TIME HORIZON FUNDS, PRER14A, 1998-05-12

TIME HORIZON FUNDS
PRER14A, 1998-05-12

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<PAGE> 1

SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[ ] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TIME HORIZON FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------

(3) Filing party:

- --------------------------------------------------------------------------------

(4) Date filed:

- --------------------------------------------------------------------------------
<PAGE> 2

TIME HORIZON FUNDS
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809

TIME HORIZON PORTFOLIO 1
TIME HORIZON PORTFOLIO 2
TIME HORIZON PORTFOLIO 3

Dear Shareholder:

Your are cordially invited to attend a Special Meeting of Shareholders of
Time Horizon Funds (the "Trust") to be held on Monday, June 26, 1998 at 9:00
a.m., Eastern Time, at 400 Bellevue Parkway, Wilmington, Delaware.

At the Meeting, shareholders will be asked to vote on the following
matters:

1. To elect six (6) Trustees to the Board of Trustees;

2. To approve an Investment Advisory Agreement between the Trust and
Bank of America National Trust and Savings Association

3. To approve a new investment advisory agreement between the Trust
and Bank of America National Trust and Savings Association in connection
with the merger of BankAmerica Corporation and NationsBank Corporation.

4. To approve the selection of Price Waterhouse LLP as independent
auditors for the current fiscal year.

Your Board of Trustees has carefully considered each of these matters and
strongly recommends that you vote in favor of each of the proposals.

Although the Trustees would like very much to have each shareholder attend
the Meeting, they realize that this is not possible. Whether or not you plan to
be present at the Meeting, your vote is needed. Please complete, sign and return
the enclosed proxy card(s) promptly. A postage paid envelope is enclosed for
this purpose. In the alternative, you may vote by phone or fax through D.F.
King, our proxy solicitor. To vote by fax, sign the proxy card and fax both
sides to (212) 269-2796 or simply call 800-848-3374.

We look forward to seeing you at the Meeting or receiving your proxy
card(s) so your shares may be voted at the Meeting.

Sincerely,

Robert E. Greeley
President

SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY
CARD(S) IN THE ENCLOSED ENVELOPE
<PAGE> 3

TIME HORIZON FUNDS
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809

TIME HORIZON PORTFOLIO 1
TIME HORIZON PORTFOLIO 2
TIME HORIZON PORTFOLIO 3

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

JUNE 26, 1998

May 18, 1998

To the Shareholders:

You are invited to attend a Special Meeting (the "Meeting") of the
shareholders of the Time Horizon Portfolio 1, Time Horizon Portfolio 2 and Time
Horizon Portfolio 3 (each a "Fund" and collectively the "Funds") of the Time
Horizon Funds, a Delaware business trust (the "Trust"). The meeting will be held
at the offices of the Trust, 400 Bellevue Parkway, Wilmington, Delaware, on
Monday, June 26, 1998, at 9:00 a.m., Eastern Standard Time, for the following
purposes and to transact such other business, if any, as may properly come
before the Meeting:

1. To elect six (6) Trustees to the Board of Trustees;

2. To approve an Investment Advisory Agreement between the Trust and
Bank of America National Trust and Savings Association;

4. To approve the selection of Price Waterhouse LLP as independent
auditors for the current fiscal year.

The Board of Trustees of the Trust has fixed the close of business on May
8, 1998 as the record date for determining the shareholders of the Funds
entitled to notice of and to vote at the Meeting. Shareholders are entitled to
one vote for each share of each Fund held.

PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD(S) IN THE ENVELOPE
PROVIDED. PLEASE MAIL YOUR PROXY PROMPTLY.

Cathy G. O'Kelly
Secretary
<PAGE> 4

TIME HORIZON FUNDS
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809

TIME HORIZON PORTFOLIO 1
TIME HORIZON PORTFOLIO 2
TIME HORIZON PORTFOLIO 3

PROXY STATEMENT

GENERAL

This Proxy Statement is furnished in connection with the solicitation by
the Board of Trustees (the "Board") of the Time Horizon Portfolio 1, Time
Horizon Portfolio 2 and Time Horizon Portfolio 3 (each a "Fund" and collectively
the "Funds") of the Time Horizon Funds, a Delaware business trust (the "Trust"),
of proxies to be voted at the Special Meeting of Shareholders of the Trust to be
held on Monday, June 26, 1998, and any and all adjournments thereof (the
"Meeting"). The date of the first mailing of the Notice, Proxy Statement and the
accompanying proxy card will be on or about May 18, 1998.

PROPOSAL 1: ELECTION OF TRUSTEES

INTRODUCTION. At the Meeting, shareholders of each Fund will be asked to
consider the election of six (6) Trustees, who will constitute the entire Board
of the Trust. The election of the six (6) Trustees is part of a restructuring of
the boards of the registered investment companies advised by Bank of America
(the "Bank of America Complex") into essentially the same board for each
investment company in the Bank of America Complex. The Board concluded that the
election of common board members to all funds will result in a number of
benefits including the following: (1) the new Board would be better positioned
to provide effective oversight in that its members would have detailed
information about all of the funds in the Bank of America Complex; (2) by
bringing together members of the boards of Bank of America sponsored funds the
new Board would have a more complete historical background of the Bank of
America Complex; (3) the Funds would benefit from reduced expenses resulting
from the elimination of multiple Board meetings and the spreading of meeting
costs among all funds in the Bank of America Complex; and (4) communications
between the new Board and management should be more effective given the
reduction in the time and effort required by management to keep multiple boards
informed and to be responsive to multiple boards' needs.

The Board, at a meeting on April 29, 1998, unanimously approved the
proposed restructuring of the Board. Therefore, the Board is proposing that, at
the Meeting shareholders elect the six (6) Trustees listed below to serve as
Trustees of the Trust. Also at an April 2, 1998 meeting, the Board unanimously
approved an amendment to the Declaration of Trust which changed the provisions
regarding the term of office for a Trustee such that a Trustee's term would end
upon the election of his or her successor at a shareholders meeting called for
the purpose of electing Trustees. Messrs. Edward S. Bottum, William P.
Carmichael and Robert E. Greeley were elected to the Board of the Trust by the
initial shareholder of the Trust on July 28, 1995. Messrs. Collins, Fletcher and
Pings are recommended for election by shareholders for the first time. The Board
and management wish to express their great appreciation to Mr. Privat, a current
board member who will not continue on the Board, for his contributions to the
Trust.

TRUSTEES. It is intended that the proxies will be voted for the election
of the nominees for election as Trustee described in the table below. All of the
nominees have consented to serve as Trustees of the Trust, if elected. In case
any nominee shall be unable or shall fail to act as a Trustee by virtue of an
unexpected occurrence, the proxies may be voted for such other person(s) as
shall be determined by the persons acting under the proxies in their discretion.
<PAGE> 5

<TABLE>
<CAPTION>
YEAR FIRST BECAME
NAME, AGE, PRINCIPAL OCCUPATION AND AFFILIATIONS A TRUSTEE
------------------------------------------------ -----------------
<S> <C>
Edward S. Bottum (64) 1995
Managing Director, Chase Franklin Corporation (venture
capital firm) (since 1990); Director, Kellwood Corporation
(women's apparel manufacturer); Trustee and Chairman,
Pacific Innovations Trust (registered investment company)
(since 1996); formerly Vice Chairman of Continental Bank
N.A. (retired 1990); formerly Trustee, 231 Funds
(registered investment company) (February 1993 to August
1995).
William P. Carmichael (54) 1995
Formerly Senior Vice President, Sara Lee Corporation (1991
to 1993); formerly Treasurer, Senior Vice President and
Chief Financial Officer, Beatrice Company (1987 to 1990),
Trustee, Pacific Innovations Trust (since 1997)
(registered investment company); formerly Trustee, 231
Funds (1993 to 1995) (registered investment company);
Director, Cobra Electronics Corporation; Director, The
Hain Food Group, Inc.
Thomas M. Collins (64) Nominee
Of counsel, law firm of McDermott & Trayner; Partner of
the law firm of Musick, Peeler & Garrett (until 1993);
Chairman of the Board and Trustee, Master Investment
Trust, Series I (registered investment company) (since
1993); Director and former President and Chairman (1982 to
1995) of the Board of Pacific Horizon Funds, Inc.; former
Trustee, Master Investment Trust, Series II (registered
investment company) 1993 to 1997; former Director, Bunker
Hill Income Securities, Inc. (registered investment
company) (through 1991).
Douglas B. Fletcher (73) Nominee
Chairman of the Board and Chief Executive Officer,
Fletcher Capital Advisor, Incorporated (registered
investment advisor) (since 1991); Director, Pacific
Horizon Funds, Inc. (since 1985); Partner, Newport
Partners (private venture capital firm) (since 1981);
Director, FCA Securities Inc. (registered broker/dealer)
(since 1993); formerly Chairman of the Board and Chief
Executive Officer, First Pacific Advisors, Inc.
(registered investment adviser) and seven investment
companies under its management (prior to 1983); former
Allied Member, New York Stock Exchange; Chairman of the
Board of FPA Paramount Fund, Inc. (through 1984);
Chairman, TIS Mortgage Investment Company (real estate
investment trust) (since 1988); Trustee and former Vice
Chairman of the Board, Claremont McKenna College;
Chartered Financial Analyst.
*Robert E. Greeley (66) 1995
Chairman, Page Mill Asset management (a private investment
company) (since 1987); Director, Pacific Horizon Funds,
Inc. (since 1993), Morgan Grenfell Small Cap Fund (since
1986); Trustee, Master Investment Trust Series I (since
1993), Master Investment Trust, Series II (from 1993 to
1997), (registered investment companies); Trustee and
President, Pacific Innovations Trust (registered
investment company) (since 1996); formerly Director,
Bunker Hill Income Securities, Inc. (from 1989 to 1994);
Trustee, SunAmerica Fund Group (previously Equitec Siebel
Fund Group) (registered investment company) (from 1984 to
1992); formerly Director, Manager, Corporate Investments,
Hewlett Packard Company (from 1979 to 1991).
Cornelius J. Pings (69) Nominee
President, Association of American Universities (since
1993); Provost (from 1982 to 1993) and Senior Vice
President for Academic Affairs (from 1981 to 1993),
University of Southern California; Director, Pacific
Horizon Funds, Inc. (since 1982); Trustee, Master
Investment Trust, Series I (since 1995); former Trustee,
Master Investment Trust, Series II (from 1995 to 1997);
Director, Farmers Group, Inc. (insurance company) (since
1991).
</TABLE>

- ---------------

* "Interested Person" as defined in the Investment Company Act of 1940. Mr.
Greeley is an "interested" person solely by reason of his position as
President of the Trust.

2
<PAGE> 6

The term of office of each person elected as a Trustee will be until the
next meeting of shareholders called for the purpose of electing trustees or
until he or she dies, resigns, is declared incompetent by a court of appropriate
jurisdiction, or is removed.

Mr. Bottum is a director of Chase Franklin Corporation and Mr. Fletcher is
a director of FCA Securities, Inc. Chase Franklin and FCA Securities are
registered broker dealers with the Securities and Exchange Commission. Chase
Franklin and FCA Securities do not execute portfolio transactions for any of the
Funds nor do they engage in principal transactions with or act as distributor
for any of the Funds. Mr. Bottum and Mr. Fletcher have advised the Trust that
Chase Franklin and FCA Securities will not execute portfolio transactions for,
engage in principal transactions with, or act as distributor for, any of the
Funds during any period when he is a Trustee of the Trust. The Board of Trustees
has determined that none of the Funds nor their shareholders will be adversely
affected as a result of Chase Franklin and FCA Securities not executing such
transactions for the Funds or engaging in such principal transactions with or
acting as distributor for the Funds. Accordingly, Mr. Bottum and Mr. Fletcher
will not be considered interested persons of the Trust due to their respective
relationships with Chase Franklin and FCA Securities.

In the fiscal year of the Trust ended June 30, 1997, the Trustees met eight
times. Each of the current trustees attended 75% or more of the meetings of the
Board. The Board currently has no committees.

For his or her services as Trustee of all of the Funds of the Trust, each
Trustee currently receives an annual retainer of $6,000 with a fee of $1,000 for
each day of board meetings attended in person plus $500 for each telephone board
meeting attended. Robert E. Greeley receives an additional $2,000 per annum as
Chairman of the Board. Each Trustee also is reimbursed for out-of-pocket
expenses incurred as a Trustee. It is anticipated that upon the restructuring of
the Board, the Trustees may change the structure for trustee compensation. The
following table sets forth the aggregate compensation paid by the Trust for the
fiscal year ended June 30, 1997, to the Trustees who are not affiliated with
Bank of America and the aggregate compensation paid to such Trustees for
services on the Trust's Board and that of all other funds in the "Trust Complex"
(as defined in Schedule 14A under the Securities Exchange Act of 1934):

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED
BENEFITS ANNUAL TOTAL
AGGREGATE ACCRUED BENEFITS COMPENSATION
COMPENSATION AS PART OF FUND UPON FROM THE TRUST
NAME FROM THE TRUST* EXPENSES RETIREMENT AND TRUST COMPLEX(1)
---- --------------- --------------- ------------- --------------------
<S> <C> <C> <C> <C>
Edward S. Bottum(2)........... $13,125 $0 $0 $29,125
William P. Carmichael(2)...... $13,625 $0 $0 $27,625
Thomas M. Collins(3).......... $0 ** ** $53,500
Douglas B. Fletcher(3)........ $0 ** ** $36,750
Robert E. Greeley(4).......... $16,250 ** ** $72,750
Cornelius J. Pings(3)......... $0 ** ** $81,892
</TABLE>

- ---------------

(1) The "Trust Complex" currently consists of the Trust, Master Investment
Trust, Series I, Pacific Innovations Trust, World Horizon Funds, the Pacific
Horizon Funds, Inc., the Seafirst Retirement Funds, which were merged into
the Pacific Horizon Funds on June 23, 1997, and the Robertson Stephens
Investment Trust. The total compensation for the Trust Complex is for the
one year period ended December 31, 1997.

(2) Messrs. Bottum and Carmichael currently also serve as Trustees for the
Pacific Innovations Trust.

(3) Messrs. Collins and Pings currently serve as Trustees for the Master
Investment Trust, Series I and Directors for the Pacific Horizon Funds, Inc.
Mr. Fletcher currently serves as Director for the Pacific Horizon Funds,
Inc.

(4) Mr. Greeley currently also serves as Trustee for the Pacific Innovations
Trust and the Master Investment Trust, Series I and Director for the Pacific
Horizon Funds, Inc.

* Mr. Privat received $14,750 in compensation from the Trust for the fiscal
year ended June 30, 1997.

** As of the fiscal year ended February 28, 1998, Pacific Horizon Funds, Inc.
had accrued on the part of all of its Directors an aggregate of $284,393 in
retirement benefits.

3
<PAGE> 7

TRUST OFFICERS. The table below describes the officers of the Trust and
their principal occupations during the past five years:

<TABLE>
<CAPTION>
NAME AND AGE POSITION WITH TRUST PRINCIPAL OCCUPATIONS
------------ ------------------- ---------------------
<S> <C> <C>
Robert E. Greeley (66).... President (see nominee table above)

Stephen M. Wynne (41)..... Vice President Executive Vice President and Chief Accounting
Officer (since 1993) and Senior Vice
President and Chief Accounting Officer
(from 1991 to 1993) PFPC, Inc.; Executive
Vice President, PFPC International (since
1995); Vice President and Chief Accounting
Officer, PNC Institutional Management Corp.
(since 1987).

Cathy G. O'Kelly (44)..... Secretary Partner in the Law Firm of Vedder, Price,
Kaufman & Kammholz.

Jay F. Nusblatt (36)...... Treasurer Vice President and Director of Fund
Accounting and Administration, PFPC, Inc.
(since 1993); formerly Assistant Vice
President, Fund/Plan Services, Inc. (from
1989 to 1993).

Gary M. Gardner (46)...... Assistant Secretary Chief Counsel -- Mutual Funds, PNC Bank
(since 1994); Associate General Counsel, The
Boston Company, Inc. (from 1992 to 1994);
General Counsel, SunAmerica Asset
Management Inc. (from 1986 to 1992).

J. Robert Dugan (32)...... Assistant Secretary Counsel -- Mutual Funds, PNC Bank (since
1993); Associate, Drinker Biddle and Reath
(from 1990 to 1993).
</TABLE>

The officers of the Trust are elected by the Board of the Trust on an
annual basis to serve until their successors are elected and qualified.

SHAREHOLDERS. On May 8, 1998 none of the Trustees and nominees owned
beneficially any shares of any Fund.

REQUIRED VOTE. The candidates receiving the affirmative vote of a
plurality of the votes cast at the Meeting, if a quorum is present, shall be
elected. Shares of all of the Funds shall vote together as a single class for
the Trustees.

THE BOARD OF TRUSTEES RECOMMENDS ELECTION OF EACH NOMINEE FOR TRUSTEE
LISTED ABOVE.

PROPOSAL 2: APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT

INTRODUCTION. On June 8, 1997, BankAmerica Corporation ("BankAmerica"),
the parent of Bank of America National Trust and Savings Association ("Bank of
America") the Funds' manager, entered into an Agreement and Plan of Merger with
Robertson, Stephens & Company Group, L.L.C. and Robertson, Stephens & Company,
Inc. pursuant to which each of those entities were merged into a wholly-owned
subsidiary of BankAmerica. Upon consummation of those mergers on October 1,
1997, BankAmerica became the owner of the entire beneficial interest in
Robertson, Stephens & Company Investment Management, L.P. ("RSIM").

On March 1, 1998, BankAmerica consolidated Bank of America's investment
advisory division with RSIM. Bank of America informed the Trust that virtually
all of the investment advisory, administrative, support and supervisory
personnel at Bank of America who are responsible for providing services to the
Trust became authorized to act on behalf of RSIM. No change in the investment
advisory personnel or the research and support personnel servicing the Trust
occurred as a result of the consolidation. As a part of the consolidation, on
February 3, 1998, the Board of Trustees approved the assumption by RSIM of the

4
<PAGE> 8

Management Agreement, dated September 5, 1995, between the Trust and Bank of
America (the "Management Agreement").

However, on April 13, 1998, Bank of America and NationsBank Corporation
("NationsBank") announced a definitive agreement to merge and form a new holding
company to be named BankAmerica Corporation (the "Merger"). The Merger is
anticipated to close by the end of 1998, however, it is subject to a number of
approvals including shareholder and regulatory approvals. Following the
announcement of the Merger, BankAmerica determined to restructure its investment
advisory business. On April 29, 1998, the Board approved the reassumption by
Bank of America of the Management Agreement. RSIM and Bank of America informed
the Trust that no change in the investment advisory personnel or the research
and support personnel servicing the Trust would occur as a result of this
restructuring.

Additionally, on April 29, 1998, the Board determined it was appropriate to
separate the investment advisory and administrative services currently provided
under the single Management Agreement into separate agreements. The Board
unanimously approved an Investment Advisory Agreement between the Trust and Bank
of America (the "Investment Advisory Agreement") and an Administrative Services
Agreement between the Trust and Bank of America (the "Administrative Services
Agreement"). The Board determined to submit the Investment Advisory Agreement to
shareholders for approval at this Meeting.

At the Meeting, shareholders of each Fund will be asked to vote on the
approval of the Investment Advisory Agreement, which is summarized below. A copy
of the form of the Investment Advisory Agreement is attached to this Proxy
Statement as Exhibit A, and the description of the Investment Advisory Agreement
which follows is qualified in its entirety by reference to Exhibit A.

The Board determined that splitting the investment advisory and
administrative services currently provided in the Management Agreement into the
Investment Advisory Agreement and Administrative Services Agreement was in the
best interest of shareholders because it allows greater flexibility both to
provide additional administrative services to the Trust and to allow other
entities to provide such services. The separation of the two agreements would
also increase the ability for Bank of America fiduciary clients to be invested
in the Trust. Bank of America currently provides both investment advisory and
administrative services to the Trust under the Management Agreement. Bank of
America will provide the same investment advisory services under the Investment
Advisory Agreement as it now provides under the Management Agreement. Bank of
America will also provide the same administrative services under the
Administrative Services Agreement as it currently provides under the Management
Agreement. The Investment Advisory Agreement will be substantially the same as
the investment advisory portion of the Management Agreement and the
Administrative Services Agreement will be substantially the same as the
administrative services portion of the Management Agreement. The total fees
payable under both the Investment Advisory Agreement and the Administrative
Services Agreement will be the same as the fee payable under the Management
Agreement. Although Bank of America has represented to the Board that it has no
present intention to change the fees payable under the Administrative Services
Agreement, the fees payable under the Administrative Services Agreement may be
changed without the approval of shareholders, although any change would still
need the approval of a majority of the Board, including a majority of the
disinterested Trustees.

Proposal 2 requires the affirmative vote of a "majority of the outstanding
voting securities" of each Fund. The term "majority of the outstanding voting
securities," as defined in the Investment Company Act of 1940 (the "1940 Act"),
and as used in this proxy statement, means: the lesser of (1) 67% of the voting
securities of each Fund present at the Meeting if more than 50% of the
outstanding shares of such Fund are present in person or by proxy, or (2) more
than 50% of the outstanding shares of such Fund. In the event the Investment
Advisory Agreement is not approved by shareholders of a Fund, Bank of America
will continue to provide investment advisory services and administrative
services to the Trust under the Management Agreement. The Board would then take
such further actions with respect to that Fund as they deem to be in the best
interest of the Fund.

Currently the Trust is offering to the public shares of Time Horizon
Portfolio 1, Time Horizon Portfolio 2 and Time Horizon Portfolio 3. In addition,
the Board has authorized the creation of a fourth class of shares,
5
<PAGE> 9

Time Horizon Portfolio 4, the shares of which are not currently offered to the
public and for which no management fees have been paid.

DESCRIPTION OF THE MANAGEMENT AGREEMENT. Bank of America currently acts as
manager for the Funds under the Management Agreement. Pursuant to the Management
Agreement, Bank of America provides a continuous investment program for the
Funds, including research and management of the Funds' investments and is
responsible for, places orders for, and makes decisions with respect to, all
purchases and sales of the Funds' securities. In providing management services
to the Trust, Bank of America may, pursuant to the Management Agreement, use
officers, and utilize the facilities, of wholly owned subsidiaries and other
affiliates of Bank of America or its parent corporation in providing management
services to the Trust.

In addition, under the Management Agreement, Bank of America provides
facilities, equipment, statistical and research data, clerical, accounting and
bookkeeping services, internal auditing and legal services, and provides all
management services required for the operation of the business and affairs of
the Fund or oversees the performance of various entities that Bank of America
has contracted to perform such services pursuant to the Management Agreement.
Specifically, the Manager of the Funds, pursuant to the authority granted in the
Management Agreement entered into a Sub-Administration and Accounting Services
Agreement dated September 15, 1997 (the "Sub-Administration and Accounting
Services Agreement") between the Trust, Bank of America and PFPC, Inc. ("PFPC")
pursuant to which PFPC currently provides certain administrative and accounting
services to the Funds. Pursuant to the Administrative Services Agreement Bank of
America will continue to use PFPC in the same capacity and will oversee PFPC's
performance.

In return for the services provided by Bank of America currently under the
Management Agreement, Bank of America is entitled to receive a fee from the
Funds at the annual rate of .60% of the Funds' average daily net assets.
Pursuant to the Sub-Administration and Accounting Services Agreement, the Trust
pays PFPC an annual accounting fee, to be calculated daily and paid monthly, and
Bank of America pays PFPC an annual sub-administration fee, to be calculated
daily and paid monthly. The Trust reimburses PFPC for its out-of-pocket expenses
incurred on behalf of each Fund, including, but not limited to, daily report
transmissions, record retention/storage and outside independent pricing service
charges. The annual sub-administration fee is an asset based fee based on the
aggregate assets of the Funds as follows: .0275% of the Funds' first $10 billion
of average daily net assets; .020% of the Funds' next $5 billion of average
daily net assets; .0175% of the Funds' next $5 billion of average daily net
assets; .015% of the Funds' next $5 billion of average daily net assets; and
.0125% of the Funds' average daily net assets in excess of $25 billion. These
fees are exclusive of out-of-pocket expenses. Bank of America has currently
agreed to reduce fees and absorb other operating expenses to ensure that the
operating expenses for each Fund (other than interest, taxes, brokerage
commissions and other portfolio transaction expenses, capital expenditures and
extraordinary expenses) will not exceed 1.20%, 1.95% and 1.70% of the average
net assets of each Fund's Class A, Class B and Class K shares, respectively.
Bank of America has voluntarily undertaken to maintain these levels for a period
of one year through April 2, 1999 unless a Fund sooner has assets of at least
$100 million.

6
<PAGE> 10

For the fiscal year ended June 30, 1997, the Trust paid Bank of America and
Bank of America waived the following amounts:

<TABLE>
<CAPTION>
TOTAL MANAGEMENT TOTAL MANAGEMENT
FUND FEES PAID FEES WAIVED*
---- ---------------- ----------------
<S> <C> <C>
Time Horizon Portfolio 1................... $202,553 $178,618
Time Horizon Portfolio 2................... $216,727 $188,559
Time Horizon Portfolio 3................... $211,743 $183,426
</TABLE>

- ---------------

* Under the Management Agreement and the Investment Advisory Agreement, Bank of
America may terminate, reduce or increase its fee waiver at any time.

Effective September 15, 1997, Provident Distributors, Inc. (the
"Distributor"), acts as distributor of the shares of the of the Trust pursuant
to a distribution agreement with the Trust. Prior to September 15, 1997, Concord
Financial Group, Inc. ("Prior Distributor") acted as distributor of the Trust's
shares.

For the fiscal year ended June 30, 1997, each Fund paid the following
shareholder service fees pursuant to the Shareholder Services Plan:

<TABLE>
<CAPTION>
SERVICE FEES PAID BY
PRIOR DISTRIBUTOR SERVICE FEES PAID BY
SERVICE FEES TO MANAGER'S PRIOR DISTRIBUTOR
FUND PAID BY THE FUNDS AFFILIATES TO OTHER FIRMS
---- ----------------------------- -------------------- --------------------
CLASS A CLASS B CLASS K ALL CLASSES ALL CLASSES
------- ------- ------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Portfolio 1.......... $14,284 $52,049 $ 12 $64,167 $2,176
Portfolio 2.......... $17,352 $55,719 $107 $70,519 $2,625
Portfolio 3.......... $15,045 $56,299 $ 76 $71,805 $ 0
</TABLE>

The table below shows the underwriting commissions paid to the Prior
Distributor in connection with the distribution of each Fund's Class A shares
for the fiscal year ended June 30, 1997. The sales load on Class A shares was
discontinued as of June 16, 1997.

<TABLE>
<CAPTION>
AMOUNT OF COMMISSIONS COMMISSIONS PAID
UNDERWRITING RETAINED BY TO MANAGER'S
FUND COMMISSIONS PRIOR DISTRIBUTOR AFFILIATES
---- ------------ ----------------- ----------------
<S> <C> <C> <C>
Portfolio 1..................... $ 66,601 $ 5,014 $ 61,587
Portfolio 2..................... $125,102 $13,963 $111,139
Portfolio 3..................... $151,558 $15,772 $135,786
</TABLE>

Expenses of the Funds and of the Prior Distributor in connection with the
Distribution Plan for the Class B shares for the fiscal year ended June 30, 1997
are set forth below.

<TABLE>
<CAPTION>
CONTINGENT COMMISSIONS TOTAL
DISTRIBUTION DEFERRED SALES PAID BY PRIOR COMMISSIONS PAID
FEES PAID BY CHARGES PAID DISTRIBUTOR TO BY PRIOR
FUND TO PRIOR TO PRIOR MANAGER'S DISTRIBUTOR TO
FUND DISTRIBUTOR DISTRIBUTOR AFFILIATES OTHER FIRMS
---- ------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Portfolio 1.......... $192,599 $0 $192,952 N/A
Portfolio 2.......... $200,979 $0 $201,273 N/A
Portfolio 3.......... $203,526 $0 $203,147 N/A
</TABLE>

For the fiscal year ended June 30, 1997, amounts paid by the Funds to the
Prior Distributor in connection with the Administrative Services Plan and the
Distribution and Administrative Services Plan for Class K shares of Portfolio 1,
Portfolio 2 and Portfolio 3 were $27, $224, and $58, respectively. The amounts
paid by the Prior Distributor to the Manager's Affiliates for Portfolio 1,
Portfolio 2 and Portfolio 3 were $8, $103 and $146, respectively.

The Management Agreement may be terminated at any time without cause upon
60 days' written notice, without penalty, by a majority vote of the Board or by
a vote of a majority of the outstanding voting securities of a Fund, by Bank of
America, and automatically terminates in the event of its assignment as defined
in the Investment Company Act of 1940 (the "1940 Act").

7
<PAGE> 11

The Management Agreement provides that Bank of America will not be liable
for any error of judgment or mistake of law or for any loss suffered in
connection with the performance of the services provided pursuant to the
investment advisory agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or negligence in the
performance of its duties or from reckless disregard by it of its duties and
obligations thereunder.

Bank of America has acted as the manager for the Funds since their
inception, except for the period when RSIM acted as the manager. RSIM acted as
the manager for the Funds since it assumed the Management Agreement on March 1,
1998 until April 28, 1998 at which time the management function was reassumed by
Bank of America. The Management Agreement was last approved by the Board on
October 28, 1997 and by the initial shareholder of each of the publicly
available Funds on September 5, 1995.

DESCRIPTION OF THE INVESTMENT ADVISORY AGREEMENT. The Investment Advisory
Agreement, like the Management Agreement, provides that Bank of America may from
time to time employ or associate itself with a sub-adviser. The Investment
Advisory Agreement provides, in addition, that notwithstanding the employment of
any sub-adviser, Bank of America will: (i) establish and monitor general
investment criteria and policies for the Funds; (ii) review and analyze on a
periodic basis the Funds' portfolio holdings and transactions in order to
determine their appropriateness in light of the Funds' respective shareholder
bases; and (iii) review and analyze on a periodic basis the policies established
by any sub-adviser for any Fund with respect to the placement of orders for the
purchase and sale of portfolio securities. In return for the services provided
by Bank of America under the Investment Advisory Agreement, Bank of America is
entitled to receive a fee from the Funds at an annual rate of .40% of the Funds'
average daily net assets.

The Investment Advisory Agreement, like the Management Agreement, provides
that, subject to the supervision of the Board (and Bank of America, with respect
to any sub-adviser) Bank of America will provide a continuous investment program
for the Funds, including investment research and management with respect to all
securities, investments, and cash equivalents in the Funds. Investment Advisory
Agreement, similar to the Management Agreement, would provide that Bank of
America could provide advisory services through its own employees or the
employees of an affiliated company that also is under the common control of
BankAmerica, as long as such employees function as part of an organized group of
persons that is managed at all times by authorized officers of Bank of America.
Bank of America will determine from time to time what securities and other
investments will be purchased, retained or sold by the Funds. Bank of America
will provide the services rendered by it under the Investment Advisory Agreement
in accordance with the investment objectives, policies and restrictions as
stated in the Trust's currently effective Registration Statement with respect to
each Fund, resolutions of the Board, and, with respect to any sub-adviser, the
investment criteria and policies established from time to time for any Fund
affected by Bank of America. Bank of America agrees in the Investment Advisory
Agreement to review, monitor and report to the Board regarding the performance
and investment procedures of any sub-adviser employed by the Board.

Pursuant to the Investment Advisory Agreement, Bank of America further
agrees that it will, among other things, (i) conform with all applicable rules
and regulations of the Securities and Exchange Commission and will conduct its
activities under its respective agreement in accordance with other applicable
law; (ii) place orders for the purchase and sale of portfolio securities for the
Funds with brokers or dealers selected by Bank of America (or, with respect to
any sub-adviser, in accordance with the policy set forth in the affected Fund's
Registration Statement or as Bank of America or the Board may direct); and (iii)
not purchase any securities from or sell any securities to Bank of America, any
subadviser, administrator, sub-administrator or distributor of the Trust or any
of their affiliates acting as principal or broker, except as permitted by law.
Bank of America also agrees to maintain such books and records regarding the
securities transactions with respect to the Funds as may be required or
otherwise requested by the Trust and the Board, and to supply the Trust and the
Board with reports, statistical data and economic information as requested.

Like the Management Agreement, under the Investment Advisory Agreement,
Bank of America agrees to maintain a policy and practice of conducting its
investment advisory operations independently of any commercial banking
operations of Bank of America or any of its affiliates.

8
<PAGE> 12

Bank of America agrees in the Investment Advisory Agreement, as it did in
the Management Agreement, to treat confidentially and as proprietary information
of the Trust all records and other information relative to the Trust and prior
or present Trust shareholders or those persons or entities who respond to
inquires concerning investment in the Trust, and agrees not to use such records
and information for any purpose other than performance of its responsibilities
and duties under the Investment Advisory Agreement, except after prior
notification to and approval in writing by the Trust.

The Investment Advisory Agreement, like the Management Agreement, provides
that Bank of America will pay all expenses incurred by it in connection with its
activities under the Investment Advisory Agreement other than the cost of
securities (including brokerage commissions, if any) purchased or sold with
respect to the Funds.

The Investment Advisory Agreement, like the Management Agreement, provides
that in executing portfolio transactions and selecting brokers or dealers, Bank
of America will use its best efforts to seek on behalf of Funds the best overall
terms available. In assessing the best overall terms available for any
transaction, Bank of America will consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available, and
in selecting the broker or dealer to execute a particular transaction, Bank of
America may also consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended)
provided with respect to a Fund, and/or other accounts over which Bank of
America or its affiliates exercise investment discretion. Bank of America is
authorized, subject to the prior approval of the Board, to negotiate and pay to
a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction with respect to a Fund that is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, Bank of America
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or
dealer -- viewed in terms of that particular transaction or in terms of the
overall responsibilities of Bank of America to the Fund and to the Trust. Bank
of America, however, is not required to seek prior approval from the Board, so
long as the broker or dealer selected by Bank of America obtains the best price
and execution on a particular transaction.

In executing portfolio transactions with respect to a Fund, Bank of America
may, but is not obligated to, to the extent permitted by applicable laws and
regulations, aggregate the securities to be sold or purchased with those of its
other clients where such aggregation is not inconsistent with the policies set
forth in the Trust's Registration Statement. In such event, Bank of America will
allocate the securities so purchased or sold, and the expenses incurred in the
transaction, in the manner it considers to be most equitable and consistent with
its fiduciary obligations to such Fund and such other clients.

The Investment Advisory Agreement, like the Management Agreement, provides
that Bank of America will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust in connection with the performance of
the Investment Advisory Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or any
loss resulting from willful misfeasance, bad faith or negligence on the part of
Bank of America in the performance of its duties or from reckless disregard by
it of its obligations and duties under the Investment Advisory Agreement.

DIFFERENCES BETWEEN THE MANAGEMENT AGREEMENT AND THE INVESTMENT ADVISORY
AGREEMENT. In addition to the differences noted above under the heading
"Introduction" regarding the fees paid under the agreement, the contractual
terms regarding the provisions of investment advisory services are the same
except to modify its effective date and termination date. The Investment
Advisory Agreement will become effective as of the date of shareholder approval
and its initial term continues until October 31, 1998.

EVALUATION BY THE BOARD OF TRUSTEES. The Investment Advisory Agreement was
unanimously approved by the Board and by a majority of those members of the
Board who were not "interested persons" (as that term is defined in the 1940
Act) of any party to the agreement at a meeting held on April 29, 1998. The
Board considered that the Investment Advisory Agreement is substantially the
same as the Trust's Management

9
<PAGE> 13

Agreement (except as noted above in that the administrative services currently
provided by Bank of America under the Management Agreement will be provided
under the Administrative Services Agreement), and that the total contractual fee
rate payable by each Fund under both the Investment Advisory Agreement and the
Administrative Services Agreement would be identical to that payable under the
Management Agreement. The Board also considered the benefits which Bank of
America may derive from the Investment Advisory Agreement. Based on its
evaluation, the Board concluded that approval of the Investment Advisory
Agreement would be in the best interests of the Trust and its shareholders.

MANAGER. Bank of America, which has principal offices located at 555
California Street, San Francisco, California 94104, serves as investment adviser
to the Funds pursuant to the Existing Agreement. Bank of America is a
wholly-owned subsidiary of BankAmerica, a registered bank holding company.
Formed in 1904, Bank of America is a national banking association that provides
commercial banking and trust business through an extensive system of branches
across the western United States. Bank of America's principal banking affiliates
operate branches in ten U.S. states as well as corporate banking, business
credit and thrift offices in major U.S. cities. In addition, it has branches,
corporate offices and representatives offices in 37 foreign countries.

The name and principal occupation of the principal executive officer and
each director of Bank of America as of April 28, 1998 were as follows: David A.
Coulter (Chief Executive Officer and President of Bank of America and
BankAmerica Corporation); Joseph F. Alibrandi (Chairman of the Board of
Whittaker Corporation); Peter Bedford (Chairman and Chief Executive Officer of
Bedford Property Investors, Inc.); Richard A. Clarke (Retired Chairman of the
Board of Pacific Electric Gas Company); Timm F. Crull (Retired Chairman of the
Board of Nestle USA, Inc.); Kathleen Feldstein (President of Economics Studies,
Inc.); Donald E. Guinn (Chairman Emeritus of Pacific Telesis Group); Frank L.
Hope, Jr. (Consulting Architect); Walter E. Massey, Ph.D. (President of
Morehouse College); John M. Richman (Of Counsel Wachtell, Lipton, Rosen & Katz);
Richard M. Rosenberg (Director and Retired Chairman of the Board of Bank of
America and BankAmerica Corporation); A. Michael Spence (Dean of the Graduate
School of Business of Stanford University) and Solomon D. Trujillo (President
and CEO of U.S. West Communications Group). It is possible that the persons
listed above may change as a result of the Merger.

Exhibit B sets forth the fees and other information relating to other
investment companies with investment objectives similar to those of the Funds
and advised by Bank of America.

No officer or trustee of the Trust is an officer, employee, or general
partner of Bank of America.

AUTHORITY TO ACT AS INVESTMENT ADVISER. Banking laws and regulations
currently prohibit a bank holding company registered under the Federal Bank
Holding Company Act of 1956 or any affiliate thereof from sponsoring, organizing
or controlling a registered open-end investment company continuously engaged in
the issuance of its shares, and prohibit banks generally from underwriting,
selling or distributing securities, but in general do not prohibit such a
holding company or affiliate banks generally from acting as investment adviser,
transfer agent or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of customers. Bank of
America is subject to such laws and regulations, but believes that it may
perform the services contemplated by the Investment Advisory Agreement without
violating the Glass-Steagall Act or other applicable banking laws or
regulations. Future changes in legal requirements relating to the permissible
activities of banks and their affiliates, as well as future interpretations of
current requirements, could prevent Bank of America from continuing to perform
such services for the Fund. If it was prohibited from acting as investment
adviser to the Fund, it is expected that the Board would recommend that
shareholders approve a new investment advisory agreement with another qualified
firm.

THE BOARD OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL
OF THE INVESTMENT ADVISORY AGREEMENT.

10
<PAGE> 14

PROPOSAL 3: APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT

INTRODUCTION. As mentioned above, on April 13, 1998, BankAmerica and
NationsBank announced a definitive agreement to merge and form a new holding
company to be named BankAmerica Corporation. The Merger is anticipated to close
by the end of 1998, however, it is subject to a number of contingencies,
including shareholder and regulatory approvals. Bank of America will continue to
serve as investment adviser to the Funds after the Merger. The Merger, however,
represents a change in ownership of the parent corporation of Bank of America
and, as such, may have the effect under the 1940 Act of terminating, at the date
of the consummation of the Merger, the Management Agreement or the Investment
Advisory Agreement, if approved by shareholders at this Meeting. As a
consequence of the Merger, and in order to facilitate the investment management
of the Funds, the Board has also proposed for your approval a new investment
advisory agreement with Bank of America to be dated as of the consummation of
the Merger (the "New Investment Advisory Agreement").

NationsBank is a North Carolina-based, bank holding company subject to the
Bank Holding Company Act of 1956, as amended, and the rules and regulations
promulgated thereunder the (the "BHCA"). Through its full-service banking
subsidiaries, NationsBank provides a wide range of commercial and retail banking
services and trust services in Maryland, Virginia, North Carolina, South
Carolina, Georgia, Florida, Kentucky, Tennessee, Illinois, Missouri, Kansas,
Oklahoma, Texas and New Mexico. The principal executive offices of NationsBank
are located at One NationsBank Plaza, Charlotte, North Carolina 28255.

The merger of NationsBank and BankAmerica will create a company with
approximately $570 billion in assets, $45 billion in shareholders' equity and a
market capitalization of approximately $133 billion which operates in 22 states
and 37 other countries.

As required by the 1940 Act, the Management Agreement and, if approved by
shareholders at this Meeting, the Investment Advisory Agreement provide for
their automatic termination upon "assignment". Consummation of the Merger may be
deemed to be an assignment (as defined in the 1940 Act) of the Management
Agreement or the Investment Advisory Agreement resulting in the termination of
either of those agreements in accordance with their terms. In anticipation of
the consummation of the Merger, and to provide continuity in investment advisory
services, the Board, including a majority of the trustees who are not
"interested persons" (as defined in the 1940 Act) at a meeting held on April 29,
1998, reapproved the New Investment Advisory Agreement in the event that the
Merger is consummated. If Proposal 3 is not approved, the Board of Trustees
will, in the event of the consummation of the Merger, take such action as it
deems to be in the best interests of shareholders.

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. Bank of America has assured the Board that both
conditions of Section 15(f) will be 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 Trust is
not aware of any such compensation arrangements are in effect or contemplated
insofar as the Fund is concerned. Bank of America represented to the Board that
it was not aware of any express or implied term, condition, arrangement or
understanding that would impose an "unfair burden" as a result of the Merger.

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 trustees must not be "interested persons" of the investment
adviser within the meaning of the 1940 Act. None of the Trust's trustees, nor
the nominees for

11
<PAGE> 15

trustee, are interested persons of the Bank of America as constituted before or
after the Merger. The Trust expects to comply with Section 15(f).

In considering whether to approve, and recommend that shareholders approve,
the New Investment Advisory Agreement in the event of the consummation of the
Merger, the Board of Trustees considered that the New Investment Advisory
Agreement will be continued on the terms and conditions identical to those in
effect immediately prior to the consummation of the Merger. In addition, the
Board obtained assurances from BankAmerica that it is firmly committed to Bank
of America and its asset management line of business and to maintaining its
relationships with shareholders of the Funds. The Board also considered a number
of other factors including the experience and financial resources of the
combined entity after the consummation of the Merger.

Proposal 3 also requires the affirmative vote of a "majority of the
outstanding voting securities" of each Fund.

DESCRIPTION OF THE NEW INVESTMENT ADVISORY AGREEMENT. The New Investment
Advisory Agreement will be the same in all material respects as the investment
advisory agreement in effect immediately prior to the consummation of the
Merger. The only change would be to modify the effective date to the date of the
consummation of the Merger, which is expected at the end of 1998.

THE BOARD OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL
OF THE NEW INVESTMENT ADVISORY AGREEMENT.

PROPOSAL 4: APPROVAL OF INDEPENDENT AUDITORS

A majority of the members of the Board who are not "interested" persons of
the Trust has recommended for approval the selection of Price Waterhouse LLP,
independent auditors, to audit the books and records of the Funds for the
current fiscal year. In connection with the consolidation of the boards for the
Bank of America Complex, the Board has determined that it would be in the Funds'
best interests to have the same independent auditors as the other funds in the
Bank of America Complex. Price Waterhouse LLP currently serves as independent
auditors for the Pacific Horizon Funds, Inc., the Master Investment Trust,
Series I, and the World Horizon Funds. The Pacific Innovations Trust's
shareholders are also being asked to approve the selection of Price Waterhouse
as independent auditors. The selection of Price Waterhouse LLP as independent
auditors of the Trust is being submitted to the shareholders for approval. The
Board has been pleased with the services of the Funds' current independent
auditors, Ernst & Young LLP, but believes that the use of a single accounting
firm for the entire Bank of America Complex would benefit the Funds by providing
economies of scale as well as allowing the Board to exercise better oversight of
the Funds. Accordingly, the current independent auditors have tendered their
resignation, effective upon the vote of shareholders approving Price Waterhouse
LLP as auditors. The current independent auditor's report on the Trust's
financial statements (1) did not contain an adverse opinion or a disclaimer of
opinion or (2) was not qualified or modified as to uncertainty, audit scope, or
accounting principles. In addition, there have been no disagreements with the
current independent auditors on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of the current independent
auditors, would have caused it to make reference to the subject matter of the
disagreements in connection with its report. A representative of Price
Waterhouse LLP is expected to be present at the Meeting and will be available to
respond to any appropriate questions raised at the Meeting and may make a
statement.

THE BOARD OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL
OF THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT AUDITORS.

GENERAL

The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs associated with the
solicitation of proxies including any additional solicitation made by letter,
telephone or telegraph, will be allocated between the Trust and Bank of America,
with Bank of America

12
<PAGE> 16

paying that portion of the costs attributable to the consideration of the New
Investment Advisory Agreement resulting from the Merger. In addition to
solicitation by mail, certain officers and representatives of the Trust,
officers, employees or agents of Bank of America and certain financial service
firms and their representatives who will receive no extra compensation for their
services may solicit proxies by telephone, telegraph, facsimile, Internet or
personally. In connection with the solicitation of certain shareholders, the
Trust's service contractors have retained D.F. King to assist in the
solicitation of proxies at a cost of approximately $6,800.

Should shareholders require additional information regarding the proxy or
replacement proxy cards, they may contact the Trust toll-free at 1-800-247-9728.
Any proxy given by a shareholder is revocable as described below.

THE FUNDS PROVIDE PERIODIC REPORTS TO ALL OF ITS SHAREHOLDERS WHICH
HIGHLIGHT RELEVANT INFORMATION INCLUDING INVESTMENT RESULTS. YOU MAY RECEIVE AN
ADDITIONAL COPY OF THE MOST RECENT ANNUAL AND SEMI-ANNUAL REPORT FOR EACH FUND
WITHOUT CHARGE BY CALLING 1-800-247-9728 OR BY WRITING TIME HORIZON FUNDS AT 400
BELLEVUE PARKWAY, WILMINGTON, DELAWARE 19809.

VOTING INFORMATION

If you do not plan to be present at the meeting, you should send your vote
in by one of the following methods:

1. Complete, sign and return the enclosed proxy card(s) promptly in
the postage paid envelope;

2. Sign the proxy card and fax both sides to D.F. King, the proxy
solicitor at (212) 269-2796; or

3. Vote by phone by calling (800) 848-3374.

Proxies are being solicited by the Board for use at the Meeting. All
properly executed proxies received in time for the Meeting will be voted as
specified in the proxy or, if no specification is made, FOR the election of
nominees for Trustees referred to in the proxy statement, FOR the approval of
the Investment Advisory Agreement, FOR the approval of the New Investment
Advisory Agreement and FOR the approval of Price Waterhouse LLP, as independent
auditors. Proxies may be revoked at any time by (a) submitting a subsequently
dated proxy or (b) by revoking in person at the time of the Meeting.

The presence at the Meeting, in person or by proxy, of the holders of
one-third of the shares entitled to be cast shall be necessary and sufficient to
constitute a quorum for the transaction of business. In the event that the
necessary quorum to transact business or the vote required to approve or reject
the proposal is not obtained at the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting in accordance with applicable
law, to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of the Funds' shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of such adjournment if they determine that such adjournment and additional
solicitation are reasonable and in the interest of the Funds' shareholders.

For purposes of determining the presence of a quorum, abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owners or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power), will be treated as shares
that are present at the Meeting but which have not been voted. Abstentions and
broker "non-votes" will have no effect on the election of trustees and will have
the effect of a "no" vote for purposes of obtaining the requisite approval of
proposals 2 through 4.

The Board of the Trust has fixed the close of business on May 8, 1998 as
the record date for determination of shareholders entitled to notice of and to
vote at the Meeting. As of May 8, 1998, the issued

13
<PAGE> 17

and outstanding shares of each Fund were as follows: Portfolio 1 --
; Portfolio 2-- and Portfolio 3--
.

The following table sets forth the holding of the shares of the Fund as of
May 8, 1998, of each person known to own, control, or hold with power to vote 5
percent or more of each Fund's outstanding voting securities:

<TABLE>
<CAPTION>
SHARES % OF SHARES
FUND NAME OWNED OUTSTANDING
---- ---- ------- -----------
<S> <C> <C> <C>
Time Horizon Portfolio 1
Class A Bank of America NT&SA
FBO PACO
PO Box 513577
Los Angeles, CA 90051
Bank of America -- Illinois
FBO UPS IRA's
PO Box 5747
Denver, CO 80217
Class K Corelink Financial Inc.
PO Box 4054
Concord, CA 94524
Time Horizon Portfolio 2
Class A Bank of America-Illinois
FBO UPS IRA's
PO Box 5747
Denver, CO 80217
Class K Corelink Financial Inc.
PO Box 4054
Concord, CA 94524
Time Horizon Portfolio 3
Class K Corelink Financial Inc.
PO Box 4054
Concord, CA 94524
</TABLE>

On May 8, 1998, Bank of America and its affiliates held of approximately
%, % and % of the outstanding shares of Time Horizon Portfolio 1,
Time Horizon Portfolio 2 and Time Horizon Portfolio 3, respectively.

Bank of America, the Funds' adviser, is located at 555 California Street,
San Francisco, California, 94104. The Funds' distributor, Provident
Distributors, Inc., is located at Four Falls Corporate Center, 6th Floor, West
Conshohocken, Pennsylvania, 19428. The Funds' sub-administrator, PFPC, Inc. is
located at 400 Bellevue Parkway, Wilmington, Delaware, 19809.

PROPOSALS OF SHAREHOLDERS

As a Delaware business trust, the Trust is not required to hold annual
shareholder meetings, but will hold special meetings as required or deemed
desirable. Since the Trust does not hold regular meetings of shareholders, the
anticipated date of the next special shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy solicitation
for a special shareholder meeting must be received by the Trust no later than
four months prior to the date when the proxy statements are mailed to
shareholders.

14
<PAGE> 18

OTHER MATTERS TO COME BEFORE THE MEETING

The Board is not aware of any matters that will be presented for action at
the Meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote the shares as to any such other
matters in accordance with their best judgment of the best interests of
shareholders.

PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.

By order of the Board of Trustees

Cathy G. O'Kelly
Secretary

15
<PAGE> 19

EXHIBIT A

FORM OF INVESTMENT ADVISORY AGREEMENT

This Investment Advisory Agreement is made as of this , 1998
between TIME HORIZON FUNDS, a Delaware business trust (herein called the
"Company"), and Bank of America National Trust and Savings Association (herein
called the "Adviser").

WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and

WHEREAS, the Company wishes to retain the Adviser under this Agreement to
render investment advisory and management services to the portfolios of the
Company known as Time Horizon 1, Time Horizon 2, Time Horizon 3 and Time
Horizon 4 (the "Initial Fund(s)", together with any other Company portfolios
which may be established later and served by the Adviser hereunder, being herein
referred to collectively as the "Funds" and individually as a "Fund"); and

WHEREAS, pursuant to a Distribution Agreement dated September 15, 1997 (the
"Distribution Agreement") between the Company and Provident Distributors, Inc.
(the "Distributor"), the Company has retained the Distributor to provide for the
sale and distribution of shares of beneficial interest of each Fund (herein
collectively called "Shares"); and

WHEREAS, the Company desires to retain the Adviser to provide investment
advisory services for the Funds, and the Adviser is willing to render such
services;

NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereto agree as follows:

1. Appointment of Adviser.

(A) The Company hereby appoints the Adviser as manager of each Fund on the
terms and for the period set forth in this Agreement and the Adviser hereby
accepts such appointment and agrees to perform the services and duties set forth
herein on the terms herein provided. The Adviser may, in its discretion, provide
such services through its own employees or the employees of one or more
affiliated companies that are qualified to provide such services to the Trust
under applicable law and are under the common control of BankAmerica
Corporation, provided (i) that all persons, when providing services hereunder,
are functioning as part of an organized group of persons, and (ii) that such
organized group of persons is managed at all times by authorized officers of the
Adviser.

(B) In the event that the Company establishes one or more portfolios other
than the Initial Funds with respect to which it desires to retain the Adviser to
render investment advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render such services, it
shall notify the Company in writing whereupon such portfolio or portfolios shall
become a Fund or Funds hereunder.

2. Investment Services and Duties. Subject to the supervision of the
Company's Board of Trustees, the Adviser shall provide a continuous investment
program for the Funds, including investment research and management with respect
to all securities and investments and cash equivalents in the Funds. The Adviser
shall determine from time to time what securities and other investments will be
purchased, retained or sold by the Company with respect to each Fund. The
Adviser shall provide the services under this Section 2 in accordance with the
Funds' investment objectives, policies and restrictions as stated in the Funds'
then current registration statement and resolutions of the Company's Board of
Trustees.

(A) The Adviser shall use the same skill and care in providing services
under this Section 3 as it uses in providing services to fiduciary accounts for
which it has investment responsibilities.

(B) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the each Fund with brokers or dealers
selected by the Adviser. In executing portfolio transactions and selecting
brokers or dealers, the Adviser will use its best efforts to seek on behalf of
each Fund the best overall
<PAGE> 20

terms available. In assessing the best overall terms available for any
transaction the Adviser shall consider all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. In evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, the Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Adviser or any affiliate of the
Adviser exercises investment discretion. The Adviser is authorized, subject to
the prior approval of the Company's Board of Trustees, to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of that particular
transaction or in terms of the overall responsibilities of the Adviser to that
Fund and to the Company. In no instance may portfolio securities be purchased
from or sold to the Adviser, any sub-adviser, or an affiliated person of any of
them acting as principal or as broker, except as permitted by law. In executing
portfolio transactions for the Funds the Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be sold or purchased with those of other investment portfolios and
its other clients where such aggregation is not inconsistent with the policies
set forth in the Company's registration statement. In such event, the Adviser
shall allocate the securities so purchased or sold, and the expenses incurred in
the transaction, in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Funds and such other clients.

(C) In performing the investment advisory services hereunder, the Adviser
is authorized to purchase, sell or otherwise deal with securities or other
instruments for which (i) the Adviser, (ii) any affiliate of the Adviser, (iii)
an entity in which the Adviser has a direct or indirect interest, and (iv)
another member of a syndicate or other intermediary (where an entity referred to
in (i), (ii) or (iii) above was a member of the syndicate), has acted, now acts
or in the future will act as an underwriter, syndicate member, market-maker,
dealer, broker or in any other similar capacity, whether the purchase, sale or
other dealing occurs during the life of the syndicate or after the close of the
syndicate, provided such purchase, sale or dealing is permitted under the 1940
Act and the rules thereunder. Insofar as permitted by law, any rules of or under
applicable law prohibiting or restricting in any way an agent or fiduciary from
dealing with itself or from dealing with respect to any matter in which it may
or does have a personal interest shall not apply to the Adviser, to the extent
its actions are authorized under this paragraph.

(D) The Adviser shall maintain books and records with respect to the
securities transactions of the Fund, and furnish the Company's Board of Trustees
such periodic special reports as the Board may request.

(E) The Adviser shall maintain a policy and practice of conducting its
investment advisory operations independently of its affiliate's commercial
banking operations. When the Adviser makes investment recommendations for a
Fund, its investment advisory personnel shall not inquire or take into
consideration whether the issuer of securities proposed for purchase or sale for
the Fund's account are customers of its affiliate's commercial department. In
dealing with commercial customers, such affiliate's commercial department shall
not inquire or take into consideration whether securities of those customers are
held by the Funds except as required by law.

(F) The Adviser shall review, monitor and report to the Board of Trustees
regarding the performance and investment procedures of any sub-adviser appointed
by the Board of Trustees, and shall assist and consult with any sub-adviser in
connection with the Fund's continuous investment program.

3. Compliance with Governing Instruments and Laws. In performing its
duties as Adviser for the Funds, the Adviser shall act in conformity with the
Company's Declaration of Trust, Bylaws, prospectuses and statements of
additional information, and the instructions and directions of the Board of
Trustees of the Company. In addition, the Adviser shall conform to and comply
with the requirements of the 1940 Act, the Rules and Regulations of the
Commission, and all other applicable federal or state laws and regulations.

2
<PAGE> 21

4. Services Not Exclusive. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees from time to time, have
no authority to act for or represent the Company in any way or otherwise be
deemed its agent. The services furnished by the Adviser hereunder are not deemed
exclusive, and the Adviser shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.

5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any such records upon the Company's request.
The Adviser further agrees to preserve for the periods prescribed by Rule 3la-2
under the 1940 Act the records required to be maintained by Rule 3la-1 under the
1940 Act.

6. Expenses Assumed as Adviser. Except as otherwise stated in this
Agreement, the Adviser shall pay all expenses incurred by it in performing its
services and duties hereunder as Adviser. The Company shall bear other expenses
incurred in the operation of the Funds, including without limitation taxes,
interest, brokerage fees and commissions, if any, fees of trustees who are not
officers, directors, partners, employees or holders of 5 percent or more of the
outstanding voting securities of the Adviser or any of its affiliates,
commission fees and state blue sky registration and qualification fees, charges
of custodians, transfer and dividend disbursing agents' fees, certain insurance
premiums, outside auditing and legal expenses, costs of maintaining trust
existence, costs of preparing and printing prospectuses or any supplements or
amendments thereto necessary for the continued effective registration of the
Shares under federal or state securities laws, costs of printing and
distributing any prospectus, supplement or amendment thereto for existing
shareholders of the Funds described therein, costs of shareholders' reports and
meetings, and any extraordinary expenses. It is understood that certain
advertising, marketing, shareholder servicing, administration and/or
distribution expenses to be incurred in connection with the Shares may be paid
by the Company as provided in any plan which may in the sole discretion of the
Company be adopted in accordance with Rule 12b-1 under the 1940 Act, and that
such expenses shall be paid apart from any fees paid under this Agreement.

7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Company shall pay the Adviser a fee, computed
daily and payable monthly, at the annual rate of .40% of the average net assets
of each Fund. Such fee as is attributable to each Fund shall be a separate (and
not joint or joint and several) obligation of each such Fund.

8. Confidentiality. The Adviser shall treat confidentially and as
proprietary information of the Company all records and other information
relative to the Company and prior or present shareholders or those persons or
entities who respond to the Distributor's inquiries concerning investment in the
Company, and shall not use such records and information for any purpose other
than performance of its responsibilities and duties hereunder or under any other
agreement with the Company except after prior notification to and approval in
writing by the Company, which approval shall not be unreasonably withheld and
may not be withheld where the Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit the Adviser from
advertising to or soliciting the public generally with respect to other products
or services, including, but not limited to, any advertising or marketing via
radio, television, newspapers, magazines or direct mail solicitation, regardless
of whether such advertisement or solicitation may coincidentally include prior
or present Company shareholders or those persons or entities who have responded
to inquiries with respect to the Funds.

9. Limitations of Liability. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company or
by any Fund in connection with the matters to which this Agreement relates,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, director, employee or agent
of the Adviser, who may be or become an officer, director, employee or agent of
the Company, shall be deemed, when rendering services to the Company or to any
Fund, or acting on any business of the Company or of any Fund (other than
services or

3
<PAGE> 22

business in connection with the Adviser's duties as Adviser hereunder or under
any other agreement with the Company) to be rendering such services to or acting
solely for the Company or Fund and not as an officer, director, employee or
agent or one under the control or direction of the Adviser even though paid by
the Adviser.

The Adviser acknowledges and agrees that the Declaration of Trust of the
Company provides that the Trustees of the Company and the officers of the
Company executing this Agreement on behalf of the Company shall not be
personally bound hereby or liable hereunder, nor shall resort be had to their
private property or the private property of the shareholders of the Company for
the satisfaction of any claim or obligation under this Agreement.

10. Duration or Termination. This Agreement shall become effective as of
the date first written above and, unless sooner terminated as provided herein,
shall continue until October 31, 1998. Thereafter, this Agreement will be
extended with respect to a particular Fund for successive one-year periods
ending on October 31st of each year, provided each such extension is
specifically approved at least annually (a) by vote of a majority of those
members of the Company's Board of Trustees who are not interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Company's Board of Trustees or by vote
of a majority of the outstanding voting securities of such Fund. This Agreement
may be terminated by the Company at any time with respect to any Fund, without
the payment of any penalty, by vote of a majority of the entire Board of
Trustees of the Company or by a vote of a majority of the outstanding voting
securities of such Fund on 60 days' written notice to the Adviser, or by the
Adviser at any time, without the payment of penalty, on 60 days' written notice
to the Company. This Agreement will immediately terminate in the event of its
assignment. As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the same
meanings as such terms have in the 1940 Act.

11. Names. The name "Time Horizon Funds" refers to the trust created and
the trustees, as trustees but not individually or personally, acting from time
to time under a Declaration of Trust dated April 12, 1995, as amended, which is
hereby referred to and a copy of which is on file at the principal office of the
Company. The trustees, officers, employees and agents of the Company shall not
personally be bound by or liable under any written obligation, contract,
instrument, certificate or other interest or undertaking of the Company made by
the trustees or by an officer, employee or agent of the Company, in his or her
capacity as such, nor shall resort be had to their private property for the
satisfaction of any obligation or claim thereunder. All persons dealing with any
series or class of shares of the Company may enforce claims against the Company
only against the assets belonging to such series or class.

12. Notices. Notices of any kind to be given to the Company hereunder by
the Adviser shall be in writing and shall be duly given if mailed or delivered
to the Company at the following:

Time Horizon Funds
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
Attn: Jay F. Nusblatt

With a copy to:

Cathy G. O'Kelly, Esq.
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle, 26th Floor
Chicago, Illinois 60601

4
<PAGE> 23

or at such other address or to such individual as shall be so specified by the
Company to the Adviser. Notices of any kind to be given to the Adviser hereunder
by the Company shall be in writing and shall be duly given if mailed or
delivered to the Adviser at:

Bank of America National

Trust and Savings Association

555 California Street
San Francisco, California 94104

Attn: Jay Gould, Esq.

or at such other address or to such individual as shall be so specified by the
Adviser to the Company.

13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section 12 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by Delaware law (without
regard to principles of conflicts of law); provided, however, that nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule
or regulation of the Commission thereunder.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

TIME HORIZON FUNDS

By:
------------------------------------
Robert E. Greeley
President

Attest:
---------------------------------------
(name)
------------------------------
Secretary

BANK OF AMERICA NATIONAL

TRUST AND SAVINGS ASSOCIATION

By:
--------------------------------------
(name)

------------------------------
(title)
-----------------------------

Attest:
- ----------------------------------------------
(name)
------------------------------
(title)
-----------------------------

5
<PAGE> 24

TIME HORIZON FUNDS
TIME HORIZON PORTFOLIO 1

This proxy is solicited by the Board of
Trustees of Time Horizon Funds (the "Trust") for
use at a Special Meeting of Shareholders to be
held on Monday, June 26, 1998, at 9:00 a.m.
TIME HORIZON FUNDS Eastern time, at the offices of the Trust, 400
P.O. BOX 8959 Bellevue Parkway, Wilmington, Delaware.
WILMINGTON, DE 19899-8959
The undersigned hereby appoints Gary M.
Gardner, Jay F. Nusblatt and J. Robert Dugan, each
of them with full power of substitution, as
proxies of the undersigned to vote at the
above-stated Special Meeting, and at all
adjournments or postponements thereof, all shares
evidencing interests in the Trust's Funds (the
"Funds") held of record by the undersigned on May
8, 1998, the record date for the meeting, upon the
following matters and upon any other matter that
may come before the meeting, in their discretion.

Please sign, date and return the proxy card
promptly using the enclosed envelope. Every
properly signed proxy will be voted in the manner
specified hereon and, in the absence of
specification, will be treated as granting
authority to vote "FOR" the proposals.

Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. When signing as attorney or executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by president or other
authorized officer. If partnership, please sign in
partnership name by authorized person.

<TABLE>

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
TIMHOI KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
- -----------------------------------------------------------------------------------------------------------------------------
TIME HORIZON PORTFOLIO 1
<S> <C> <C> <C> <C>
VOTE ON TRUSTEES FOR WITHHOLD FOR ALL TO WITHHOLD AUTHORITY TO VOTE, MARK "FOR ALL EXCEPT"
1. 1) E.S. Bottum, 2) W.P. Carmichael, ALL ALL EXCEPT: AND WRITE THE NOMINEE'S NUMBER ON THE LINE BELOW.
3) T.M. Collins, 4) D.B. Fletcher,
5) R.E. Greeley, 6) C.J. Pings [ ] [ ] [ ] ----------------------------------------------------

VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. Proposal to approve an Investment Advisory Agreement between the Trust and Bank of
America National Trust and Savings Association. [ ] [ ] [ ]

3. Proposal to approve a new Investment Advisory Agreement between the Trust and Bank of
America National Trust and Savings Association in connection with the merger of
BankAmerica Corporation and NationsBank Corporation. [ ] [ ] [ ]

4. Proposal to approve the selection of Price Waterhouse LLP as independent auditors for
the current fiscal year ending June 30, 1998. [ ] [ ] [ ]

5. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.

----------------------------------------------------- -----------------------------------------------------

----------------------------------------------------- -----------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 25

TIME HORIZON FUNDS
TIME HORIZON PORTFOLIO 2

<TABLE>

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
TIMHOB KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
- -----------------------------------------------------------------------------------------------------------------------------
TIME HORIZON PORTFOLIO 2
<S> <C> <C> <C> <C>
VOTE ON TRUSTEES FOR WITHHOLD FOR ALL TO WITHHOLD AUTHORITY TO VOTE, MARK "FOR ALL EXCEPT"
1. 1) E.S. Bottum, 2) W.P. Carmichael, ALL ALL EXCEPT: AND WRITE THE NOMINEE'S NUMBER ON THE LINE BELOW.
3) T.M. Collins, 4) D.B. Fletcher,
5) R.E. Greeley, 6) C.J. Pings [ ] [ ] [ ] ----------------------------------------------------

VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. Proposal to approve an Investment Advisory Agreement between the Trust and Bank of
America National Trust and Savings Association. [ ] [ ] [ ]

4. Proposal to approve the selection of Price Waterhouse LLP as independent auditors for
the current fiscal year ending June 30, 1998. [ ] [ ] [ ]

5. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.

----------------------------------------------------- -----------------------------------------------------

<PAGE> 26

TIME HORIZON FUNDS
TIME HORIZON PORTFOLIO 3

<TABLE>

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
TIMHOC KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
- -----------------------------------------------------------------------------------------------------------------------------
TIME HORIZON PORTFOLIO 3
<S> <C> <C> <C> <C>
VOTE ON TRUSTEES FOR WITHHOLD FOR ALL TO WITHHOLD AUTHORITY TO VOTE, MARK "FOR ALL EXCEPT"
1. 1) E.S. Bottum, 2) W.P. Carmichael, ALL ALL EXCEPT: AND WRITE THE NOMINEE'S NUMBER ON THE LINE BELOW.
3) T.M. Collins, 4) D.B. Fletcher,
5) R.E. Greeley, 6) C.J. Pings [ ] [ ] [ ] ----------------------------------------------------

VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. Proposal to approve an Investment Advisory Agreement between the Trust and Bank of
America National Trust and Savings Association. [ ] [ ] [ ]

4. Proposal to approve the selection of Price Waterhouse LLP as independent auditors for
the current fiscal year ending June 30, 1998. [ ] [ ] [ ]

5. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.

----------------------------------------------------- -----------------------------------------------------