<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:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential for use of the Commission Only (as
/ / Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE PILOT 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)(4) 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 of 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:
-----------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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 of
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------
(2) Form, Schedule or Registration No.:
------------------------------
(3) Filing Party:
------------------------------
(4) Date Filed:
------------------------------
<PAGE> 2
PRELIMINARY COPY
THE PILOT FUNDS
PILOT SMALL CAPITALIZATION EQUITY FUND
PILOT SHORT-TERM U.S. TREASURY FUND
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT GROWTH FUND
PILOT DIVERSIFIED BOND INCOME FUND
PILOT INTERNATIONAL EQUITY FUND
PILOT GROWTH AND INCOME FUND
PILOT EQUITY INCOME FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
PILOT U.S. GOVERNMENT SECURITIES FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
PILOT MUNICIPAL BOND FUND
3435 Stelzer Road
Columbus, OH 43219
November 7, 1996
Dear Shareholders:
You are cordially invited to attend the combined special meeting of the
Pilot Small Capitalization Equity Fund, Pilot Short-Term U.S. Treasury Fund,
Pilot Short-Term Diversified Assets Fund, Pilot Short-Term Tax-Exempt
Diversified Fund, Pilot Missouri Short-Term Tax-Exempt Fund, Pilot Growth Fund,
Pilot Diversified Bond Income Fund, Pilot International Equity Fund, Pilot
Growth and Income Fund, Pilot Equity Income Fund, Pilot Intermediate U.S.
Government Securities Fund, Pilot U.S. Government Securities Fund, Pilot
Intermediate Municipal Bond Fund, and Pilot Municipal Bond Fund (each a "Fund"
and together, the "Funds") of The Pilot Funds (the "Trust"), which will be held
on December 18, 1996 at 10:00 a.m. at the offices of BISYS Fund Services, Inc.,
3435 Stelzer Rd., Columbus, Ohio. The matters to be acted upon are described
in the attached Notice and Proxy Statement.
On August 29, 1996, Boatmen's Bancshares, Inc. ("Bancshares"), the
parent of Boatmen's Trust Company ("Boatmen's), the Funds' investment adviser,
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
NationsBank Corporation ("NationsBank"). The Merger Agreement provides that
Bancshares will merge with and into a wholly-owned subsidiary of NationsBank
(the "Merger"). It is currently expected that the Merger will be consummated on
or before ___________, 1997.
NationsBank manages or otherwise oversees the investment of over $_____
billion in assets belonging to a wide range of clients, including the Nations
Fund family of mutual funds, which funds had assets of $____ billion as of
____________, 1996.
In anticipation of the Merger and to facilitate the investment
management of assets and the delivery of shareholder services to the Trust, the
Trustees of your Funds are proposing for your approval, new investment advisory
arrangements with Boatmen's and also, in the case of Pilot International Equity
Fund, new investment management arrangements with Kleinwort Benson Investment
Management Americas, Inc.
1
<PAGE> 3
Although we would like very much to have each shareholder attend the
meeting, we realize this is not possible. Whether or not you plan to be
present, we need your vote. We urge you to complete, sign and return the
enclosed proxy card or cards promptly. A postage-paid envelope is enclosed for
this purpose.
If you return your proxy or proxies promptly you can help your Fund
avoid the expense of follow-up mailings to achieve a quorum. If your shares in
a Fund are held in street name, your bank or broker can vote your shares, but
may do so only upon receipt of your specific instructions. Please contact the
person responsible for your account and instruct him or her to execute a proxy
card today. If you decide between now and the meeting that you can attend the
meeting in person, you can revoke your proxy at that time and vote your shares
at the meeting.
As the date of the meeting approaches, if we have not received your
vote, you may receive a call from _________________________ which has been
retained to assist shareholders in the voting process.
We look forward to seeing you at the meeting or receiving your proxy so
that your shares may be voted at the meeting.
Sincerely,
WILLIAM J. TOMKO
President
The Pilot Funds
2
<PAGE> 4
PRELIMINARY COPY
THE PILOT FUNDS
PILOT SMALL CAPITALIZATION EQUITY FUND
PILOT SHORT-TERM U.S. TREASURY FUND
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT GROWTH FUND
PILOT DIVERSIFIED BOND INCOME FUND
PILOT INTERNATIONAL EQUITY FUND
PILOT GROWTH AND INCOME FUND
PILOT EQUITY INCOME FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
PILOT U.S. GOVERNMENT SECURITIES FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
PILOT MUNICIPAL BOND FUND
3435 Stelzer Road
Columbus, OH 43219
-----------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
December 18, 1996
-----------------------------------------
Notice is hereby given that a combined special meeting (the "Meeting")
of shareholders of Pilot Small Capitalization Equity Fund, Pilot Short-Term
U.S. Treasury Fund, Pilot Short-Term Diversified Assets Fund, Pilot Short-Term
Tax-Exempt Diversified Fund, Pilot Missouri Short-Term Tax-Exempt Fund, Pilot
Growth Fund, Pilot Diversified Bond Income Fund, Pilot International Equity
Fund, Pilot Growth and Income Fund, Pilot Equity Income Fund, Pilot
Intermediate U.S. Government Securities Fund, Pilot U.S. Government Securities
Fund, Pilot Intermediate Municipal Bond Fund, and Pilot Municipal Bond Fund
(each a "Fund" and together, the "Funds"), each of which is a series of The
Pilot Funds (the "Trust"), will be held at the offices of BISYS Fund Services,
Inc., 3435 Stelzer Rd., Columbus, Ohio, on December 18, 1996 at 10:00 a.m.,
Eastern time, for the following purposes:
1A. To approve proposed new Investment Advisory Agreements
between the Trust, on behalf of each Fund, and Boatmen's Trust Company
as set forth in the accompanying Proxy Statement.
1B. To approve a proposed new Investment Management Agreement
between the Trust on behalf of Pilot International Equity Fund,
Boatmen's Trust company, and Kleinwort Benson Investment Management
Americas, Inc. as described in the accompanying proxy statement.
2. To ratify the selection of Arthur Andersen LLP as independent
certified public accountants for the Trust.
3. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
1
<PAGE> 5
Only shareholders of record of each Fund at the close of business on
October 31, 1996 (the "Record Date") are entitled to receive notice of and to
vote at the Meeting and at any adjournments thereof on matters relating to that
Fund.
At the Meeting on December 18, 1996, the matters specified in the
accompanying proxy statement will be voted upon. Only shareholders of the Funds
are being solicited for their proxies.
By Order of the Trustees,
GEORGE O. MARTINEZ
Secretary
November 7, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. A PROXY CARD
IS ENCLOSED FOR THE FUND OR FUNDS IN WHICH YOU ARE A SHAREHOLDER IF YOU DO NOT
EXPECT TO ATTEND THE MEETING. WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE
ENCLOSED PROXY OR PROXIES IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOUR
SHARES WILL BE REPRESENTED AND VOTED AT THE MEETING. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING
YOUR PROXY OR PROXIES PROMPTLY.
THE TRUSTEES RECOMMEND THAT YOU VOTE IN FAVOR OF EACH PROPOSAL.
2
<PAGE> 6
INSTRUCTIONS FOR EXECUTING PROXY CARD
Please follow the general rules for signing proxy cards below to avoid
the time and expense involved in validating your vote if you fail to sign your
proxy card properly.
1. Individual Accounts. Sign your name exactly as it appears on the
proxy card.
2. Joint Accounts. Either party may sign, but the name of the party
signing should conform exactly to a name shown on the proxy card.
3. All Other Accounts. The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the name on the proxy card.
For example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp. (1) ABC Corp.
John Doe, Treasurer
(2) ABC Corp. (2) John Doe
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan (3) John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust (1) Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee (2) Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. (1) John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. (2) Jon B. Smith, Executor
</TABLE>
<PAGE> 7
PRELIMINARY COPY
THE PILOT FUNDS
PILOT SMALL CAPITALIZATION EQUITY FUND
PILOT SHORT-TERM U.S. TREASURY FUND
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT GROWTH FUND
PILOT DIVERSIFIED BOND INCOME FUND
PILOT INTERNATIONAL EQUITY FUND
PILOT GROWTH AND INCOME FUND
PILOT EQUITY INCOME FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
PILOT U.S. GOVERNMENT SECURITIES FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
PILOT MUNICIPAL BOND FUND
3435 STELZER ROAD
COLUMBUS, OH 43219
------------------------------------
PROXY STATEMENT
------------------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by The Pilot Funds (the "Trust") on behalf of its series, Pilot Small
Capitalization Equity Fund, Pilot Short-Term U.S. Treasury Fund, Pilot
Short-Term Diversified Assets Fund, Pilot Short-Term Tax-Exempt Diversified
Fund, Pilot Missouri Short-Term Tax-Exempt Fund, Pilot Growth Fund, Pilot
Diversified Bond Income Fund, Pilot International Equity Fund, Pilot Growth and
Income Fund, Pilot Equity Income Fund, Pilot Intermediate U.S. Government
Securities Fund, Pilot U.S. Government Securities Fund, Pilot Intermediate
Municipal Bond Fund, and Pilot Municipal Bond Fund (each a "Fund" and together,
the "Funds") to be used at the combined Special Meeting of shareholders of the
Funds and at any adjournments thereof (the "Meeting").
The Meeting is scheduled to be held on December 18, 1996 at 10:00 a.m.
Eastern time at the offices of BISYS Fund Services, Inc., 3435 Stelzer Rd.,
Columbus, Ohio. This proxy statement and the accompanying form of proxy are
being first mailed to shareholders of the Funds on or about November 7, 1996.
Copies of each Fund's most recent Annual Report are available without charge by
writing to the Trust at the address above or calling 1-800/71-PILOT.
At the Meeting on December 18, 1996, the matters specified in the
accompanying proxy statement will be voted upon. Only shareholders of the Funds
are being solicited for their proxies.
1
<PAGE> 8
The following shares of each Fund were outstanding on October 31, 996
(the "Record Date"):
<TABLE>
<S> <C>
Pilot Small Capitalization Equity Fund...................................
Pilot Short-Term U.S. Treasury Fund......................................
Pilot Short-Term Diversified Assets Fund.................................
Pilot Short-Term Tax-Exempt Diversified Fund.............................
Pilot Missouri Short-Term Tax-Exempt Fund................................
Pilot Growth Fund .......................................................
Pilot Diversified Bond Income Fund.......................................
Pilot International Equity Fund..........................................
Pilot Growth and Income Fund.............................................
Pilot Equity Income Fund.................................................
Pilot Intermediate U.S. Government Securities Fund.......................
Pilot U.S. Government Securities Fund....................................
Pilot Intermediate Municipal Bond Fund...................................
Pilot Municipal Bond Fund................................................
</TABLE>
For additional information with respect to the Meeting, the number of
shares needed for a quorum and the number of votes necessary to approve the
proposals described herein, please see the discussion under the heading
"Voting; Quorum."
2
<PAGE> 9
SUMMARY OF PROPOSALS
The Meeting is being called to consider three separate proposals. One
proposal relates only to International Equity Fund. The table below summarizes
each proposal and identifies the Fund or Funds whose shareholders may vote on
that proposal:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PROPOSAL PROPOSAL SHAREHOLDERS OF THE
NO. FOLOWING FUNDS ARE
ELIGIBLE TO VOTE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
1A To approve a new investment Pilot Small Capitalization Equity Fund, Pilot
advisory agreement between Short-Term U.S. Treasury Fund, Pilot Short-
Boatmen's and the Trust on Term Diversified Assets Fund, Pilot Short-
behalf of the applicable Fund Term Tax-Exempt Diversified Fund, Pilot
Missouri Short-Term Tax-Exempt Fund, Pilot
Growth Fund, Pilot Diversified Bond Income
Fund, Pilot International Equity Fund, Pilot
Growth and Income Fund, Pilot Equity Income
Fund, Pilot Intermediate U.S. Government
Securities Fund, Pilot U.S. Government
Securities Fund, Pilot Intermediate Municipal
Bond Fund, and Pilot Municipal Bond Fund
- ---------------------------------------------------------------------------------------------------------
1B To approve a new investment Pilot International Equity Fund ("International
management agreement among Equity Fund")
Boatmen's, Kleinwort Benson,
and the Trust on behalf of Pilot
International Equity Fund
- ---------------------------------------------------------------------------------------------------------
2 To ratify the selection of Arthur Pilot Small Capitalization Equity Fund, Pilot
Andersen LLP as independent Short-Term U.S. Treasury Fund, Pilot Short-
certified public accountants for Term Diversified Assets Fund, Pilot Short-
the Trust Term Tax-Exempt Diversified Fund, Pilot
Missouri Short-Term Tax-Exempt Fund, Pilot
Growth Fund, Pilot Diversified Bond Income
Fund, Pilot International Equity Fund, Pilot
Growth and Income Fund, Pilot Equity Income
Fund, Pilot Intermediate U.S. Government
Securities Fund, Pilot U.S. Government
Securities Fund, Pilot Intermediate Municipal
Bond Fund, and Pilot Municipal Bond Fund
- ---------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 10
INTRODUCTION
The Proposed Merger. On August 29, 1996, Boatmen's Bancshares, Inc.
("Bancshares"), the parent of Boatmen's Trust Company ("Boatmen's), the Funds'
investment adviser, entered into an Agreement and Plan of Merger (the "Merger
Agreement") with NationsBank Corporation ("NationsBank"). Bancshares' principal
offices are located at One Boatmen's Plaza, 800 Market Street, St. Louis,
Missouri 62166. NationsBank's principal offices are located at 100 North Tryon
Center, Charlotte, North Carolina 28255. Boatmen's principal offices are
located at 100 North Broadway, St. Louis, MO 63178. The Merger Agreement
provides, among other things, for the merger of Bancshares with and into a
wholly-owned subsidiary of NationsBank, subject to the terms and conditions
contained in the Merger Agreement (the "Merger"). It is currently expected that
the Merger will be consummated on or before___________, 1997, subject to the
satisfaction of various conditions of closing set forth in the Merger
Agreement. Consummation of the Merger is expected to result in one of the
nation's largest bank holding companies, with estimated assets of over $230
billion. As of September 30, 1996, NationsBank was the nation's fifth largest
bank holding company, with assets of over $___ billion. As of the same date
Bancshares assets were approximately $__ billion.
NationsBank is a publicly owned multibank holding company registered as
a bank holding company under the Federal Bank Holding Company Act of 1956, as
amended. NationsBank has informed the Trust that, based on filings with the
Securities and Exchange Commission (the "SEC"), no person beneficially owned
more than 10% of the outstanding shares of NationsBank's voting securities, as
of ______________, 1996.
NationsBank and its subsidiaries provide a broad range of financial
services to individuals and businesses through offices in 9 states.
Subsidiaries of NationsBank manage or otherwise oversee the investment of over
$__ billion in assets belonging to a wide range of clients, including the
Nations Fund family of funds which had assets of $____ billion as of _______,
1996 and for which and for which Nations Bank has served as investment adviser
since __________.
As required by the Investment Company Act of 1940, as amended (the
"1940 Act"), the current investment advisory agreement for each Fund (each, a
"Current Investment Advisory Agreement" and collectively, the "Current
Investment Advisory Agreements") pursuant to which Boatmen's provides
investment advisory services to the Fund provides for its automatic termination
upon "assignment." The current investment management agreement for
International Equity Fund among the Trust, Boatmen's, and Kleinwort Benson (the
"Current Investment Management Agreement") similarly complies with this
requirement of the 1940 Act by providing for termination of the agreement in
the event of its assignment. The 1940 Act defines "assignment" to include any
direct or indirect transfer or hypothecation of a contract by the assignor, or
of a controlling block of the assignor's outstanding voting securities by a
security holder of the assignor. If the Merger is consummated, an indirect
transfer to NationsBank of the controlling block of the outstanding voting
securities of Bancshares, Boatmen's parent corporation, will occur, giving rise
to an "assignment" of the Current Investment Advisory Agreements and the
Current Investment Management Agreement within the meaning of the 1940 Act,
necessitating shareholder approval of new investment advisory and management
arrangements.
Consummation of the Merger is subject to receipt of regulatory and
stockholder approvals, as well as other conditions set forth in the Merger
Agreement. No assurance can be given that the Merger will be consummated. The
Merger is not conditioned upon the approval by Fund shareholders of the
proposals with respect to investment advisory and management arrangements set
forth in this proxy statement. It is expected that the Merger will take place
whether or not the proposals with respect to investment advisory and management
arrangements described herein are approved by Fund shareholders.
4
<PAGE> 11
If a new investment advisory agreement for a Fund is not approved by
its shareholders and the Merger is consummated, the Trustees will make other
investment advisory arrangements which, in their judgment, would be in the best
interest of the Fund and its shareholders until such time as shareholders
approve a new investment advisory agreement. If a new investment management
agreement is not approved by shareholders of International Equity Fund and the
Merger is consummated, the Trustees will take such further action as they deem
to be in the best interests of International Equity Fund. If the Merger is
consummated and shareholders of each Fund approve the proposed new investment
advisory arrangements with Boatmen's and the shareholders of International
Equity Fund approve the new investment management arrangements with Kleinwort
Benson, Boatmen's and Kleinwort Benson will continue in their current capacity
as investment adviser and investment manager, respectively. If the Merger is
not consummated, the Funds' current investment advisory arrangements with
Boatmen's and International Equity Fund's investment management arrangements
with Kleinwort Benson will remain in place.
PROPOSAL 1A
APPROVAL OF THE PROPOSED
NEW INVESTMENT ADVISORY AGREEMENTS
INTRODUCTION
New Investment Advisory Agreements. In view of the Merger Agreement and
the factors discussed below, the Trustees of the Trust, including those
Trustees who are not "interested persons" (as defined in the 1940 Act) (the
"Independent Trustees") of the Trust, the Funds, or Boatmen's are proposing
that shareholders of each Fund approve for their Fund a new investment advisory
agreement between the Trust, on behalf of each Fund, and Boatmen's (each, a
"New Investment Advisory Agreement" and together, the "New Investment Advisory
Agreements"), to become effective upon the later of the consummation of the
Merger, which, as noted earlier, is expected to occur on or before __________,
1997 or shareholder approval. If the Merger is not consummated, the New
Investment Advisory Agreements will not become effective, and Boatmen's will
continue to act as each Fund's investment adviser pursuant to the current
Agreements. Under the New Investment Advisory Agreements, the same investment
advisory fee schedule as currently in effect for the Funds will remain in
place, and Boatmen's will continue to provide the Funds with the services it
currently provides. The description of the New Investment Advisory Agreements
in this Proxy Statement is qualified in its entirety by reference to the form
of Investment Advisory Agreement attached hereto as Exhibit A for all Funds
except International Equity Fund and to the form of Investment Advisory
Agreement attached hereto as Exhibit B for International Equity Fund.
Section 15(f) of the 1940 Act provides that an investment adviser to a
registered investment company may receive any amount or benefit in connection
with a sale of any interest in such adviser which results in an assignment of
an investment advisory contract if two conditions are satisfied. One condition
is that, for a period of three years after such assignment, at least 75% of the
Board of Trustees of the investment company cannot be "interested persons" (as
defined in the 1940 Act) of the new investment adviser or its predecessor. The
second condition is that no "unfair burden" (as defined in the 1940 Act) be
imposed on the investment company as a result of the assignment or any express
or implied terms, conditions or understandings applicable thereto. The parties
to the Merger Agreement intend to meet the foregoing safe harbor conditions.
5
<PAGE> 12
Current Investment Advisory Agreements. The chart below shows the date
of the Current Investment Advisory Agreement for each Fund and the date it was
last approved by Fund shareholders.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
FUND DATE OF CURRENT INVESTMENT DATE FUND SHAREHOLDERS
ADVISORY AGREEMENT APPROVED CURRENT AGREEMENT
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pilot Small Capitalization Equity
Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Short-Term U.S. Treasury
Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Short-Term Diversified
Assets Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Short Term Tax-Exempt
Diversified Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Missouri Short-Term Tax
Exempt Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Growth Fund October 17, 1996*
- -------------------------------------------------------------------------------------------------------------
Pilot Diversified Bond Income October 17, 1996*
Fund
- -------------------------------------------------------------------------------------------------------------
Pilot International Equity Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Growth and Income Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Equity Income Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Intermediate U.S.
Government Securities Fund
- -------------------------------------------------------------------------------------------------------------
Pilot U.S. Government
Securities Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Intermediate Municipal
Bond Fund
- -------------------------------------------------------------------------------------------------------------
Pilot Municipal Bond Fund
- -------------------------------------------------------------------------------------------------------------
</TABLE>
*Approved by BISYS Fund Services, Inc., the sole shareholder of the Fund.
[Paragraph explaining reasons contracts were presented for shareholder
approval, e.g., initial shareholders approval after commencement of operations,
change in adviser]
6
<PAGE> 13
During the fiscal year ended August 31, 1996 the Adviser received from
the Funds and the Adviser waived, respectively, the following advisory fees:
<TABLE>
<CAPTION>
ADVISORY FEES ADVISORY FEES
FUND PAID WAIVED
---- ------------- -------------
<S> <C> <C>
Pilot Small Capitalization Equity Fund...............
Pilot Short-Term U.S. Treasury Fund..................
Pilot Short-Term Diversified Assets Fund.............
Pilot Short-Term Tax-Exempt Diversified Fund.........
Pilot Missouri Short-Term Tax-Exempt Fund............
Pilot Growth Fund ...................................
Pilot Diversified Bond Income Fund...................
Pilot International Equity Fund......................
Pilot Growth and Income Fund.........................
Pilot Equity Income Fund.............................
Pilot Intermediate
U.S. Government Securities Fund....................
Pilot U.S. Government Securities Fund................
Pilot Intermediate Municipal Bond Fund...............
Pilot Municipal Bond Fund............................
</TABLE>
It is currently expected that if the proposed New Investment Advisory
Agreements are approved by the Funds' shareholders, any fee waiver policies
currently in effect will continue; however, shareholders should note that any
existing fee waivers may be discontinued at any time and without further
notice, except that Boatmen's has voluntarily agreed to limit the total
operating expense ratios of the Pilot Shares of Pilot Growth Fund, Pilot Growth
and Income Fund, and Pilot Diversified Bond Income Fund to __%, __%, and __%,
respectively, of each Fund's average net assets until February 1, 1998.
COMPARISON OF THE NEW INVESTMENT ADVISORY AGREEMENTS AND THE CURRENT INVESTMENT
ADVISORY AGREEMENTS
Advisory Services. The management and advisory services to be provided
by Boatmen's under the New Investment Advisory Agreements are identical to
those currently provided by Boatmen's under the Current Investment Advisory
Agreements. Under each Agreement, Boatmen's manages a Fund's investment
portfolio, selecting investments, making purchases and sales and otherwise
supervising the Fund's investment program. Boatmen's also furnishes to the
Trustees periodic reports and such special reports as they may request.
Fees and Expenses. The investment advisory fees for the Funds under the
Current Investment Advisory Agreements and the New Investment Advisory
Agreements are set forth below.
Under both the New Investment Advisory Agreements and the Current
Investment Advisory Agreements, the investment advisory fee payable by each
Fund will remain the same and will continue to be expressed as a percentage of
net assets at an annual rate, based on a Fund's average daily net assets; such
fee currently is, and under the proposed New Investment Advisory Agreements
will be, accrued daily and paid monthly.
7
<PAGE> 14
The schedule of the compensation for investment advisory services
currently payable to Boatmen's under the Current Investment Advisory Agreement
for each Fund and the schedule of fees proposed to be paid to Boatmen's under
the proposed New Investment Advisory Agreement for each Fund are shown below
expressed as a percentage of a Fund's average net assets (without regard to any
fee waivers by the Adviser):
CURRENT AND PROPOSED INVESTMENT ADVISORY FEE SCHEDULE
<TABLE>
<CAPTION>
FUND ANNUAL FEE
---- ----------
<S> <C>
Pilot Small Capitalization Equity Fund........................ 1.00%
Pilot Short-Term U.S. Treasury Fund........................... .15
Pilot Short-Term Diversified Assets Fund...................... .15
Pilot Short-Term Tax-Exempt Diversified Fund.................. .20
Pilot Missouri Short-Term Tax-Exempt Fund..................... .20
Pilot Growth Fund ............................................ .75
Pilot Diversified Bond Income Fund............................ .55
Pilot International Equity Fund............................... .80
Pilot Growth and Income Fund.................................. .75
Pilot Equity Income Fund...................................... .75
Pilot Intermediate
U.S. Government Securities Fund............................. .55
Pilot U.S. Government Securities Fund......................... .55
Pilot Intermediate Municipal Bond Fund........................ .55
Pilot Municipal Bond Fund..................................... .55
</TABLE>
Each Fund is responsible for all expenses incurred by it, other than
those expressly borne by Boatmen's, BISYS Fund Services Limited Partnership
("BISYS"), the Trust's administrator and a wholly owned subsidiary of the BISYS
Group, Inc., Pilot Funds Distributors, Inc. ("PFD"), the distributor of each
Fund's shares and a wholly-owned subsidiary of The BISYS Group, Inc., and BISYS
Fund Services, Inc. (the "Transfer Agent"), the Trust's transfer agent and a
wholly owned subsidiary of the BISYS Group Inc., under the Advisory,
Distribution, Administration and Transfer Agency Agreements, respectively. Such
expenses include, without limitation, the fees payable to Boatmen's, BISYS,
PFD, and the Transfer Agent, fees and expenses incurred in connection with
membership in investment company organizations, fees and expenses of a Fund's
custodian and fund accounting agent, brokerage fees and commissions, any
portfolio losses, filing fees for the registration or qualification of Fund
shares under federal or state securities laws, expenses of the organization of
a Fund, taxes, interest, costs of liability insurance, fidelity bonds,
indemnification or contribution, any costs, expenses or losses arising out of
any liability of, or claim for damages or other relief asserted against, a Fund
for violation of any law, legal and auditing and tax fees and expense, expenses
of preparing and setting in type prospectuses, statements of additional
information, proxy materials, reports and notices and the printing and
distribution of the same to Fund shareholders and regulatory authorities,
compensation and expenses of the Trustees and extraordinary expense incurred by
a Fund. If in any fiscal year, the sum of a Fund's expenses (excluding taxes,
interest, brokerage and extraordinary expenses such as for litigation) exceeds
the expense limitations applicable to the Fund imposed by state securities
administrators, as such limitations may be lowered or raised from time to time,
under both its Current and New Investment Advisory Agreements a Fund is
entitled to be reimbursed on a pro rata basis based on Boatmen's share of the
fees paid by the Fund to Boatmen's for investment advisory services, to the
extent required by these expense limitations.
8
<PAGE> 15
Limitations of Liability. Each Current Investment Advisory Agreement
and proposed New Investment Advisory Agreement provides that, subject to
Section 36 of the 1940 Act to the extent applicable, Boatmen's shall not be
liable to the Trust for any error of judgment or mistake of law or for any loss
suffered by the Trust in matters related to the Agreement except a loss
resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties under the Agreement.
Term. The proposed New Investment Advisory Agreement between each Fund
and Boatmen's will become effective upon the later to occur of (1) shareholder
approval or (2) consummation of the Merger, which is currently expected to
occur on or before ___________, 1997. Following effectiveness, each New
Investment Advisory Agreement will continue in effect until May 31, 1997, and
thereafter will continue from year to year, provided that continuation is
specifically approved at least annually, in the manner required by the 1940
Act. The 1940 Act requires that each New Investment Advisory Agreement and any
renewal thereof be approved by a vote of a majority of Trustees of the Trust
who are not parties thereto or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting duly called for the purpose of
voting on such approval, and by a vote of the Trustees of the Trust or a
majority of the outstanding voting securities of the applicable Fund. A vote of
a majority of the outstanding voting securities of a Fund is defined in the
1940 Act to mean a vote of the lesser of (i) more than 50% of the outstanding
voting securities of the Fund or (ii) 67% or more of the voting securities
which are present or represented by proxy. The Current Investment Advisory
Agreement contains comparable provisions.
Termination; Assignments. Each Current Investment Advisory Agreement
and proposed New Investment Advisory Agreement provides that it may be
terminated without penalty upon 60 days' written notice by a majority of the
Trustees or by the affirmative vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the applicable
Fund or by Boatmen's on 60 days' written notice to the Trust. Also, each
proposed New Investment Advisory Agreement will automatically terminate in the
event of its "assignment" (as defined in the 1940 Act).
INFORMATION ABOUT THE FUNDS' INVESTMENT ADVISER
Boatmen's. Founded in 1889, Boatmen's, a trust company organized under
the laws of Missouri, provides a broad range of trust and investment services
for individuals, privately and publicly held businesses, governmental units,
pension and profit sharing plans and other institutions and organizations. As
of September 30, 1996, Boatmen's and its affiliates managed $__ billion in
assets ($__ billion over which they had investment discretion and $__ billion
over which they did not have investment discretion).
Attached to this Proxy Statement as Exhibit D is a table that provides
information with respect to the current directors and principal executive
officers of Boatmen's.
In addition to serving as each Fund's investment adviser, Boatmen's
also acts as each Fund's custodian pursuant to a contract dated May 4, 1996. As
custodian, Boatmen's is responsible for holding the investments purchased by
each Fund. For the fiscal year ended August 31, 1996, Boatmen's received $_____
from the Funds for its services as custodian. Regardless of whether a Fund's
shareholders approve the New Investment Advisory Agreement with respect to a
Fund, it is currently anticipated that Boatmen's will continue to serve as each
Fund's custodian.
Transactions with Affiliated Brokers. For the fiscal year ended August
31, 1996, no brokerage commissions were paid to any broker that is (i) an
"affiliated" person of the Trust, as defined in the 1940 Act; (ii) an
affiliated person of such person; or (iii) an affiliated person of which is an
affiliated person of the Trust, its principal underwriter, its investment
adviser, or its administrator.
9
<PAGE> 16
TRUSTEE CONSIDERATIONS AND RECOMMENDATION.
On October 22, 1996, the Trustees, including all of the Independent
Trustees, met to consider a proposal to approve the New Investment Advisory
Agreement for each Fund. In preparation for the meeting, the Trustees were
provided with a variety of information about Boatmen's and NationsBank,
including: (i) information about the Merger; (ii) financial information relating
to NationsBank; (iii) information concerning NationsBank personnel who are
currently expected to become involved in the investment management function at
Boatmen's following the Merger; and (iv) information relating to NationsBank's
investment advisory and other activities, including information regarding other
registered investment companies advised by NationsBank and its affiliates. At
the meeting, the Trustees were informed that NationsBank has no present
intention of changing the investment management personnel responsible for the
Pilot Funds, the distribution and service arrangement for the Funds, or the
voluntary fee waivers and expense reimbursement commitments currently in place.
In the course of their deliberations, the Trustees also considered information
presented to them in May 1996 in connection with their consideration of the
Current Investment Advisory Agreements, and were advised by Boatmen's that since
May 1996, there had been no material changes in Boatmen's financial condition,
personnel or business operations that would materially adversely affect its
ability to provide investment advisory services to the Funds. In addition, the
Trustees noted the general reputation of NationsBank, that the term of each
agreement will not change and, therefore that the Trustees will have the
opportunity to review each New Investment Advisory Agreement again in May 1997,
and that the terms and conditions of the New Investment Advisory Agreement for
each Fund, including services provided and fees charged for these services, are
identical to the Current Investment Advisory Agreement. The Trustees also noted
the advantages to each Fund of maintaining Boatmen's as the Fund's adviser,
which will provide continued access to the demonstrated skills and capability of
Boatmen's staff, and the disadvantages of changing the adviser, which would
result in shareholder confusion and portfolio disruptions.
Based on these considerations, the Trustees determined that each Fund's New
Investment Advisory Agreement is in the Fund's and its shareholders' best
interests. Accordingly, the Trustees, including the Independent Trustees,
unanimously voted to approve the New Investment Advisory Agreement for each Fund
and to submit the Agreement to shareholders for approval. THE TRUSTEES RECOMMEND
THAT THE SHAREHOLDERS OF EACH FUND VOTE TO APPROVE THE PROPOSED NEW INVESTMENT
ADVISORY AGREEMENT FOR THEIR FUND.
PROPOSAL 1B
APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE TRUST, ON
BEHALF OF PILOT INTERNATIONAL EQUITY FUND, KLEINWORT BENSON INVESTMENT
MANAGEMENT AMERICAS INC. AND BOATMEN'S TRUST COMPANY
10
<PAGE> 17
Introduction and Discussion. In view of the Merger discussed above and
the considerations discussed below, the Trustees of the Trust, including those
Trustees who are not "interested persons" (as defined in the 1940 Act) (the
"Independent Trustees") of the Trust, Pilot International Equity Fund (the
"Fund"), Kleinwort Benson Investment Management Americas Inc. ("Kleinwort
Benson") or Boatmen's are proposing that shareholders of the Fund approve a new
investment management agreement among the Trust, on behalf of the Fund,
Kleinwort Benson, and Boatmen's (the "New Investment Management Agreement"), to
become effective upon the later of the consummation of the Merger, which, as
noted earlier, is expected to occur on or before __________, 1997, or
shareholder approval. Under the current investment management agreement dated
______, 1995 (the "Current Investment Management Agreement"), Kleinwort Benson
manages the Fund's investment operations and the composition of the Fund's
assets in accordance with the Fund's stated policies under Boatmen's
supervision and subject to the oversight of the Board. Because Boatmen's is a
party to the Current Investment Management Agreement, upon the effectiveness of
the Merger, the Current Investment Management Agreement will by its terms
terminate. Under the New Investment Management Agreement, Kleinwort Benson will
continue to provide the Funds with the services it currently provides and will
continue to be paid by Boatmen's under the same fee schedule in effect under
the Current Investment Management Agreement. If the Merger is not consummated,
the New Investment Management Agreement will not become effective, and
Kleinwort Benson will continue to act as the Fund's investment manager pursuant
to the Current Investment Management Agreement.
The Current And New Investment Management Agreements. As indicated
above, the Current and New Investment Management Agreements are identical in
all material respects except for the date of effectiveness and initial term. A
copy of the New Investment Management Agreement in the form being presented for
approval, and as approved by the Board, is set forth as Exhibit C to this Proxy
Statement.
Under the terms of both the Current and New Investment Management
Agreements, Kleinwort Benson manages the Fund's investment operations and the
composition of the Fund's assets in accordance with the Fund's stated policies,
under the supervision of Boatmen's and subject to oversight by the Board.
Kleinwort Benson is also responsible for making investment decisions for the
Fund, placing purchase and sale orders and providing research, statistical
analysis and continuous supervision of the Fund's investment portfolio.
As compensation for Kleinwort Benson's services, both the Current and
New Investment Management Agreements provide that Kleinwort Benson is entitled
to a fee paid by Boatmen's directly out of Boatmen's advisory fee computed
daily and payable monthly, at an annual rate equal to, effective June 1, 1995,
.40 of 1% up to $325,000,000 of the Fund's average daily net assets and .25 of
1% of such assets in excess of $325,000,000, on an annualized basis. Prior to
June 1, 1995, Kleinwort Benson was entitled to a fee, computed daily and
payable monthly at an annual rate equal to .80 of 1% of the Fund's average
daily net assets up to $65,000,000, .40 of 1% of such assets in excess of
$65,000,000 and .25 of 1% of such assets in excess of $325,000,000. All fees
and expenses are accrued daily and deducted before declaration of dividends to
shareholders. [last three fiscal years only] For the fiscal year ended August
31, 1994, the fee paid by Boatmen's to Kleinwort Benson was $1,465,815 which
equaled .48 of 1% of the Fund's average daily net assets. For the fiscal year
ended August 31, 1995, the fee paid by Boatmen's to Kleinwort Benson was
$1,535,377, which equaled .43 of 1% of the Fund's average daily net assets. The
rate used to determine fees payable pursuant to the New Investment Management
Agreement is identical to the rate in
11
<PAGE> 18
the Current Investment Management Agreement. For the fiscal year ended August
31, 1996, the fee paid by Boatmen's to Kleinwort Benson was $1,698,407, which
equaled .__ of 1% of the Fund's average daily net assets.
The Fund is responsible for all expenses incurred by it, other than
those expressly borne by Boatmen's, Kleinwort Benson, BISYS Fund Services
Limited Partnership ("BISYS"), the Trust's administrator and a wholly owned
subsidiary of the BISYS Group, Inc., Pilot Funds Distributors, Inc. ("PFD"),
the distributor of the Fund's shares and a wholly-owned subsidiary of The BISYS
Group, Inc., and BISYS Fund Services, Inc. (the "Transfer Agent"), the Trust's
transfer agent and a wholly owned subsidiary of the BISYS Group Inc., under the
Advisory, Investment Management, Distribution, Administration and Transfer
Agency Agreements, respectively. Such expenses include, without limitation, the
fees payable to Boatmen's, BISYS, PFD, and the Transfer Agent, fees and
expenses incurred in connection with membership in investment company
organizations, fees and expenses of the Fund's custodian and fund accounting
agent, brokerage fees and commissions, any portfolio losses, filing fees for
the registration or qualification of the Fund's shares under federal or state
securities laws, expenses of the organization of the Fund, taxes, interest,
costs of liability insurance, fidelity bonds, indemnification or contribution,
any costs, expenses or losses arising out of any liability of, or claim for
damages or other relief asserted against, the Fund for violation of any law,
legal and auditing and tax fees and expense, expenses of preparing and setting
in type prospectuses, statements of additional information, proxy materials,
reports and notices and the printing and distribution of the same to the Fund's
shareholders and regulatory authorities, compensation and expenses of the
Trustees and extraordinary expense incurred by the Fund.
The New Investment Management Agreement will continue until May 31,
1997 and automatically thereafter for successive annual periods, provided such
continuance is specifically approved at least annually by (i) the Board or (ii)
vote of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting securities and further provided, that in either event its continuance
also is approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of any party to the New Investment
Management Agreement by a vote cast in person at a meeting called for the
purpose of voting on such approval. The New Investment Management Agreement may
be terminated without penalty, (a) by the Trust pursuant to the vote of a
majority of the Trustees of the Trust or the vote of the holders of a majority
of the Fund's outstanding voting securities or by Boatmen's, on 60 days'
written notice to Kleinwort Benson, or (b) by Kleinwort Benson upon not less
than 60 days' written notice to the Trust and to Boatmen's. The New Investment
Management Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act). The provisions noted above relating to
continuation and termination of the Investment Management Agreement are
identical in the Current and New Investment Management Agreements.
The Current and New Investment Management Agreements both provide that
subject to the 1940 Act, Kleinwort Benson will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund, except
liability to the Fund or its shareholders to which Kleinwort Benson would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of, or its reckless disregard of, its obligations
and duties under the respective Investment Management Agreement. The agreements
also provide that the Fund will indemnify Kleinwort Benson against certain
liabilities under federal securities and other laws, or, in lieu thereof,
contribute to losses resulting from such liabilities.
12
<PAGE> 19
More Information About the Fund's Investment Manager. Kleinwort
Benson, located at 200 Park Avenue, New York, New York 10166, is the U.S.
registered investment management subsidiary of the London-based Kleinwort
Benson Group plc ("KB Group"), a holding company for a merchant banking group
whose origins date back to 1792. KB Group and its subsidiaries including
Kleinwort Benson are wholly owned subsidiaries of Dresdner Bank AG
("Dresdner"). Dresdner is the second largest bank in Germany, where it has a
leading position in both commercial and investment banking, and is also one of
the largest banking groups in Europe. Dresdner's headquarters are located at
Jurgen-Ponto-Platz 1, Frankfurt/Main, Germany. Dresdner has offices in over 60
countries worldwide, including all main financial centers, and has over 46,000
employees, including those employed by the former KB Group. At June 30, 1996,
Dresdner's total assets were US$346 billion and its stockholders' equity was
US$9 billion.
Kleinwort Benson has offices in London, Hong Kong and Tokyo and may
utilize the general expertise of KB Group, its indirect corporate parent, and
its affiliates in respect of, for example, economic analyses and predictions
and market developments and trends. Since it commenced operations in 1980,
Kleinwort Benson has managed investment accounts, primarily for institutions in
North America, comprised of equity, fixed income and balanced portfolios. These
portfolios generally consist principally of foreign securities. As of September
30, 1996, Kleinwort Benson had approximately $1.5 billion of assets under
management.
13
<PAGE> 20
The following persons are the principal executive officer and the
directors of Kleinwort Benson:
<TABLE>
<CAPTION>
Name/Address Title Principal Occupation
------------ ----- --------------------
<S> <C> <C>
Peter J. Ellis Director and Chairman Director, Kleinwort Benson
10 Fenchurch Street Investment Management Ltd.
London, England
John L. Duffy Director and Chief Operating Director, Kleinwort Benson
10 Fenchurch Street Officer Investment Management Ltd.
London, England
Francis M. Harte Director Senior Vice President and
75 Wall Street Chief Financial Officer,
New York, NY 10005 Dresdner Kleinwort Benson North
Americas LLC
Jerome S. Pilpel Director and Corporate Senior Vice President and
200 Park Avenue Secretary Director of Compliance,
New York, NY 10166 Dresdner Kleinwort Benson North
America LLC
Lauren R. Teel Director Senior Vice President,
200 Park Avenue Kleinwort Benson
New York, NY 10166
</TABLE>
Transactions with Affiliated Brokers. For the fiscal year ended August
31, 1996, no brokerage commissions were paid to any broker that is (i) an
"affiliated" person of the Trust, as defined in the 1940 Act; (ii) an
affiliated person of such person; or (iii) an affiliated person of which is an
affiliated person of the Trust, its principal underwriter, its investment
adviser, or its administrator.
TRUSTEE CONSIDERATIONS AND RECOMMENDATION.
On October 22, 1996, the Trustees, including all of the Independent
Trustees, met to consider a proposal to approve the New Investment Management
Agreement for the Fund. In the course of their deliberations, the Trustees
considered the following: (i) the fact that the Merger will have no effect on
Kleinwort Benson or on Boatmen's obligations under the New Investment
Management Agreement; (ii) the factors noted in the previous proposal with
respect to NationsBank, Boatmen's and the approval of the New Investment
Advisory Agreement for the Fund; (iii) information presented to the Board of
Trustees in May 1996 in connection with their consideration of the Current
Investment Management Agreement and Kleinwort Benson's representation that,
since the Trustees approved the continuation of the Current Investment
Management Agreement, there have been no material changes in Kleinwort Benson's
financial condition, personnel, or business operations which would materially
adversely affect its ability to provide investment management services to the
Fund; (iv) the fact that the terms and conditions of the New Investment
Management Agreement, including services provided, are identical to those of
the Current Investment Management Agreement; (v) the potential benefits to the
Fund of maintaining continued access to the demonstrated skills and capability
of the staff of Kleinwort Benson; and (vi) the disruption to Fund operations
that might result from a change in its investment manager.
Based on these considerations, the Trustees determined that the New
Investment Management Agreement is in the Fund's and its shareholders' best
interests. Accordingly, the Trustees, including the Independent Trustees,
unanimously voted to approve the New Investment Management Agreement and to
submit the Agreement to shareholders for approval. THE TRUSTEES RECOMMEND THAT
THE SHAREHOLDERS VOTE TO APPROVE THE PROPOSED NEW INVESTMENT MANAGEMENT
AGREEMENT.
14
<PAGE> 21
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Trust's current Trustees have selected Arthur Andersen LLP as the
independent certified public accountants for the Trust for the fiscal year
ending August 31, 1997. Arthur Andersen LLP has acted as independent certified
public accountants with respect to the Funds since the Trust's inception.
Arthur Andersen LLP has advised the Trust that it has no direct or indirect
financial interest in any one of the Funds or in the Trust. Arthur Andersen LLP
also acts as independent public accountants for other investment companies and
series of investment companies. If the Trust receives a written request from
any shareholder at least five days prior to the Meeting stating that the
shareholder will be present in person at the Meeting and desires to ask
questions of the accountants concerning their Fund's financial statements, the
Trust will arrange for a representative of Arthur Andersen LLP to be available
at the Meeting to respond to appropriate questions. If sufficient votes to
approve this proposal are not obtained, the Trustees will consider what action,
if any, to take.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE IN FAVOR OF THE RATIFICATION
OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE TRUST'S INDEPENDENT ACCOUNTANTS.
MISCELLANEOUS MATTERS
VOTING; QUORUM
Each share of each Fund is entitled to one vote on each matter
submitted to a vote of the shareholders of the Fund at the Meeting; no shares
have cumulative voting rights. Shares held by two or more persons (whether as
joint tenants, co-fiduciaries or otherwise) will be voted as follows unless a
written instrument or court order providing to the contrary has been filed with
the Secretary of the Trust: (1) if only one votes, his or her vote will bind
all; (2) if more than one votes, the vote of the majority will bind all; and
(3) if more than one votes and the vote is evenly divided, the shares will be
voted in accordance with the determination of a majority of such persons and
any person appointed to act by a court of competent jurisdiction, or in the
absence of such appointment, the vote will be cast proportionately.
Shares represented by duly appointed proxies in the form included with
this Proxy Statement will be voted in accordance withe specifications made. If
no specification is made with respect to a particular matter, shares will be
voted in accordance with the recommendation of the Trustees. Proxies may be
revoked at any time before they are voted by a written revocation received by
the Secretary of the Trust, by properly executing a later-dated proxy or by
attending the Meeting and voting in person. The Funds will require
broker-dealer firms, custodians, nominees and fiduciaries to forward proxy
material to the beneficial owners of the shares of record held by such persons.
[Boatmen's] will reimburse such persons for their reasonable expenses incurred
in connection with such proxy solicitation. Votes cast by proxy or in person
will be counted by persons appointed by the Fund to act as proxies for the
Meeting.
Approval of the proposals regarding the proposed New Investment
Advisory Agreements and the proposed New Investment Management Agreement for
International Equity Fund requires, with respect to a
15
<PAGE> 22
Fund, the affirmative vote of (i) 67% or more of the shares of the Fund present
in person at the Meeting or represented by proxy, if holders of more than 50%
of the shares of the Fund outstanding on the Record Date are present, in person
or by proxy, or (ii) more than 50% of the outstanding shares of the Fund on the
Record Date, whichever is less. Approval of the proposal regarding the
ratification of the selection of Arthur Andersen LLP as independent certified
public accountants of the Trust requires the approval of a majority of votes
cast. If any other business comes before the Meeting, the persons named as
proxies intend to take such actions as they consider to be in the best
interests of shareholders of each Fund.
A quorum for the transaction of business at the Meeting is constituted
with respect to a Fund by the presence in person or by proxy of the holders of
not less than a majority of the outstanding shares of such Fund entitled to
vote at the Meeting. A quorum for the transaction of business is constituted
with respect to the Trust as a whole by the presence in person or by proxy of
the holders of not less than a majority of the outstanding shares of the Trust
entitled to vote at the Meeting. If, by the time scheduled for the Meeting, a
quorum of shareholders of a Fund or, as the case may be, the Trust, is not
present or if a quorum of a Fund's (or, as the case may be, the Trust's)
shareholders is present but sufficient votes in favor of each of the Proposals
described in this Proxy Statement are not received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies from shareholders of the Fund which has not received
insufficient votes. Any such adjournment will require the affirmative vote of a
majority of the Shares of the Fund with respect to which the Meeting is being
adjourned or, as the case may be, shares of the Funds present in person or
represented by proxy at the session of the Meeting to be adjourned. The persons
named as proxies will vote in favor of any such adjournment if they determine
that such adjournment and additional solicitation are reasonable and in the
interests of the Fund's shareholders. An adjourned session or sessions may be
held, within a reasonable time after the date set for the original meeting,
without the necessity of further notice.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees which cannot be voted on a
Proposal because instructions have not been received from the beneficial
owners) will be counted for purposes of determining whether a quorum is present
for purposes of convening the Meeting. If a Proposal must be approved by a
percentage of "votes cast" on the Proposal (i.e., Proposal 2), abstentions and
broker non-votes will not be counted as "votes cast" on the Proposal and will
have no effect on the result of the vote. If a Proposal must be approved by (i)
a percentage of voting securities present at the Meeting or (ii) a majority of
the shares issued and outstanding (i.e., Proposals 1A and 1B), abstentions and
broker non-votes will be considered to be both present and issued and
outstanding and, as a result, will have the effect of being counted as votes
against the Proposal.
If the accompanying form of proxy is properly executed and returned in
time to be voted at the Meeting, the shares covered thereby will be voted in
accordance with the instructions marked thereon by the shareholder. Executed
proxies that are unmarked will be voted FOR each Proposal submitted to a vote
of the shareholders.
SOLICITATION OF PROXIES
[The costs of the solicitation, including the cost of the Meeting and
the cost of printing, assembling and mailing the proxy materials, will be borne
by parties other than the Trust.]
Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal
solicitations conducted by officers and employees of Boatmen's or its
affiliates or other representatives of the Funds (who will not be paid for the
their solicitation activities). [__________________ ("__________") has been
engaged by Boatmen's to assist in soliciting proxies, and may contact certain
shareholders of the Funds by telephone. Shareholders who are contacted by
___________ may be asked to cast their vote by telephonic proxy. Such proxies
will be recorded in
16
<PAGE> 23
accordance with procedures set forth below. Boatmen's believes these procedures
are reasonably designed to ensure that the identity of the shareholder casting
the vote is accurately determined and that the voting instructions of the
shareholder are accurately reflected.
In all cases where a telephonic proxy is solicited, the ________
representative will ask you for your full name, address, social security or
employer identification number, title (if you are authorized to act on behalf
of an entity, such as a corporation), and number of shares owned. If the
information solicited agrees with the information provided to ___ by Boatmen's,
then the ___ representative will explain the process, read the Proposals listed
on the proxy card and ask for your instructions on each Proposal. The ____
representative, although he or she will answer questions about the process,
will not recommend to you how you should vote, other than to read the
recommendations set forth in this Proxy Statement. Within 72 hours, ________
will send you a letter or mailgram to confirm your vote and asking you to call
_______ immediately if your instructions are not correctly reflected in the
confirmation.]
If you wish to participate in the Meeting and any adjournments
thereof, but do not wish to give your proxy by telephone, you may still submit
the proxy card included with this Proxy Statement or attend the Meeting in
person. Any proxy given by you, whether in writing or by telephone, is
revocable in the manner described above.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The only voting securities of each Fund are its shares of beneficial
interest, par value $0.001 per share. As of the Record Date, the Trustees and
officers of the Trust owned as a group less than 1% of the outstanding voting
securities of the Funds.
As of the Record Date the following shareholders owned beneficially 5%
or more of the shares of a class of a Fund:
PILOT SMALL CAPITALIZATION EQUITY FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT SHORT-TERM U.S. TREASURY FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
17
<PAGE> 24
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT GROWTH FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT DIVERSIFIED BOND INCOME FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
18
<PAGE> 25
PILOT EQUITY INCOME FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT U.S. GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
PILOT MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
NAME AND AMOUNT AND PERCENT
ADDRESS OF NATURE OF OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------
Boatmen's holds Fund shares in a variety of capacities. Boatmen's has
advised the Trust that it currently anticipates it will vote shares held in
trust or other fiduciary accounts over which it has voting power as follows:
(a) with respect to Fund shares held in any trust or other fiduciary account
over which Boatmen's has voting power as a co-fiduciary, Boatmen's will not
participate in any decision by the other fiduciaries of such account with
regard to the proposals presented in this Proxy Statement; (b) with respect to
Fund shares held in any trust or other fiduciary account for which Boatmen's
has sole voting power, Boatmen's will pass voting power through to an owner,
plan sponsor or independent thirty party fiduciary to the extent such action is
permissible; and (c) with respect to all other fiduciary accounts, Boatmen's
will vote Fund shares in the same manner and proportion as all other Fund
shares are voted.
OTHER INFORMATION
Pursuant to an Administration Agreement dated June 1, 1996 between the
Trust and BISYS Fund Services Limited Partnership ("BISYS"), BISYS acts as the
Administrator for the Funds. Pilot Funds Distributors, Inc., ("PFD") an
affiliate of BISYS, acts as the Funds' Distributor. Both BISYS and PFD have
their principal offices at 3435 Stelzer Road, Columbus, OH 43219.
19
<PAGE> 26
OTHER BUSINESS
The Board of Trustees knows of no other business to be brought before
the Meeting. If any other business should come before the Meeting, the persons
named as proxies will vote thereon in accordance with their best judgment.
NEXT MEETING OF SHAREHOLDERS
The Trust is not required to and does not intend to hold annual or
other periodic meetings of shareholders except as required by the 1940 Act. The
next meeting of the shareholders of the Trust will be held at such time as the
Board of Trustees may determine or at such time as may be legally required. Any
shareholder proposal intended to be presented at such meeting must be received
by the Trust at its office a reasonable time prior to the Trust's solicitation
of proxies relating to such meeting, as determined by the Board of Trustees, to
be included in a Fund's proxy statement and form of proxy relating to such
meeting, and must satisfy all other legal requirements.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
20
<PAGE> 27
EXHIBIT A
The form of advisory agreement below for Pilot Small Capitalization
Equity Fund, Pilot Growth Fund, Pilot Diversified Bond Income Fund, Pilot
Growth and Income Fund, Pilot Equity Income Fund, Pilot Intermediate U.S.
Government Securities Fund, Pilot U.S. Government Securities Fund, Pilot
Intermediate Municipal Bond Fund, Pilot Municipal Bond Fund, Pilot Short-Term
U.S. Treasury Fund, Pilot Short-Term Diversified Assets Fund, Pilot Missouri
Short-Term Tax-Exempt Fund, and Pilot Short-Term Tax Exempt Diversified Fund
does not contain Fund names or advisory fee rates. The advisory fee rate for
each Fund appears in Appendix A to the Agreement across from the Fund's name.
FORM OF
INVESTMENT ADVISORY AGREEMENT
-----------------------------
AGREEMENT made this ____ day of __________, 199_ between THE PILOT
FUNDS, a Massachusetts business trust (the "Trust"), on behalf of the Pilot
___________________ Fund, and BOATMEN'S TRUST COMPANY, a Trust Company
organized under the laws of Missouri (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Trust is authorized to issue Units of beneficial interest
(hereafter referred to as "Shares") in separate series with each such series
representing the interests in a separate portfolio of securities and other
assets;
WHEREAS, the Trust has established and presently offers (or intends to
offer) Shares of beneficial interest in a portfolio currently known as the
Pilot __________________ Fund (the "Portfolio"); and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services to the Trust with respect to the Portfolio as indicated
herein and the Adviser is willing to so render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Adviser. The Trust hereby appoints the Adviser to act
as investment adviser to the Trust and the Portfolio for the periods and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has delivered (or will deliver as
soon as is possible) to the Adviser copies of each of the following documents:
(a) Agreement and Declaration of Trust of the Trust dated as of
July 15, 1982 (such Agreement and Declaration of Trust, as presently in effect
and as amended from time to time, is herein called the "Trust Agreement" or the
"Declaration") copies of which are also on file with the Secretary of the
Commonwealth of Massachusetts;
(b) By-Laws of the Trust (such By-Laws, as presently in effect
and as amended from time to time, are herein called the "By-Laws");
A-1
<PAGE> 28
(c) Certified resolutions of the Shareholder(s) and the Trustees
of the Trust approving the terms of this Agreement;
(d) Custodian Agreement (including related fee schedule) dated
May 4, 1996 between the Trust and State Street Bank and Trust Company (such
Agreement, as presently in effect and as amended and/or superseded from time to
time, is herein called the "Custodian Agreement");
(e) Prospectuses and Statements of Additional Information of the
Trust with respect to the Portfolio as currently in effect (such Prospectuses
and Statements of Additional Information, as currently in effect and as
amended, supplemented and/or superseded from time to time, is herein called the
"Prospectus"); and
(f) Registration Statement of the Trust under the Securities Act
of 1933, as amended (the "1933 Act"), and the 1940 Act on Form N-1 as filed
with the Securities and Exchange Commission (the "Commission") on July 16,
1982, and as amended on Form N-1A (such Registration Statement, as presently in
effect and as amended from time to time, is herein called the "Registration
Statement").
The Trust agrees to promptly furnish the Adviser from time to time with
copies of all amendments of or supplements to or otherwise current versions of
any of the foregoing documents not heretofore furnished.
3. Duties of Adviser.
(a) Subject to the general supervision of the Trustees of the
Trust, the Adviser shall manage the investment operations of the Portfolio and
the composition of the Portfolio's assets, including the purchase, retention
and disposition thereof. In this regard, the Adviser:
(i) shall provide supervision of the Portfolio's
assets, furnish a continuous investment program for the Portfolio,
determine from time to time what investments or securities will be
purchased, retained or sold by the Portfolio, and what portion of the
assets will be invested or held uninvested as cash;
(ii) shall place orders with broker-dealers, foreign
currency dealers, futures commissions merchants or others pursuant to
the Adviser's determinations in accordance with the Portfolio's
policies as expressed in the Registration Statement; and
(iii) may, on occasions when it deems the purchase or
sale of a security to be in the best interests of the Portfolio as well
as its other customers (including any other Portfolio or any other
investment company or trust or advisory account for which the Adviser
acts as adviser), aggregate, to the extent permitted by applicable laws
and regulations, the securities to be sold or purchased in order to
obtain the best net price and the most favorable execution. In such
event, allocation of the securities so purchased or sold, as well as
the expenses incurred in the transaction, will be made by the Adviser
in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Portfolio and to such other customers.
(b) The Adviser, in the performance of its duties hereunder,
shall act in conformity with the Trust Agreement, By-Laws, Registration
Statement and Prospectus and with the instructions and directions of the
Trustees of the Trust, and will use its best efforts to conform to the
requirements of the 1940 Act, the Investment Advisers Act of 1940 (to the
extent applicable), the Internal Revenue Code of 1986, as amended, relating to
regulated investment companies and all rules and regulations thereunder, the
Insider Trading and Securities Fraud Enforcement Act of 1988 (to the extent
applicable) and all other applicable federal and state laws, regulations and
rulings.
A-2
<PAGE> 29
(c) The Adviser shall render to the Trustees of the Trust such
periodic and special reports as the Trustees may reasonably request.
(d) The Adviser shall notify the Trust of any material change in
the management of the Adviser within a reasonable time after such change.
(e) The Adviser shall immediately notify the Trust in the event
that the Adviser or any of its affiliates: (1) becomes aware that it is subject
to a statutory disqualification that prevents the Adviser from serving as
investment adviser pursuant to this Agreement; or (2) becomes aware that it is
the subject of an administrative proceeding or enforcement action by the
Securities and Exchange Commission or other regulatory authority. The Adviser
further agrees to notify the Trust immediately of any material fact known to
the Adviser respecting or relating to the Adviser that is not contained in the
Trust's Registration Statement regarding the Trust, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
(f) The services of the Adviser hereunder are not deemed
exclusive and the Adviser shall be free to render similar services to others so
long as its services under this Agreement are not impaired thereby.
4. Expenses
(a) During the term of this Agreement, the Adviser will pay all
costs incurred by it in connection with the performance of its duties under
paragraph 3 hereof, other than the cost (including taxes and brokerage
commissions, if any) of securities purchased for the Portfolio.
(b) The Adviser agrees that its gross compensation for any
fiscal year shall not be greater than an amount which, when added to the other
expenses of the Portfolio, shall cause the aggregate expenses of the Portfolio
to equal the maximum expenses under the lowest applicable expense limitation
established pursuant to the statutes or regulations of any jurisdiction in
which the Shares of the Portfolio may be qualified for offer and sale. Except
to the extent that such amount has been reflected in reduced payments to the
Adviser, the Adviser shall refund to the Portfolio the amount of any payment
received in excess of the limitation pursuant to this section as promptly as
practicable after the end of such fiscal year, provided that the Adviser shall
not be required to pay the Portfolio an amount greater than the fee paid to the
Adviser in respect of such year pursuant to this Agreement. As used in this
section, "expenses" shall mean those expenses included in the applicable
expense limitation having the broadest specifications thereof, and "expense
limitation" means a limit on the maximum annual expenses which may be incurred
by the Portfolio determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of the Portfolio's net assets for a
fiscal year or (ii) by multiplying a fixed percentage by the Portfolio's net
investment income for a fiscal year. The words "lowest applicable expense
limitation" shall be construed to result in the largest reduction of the
Adviser's compensation for any fiscal year of the Portfolio; provided, however,
that nothing in this Agreement shall limit the Adviser's fees if not required
by an applicable statute or regulation referred to above in this section.
The Adviser may waive all or a portion of its fees provided for
hereunder and such waiver shall be treated as a reduction in purchase price of
the Adviser's services. The Adviser shall be contractually bound hereunder by
the terms of any publicly announced waiver of its fee, or any limitation of the
Portfolio's expenses, as if such waiver or limitation were fully set forth
herein.
A-3
<PAGE> 30
5. Compensation
(a) For the services provided and the expenses assumed by the
Adviser pursuant to this Agreement, the Trust will pay to the Adviser as full
compensation therefor a fee at an annual rate of .__ of 1% of the Portfolio's
average net assets.
(b) The fee will be computed based on net assets on each day and
will be paid to the Adviser monthly.
6. Books and Records. The Adviser shall maintain all of the Trust's
records relating to the Adviser's duties with respect to the Portfolio. The
Adviser agrees that all records so maintained are the property of the Trust and
it will surrender promptly to the Trust any of such records upon the Trust's
request. The Adviser further agrees to preserve for the periods, and in the
manner, prescribed by the Rules of the Commission under the 1940 Act any such
records as are required to be maintained by such Rules. To the extent required
by law, the Adviser shall furnish to regulatory authorities having the
requisite authority such records which may be requested in order to ascertain
whether the operations of the Trust with respect to the Portfolio are being
conducted in a manner consistent with applicable laws and regulations.
7. Indemnification
(a) Subject to Section 36 of the 1940 Act to the extent
applicable, the Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its
obligations and duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement.
(b) The Trust, on behalf of the Portfolio, hereby agrees to
indemnify and hold harmless the Adviser, its directors, officers and employees
and each person, if any, who controls the Adviser (collectively, the
"Indemnified Parties") against any and all losses, claims, damages or
liabilities, joint or several, relating to the Portfolio, to which any such
Indemnified Party may become subject under the 1933 Act, the Securities
Exchange Act of 1934, the Advisers Act, the 1940 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon
(i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material
fact required to be stated or necessary to make the statement made not
misleading in (x) the Registration Statement or the Prospectus, (y) any
advertisement or sales literature authorized by the Trust for use in
the offer and sale of Shares of the Portfolio, or (z) any application
or other document filed in connection with the qualification of the
Trust or Shares of the Portfolio under the Blue Sky or securities laws
of any jurisdiction, except insofar as such losses, claims, damages or
liabilities (or actions in respect thereto arise out of or are based
upon any such untrue statement or omission or alleged untrue statement
or omission (1) in a document prepared by the Adviser, or (2) made in
reliance upon and in conformity with information furnished to the Trust
by or on behalf of the Adviser pertaining to or originating with the
Adviser for use in connection with any document referred to in clauses
(x), (y) or (z), or
(ii) subject in each case to clause (i) above, the
Adviser acting as investment adviser to the Trust with respect to the
Portfolio;
A-4
<PAGE> 31
and the Trust, from the assets of the Portfolio, will reimburse each
Indemnified Party for any legal or other expenses incurred by such Indemnified
Party in connection with investigating or defending any such loss, claim,
damage, liability or action.
(c) If the indemnification provided for in paragraph 7(b) is
available in accordance with the terms of such paragraph but is for any reason
held by a court in a final adjudication to be unavailable from the Trust, then
the Trust, from the assets of the Portfolio, shall contribute to the aggregate
amount paid or payable by the Trust and such Indemnified Party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect (i) the relative benefits received
by the Portfolio and such Indemnified Party in connection with the operations
of the Portfolio, (ii) the relative fault of the Trust with respect to the
Portfolio and such Indemnified Party, and (iii) any other relevant equitable
considerations. The Trust and the Adviser agree that it would not be just and
equitable if contribution pursuant to this subparagraph (c) were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above in this subparagraph
(c). The amount paid or payable as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subparagraph (c) shall be deemed to include any legal or other expenses
incurred by the Trust and the Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or action.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(d) It is understood, however, that nothing in this paragraph 7
shall protect any Indemnified Party against, or entitle any Indemnified Party
to indemnification against, or contribution with respect to, any liability to
the Trust or its Shareholders to which such Indemnified Party is subject, by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of any reckless disregard of its
obligations and duties, under this Agreement or otherwise to an extent or in a
manner inconsistent with' Section 17(i) of the 1940 Act.
8. Duration and Termination. This Agreement, shall continue, unless
sooner terminated as provided herein, until May 31, 1997, and thereafter shall
continue automatically for periods of one year so long as each such latter
continuance is approved at least annually (a) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons (as defined by the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Trustees of the Trust or by vote of a majority of the outstanding Shares (as
defined with respect to voting securities in the 1940 Act) representing the
interests in the Portfolio; provided, however, that this Agreement may be
terminated by the Trust at any time, without the payment of any penalty, by
vote of a majority of the Trustees of the Trust or by vote of a majority of the
outstanding Shares (as so defined) representing the interests in the Portfolio
affected thereby on 60 days' written notice to the Adviser, or by the Adviser
at any time, without the payment of any penalty, on 60 days' written notice to
the Trust. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined by the 1940 Act).
9. Status of Adviser as Independent Contractor. 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 Trustees of the
Trust from time to time, have no authority to act for or represent the Trust or
Portfolio in any way or otherwise be deemed an agent of the Trust or Portfolio.
10. Amendment of Agreement. This Agreement may be amended, changed
or waived only by an instrument in writing and by mutual consent, but the
consent of the Trust must be approved (a) by vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on
A-5
<PAGE> 32
such amendment, and (b) by vote of a majority of the outstanding Shares (as
defined with respect to voting securities by the 1940 Act) representing the
interests in the Portfolio.
11. Limitation of Liability. The name "The Pilot Funds" refers to the
Trustees under the Declaration collectively as trustees and not as individuals.
The Declaration, a copy of which, together with all amendments thereto, is on
file in the Office of the Secretary of the Commonwealth of Massachusetts,
provides that no shareholder, Trustee, officer, employee or agent of the Trust,
shall be subject to claims against or obligations of the Trust to any extent
whatsoever, but that the Trust estate only shall be liable.
The Adviser is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and agrees that the obligations
assumed by the Trust pursuant to this Agreement shall be limited in all cases
to the Portfolio's assets, and the Adviser shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the Trust or
Portfolio or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. The Adviser understands that the rights and
obligations of each series under the Declaration are separate and distinct from
those of any and all other series.
12. 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. This Agreement shall be construed in accordance with
applicable federal law and the laws of the Commonwealth of Massachusetts and
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors subject to the last sentence of paragraph 9, and,
to the extent provided in paragraph 7 hereof, each Indemnified Party. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause
the Trust to fail to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended, nor shall this Agreement be
construed to require, or to impose any duty upon, either of the parties to do
anything in violation of any applicable laws or regulations. This Agreement may
be executed simultaneously in two counterparts, each of which shall be deemed
an original, but both of which together shall constitute one and the same
instrument. This Agreement shall supersede all prior investment advisory or
management agreements entered into between the parties. This Agreement shall
not apply to the management of assets allocated to any series of the Trust
other than the Portfolio.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
THE PILOT FUNDS
Attest:
By:
- ------------------------- ------------------------------
Title:
-----------------------
BOATMEN'S TRUST COMPANY
Attest:
By:
- ------------------------- ------------------------------
Title:
-----------------------
A-6
<PAGE> 33
Appendix A
The Pilot Funds
Contractual Advisory Fees
<TABLE>
<CAPTION>
Portfolio Fee
- --------- ---
<S> <C>
Growth & Income Fund .75%
Equity Income Fund .75%
Intermediate Municipal Bond Fund .55%
Municipal Bond Fund .55%
Intermediate U.S. Government Securities Fund .55%
U.S. Government Securities Fund .55%
Growth Fund .75%
Diversified Bond Income Fund .55%
Small Capitalization Equity Fund 1.00%
Short-Term U.S. Treasury Fund .15%
Short-Term Diversified Assets Fund .15%
Short-Term Tax-Exempt Diversified Fund .20%
Missouri Short-Term Tax-Exempt Fund .20%
</TABLE>
A-7
<PAGE> 34
EXHIBIT B
FORM OF
ADVISORY AGREEMENT
FOR
PILOT INTERNATIONAL EQUITY FUND
AGREEMENT made this ____ day of _________, 199_ between THE PILOT
FUNDS, a Massachusetts business trust (the "Trust"), on behalf of the Pilot
International Equity Fund, and BOATMEN'S TRUST COMPANY, a Trust Company
organized under the laws of Missouri (the "Adviser").
W I T N E S S E T H
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Trust is authorized to issue Units of beneficial interest
(hereafter referred to as "Shares") in separate series with each such series
representing the interests in a separate portfolio of securities and other
assets;
WHEREAS, the Trust has established and presently offers (or intends to
offer) Shares in a portfolio currently known as the Pilot International Equity
Fund (the "Portfolio"); and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services to the Trust with respect to the Portfolio as indicated
herein and the Adviser is willing to so render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Adviser. The Trust hereby appoints the Adviser to act
as investment adviser to the Trust and the Portfolio for the periods and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has delivered (or will deliver as
soon as is possible) to the Adviser copies of each of the following documents:
(a) Agreement and Declaration of Trust of the Trust dated as of July
15, 1982 (such Agreement and Declaration of Trust, as presently in effect and
as amended from time to time, is herein called the "Trust Agreement"), copies
of which are also on file with the Secretary of the Commonwealth of
Massachusetts;
(b) By-Laws of the Trust (such By-Laws, as presently in effect and as
amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Shareholder(s) and the Trustees of
the Trust approving the terms of this Agreement;
B-1
<PAGE> 35
(d) Custodian Agreement (including related fee schedule) dated
November 24, 1982 between the Trust and State Street Bank and Trust Company
(such Agreement, as presently in effect and as amended and/or superseded from
time to time, is herein called the "Custodian Agreement");
(e) Prospectus and Statement of Additional Information of the Trust
with respect to the Portfolio as currently in effect (such Prospectus and
Statement of Additional Information, as currently in effect and as amended,
supplemented and/or superseded from time to time, is herein called the
"Prospectus"); and
(f) Registration Statement of the Trust under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act on Form N-1 as filed with
the Securities and Exchange Commission (the "Commission") on July 16, 1982, and
as amended on Form N-1A (such Registration Statement, as presently in effect
and as amended from time to time, is herein called the "Registration
Statement").
The Trust agrees to promptly furnish the Adviser from time to time
with copies of all amendments of or supplements to or otherwise current
versions of any of the foregoing documents not heretofore furnished.
3. Duties of Adviser.
(a) Subject to the general supervision of the Trustees of
the Trust, the Adviser shall:
(i) provide guidelines for the manager with regard to (a)
the basic investment strategy of the Portfolio; and (b) the allocation
of the Portfolio's assets among the countries and currencies in which
the Portfolio is permitted to invest as provided in its then currently
effective Prospectus and Statement of Additional Information;
(ii) monitor the manager's compliance with the guidelines
established pursuant to Subparagraphs 3(a)(i)(a) and 3(a)(i)(b) above;
(iii) review the selection of foreign subcustodians and
monitor the performance of foreign subcustodians, including responding
to operational issues relating thereto;
(iv) provide cash management services to the Portfolio as
necessary;
(v) periodically review the pricing of portfolio
securities;
(vi) monitor the performance of the Portfolio's manager;
(vii) periodically report to the Trustees of the Portfolio,
no less frequently than annually, on the performance of the manager
and make recommendations to the Trustees as to the continuation or
termination of such management relationship; and
(viii) provide assistance in the preparation and presentation
to the Board of information relating to the Portfolio.
(b) The Adviser, in the performance of its duties
hereunder, shall act in conformity with the Trust Agreement, By-Laws,
Registration Statement and Prospectus and with the instructions and directions
of the Trustees of the Trust, and will use its best efforts to conform to the
requirements of the 1940 Act, the Investment Advisers Act of 1940 (to the
extent applicable), the Internal Revenue Code of 1986, as amended, relating to
regulated investment companies and all rules and regulations thereunder, the
B-2
<PAGE> 36
Insider Trading and Securities Fraud Enforcement Act of 1988 (to the extent
applicable) and all other applicable federal and state laws, regulations and
rulings.
(c) The Adviser shall render to the Trustees of the Trust
such periodic and special reports as the Trustees may reasonably request.
(d) The Adviser shall notify the Trust of any change in
the management of the Adviser within a reasonable time after such change.
(e) The Adviser shall immediately notify the Trust in the
event that the Adviser or any of its affiliates: (1) becomes aware that it is
subject to a statutory disqualification that prevents the Adviser from serving
as investment adviser pursuant to this Agreement; or (2) becomes aware that it
is the subject of an administrative proceeding or enforcement action by the
Securities and Exchange Commission or other regulatory authority. The Adviser
further agrees to notify the Trust immediately of any material fact known to
the Adviser respecting or relating to the Adviser that is not contained in the
Trust's Registration Statement regarding the Trust, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
(f) The services of the Adviser hereunder are not deemed
exclusive and the Adviser shall be free to render similar services to others so
long as its services under this Agreement are not impaired thereby.
4. Expenses.
(a) During the term of this Agreement, the Adviser will
pay all costs incurred by it in connection with the performance of its duties
under paragraph 3 hereof other than the cost, if any, (including taxes and
brokerage commissions, if any) of securities purchased for the Portfolio.
(b) The Adviser agrees that its gross compensation for any
fiscal year shall not be greater than an amount which, when added to the other
expenses of the Portfolio, shall cause the aggregate expenses of the Portfolio
to equal the maximum expenses under the lowest applicable expense limitation
established pursuant to the statutes or regulations of any jurisdiction in
which the Shares of the Portfolio may be qualified for offer and sale. Except
to the extent that such amount has been reflected in reduced payments to the
Adviser, the Adviser shall refund to the Portfolio its proportionate share of
the amount by which the aggregate payments received by the Adviser and the
investment manager are in excess of the limitation pursuant to this section as
promptly as practicable after the end of such fiscal year, provided that the
Adviser shall not be required to pay the Portfolio an amount greater than the
fee paid to the Adviser in respect of such year pursuant to this Agreement. As
used in this section, "expenses" shall mean those expenses included in the
applicable expense limitation having the broadest specifications thereof, and
"expense limitation" means a limit of the maximum annual expenses which may be
incurred by the Portfolio determined (i) by multiplying a fixed percentage by
the average, or by multiplying more than one such percentage by different
specified amounts of the average, of the values of the Portfolio's net assets
for a fiscal year or (ii) by multiplying a fixed percentage by the Portfolio's
net investment income for a fiscal year. The words "lowest applicable expense
limitation" shall be construed to result in the largest reduction of the
Adviser's compensation for any fiscal year of the Portfolio; provided, however,
that nothing in this Agreement shall limit the Adviser's fees if not required
by an applicable statute or regulation referred to above in this section. As
used in this section, The Adviser's "proportionate share,, shall be based on
the amount of the Adviser's fee as a percentage of the total advisory and
management fees paid or payable by the Trust with respect to the appropriate
fiscal year, on behalf of the Portfolio.
B-3
<PAGE> 37
The Adviser may waive all or a portion of its fees provided for
hereunder and such waiver shall be treated as a reduction in purchase price of
the Adviser's services. The Adviser shall be contractually bound hereunder by
the terms of any publicly announced waiver of its fee, or any limitation of the
Portfolio's expenses, as if such waiver or limitation were fully set forth
herein.
5. Compensation.
(a) For the services provided and the expenses assumed by
the Adviser pursuant to this Agreement, the Trust will pay to the Adviser as
full compensation therefor a fee at an annual rate of .80 of 1% of the
Portfolio's average net assets.
(b) The fee will be computed based on net assets on each
day and will be paid to the Adviser monthly.
6. Books and Records. The Adviser shall maintain all of the
Trust's records relating to the Adviser's duties with respect to the Portfolio.
The Adviser agrees that all records so maintained are the property of the Trust
and it will surrender promptly to the Trust any of such records upon the
Trust's request. The Adviser further agrees to preserve for the periods, and in
the manner, prescribed by the Rules of the Commission under the 1940 Act any
such records as are required to be maintained by such Rules. To the extent
required by law, the Adviser shall furnish to regulatory authorities having the
requisite authority such records which may be requested in order to ascertain
whether the operations of the Trust with respect to the Portfolio are being
conducted in a manner consistent with applicable laws and regulations.
7. Indemnification.
(a) Subject to Section 36 of the 1940 Act to the extent
applicable, the Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its
obligations and duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement.
(b) The Trust, on behalf of the Portfolio, hereby agrees
to indemnify and hold harmless the Adviser, its officers, partners and
employees and each person, if any, who controls the Adviser (collectively, the
"Indemnified Parties") against any and all losses, claims, damages or
liabilities, joint or several, relating to the Portfolio, to which any such
Indemnified Party may become subject under the 1933 Act, the Securities
Exchange Act of 1934, the Advisers Act, the 1940 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:
(i) any untrue statement or alleged untrue statement
of a material fact or any omission or alleged omission to state a
material fact required to be stated or necessary to make the
statements made not misleading in (x) the Registration Statement or
the Prospectus, (y) any advertisement or sales literature authorized
by the Trust for use in the offer and sale of Shares of the Portfolio,
or (z) any application or other document filed in connection with the
qualification of the Trust or Shares of the Portfolio under the Blue
Sky or securities laws of any jurisdiction, except insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any such untrue statement or omission
or alleged untrue statement or omission (1) in a document prepared by
the Adviser, (2) pertaining to a failure to disclose a breach of the
Adviser's duties in connection with this Agreement, or (3) made in
reliance upon and in conformity with information furnished to the
Trust by or on behalf of the Adviser pertaining to or originating with
the Adviser for use in connection with any document referred to in
clauses (x), (y) or (z), or
B-4
<PAGE> 38
(ii) subject in each case to clause (i) above, the
Adviser acting as investment adviser to the Trust with respect to the
Portfolio;
and the Trust, from the assets of the Portfolio, will reimburse each
Indemnified Party for any legal or other expenses incurred by such Indemnified
Party in connection with investigating or defending any such loss, claim,
damage, liability or action.
(c) If the indemnification provided for in paragraph 7(b)
is available in accordance with the terms of such paragraph but is for any
reason held by a court to be unavailable from the Trust, then the Trust, from
the assets of the Portfolio, shall contribute to the aggregate amount paid or
payable by the Trust and such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Portfolio and such Indemnified Party in connection with the operations of
the Portfolio, (ii) the relative fault of the Trust with respect to the
Portfolio and such Indemnified Party, and (iii) any other relevant equitable
considerations. The Trust and the Adviser agree that it would not be just and
equitable if contribution pursuant to this subparagraph (c) were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above in this subparagraph
(c). The amount paid or payable as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subparagraph (c) shall be deemed to include any legal or other expenses
incurred by the Trust and the Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or action.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(d) It is understood, however, that nothing in this
paragraph 7 shall protect any Indemnified Party against, or entitle any
Indemnified Party to indemnification against, or contribution with respect to,
any liability to the Trust or its Shareholders to which such Indemnified Party
is subject, by reason of its willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of any reckless disregard of its
obligations and duties, under this Agreement, or otherwise to an extent or in a
manner inconsistent with Section 17(i) of the 1940 Act.
8. Duration and Termination. This Agreement shall continue,
unless sooner terminated as provided herein, until November 31, 1997, and
thereafter shall continue automatically for periods of one year so long as each
such latter continuance is approved at least annually (a) by the vote of a
majority of the Trustees of the Trust who are not parties to this Agreement or
interested persons (as defined by the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust or by vote of a majority of the outstanding Shares
(as defined with respect to voting securities in the 1940 Act) representing the
interests in the Portfolio; provided, however, that this Agreement may be
terminated by the Trust at any time, without the payment of any penalty, by
vote of a majority of the Trustees of the Trust or by vote of a majority of the
outstanding Shares (as so defined) representing the interests in the Portfolio
affected thereby on 60 days' written notice to the Adviser, or by the Adviser
at any time, without the payment of any penalty, on 60 days, written notice to
the Trust. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined by the 1940 Act).
9. Status of Adviser as Independent Contractor. 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 Trustees
of the Trust from time to time, have no authority to act for or represent the
Trust or Portfolio in any way or otherwise be deemed an agent of the Trust or
Portfolio.
B-5
<PAGE> 39
10. Appointment of Manager. The Adviser is hereby authorized,
subject to such approvals as may be required by law, to appoint a manager to
provide investment management services to the Trust, on behalf of the
Portfolio.
11. Amendment of Agreement. This Agreement may be amended,
changed or waived only by an instrument in writing and by mutual consent, but
the consent of the Trust must be approved (a) by vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) by vote of
a majority of the outstanding Shares (as defined with respect to voting
securities by the 1940 Act) representing the interests in the Portfolio.
12. Limitation of Liability. The name "The Pilot Funds" refers to
the under the Declaration collectively as trustees and not as individuals. The
Declaration, a copy of which, together with all amendments thereto, is on file
in the Office of the Secretary of the Commonwealth of Massachusetts, provides
that no shareholder, Trustee, officer, employee or agent of the Trust, shall be
subject to claims against or obligations of the Trust to any extent whatsoever,
but that the Trust estate only shall be liable.
The Adviser is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and agrees that the obligations
assumed by the Trust pursuant to this Agreement shall be limited in all cases
to the Portfolio's assets, and the Adviser shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the Trust or
Portfolio or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. The Adviser understands that the rights and
obligations of each series under the Declaration are separate and distinct from
those of any and all other series.
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. This Agreement shall be construed in accordance with
applicable federal law and the laws of the Commonwealth of Massachusetts and
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors subject to the last sentence of paragraph 8, and,
to the extent provided in paragraph 7 hereof, each Indemnified Party. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause
the Trust to fail to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended, nor shall this Agreement be
construed to require, or to impose any duty upon, either of the parties to do
anything in violation of any applicable laws or regulations.
This Agreement may be executed simultaneously in two counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument. This Agreement shall supersede all
prior investment advisory or management agreements entered into between the
parties. This Agreement shall not apply to the management of assets allocated
to any series of the Trust other than the Portfolio.
B-6
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
THE PILOT FUNDS
Attest:
By:
- ---------------------------- ----------------------------
Name:
Title:
BOATMEN'S TRUST COMPANY
Attest:
By:
- ---------------------------- ----------------------------
Name:
Title:
B-7
<PAGE> 41
EXHIBIT C
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
for
Pilot International Equity Fund
AGREEMENT made this ____ day of _________, 199_ among THE PILOT FUNDS,
a Massachusetts business trust (the "Trust"), on behalf of PILOT INTERNATIONAL
EQUITY FUND, BOATMEN'S TRUST COMPANY and KLEINWORT BENSON INVESTMENT MANAGEMENT
AMERICAS INC., a Delaware corporation (the "Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, the Trust is authorized to issue units of beneficial interest
(hereafter referred to as "Shares") in separate series with each such series
representing the interests in a separate portfolio of securities and other
assets;
WHEREAS, the Trust has established and presently offers (or intends to
offer) Shares in a portfolio currently known as the Pilot International Equity
Fund (the "Fund"); and
WHEREAS, pursuant to authority granted to Boatmen's Trust Company (the
"Adviser") by the Trust's Trustees and pursuant to the provisions of the
Advisory Agreement dated _________, 199_ between the Adviser and the Trust, the
Adviser has selected the Manager to render investment management services to
the Trust with respect to the Fund as indicated herein and the Manager is
willing to so render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Manager. The Trust and the Adviser hereby
appoint the Manager to act as investment manager to the Trust and the Fund for
the periods and on the terms herein set forth. The Manager accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Name of Manager. The Trust and the Adviser hereby agree not
to use the name "Kleinwort Benson Investment Management Americas Inc.", or any
derivative thereof, in the Trust's Registration Statement on Form N-lA, or in
any sales literature, advertisement or other document distributed to the public
without the consent of the Manager provided, however, that the Trust reserves
the right to redesignate the name of the Fund in the event Kleinwort Benson
Investment Management Americas Inc. ceases to act as investment manager
hereunder.
3. Delivery of Documents. The Trust has delivered (or will
deliver as soon as is possible) to the Manager copies of each of the following
documents:
C-1
<PAGE> 42
(a) Agreement and Declaration of Trust of the Trust dated as
of July 15, 1982 (such Agreement and Declaration of Trust, as presently in
effect and as amended from time to time, is herein called the "Trust Agreement"
or the "Declaration"), copies of which are also on file with the Secretary of
The Commonwealth of Massachusetts;
(b) By-Laws of the Trust (such By-Laws, as presently in
effect and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Shareholder(s) and the
Trustees of the Trust approving the terms of this Agreement;
(d) Custodian Agreement (including related fee schedule)
dated May 4, 1996 between the Trust and Boatmen's Trust Company (such
Agreement, as presently in effect and as amended and/or superseded from time to
time, is herein called the "Custodian Agreement");
(e) Prospectuses and Statements of Additional Information of
the Trust with respect to the Fund as currently in effect (such Prospectuses
and Statements of Additional Information, as currently in effect and as
amended, supplemented and/or superseded from time to time, are herein called
the "Prospectus"); and
(f) Registration Statement of the Trust under the Securities
Act of 1933, as amended (the "1933 Act"), and the 1940 Act on Form N-1 as filed
with the Securities and Exchange Commission (the "Commission") on July 16,
1982, and as amended on Form N-lA (such Registration Statement, as presently in
effect and as amended from time to time, is herein called the "Registration
Statement").
The Trust agrees to promptly furnish the Manager from time to time
with copies of all amendments of or supplements to or otherwise current
versions of any of the foregoing documents not heretofore furnished.
4. Duties of Manager.
(a) Subject to the general supervision of the Adviser and the
Trustees of the Trust, the Manager shall manage the investment operations of
the Fund and the composition of the Fund's assets, including the purchase,
retention and disposition thereof. In this regard, the Manager:
(i) shall provide supervision of the Fund's
assets, furnish a continuous investment program for the Fund,
determine from time to time what investments or securities will be
purchased, retained or sold by the Fund, and what portion of the
assets will be invested or held uninvested as cash;
(ii) shall place orders with broker-dealers,
foreign currency dealers, futures commissions merchants or others
pursuant to the Manager's determinations in accordance with the Fund's
policies as expressed in the Registration Statement; and
(iii) may, on occasions when it deems the purchase
or sale of a security to be in the best interests of the Fund as well
as its other customers (including any other Fund or any other
investment company or management account for which the Manager acts as
manager or adviser), aggregate, to the extent permitted by applicable
laws and regulations, the securities to be sold or purchased in order
to obtain the best net price and the most favorable execution. In such
event, allocation of the securities so purchased or sold, as well as
the expenses incurred in the
C-2
<PAGE> 43
transaction, will be made by the Manager in the manner it considers to
be the most equitable and consistent with its fiduciary obligations to
the Fund and to such other customers.
(b) The Manager, in the performance of its duties hereunder,
shall act in conformity with the Trust Agreement, By-Laws, Registration
Statement and Prospectus and with the instructions and directions of the
Trustees of the Trust, and will use its best efforts to conform to the
requirements of the 1940 Act, the Investment Advisers Act of 1940, the Internal
Revenue Code of 1986, as amended, relating to regulated investment companies
and all rules and regulations thereunder, the Insider Trading and Securities
Fraud Enforcement Act of 1988 and all other applicable federal and state laws,
regulations and rulings.
(c) The Manager shall render to the Trustees of the Trust
such periodic and special reports as the Trustees may reasonably request.
(d) The Manager shall notify the Trust of any change in the
management of the Manager within a reasonable time after such change.
(e) The Manager shall immediately notify the Trust in the
event that the Manager or any of its affiliates: (1) becomes aware that it is
subject to a statutory disqualification that prevents the Manager from serving
as investment manager pursuant to this Agreement; or (2) becomes aware that it
is the subject of an administrative proceeding or enforcement action by the
Securities and Exchange Commission or other regulatory authority. The Manager
further agrees to notify the Trust immediately of any material fact known to
the Manager respecting or relating to the Manager that is not contained in the
Trust's Registration Statement regarding the Trust, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
5. Expenses.
(a) During the term of this Agreement, the Manager will pay
all costs incurred by it in connection with the performance of its duties under
paragraph 3 hereof, other than the cost (including taxes and brokerage
commissions, if any) of securities purchased for the Fund.
(b) The Manager agrees that its gross compensation for any
fiscal year shall not be greater than an amount which, when added to the other
expenses of the Fund, shall cause the aggregate expenses of the Fund to equal
the maximum expenses under the lowest applicable expense limitation established
pursuant to the statutes or regulations of any jurisdiction in which the Shares
of the Fund may be qualified for offer and sale. Except to the extent that such
amount has been reflected in reduced payments to the Manager, the Manager shall
refund to the Fund its proportionate share of the amount by which the aggregate
payments received by the Adviser and the Manager are in excess of the
limitation pursuant to this section as promptly as practicable after the end of
such fiscal year, provided that the Manager shall not be required to pay the
Fund an amount greater than the fee paid to the Manager in respect of such year
pursuant to this Agreement. As used in this section, "expenses" shall mean
those expenses included in the applicable expense limitation having the
broadest specifications thereof, and "expense limitation" means a limit of the
maximum annual expenses which may be incurred by the Fund determined (i) by
multiplying a fixed percentage by the average, or by multiplying more than one
such percentage by different specified amounts of the average, of the values of
the Fund's net assets for a fiscal year or (ii) by multiplying a fixed
percentage by the Fund's net investment income for a fiscal year. The words
"lowest applicable expense limitation" shall be construed to result in the
largest reduction of the Manager's compensation for any fiscal year of the
Fund; provided, however, that nothing in this Agreement shall limit the
Manager's fees if not required by an applicable statute or regulation referred
to above in this section. As used in this section, the Manager's "proportionate
share" shall be based on the amount of the Manager's fee as a percentage of the
C-3
<PAGE> 44
total advisory and management fees paid or payable by the Trust directly or
indirectly with respect to the appropriate fiscal year, on behalf of the Fund.
The Manager may waive all or a portion of its fees provided for
hereunder and such waiver shall be treated as a reduction in purchase price of
the Manager's services. The Manager shall be contractually bound hereunder by
the terms of any publicly announced waiver of its fee, with the consent of the
Manager, or any limitation of the Fund's expenses, as if such waiver or
limitation were fully set forth herein.
6. Compensation.
(a) For the services provided and the expenses assumed by the
Manager pursuant to this Agreement, the Adviser will pay to the Manager as full
compensation therefor a fee at an annual rate of .40 of 1% of the average daily
net assets of the Fund up to $325,000,000; provided, that if the average daily
net assets of the Fund exceed $325,000,000, the fee payable to the Manager
based on that portion of the average of such value in excess of $325,000,000
shall be .25 of 1% of the average daily net assets of the Fund.
(b) The fee will be computed based on net assets on each day
and will be paid to the Manager monthly.
7. Books and Records. The Manager shall maintain all of the
Trust's records relating to the Manager's duties with respect to the Fund. The
Manager agrees that all records so maintained are the property of the Trust and
it will surrender promptly to the Trust any of such records, other than those
records which are by law required to be maintained by the Manager, upon the
Trust's request. The Manager further agrees to preserve for the periods, and in
the manner, prescribed by the Rules of the Commission under the 1940 Act any
such records as are required to be maintained by such Rules. To the extent
required by law, the Manager shall furnish to regulatory authorities having the
requisite authority such records which may be requested in order to ascertain
whether the operations of the Trust with respect to the Fund are being
conducted in a manner consistent with applicable laws and regulations.
8. Indemnification.
(a) Subject to Section 36 of the 1940 Act to the extent
applicable, the Manager shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its
obligations and duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement.
(b) The Trust, on behalf of the Fund, hereby agrees to
indemnify and hold harmless the Manager, its officers, directors and employees
and each person, if any, who controls the Manager (collectively, the
"Indemnified Parties") against any and all losses, claims, damages or
liabilities, joint or several, relating to the Fund, to which any such
Indemnified Party may become subject under the 1933 Act, the Securities
Exchange Act of 1934, the Advisers Act, the 1940 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon
(i) any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission to
state a material fact required to be stated or necessary to make the
statements made not misleading in (x) the Registration Statement or
the Prospectus, (y) any advertisement or sales literature authorized
by the Trust for use in the offer and sale of Shares of the Fund, or
(z) any application or other document filed in connection with the
qualification of the
C-4
<PAGE> 45
Trust or Shares of the Fund under the Blue Sky or securities laws of
any jurisdiction, except insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any such untrue statement or omission or alleged untrue statement
or omission (1) in a document prepared by the Manager, (2) which
pertains to a failure to disclose a breach of the Manager's duties in
connection with this Agreement, or (3) made in reliance upon and in
conformity with information furnished to the Trust by or on behalf of
the Manager pertaining to or originating with the Manager for use in
connection with any document referred to in clauses (x), (y) or (z),
or
(ii) the Manager acting as investment manager to the
Trust with respect to the Fund;
and the Trust, from the assets of the Fund, will reimburse each Indemnified
Party for any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) If the indemnification provided for in paragraph 8(b) is
available in accordance with the terms of such paragraph but is for any reason
held by a court to be unavailable from the Trust, then the Trust, from the
assets of the Fund, shall contribute to the aggregate amount paid or payable by
the Trust and such Indemnified Party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the Fund and such
Indemnified Party in connection with the operations of the Fund, (ii) the
relative fault of the Trust with respect to the Fund and such Indemnified
Party, and (iii) any other relevant equitable considerations. The Trust and the
Manager agree that it would not be just and equitable if contribution pursuant
to this subparagraph (c) were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above in this subparagraph (c). The amount paid or
payable as a result of the losses, claims, damages or liabilities (or actions
in respect thereof) referred to above in this subparagraph (c) shall be deemed
to include any legal or other expenses incurred by the Trust and the
Indemnified Party in connection with investigating or defending any such loss,
claim, damage, liability or action. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(d) It is understood, however, that nothing in this paragraph
8 shall protect any Indemnified Party against, or entitle any Indemnified Party
to indemnification against, or contribution with respect to, any liability to
the Trust or its Shareholders to which such Indemnified Party is subject, by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of any reckless disregard of its
obligations and duties, under this Agreement, or otherwise to an extent or in a
manner inconsistent with Section 17(i) of the 1940 Act.
9. Duration and Termination. Insofar as the Shareholders of the
Fund are affected by this Agreement, it shall continue, unless sooner
terminated as provided herein, until May 31, 1997, and thereafter shall
continue automatically for periods of one year so long as each such latter
continuance is approved at least annually (a) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons (as defined by the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Trustees of the Trust or by vote of a majority of the outstanding Shares (as
defined with respect to voting securities in the 1940 Act) of the Fund;
provided, however, that this Agreement may be terminated by the Trust, at any
time, without the payment of any penalty, by vote of a majority of the Trustees
of the Trust or by vote of a majority of the outstanding Shares (as so defined)
of the Fund affected thereby or by the Adviser, on 60 days' written notice to
the Manager, or by the Manager at any time, without the payment of any penalty,
on 60 days'
C-5
<PAGE> 46
written notice to the Trust and the Adviser. This Agreement will automatically
and immediately terminate in the event of its assignment (as defined by the
1940 Act).
10. Status of Manager as Independent Contractor. The Manager
shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Trustees
of the Trust from time to time, have no authority to act for or represent the
Trust or Fund in any way or otherwise be deemed an agent of the Trust or Fund
or of the Adviser.
11. Amendment of Agreement. This Agreement may be amended,
changed or waived only by an instrument in writing and by mutual consent of the
Trust, the Adviser and the Manager, but the consent of the Trust must be
approved (a) by vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such amendment, and (b) by vote of a majority of the outstanding Shares (as
defined with respect to voting securities by the 1940 Act) of the Fund.
12. Limitation of Liability. The name "The Pilot Funds" refers to
the Trustees under the Declaration collectively as trustees and not as
individuals. The Declaration, a copy of which, together with all amendments
thereto, is on file in the Office of the Secretary of the Commonwealth of
Massachusetts, provides that no shareholder, Trustee, officer, employee or
agent of the Trust, shall be subject to claims against or obligations of the
Trust to any extent whatsoever, but that the Trust estate only shall be liable.
The Manager is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and agrees that the obligations
assumed by the Trust pursuant to this Agreement shall be limited in all cases
to the Fund's assets, and the Manager shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Trust or Fund or any
other series of the Trust, or from any Trustee, officer, employee or agent of
the Trust. The Manager understands that the rights and obligations of each
series under the Declaration are separate and distinct from those of any and
all other series.
13. Investment Information. Kleinwort Benson Investment
Management Americas Inc. is a wholly-owned, independent subsidiary of Kleinwort
Benson Group plc. The Fund may include securities of companies with respect to
which Kleinwort Benson Group plc or its affiliates (including, without
limitation, Kleinwort Benson Limited) (collectively, the "Kleinwort Benson
Group") provides investment banking, financial, management or other services,
has other confidential relationships, maintains a position or makes a market or
otherwise may have an interest. The Trust acknowledges that, for good
commercial and legal reasons, nonpublic information (a) which becomes available
to any member of the Kleinwort Benson Group through its relationships or for
any other reason cannot be passed on to Kleinwort Benson Investment Management
Americas Inc. or to the Trust or used for the benefit of any of the series of
the Trust; and (b) which becomes available to Kleinwort Benson Investment
Management Americas Inc. for any reason cannot be passed on to the Trust or
used for the benefit of the Fund or any other series of the Trust.
14. 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. This Agreement shall be construed in accordance with
applicable federal law and the laws of the Commonwealth of Massachusetts and
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors subject to the last sentence of paragraph 9, and,
to the extent provided in paragraph 8 hereof, each Indemnified Party. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause
the Trust to fail to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended, nor shall this Agreement
C-6
<PAGE> 47
be construed to require, or to impose any duty upon, either of the parties to
do anything in violation of any applicable laws or regulations.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument. This Agreement shall
supersede all prior investment advisory, subadvisory or management agreements
entered into between the parties. This Agreement shall not apply to the
management of assets allocated to any series of the Trust other than the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
THE PILOT FUNDS
Attest:
By:
---------------------------
Name:
Title:
KLEINWORT BENSON INVESTMENT
MANAGEMENT AMERICAS INC.
Attest:
By:
---------------------------
Name:
Title:
BOATMEN'S TRUST COMPANY
Attest:
By:
---------------------------
Name:
Title:
C-7
<PAGE> 48
EXHIBIT D
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF BOATMEN'S
<TABLE>
<CAPTION>
Position with Position and Name
Name Boatmen's Trust Company of Other Business
---- ----------------------- -----------------
<S> <C> <C>
Howard F. Baer Director Retired
32 North Kings Highway, Suite 504
St. Louis, Missouri 63108
Clarence C. Barksdale Director Vice Chairman
Washington University
7425 Forsyth Boulevard
Campus Box 1227
St. Louis Missouri 63105
Gerald D. Blatherwick Director Retired
26 Fordyce Lane
St. Louis, Missouri 63124
Stephen F. Brauer Director President
Hunter Engineering Company
11250 Hunter Drive
Bridgeton, Missouri 63004
Mary L. Burke, Ph.D Director Head of School
Whitfield School
175 South Mason Road
St. Louis, Missouri 63141
Andrew B. Craig, III Director Chairman and Chief Executive
Officer
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
St. Louis, Missouri 63101
Donald Danforth, Jr. Director President
Danforth Agri-Resources Inc.
700 Corporate Park Drive, Suite 330
St. Louis, Missouri 63105-4209
The Honorable John C. Danforth Director Bryan Cave LLP
One Metropolitan Sq.
211 N. Broadway, Suite 3600
St. Louis, MO 63102-2750
Martin E. Galt, III Director and Chairman of the Board, President and
President Chief Executive Officer
Boatmen's Trust Company
100 North Broadway
St. Louis, Missouri 63102
</TABLE>
D-1
<PAGE> 49
<TABLE>
<CAPTION>
Position with Position and Name
Name Boatmen's Trust Company of Other Business
---- ----------------------- -----------------
<S> <C> <C>
A. William Hager Director Chairman of the Board
Hager Hinge Company
139 Victor Street
St. Louis, Missouri 63104
Samuel B. Hayes, III Director President, Boatmen's Bancshares, Inc.
The Boatmen's National Bank of
St. Louis
One Boatmen's Plaza
St. Louis, Missouri 63101
Robert B. Hoffman Director Senior Vice President and
Chief Financial Officer
Monsanto Company - DIF
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
Robert E. Kresko Director Pierre Laclede Center
7701 Forsyth, Suite 680
St. Louis, Missouri 63105
John Peters MacCarthy Director Retired
6 Robin Hill Lane
St. Louis, Missouri 63124
James S. McDonnell, III Director Retired
40 Glens Eagles Drive
St. Louis, Missouri 63124
John B. McKinney Director President, Chief Executive Officer
Laclede Steel Company
One Metropolitan Square, 15th Floor
St. Louis, Missouri 63102
Reuben M. Morriss, III Director Retired
10048 Litzsinger Road
St. Louis, Missouri 63124
William C. Nelson Director Chairman, President and
Chief Executive Officer
Boatmen's First National Bank of
Kansas City
10th & Baltimore
P.O. Box 419038
Kansas City, Missouri 64183
Kimberly A. Olson Director Executive Vice President
Group One Capital
1611 Des Peres Road, Suite 395
St. Louis, Missouri 63131
</TABLE>
D-2
<PAGE> 50
<TABLE>
<CAPTION>
Position with Position and Name
Name Boatmen's Trust Company of Other Business
---- ----------------------- -----------------
<S> <C> <C>
William A. Peck, M.D. Director Executive Vice Chancellor and Dean
Washington University School of
Medicine
660 South Euclid Avenue, Box 8106
St. Louis, Missouri 63110
W.R. Persons Director 200 South Bemiston Avenue
Suite 308
St. Louis, Missouri 63105
Jerry E. Ritter Director Chairman of the Board of
Clark Enterprise, Inc. and
Consultant to Anheuser-Busch
Companies, Inc.
1401 Clark Avenue, 63103
St. Louis, Missouri 63103
Hugh Scott, III Director Chairman and Chief Executive
Officer
Western Diesel Services, Inc.
101 South Hauley, Suite 1910
St. Louis, Missouri 63105
Richard W. Shomaker Director Retired
14181 Woods Mill Cove
Chesterfield, Missouri 63017
Brice R. Smith, Jr. Director Chairman Emeritus
Sverdrup Corporation
SPIRE Co. LLC
13801 Riverport Drive, Suite 301
Maryland Heights, Missouri 63043
William D. Stamper Director President
William D. Stamper Company
7777 Bonhomme, Suite 1006
St. Louis, Missouri 63105
Janet M. Weakley Director President
Janet McAfee Inc. Real Estate
9889 Clayton Road
St. Louis, Missouri 63124
Gordon E. Wells Director Retired
3121 West 67th Terrace
Shawnee Mission, Kansas 66208
</TABLE>
D-3
<PAGE> 51
PRELIMINARY COPY
FORM OF PROXY
THE PILOT FUNDS
<TABLE>
<S> <C>
Pilot Small Capitalization Equity Fund Pilot International Equity Fund
Pilot Growth and Income Fund Pilot Short-Term U.S. Treasury Fund
Pilot Short-Term Diversified Assets Fund Pilot Equity Income Fund
Pilot Short-Term Tax-Exempt Diversified Fund Pilot Municipal Bond Fund
Pilot Missouri Short-Term Tax-Exempt Pilot Growth Fund
Pilot U.S. Government Securities Fund Pilot Pilot Diversified Bond Income Fund
Pilot Intermediate Municipal Bond Fund Pilot Pilot Intermediate U.S. Government Securities Fund
</TABLE>
PROXY SOLICITED BY THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS December 18, 1996
The undersigned appoints William J. Tomko, George O. Martinez, and Bruce Treff
and each of them, attorneys and proxies of the undersigned, with full power of
substitution, to vote all shares of Pilot Small Capitalization Equity Fund,
Pilot Short-Term U.S. Treasury Fund, Pilot Short-Term Diversified Assets Fund,
Pilot Short-Term Tax-Exempt Diversified Fund, Pilot Missouri Short-Term
Tax-Exempt Fund, Pilot Growth Fund, Pilot Diversified Bond Income Fund, Pilot
International Equity Fund, Pilot Growth and Income Fund, Pilot Equity Income
Fund, Pilot Intermediate U.S. Government Securities Fund, Pilot U.S. Government
Securities Fund, Pilot Intermediate Municipal Bond Fund, and Pilot Municipal
Bond Fund (each, a "Fund" and collectively, the "Funds"), each a series of The
Pilot Funds, which the undersigned is entitled to vote at the combined special
meeting of shareholders of the Funds to be held on December 18, 1996 at 10:00
a.m., Eastern time, and at any adjournment thereof.
NOTE: This instrument must be
signed by the registered holder(s).
When signing as attorney,
administrator, trustee or guardian,
please give your title as such.
-----------------------------
Date
-----------------------------
-----------------------------
Signature(s)
D-4
<PAGE> 52
Please complete, sign and date on Reverse and Mail in Accompanying Postpaid
Envelope.
THE BOARD OF TRUSTEES FAVORS A VOTE FOR EACH PROPOSAL
1A. To approve a proposed new Investment Advisory Agreement between
the Trust on behalf of each Fund whose shares the party granting this proxy is
entitled to vote and Boatmen's Trust Company, as set forth in the accompanying
proxy statement. (THIS PROPOSAL IS APPLICABLE TO SHAREHOLDERS OF ALL FUNDS.)
FOR / / FOR ALL EXCEPT / / ABSTAIN / /
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR THE NEW INVESTMENT
ADVISORY AGREEMENT FOR A PARTICULAR FUND, MARK THE "FOR ALL EXCEPT"
BOX AND WRITE THE NAME OF THE FUND IN THE SPACE BELOW.)
1B. To approve a proposed new Investment Management Agreement between
the Trust on behalf of Pilot International Equity Fund, Boatmen's Trust
Company, and Kleinwort Benson Investment Management Americas Inc. as described
in the accompanying proxy statement. (THIS PROPOSAL IS APPLICABLE ONLY TO
SHAREHOLDERS OF PILOT INTERNATIONAL EQUITY FUND.)
FOR / / FOR ALL EXCEPT / / ABSTAIN / /
2.To ratify the selection of Arthur Andersen LLP as independent
certified public accountants for the Trust. (THIS PROPOSAL IS APPLICABLE TO
SHAREHOLDERS OF ALL FUNDS.)
FOR / / FOR ALL EXCEPT / / ABSTAIN / /
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY SHALL BE
VOTED "FOR" THE APPROVAL OF PROPOSAL 1A AND 1B AND "FOR" THE APPROVAL OF
PROPOSAL 2 AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ALL OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY ADJOURNMENTS
THEREOF. THE PARTY SIGNING ON THE REVERSE ACKNOWLEDGES RECEIPT OF THE
ACCOMPANYING NOTICE OF SPECIAL MEETING AND PROXY STATEMENT.
D-5
