal to
reorganize your Pacific Horizon Fund into a corresponding portfolio of Nations
Institutional Reserves. 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, Inc. ("Pacific Horizon")
and the Boards of Trustees/Directors of Nations Institutional Reserves, Nations
Fund Trust and Nations Fund, Inc. (collectively, "Nations Funds") have each
determined that the consolidation of the Pacific Horizon Funds into
corresponding portfolios of Nations Funds is in the best interests of their
respective shareholders. Among the benefits for Pacific Horizon Fund
shareholders considered by the Pacific Horizon 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 Pacific Horizon Board of Directors 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.
<PAGE>
Q: HOW WILL THE PACIFIC HORIZON FUNDS BE REORGANIZED?
A: As you may know, Pacific Horizon consists of seventeen separate mutual funds,
including 6 money market funds. The Proxy/Prospectus that accompanies these
materials, however, relates only to the eleven 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 eleven funds,
approved by the Pacific Horizon Board of Directors, contemplates the
reorganization of five of these Pacific Horizon Funds into four corresponding
Nations Funds portfolios having similar investment objectives and policies. The
remaining six Pacific Horizon Funds listed below will be reorganized into shell
Nations Funds that are being created to continue the current operations of these
Pacific Horizon Funds. The investment objectives and strategies of these shell
portfolios will be substantially the same as those of the corresponding 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:
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON FUNDS CORRESPONDING NATIONS FUNDS PORTFOLIO
--------------------- -------------------------------------
Asset Allocation Fund Nations Asset Allocation Fund (SHELL PORTFOLIO)
Blue Chip Fund Nations Blue Chip Fund (SHELL PORTFOLIO)
California Municipal Bond Fund Nations California Municipal Bond Fund (SHELL PORTFOLIO)
California Tax-Exempt Money Market Fund Nations California Tax-Exempt Reserves (SHELL PORTFOLIO)
Capital Income Fund Nations Capital Income Fund (SHELL PORTFOLIO)
Government Fund Nations Government Reserves
Intermediate Bond Fund Nations Intermediate Bond Fund (SHELL PORTFOLIO)
Prime Fund Nations Cash Reserves
Tax-Exempt Money Fund Nations Municipal Reserves
Treasury Fund Nations Treasury Reserves
Treasury Only Fund Nations Government Reserves
</TABLE>
Please refer to Table I of the accompanying Proxy/Prospectus for information
regarding the specific classes of shares of the Pacific Horizon Funds and
Nations Funds involved in the Reorganization.
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.
2
<PAGE>
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.
3
<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 Pacific Horizon Funds, Inc. ("Pacific Horizon"), including the
Pacific Horizon Funds named above (each a "Pacific Horizon Fund" and together,
the "Pacific Horizon Funds"), each of which is a portfolio of 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 and contemplates: (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; (c) the
transfer of all of the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the deregistration under the
Investment Company Act of 1940, as amended, of Pacific Horizon. In the
case of Pacific Horizon Blue Chip Fund and Pacific Horizon Intermediate
Bond Fund only, shareholders are also being asked, as part of a
combined vote, 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 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.
<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 BALLOT(S), 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 WEBSITE 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, PACIFIC HORIZON WOULD CONTINUE
TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM. YOUR VOTE COULD BE CRITICAL
IN ALLOWING PACIFIC HORIZON 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 8, 1999
PACIFIC HORIZON FUNDS, INC.
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809
1-800-653-9427
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 February 8, 1999 (the "Reorganization Agreement"), by and
between Pacific Horizon and Nations Institutional Reserves
("Nations"), which provides for and contemplates (a) the transfer
of the 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 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; (c) the transfer of all of the assets and
liabilities of Pacific Horizon; and (d) 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 only, shareholders are also being asked, as
part of a combined vote, to approve an additional proposed
Agreement and Plan of Reorganization dated as of February 8, 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
portfolios 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, the form of which is attached as Appendix
I(A), provides for the transfer of assets and liabilities of each Pacific
Horizon Fund to a corresponding Nations Fund 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), the form of which is attached as Appendix I(B),
provides for the transfer of assets and liabilities of the Blue Chip Master
Portfolio and the Investment Grade 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 objectives and policies as the MIT Master Portfolios (each a
"Nations Master Portfolio" and collectively, the "Nations Master Portfolios") of
a shell 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:
TABLE I(A)
<TABLE>
<CAPTION>
<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
2
<PAGE>
PACIFIC HORIZON FUND/SHARE CLASS CORRESPONDING NATIONS FUND/SHARE CLASS
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 Service Shares Adviser 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 Adviser 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 Adviser Shares
Pacific Horizon Shares Investor Shares
S Shares Daily Shares
X Shares Daily Shares
Y Shares Service Shares
TAX-EXEMPT MONEY FUND NATIONS MUNICIPAL RESERVES
Horizon Shares Capital Shares
Horizon Service Shares Adviser Shares
Pacific Horizon Shares Investor Shares
S Shares Daily Shares
3
<PAGE>
PACIFIC HORIZON FUND/SHARE CLASS CORRESPONDING NATIONS FUND/SHARE CLASS
TREASURY FUND NATIONS TREASURY RESERVES
Horizon Shares Capital Shares
Horizon Service Shares Adviser Shares
Pacific Horizon Shares Investor Shares
X Shares Daily Shares
Y Shares Service Shares
TREASURY ONLY NATIONS GOVERNMENT RESERVES
Horizon Shares Capital Shares
Horizon Service Shares Adviser Shares
Pacific Horizon Shares Investor Shares
</TABLE>
Table I(B) below shows each MIT Master Portfolio and the corresponding
Nations Master Portfolio:
TABLE I(B)
<TABLE>
<CAPTION>
<S> <C>
MIT MASTER PORTFOLIO CORRESPONDING NMIT MASTER PORTFOLIO (SHELL)
Blue Chip Master Portfolio Nations Blue Chip Master Portfolio (shell)
Investment Grade Bond Master Portfolio Nations Intermediate Bond Master Portfolio (shell)
</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, deregister as a
registered investment company and dissolve under Maryland law. For more
information about this aspect of the Reorganization, see "Voting Matters."
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, Nations
Intermediate Bond Fund (the "Shell Nations Funds") or the Nations Master
Portfolios because these funds 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 the
same 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 September 1, 1998 or
January 25, 1999, as supplemented, 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 8, 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.
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.
NATIONS BLUE CHIP FUND AND NATIONS INTERMEDIATE BOND FUND INVEST ALL OF
THEIR NET INVESTABLE ASSETS IN CORRESPONDING MASTER PORTFOLIOS WHICH, IN TURN,
INVEST IN INDIVIDUAL SECURITIES.
5
<PAGE>
TABLE OF CONTENTS
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FEE TABLES.............................................................................................7
Table II.................................................................................8
SUMMARY................................................................................................9
Proposed Reorganization.......................................................................9
Special Consideration for Shareholders of the Pacific Horizon
Blue Chip Fund and the Pacific Horizon Intermediate Bond Fund...........................10
Overview of the Funds........................................................................11
Federal Income Tax Consequences..............................................................11
Pacific Horizon, MIT, Nations and NMIT Board Consideration...................................11
Principal Risk Factors.......................................................................12
Voting Information...........................................................................12
THE REORGANIZATION....................................................................................13
Reasons for the Reorganization...............................................................13
Description of the Reorganization Agreement..................................................13
Description of the Master Trust Reorganization Agreement.....................................15
Pacific Horizon and MIT Board Consideration..................................................15
Capitalization...............................................................................16
Table III...............................................................................16
Federal Income Tax Considerations............................................................22
Other Matters................................................................................23
COMPARISON OF PACIFIC HORIZON AND NATIONS.............................................................23
Investment Objectives and Policies...........................................................23
Investment Advisory Services ................................................................23
Table IV................................................................................24
Other Service Providers for the Pacific Horizon Funds and Nations Funds......................25
Sales Load, Distribution, Shareholder Servicing Arrangements
for the Pacific Horizon Funds...........................................................25
Sales Load, Distribution and Shareholder Servicing Arrangements
for the Nations Funds...................................................................28
Administration Agreements....................................................................29
Shareholder Transactions and Services........................................................30
Fees and Expenses............................................................................30
Share Structure..............................................................................30
Comparison of Corporate/Trust Structure......................................................31
VOTING MATTERS........................................................................................31
General Information..........................................................................31
Shareholder and Board Approvals..............................................................32
Special Consideration for Shareholders of the Pacific Horizon Blue Chip Fund
and the Pacific Horizon Intermediate Bond Fund..........................................33
Principal Shareholders.......................................................................33
Table V(A)..............................................................................34
Table V(B)..............................................................................44
Quorum.......................................................................................47
Annual Meetings and Shareholder Meetings.....................................................47
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ADDITIONAL INFORMATION ABOUT NATIONS..................................................................47
ADDITIONAL INFORMATION ABOUT PACIFIC HORIZON..........................................................48
FINANCIAL STATEMENTS..................................................................................48
OTHER BUSINESS........................................................................................48
SHAREHOLDER INQUIRIES.................................................................................49
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APPENDICES I(A) FORM OF REORGANIZATION AGREEMENT
I(B) FORM OF MASTER TRUST REORGANIZATION AGREEMENT
II EXPENSE SUMMARIES OF PACIFIC HORIZON FUNDS AND
CORRESPONDING NATIONS FUNDS
III INVESTMENT OBJECTIVES, LIMITATIONS AND
CERTAIN SIGNIFICANT INVESTMENT POLICIES
OF THE OPERATING NATIONS FUNDS AND
CORRESPONDING PACIFIC HORIZON FUNDS
IV SHAREHOLDER TRANSACTIONS AND SERVICES OF THE
NATIONS FUNDS AND CORRESPONDING PACIFIC HORIZON
FUNDS
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FEE TABLES
The following table shows (i) the current annualized total expense
ratio as of September 30, 1998, of those Pacific Horizon Funds to be reorganized
into Shell Nations Funds, and as of October 31, 1998 of those Pacific Horizon
Funds to be reorganized into Operating Nations Funds, and also the Operating
Nations Funds, both before and after fee waivers and/or expense reimbursements;
and (ii) the PRO FORMA annualized total expense ratio of the Shell Nations Funds
or Combined Funds, as the case may be, both before and after fee waivers and/or
expense reimbursements, as of the same dates, based upon the fee arrangements
and commitments 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, after fee
waivers and/or reimbursements, based upon the fee arrangements and commitments
that will be in place upon consummation of the Reorganization.
California Municipal Bond Fund - A & B Shares
California Tax-Exempt Money Market Fund -- Horizon Service and Pacific
Horizon Shares
Government Fund -- Horizon and Horizon Service Shares
Prime Fund -- Horizon, Horizon Service, Pacific Horizon and Y Shares
Tax-Exempt Money Fund -- Horizon, Horizon Service, Pacific Horizon and
S Shares
Treasury Fund -- Horizon, Horizon Service, Pacific Horizon and Y Shares
Treasury Only Fund -- Horizon, Horizon Service and Pacific Horizon
Shares
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The following funds and classes are projected to experience higher
annualized per share total operating expense ratios, after fee waivers and/or
reimbursements, based upon the fee arrangements and commitments 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 -- A and K Shares
Prime Fund -- S and X Shares
Treasury Fund -- X Shares
The following funds and classes are projected to experience no change
in annualized per share total operating expense ratios, after fee waivers and/or
reimbursements, based upon the arrangements and commitments 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
TABLE II
TOTAL EXPENSE INFORMATION
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PRO FORMA
PACIFIC HORIZON FUND/ TOTAL CORRESPONDING TOTAL COMBINED FUND/SHARE TOTAL
SHARE CLASS OPERATING NATIONS FUND/SHARE CLASS OPERATING CLASS POST-REORGANIZATION OPERATING
EXPENSES EXPENSES EXPENSES
BEFORE/AFTER BEFORE/AFTER BEFORE/AFTER
WAIVERS AND/OR WAIVERS AND/OR WAIVERS AND/OR
REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS
$ $ $
ASSET ALLOCATION FUND NATIONS ASSET ALLOCATION FUND (SHELL) NATIONS ASSET ALLOCATION FUND (SHELL)
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%
SRF Shares 0.97%/0.95% Seafirst Shares n/a Seafirst Shares 1.22%/0.95%
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PACIFIC HORIZON FUND/ TOTAL CORRESPONDING TOTAL COMBINED FUND/SHARE TOTAL
SHARE CLASS OPERATING NATIONS FUND/SHARE CLASS OPERATING CLASS POST-REORGANIZATION OPERATING
EXPENSES EXPENSES EXPENSES
BEFORE/AFTER BEFORE/AFTER BEFORE/AFTER
WAIVERS AND/OR WAIVERS AND/OR WAIVERS AND/OR
REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS
$ $ $
BLUE CHIP FUND NATIONS BLUE CHIP FUND (SHELL) NATIONS BLUE CHIP FUND (SHELL)
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%
SRF Shares 1.23%/0.95% Seafirst Shares n/a Seafirst Shares 1.28%/0.95%
CALIFORNIA MUNICIPAL BOND FUND NATIONS CALIFORNIA MUNICIPAL BOND FUND NATIONS CALIFORNIA MUNICIPAL BOND FUND
A Shares 0.94%/0.94% (SHELL) (SHELL)
B Shares 1.69%/1.69% Investor A Shares n/a Investor A Shares 1.07%/0.80%
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 Serv. Shares 0.49%/0.49% (SHELL) (SHELL)
Pac. Horizon Shares 0.59%/0.56% Adviser Shares n/a Adviser Shares 0.54%/0.45%
S Shares 1.24%/0.79% Investor Shares n/a Investor Shares 0.64%/0.55%
X Shares 0.81%/0.79% Daily Shares n/a Daily Shares 0.89%/0.80%
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%
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% Adviser Shares 0.54%/0.45% Adviser Shares 0.54%/0.45%
Pac. Horizon Shares 0.60%/0.55% Investor Shares (shell) n/a Investor Shares (shell) 0.64%/0.55%
INTERMEDIATE BOND FUND NATIONS INTERMEDIATE BOND FUND (SHELL) NATIONS INTERMEDIATE BOND FUND (SHELL)
A Shares 1.00%/0.96% Investor A Shares n/a Investor A Shares 1.06%/1.06%
K Shares 1.75%/1.46% Investor C Shares n/a Investor C Shares 1.81%/1.81%
SRF 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% Adviser Shares 0.53%/0.45% Adviser Shares 0.53%/0.45%
Pac. Horizon Shares 0.56%/0.56% Investor Shares (shell) n/a Investor Shares (shell) 0.63%/0.55%
S Shares 1.24%/0.79% Daily Shares (shell) n/a Daily Shares (shell) 0.88%/0.80%
X Shares 0.79%/0.79% Daily Shares (shell) n/a Daily Shares (shell) 0.88%/0.80%
Y Shares 1.24%/1.24% Service Shares (shell) n/a Service Shares (shell) 1.28%/1.20%
TAX-EXEMPT MONEY FUND NATIONS MUNICIPAL RESERVES NATIONS MUNICIPAL RESERVES
Horizon Shares 0.27%/0.27% Capital Shares 0.30%/0.20% Capital Shares 0.30%/0.20%
Horizon Serv. Shares 0.52%/0.52% Adviser Shares 0.55%/0.45% Adviser Shares 0.55%/0.45%
Pac. Horizon Shares 0.59%/0.59% Investor Shares (shell) n/a Investor Shares (shell) 0.65%/0.55%
S Shares 1.27%/0.82% Daily Shares (shell) n/a Daily Shares (shell) 0.90%/0.80%
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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% Adviser Shares 0.54%/0.45% Adviser Shares 0.54%/0.45%
Pac. Horizon Shares 0.56%/0.56% Investor Shares (shell) n/a Investor Shares (shell) 0.64%/0.55%
X Shares 0.79%/0.79% Daily Shares (shell) n/a Daily Shares (shell) 0.89%/0.80%
Y Shares 1.24%/1.24% Service Shares (shell) n/a Service Shares (shell) 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% Adviser Shares 0.54%/0.45% Adviser Shares 0.54%/0.45%
Pac. Horizon Shares 0.59%/0.59% Investor Shares (shell) n/a Investor Shares (shell) 0.64%/0.55%
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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 and
contemplates: (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; (3) the transfer of
all the assets and liabilities of Pacific Horizon; and (4) 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 the 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."
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NationsBanc Advisors, Inc. ("NBAI") has advised Pacific Horizon and
Nations Funds that NationsBank, N.A. ("NationsBank"), Bank of America National
Trust and Savings Association ("Bank of America") and their 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 will 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, Bank of America and their 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 Adviser Shares that such accounts will receive as a result of the
Reorganization for Trust Shares of the same Nations 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
net investable 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 net investable 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.
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COMPARISON OF INVESTMENT OBJECTIVES
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PACIFIC HORIZON FUND CORRESPONDING NATIONS FUND
- - -------------------- --------------------------
PACIFIC HORIZON GOVERNMENT FUND: seeks current NATIONS GOVERNMENT RESERVES: seeks to preserve
income, a stable share price and daily liquidity. principal value and maintain a high degree of
liquidity while providing current income.
PACIFIC HORIZON PRIME FUND: seeks current income, a NATIONS CASH RESERVES: seeks to preserve principal
stable share price and daily liquidity. value and maintain a high degree of liquidity while
providing current income.
PACIFIC HORIZON TAX-EXEMPT MONEY FUND: seeks current NATIONS MUNICIPAL RESERVES: seeks to preserve
income exempt from Federal taxes, a stable price and principal value and maintain a high degree of
daily liquidity. liquidity while providing current income exempt from
Federal income taxes.
PACIFIC HORIZON TREASURY FUND: seeks current income, NATIONS TREASURY RESERVES: seeks to preserve
a stable share price and daily liquidity. principal value and maintain a high degree of
liquidity while providing current income.
PACIFIC HORIZON TREASURY ONLY FUND: seeks current NATIONS GOVERNMENT RESERVES: seeks to preserve
income, a stable share price and daily liquidity. principal value and maintain a high degree of
liquidity while providing current income.
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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 the same as 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, 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.
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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 Nations Asset Allocation Fund, for which TradeStreet
and Chicago Equity will serve as co-investment sub-advisers. 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 all
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. With respect to thirty-two of the
forty-one share classes described in this Proxy/Prospectus, total operating
expense ratios (after waivers and reimbursements) are currently substantially
the same as or lower for the Nations Fund classes compared with corresponding
Pacific Horizon Fund classes. NBAI has agreed that it will commit to waive fees
and/or reimburse expenses as needed to ensure that, for one year from the
Reorganization, the Nations Funds total expense ratios will not exceed the PRO
FORMA after waiver expense rations shown in Table II, absent a determination by
the Nations Board that extraordinary circumstances or a material reduction in
Fund assets has occurred that has made it appropriate to permit an increase in
expense ratios. There can be no assurance that such expense ratios will continue
after this commitment expires. 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.
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 CONTINGENT DEFERRED SALES LOADS WILL BE
IMPOSED ON ANY OF THE SHAREHOLDERS OF THE PACIFIC HORIZON FUNDS SHARES AS A
RESULT OF THE EXCHANGE OF SHARES IN THE REORGANIZATION. IN ADDITION, NO
FRONT-END SALES LOADS WILL BE IMPOSED ON ANY OF THE NATIONS FUND SHARES ISSUED
IN THE REORGANIZATION.
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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 -- 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 other Pacific Horizon funds not described in 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 the Nations Funds Family; (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 Pacific Horizon 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. It also was noted that
NBAI or an affiliate would assume all customary expenses associated with the
Reorganization and that NBAI would commit to waive fees and/or reimburse
expenses as needed to ensure that, for one year from the date of the
Reorganization, the Nations Funds total operating expense ratios will not exceed
the PRO FORMA after waiver expense ratios shown in Table II, absent a
determination by the Nations' Board that extraordinary circumstances or a
material reduction in Fund assets has occurred that has made it appropriate to
permit an increase in expense levels. For additional information, see "The
Reorganization--Pacific Horizon and MIT Board Consideration."
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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 participation in the Reorganization, as contemplated by
the Reorganization Agreement, was in the best interests of Pacific Horizon and
that the interests of the existing shareholders of Pacific Horizon 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 MIT Master Portfolios.
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 MIT, and
that the interests of existing interestholders of MIT will not be diluted as a
result of the Reorganization. MIT'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT THE ITS INTERESTHOLDERS 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 shareholders of the Nations Funds and the Nations Master
Portfolios, respectively, and that the interests of the shareholders of the
Nations Funds and the interestholders 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 New 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, in general, 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.
16
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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 interestholders
in MIT, in the same proportion. The Master Trust Reorganization Agreement is
subject to approval by its interestholders, which includes two offshore funds
managed by Bank of America (the "World Horizon Funds") that also invest in the
MIT Master Portfolios. 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
REASONS FOR THE REORGANIZATION. Significant features of the
Reorganization are summarized below. This summary is qualified in its entirety
by reference to the Reorganization Agreement, the form of which is attached as
Appendix I(A) and the Master Trust Reorganization Agreement, the form of which
is attached as Appendix I(B).
The proposed Reorganization is expected to benefit Pacific Horizon Fund
shareholders by, among other things:
(i) 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;
17
<PAGE>
(ii) Offering access to a broader array of investment products, including a line
of fund-of-funds;
(iii) Offering similar access and servicing arrangements; and
(iv) Providing opportunities for enhanced returns through combined investment
portfolios.
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 pages 4-5 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. NBAI has advised Pacific Horizon and Nations
Funds that NationsBank, Bank of America and their 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 will 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 Adviser Shares
that such accounts will receive as a result of the Reorganization for Trust
Shares of the same Fund of equal value at or shortly after Closing.
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.
18
<PAGE>
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 of certain
administrative servicing responsibilities to The Bank of New York ("BNY"); the
receipt of an exemptive order with respect to Section 9(a) of the 1940 Act by
Stephens Inc. ("Stephens"); 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 Pacific Horizon Board of
Directors will contemplate what further action is appropriate.
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 Nations, 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 or trustees must not be "interested persons" of the investment
adviser, within the meaning of the 1940 Act. Nations' 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 -- the Pacific Horizon Funds' investment
adviser -- which occurred when NationsBank Corporation and BankAmerica
Corporation merged on September 30, 1998.
19
<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 3 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 interestholders, which, at such time, will be Nations
Blue Chip Fund and Nations Intermediate Bond Fund and the two corresponding
World Horizon Funds (the two offshore funds that also invest in each MIT Master
Portfolio), 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 Pacific Horizon Blue Chip 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
interestholders 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.
20
<PAGE>
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 Funds 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 several times in late 1998 and early 1999, 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 for each Fund and its shareholders and each Master Portfolio
and its interestholders. In addition, the Pacific Horizon Directors and MIT
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 Pacific Horizon Board
also was 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).
The Reorganization was unanimously approved by the Pacific Horizon
Board of Directors and by the MIT Board of Trustees on January 14, 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 other Pacific Horizon funds not described in 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 Pacific Horizon 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.
21
<PAGE>
Pacific Horizon's Directors further noted that, with respect to
thirty-three of the forty-two share classes of the Pacific Horizon Funds
described in this Proxy/Prospectus, 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.
See "Table II - Total Expense Information" and Appendix II for more information.
It also noted that NBAI or an affiliate 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 the
Reorganization, the Nations Funds total operating expense ratios will not exceed
the PRO FORMA after waiver expense ratios shown in Table II, absent a
determination by the Nations Board that extraordinary circumstances or a
material reduction in Fund assets has occurred that has made it appropriate to
permit an increase in expense ratios. In addition, it noted that NBAI would
agree to waive fees and/or reimburse expenses, as needed, to ensure that the
total operating expense ratio of any Pacific Horizon Fund that is not
reorganized into a corresponding Nations Fund on the closing date of the
reorganization of the other Pacific Horizon Funds into corresponding Nations
Funds will not, for one year from such date, exceed such Fund's current expense
ratio as shown in Table II, absent a determination by the Pacific Horizon Board
that extraordinary circumstances or a material reduction in Fund assets that
impacts expense levels has occurred that has made it appropriate to permit an
increase in expense levels.
After consideration of the foregoing and other factors, the Pacific
Horizon Directors unanimously determined that the Reorganization is in the best
interest of Pacific Horizon, and that the interest of the existing shareholders
of Pacific Horizon 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 MIT,
and that the interests of the existing interestholders of MIT will not be
diluted as a result of the 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.
22
<PAGE>
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.
<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)
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>
23
<PAGE>
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.
<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)
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/Seafirst) (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>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING 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)
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>
24
<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 $746,840,011 746,903,947 $1.00
Money Market Fund (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)
PRO FORMA Combined Fund $746,840,011 746,903,947 $1.00
(Horizon Service (Horizon Service (Horizon Service
Shares/ Shares/ Shares/
Adviser Class) Adviser Class) Adviser 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>
25
<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)
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.
<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)
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>
26
<PAGE>
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)
$1,201,778,801 1,201,983,445 $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
(Adviser Class) (Adviser Class) (Adviser Class)
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/
Adviser Class) Adviser Class) Adviser 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>
27
<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>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING 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
(Adviser Class) (Adviser Class) (Adviser Class)
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/
Adviser Class) Adviser Class) Adviser 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>
28
<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 ) 414,459,631 (Pacific Horizon )
$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
(Adviser Class) (Adviser Class) (Adviser 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/
Adviser Class) Adviser Class) Adviser Class)
$432,672,305 432,816,395 $1.00
(Pacific Horizon/ (Pacific Horizon/ (Pacific Horizon/
Investor Class) Investor Class) Investor Class)
$414,462,658 414,459,631 $1.00
(X Shares/Daily (X Shares/Daily Shares) (X Shares/Daily
Shares) 99,146,971 Shares)
$99,148,339 (Y Shares/ Service $1.00
(Y Shares/ Service Class) (Y Shares/ Service
Class) Class)
</TABLE>
29
<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>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
---------------- ------------------ ---------
<S> <C> <C> <C>
Pacific Horizon Government Fund $80,154,845 80,182,972 $1.00
(Fund A) (Horizon Shares) (Horizon Shares) (Horizon Shares)
$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)
$257,223,848 257,238,569 $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
(Adviser Class) (Adviser Class) (Adviser Class)
PRO-FORMA Combined Fund $240,454,845 240,483,483 $1.00
(Fund A+ Fund C) (Horizon Shares/ (Horizon Shares/ (Horizon Shares/
Capital Class) Capital Class) Capital Class)
$349,703,621 349,798,865 $1.00
(Horizon Service/ (Horizon Service/ (Horizon Service/
Adviser Class) Adviser Class) Adviser 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/
Adviser Class) Adviser Class) Adviser Class)
$227,237,891 227,268,646 $1.00
(Pacific Horizon/ (Pacific Horizon/ (Pacific Horizon/
Investor Class) Investor Class) Investor Class)
30
<PAGE>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
---------------- ------------------ ---------
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/
Adviser Class) Adviser Class) Adviser Class)
$379,685,896 379,853,001 $1.00
(Pacific (Pacific (Pacific
Horizon/Pacific Horizon/Pacific Horizon/Pacific
Horizon/ Investor Horizon/ Investor Horizon/ Investor
Class) Class) Class)
</TABLE>
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 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 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 assets and
assumption of liabilities of the Pacific Horizon Fund solely in exchange for the
Nations Fund Shares; (iv) the basis of the Pacific Horizon Fund's 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.
31
<PAGE>
Consummation of the consolidation of the Blue Chip and Investment Grade
Portfolio of MIT into corresponding portfolios of NMIT is subject to the
condition that Pacific Horizon and Nations receive an opinion from Morrison &
Foerster LLP substantially to the effect that, among other things: the
consolidation will not result in the recognition of gain or loss by the Blue
Chip and Investment Grade Portfolio of MIT or corresponding portfolios of NMIT,
or their respective interestholders; the basis of the Blue Chip and Investment
Grade Portfolios' assets received by corresponding portfolios of NMIT will be
the same as the basis of those assets in the hands of Blue Chip and Investment
Grade Portfolios of MIT immediately prior to the consolidation; and the holding
period of NMIT's Master Portfolios in the assets received from MIT will be the
same as the MIT's holding period immediately prior to the consolidation.
Pacific Horizon, Nations, 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 opinions of
Morrison & Foerster LLP with respect to the federal income tax consequences of
the Reorganization and consolidation of MIT and NMIT are not binding on the IRS
and does not preclude the IRS from adopting contrary positions. 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. NBAI has recommended to the Nations Board that two
Directors from the Pacific Horizon Board be added to the Nations Board. The
Nations Board is expected to consider such recommendation shortly.
In addition, under a retirement plan approved by the Pacific Horizon
Board, several Pacific Horizon Directors who have been in office for a specified
period of time are 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 for all the Pacific
Horizon Directors who will, therefore, receive retirement benefits following the
Reorganization. NBAI will contribute to Pacific Horizon the amount of any
shortfall to the extent that payment of benefits exceed what was accrued.
It also is currently contemplated that, certain additional mutual funds
if shareholder approval is obtained, would be reorganized into the Nations Asset
Allocation Fund after the Reorganization. These reorganizations, if approved,
would increase the total assets of the Nations Asset Allocation Fund.
32
<PAGE>
COMPARISON OF PACIFIC HORIZON AND NATIONS
INVESTMENT OBJECTIVES AND POLICIES. The investment objectives, policies
and restrictions of the Pacific Horizon Funds are, in general, 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. In addition, it is expected that Nations Funds shareholders
will be asked in mid-1999 to approve certain changes to the investment policies
and restrictions of certain Nations Funds. These changes, if approved, would not
alter the primary investment strategy of any such Nations 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 the same as 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, 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
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.
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.
33
<PAGE>
INVESTMENT ADVISORY SERVICES. 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 and Nations Asset Allocation
Fund). 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.
The following table shows the contractual investment advisory and,
where applicable, sub-advisory fee ratios. The table also shows the respective
investment advisory and sub-advisory fee rates paid to the investment adviser
and sub-adviser after taking into account voluntary fee waivers, for each
Pacific Horizon Fund (as of September 30, 1998) and corresponding Nations Fund
(as of September 30, 1998 or October 31, 1998, as the case may be). The Nations
Funds' investment advisory fees as of September 30, 1998, however, have been
adjusted to reflect a Board-approved reduction in the advisory fee rates under
the investment advisory contracts. The investment advisory fees shown are
expected to become effective in May 1999, at or prior to the closing of the
Reorganization.
TABLE IV
INVESTMENT ADVISORY AND SUB-ADVISORY FEE INFORMATION
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON FUND ADVISORY FEES CORRESPONDING NATIONS FUND ADVISORY & SUB-
BEFORE/ AFTER WAIVERS ADVISORY FEES
BEFORE/ AFTER WAIVERS
- - ---------------------------------------------------------------------------------------------------------
Pacific Horizon Asset Allocation Fund Nations Asset Allocation Fund (shell)
Advisory Fee 0.40%/0.40% Advisory Fee 0.65%%/0.65%
Sub-Advisory Fee 0.25%/0.25%
(paid by Advisor)
Pacific Horizon Blue Chip Fund Nations Blue Chip Fund (shell)
Advisory Fee 0.50%/0.50% Advisory Fee 0.65%%/0.65%
Sub-Advisory Fee 0.25%/0.25%
(paid by Advisor)
Pacific Horizon California Municipal Bond Fund Nations California Municipal Bond Fund (shell)
Advisory Fee 0.30%/0.30% Advisory Fee 0.50%/0.28%
Sub-Advisory Fee 0.07%/0.07%
(paid by Advisor)
34
<PAGE>
PACIFIC HORIZON FUND ADVISORY FEES CORRESPONDING NATIONS FUND ADVISORY & SUB-
BEFORE/ AFTER WAIVERS ADVISORY FEES
BEFORE/ AFTER WAIVERS
- - ---------------------------------------------------------------------------------------------------------
Pacific Horizon California Tax-Exempt Money Market Fund Nations California Tax-Exempt Reserves (shell)
Advisory Fee 0.10%/0.10% Advisory Fee 0.15%/0.10%
Sub-Advisory Fee 0.033%/0.033%
(paid by Advisor)
Pacific Horizon Capital Income Fund Nations Capital Income Fund (shell)
Advisory Fee 0.45%/0.45% Advisory Fee 0.65%/0.65%
Sub-Advisory Fee 0.25%/0.25%
(paid by Advisor)
Pacific Horizon Government Fund Nations Government Reserves
Advisory Fee 0.10%/0.05% Advisory Fee 0.15% 0.10%
Sub-Advisory Fee 0.033%/0.033%
(paid by Advisor)
Pacific Horizon Intermediate Bond Fund Nations Government Reserves
Advisory Fee 0.30%/0.26% Advisory Fee 0.15% 0.10%
Sub-Advisory Fee 0.033%/0.033%
(paid by Advisor)
Pacific Horizon Prime Fund Nations Cash Reserves
Advisory Fee 0.09%/0.09% Advisory Fee 0.15%/0.10%
Sub-Advisory Fee 0.033%/0.033%
(paid by Advisor)
Pacific Horizon Treasury Fund Nations Treasury Reserves
Advisory Fee 0.10%/0.10% Advisory Fee 0.15%/0.10%
Sub-Advisory Fee 0.033%/0.033%
(paid by Advisor)
Pacific Horizon Treasury Only Fund Nations Government Reserves
Advisory Fee 0.10%/0.10% Advisory Fee 0.15% 0.10%
Sub-Advisory Fee 0.033%/0.033%
(paid by Advisor)
Pacific Horizon Tax-Exempt Money Fund Nations Municipal Reserves
Advisory Fee 0.10%/0.10% Advisory Fee 0.15% 0.10%
Sub-Advisory Fee 0.033%/0.033%
(paid by Advisor)
</TABLE>
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>
<S> <C>
Pacific Horizon Funds Nations Funds
--------------------- -------------
Distributor Provident Distributors, Inc. Stephens
(Pacific Horizon Funds Only)
Administrator Bank of America Stephens and NBAI
PFPC, Inc. (MIT Master Portfolios)
Sub-Administrator PFPC, Inc. NationsBank
Transfer Agent PFPC, Inc. First Data Investor Services Group,
Inc.
Sub-Transfer Agent N/A NationsBank, N.A.
Custodian PFPC Trust Company (Asset Allocation BNY
Fund and MIT Master Portfolios Only)
BNY (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.
SALES LOAD, DISTRIBUTION AND SHAREHOLDER SERVICING ARRANGEMENTS 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 A 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 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 of $1,000,000 or more
are subject to a contingent deferred sales charge ("CDSC") of 1% on redemptions
made within 18 months of purchases made before November 16, 1998 or 1% on
redemptions made within one 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 of 1% on redemptions made within one year of
purchase, declining to .50% in the second year and eliminated thereafter. 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 to
existing shareholders). Shareholder Servicing expenses include expenses incurred
in connection with Shareholder Services provided by Bank of America and
Provident and payments to service organizations for the provision of support
services with respect to beneficial owners of B Shares. Under the Distribution
and Services 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 and payments for Shareholder Servicing may not exceed 0.25%
(annualized) of the average daily net assets of a Fund's B Shares. Class B
Shares are offered at net asset value per share without the imposition of a
front-end sales load. There is a maximum CDSC of 5% on redemptions of B Shares
made within 1 year of purchase declining to 1% in the sixth year and eliminated
thereafter; Investor B Shares of the corresponding Nations Fund received in
exchange for such shares will be subject to the same CDSC. For all cases, former
Class B shareholders will be credited for the period of time from the original
date of purchase of their shares for the purposes of determining the amount of
their CDSC, if any.
K SHARES. Pacific Horizon 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 to 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.
37
<PAGE>
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, payments for shareholder servicing
expenses may not exceed 0.25% (annualized) of the average daily net assets of a
Fund's K Shares, 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 K Shares. Class K Shares are offered
at net asset value per share with no front-end sales load or contingent deferred
sales charge.
SRF SHARES. Pacific Horizon has adopted a Shareholder Services Plan for
SRF Shares under which the SRF Shares of each Pacific Horizon Fund reimburse
Pacific Horizon's distributor--Provident--for shareholder servicing fees that
Provident pays to various service organizations whose customers own SRF Shares.
Payments made under the Shareholder Services Plan for SRF Shares also cover
shareholder services provided by Provident and for support services provided to
the beneficial owners of SRF 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" SRF Shares. Excluded from this calculation, however, are all
shares acquired via a transfer of assets from trust and agency accounts at Bank
of America. SRF Shares are offered at net asset value per share with no
front-end sales load or contingent deferred sales charge.
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 services provided to holders of such 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. Horizon Service Shares are offered
at net asset value per share with no front-end sales load or contingent deferred
sales charge.
38
<PAGE>
PACIFIC HORIZON SHARES. Pacific Horizon has adopted a Special
Management Services Plan for Pacific Horizon Shares, under which the Pacific
Horizon Shares of each Pacific Horizon Fund reimburse Bank of America and its
affiliates, securities dealers, financial institutions and other industry
professionals for services provided to holders of Pacific Horizon Shares.
Payments made under the Special Management Services Plan for Pacific Horizon
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. Pacific Horizon
Shares are offered at net asset value per share with no front-end sales load or
contingent deferred sales charge.
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 (except those used for regulatory purposes or distributed to
existing shareholders). Shareholder servicing expenses include payment for
support services to beneficial owners of X Shares. Under the Distribution and
Services 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. Class X Shares are offered at
net asset value per share with no front-end sales load or contingent deferred
sales charge.
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 (except those used for regulatory purposes or distributed to
existing shareholders). Shareholder servicing expenses include payment for
support services to beneficial owners of Y Shares. Under the Distribution and
Services 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. Class Y Shares are offered
at net asset value per share with no front-end sales load or contingent deferred
sales charge.
39
<PAGE>
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. Shareholder servicing expenses include payments for support
services to beneficial owners of S Shares. Under the Distribution and Services
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. Class S Shares are offered
at net asset value per share with no front-end sales load or contingent deferred
sales charge.
SALES LOAD, 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, and 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). Purchases of $1
million or more of Investor A Shares that are purchased at net asset value are
subject to a maximum deferred sales charge of 1% of the lower of the original
purchase price or redemption proceeds, if redeemed within 1 year of purchase
declining to .50% in the second year and eliminated thereafter. Investor A
Shares that were purchased by investors investing $1 million or more between
July 31, 1997 and November 15, 1998 are subject to a 1% redemption fee if the
Investor A Shares are held less than 18 months. Investor A Shares of the Nations
Fund received in exchange for Class A Shares will be subject to the CDSC. 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 the purposes of
determining the amount of their CDSC, if any.
40
<PAGE>
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 are offered at net asset value per share without the
imposition of a front-end sales load. There is a maximum CDSC of 5% on
redemptions of Investor B Shares made within 1 year of purchase declining to 1%
in the sixth year and eliminated thereafter; Investor B Shares of the Nations
Fund received in exchange for Class B Shares will be subject to the CDSC. For
all cases, former Class B shareholders will be credited for the period of time
from the original date of purchase of their shares for the purposes of
determining the amount of their CDSC, if any.
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 19, 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.
41
<PAGE>
ADVISER 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 connection 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. Adviser Shares are offered at net asset value per share with no
front-end sales load or contingent deferred sales charge.
SEAFIRST SHARES. It is anticipated that Nations will adopt 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 Shares. Seafirst Shares are offered at net asset value per share
with no front-end sales load or contingent deferred sales charge.
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. Investor Shares
are offered at net asset value per share with no front-end sales load or
contingent deferred sales charge.
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. Daily Shares are offered at
net asset value per share with no front-end sales load or contingent deferred
sales charge.
42
<PAGE>
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. Service
Shares are offered at net asset value per share with no front-end sales load or
contingent deferred sales charge.
ADMINISTRATION AGREEMENTS. The Pacific Horizon Funds have entered into
an administration agreement with Bank of America. Stephens serves as
co-administrator to Nations Funds. Effective December 1, 1998, NBAI began
serving as co-administrator to Nations Funds with Stephens, and BNY began
serving as sub-administrator. Under the new administration arrangements, which
become effective for the Nations Funds on a Fund by Fund basis during the fourth
quarter of 1998 and the first quarter of 1999, Stephens and NBAI provide various
administrative, accounting and corporate secretarial services and BNY assists
NBAI in performing certain administrative and accounting services.
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 Investor A Shares and Investor
C Shares of the Nations Funds is generally $1,000. Also, each Pacific Horizon
Fund generally requires a $500 minimum account balance, while Nations requires a
$1,000 minimum account 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.
43
<PAGE>
The Pacific Horizon Funds and the corresponding Nations Funds also
offer generally similar exchange privileges, with some differences. One
difference is that not all Pacific Horizon Fund shares that may currently be
exchanged for shares of Pacific Horizon California Tax-Exempt Money Market Fund
will, following the Reorganization, be exchangeable for shares of Nations
California Tax-Exempt Reserves. Another difference is that shares of Pacific
Horizon money market funds acquired in an exchange from shares of Pacific
Horizon non-money market funds that were subject to a sales load at the time of
original purchase, will no longer be freely exchangeable into a Nations Funds
non-money market fund following the Reorganization. Accordingly, certain
shareholders seeking to sell such money market fund shares and purchase shares
of Nations non-money market funds may be subject to an additional sales load. In
addition, shares of Time Horizon Funds will no longer be available for exchange
following the Reorganization.
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 a determination by the Nations Funds
Board that extraordinary circumstances or a material reduction in Fund assets
has occurred that has made it appropriate to permit an increase in expense
levels. There can be no assurance that such expense ratios will continue after
this commitment expires. 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 Funds Family, which includes several
registered investment companies, currently offers sixty-one funds and 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 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.
44
<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 Pacific Horizon 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 Pacific Horizon and Nations 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
interestholder 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, interestholders of a
Massachusetts business trust like Nations 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 interestholder incurring a financial
loss on account of interestholder liability is limited to circumstances in which
the trust itself is unable to meet its obligations.
In addition, Nations Funds shareholders may be asked to approve certain
changes to the corporate structure of Nations, including, possibly changing
Nations from a Massachusetts business trust to a Delaware business trust. This
change, if required approvals are obtained, will allow the several registered
investment companies in the Nations Funds Family to operate under a single
registered investment company thereby permitting the Nations Funds Family to
operate with increased efficiency.
45
<PAGE>
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 MAY ALSO SOLICIT PROXIES BY TELEPHONE OR OTHERWISE. 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) by 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 of
revocation or a subsequently executed proxy or by attending the Meeting and
voting in person.
Any expenses incurred as a result of hiring ADP Proxy Services or any
other proxy solicitation agent will be borne by NBAI or its affiliates.
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 3,226,763.17
B Shares 170,419.24
K Shares 80,935.10
SRF Shares 12,346,171.24
BLUE CHIP FUND
A Shares 11,936,562.48
B Shares 291,681.75
K Shares 378,920.92
SRF Shares 14,274,285.54
CALIFORNIA MUNICIPAL BOND FUND
A Shares 28,909,675.83
B Shares 246,705.13
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
Horizon Service Shares 726,981,000.28
Pacific Horizon Shares 574,847,823.54
S Shares 299,332,058.48
X Shares 34,944,197.16
46
<PAGE>
NAME OF PACIFIC HORIZON FUND AND CLASS SHARES ENTITLED TO VOTE
- - -------------------------------------- -----------------------
CAPITAL INCOME FUND
A Shares 21,202,563.92
B Shares 163,269.53
K Shares 225,277.76
GOVERNMENT FUND
Horizon Shares 173,838,398.51
Horizon Service Shares 201,684,643.25
Pacific Horizon Shares 139,075,898.93
INTERMEDIATE BOND FUND
A Shares 6,762,516.10
K Shares 51,402.79
SRF Shares 3,120,935.37
PRIME FUND
Horizon Shares 3,928,634,945.13
Horizon Service Shares 4,398,620,097.13
Pacific Horizon Shares 2,931,913,169.44
S Shares 1,436,409,926.58
X Shares 1,859,315,383.25
Y Shares 214,930,420.74
TAX-EXEMPT MONEY FUND
Horizon Shares 349,794,173.87
Horizon Service Shares 189,829,041.40
Pacific Horizon Shares 162,699,967.64
S Shares 61,150,711.05
TREASURY FUND
Horizon Shares 813,687,978.13
Horizon Service Shares 1,668,841,214.25
Pacific Horizon Shares 366,005,205.04
X Shares 557,699,132.10
Y Shares 117,557,093.79
TREASURY ONLY
Horizon Shares 39,615,302.71
Horizon Service Shares 281,112,181.19
Pacific Horizon Shares 189,420,127.86
Each whole and fractional share of a Pacific Horizon Fund is entitled
to a whole or fractional vote.
47
<PAGE>
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.
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 14, 1999. The
Reorganization Agreement must be approved by a majority of the outstanding
shares of each Pacific Horizon Fund and the reorganization of Pacific Horizon
must be approved by a majority of the outstanding shares of all the funds 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 shares
may approve the Reorganization Agreement while a sufficient majority of all
shares of Pacific Horizon funds voting in the aggregate do not vote to approve
the reorganization of Pacific Horizon. In such a case, the Board of Directors
will contemplate what further action is appropriate.
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.
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 interestholders
in MIT, in the same proportion. The Master Trust Reorganization Agreement is
subject to approval by its interestholders, which includes two World Horizon
Funds that also invest in each MIT Master Portfolio. 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.
48
<PAGE>
With respect to the approval of the MIT 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.
PRINCIPAL SHAREHOLDERS. As of January 14, 1999, the officers and
Directors of Pacific Horizon and the Trustees of MIT as a group owned or
controlled less 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 or
controlled less than 1% of any of the Nations Funds. Table V(A) shows the name,
address and share ownership of each person known to Pacific Horizon to have
ownership with respect to 5% or more of a class of a Pacific Horizon Fund as of
January 14, 1999. Table V(B) shows the name, address and share ownership of each
person known to Nations to have ownership with respect to 5% or more of a class
of a Nations Fund as of January 14, 1999. The type of ownership of each entry
listed on Tables V(A) and V(B) is record ownership.
TABLE V(A)
<TABLE>
<CAPTION>
PERCENTAGE
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
<S> <C> <C> <C> <C>
Pacific Horizon Corelink Financial Inc. A; 327,696.61 10.15% 2.07% 2.07%
Asset Allocation Fund PO Box 4054
Concord, CA 94524
Bank of America MT&SA A; 268,724.42 8.33% 1.70% 1.70%
FBO PACO
Attn Mutual Funds Unit R
38615
PO Box 3577 Terminal Annex
Los Angeles, CA 90051
Vanguard Fiduciary Trust A; 162,187.09 5.02% 1.02% 1.02%
Company
FBO Kirkland & Ellis Def
Contribution
Retirement Plan 91926
PO Box 2600 VN 421
Valley Forge, PA 19482-
2600
49
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
BA Investment Services Inc. B; 9,794.26 5.92% 0.06% 0.06%
FBO 434216501
185 Berry St.
3rd Floor 12640
San Francisco, CA 94107
Corelink Financial Inc. K; 79,339.29 100% 0.50% 0.50%
PO Box 4054
Concord, CA 94524
Seafirst Bank SRF; 12,351,014.31 100% 78.05% 78.05%
FBO Retirement Services
PO Box 84248 CSC-11
Seattle, WA 98124
Pacific Horizon Blue Bank of America MT&SA A; 775,730.88 6.48% 2.89% 2.89%
Chip Fund The Private Bank
Attn Common Trust Funds
Unit 38329
PO Box 513577 Terminal
Annex
Los Angeles, CA 90051
Corelink Financial Inc. A; 602,236.58 5.03% 2.24% 2.24%
PO Box 4054
Concord, CA 94524
Corelink Financial Inc. K; 326,829.02 99.31% 1.37% 1.37%
PO Box 4054
Concord, CA 94524
Seafirst Bank SRF; 14,275,619.10 100% 53.11% 53.11%
FBO Retirement Services
PO Box 84248 CSC-11
Seattle, WA 98124
Pacific Horizon BA Investment Services Inc. B; 19,936.12 8.08% 0.07% 0.07%
California Municipal FBO 423463871
Bond Fund 185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
BA Investment Services Inc. B; 13,143.19 5.32% 0.05% 0.05%
FBO 433206391
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
50
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
BA Investment Services Inc. B; 23,804.59 9.64% 0.08% 0.08%
FBO 350054041
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
BA Investment Services Inc. B; 17,668.70 7.16% 0.06% 0.06%
FBO 432872421
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
BA Investment Services Inc. B; 27,135.64 10.99% 0.09% 0.09%
FBO 426864851
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
BA Investment Services Inc. B; 14,136.36 5.73% 0.05% 0.05%
FBO 426314811
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
BA Investment Services Inc. B; 13,932.26 5.64% 0.05% 0.05%
FBO 432980251
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
BA Investment Services Inc. B; 13,529.53 5.48% 0.05% 0.05%
FBO 320001191
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
BA Investment Services Inc. B; 13,700.68 5.55% 0.05% 0.05%
FBO 424327321
185 Berry Street
3rd Floor 12640
San Francisco, CA 94107
Pacific Horizon BA Investment Services Inc. S; 299,260,834.25 99.98% 18.29% 18.29%
California For the Benefit of
Tax-Exempt Money Customers
Market Fund Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
51
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
BA Investment Services Inc. X; 34,944,197.16 100% 2.14% 2.14%
For the Benefit of
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
BA Investment Services Inc. Pacific Horizon; 49.74% 17.47% 17.47%
For the Benefit of 285,898,234.44
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
BancAmerica Robertson Pacific Horizon; 44.78% 15.73% 15.73%
Stephens 257,427,533.23
For the Benefit of
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
Bank of America MT&SA Horizon Service;; 63.13% 25.69% 25.69%
Trst/Cus 420,297,706.56
Attn Common TR FDS Unit
38329
Terminal Annex
PO Box 513577
Los Angeles, CA 90051-1577
BA Investment Services Inc. Horizon Service;; 35.36% 14.39% 14.39%
For the Benefit of 235,403,780.67
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
H. Joseph Horowitz Horizon Service; 9.86% 0.37% 0.37%
and Joele L. Horowitz 6,029,332.48
Trst The Horowitz Family
Trust
U/A DTD 11-6-89
52 Isabella Avenue
Atherton, CA 94025
52
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
Leo Zuckerman Horizon Service; 6.54% 0.24% 0.24%
Trst Leo Zuckerman Trust 3,997,714.63
DTD 12-11-91
4444 Viewridge Avenue
San Diego, CA 92123
R. C. Johnstone, Jr. Horizon Service; 5.62% 0.21% 0.21%
PO Box 938 3,438,599.64
Drinda, CA 94563
Lakeshore Learning Natl's Horizon Service; 10.75% 0.40% 0.40%
2695 E. Dominquez St. 6,574,562.22
Carson, CA 90749
Allan G. Byer Horizon Service; 7.53% 0.28% 0.28%
and Marian Byer 4,607,244.69
Tenants in Common
Attn Ed Hamburg Byer
California
66 Potrero Avenue
San Francisco, CA 94103
Pacific Horizon Corelink Financial Inc. K; 204,088.84 91.79% 0.95% 0.95%
Capital Income Fund PO Box 4054
Concord, CA 94524
Pacific Horizon Bank of America MT&SA Cus Horizon; 7.62% 2.57% 0.98%
Government Fund PO Box 513577 13,247,948.92
Attn Common TA FDS Unit
38329
Terminal Annex
Los Angeles, CA 90051-1577
Skinner Corporation Horizon; 6.99% 2.36% 0.90%
Attn Debbie Sokvitne 12,148,145.58
1326 Fifth Ave., Ste 711
Seattle, WA 98101-0000
Imperial Thrift and Loan Horizon; 5.56% 1.88% 0.71%
Association 9,657,275.54
Attn Steve Cooper
700 N. Central Ave, #600
Glendale, CA 91203
53
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
Cypress Insurance Co. Horizon; 8.89% 3.01% 1.14%
Attn Larry Tetzloff 15,468,153.19
9290 W. Dodge Rd.
Omaha, NE 68124-0000
E-Tek Dynamics Horizon ; 11.54% 3.90% 1.48%
Cont Jeff Chase 20,066,483.30
Attn General Accounting
1865 Lundy Ave.
San Jose, CA 95101
Lone Star Technologies Inc. Horizon ; 10.83% 3.66% 1.39%
Attn Charles J. Keszler 18,822,092.63
PO Box 803546
Dallas, TX 75380-3546
Chase Manhattan Bank Horizon; 36.91% 12.47% 4.74%
FBO Global Trust 64,168,687.10
Attn Dave Sturman
450 W. 33rd St., 15th Flr.
New York, NY 10001
Wall Data Incorporated Pacific Horizon; 5.98% 1.61% 0.61%
11332 NE 122nd Way 8,302,960.89
Kirkland, WA 98034
Hare & Co. Pacific Horizon; 5.31% 1.43% 0.54%
Attn Bank of New York 7,383,276.70
Short Term Investment Funds
One Wall Street, 2nd Fl.
New York, NY 10286
BA Investment Services Inc. Pacific Horizon; 64.33% 17.38% 6.61%
For the Benefit of 89,467,284.80
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
BancAmerica Robertson Pacific Horizon; 11.44% 3.09% 1.18%
Stephens 15,908,350.13
For the Benefit of
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
54
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
Bank of America MT&SA Horizon Service; 78.93% 7.66% 2.91%
Trst Financial Management 39,423,822.88
& Trust Srvcs
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
Security Pacific Cash Horizon Service; 13.86% 1.35% 0.51%
Management 6,922,700.00
c/o Bank of America GPO
M/C 5533
Attn Regina Olsen
1850 Gateway Blvd. M/C 5533
Concord, CA 94520-0000
Charlotte Russe Inc. Horizon Service; 6.41% 1.89% 0.72%
Attn Accounting Department 9,731,596.64
4645 Morena Blvd.
San Diego, CA 92117-3650
Lone Star Northwest Inc. Horizon Service; 5.30% 1.56% 0.59%
Attn Troy Lucas 8,026,735.60
PO Box 1730
Seattle, WA 98111
Viejas Band of Kumevaay Horizon Service; 8.01% 2.36% 0.89%
Indians 12,155,086.94
A Federally Recognized
Indian Tribe
5000 Willows Rd.
Alpine, CA 91901
Viejas Band of Kumevaay Horizon Service; 5.73% 1.69% 0.64%
Indians 8,694,999.81
5005 Willow Rd., Ste 229
Alpine, CA 91901
Hometown Health Prov. Ins. Horizon Service; 5.70% 1.68% 0.64%
Co. 8,650,000.00
Attn Jackie Drews
240 S. Rock, Ste. 123
Reno, NV 89502
55
<PAGE>
Pacific Horizon PACO A; 749,200.41 11.08% 7.54% 7.54%
Intermediate Bond Attn Mutual Funds
Fund PO Box 513577
Los Angeles, CA 90051
Bank of America MT&SA A; 4,091,475.28 60.49% 41.18% 41.18%
The Private Bank
Attn Common Trust Funds
Unit 38329
PO Box 3577 Terminal Annex
Los Angeles, CA 90051
PACO A; 431,389.74 6.38% 4.34% 4.34%
PO Box 513577
Los Angeles, CA 90051
Corelink Financial Inc. K; 50,718.19 99.99% 0.51% 0.51%
PO Box 4054
Concord, CA 94524
Seafirst Bank SRF; 3,123,953.28 100.% 31.44% 31.44%
FBO Retirement Services
PO Box 84248 CSC-11
Seattle, WA 98124
Pacific Horizon Bank of America MT&SA Horizon; 28.77% 7.65% 4.76%
Prime Fund Private Bank 1,130,283,259.08
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
Ceridian Corporation Horizon; 14.38% 3.83% 2.38%
Trst Ceridian Corp Tax 565,000,000.00
Filing Trust
Attn Michael Yietz
17390 Brookhurst St.
Fountain Valley, CA
92708-3737
Bank of America MT&SA Horizon Service; 42.26% 6.73% 4.19%
Financial Management & 994,555,917.66
Trust Services
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
56
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
BancAmerica Robertson Horizon Service; 5.07% 0.81% 0.50%
Stephens 119,370,558.73
For the Benefit of
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
BA Investment Services Inc. Horizon Service; 15.61% 2.49% 1.55%
For the Benefit of 367,259,020.18
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
Security Pacific Cash Horizon Service; 34.71% 5.53% 3.44%
Management 816,808,100.00
c/o Bank of America-GPO
M/C 5533
Attn Regina Olsen
1850 Gateway Blvd. M/C 5533
Concord, CA 94520-0000
BA Investment Services Inc. S; 99.67% 9.69% 6.03%
For the Benefit of 1,431,765,366.95
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
Hare & Co. Pacific Horizon; 5.31% 1.05% 0.66%
Attn Bank of New York 155,637,987.35
Short Term Investment Funds
One Wall Street, 2nd Fl.
New York, NY 10286
BA Investment Services Inc. Pacific Horizon; 77.51% 15.39% 9.57%
For the Benefit of 2,272,823,240.53
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
57
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
BancAmerica Robertson Pacific Horizon; 11.32% 2.25% 1.40%
Stephens 331,807,437.18
For the Benefit of
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
BA Investment Services Inc. X; 892,286,128.52 48.00% 6.04% 3.76%
For the Benefit of
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
BA Investment Services Inc. Y; 5,419.39 100% 0.00% 0.00%
FBO 330085411
185 Berry St.
3rd Floor 12640
San Francisco, CA 94107
BofA California Prime Y Y; 12,347,720.78 5.75% 0.10% 0.05%
Class
Sean Ehrlich
2044 Franklin St.
Oakland, CA 94612
Pacific Horizon Bank of America MT&SA Horizon; 95.21% 43.62% 28.25%
Tax-Exempt Money Fund The Private Bank 33,022,640.44
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
BA Investment Services Inc. Pacific Horizon; 97.15% 20.70% 13.41%
For the Benefit of 158,065,692.45
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
58
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
Sleep Country USA Horizon Service; 8.68% 0.32% 0.21%
Attn Sunny Kobe Coon 2,458,131.23
7029 SD 220th
Kent, WA 98032
Jack Kirk Horizon Service; 10.56% 0.39% 0.25%
1533 NW Blue Ridge Dr. 2,992,204.58
Seattle, WA 98177
The McGregor Co. Horizon Service; 10.88% 0.40% 0.26%
PO Box 740 3,082,437.01
Colfax, WA 99111
Ashon Kumar Shah Horizon Service; 6.08% 0.23% 0.15%
and Indu Shah 1,723,620.10
10714 Durland Ave., NE
Seattle, WA 98125-6945
Dale F. Nagy Horizon Service; 6.78% 0.25% 0.16%
DBA Picadilly Investment 1,919,906.75
Properties
410 S. Orchard 128
Boise, ID 83705
Black Hills Energy Horizon Service; 5.69% 0.21% 0.14%
Resources Inc. 1,610,927.99
2323 S. Shepherd, Ste 1150
Houston, TX 77019-7024
Lynn E. Barr Horizon Service; 10.68% 0.40% 0.26%
and Linda D. Barr 3,026,068.23
Trustees for L.E. & L.D.
Barr Rev. Trst
PO Box 2000
Benica, CA 94510
BA Investment Services Inc. S; 61,150,711.05 100% 8.01% 5.19%
For the Benefit of
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
59
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
BA Investment Services Inc. Horizon Service; 14.41% 3.05% 1.97%
For the Benefit of 23,273,222.51
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
Bank of America FM&TS Oper Horizon Service; 85.49% 18.08% 11.71%
CA 138,065,936.17
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
Pacific Horizon Bank of America MT&SA Horizon; 27.33% 6.31% 3.77%
Treasury Fund The Private Banking 222,387,640.64
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
Hare & Co. Horizon; 30.98% 7.15% 4.28%
Attn Binal Saha 252,098,402.73
c/o Bank of New York
One Wall Street, 2nd Fl.
New York, NY 10005-2501
KMPG Peat Marwick LLP Horizon; 8.36% 1.93% 1.15%
Attn Harvey Skolnick 68,000,000.00
3 Chestnut Ridge Rd.
Montvale, NJ 07645-0000
Los Angeles Department of Horizon; 6.49% 1.50% 0.89%
Airports 52,776,601.21
Attn Sandee Parks
515 South Flower St.
Los Angeles, CA 90071-2291
Abbey Properties LLC Horizon; 5.90% 1.36% 0.81%
Attn Matt Gambetta 48,000,000.00
12383 Lewis St., Ste 200
Garden Grove, CA 92840
60
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
Hare & Co Horizon Service; 9.68% 1.58% 0.94%
c/o Bank of New York 55,689,342.99
One Wall Street, 2nd Fl.
New York, NY 10005-2501
Security Pacific Cash Horizon Service; 34.62% 5.65% 3.38%
Management 199,089,300.00
c/o Bank of America GPO
M/C 5533
Attn Regina Olsen
1850 Gateway Blvd. M/C 5533
Concord, CA 94520-0000
Bank of America FM&TS Horizon Service; 49.07% 8.01% 4.79%
Operat. CA 282,216,729.01
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
BofA California Treasury Y Y; 7,133,853.68 6.07% 0.20% 0.12%
Class
Sean Ehrlich
2044 Franklin Street
Oakland, CA 94612
BA Arizona Treasury Y Class Y; 10,087,642.20 8.58% 0.29% 0.17%
2044 Franklin St.
Oakland, CA 94612
BA Nevada Treasury Y Class Y; 7,404,809.00 6.30% 0.21% 0.13%
2044 Franklin St.
Oakland, CA 94612
Hare & Co. Pacific Horizon; 24.55% 2.55% 1.52%
Attn Bank of New York 89,873,418.84
Short Term Investment Funds
One Wall Street, 2nd Fl.
New York, NY 10286
BA Investment Services Inc. Pacific 51.65% 5.37% 3.21%
For the Benefit of Horizon;189,076,066.74
Customers
Unit 17852 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
61
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
BancAmerica Robertson Pacific Horizon; 11.72% 1.22% 0.73%
Stephens 42,891,584.88
For the Benefit of
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
Hellman & Friedman Capital Pacific Horizon; 5.68% 0.59% 0.35%
Partners III 20,785.197.26
Limited Partnership
1 Maritime Plz 12th Floor
San Francisco, CA 94111
BA Investment Services Inc. X; 28,387,125.13 5.09% 0.81% 0.48%
For the Benefit of
Customers
Unit 178582 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
BofA California Treasury X X; 78,783,831.34 14.13% 2.24% 1.34%
Class
Sean Ehrlich
2044 Franklin St.
Oakland, CA 94612
Clark County Treasurer X; 59,100,806.32 10.59% 1.68% 1.00%
Attn Rick Phillips
PO Box 55120
Las Vegas, NV 89155-1220
Pacific Horizon Bank of America Illinois Horizon; 12.82% 1.00% 0.38%
Treasury Only Fund Treas. Stan 5,077,000.00
Attn Jewel James
231 S. LaSalle St.
Chicago, IL 60697-0000
Bank of America MT&SA Horizon; 62.46% 4.85% 1.83%
Trst/Cus 24,743,503.82
Attn Common TR FDS Unit
38329
Terminal Annex
PO Box 513577
Los Angeles, CA 90051-1577
62
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
City and County of San Horizon; 12.16% 0.94% 0.36%
Francisco 4,817,845.02
Mayors Office of Community
Development MOCO
25 Van Ness Ave., Suite 700
San Francisco, CA 94102
First American Title Horizon; 7.72% 0.60% 0.23%
Trst Toll Brothers Inc. 3,057,504.30
Attn Nikki
2520 Financial Sq., Ste 20
Oxnard, CA 93030
Foothill Eastern Horzion Service; 5.12% 1.29% 0.49%
Transportation Corridor 6,592,704.67
Agency
Attn Laura Barker
201 East Sand Pointe, Ste.
200
Santa Ana, CA 92707
Bank of America MT&SA Horizon Service; 62.17% 15.70% 5.94%
Trst/Cus 80,107,244.28
Attn Common TR FDS Unit
38329
PO Box 513577
Terminal Annex
Los Angeles, CA 90051-1577
BA Investment Services Inc. Horizon Service; 21.72% 5.49% 2.08%
For the Benefit of 27,992,571.52
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
San Joaquin Hills Horizon Service; 5.62% 1.42% 0.54%
Transportation Corridor 7,237,953.34
Agency
Attn Marybeth Hudson
201 E. Sand Pointe, Suite
200
PO Box 28870
Santa Ana, CA 92799-8870
63
<PAGE>
PACIFIC HORIZON NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
Hare & Co. Pacific Horizon; 7.58% 2.81% 1.06%
Attn Bank of New York 14,349,148.21
Short Term Investment Funds
One Wall Street, 2nd Fl.
New York, NY 10286
BA Investment Services Inc. Pacific Horizon; 56.83% 21.10% 7.98%
For the Benefit of 107,641,490.89
Customers
Unit 178582 Attn H. David
Jones 3rd
PO Box 7042
San Francisco, CA 94120
BancAmerica Robertson Pacific Horizon; 31.30% 11.62% 4.40%
Stephens 59,292,327.98
For the Benefit of
Customers
Attn H. David Jones III
PO Box 7042
San Francisco, CA 94120
The Torrance Company Horizon Service; 12.46% 3.72% 1.41%
Attn Harry Komsky 18,966,883.65
3 Del and Fashion Ctr.
Torrance, CA 90503
Carson-Madrona Co. Horizon Service; 9.07% 2.71% 1.02%
3 Del and Fashion Ctr. 13,808,178.62
Torrance, CA 90503
Penn-Cal Co. Horizon Service; 12.48% 3.72% 1.41%
Attn Harry Komsky 19,001,404.52
3 Del land Fashion Ctr.
Torrance, CA 90503
</TABLE>
64
<PAGE>
TABLE V(B)
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
NATIONS FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
- - ------------ ------- --------------- -------- ------- ------------
<S> <C> <C> <C>
Nations Cash Reserves The Bank of New York Capital; 14.58% 8.60% 3.25%
as Agent for its 773,000,000.00
Securities Lending
Customers
101 Barclay St.
New York, NY 10286
NationsBank of Texas, NA Capital; 11.39% 6.72% 2.54%
Attn: David Thayer 603,589,295.18
1401 Elm Street, 11th Floor
Dallas, TX 75202
Adelphia Communications Capital; 10.55% 6.22% 2.35%
Corp. #2 559,000,000.00
5 West 3rd St.
Coudersport, PA 16915
Republic Services Inc. Capital; 9.49% 5.60% 2.11%
110 SE 6th St., Ste 2800 503,000,000.00
Ft. Lauderdale, FL 33301
Bankers Trust FBO Adviser; 10.65% 1.03% 0.39%
Tenneco Salary - 193024 93,083,351.47
PO Box 9014
Church Street Station
New York, NY 10008
Nations Treasury NationsBank of Texas NA Capital; 32.23% 6.89% 2.77%
Reserves Attn: David Thayer 163,695,220.59
1401 Elm Street, 11th Floor
Dallas, TX 75202
Mindspring Enterprises Inc. Capital; 27.62% 5.91% 2.37%
1430 W. Peachtree St., NW 140,272,097.56
Atlanta, GA 30309
Community Care Foundation Capital; 10.90% 2.33% 0.93%
Inc. 55,341,655.85
Operating Account
PO Box Drawer 207
Springdale, AR 72765-0207
65
<PAGE>
PERCENTAGE
NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
NATIONS FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
- - ------------ ------- --------------- -------- ------- ------------
Commercial Financial Svcs Capital; 7.97% 1.70% 0.68%
Inc. 40,562,049.82
Operating Account
Attn Accounting Department
2448 E. 81st St., Ste 5200
Tulsa, OK 74137-4248
Radiant Systems Inc. Capital; 5.17% 1.10% 0.44%
Attn Paul Ilse 26,244,767.79
100 Alderman Dr., Ste. B
Alpharetta, GA 30202
Central Carolina Bank Capital; 12.42% 1.80% 0.72%
Attn Cash management 42,749,668.67
111 Corcoran Street, 2nd
Flr MO 2-1
Durham, NC 27701
Hare & Co., Bank of New Capital; 6.75% 0.97% 0.39%
York 23,218,273.96
Attn Stif/Master Note
One Wall Street, 2nd Fl.
New York, NY 10286
Carr Realty LP Capital; 6.67% 0.96% 0.38%
1850 K Street, NW 22,956,793.49
Washington, DC 20006
Michael R. Bloomberg Capital; 5.67% 0.82% 0.33%
Family Foundation 19,504,830.28
17 East 79th Street
New York, NY 10027
Group Health Plan Inc. Capital; 5.39% 0.78% 0.31%
Attn Catina Warren 18,550,755.14
940 West Port Plaza, Suite
300
St. Louis, MO 63146-3108
NationsBank NA F/A/O Capital; 5.33% 0.77% 0.31%
1201 F Street LLC 18,350,000.00
Cash Collateral Account
6610 Rockledge Drive, 6th
Fl.
Bethesda, MD 20817
66
<PAGE>
PERCENTAGE
NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
NATIONS FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
- - ------------ ------- --------------- -------- ------- ------------
Nations Government Flagler Co. Board of Capital; 20.17% 4.91% 3.04%
Reserves Commissioners #1 Fund 41,190,241.93
PO Box 787
201 East Moody Blvd.
Bunnell, FL 32110
Reese M. Rowlins Capital; 15.56% 3.78% 2.34%
500 N. Water St., Suite 31,761,894.68
1100N
Corpus Christi, TX
78471-0000
Arkansas State Treasury Capital; 14.09% 3.43% 2.12%
Attn Treasury Management 28,772,546.44
State Capitol Building,
Rm. 220
Little Rock, AR 72201
Dallas ISD I&S Fund Capital; 11.23% 2.73% 1.69%
3700 Ross Ave., Room 218C 22,934,153.95
Dallas, TX 75204
The Nemours Foundation Capital; 10.12% 2.46% 1.52%
Attn Ron Malloy 20,657,518.49
1650 Prudential Dr., Ste.
300
Jacksonville, FL
32207-8147
Community Care Foundation Capital; 8.41% 2.04% 1.26%
Inc. 17,176,412.05
Operating Account
PO Box Drawer 207
Springdale, AR 72765-0207
AARP Financial Services Capital; 5.52% 1.34% 0.83%
Corp. 11,262,644.69
Attn Linda Wiegano
601 E Street, NW
Washington, DC 20049
Hunt Memorial Hospital Adviser; 20.22% 2.38% 1.48%
Dist. 20,041,289.74
Attn Van Tucker
PO Box 1059
Greenville, TX 75403
67
<PAGE>
PERCENTAGE
NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
NATIONS FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
- - ------------ ------- --------------- -------- ------- ------------
Collins & 194th Associates Adviser; 10.61% 1.25% 0.77%
Ltd. 10,516,500.59
By Chicago Title Insurance
Co. as Escrow Agent
c/o State Accounting
1818 S. Australian Ave.,
Suite 210
West Palm Beach, FL 33409
Norwest Bank as TTEE for Adviser; 9.65% 1.14% 0.70%
Pace Academy 9,562,835.69
6 St. Marquette Ave.
Minneapolis, MN 55479
Tuesday Morning Inc. Adviser; 5.85% 0.69% 0.42%
Attn Alan Openheimer 5,800,000.00
14621 Inwood Road
Dallas, TX 75224
Hunt Memorial Hosp. Adviser; 5.53% 0.65% 0.40%
District Construction Fund 5,486,550.07
PO Box 1059
Greenville, TX 75403
Nations Municipal NationsBank of Texas, N.A. Capital; 69.39% 20.32% 7.15%
Reserves Attn David Thayer 84,372,461.96
1401 Elm Street, 11th Floor
Dallas, TX 75202
William K. Warren Jr. Capital; 6.17% 1.80% 0.63%
Trust B-3 7,504,108.33
Attn John-Kelly C. Warren
6585 S. Yale Avenue, Ste
900
Tulsa, OK 74136
G&D Systems LP Adviser; 14.04% 2.89% 1.02%
11419 Sunset Hills Rd. 12,001,228.20
Reston, VA 22090
Phil McDaniel Adviser; 9.20% 1.89% 0.67%
51 Water Street 7,862,787.13
St. Augustine, FL
32084-0000
68
<PAGE>
PERCENTAGE
NAME AND CLASS; AMOUNT PERCENTAGE PERCENTAGE OF FUND
NATIONS FUND ADDRESS OF SHARES OWNED OF CLASS OF FUND POST-CLOSING
- - ------------ ------- --------------- -------- ------- ------------
Sieben Inc. Adviser; 8.88% 1.83% 0.63%
c/o Gary Schulz 7,584,392.21
PO Box 419121
St. Louis, MO 63141
Dean Desantis Adviser; 8.55% 1.76% 0.62%
7600 Hyannis Ln. 7,307,527.11
Parkland, FL 33067-1672
Timothy A. Braswell Adviser; 6.34% 1.30% 0.46%
17925 S.E. Village Circle 5,414,896.10
Tequesta, FL 33469
</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
with respect to 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 as in its capacity as fiduciary and that it has engaged an independent
third party to evaluate the Reorganization proposal and make a recommendation as
to how to vote the shares.
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 Pacific Horizon or 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 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 with respect to
such Funds.
69
<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 trustees/directors 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 September 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.
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.
70
<PAGE>
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 Funds 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 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.
The annual financial statements and financial highlights of the Pacific
Horizon Funds and MIT Master Portfolios 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.
71
<PAGE>
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.
72
<PAGE>
APPENDIX I(A)
AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of this 8th day of February, 1999, 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.
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:
I(A)-1
<PAGE>
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 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. 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
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
Acquiring 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 as
obligations of the respective Acquiring Fund, 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.
I(A)-2
<PAGE>
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 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.
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.
I(A)-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
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.
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.
I(A)-4
<PAGE>
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.
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.
I(A)-5
<PAGE>
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
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
basis 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"), as necessary to
consummate the transaction contemplated hereby. Nations Funds
will prepare and file with the appropriate state securities
commission any notices or other filings required to consummate
the transactions contemplated hereby. 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 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.
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<PAGE>
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 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;
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<PAGE>
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
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 nor is
there outstanding any security convertible into 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 the
applicable notice or filing requirements, or
exemptions therefrom, of 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;
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<PAGE>
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 "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 the filing of Articles of
Transfer pursuant to Maryland law 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);
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; and
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<PAGE>
5.1.m. 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 grant 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. Each Acquired Fund is 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 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 Pacific Horizon
Funds or its business, the Acquired Funds or any of
their properties or assets which, if adversely
determined, would materially and adversely affect
Pacific Horizon or an Acquired Fund's financial
condition or the conduct of their 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;
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<PAGE>
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 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;
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<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 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 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; and
5.2.n. At the Closing Date, the Acquired Funds will have
good and marketable title to their assets and full
right, power and authority to assign, deliver and
otherwise transfer such assets.
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:
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.
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<PAGE>
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;
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. 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, except for such consents,
approvals, authorizations and filings (including
filing of Articles of Transfer pursuant to Maryland
law) as have been made or received, except for such
consents, approvals, authorizations and filings as
may be required subsequent to the Closing Date; and
except for such consents, approvals, authorizations
and filings as may be required under state securities
or blue sky law;
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<PAGE>
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 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 Horizon Funds, 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 also set forth
the basis for NBAI's determination 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.
I(A)-14
<PAGE>
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUNDS
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
management 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 which 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 each Acquired Fund and, assuming due
authorization, execution and delivery of this
Agreement on behalf of each Acquiring Fund, is a
valid and binding obligation of Pacific 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;
I(A)-15
<PAGE>
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 (including
filing of Articles of Transfer pursuant to Maryland
law) as have been made or received, except for such
consents, approvals, authorizations and filings as
may be required subsequent to the Closing Date; and
except for such consents, approvals, authorizations
and filings as may be required under state securities
or blue sky law;
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.
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;
I(A)-16
<PAGE>
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
Acquired 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 or
October 31, 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. 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 Pacific Horizon
Funds and that the interests of the existing shareholders of
Pacific Horizon Funds 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 a majority of the votes of the shares of
common stock outstanding and entitled to vote 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 a majority of the votes of the shares of
common stock outstanding and entitled to vote 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 a majority of the votes of
the shares of common stock outstanding and entitled to vote 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.
I(A)-17
<PAGE>
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 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 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 or October 31, 1998)
in the Combined Proxy Statement/Prospectus; and (c) "Appendix
II -- Expense Summaries of Pacific Horizon Funds and the
Corresponding Nations Funds" in Combined Proxy
Statement/Prospectus; and (d) 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;
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;
I(A)-18
<PAGE>
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
memorandum addressed to Nations Funds and the Pacific Horizon
Funds, 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 Nations Funds pursuant to this
Agreement under applicable state securities laws or the
exemption from such filing and payment requirements under such
laws.
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 shall 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.
I(A)-19
<PAGE>
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. Except for certain side letter agreements, between NationsBanc
Advisors, Inc. and Pacific Horizon Funds, 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 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 for possible liability on the part of Nations Funds or
Pacific Horizon Funds 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.
I(A)-20
<PAGE>
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 Investors, without the Acquired Fund 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
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.
I(A)-21
<PAGE>
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, 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.
I(A)-22
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C>
NATIONS INSTITUTIONAL RESERVES, for itself and on
ATTEST: behalf of each Acquiring Fund
/s/ Richard H. Blank, Jr. By: /s/ A. Max Walker
- - ----------------------------- -------------------------------
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the Board of Trustees
PACIFIC HORIZON FUNDS, INC., for itself and on behalf
ATTEST: of each Acquired Fund
/s/ W. Bruce McConnel, III By: /s/ Dr. Cornelius J. Pings
- - ----------------------------- -------------------------------
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 9.2 and 11.2 hereof
By: /s/ Robert H. Gordon
-------------------------------
Robert H. Gordon
President
</TABLE>
I(A)-23
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
----------
<S> <C>
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) Service 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 Series 1) Advisor Class Shares
Horizon Class Shares (Class L-Special Series 2) Capital Class Shares
Pacific Horizon Class Shares (Class L) Investor Class Shares
Pacific Horizon Treasury Fund Nations Treasury Reserves
Class X Shares (Class A-Special Series 4) Daily Class Shares
Class Y Shares (Class A-Special Series 5) Service Class Shares
Horizon Service Class Shares (Class A-Special Series 1) Advisor Class Shares
Horizon Class Shares (Class A-Special Series 2) Capital Class Shares
Pacific Horizon Class Shares (Class A) Investor Class Shares
Pacific Horizon Treasury Only Fund Nations Government Reserves
Horizon Service Class Shares (Class K-Special Series 1) Advisor Class Shares
Horizon Class Shares (Class K-Special Series 2) Capital Class Shares
Pacific Horizon Class Shares (Class K) Investor Class Shares
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 Series 1) Advisor Class Shares
Pacific Horizon Class Shares (Class J) Investor Class Shares
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 Series 1) Advisor Class Shares
Horizon Class Shares (Class I-Special Series 2) Capital Class Shares
Pacific Horizon Class Shares (Class I) Investor Class Shares
Pacific Horizon Asset Allocation Fund 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 (Class O-Special Series 5) Investor C
Share Class SRF (Class O-Special Series 7) Seafirst Class
Pacific Horizon Capital Income Fund Nations Capital Income Fund (Shell)
Share Class A (Class F) Investor A
Share Class B (Class F-Special Series 3) Investor B
Share Class K (Class F-Special Series 5) Investor C
A-1
<PAGE>
Pacific Horizon California Municipal Bond Fund Nations California Municipal Bond Fund (Shell)
Share Class A (Class G) Investor A
Share Class B (Class G-Special Series 3) Investor B
Pacific Horizon Intermediate Bond Fund (feeder) Nations Intermediate Bond Fund (Feeder Shell)
Share Class A (Class M) Investor A
Share Class K (Class M-Special Series 5) Investor C
Share Class SRF (Class M-Special Series 7) Seafirst Class
Pacific Horizon Blue Chip Fund (feeder) 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 (Class N-Special Series 5) Investor C
Share Class SRF (Class N-Special Series 7) Seafirst Class
</TABLE>
A-2
<PAGE>
APPENDIX I(B)
AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is made as of this 8th day of February, 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 Investment Grade 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) 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
interestholders in liquidation of each Acquired Fund.
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 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 the
Acquiring Fund's shares of beneficial interests 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 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. 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
interestholders 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. 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.
I(B)-1
<PAGE>
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 Amended and Restated
Declaration of Trust, as in effect as of the date of this
Agreement ("Liabilities"). Without limiting the foregoing,
each Acquiring Fund agrees that all rights to indemnification
and all limitations of liability existing in favor of MIT's
current and former Trustees and officers, acting in their
capacities as such, under MIT's Amended and Restated
Declaration of Trust as in effect as of the date of this
Agreement shall survive the Reorganization as obligations of
the Acquiring Funds and shall continue in full force and
effect, without any amendment thereto, and shall constitute
rights which may be asserted against NMIT. The Liabilities
assumed by NMIT 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 Acquiring Fund
Shares received by the Acquired Fund pursuant to paragraph 1.1
to its interestholders 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 Acquiring
Fund Shares under this Agreement with respect to the interests
in 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.
1.5. If a request shall be made for a change of the registration of
interests in an Acquiring Fund to another person from the
account of the interestholder in which name the shares are
registered in the records of the corresponding Acquired Fund,
it shall be a condition of such registration of interests 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 interests are outstanding in certificated
form, the certificates representing such interests, 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 4.10. Subject to the provisions of
Section 1.7 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.
I(B)-2
<PAGE>
2. VALUATION
2.1. 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, each security shall be priced in
accordance with the pricing policies and procedures of the
Acquiring Funds as described in its then current registration
statement. 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 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 Funds, 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 (a "Closing Date"), but in any
case, no earlier than 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 instructions 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 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.
I(B)-3
<PAGE>
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
interestholders and the number and percentage ownership of
outstanding Acquired Fund interests owned by such Acquired
Fund interestholder, 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
interestholders' 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.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
4.1. MIT will take such 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.
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
interestholders 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.
4.6. NMIT will prepare and file with the Securities and Exchange
Commission ("SEC") a registration statement on Form N-1A so
that all Acquiring Funds are registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as necessary
to consummate the transactions contemplated hereby. NMIT will
prepare and file with appropriate state securities commissions
any notices or other filings required to consummate the
transactions contemplated hereby. 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 registration statement 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
registration statement.
I(B)-4
<PAGE>
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 registration statement prepared in accordance with
Form N-1A, as may be modified from time to time, including
qualifying as a partnership under the Internal Revenue Code of
1986, as amended (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 registration statement 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 Fund 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 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 1.7 hereof. 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 a Certificate of Cancellation with the
Secretary of State of Delaware in accordance with the Delaware
Business Trust Act, and shall take, in accordance with
Delaware Business Trust Act, all other steps necessary and
proper to effect its complete dissolution.
5. REPRESENTATIONS AND WARRANTIES
5.1. NMIT, on behalf of itself and each Acquiring Fund, represents
and warrants to MIT as follows:
5.1.a. NMIT was duly created pursuant to its Agreement and
Declaration of Trust 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 registration
statement 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 N-1A registration statement of each Acquiring
Fund, will conform, at the Closing Date, in all
material respects to the applicable requirements of
the 1940 Act and the regulations thereunder and 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;
I(B)-5
<PAGE>
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;
5.1.d. Except as previously disclosed in writing to 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 interests, including
interests 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 interests nor is
there outstanding any security convertible into any
of its interests;
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 interestholders, pursuant to the
terms hereof, will have been duly authorized as of
the Closing Date, if any, and, when so issued and
delivered, will be duly and validly issued, fully
paid and non-assessable, and the shares of beneficial
interest of the Acquiring Fund issued and outstanding
prior to the Closing Date, if any, were offered and
sold in compliance with the applicable registration
requirements, or exemptions therefrom, of the 1933
Act, and the applicable notice or filing
requirements, or exemptions therefrom, of all
applicable state securities laws, and the regulations
thereunder, and no interestholder of an Acquiring
Fund shall have any preemptive right of subscription
or purchase in respect thereto;
5.1.h. From the date hereof to the Closing Date, any written
information furnished by NMIT with respect to an
Acquiring Fund for use in any 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;
I(B)-6
<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 N-1A
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; and
5.1.j. Each Acquiring Fund intends to qualify as a
partnership for federal income tax purposes.
5.2. MIT, on behalf of itself and each Acquired Fund, represents
and warrants to NMIT as follows:
5.2.a. MIT was formed as a statutory business trust 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 Amended and Restated
Declaration of Trust 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 prospectus 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;
5.2.b. All of the issued and outstanding shares of
beneficial interest 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 or exempt
thereto;
5.2.c. Each Acquired Fund is 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 Amended and
Restated 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 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 MIT or its business, the Acquired
Funds or any of their properties or assets which, if
adversely determined, would materially and adversely
affect MIT or an 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
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 MIT 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 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, if any, 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 partnership for federal income tax
purposes under the Code, as of and since its first
taxable year and, since its formation, has operated
in a manner so that a regulated investment company,
as defined in the Code, investing therein can
continue to so qualify;
5.2.i. All issued and outstanding interests 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
interests 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 interests;
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, 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 MIT and the Trustees,
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 date hereof to the Closing Date, any written
information furnished by MIT, on behalf of the
Acquired Funds, for use in any 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;
I(B)-7
<PAGE>
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 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 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 interestholders of the Acquired Funds as
described in paragraph 8.1; and
5.2.n. At the Closing Date, the Acquired Funds will have
good and marketable title to their assets and full
right, power and authority to assign, deliver and
otherwise transfer such assets.
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;
I(B)-8
<PAGE>
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;
6.3.d. the Acquiring Fund Shares to be issued to the
Acquired Funds Investors pursuant to this Agreement
are duly authorized and upon such issuance will be
validly issued and outstanding and fully paid and
non-assessable, and no interestholder of an Acquiring
Fund has any preemptive rights to subscription or
purchase in respect thereof;
6.3.e. the N-1A registration statement has 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. 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
of the Reorganization by NMIT with respect to each
Acquiring Fund, except for such consents, approvals,
authorizations and filings as have been made or
received, except for such consents, approvals,
authorizations and filings as may be required
subsequent to the Closing Date; and except for such
consents, approvals, authorizations and filings as
may be required under state securities or blue sky
laws;
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, except as otherwise
disclosed to MIT, 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, other fees
payable for services provided to the Acquiring Funds, fee
waiver or expense reimbursement undertakings as described in
the N-1A registration statement.
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 interestholders of each Acquiring Fund would not be
diluted as a result of the Reorganization.
I(B)-9
<PAGE>
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 comparable
to the liability coverage currently applicable to both former
and current Trustees and officers of MIT, covering the actions
of such Trustees and officers of MIT for the period they
served as such.
6.7. NBAI shall have delivered to MIT, 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
also set forth the basis for NBAI's determination 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.
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 management
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 which is a
duly formed statutory business trust, validly
existing and in good standing under the laws of the
State of Delaware, and the Amended and Restated
Declaration of Trust 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's business as described in the
current prospectuses of MIT;
I(B)-10
<PAGE>
7.3.c. this Agreement has been duly authorized, executed and
delivered by MIT, for itself and on behalf of each
Acquired Fund 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;
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, except for such consents, approvals,
authorizations and filings as may be required
subsequent to the Closing Date; and except for such
consents, approvals, authorizations and filings as
may be required under state securities or blue sky
laws;
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 Amended and
Restated Declaration of Trust 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; and
7.3.f. to such counsel's knowledge, except as otherwise
disclosed to NMIT, 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 any 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.
7.5. The Board of Trustees of MIT, including a majority of
"non-interested" Trustees, has determined that the
Reorganization is in the best interests of MIT and that the
interests of the existing interestholders of MIT 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:
I(B)-11
<PAGE>
8.1. This Agreement and the transactions contemplated herein shall
have been approved by a majority of the holders of the
interests of each Acquired Fund, consistent with the
provisions of the laws of the State of Delaware, MIT's Amended
and Restated Declaration of Trust 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 a majority of the holders
of the shares of beneficial interests outstanding and entitled
to vote in an Acquired Fund shall constitute approval of all
of the transactions contemplated herein, including the
reorganization of all investment portfolios of MIT with NMIT
and the termination 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 Acquiring Fund or its
corresponding Acquired Fund.
8.4. Except to the extent prohibited by Rule 19b-1 promulgated
under the 1940 Act, each Acquired Fund 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 interestholders 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) determined as if the Acquired Fund is a
"regulated investment company" under the Code.
8.5. The N-1A registration statement shall have become effective
under the 1940 Act, no stop order 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 1940 Act.
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
that for federal income tax purposes:
8.6.a. each Reorganization will not be taxable for federal
income tax purposes to each Acquiring Fund, or their
respective interestholders;
8.6.b. 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.c. 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.d. the basis of the Acquiring Fund Shares received by
the interestholders of the corresponding Acquired
Fund will be the same as the basis of the Acquired
Fund shares surrendered by such interestholders
pursuant to the Reorganization;
I(B)-12
<PAGE>
8.6.e. the holding period for the Acquiring Fund Shares
received by the Acquired Fund interestholders will
include the period during which such interestholders
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
interestholders on the date of the exchange; and
8.6.f. each Acquiring Fund will be treated as a partnership
that is a continuation of the corresponding Acquired
Fund.
In rendering such opinion described in this paragraph 8.6,
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 interestholders. Notwithstanding anything herein
to the contrary, neither an Acquiring Fund nor its corresponding Acquired Fund
may waive the condition set forth in this paragraph 8.6.
8.7. NMIT and MIT shall have received 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.
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 shall
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. 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;
I(B)-13
<PAGE>
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 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.
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
Trustees or officers of MIT, on account of
termination pursuant to paragraphs 11.1(a) or (b),
except for possible liability on the part of Nations
Funds or MIT 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 interestholders of the Acquired Funds, no such amendment may
have the effect of changing the provisions for determining the number of
interests of the corresponding Acquiring Funds to be issued to the Acquired Fund
intrestholders under this Agreement to the detriment of such Acquired Fund
interestholders, or otherwise materially and adversely affecting such Acquired
Fund interestholders, without the Acquired Fund obtaining the MIT
interestholders 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 interestholders 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 Trustees of the waiving party, or any appropriate
officer of either party, with or without the approval of such party's
interestholders).
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:
I(B)-14
<PAGE>
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
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.
14.5. It is expressly agreed that the obligations of NMIT hereunder
shall not be binding upon any of the Trustees,
interestholders, 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.
I(B)-15
<PAGE>
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 obligations of "MIT" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are
made not individually, but in such capacities, and are not
binding upon any of the Trustees, interestholders, or
representatives of MIT personally, but bind only the business
trust property, and all persons dealing with any shares of
beneficial interest of MIT must look solely to the business
trust property belonging to such class for the enforcement of
any claims against MIT.
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.
<TABLE>
<CAPTION>
<S> <C>
NATIONS MASTER INVESTMENT TRUST, for itself and on
ATTEST: behalf of each Acquiring Fund
/s/ Richard H. Blank, Jr. By: /s/ A. Max Walker
- - ---------------------------- -----------------------------
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the Board of Trustees
MASTER INVESTMENT TRUST, SERIES I., for itself and on
ATTEST: behalf of each Acquired Fund
/s/ W. Bruce McConnel, III By: /s/ Monroe Haegele
- - ---------------------------- -----------------------------
W. Bruce McConnel, III Monroe Haegele
Secretary President
NATIONSBANC ADVISORS, INC., hereby joins in this
Agreement with respect to, and agrees to be bound by
Section 9.2 and 11.2 hereof
By: /s/ Robert H. Gordon
-----------------------------
Robert H. Gordon
President
</TABLE>
I(B)-16
<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 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 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
or October 31, 1998, as applicable, have been adjusted to reflect a
Board-approved reduction in the contractual fee rates under the management
contracts. The contractual management fees shown are expected to become
effective in May 1999, at or prior to the 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. NBAI has agreed that it will commit to waive
fees and/or reimburse expenses as needed to ensure that, for one year from the
Reorganization, the Nations Funds total expense ratios will not exceed the PRO
FORMA after waiver expense ratios shown here, absent a determination by the
Nations Board that extraordinary circumstances or a material reduction in Fund
assets has occurred that has made it appropriate to permit an increase in
expense ratios. There can be no assurance that such expense ratios will continue
after this commitment expires.
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
<TABLE>
<CAPTION>
PACIFIC HORIZON NATIONS ASSET
ASSET ALLOCATION FUND
ALLOCATION FUND PRO FORMA
--------------- ---------
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C>
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%
==== ====
</TABLE>
- - --------------------
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:*
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:
<TABLE>
<CAPTION>
PACIFIC HORIZON NATIONS ASSET
ASSET ALLOCATION ALLOCATION FUND
FUND PRO FORMA
<S> <C> <C>
1 year ............................................ $67 $69
3 years ........................................... 87 93
5 years ........................................... 108 120
10 years .......................................... 170 195
</TABLE>
- - --------------------
* 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
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS ASSET
ASSET ALLOCATION FUND
ALLOCATION 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):3......... 1.72% 1.95%
==== ====
</TABLE>
- - --------------------
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.
II-3
<PAGE>
EXAMPLE:*
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
ASSET NATIONS ASSET
ALLOCATION 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
- - --------------------
* 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-4
<PAGE>
PACIFIC HORIZON ASSET ALLOCATION FUND-K SHARES
NATIONS ASSET ALLOCATION FUND-INVESTOR C SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS ASSET
ASSET ALLOCATION FUND
ALLOCATION 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%
==== ====
</TABLE>
- - --------------------
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.
II-5
<PAGE>
EXAMPLE:*
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 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 HORIZON NATIONS ASSET
ASSET ALLOCATION ALLOCATION FUND
FUND PRO FORMA
---- ---------
1 year ......................... $ 15 $ 20
3 years ........................ 46 61
5 years ........................ 80 105
10 years ....................... 176 228
- - --------------------
* 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
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS ASSET
ASSET ALLOCATION FUND
ALLOCATION 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%
==== ====
</TABLE>
- - --------------------
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.
II-7
<PAGE>
EXAMPLE:*
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 ASSET
ASSET ALLOCATION ALLOCATION FUND
FUND PRO FORMA
---- ---------
1 year ............................ $ 10 $ 10
3 years ........................... 30 30
5 years ........................... 53 53
10 years .......................... 117 117
- - --------------------
* 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.
PACIFIC HORIZON BLUE CHIP FUND-A SHARES
NATIONS BLUE CHIP FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
PACIFIC HORIZON NATIONS BLUE
BLUE CHIP CHIP FUND
FUND PRO FORMA
---- ---------
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
<S> <C> <C>
(as a percentage of offering price) ............ 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 .................................... 0.50% 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%
==== ====
</TABLE>
II-8
<PAGE>
- - --------------------
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:*
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
BLUE CHIP CHIP FUND
FUND PRO FORMA
---- ---------
1 year ................................ $ 69 $ 69
3 years ............................... 93 93
5 years ............................... 120 120
10 years .............................. 195 195
- - --------------------
* 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-9
<PAGE>
PACIFIC HORIZON BLUE CHIP FUND-B SHARES
NATIONS BLUE CHIP FUND-INVESTOR B SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS BLUE
PACIFIC HORIZON CHIP FUND
BLUE CHIP 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 (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 .................................... 0.50% 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%
==== ====
</TABLE>
- - --------------------
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.
II-10
<PAGE>
EXAMPLE:*
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
BLUE CHIP CHIP FUND
FUND PRO FORMA
---- ---------
1 year ............................... $ 70 $ 70
3 years .............................. 91 91
5 years .............................. 125 125
10 years ............................. 227 208
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 BLUE
BLUE CHIP CHIP FUND
FUND PRO FORMA
---- ---------
1 year ............................... $ 20 $ 20
3 years .............................. 61 61
5 years .............................. 105 105
10 years ............................. 227 208
- - --------------------
* 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-11
<PAGE>
PACIFIC HORIZON BLUE CHIP FUND-K SHARES
NATIONS BLUE CHIP FUND-INVESTOR C SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS BLUE
BLUE CHIP 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 (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 .................................... 0.50% 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%
==== ====
</TABLE>
- - --------------------
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.
II-12
<PAGE>
EXAMPLE:*
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
BLUE CHIP CHIP FUND
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 HORIZON NATIONS
BLUE CHIP BLUE CHIP FUND
FUND PRO FORMA
---- ---------
1 year ............................ $ 17 $ 20
3 years ........................... 54 61
5 years ........................... 92 105
10 years .......................... 202 228
- - -------------------
* 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-13
<PAGE>
PACIFIC HORIZON BLUE CHIP FUND-SRF SHARES
NATIONS BLUE CHIP FUND-SEAFIRST SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS BLUE
BLUE CHIP 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 (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 .................................... 0.50% 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%
==== ====
</TABLE>
- - --------------------
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 Pacific Horizon
Blue Chip Fund and 0.38% for Nations Blue Chip Fund.
3 Total Fund Operating Expenses (absent waivers) would be 1.23% for the
Pacific Horizon Blue Chip Fund and 1.28% for Nations Blue Chip Fund.
II-14
<PAGE>
EXAMPLE:*
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
BLUE CHIP CHIP FUND
FUND PRO FORMA
1 year ............................. $ 10 $ 10
3 years ............................ 30 30
5 years ............................ 53 53
10 years ........................... 117 117
- - --------------------
* 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-15
<PAGE>
PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND-A SHARES
NATIONS CALIFORNIA MUNICIPAL BOND FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
NATIONS
PACIFIC HORIZON CALIFORNIA
CALIFORNIA MUNICIPAL BOND
MUNICIPAL BOND FUND
FUND PRO FORMA
---- ---------
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
<S> <C> <C>
(as a percentage of offering price) ............ 4.75% 4.75%
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 (after waivers)2.................... 0.30% 0.28%
12b-1/Shareholder Servicing Fees3................... 0.25% 0.20%
Other Expenses...................................... 0.39% 0.32%
---- ----
TOTAL FUND OPERATING EXPENSES (AFTER WAIVERS)4:.......... 0.94% 0.80%
==== =====
</TABLE>
- - --------------------
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 Distribution and Servicing Fees (absent waivers) would be 0.25% for the
Nations California Municipal Bond Fund.
4 Total Fund Operating Expenses (absent waivers) would be 1.07% for the
Nations California Municipal Bond Fund.
II-16
<PAGE>
EXAMPLE:*
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 HORIZON CALIFORNIA
CALIFORNIA MUNICIPAL BOND
MUNICIPAL BOND FUND
FUND PRO FORMA
1 year ............................. $ 57 $ 55
3 years ............................ 76 72
5 years ............................ 97 90
10 years ........................... 158 142
- - --------------------
* 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>
PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND-B SHARES
NATIONS CALIFORNIA MUNICIPAL BOND FUND-INVESTOR B SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC HORIZON CALIFORNIA
CALIFORNIA MUNICIPAL BOND
MUNICIPAL BOND 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 (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 (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%
==== =====
</TABLE>
- - ---------------
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.
II-18
<PAGE>
EXAMPLE:*
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 HORIZON CALIFORNIA
CALIFORNIA MUNICIPAL BOND
MUNICIPAL BOND FUND
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:
NATIONS
PACIFIC HORIZON CALIFORNIA
CALIFORNIA MUNICIPAL BOND
MUNICIPAL BOND FUND
FUND PRO FORMA
---- ---------
1 year ............................. $ 17 $ 15
3 years ............................ 53 46
5 years ............................ 92 79
10 years ........................... 200 157
- - --------------------
* 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-19
<PAGE>
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND-
HORIZON SERVICE SHARES
NATIONS CALIFORNIA TAX-EXEMPT RESERVES-ADVISER SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
CALIFORNIA CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
MONEY MARKET RESERVES
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%
==== ====
</TABLE>
- - --------------------
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.
II-20
<PAGE>
EXAMPLE:*
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 TAX CALIFORNIA
EXEMPT MONEY TAX-EXEMPT
MARKET FUND RESERVES
PRO FORMA
1 year ............................. $ 5 $ 5
3 years ............................ 16 14
5 years ............................ 27 25
10 years ........................... 62 57
- - --------------------
* 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-21
<PAGE>
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND-
PACIFIC HORIZON SHARES
NATIONS CALIFORNIA TAX-EXEMPT RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
CALIFORNIA CALIFORNIA
TAX-EXEMPT TAX-EXEMPT
MONEY MARKET RESERVES
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)2..................... 0.11% 0.10%
---- ----
TOTAL FUND OPERATING EXPENSES (AFTER WAIVERS):3 0.56% 0.55%
==== ====
</TABLE>
- - --------------------
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.
II-22
<PAGE>
EXAMPLE:*
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 HORIZON CALIFORNIA
CALIFORNIA TAX TAX-EXEMPT
EXEMPT MONEY RESERVES
MARKET FUND PRO FORMA
----------- ---------
1 year ............................... $ 6 $ 6
3 years .............................. 18 18
5 years .............................. 31 31
10 years ............................. 70 69
- - --------------------
* 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-23
<PAGE>
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND-
S AND X SHARES
NATIONS CALIFORNIA TAX-EXEMPT RESERVES-DAILY SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON PACIFIC HORIZON
CALIFORNIA CALIFORNIA NATIONS
TAX-EXEMPT TAX-EXEMPT CALIFORNIA
MONEY MARKET MONEY MARKET TAX-EXEMPT
FUND 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 Fees(after waivers)2.... 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%
==== ==== ====
</TABLE>
- - --------------------
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 and 0.57% for X 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,
0.81% for the X Shares of the Pacific Horizon California Tax-Exempt
Money Market Fund and 0.89% for Nations California Tax-Exempt Reserves.
II-24
<PAGE>
EXAMPLE:*
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 PACIFIC HORIZON
CALIFORNIA CALIFORNIA NATIONS
TAX-EXEMPT MONEY TAX-EXEMPT CALIFORNIA
MARKET FUND MONEY MARKET TAX-EXEMPT
S SHARES FUND RESERVES
X SHARES PRO FORMA
1 year .............. $ 8 $ 8 $ 8
3 years ............. 25 25 26
5 years ............. 44 44 44
10 years ............ 98 98 99
- - --------------------
* 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-A SHARES
NATIONS CAPITAL INCOME FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS CAPITAL
CAPITAL INCOME INCOME 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 .................................... 0.45% 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%
==== ====
</TABLE>
- - --------------------
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:*
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 CAPITAL
CAPITAL INCOME INCOME FUND
FUND PRO FORMA
1 year .......................... $ 69 $ 69
3 years ......................... 94 94
5 years ......................... 120 121
10 years ........................ 196 198
- - --------------------
* 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-26
<PAGE>
PACIFIC HORIZON CAPITAL INCOME FUND-B SHARES
NATIONS CAPITAL INCOME FUND-INVESTOR B SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS CAPITAL
CAPITAL INCOME INCOME 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 .................................... 0.45% 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%
==== ====
</TABLE>
- - --------------------
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:*
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 CAPITAL
CAPITAL INCOME INCOME FUND
FUND PRO FORMA
---- ---------
1 year ................................ $ 70 $ 70
3 years ............................... 92 92
5 years ............................... 126 127
10 years .............................. 229 211
II-27
<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 HORIZON NATIONS CAPITAL
CAPITAL INCOME INCOME FUND
FUND PRO FORMA
---- ---------
1 year ................................ $ 20 $ 20
3 years ............................... 62 62
5 years ............................... 106 107
10 years .............................. 229 211
- - -------------------
* 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.
PACIFIC HORIZON CAPITAL INCOME FUND-K SHARES
NATIONS CAPITAL INCOME FUND-INVESTOR C SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS CAPITAL
CAPITAL INCOME INCOME 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 .................................... 0.45% 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%
==== ====
</TABLE>
II-28
<PAGE>
- - --------------------
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:*
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 CAPITAL
CAPITAL INCOME INCOME FUND
FUND PRO FORMA
---- ---------
1 year ................................ $ 17 $ 30
3 years ............................... 54 62
5 years ............................... 93 107
10 years .............................. 203 232
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 CAPITAL
CAPITAL INCOME INCOME FUND
FUND PRO FORMA
---- ---------
1 year ................................ $ 17 $ 20
3 years ............................... 54 62
5 years ............................... 93 107
10 years .............................. 203 232
- - --------------------
* 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
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
GOVERNMENT FUND GOVERNMENT COMBINED 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 (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................. 0.05% 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%
==== ==== ====
</TABLE>
- - --------------------
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:*
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:
II-30
<PAGE>
PACIFIC HORIZON NATIONS
GOVERNMENT FUND GOVERNMENT COMBINED FUND
RESERVES PRO FORMA
1 year ............... $ 2 $ 2 $ 2
3 years .............. 7 6 6
5 years .............. 13 11 11
10 years ............. 29 26 26
- - --------------------
* 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.
PACIFIC HORIZON GOVERNMENT FUND-HORIZON SERVICE SHARES
NATIONS GOVERNMENT RESERVES-ADVISER SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
GOVERNMENT FUND GOVERNMENT COMBINED 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 (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 ................ 0.05% 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%
==== ==== ====
</TABLE>
II-31
<PAGE>
- - --------------------
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:*
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
GOVERNMENT FUND GOVERNMENT COMBINED FUND
RESERVES PRO FORMA
1 year ................ $ 5 $ 5 $ 5
3 years ............... 15 14 14
5 years ............... 27 25 25
10 years .............. 60 57 57
- - --------------------
* 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 GOVERNMENT FUND-PACIFIC HORIZON SHARES
NATIONS GOVERNMENT RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC HORIZON GOVERNMENT COMBINED FUND
GOVERNMENT 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 (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 ................ 0.05% 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%
==== ==== ====
</TABLE>
- - --------------------
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.
II-33
<PAGE>
EXAMPLE:*
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
GOVERNMENT FUND GOVERNMENT COMBINED FUND
RESERVES PRO FORMA
1 year .............. $ 6 $ 6 $ 6
3 years ............. 18 18 18
5 years ............. 31 31 31
10 years ............ 69 69 69
- - --------------------
* 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-34
<PAGE>
PACIFIC HORIZON INTERMEDIATE BOND FUND-A SHARES
NATIONS INTERMEDIATE BOND FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC 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 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 (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%
==== ----
</TABLE>
- - --------------------
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.
II-35
<PAGE>
EXAMPLE:*
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 HORIZON INTERMEDIATE
INTERMEDIATE BOND FUND
BOND FUND PRO FORMA
--------- ---------
1 year .............................. $ 42 $ 43
3 years ............................. 62 65
5 years ............................. 84 89
10 years ............................ 147 158
- - --------------------
* 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.
PACIFIC HORIZON INTERMEDIATE BOND FUND-K SHARES
NATIONS INTERMEDIATE BOND FUND-INVESTOR C SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC 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 (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 (after waivers)1.................... 0.26% 0.40%
12b-1/Shareholder Servicing Fees (after waivers)2... 0.75% 1.00%
Other Expenses ..................................... 0.45% 0.41%
---- ----
TOTAL FUND OPERATING EXPENSES (AFTER WAIVERS)3:.......... 1.46% 1.81%
==== ----
</TABLE>
II-36
<PAGE>
- - --------------------
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:*
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 HORIZON INTERMEDIATE
INTERMEDIATE BOND FUND
BOND FUND PRO FORMA
--------- ---------
1 year ............................ $ 15 $ 28
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:
NATIONS
PACIFIC 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
- - --------------------
* 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-37
<PAGE>
PACIFIC HORIZON INTERMEDIATE BOND FUND-SRF SHARES
NATIONS INTERMEDIATE BOND FUND-SEAFIRST SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC 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 (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.................... 0.26% 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%
==== ----
</TABLE>
- - --------------------
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 1.06% for Nations
Intermediate Bond Fund.
II-38
<PAGE>
EXAMPLE:*
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 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
- - --------------------
* 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.
PACIFIC HORIZON PRIME FUND-HORIZON SHARES
NATIONS CASH RESERVES-CAPITAL SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS CASH COMBINED 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
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%
Other Expenses (after waivers)2..................... 0.15% 0.10% 0.10%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER WAIVERS)3:.......... 0.24% 0.20% 0.20%
==== ==== ====
</TABLE>
II-39
<PAGE>
- - --------------------
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:*
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 CASH COMBINED 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 26
- - --------------------
* 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-HORIZON SERVICE SHARES
NATIONS CASH RESERVES-ADVISER SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS CASH COMBINED 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.................... 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%
==== ==== ====
</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 Total Fund Operating Expenses (absent waivers) would be 0.53% for
Nations Cash Reserves and the Combined Fund.
EXAMPLE:*
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 CASH COMBINED 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
II-41
<PAGE>
- - --------------------
* 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.
PACIFIC HORIZON PRIME FUND-PACIFIC HORIZON SHARES
NATIONS CASH RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS CASH COMBINED 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
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.................... 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%
==== ==== ====
</TABLE>
II-42
<PAGE>
- - --------------------
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:*
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
PRIME NATIONS CASH COMBINED 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
- - --------------------
* 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 PRIME FUND-S AND X SHARES
NATIONS CASH RESERVES-DAILY SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON PACIFIC HORIZON
PRIME FUND- PRIME FUND- NATIONS CASH COMBINED FUND
S SHARES X SHARES RESERVES PRO FORMA
-------- -------- -------- ---------
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.
II-44
<PAGE>
EXAMPLE:*
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:
<TABLE>
<CAPTION>
PACIFIC HORIZON PACIFIC HORIZON
PRIME FUND- PRIME FUND- NATIONS CASH COMBINED FUND
S SHARES X SHARES RESERVES PRO FORMA
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
1 year ............................................ $ 8 $ 8 $ 8 $ 8
3 years ........................................... 25 25 26 26
5 years ........................................... 44 44 44 44
10 years .......................................... 98 98 99 99
</TABLE>
- - --------------------
* 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 PRIME FUND-Y SHARES
NATIONS CASH RESERVES-SERVICE SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS CASH COMBINED 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%
==== ==== ====
</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 Total Fund Operating Expenses (absent waivers) would be 1.28% for
Nations Cash Reserves and the Combined Fund.
EXAMPLE:*
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
PRIME NATIONS CASH COMBINED 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
II-46
<PAGE>
- - --------------------
* 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.
PACIFIC HORIZON TAX-EXEMPT MONEY FUND-HORIZON SHARES
NATIONS MUNICIPAL RESERVES-CAPITAL SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TAX-EXEMPT MUNICIPAL COMBINED 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%
==== ==== ====
</TABLE>
II-47
<PAGE>
- - --------------------
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:*
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
TAX-EXEMPT MONEY MUNICIPAL COMBINED 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
- - --------------------
* 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 TAX-EXEMPT MONEY FUND-HORIZON SERVICE SHARES
NATIONS MUNICIPAL RESERVES-ADVISER SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TAX-EXEMPT MUNICIPAL COMBINED 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%
==== ==== ====
</TABLE>
- - --------------------
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:*
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
TAX-EXEMPT MONEY MUNICIPAL COMBINED 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
II-49
<PAGE>
- - --------------------
* 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.
PACIFIC HORIZON TAX-EXEMPT MONEY FUND-PACIFIC HORIZON SHARES
NATIONS MUNICIPAL RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TAX-EXEMPT MUNICIPAL COMBINED 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%
==== ==== ====
</TABLE>
II-50
<PAGE>
- - --------------------
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:*
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
TAX-EXEMPT MONEY MUNICIPAL COMBINED FUND
FUND RESERVES PRO FORMA
1 year ............... $ 6 $ 6 $6
3 years .............. 19 18 18
5 years .............. 33 31 31
10 years ............. 74 69 69
- - --------------------
* 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 TAX-EXEMPT MONEY FUND-S SHARES
NATIONS MUNICIPAL RESERVES-DAILY SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TAX-EXEMPT MUNICIPAL COMBINED 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%
==== ==== ====
</TABLE>
- - --------------------
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.
3 Other Expenses (absent waivers) would be 0.15% for Nations Municipal
Reserves and the Combined Fund.
4 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.
II-52
<PAGE>
EXAMPLE:*
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
TAX-EXEMPT MONEY MUNICIPAL COMBINED 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
- - --------------------
* 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 TREASURY FUND-HORIZON SHARES
NATIONS TREASURY RESERVES-CAPITAL SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC HORIZON TREASURY COMBINED FUND
TREASURY 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%
==== ==== ====
</TABLE>
- - --------------------
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:*
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 HORIZON TREASURY COMBINED 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
II-54
<PAGE>
- - --------------------
* 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.
PACIFIC HORIZON TREASURY FUND-HORIZON SERVICE SHARES
NATIONS TREASURY RESERVES-ADVISER SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC HORIZON TREASURY COMBINED FUND
TREASURY 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..................... 0.14% 0.10% 0.10%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER WAIVERS):3 0.49% 0.45% 0.45%
==== ==== ====
</TABLE>
II-55
<PAGE>
- - --------------------
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:*
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 FUND
TREASURY FUND TREASURY PRO FORMA
RESERVES
1 year ........... $ 5 $ 5 $ 5
3 years .......... 16 14 14
5 years .......... 27 25 25
10 years ......... 62 57 57
- - --------------------
* 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>
PACIFIC HORIZON TREASURY FUND-PACIFIC HORIZON SHARES
NATIONS TREASURY RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
NATIONS
PACIFIC HORIZON TREASURY COMBINED FUND
TREASURY 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%
==== ==== ====
</TABLE>
- - --------------------
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:*
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 HORIZON TREASURY COMBINED 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
II-57
<PAGE>
- - --------------------
* 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.
PACIFIC HORIZON TREASURY FUND-X SHARES
NATIONS TREASURY RESERVES-DAILY SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TREASURY FUND TREASURY COMBINED FUND
X SHARES 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.................... 0.55% 0.60% 0.60%
Other Expenses (after waivers)2..................... 0.14% 0.10% 0.10%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER WAIVERS):3 0.79% 0.80% 0.80%
==== ==== ====
</TABLE>
II-58
<PAGE>
- - --------------------
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 0.89% for
Nations Treasury Reserves and the Combined Fund.
EXAMPLE:*
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 FUND NATIONS COMBINED FUND
X SHARES TREASURY PRO FORMA
RESERVES
1 year .............. $ 8 $ 8 $ 8
3 years ............. 25 26 26
5 years ............. 44 44 44
10 years ............ 98 99 99
- - --------------------
* 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-59
<PAGE>
PACIFIC HORIZON TREASURY FUND-Y SHARES
NATIONS TREASURY RESERVES-SERVICE SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS TREASURY COMBINED FUND
TREASURY 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%
==== ==== ====
</TABLE>
- - --------------------
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:*
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 FUND
TREASURY FUND TREASURY PRO FORMA
RESERVES
1 year ............... $ 13 $ 12 $ 12
3 years .............. 39 38 38
5 years .............. 68 66 66
10 years ............. 150 145 145
II-60
<PAGE>
- - --------------------
* 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.
PACIFIC HORIZON TREASURY ONLY FUND-HORIZON SHARES
NATIONS GOVERNMENT RESERVES-CAPITAL SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TREASURY ONLY GOVERNMENT COMBINED 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 (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%
==== ==== ====
</TABLE>
II-61
<PAGE>
- - --------------------
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:*
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
TREASURY ONLY GOVERNMENT COMBINED 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
- - --------------------
* 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-62
<PAGE>
PACIFIC HORIZON TREASURY ONLY FUND-HORIZON SERVICE SHARES
NATIONS GOVERNMENT RESERVES-ADVISER SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TREASURY ONLY GOVERNMENT COMBINED 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 (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%
==== ==== ====
</TABLE>
- - --------------------
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.
II-63
<PAGE>
EXAMPLE:*
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
TREASURY ONLY GOVERNMENT COMBINED 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
- - --------------------
* 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.
PACIFIC HORIZON TREASURY ONLY FUND-PACIFIC HORIZON SHARES
NATIONS GOVERNMENT RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON NATIONS
TREASURY ONLY GOVERNMENT COMBINED 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 (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%
==== ==== ====
</TABLE>
II-64
<PAGE>
- - --------------------
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:*
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
TREASURY ONLY GOVERNMENT COMBINED FUND
FUND RESERVES PRO FORMA
---- -------- ---------
1 year .............. $ 6 $ 6 $ 6
3 years ............. 19 18 18
5 years ............. 33 31 31
10 years ............ 74 69 69
- - --------------------
* 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-65
<PAGE>
PACIFIC HORIZON GOVERNMENT & TREASURY ONLY-HORIZON SHARES
NATIONS GOVERNMENT RESERVES-CAPITAL SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON PACIFIC HORIZON NATIONS
GOVERNMENT TREASURY ONLY GOVERNMENT COMBINED FUND
FUND FUND RESERVES PRO FORMA
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 (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 ................ 0.05% 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.
II-66
<PAGE>
EXAMPLE:*
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:
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON PACIFIC HORIZON NATIONS
GOVERNMENT TREASURY ONLY GOVERNMENT COMBINED FUND
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
</TABLE>
- - --------------------
* 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.
PACIFIC HORIZON GOVERNMENT & TREASURY ONLY-HORIZON SERVICE SHARES
NATIONS GOVERNMENT RESERVES-ADVISER SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON PACIFIC HORIZON NATIONS
GOVERNMENT TREASURY ONLY GOVERNMENT COMBINED FUND
FUND FUND RESERVES PRO FORMA
---- ---- -------- ---------
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 (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 ................ 0.05% 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>
II-67
<PAGE>
- - --------------------
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:*
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:
<TABLE>
<CAPTION>
PACIFIC HORIZON PACIFIC HORIZON NATIONS
GOVERNMENT TREASURY ONLY GOVERNMENT COMBINED FUND
FUND FUND RESERVES PRO FORMA
---- ---- -------- ---------
<S> <C> <C> <C> <C>
1 year ............................................ $ 5 $ 5 $ 5 $ 5
3 years ........................................... 15 17 14 14
5 years ........................................... 27 29 25 25
10 years .......................................... 60 65 57 57
</TABLE>
- - --------------------
* 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-68
<PAGE>
PACIFIC HORIZON GOVERNMENT & TREASURY ONLY-PACIFIC HORIZON SHARES
NATIONS GOVERNMENT RESERVES-INVESTOR SHARES
<TABLE>
<CAPTION>
<S> <C>
PACIFIC HORIZON PACIFIC HORIZON NATIONS
GOVERNMENT TREASURY ONLY GOVERNMENT COMBINED FUND
FUND FUND RESERVES PRO FORMA
---- ---- -------- ---------
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 (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 ................ 0.05% 0.10% 0.10% 0.10%
12b-1/Shareholder Servicing Fees................. 0.32% 0.32% 0.35% 0.35%
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 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.
II-69
<PAGE>
EXAMPLE:*
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:
<TABLE>
<CAPTION>
PACIFIC HORIZON PACIFIC HORIZON NATIONS
GOVERNMENT TREASURY ONLY GOVERNMENT COMBINED FUND
FUND FUND RESERVES PRO FORMA
---- ---- -------- ---------
<S> <C> <C> <C> <C>
1 year ............................................ $ 6 $ 6 $ 6 $ 6
3 years ........................................... 18 19 18 18
5 years ........................................... 31 33 31 31
10 years .......................................... 69 74 69 69
</TABLE>
- - --------------------
* 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-70
<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
policies of five Pacific Horizon Funds and the four corresponding Operating
Nations Funds into which they would be reorganized. Because the Pacific Horizon
Asset Allocation, Blue Chip, California Municipal Bond Fund, California
Tax-Exempt Money Market Fund, Capital Income Fund and Intermediate Bond Fund
would be reorganized into Shell Nations Funds that have substantially the same
investment objectives, restrictions and policies as their corresponding Pacific
Horizon Funds, they are not discussed in this Appendix. 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 repurchase 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 the Reorganization, 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.
III-1
<PAGE>
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 repurchase 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 Nations 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 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 maturities not exceeding 397 days. Additionally, 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 and their agencies ("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.
III-2
<PAGE>
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 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 repurchase 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.
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-3
<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 Plus(R) 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, quantity 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% and 0.50% maximum deferred sales charge
which is imposed only if shares are redeemed within the first and second years
of purchase, respectively.
B. Purchase Policies
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Minimum initial investment $500 for a regular account; $100 for $1,000 for a regular account; $500
investors purchasing through BofA or for IRA investors; $250 for
its affiliates*; $500 for IRA, Roth non-working spousal IRAs; $250 for
IRA, or SEP IRA investors; $250 for wrap fee and other investment
non-working spousal IRAs; $2500 for adviser accounts; $100 for investors
SEP-IRAs with more than one participating in the Systematic
participant. 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 investments $50 for regular accounts and $0 for $100; $50 for subsequent investments
investors purchasing through BofA or made through the Systematic
its affiliates; for IRA, Roth IRA or Investment Plan.
SEP IRA investors; for non-working
spousal IRAs; or for SEP-IRAs.
</TABLE>
- - ----------
* 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-2
<PAGE>
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Purchase methods Through Bank of America; Service Through Selling Agents, Servicing
Organizations; by mail; by wire; by Agents, a 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 selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature Yes ($500 transaction minimum) None
(fixed income funds only)
By automatic withdrawal plan Yes (net asset value of account must Yes (net asset value of account must
be $5,000) 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>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Yes ($50 minimum initial and Yes (in any amount from $50 to
subsequent investment) $100,000).
E. Share Exchanges
PACIFIC HORIZON FUNDS NATIONS FUNDS
By mail Yes Yes
By telephone Yes Yes
Minimum The A Shares exchanged must have a The Investor A Shares exchanged must
current value of at least $500. have a 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>
- - ----------
# 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-3
<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, or for Pacific Horizon Shares of Pacific Horizon
money market funds. 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
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Minimum initial investment $500 for a regular account; $100 for $1,000 for a regular account; $500
investors purchasing through BofA or for IRA investors; $250 for
its affiliate*; $500 for IRA, Roth non-working spousal IRAs; $100 for
IRA or SEP IRA investors; $250 for investors participating in the
non-working spousal IRAs; $2500 for Systematic Investment Plan; no
SEP-IRAs with more than one minimum investment for 401(k) plans,
participant. simplified employee pension plans
("SEPs"), Savings Incentives Method
Plans for Employees ("SIMPLE IRAs")
and salary reduction-IRAs
("SAR-IRAs").**
Minimum subsequent investments $50 for regular accounts and $0 for $100; $50 for subsequent investments
investors purchasing through BofA or made through the Systematic
its affiliate; for IRA or SEP IRA Investment Plan.
investors; for non-working spousal
IRAs; or for SEP-IRAs.
Purchase methods Through Bank of America; Service Through Selling Agents, Servicing
Organizations; by mail; by wire; by Agents, a Nations Fund Personal
telephone; or Teletrade. Investment Planner account; by mail;
by wire; by telephone# and a
Systematic Investment Plan.
</TABLE>
- - ----------
* 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-4
<PAGE>
C. Redemption Procedures
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes#
By wire Yes Yes
Check writing feature (fixed income Yes ($500 transaction minimum) None
funds only)
By automatic withdrawal plan Yes (net asset value of account must Yes (net asset value of account must
be $5,000) 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 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>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Yes ($50 minimum initial and Yes (in any amount from $50 to
subsequent investment) $100,000).
Conversion feature Yes (to A Shares in 8 years) Yes (to Investor A 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 must have a The Investor B Shares exchanged must
current value of at least $500. have a current value of at least
$1,000
Automatic exchange feature None None
</TABLE>
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.
- - ----------
# 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-5
<PAGE>
III. PACIFIC HORIZON FUND - K SHARES
CORRESPONDING NATIONS FUND - INVESTOR C SHARES
A. Sales Charges and Exemptions
Pacific Horizon's K Shares and Nations Funds' Investor C Shares are
offered at net asset value with no front-end sales charge, although a 1.00%
deferred sales charge will apply to all redemptions made within one year of
purchase.
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
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Minimum initial investment $500 for a regular account; $100 for $1,000 for a regular account; $500
investors purchasing through BofA or for IRA investors; $250 for
its affiliate*; $500 for IRA, Roth non-working spousal IRAs; $100 for
IRA or SEP IRA investors; $250 for investors participating in the
non-working spousal IRAs; $2500 for Systematic Investment Plan; no
SEP-IRAs with more than one minimum investment for 401(k) plans,
participant. simplified employee pension plans
("SEPs"), Savings Incentives Method
Plans for Employees ("SIMPLE IRAs")
and salary reduction-IRAs
("SAR-IRAs").**
Minimum subsequent investments $50 for regular accounts and $0 for $100; $50 for subsequent investments
investors purchasing through BofA or made through the Systematic
its affiliate; for IRA or SEP IRA Investment Plan.
investors; for non-working spousal
IRAs; or for SEP-IRAs.
Purchase methods Through eligible interest accounts. Through Selling Agents, Servicing
Agents, a Nations Fund Personal
Investment Planner account; by mail;
by wire; by telephone# and a
Systematic Investment Plan.
</TABLE>
- - ----------
* 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.
# Telephone transactions for the Nations Funds, consisting of purchases,
exchanges and redemptions, are limited to $50,000.
IV-6
<PAGE>
C. Redemption Procedures
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature (fixed income Yes ($500 transaction minimum) None
funds only)
By automatic withdrawal plan Yes (net asset value of account must Yes (net asset value of account must
(fixed income funds only) be $5,000) 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.
D. Additional Shareholder Services
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Yes ($50 minimum initial and Yes (in any amount from $50 to
subsequent investment) $100,000).
E. Share Exchanges
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
By mail Yes Yes
By telephone Yes Yes
Minimum The K Shares exchanged must have a The Investor C Shares exchanged must
current value of at least $500. have a 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 any other Nations Funds non-money market fund or Daily Shares of
certain money market funds. 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.
- - ----------
@ 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-7
<PAGE>
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
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS*
--------------------- --------------
<S> <C> <C>
Minimum initial investment None None
Minimum subsequent investments None None
Purchase methods Through eligible interest accounts. None
C. Redemption Procedures
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone No Yes
By wire No Yes
Check writing feature None None
</TABLE>
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
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan None None
</TABLE>
- - ----------
* Seafirst Shares of Nations Funds will not be offered to new investors.
IV-8
<PAGE>
E. Share Exchanges
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
By mail Yes Yes
By telephone Yes Yes
Minimum None The Seafirst Shares exchanged must have
a current value of at least $1,000.
Automatic Conversion Plan On June 23, 2000 to A Shares Yes
</TABLE>
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.
Seafirst Shares of Nations Funds may be exchanged for Seafirst Shares
of any other Nations Fund and for Investor A Shares of most Nations Funds.
Seafirst Shares of Nations Funds will automatically convert to Investor A shares
of equal value on June 23, 2000.
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.
<TABLE>
<CAPTION>
B. Purchase Policies
PACIFIC HORIZON FUNDS*** NATIONS FUNDS
------------------------ -------------
<S> <C> <C>
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 investments None $100; $50 for subsequent investments
made through the Systematic Investment
Plan.
</TABLE>
*** 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-9
<PAGE>
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS*** NATIONS FUNDS
------------------------ -------------
<S> <C> <C>
Purchase methods Through departments of Bank of Through Selling Agents, Servicing
America or Service Organizations Agents, a 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 selling or Yes Yes
servicing agent
By mail Terms set by Service Organization Yes
By telephone Terms set by Service Organization Yes#
By wire Terms set by Service Organization Yes
Check writing feature None Yes ($250 transaction minimum)
By automatic withdrawal plan Terms set by Service Organization Yes (net asset value of account must
be $10,000)@
</TABLE>
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
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Terms set by Service Organization Yes (in any amount from $50 to
$100,000).
</TABLE>
- - ----------
# 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-10
<PAGE>
E. Share Exchanges
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
By mail Terms set by Service Organization Yes
By telephone Terms set by Service Organization Yes
Minimum Terms set by Service Organization The Daily Shares exchanged must have
a current value of at least $1,000
Automatic exchange feature Terms set by Service Organization Yes. A shareholder may
automatically exchange at least $25
on a monthly or quarterly basis.#
</TABLE>
Daily Shares of a Nations Institutional Reserves money market fund may
be exchanged for Daily Shares of any other Nations Institutional Reserves money
market 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.
- - ----------
# Shares of Nations Fund 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-11
<PAGE>
B. Purchase Policies
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS*** NATIONS FUNDS
------------------------ -------------
<S> <C> <C>
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 investments None $100; $50 for subsequent investments
made through the Systematic Investment
Plan.
Purchase methods Through departments of Bank of Through Selling Agents, Servicing
America or Service Organizations Agents, a 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 selling or Yes Yes
servicing agent
By mail Terms set by Service Organization Yes
By telephone Terms set by Service Organization Yes
By wire Terms set by Service Organization Yes
Check writing feature None Yes ($250 transaction minimum)
By automatic withdrawal plan Terms set by Service Organization Yes (net asset value of account must
be $10,000)@
</TABLE>
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.
- - ----------
*** 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.
# 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-12
<PAGE>
<TABLE>
<CAPTION>
D. Additional Shareholder Services
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Terms set by Service Organization Yes (in any amount from $50 to
$100,000).
E. Share Exchanges
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
By mail Terms set by Service Organization Yes
By telephone Terms set by Service Organization Yes
Minimum Terms set by Service Organization The Daily Shares exchanged must have
a current value of at least $1,000
Automatic exchange feature Terms set by Service Organization Yes. A shareholder may
automatically exchange at least $25
on a monthly or quarterly basis.
</TABLE>
Daily Shares of a Nations Institutional Reserves money market fund may
be exchanged for Daily Shares of any other Nations Institutional Reserves money
market 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.
<TABLE>
<CAPTION>
B. Purchase Policies
PACIFIC HORIZON FUNDS*** NATIONS FUNDS
------------------------ -------------
<S> <C> <C>
Minimum initial investment None None
Minimum subsequent investments None None
Purchase methods Through departments of Bank of Through Selling Agents, Servicing
America or Service Organizations Agents, a Nations Fund Personal
Investment Planner account; by mail;
by wire; by telephone# and a
Systematic Investment Plan.
</TABLE>
- - ----------
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance requirements.
IV-13
<PAGE>
<TABLE>
<CAPTION>
C. Redemption Procedures
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent
By mail Terms set by Service Organization Yes
By telephone Terms set by Service Organization Yes#
By wire Terms set by Service Organization Yes
Check writing feature None Yes ($250 transaction minimum)
By automatic withdrawal plan Terms set by Service Organization Yes (net asset value of account must
be $10,000)@
Reinstatement Privileges Within 120 days only for
exchanges None of B Shares into Y
Shares of Pacific Horizon's Prime Fund.
</TABLE>
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.
<TABLE>
<CAPTION>
D. Additional Shareholder Services
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Terms set by Service Organization Yes (in any amount from $50 to
$100,000).+
E. Share Exchanges
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
By mail Terms set by Service Organization Yes
By telephone Terms set by Service Organization Yes
Minimum Terms set by Service Organization None
Automatic exchange feature Terms set by Service Organization Yes. A shareholder may
automatically exchange at least $25
on a monthly or quarterly basis.
</TABLE>
Service Shares of a Nations Institutional Reserves money market fund
may be exchanged for Service Shares of any other Nations Institutional Reserves
money market fund. Exchanges are subject to the minimum investment requirements
imposed.
- - ----------
# 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.
+ Minimum initial investment: $1,000.
IV-14
<PAGE>
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.
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.
<TABLE>
<CAPTION>
B. Purchase Policies
PACIFIC HORIZON FUNDS*** NATIONS FUNDS
------------------------ -------------
<S> <C> <C>
Minimum initial investment $500,000 $100,000
Minimum subsequent investments None None
Purchase methods Directly by institutional clients or Through Stephens, the Transfer
through selected Service Agent, or their respective agents
Organizations upon execution of the
appropriate account documentation
C. Redemption Procedures
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
Through an authorized selling or Yes Yes
servicing agent
By telephone Yes Yes
By wire Yes Yes
Check writing feature None None
By automatic withdrawal plan None None
</TABLE>
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.
<TABLE>
<CAPTION>
D. Additional Shareholder Services
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Terms set by Service Organization None
</TABLE>
- - ----------
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance requirements.
IV-15
<PAGE>
E. Share Exchanges
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
By mail Terms set by Service Organization None
By telephone Terms set by Service Organization Yes
Minimum Terms set by Service Organization None
Automatic exchange feature Terms set by Service Organization None
</TABLE>
Adviser Shares of a Nations Institutional Reserves money market fund
may be exchanged for Adviser Shares of any other Nations Institutional Reserves
money market 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.
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
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS*** NATIONS FUNDS
------------------------ -------------
<S> <C> <C>
Minimum initial investment $500,000* $1,000,000
Minimum subsequent investments None None
Purchase methods Directly by institutional clients or Through Stephens, the Transfer
through selected Service Agent, or their respective agents
Organizations upon execution of the
appropriate account documentation
C. Redemption Procedures
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
Through an authorized selling or Yes Yes
servicing agent
By telephone Yes Yes
By wire Yes Yes
Check writing feature None None
By automatic withdrawal plan None None
</TABLE>
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 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.
- - ----------
*** Service Organizations set their own terms and conditions regarding
purchases, exchanges, redemptions, investment limits and balance requirements.
* Purchases by checks are not permitted.
IV-16
<PAGE>
D. Additional Shareholder Services
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Terms set by Service Organization None
E. Share Exchanges
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
By mail Terms set by Service Organization Yes
By telephone Terms set by Service Organization Yes
Minimum Terms set by Service Organization None
Automatic exchange feature Terms set by Service Organization None
</TABLE>
Capital Shares of a Nations Institutional Reserves money market fund
may be exchanged for Capital Shares of any other Nations Institutional Reserves
money market 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
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
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Minimum initial investment $500 for a regular account; $500 for $25,000
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 investments $50, $500 for Teletrade, $0 for None
investors purchasing through BofA or
its affiliations; for IRA or Roth
IRA investors; for non-working
spousal IRAs; or for SEP-IRAs with
more than one participant.
Purchase methods Through Bank of America or Service Through Stephens, the Transfer
Organizations. Agent, or their respective agents.
</TABLE>
IV-17
<PAGE>
<TABLE>
<CAPTION>
C. Redemption Procedures
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature Yes (transaction minimum: $500) Yes (transaction minimum: $500)
By automatic withdrawal plan Yes (net asset value of account must None
be $5,000)
Reinstatement privileges Yes (within 90 days) Yes (within 90 days)
</TABLE>
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.
<TABLE>
<CAPTION>
D. Additional Shareholder Services
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Systematic/automatic Yes ($50 minimum None
investment plan initial and subsequent
investment).
E. Share Exchanges
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
By mail Yes Yes
By telephone Yes Yes
Minimum The Pacific Horizon Shares exchanged None
must have a current value of a least
$500.
Automatic exchange feature None None
</TABLE>
Investor Shares of a Nations Institutional Reserves money market fund
may be exchanged for Investor Shares of any other Nations Institutional Reserves
money market 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.
IV-18
<PAGE>
XI. DIVIDENDS. Dividends for each of the Pacific Horizon Funds and Nations Funds
are declared and paid as follows:
<TABLE>
<CAPTION>
PACIFIC HORIZON FUNDS NATIONS FUNDS
--------------------- -------------
<S> <C> <C>
Declared daily and paid monthly Tax-Exempt Money Fund Municipal Reserves
Prime Fund Cash Reserves
Treasury Fund Treasury Reserves
Treasury Only Fund Government Reserves
California Tax-Exempt Money Market California Tax-Exempt Money Market
Fund Reserves
Intermediate Bond Fund Intermediate Bond Fund
California Municipal Bond Fund
Declared and paid quarterly Asset Allocation Fund Asset Allocation Fund
Blue Chip Fund Blue Chip Fund
Capital Income Fund Capital Income Fund
Declared and paid at least California Municipal Bond Fund
annually
</TABLE>
IV-19
<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 as supplemented.
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.
1
<PAGE>
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.
2
<PAGE>
TABLE OF CONTENTS
General
Information....................................................................4
Introductory Note to PRO FORMA Financial Information...........................5
3
<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.
4
<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.
5
<PAGE>
[ PRO FORMA FINANCIALS TO BE DISTRIBUTED SEPARATELY BY NBAI ]
6
<PAGE>
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------
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>
INVESTMENT IN MASTER
INVESTMENT TRUST, SERIES I-
BLUE CHIP $ - $ 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 1,620 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
(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
---------------------------------------
0 130,109 130,009
---------------------------------------
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 Reserves Prime Fund Combined
Principal Amount Amount Combined Principal Description Value Value Value
Amount (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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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% 11/2/98 124,903 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 BANKERS 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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 SECURITIZATION 11/12/98 60,399 0 60,399
76,146,000 0 76,146,000 INTERNATIONAL SECURITIZATION 12/10/98 75,715 0 75,715
35,250,000 0 35,250,000 INTERNATIONAL SECURITIZATION 4/22/99 34,408 0 34,408
55,050,000 0 55,050,000 INTERNATIONAL SECURITIZATION 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 11/16/98 49,884 0 49,884
60,000,000 0 60,000,000 LEHMAN BROS 12/21/98 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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% 11/3/98 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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% 9/15/99 124,984 0 124,984
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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 $ 13,274,991 $ -- $ 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 810,616 4,078,815 -- 4,889,431
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
------------ ------------ ------------ ------------
7,082,785 13,277,869 -- 20,360,654
------------ ------------ ------------ ------------
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) - (1,030)
----------------------------------------- --------------
<PAGE>
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $289,697 $557,087 ($7,644) $839,140
========================================= ==============
</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.
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 for the year ended October
31, 1998 assumes the exchange occurred as of November 1, 1997. 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 Nations Cash Reserves
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 shareholder servicing and
distribution 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 Horizon Government Fund
Pro Forma Combining Schedule of Investments (Unaudited)
October 31,1998
Nations Pacific
Government Horizon Pacific
Reserves Government Fund Pro Forma Combined Nations Horizon
Principal Principal Principal Government Government Fund Pro Forma Combined
Amount Amount Amount Asset Description Reserves Value Value Value
(in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C> <C> <C>
Investment Companies - 0.77%
9,105,000 0 9,105,000 DREYFUS TREASURY CASH MANAGEMENT 9,105 0 9,105
----------------------------------------
9,105 0 9,105
----------------------------------------
Repurchase Agreements--42.56%
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 GOLDMAN 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 - 1.5%
17,847,000 0 17,847,000 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--
48.93%
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 FANNIE MAE 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 DISC NOTE 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 02/17/99
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 8,705 8,705
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, DISC NOTE 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 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 11/12/98 5,026 0 5,026
8,000,000 0 8,000,000 FHLMC DISC NOTE 2/19/99 7,884 0 7,884
6,703,000 0 6,703,000 FHLMC 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
----------------------------------------
302,513 278,695 581,208
----------------------------------------
Total Investments 93.76% (Cost
$646,465, $467,210, $1,113,675
respectively) 646,465 467,210 1,113,675
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizon Government Fund
Pro Forma Combining Statement of Net Assets (Unaudited)
October 31,1998
Nations Pacific
Government Horizon 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 -- 188,067
Payable for investments purchased -- (188,515) -- (188,515)
Other assets and liabilities, net (678) (225) -- (903)
--------------------------------------------- ---------------
Total Other Assets and Liabilities (678) (673) -- (1,351)
--------------------------------------------- ---------------
Net Assets $ 645,787 $ 466,537 $-- $1,112,324
============================================= ===============
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 Horizon Government Fund
Pro Forma Combining Statement of Operations (unaudited)
For the Twelve Month Period Ended October 31,1998
Nations Pacific
Government Horizon 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 1,657 447 (602) (a) 1,503
Administration 553 448 - (a) 1,001
Transfer Agent 42 17 - (b) 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 32 (65) (b) 51
---------------------------------------------- ---------------
Subtotal 2,446 1,291 (728) 3,009
---------------------------------------------- ---------------
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) 1,130(c) (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.
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, 1998 and the
unaudited Pro Forma Combining Statement of Operations for the year ended October
31, 1998 assumes the exchange occurred as of November 1, 1997. 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 Nations Government
Reserves 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 shareholder servicing and
distribution 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 Horizon Treasury Only Fund
Pro Forma Combining Schedule of Investments (unaudited)
October 31,1998
Pacific
Nations Pacific Horizon
Government Horizon Pro Forma Combined Nations Treasury
Reserves Treasury Only Fund Principal Government Only Fund Pro Forma Combined
Principal Amount Principal Amount Amount Asset Description Reserves 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 GOLDMAN 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 FANNIE MAE 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
02/17/99
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, DISC NOTE 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 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 11/12/98 5,026 0 5,026
<PAGE>
8,000,000 0 8,000,000 FHLMC DISC NOTE 2/19/99 7,884 0 7,884
6,703,000 0 6,703,000 FHLMC 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 and $1,099,204 respectively) 646,465 452,739 1,099,204
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations Government Reserves / Pacific Horizon 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 $- 227,238 $- $227,238
--------------------------------------------- ---------------
$645,787 $528,248 $- $1,174,035
--------------------------------------------- ---------------
Shares Outstanding by Class:
Capital Class / Horizon (Primary) 160,301 43,787 - 204,088
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 - 227,269 - 227,269
--------------------------------------------- ---------------
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 Horizon Treasury Only Fund
Pro Forma Combining Statement of Operations (unaudited)
For the Twelve Month Period Ending 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.
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, 1998 and the
unaudited Pro Forma Combining Statement of Operations assumes for the year ended
October 31, 1998 the exchange occurred as of November 1, 1997. 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 Nations Government
Reserves 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 shareholder servicing and
distribution 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 HORIZON GOVERNMENT & TREASURY ONLY FUNDS
Pro Forma Combining Schedule of Investments (unaudited)
October 31,1998
Pacific Horizon
Nations Gov't Pacific Horizon Treasury Only Fund Pro Forma Combined
Reserves Gov't Fund Principal Principal Principal
Principal Amount Amount Amount Amount Description
<S> <C> <C> <C> <C>
INVESTMENT COMPANIES - 0.55%
9,105,000 0 0 9,105,000 DREYFUS TREASURY CASH MANAGEMENT
REPURCHASE AGREEMENTS - 30.81%
157,000,000 0 0 157,000,000 ABN-AMRO CHIC 5.625% 11/02/98
140,000,000 0 0 140,000,000 FIRST UNION CAPITAL 5.62% 11/02/98
20,000,000 0 0 20,000,000 GOLDMAN SACHS TERM 5.21% 11/02/98
0 50,000,000 0 50,000,000 HSBC 5.6% 11/2/98
0 23,515,000 0 23,515,000 J.P. MORGAN 5% 11/2/98
0 60,000,000 0 60,000,000 LEHMAN 5.6% 11/2/98
0 55,000,000 0 55,000,000 PRUDENTIAL 5.6% 11/2/98
TIME DEPOSITS- EURO - 1.09%
17,847,000 0 0 17,847,000 BANK OF NEW YORK CAYMAN ISLAND
4.75% 11/02/98
Pacific
Nations Pacific Horizon
Gov't Horizon Treasury
Reserves Gov't Fund Only Fund Pro Forma Combined
Description Value Value Value Value
(in 000's) (in 000's) (in 000's) (in 000's)
<S> <C> <C> <C> <C>
INVESTMENT COMPANIES - 0.55%
DREYFUS TREASURY CASH MANAGEME 9,105 9,105
-------------------------------------------------
9,105 9,105
-------------------------------------------------
REPURCHASE AGREEMENTS - 30.81%
ABN-AMRO CHIC 5.625% 11/02/98 157,000 157,000
FIRST UNION CAPITAL 5.62% 11/02/98 140,000 140,000
GOLD SACHS TERM 5.21% 11/02/98 20,000 20,000
HSBC 5.6% 11/2/98 50,000 50,000
J.P. MORGAN 5% 11/2/98 23,515 23,515
LEHMAN 5.6% 11/2/98 60,000 60,000
PRUDENTIAL 5.6% 11/2/98 55,000 55,000
-------------------------------------------------
317,000 188,515 505,515
-------------------------------------------------
TIME DEPOSITS- EURO - 1.09%
BANK OF NEW YORK CAYMAN ISLAND 17,847 17,847
4.75% 11/02/98
-------------------------------------------------
17,847 17,847
-------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 35.43%
0 11,245,000 0 11,245,000 FANNIE MAE 5.05% 11/10/98
0 15,000,000 0 15,000,000 FANNIE MAE 5.38% 02/09/99
0 5,000,000 0 5,000,000 FANNIE MAE 5.49% 08/03/99
0 5,000,000 0 5,000,000 FANNIE MAE 5.57% 05/07/99
0 3,000,000 0 3,000,000 FANNIE MAE 9.55 3/10/99
0 20,000,000 0 20,000,000 FANNIE MAE DISC NOTE 01/04/99
U.S. GOVERNMENT AGENCY OBLIGATIONS - 35.43%
FANNIE MAE 5.05% 11/10/98 11,243 11,243
FANNIE MAE 5.38% 02/09/99 15,015 15,015
FANNIE MAE 5.49% 08/03/99 4,995 4,995
FANNIE MAE 5.57% 05/07/99 4,996 4,996
FANNIE MAE 9.55 3/10/99 3,041 3,041
FANNIE MAE DISC NOTE 01/04/99 19,821 19,821
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
0 10,000,000 0 10,000,000 FANNIE MAE DISC NOTE 01/27/99
0 10,000,000 0 10,000,000 FANNIE MAE DISC NOTE 02/01/99
0 10,000,000 0 10,000,000 FANNIE MAE DISC NOTE 04/01/99
0 25,000,000 0 25,000,000 FANNIE MAE DISC NOTE 11/20/98
8,000,000 0 0 8,000,000 FANNIE MAE SERIES MTN 4.441%
4/28/99
6,000,000 5,000,000 0 11,000,000 FEDERAL FARM CREDIT BANK 5.70%
11/03/98
11,000,000 0 0 11,000,000 FEDERAL FARM CREDIT BANK, DN
5.65% 01/04/99
6,901,000 0 0 6,901,000 FEDERAL HOME LOAN BANK 4/14/99
12,000,000 0 0 12,000,000 FEDERAL HOME LOAN BANK 5.24%
10/21/99
0 15,000,000 0 15,000,000 FEDERAL HOME LOAN BANK 08/12/99
0 8,400,000 0 8,400,000 FEDERAL HOME LOAN BANK 5.335%
01/11/99
0 5,000,000 0 5,000,000 FEDERAL HOME LOAN BANK 5.718%
05/06/99
0 5,000,000 0 5,000,000 FEDERAL HOME LOAN BANK 5.723%
05/05/99
8,000,000 9,760,000 0 17,760,000 FEDERAL HOME LOAN BANK DISC NOTE
01/04/99
9,000,000 0 0 9,000,000 FEDERAL HOME LOAN BANK, NOTE
5.65% 4/09/99
8,000,000 0 0 8,000,000 FEDERAL HOME LOAN BK DN 11/13/98
0 5,000,000 0 5,000,000 FEDERAL HOME LOAN MORTGAGE CORP
5.60% 04/21/99
0 3,237,000 0 3,237,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 01/04/99
8,905,000 10,000,000 0 18,905,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 01/15/99
0 10,000,000 0 10,000,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 01/19/99
5,000,000 20,000,000 0 25,000,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 02/17/99
FANNIE MAE DISC NOTE 01/27/99 9,884 9,884
FANNIE MAE DISC NOTE 02/01/99 9,877 9,877
FANNIE MAE DISC NOTE 04/01/99 9,807 9,807
FANNIE MAE DISC NOTE 11/20/98 24,928 24,928
FANNIE MAE SERIES MTN 4.441% 7,998 7,998
4/28/99
FEDERAL FARM CREDIT BANK 5.70% 6,000 5,000 11,000
11/03/98
FEDERAL FARM CREDIT BANK, DN 11,000 11,000
5.65% 01/04/99
FEDERAL HOME LOAN BANK 4/14/99 6,756 6,756
FEDERAL HOME LOAN BANK 5.24% 12,000 12,000
10/21/99
FEDERAL HOME LOAN BANK 08/12/99 14,994 14,994
FEDERAL HOME LOAN BANK 5.335% 8,395 8,395
01/11/99
FEDERAL HOME LOAN BANK 5.718% 4,999 4,999
05/06/99
FEDERAL HOME LOAN BANK 5.723% 4,999 4,999
05/05/99
FEDERAL HOME LOAN BANK DISC NOTE 7,928 9,673 17,601
01/04/99
FEDERAL HOME LOAN BANK, NOTE 8,999 8,999
5.65% 4/09/99
FEDERAL HOME LOAN BK DN 11/13/98 7,987 7,987
FEDERAL HOME LOAN MORTGAGE CORP 4,998 4,998
5.60% 04/21/99
FEDERAL HOME LOAN MORTGAGE CORP 3,208 3,208
DISC NOTE 01/04/99
FEDERAL HOME LOAN MORTGAGE CORP 8,809 9,901 18,710
DISC NOTE 01/15/99
FEDERAL HOME LOAN MORTGAGE CORP 9,885 9,885
DISC NOTE 01/19/99
FEDERAL HOME LOAN MORTGAGE CORP 4,929 19,703 24,632
DISC NOTE 02/17/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
0 20,000,000 0 20,000,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 03/05/99
0 15,000,000 0 15,000,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 11/25/98
0 25,000,000 0 25,000,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 12/04/98
0 8,760,000 0 8,760,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 12/18/98
0 1,148,000 0 1,148,000 FEDERAL HOME LOAN MORTGAGE CORP
DISC NOTE 12/22/98
6,000,000 0 0 6,000,000 FEDL HOME LN BK, DISC NOTE 2/12/99
7,151,000 0 0 7,151,000 FEDL HOME LN BK,DUE 02/11/99
15,000,000 0 0 15,000,000 FHLB 5.57% 3/09/99
4,000,000 0 0 4,000,000 FHLB 5.705% 5/05/99
13,000,000 0 0 13,000,000 FHLB 4.574% 6/17/99
12,000,000 0 0 12,000,000 FHLB 5.51% 7/06/99
7,000,000 0 0 7,000,000 FHLB DISC NOTE 12/11/98
20,000,000 0 0 20,000,000 FHLB FRN 4.62% 12/24/98
6,000,000 0 0 6,000,000 FHLB GOV AGENCIES 5.415% 2/10/99
8,000,000 0 0 8,000,000 FHLMC 1/07/99
8,000,000 0 0 8,000,000 FHLMC 1/08/99
8,000,000 0 0 8,000,000 FHLMC 1/22/99
7,000,000 0 0 7,000,000 FHLMC 2/16/99
3,293,000 0 0 3,293,000 FHLMC 3/12/99
3,108,000 0 0 3,108,000 FHLMC 3/29/99
8,000,000 0 0 8,000,000 FHLMC DISC NOTE 1/26/99
5,034,000 0 0 5,034,000 FHLMC DISC NOTE 11/12/98
8,000,000 0 0 8,000,000 FHLMC DISC NOTE 2/19/99
6,703,000 0 0 6,703,000 FHLMC DISC NOTE 2/05/99
5,000,000 0 0 5,000,000 FNMA 5.66% 11/20/98
8,000,000 0 0 8,000,000 FNMA 5.63% 5/05/99
8,000,000 0 0 8,000,000 FNMA DISC NOTE 4.75 2/18/99
4,000,000 0 0 4,000,000 FREDDIE MAC DN 11/06/98
6,000,000 0 0 6,000,000 FREDDIE MAC DN 12/10/98
6,000,000 0 0 6,000,000 SLMA DUE 5.51% 9/16/99
12,000,000 0 0 12,000,000 SLMA FRN 5.19% 9/15/99
FEDERAL HOME LOAN MORTGAGE CORP 19,662 19,662
DISC NOTE 03/05/99
FEDERAL HOME LOAN MORTGAGE CORP 14,947 14,947
DISC NOTE 11/25/98
FEDERAL HOME LOAN MORTGAGE CORP 24,879 24,879
DISC NOTE 12/04/98
FEDERAL HOME LOAN MORTGAGE CORP 8,706 8,706
DISC NOTE 12/18/98
FEDERAL HOME LOAN MORTGAGE CORP 1,140 1,140
DISC NOTE 12/22/98
FEDL HOME LN BK, DISC NOTE 2/12/99 5,915 5,915
FEDL HOME LN BK,DUE 02/11/99 7,044 7,044
FHLB 5.57% 3/09/99 14,999 14,999
FHLB 5.705% 5/05/99 4,013 4,013
FHLB 4.574% 6/17/99 12,998 12,998
FHLB 5.51% 7/06/99 11,992 11,992
FHLB DISC NOTE 12/11/98 6,959 6,959
FHLB FRN 4.62% 12/24/98 19,999 19,999
FHLB GOV AGENCIES 5.415% 2/10/99 5,999 5,999
FHLMC 1/07/99 7,923 7,923
FHLMC 1/08/99 7,921 7,921
FHLMC 1/22/99 7,905 7,905
FHLMC 2/16/99 6,903 6,903
FHLMC 3/12/99 3,232 3,232
FHLMC 3/29/99 3,048 3,048
FHLMC DISC NOTE 1/26/99 7,904 7,904
FHLMC DISC NOTE 1/12/98 5,026 5,026
FMC DISC NOTE 2/19/99 7,884 7,884
FMLMC DISC NOTE 2/05/99 6,610 6,610
FNMA 5.66% 11/20/98 5,000 5,000
FNMA 5.63% 5/05/99 7,998 7,998
FNMA DISC NOTE 4.75 2/18/99 7,885 7,885
FREDDIE MAC DN 11/06/98 3,997 3,997
FREDDIE MAC DN 12/10/98 5,968 5,968
SLMA DUE 5.51% 9/16/99 6,000 6,000
SLMA FRN 5.19% 9/15/99 11,992 11,992
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
17,000,000 0 0 17,000,000 SLMA MED TERM NOTE 5.40% 2/10/99
U.S. TREASURY NOTES - 27.60%
0 0 93,770,000 93,770,000 US TREASURY NOTE 5.00% 1/31/99
0 0 49,150,000 49,150,000 US TREASURY NOTE 5.00% 2/15/99
0 0 49,575,000 49,575,000 US TREASURY NOTE 5.125% 11/30/98
0 0 53,340,000 53,340,000 US TREASURY NOTE 5.125% 12/31/98
0 0 97,850,000 97,850,000 US TREASURY NOTE 5.50% 11/15/98
0 0 25,000,000 25,000,000 US TREASURY NOTE 5.75% 12/31/98
0 0 4,300,000 4,300,000 US TREASURY NOTE 5.875% 1/31/99
0 0 8,955,000 8,955,000 US TREASURY NOTE 6.25% 3/31/99
0 0 30,000,000 30,000,000 US TREASURY NOTE 8.875% 11/15/98
0 0 40,000,000 40,000,000 US TREASURY NOTE 8.875% 2/15/99
SLMA MED TERM NOTE 5.40% 2/10/99 16,993 16,993
------------------------------------------------
302,513 278,695 581,208
------------------------------------------------
U.S. TREASURY NOTES - 27.60% 93,840
US TREASURY NOTE 5.00% 1/31/99 93,840
US TREASURY NOTE 5.00% 2/15/99 49,152 49,152
US TREASURY NOTE 5.125% 11/30/98 49,577 49,577
US TREASURY NOTE 5.125% 12/31/98 53,404 53,404
US TREASURY NOTE 5.50% 11/15/98 97,864 97,864
US TREASURY NOTE 5.75% 12/31/98 25,058 25,058
US TREASURY NOTE 5.875% 1/31/99 4,308 4,308
US TREASURY NOTE 6.25% 3/31/99 9,021 9,021
US TREASURY NOTE 8.875% 11/15/98 30,039 30,039
US TREASURY NOTE 8.875% 2/15/99 40,476 40,476
-------------------------------------------------
452,739 452,739
-------------------------------------------------
Total Investment--95.48% (Cost 646,465 467,210 452,739 1,566,414
$646,465, $467,210, $452,739,
$1,566,414, respectively)
NATIONS GOVERNMENT RESERVES / PACIFIC HORIZON GOVERNMENT & TREASURY ONLY FUNDS
Pro Forma Combining Statement of Net Assets (unaudited)
October 31,1998
Nations Pacific Pacific Adjustments to Pro Forma
Government Horizon Horizon Pro Forma Combined
Reserves Government Treasury
Fund Only Fund
(in 000's) (in 000's) (in 000's) (in 000's) (in 000's)
------------------------------------------------------- --------------
TOTAL INVESTMENTS $646,465 $467,210 $452,739 $1,566,414
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OTHER ASSETS AND LIABILITIES:
Receivable for investments sold - 188,067 129,800 - 317,867
Payable for investments purchased - (188,515) (75,652) - (264,167)
Other assets and liabilities, net (678) (225) 21,361 - 20,458
--------------------------------------- ----------- --------------
Total Other Assets and Liabilities (678) (673) 75,509 - 74,158
--------------------------------------- ----------- --------------
NET ASSETS 645,787 466,537 528,248 - 1,640,572
======================================= =========== ==============
NET ASSETS BY CLASS:
Capital Class / Horizon (Primary) $160,300 $80,155 $43,786 $ - $ 284,241
Liquidity Class $ 42,718 $ - $ - $ - $ 42,718
Advisor Class / Horizon Service $115,769 $233,934 $257,224 $ - $ 606,927
Market Class $327,000 $ - $ - $ - $ 327,000
- - -
Investor Class / Pacific Horizon $ - $152,448 $227,238 $ - $ 379,686
---------------------------------------- ---------- --------------
$645,787 $466,537 $528,248 $ - $1,640,572
---------------------------------------- ---------- --------------
SHARES OUTSTANDING BY CLASS:
Capital Class / Horizon (Primary) 160,301 80,183 43,788 - 284,272
Liquidity Class 42,719 - - - 42,719
Advisor Class / Horizon Service 115,769 234,030 257,239 - 607,038
Market Class 327,000 - - - 327,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Investor Class / Pacific Horizon
- 227,268 152,584 - 379,852
------------------------------------------------------- --------------
645,789 528,295 466,797 - 1,640,881
------------------------------------------------------- --------------
NET ASSET VALUE PER SHARE BY CLASS:
Capital Class / Horizon (Primary) $1.00 $ 1.00 $ 1.00 $ - $ 1.00
Liquidity Class $1.00 $ - $ - $ - $ 1.00
Adviser Class / Horizon Service $1.00 $ 1.00 $ 1.00 $ - $ 1.00
Market Class $1.00 $ - $ - $ - $ 1.00
Investor Class / Pacific Horizon $ - $ 1.00 $ 1.00 $ - $ 1.00
</TABLE>
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NATIONS GOVERNMENT RESERVES / PACIFIC HORIZON GOVERNMENT & TREASURY ONLY FUNDS
Pro Forma Combining Statement of Operations (unaudited)
For the Twelve Month Period Ending October 31,1998
Nations Pacific Pacific Adjustments to Pro Forma
Government Horizon Horizon Pro Forma Combined
Reserves Government Treasury
Fund Only Fund
(in 000's) (in 000's) (in 000's) (in 000's) (in 000's)
------------------------------------------------------- --------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Interest $30,349 $25,066 $23,607 $ - $79,022
Dividends 508 - - - 508
------------------------------------------------------- --------------
Total Investment Income 30,857 25,066 23,607 - 79,530
------------------------------------------------------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXPENSES:
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory 1,657 447 451 (377) (a) 2,178
Administration 553 448 451 1,452
Transfer Agent 42 17 52 (6) (b) 105
Custodian 48 85 56 189
Legal and Audit Fees 10 33 38 (52) (b) 29
Registration & Filing 101 159 38 (20) (b) 278
Trustees' Fees 11 10 7 (10) (b) 18
Interest Expense - - - - -
Other expenses 24 92 99 (120)(b) 95
------------------------------------------------------- --------------
Subtotal 2,446 1,291 1,192 (585) 4,344
------------------------------------------------------- --------------
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Liquidity Class 407 - - - 407
Adviser Class / Horizon Service 190 613 535 - 1,338
Market Class 1,321 - - - 1,321
Investor Class / Pacific Horizon - 454 652 104(a) 1,210
------------------------------------------------------- --------------
Subtotal 1,918 1,067 1,187 104 4,276
------------------------------------------------------- --------------
</TABLE>
Fees waived and/or reimbursed by investment
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
advisor, administrator and/or distributor (2,047) (204) - 812(c) (1,439)
------------------------------------------------------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL EXPENSES 2,317 2,154 2,379 331 7,181
------------------------------------------------------- --------------
------------------------------------------------------- --------------
NET INVESTMENT INCOME 28,540 22,912 21,228 (331) 72,349
------------------------------------------------------- --------------
NET REALIZED GAIN/(LOSS) ON
INVESTMENTS: - 3 (23) - (20)
NET INCREASE/(DECREASE) IN NET ASSETS ======================================================= ==============
RESULTING FROM OPERATIONS: $28,540 $22,915 $ $21,205 (331) $72,329
======================================================= ==============
</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.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
<PAGE>
Nations Government Reserves
Pacific Horizon Government Fund
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, 1998 and the
unaudited Pro Forma Combining Statement of Operations for the year ended October
31, 1998 assumes the exchange occurred as of November 1, 1997. 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 and 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 Nations Government Reserves 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 shareholder servicing and
distribution 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 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)
---------------------------------------------------------------------
Investment in Master
Investment Trust, Series I-
Investment Grade Bond Portfolio $ - $ 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 - 92 (45) 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 Horizon Tax Exempt Fund
Pro Forma Combining Schedule of Investments (unaudited)
October 31,1998
<TABLE>
<CAPTION>
<S> <C>
Nations Nations Pacific
Municipal Pacific Horizon Municipal Horizon Tax Pro Forma
Reserves Tax Exempt Fund Pro Forma Par Reserves Exempt Fund Market Combined
Par Par Combined Security Description Market Value Value Market Value
(in 000's) (in 000's) (in 000's)
Investment Companies - 0.2%
1,650,000 0 1,650,000 AIM TAX EXEMPT FUND 1,650 0 1,650
575,000 0 575,000 FEDERATED TAX EXEMPT MONEY MARKET FUND 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% 03/01/2015 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
PHOENIX CITY ALA IND DEV FRN 3.75%
2,470,000 0 2,470,000 6/01/28 2,470 0 2,470
PHOENIX 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
------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 - 1.99%
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 - 2.05%
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 - District of Columbia - 3.90%
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
------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Municipal Bonds And Notes -
Florida - 7.41%
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 - 4.87%
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 GEORGIA (STATE OF) 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 -
1.36%
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 -
1.79%
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 - 9.46%
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 8,050
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 REV 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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% 5/01/11 895 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
2/01/12 ------------------------------------------
13,100 104,327 117,427
------------------------------------------
Municipal Bonds And Notes -
South Carolina - 1.08%
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
100,000 0 100,000 GRAPEVINE TEX INDL DEV CORP FR SERIES A2 100 0 100
3.65% 12/01/24
400,000 0 400,000 GRAPEVINE TEX INDL FRN SERIES A1 3.65%
12/01/24 400 0 400
1,100,000 0 1,100,000 GRAPEVINE TEX INDL FRN SERIES B2 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 - 1.18%
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 - 0.15%
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
------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Municipal Bonds And Notes -
Wyoming - 0.29%
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 Horizon 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) 490
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.
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, 1998 and the
unaudited Pro Forma Combining Statement of Operations for the year ended October
31, 1998 assumes the exchange occurred as of November 1, 1997. 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 in exchange for
shares of Nations Municipal 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 Nations Municipal
Reserves 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 shareholder servicing and
distribution 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 Pro Forma
Nations Treasury Pacific Horizon Pro Forma Par Reserves Treasury Combined
Reserves Par Treasury Par Combined Security Description Market Market Market
Value Value Value
(in 000's) (in 000's) (in 000's)
INVESTMENT COMPANIES - 1.27%
49,531,000 0 49,531,000 AIM TREASURY 49,531 49,531
22,050,000 0 22,050,000 DREYFUS TREASURY CASH MANAGEMENT 22,050 22,050
-------------------------------------
71,581 0 71,581
-------------------------------------
REPURCHASE AGREEMENTS - 80.40%
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 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 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 - .53%
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 US TREASURY NOTE 6.25% 5/31/99 100,926 75,717 176,643
30,000,000 0 30,000,000 US 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 50,152 50,152
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 50,496 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 75,758 75,758
-------------------------------------
432,073 853,829 1,285,902
-------------------------------------
-------------------------------------
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, 1998 and the
unaudited pro Forma Combining Statement of Operations for the year ended October
31, 1998 assumes the exchange occurred as of November 1, 1997. 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 Nations Treasury Reserves
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 shareholder servicing and
distribution fees 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
FILE NOS. 333-70027
Exhibit Number Description
- - -------------- -----------
Ex-99.17 Form of Proxy Ballot
EXH. 99.17
PACIFIC HORIZON FUNDS, INC.
ASSET ALLOCATION FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON ASSET ALLOCATION FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
BLUE CHIP FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON BLUE CHIP FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value, (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund and (c)
the transfer of all the assets and liabilities of Pacific Horizon;
and (d) the dissolution under state law and the deregistration
under the Investment Company Act of 1940, as amended, of Pacific
Horizon. In the case of the Pacific Horizon Blue Chip Fund and
Pacific Horizon Intermediate Bond Fund only, to approve an
additional 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
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.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
CALIFORNIA MUNICIPAL BOND FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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
FAXING THE PROXY BALLOT TO A.D.P. PROXY SERVICES AT (704) 388-2641 OR (2)
TOUCHTONE VOTING AT (800) 690-6903 OR ON-LINE VOTING AT WWW.PROXYVOTE.COM; (4)
BY MAILING IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK,
SIGN AND DATE YOUR PROXY CARD.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON CALIFORNIA MUNICIPAL BOND FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
CAPITAL INCOME FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON CAPITAL INCOME FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
GOVERNMENT FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON GOVERNMENT FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
INTERMEDIATE BOND FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON INTERMEDIATE BOND FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates, (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 of equal value, (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund and (c)
the transfer of all of the assets and liabilities of Pacific
Horizon; (d) the dissolution under state law and the
deregistration under Investment Company Act of 1940, as amended,
of Pacific Horizon in the case of the Pacific Horizon Blue Chip
Fund, and Pacific Horizon Intermediate Bond Fund only, 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 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.
|_|FOR |_|AGAINST |_|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.
------------------------ -----------
Signature Date
------------------------ -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
PRIME FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (the "Proxies") 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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON PRIME FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
TAX-EXEMPT MONEY FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON TAX-EXEMPT MONEY MARKET FUND
VOTE ON PROPOSAL
1. 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.
|_|FOR |_|AGAINST |_|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.
------------------------ -----------
Signature Date
------------------------ -----------
Signature (Joint Owners) Date
PACIFIC HORIZON FUNDS, INC.
TREASURY FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON TREASURY FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
------------------------ -----------
Signature Date
------------------------ -----------
Signature (Joint Owners) Date
<PAGE>
PACIFIC HORIZON FUNDS, INC.
TREASURY ONLY FUND
PROXY CARD
SPECIAL MEETING OF SHAREHOLDERS-APRIL 12, 1999
The undersigned hereby appoints Stephen M. Wyane, Jay F. Nesblatt, Gary
M. Gardners and J. Robert Dugan (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;
(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.
Please sign below 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.
<PAGE>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PACIFIC HORIZON TREASURY ONLY FUND
VOTE ON PROPOSAL
1. To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates (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 of equal value; (b) the
distribution of shares of designated classes of the corresponding
Nations Fund to shareholders of each Pacific Horizon Fund; (c) the
transfer of all the assets and liabilities of Pacific Horizon; and
(d) the dissolution under state law and the Investment Company Act
of 1940, as amended, of Pacific Horizon.
|_|FOR |_|AGAINST |_|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.
-------------------- -----------
Signature Date
-------------------- -----------
Signature (Joint Owners) Date
